<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 9, 1998
REGISTRATION NO. 333-47977
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN ATM CORP.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
FLORIDA 7389 65-0656168
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER IDENTIFICATION NO.)
</TABLE>
5061 NORTH DIXIE HIGHWAY
BOCA RATON, FLORIDA 33431
(561) 367-8433
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
MORI AARON SCHWEITZER,
CHAIRMAN, CEO, PRESIDENT AND TREASURER
5061 NORTH DIXIE HIGHWAY
BOCA RATON, FLORIDA 33431
(561) 367-8433
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPY OF ALL COMMUNICATIONS TO:
GERALD A. ADLER, ESQ.
MARY P. O'HARA, ESQ.
BONDY & SCHLOSS LLP
6 EAST 43RD STREET, 25TH FLOOR
NEW YORK, NEW YORK 10017
(212) 661-3535
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 9, 1998
PROSPECTUS
AMERICAN ATM CORP.
3,562,500 SHARES OF COMMON STOCK, $.001 PAR VALUE
ALL OF WHICH UNDERLY COMMON STOCK PURCHASE WARRANTS
------------------------
This prospectus relates to 3,562,500 shares of common stock, par value
$0.001 per share, all of which underly issued and outstanding warrants (the
'Warrants') of American ATM Corp. (the 'Company'). The Common Stock and the
Warrants are traded on the over-the-counter Bulletin Board under the symbols
AATM and AATMW, respectively. The Warrants entitle the holders thereof to
purchase common stock at a price of $2.40 per share.
The shares (the 'Shares') being registered herewith are issuable from time
to time by the Company upon the exercise of the Warrants by the respective
holders thereof. This prospectus relates to the exercise of the Warrants for
shares of Common Stock. The Company is not using this prospectus to offer the
Warrants for resale by selling securityholders. This prospectus may not be used
for resale of the Common Stock underlying any Warrants without an appropriate
amendment setting forth the required information relating to distribution and
selling securityholders. See 'Plan of Distribution.'
------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE 'RISK
FACTORS' BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Company will receive all of the proceeds from the sale of the Shares to
the holders of Warrants. Assuming all Warrants are exercised in full, the
Company will receive gross proceeds of approximately $8,550,000. The Company
will bear all costs relating to the registration of the Shares, which are
estimated to be approximately $90,000.00. See 'Plan of Distribution.'
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING SECURITYHOLDERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION SET FORTH HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
Prior to the date of this Prospectus, the Company was not subject to the
informational requirements of the Securities Exchange Act of 1934. The Company
intends to furnish its stockholders with annual reports containing financial
statements audited by its independent accounting firm, after the end of each
fiscal year, and such other periodic reports as the Company deems appropriate or
as may be required by law.
2
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information and the Company's financial
statements (including the notes thereto) appearing elsewhere in this Prospectus.
Each prospective investor is therefore urged to read this prospectus in its
entirety. The securities offered hereby involve a high degree of risk, and the
exercise of the Warrants and subsequent issuance of the shares by the Company
will result in immediate substantial dilution. This Prospectus contains forward
looking statements that involve risks and uncertainties. The Company's actual
results could differ materially from those anticipated in these forward looking
statements as a result of certain factors discussed under the caption 'Risk
Factors.'
THE COMPANY
The Company, a development stage corporation, is an independent owner and
operator of automatic teller machines (each, an 'ATM') which provide individuals
with the mechanism to use their bank debit card, MasterCard, Visa, Discover,
Diners, or American Express card or other cards to obtain on-the-spot cash from
their bank savings and checking accounts for a fee. The Company presently owns
32 and operates 25 ATMs, and has lease contracts for additional locations. It
continues to actively pursue additional locations. The Company selects locations
in regional and local shopping malls, grocery and convenience stores, airports,
night clubs, and other high traffic retail locations. The Company's ATMs and
lease contracts are concentrated in the states of Florida, New York, Maine and
New Jersey.
The Company provides its services and places its ATMs in locations pursuant
to agreements with the owners of business premises. The Company's ATMs provide a
benefit to business operators and their customers in that they increase traffic
by causing customers to enter a location with the potential of increasing sales.
In addition, cash eliminates the risk of check acceptance and the cost of check
guard services and credit card discounts. Offering in-store service of
electronic banking may give merchants a powerful differentiator with respect to
competitors. Also, the Company believes replacing credit cards and checks with
cash at the register speeds up the checkout process, provides lower labor costs
per customer transaction and creates happier customers.
ATMs also provide convenience to their users. Consumers can access their
cash from more locations while handling other shopping needs, and in-store
locations provide customers with additional security.
The Company's growth strategy is to increase the number of ATMs it operates
by approximately 75 by the end of 1998 and add an additional 150 machines by the
end of 1999. The Company also expects to expand to other geographic locations.
The Company was incorporated in Florida in March 1996. Its executive
offices are located at 5061 North Dixie Highway, Boca Raton, Florida 33431 and
its telephone number is (561) 367-8433.
3
<PAGE>
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered:....................... 3,562,500 Shares, all of which are issuable by the Company upon the
exercise of the Warrants. See 'Plan of Distribution.'
Securities Outstanding Before the Offering
and the Exercise of all Warrants and
Options:................................ 2,816,250 shares of Common Stock; Warrants to purchase up to
3,562,500 Shares of Common Stock; and options to purchase 412,500
shares of common stock.
Securities Outstanding After the Offering
and the Exercise of all Warrants:....... 6,378,750 shares of common stock; Options to purchase 412,500 shares
of common stock.
Use of Proceeds:.......................... The Company will receive proceeds from the issuance of the Shares
upon the exercise of the Warrants at a price of $2.40 per share. If
all of the Warrants are exercised, the Company will receive gross
proceeds of approximately $8,550,000. The Company cannot be
certain that any of the Warrant holders will exercise their
warrants.
Risk Factors:............................. An investment in the Shares offered hereby involves a high degree of
risk and, therefore, the Shares should not be purchased by anyone
who cannot afford the loss of their entire investment. Prospective
purchasers of the Shares should carefully review and consider the
factors set forth under 'Risk Factors' as well as other information
contained herein, before purchasing any of the Shares. See 'Risk
Factors'.
</TABLE>
4
<PAGE>
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION
The following table sets forth summary historical financial data for the
Company as at June 30, 1998 and 1997, and for the years ended June 30, 1998 and
1997, which are derived from the financial statements (and notes thereto) of the
Company included elsewhere in this Prospectus. The summary historical financial
data should be read in conjunction with the financial statements (and notes
thereto) of the Company and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' included elsewhere in this Prospectus.
SUMMARY HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
OPERATING DATA
Fee Income................................................................ $ 323,100 $ 118,852
Direct costs (including interest of $26,642 and $68,247).................. 443,041 407,473
Selling, general and administrative expenses.............................. 298,701 348,783
Loss on disposal of equipment............................................. 206,119 --
Interest expense.......................................................... (18,921) --
Interest income........................................................... 20,238 22,814
Provision for income taxes................................................ 3,000 1,000
Net loss.................................................................. (626,417) (615,590)
Per share data:
Net loss per common share............................................ $ (0.22) $ (0.26)
Average number of shares outstanding...................................... 2,816,250 2,342,160
BALANCE SHEET DATA
Working capital (deficiency).............................................. $ (135,766) $ 143,388
Total assets.............................................................. 489,346 881,175
Current liabilities....................................................... 338,393 254,805
Long term debt............................................................ 111,000 2,000
Total liabilities......................................................... 449,393 256,805
Accumulated deficit....................................................... (1,281,263) (654,846)
Shareholder equity........................................................ 39,973 624,370
</TABLE>
5
<PAGE>
<PAGE>
RISK FACTORS
An investment in the Shares being offered hereby involves a high degree of
risk. Prior to making any investment decisions, prospective investors should
carefully consider the following factors, together with the other information
presented in this Prospectus including the Financial Statements (and notes
thereto).
LIMITED OPERATING HISTORY; NEW BUSINESS ACTIVITIES
Since the Company's incorporation on March 11, 1996, it has had minimal
operating history and operating revenues and must be considered in the initial
stages of building its business. Although the Company left the development stage
in September 1996, it has had no subsequent significant operating history upon
which an evaluation of its business and its prospects can be based. Its business
is subject to all of the risks inherent in the establishment of a new business
enterprise. The likelihood of the success of the Company must be considered in
light of the problems, expenses, complications and delays frequently encountered
in connection with the formation of a new business, the development of new
products or services, the competitive environment in which the Company is
operating, and the possibility that its activities may not succeed in obtaining
an appreciable share of the markets which it seeks to enter. Additionally, as a
result of the short history of its business and the fact that it has virtually
no share of its intended markets, the Company may be expected to sustain
operating losses for the immediate future. See 'Business' and the Company's
financial statements located elsewhere in this Prospectus.
RECENT AND SUBSTANTIAL LOSSES; GOING CONCERN LETTER IN AUDITOR'S REPORT; WORKING
CAPITAL DEFICIT
For the years ended June 30, 1998 and 1997, the Company has reported net
losses of $626,417 and $615,590, respectively. In addition, as of June 30, 1998,
the Company had a working capital deficit of $135,766 and an accumulated deficit
of $1,281,263. The auditor's report to the Company's financial statements as at
and for the two years ended June 30, 1998 states that the working capital
deficit and continuing substantial losses raise doubts about the Company's
ability to operate as a going concern. For at least the current fiscal year, the
Company is likely to incur additional losses which may be substantial. There can
be no assurance that the Company's operations will be profitable in the future
or, if achieved, that such profitability will be sustained. See the Company's
financial statements located elsewhere in this prospectus.
TECHNOLOGICAL CHANGES AND NEW SERVICES
The ATM industry has been characterized by rapid technological
advancements, frequent new service introductions and revolving industry
standards. The Company believes that its future success will depend on its
ability to anticipate and respond to such changes. There can be no assurance
that the Company will have sufficient resources to make the investments
necessary to acquire new technology or to introduce new services that would
satisfy an expanded range of customer needs.
COMPETITION
The ATM business is and can be expected to remain highly competitive. While
the Company's principal competition comes from national and regional banks, the
Company also competes with other independent ATM companies. All of these
competitors offer services similar to or substantially the same as the Company.
Most of these competitors are larger, more established and have greater
financial and other resources than the Company. Such competition could prevent
the Company from obtaining or maintaining desirable locations for its machines
or could cause the Company to reduce its user fees generated by its ATMs or
cause the Company to pay higher leasing fees thereby reducing the Company's
profits. The independent ATM business has become increasingly competitive as
entities other than banks have entered the market with relatively few barriers
to accomplish such entry. See 'Business.'
6
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<PAGE>
BUSINESS CONDITIONS IN GENERAL
An investment in the Company involves the general risks associated with
ownership and operation of a small, newly established business. One of the
principal business risks associated with an investment in the Company is its
potential inability to establish itself profitably within the ATM industry.
Operations could also be affected by economic and business factors, most of
which are beyond the Company's control. Such factors include, but are not
limited to, additional governmental regulation of the ATM industry and
competition from banks expanding into the field outside of their individual
banking network.
REGULATORY UNCERTAINTY
The Company operates in a changing and largely unpredictable regulatory
environment. While the ATM industry is regulated by the Federal Electronic Funds
Transfer Act which provides a basic framework establishing the rights,
liabilities and responsibilities of participants in electronic funds transfer
systems, the Company has no obligation to inform governmental authorities about
or obtain governmental approval for its operations. However, in the event that
the Company's business becomes regulated, the cost of complying with such
regulations could be unduly burdensome, which could result in a reduction of the
Company's profits. Recent legislation has been introduced in certain states and
in Congress which would sharply limit, or even prevent, ATM operators from
charging fees for ATM transactions. Passage of any such legislation could
result in a substantial loss of revenues and/or a total loss of the Company's
business.
RELIANCE ON KEY PERSONNEL; INEXPERIENCED PERSONNEL
The Company is heavily dependent upon the efforts and abilities of Mori
Aaron Schweitzer, the Chief Executive Officer, President and Chairman of the
Board and Ms. Carmen Panizzi, Vice President and ATM Administrator. Mr.
Schweitzer and Ms. Panizzi have had limited experience in the ATM business.
However, Mr. Schweitzer has had significant business experience as have the
other officers and directors of the Company. The loss of the services of Mr.
Schweitzer, Ms. Panizzi or other management personnel could have a material
adverse effect on the Company's business, financial condition or results of
operations. Currently, the Company does not have employment agreements with any
of its key personnel, nor does it have key-man insurance on any of their lives.
ABILITY TO EXPAND OPERATIONS
The Company intends to continue expansion of its operations by installing
or acquiring ATM machines in the areas where the Company is presently operating
(Florida, Alabama, Maine, New York and New Jersey), as well as in new areas. The
ability of the Company to install additional ATM machines depends on numerous
factors, including having adequate financial resources, locating satisfactory
sites for ATM machines and hiring service companies to service the sites and to
support the advanced technology necessary to provide service enhancement. No
assurance can be given that the proceeds of this offering (even if all of the
Warrants are exercised, of which there can be no assurance) and any revenue
which the Company may generate from operations, if any, will be sufficient to
meet the Company's capital needs. If not, the Company will require additional
financing in the future. There can be no assurance that the Company will be able
to secure addition financing or that such financing will be available on terms
acceptable to the Company. If adequate funds are not available from operations
or financing, the Company may have to modify its business strategy.
LISTING AND MAINTENANCE CRITERIA FOR NASDAQ QUOTATION
Assuming the exercise of all of the Warrants, of which no assurance can be
given, the Company intends to apply to have the Shares approved for quotation on
Nasdaq SmallCap MarketSM. However, no assurance can be given that it will be
able to satisfy the criteria for initial or continued quotation on Nasdaq
following this Offering. To be listed and continue to be quoted on Nasdaq, the
Company must satisfy certain maintenance criteria, including having (i) at least
two market makers for its Common Stock; (ii) total assets of at least $4
million; (iii) capital and surplus of at least $2 million; (iv) a minimum bid
price per share of $3.00; (v) at least 300 shareholders and (vi) a public float
of at least 100,000 shares with a market value of at least $1 million. If the
Company's securities become listed on
7
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<PAGE>
the Nasdaq SmallCap Market, failure to meet any of these maintenance criteria in
the future would result in the Company's securities being delisted by Nasdaq.
In the event that the Company's securities were delisted, any trading in
the securities would resume in the over-the-counter market or the OTC Electronic
Bulletin Board of the National Association of Securities Dealers, Inc. As a
result of such delisting, an investor could find it more difficult to dispose
of, or to obtain accurate quotations as to the market value of the Company's
securities.
PENNY STOCK RULE
Trading in the Company's securities is conducted on the NASD's Electronic
Bulletin Board. In the absence of the common stock being quoted on Nasdaq, or
the Company having $2 million in net tangible assets, trading in the common
stock would be covered by Rule 15g-9 promulgated under the Securities Exchange
Act of 1934, as amended (the 'Exchange Act') for non-Nasdaq and non-exchange
listed securities. Under such rule, broker-dealers who recommend such securities
to persons other than established customers and accredited investors must make a
special written suitability determination for the purchaser and receive the
purchaser's written agreement to a transaction prior to sale. Securities are
exempt from this rule if the market price is at least $5.00 per share.
The Securities and Exchange Commission (the 'Commission') has adopted
regulations that generally define a penny stock to be an equity security that
has a market price of less that $5.00 per share, subject to certain exemptions.
Such exemptions include an equity security listed on Nasdaq and an equity
security issued by an issuer that has (i) net tangible assets of at least $5
million, if such issuer has been in continuous operation for less than three (3)
years, or (iii) average revenue of at least $6 million for the proceeding three
(3) years. Unless an exemption is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated therewith.
As the Company's common stock is presently subject to the regulations on penny
stock, the market liquidity for the common stock could be severely and adversely
affected due to the limitations on the ability of broker-dealers to sell the
common stock in the public market.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS
At such time as the Shares underlying the Warrants become registered under
the Securities Act of 1933, as amended (the 'Securities Act'), holders of the
Warrants will be able to exercise the Warrants only if (i) a current Prospectus
under the Securities Act relating to the Shares is then in effect and (ii) the
Shares are qualified for sale or exempt from qualification under the applicable
securities laws of the state in which the various holders of Warrants reside.
Although the Company has agreed to use its best efforts to maintain a current
registration statement covering the Shares, there can be no assurance that the
Company will be able to do so. The value of the Shares may be greatly reduced if
a registration statement covering the Shares is not kept current or if the
Shares are not qualified, or exempt from qualification, in the states in which
the holders of warrants and options reside. Persons holding Warrants who reside
in jurisdictions in which the Shares are not qualified and in which there is no
exemption will be unable to exercise their Warrants and would either have to
sell their Warrants or allow them to expire unexercised.
NO DIVIDENDS ON COMMON STOCK
The Company does not currently pay and does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future because it intends to
retain its earnings to finance the expansion of its business. There can be no
assurance that the operations of the Company will result in sufficient revenues
to enable the Company to operate at profitable levels or to generate a positive
cash flow. Therefore, investors who anticipate the need of an immediate income,
in the form of dividends on their common stock should refrain from purchasing
the Shares being offered hereby.
8
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POSSIBLE ADVERSE EFFECT OF ISSUANCE OF PREFERRED STOCK
The Company's Certificate of Incorporation, as amended, authorizes the
issuance of 100,000 shares of Preferred Stock, with designations, rights and
preferences to be determined from time to time by the Board of Directors. As a
result of the foregoing, the Board of Directors is empowered, without further
shareholder approval, to issue Preferred Stock with dividend, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the holders of the Common Stock. In the event of issuance,
the Preferred Stock, could be used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company.
Although the Company has no plans to issue any shares of Preferred Stock, there
can be no assurance that it will not issue Preferred Stock at some time in the
future. See 'Description of Securities.'
SHARES ELIGIBLE FOR FUTURE SALE
Assuming the exercise of all of the outstanding Warrants and Options,
1,303,750 shares of the Company's 6,791,250 outstanding shares of Common Stock
will be 'restricted securities' and in the future, may be sold only in
compliance with Rule 144 or other exemption under the Securities Act, unless
registered under the Securities Act. Under Rule 144, a person who has owned
Common Stock for at least one (1) year may, under certain circumstances, sell
within any three-month period, a number of shares of Common Stock that does not
exceed the greater of one (1%) percent of the then outstanding shares of Common
Stock or the average weekly trading volume during the four (4) calendar weeks
prior to such sale. In addition, a person who is not deemed to have been an
affiliate at any time during the three (3) months preceding a sale and who has
beneficially owned the restricted securities for the last three (3) years, is
entitled to sell all such shares without regard to the volume limitations,
current public information requirements, manner of sale provisions and notice
requirements. The Company cannot predict how sales made pursuant to Rule 144
would affect the prevailing market price of the shares of Common Stock, if a
market should develop therefore. See 'Shares Eligible for Future Sale.'
SIGNIFICANT OUTSTANDING OPTIONS AND WARRANTS
As of the date of this Prospectus, there are outstanding immediately
exercisable Warrants, and Options to purchase an aggregate of 3,975,000 shares
of common stock at exercise prices ranging from $.80 to $2.40 per share. The
registration of the securities pursuant to this Prospectus will render the
Warrants immediately exercisable by their terms. To the extent that such
Warrants, and Options are exercised, immediate and substantial dilution to the
Company's shareholders as well as holders exercising Warrants, and/or Options,
will occur.
Moreover, with respect to the Warrants and Options, the terms upon which
the Company will be able to obtain additional equity capital may be adversely
affected, since the holders of the options can be expected to exercise or
convert them at a time when the Company would, in all likelihood, be able to
obtain any needed capital on terms more favorable to the Company than the
exercise and conversion terms provided in such securities.
FORWARD LOOKING STATEMENTS
This Prospectus and the information incorporated herein by reference
contain various 'forward-looking statements' within the meaning of federal and
state securities laws, including those identified or predicated by the words
'believes,' 'anticipates' 'expects,' 'plans' or similar expressions. Such
statements are subject to a number of uncertainties that could cause the actual
results to differ materially from those projected. Such factors include, but are
not limited to, those described under 'Risk Factors'. Given these uncertainties,
prospective purchasers are cautioned not to place undue reliance upon such
statements.
9
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USE OF PROCEEDS
The Company will receive proceeds from the issuance of the Shares upon the
exercise of Warrants, if any, at $2.40 per share. If all the Warrants are
exercised, the Company will receive net proceeds, after deduction of Offering
expenses, of approximately $8,460,000. The Company intends to use the net
proceeds for the following purposes in order of priority: (i) approximately
$2,000,000 to purchase and install 200 ATM machines; (ii) approximately
$1,000,000 to provide cash to supply the ATM machines with working capital;
(iii) approximately $3,000,000 for unidentified compatible financial based
acquisition; and (iv) approximately 2,460,000 in working capital.
CAPITALIZATION
The following table sets forth the capitalization of the Company at June
30, 1998. The following table should be read in conjunction with the financial
statements and related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1998
-------------
<S> <C>
Current liabilities................................................................................ $ 338,393
Long-term obligations.............................................................................. 111,000
Total liabilities.................................................................................. 449,393
Stockholders' equity
Preferred Stock, par value, $10.00 per share: 100,000 shares authorized; no shares issued or
outstanding.................................................................................. 0
Common Stock, par value, $.001 per share:
authorized: 10,000,000 shares
issued and outstanding: 2,816,250........................................................... 2,816
Additional paid-in capital............................................................... 1,318,400
Accumulated deficit...................................................................... (1,281,263)
Total stockholders' equity.................................................................... 39,953
-------------
Total capitalization.......................................................................... $ 489,346
-------------
-------------
</TABLE>
10
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DILUTION
As of June 30, 1998, the Company's negative tangible book value was
($29,729) or ($0.01) per share of the Common Stock. The net tangible book value
of the Company is the tangible assets less total liabilities. The Company has
net intangible assets amounting to $69,682 at June 30, 1998. Dilution per share
represents the difference between the amount paid per share by purchasers in
this Offering and the pro forma net tangible book value per share after the
Offering.
After giving effect to the assumed issuance of 3,562,500 shares of
Company's Common Stock based upon the Assumed Conversion of all the outstanding
warrants and the assumed application of the net proceeds thereof, the pro forma
net tangible book value of the Company as of June 30,
1998 would have been approximately $8,499,853 or $1.33 per share. This
represents an increase in the net tangible book value per share of $1.34 to the
Company's existing shareholders and an immediate dilution of $1.07 per share to
the Warrantholders converting their warrants into Common Shares at $2.401 per
share.
The following table illustrates this dilution on a per share basis:
<TABLE>
<S> <C> <C>
Per share conversion price of Warrants................................................ $2.40
Net tangible book value per share before conversion................................... ($0.01)
Increase per share attributable to payments by Warrantholders......................... 1.34
------
Tangible net book value per share after............................................... 1.33
-----
Dilution per share.................................................................... $1.07
-----
</TABLE>
The following table summarizes the differences between the existing
stockholders and new investors with respect to the number of shares of Common
Stock purchased from the Company, and the total consideration and the average
price per share paid:
<TABLE>
<CAPTION>
PERCENTAGE
OF OUTSTANDING TOTAL PER CENT OF AVERAGE PRICE
SHARES OF SHARES OF CONSIDERATION TOTAL CONSIDERATION PER SHARE OF
COMMON STOCK COMMON STOCK PAID PAID COMMON STOCK
------------ -------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
Existing
Stockholders..... 2,816,750 44.2% $ 1,161,500 11.7% $0.41
New Investors...... 3,562,500 55.8 8,655,000 88.3 $2.43
------------ ------ ------------- ------
6,378,750 100.0% $ 9,815,500 100.0% $1.54
------------ ------ ------------- ------
------------ ------ ------------- ------
</TABLE>
DIVIDEND POLICY
The Company has never paid dividends on its Common Stock and does not
anticipate paying dividends or altering its dividend policy in the foreseeable
future. The Company currently intends to retain all available funds for use in
the operation and expansion of its business. The payment of dividends on its
Common Stock will depend on its earnings, financial condition, cash flows,
capital requirements and such other considerations as the Board of Directors may
consider relevant, including any contractual prohibitions with respect to the
payment of dividends.
11
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<PAGE>
SELECTED HISTORICAL AND FINANCIAL DATA
The following table sets forth summary historical financial data for the
Company at June 30, 1998 and 1997 and for the years ended June 30, 1998 and 1997
which are derived from the financial statements (and notes thereto) of the
Company included elsewhere in this Prospectus. The summary historical financial
data should be read in conjunction with the financial statements (and notes
thereto) of the Company and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' included elsewhere in this Prospectus.
SUMMARY HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JUNE 30, 1998 JUNE 30, 1997
------------------ ------------------
<S> <C> <C>
Operating Data
Net income......................................................... $ 323,100 $ 118,852
Direct costs (including interest of $26,642 and $68,247)........... 443,041 407,473
Selling, general and administrative expenses....................... 298,701 348,783
Loss on disposal of equipment...................................... 206,119 --
Interest expense................................................... (18,921) --
Interest income.................................................... 20,238 22,814
Provision for income taxes......................................... 3,000 1,000
Net loss........................................................... (626,417) (615,590)
Per share data:
Net loss...................................................... ($0.22) ($0.26)
Average Number of shares outstanding.......................... 2,816,250 2,342,160
Balance Sheet Data
Working capital (deficiency)....................................... (135,766) 143,388
Total assets....................................................... 489,346 881,175
Current liabilities................................................ 338,393 254,805
Long term debt..................................................... 111,000 2,000
Total liabilities.................................................. 449,393 256,805
Accumulated deficit................................................ (1,281,263) (654,846)
Shareholder equity................................................. 39,973 624,370
</TABLE>
12
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto contained elsewhere in this
Prospectus. Certain statements under this caption 'Management's Discussion and
Analysis of Financial Conditions and Results of Operations,' constitute
'forward-looking statements' under the Private Securities Litigation Reform Act
of 1995. See 'Risk Factors-Forward Looking Statements.'
PLAN OF OPERATION
The Company's plan of operation for the next twelve months will principally
involve the acquisition of additional ATMs and leased sites. The Company
anticipates, with the net proceeds of this offering, together with funds
previously raised by the Company, that it will be able to have approximately 50
ATMs in operation by December 31, 1998 with an additional 100 ATMs in operation
by the end of fiscal 1999. In addition, the Company has applied for a license to
operate ATMs in the Commonwealth of Massachusetts which, if granted, should
enable the Company to obtain another 10 to 25 locations in that state. The
Company will also seek to acquire other privately held companies in the ATM,
banking and related industries. To date, no such companies have been identified.
Assuming all of the Warrants are exercised, of which no assurance can be
given, the net proceeds of this offering will be approximately $8,460,000. The
Company believes such proceeds will be sufficient for it to meet its cash
requirements to fund and operate its business on an ongoing basis.
RESULTS OF OPERATIONS
The Company derives its revenues from fees charged for the operation of
ATMs which dispense cash to the customer who uses his/her bank ATM debit or
credit card. These machines are located in high traffic retail areas and
selected convenience stores. The Company has signed 25 of these locations to
date and expects to sign at least an additional 25 to 30 before December 31,
1998. The Company currently has 25 machines installed and operating. Generally,
the Company has more machines signed than actually installed and in operation
because it is always in the process of changing machine locations in an ongoing
effort to optimize usage. The Company had non-binding agreements with suppliers
for additional machines.
YEAR ENDED JUNE 30, 1998 VS. JUNE 30, 1997
Fee Income
For the year ended June 30, 1998, the Company had gross income of $323,000
compared with $119,000 for the year ended June 30, 1997. The $204,000 (171.9%)
increase was the result of having more equipment in place and all installed
equipment beginning to generate fee income in 1998. Additionally, the Company
was in the development stage through September 1997 during which time the
Company had de minimis revenues.
Direct Costs
The Company's direct costs associated with its ATMs operations were
$443,000 (137.1% of revenues) as compared with $407,000 (342.8% of revenues) for
1997. The increase in direct costs of $36,000 (8.8%) is attributable to
installations at new locations. The decrease in gross loss from $289,000 in 1997
(242.8% of revenues) to $120,000 (37.1% of revenues) is attributable to the
generation of higher fee income from ATMs installed in the prior year and fees
from machines installed in 1998 while fixed direct costs remained stable.
Variable direct costs increased in relation to the increased number of new
machines. Installation relocation and maintenance costs increased in 1998 due to
the decision to dispose of certain machines whose operating maintenance costs
were so prohibitively high as to render the machines virtually valueless. These
machines were replaced with more user friendly machines whose operating and
maintenance costs are considerably lower.
13
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<PAGE>
Selling Expenses
The Company's selling expenses decreased $88,000 (48.2%) in the current
year to $94,000 (29.2% of revenues) from $182,000 (153.0% of revenues) in fiscal
1997. The decrease is largely attributable to a non-cash charge to operations
for public relations services of $85,000 rendered by consultants during the
second quarter of fiscal 1997.
General and Administrative Expenses
The $37,000 (22.5%) increase in general and administrative costs to
$204,000 (63.3% of revenues) in the current year from $167,000 (140.5% of
revenues) in the prior year resulted primarily from an increase in personnel
costs of $22,000 as well as an increase in occupancy and office costs of
$16,000. These costs increased because of the increased number of machines in
operation during 1998 and because the Company was operating in the development
stage during the first quarter of 1997 in which such expenses incurred were
less.
Loss on Disposal of Equipment
In analyzing its on going operations management in the second quarter
became aware that certain of its machines required an inordinate amount of
maintenance and other operating direct costs than its newer and more
technologically advanced ATMs. Additionally, these older machines were
discontinued by their manufacturer and spare/replacement parts were becoming
difficult to obtain. Coupled with its review of its operating costs of these
machines, management also reviewed its poorer performing locations and
determined to dispose of these high cost machines and close the poorer
performing sites. The Company disposed of the machines essentially for the cost
of removing the sites from the canceled locations resulting in a loss of
$206,000.
Interest
Interest expense in 1998 was $45,000 of which $26,000 was included in
direct costs in the accompanying financial statements. Interest which was
included as a direct cost in 1997 aggregated $68,000. The decrease of $23,000
(34.7%) is attributable to the Company's commencement of the use of rented cash
in the second half of 1998 and the termination of its line of credit which was
in effect in 1997. This resulted in a reduction of direct interest expenses of
$42,000. This interest reduction was offset by rent expense on the rented cash
of $26,000 in 1998 and interest of $19,000 on $370,000 in debt financing from
related parties obtained in December 1997. Interest income in both years
remained relatively constant.
Net Loss
The net loss increased $10,000 (1.5%) to $626,000 in 1998 from $616,000 as
per the above analysis. As the Company was not an operating entity from its
inception on March 11, 1996 through June 30, 1996, any discussion and analysis
of the results of operations between fiscal 1997 and 1996 would not be
meaningful.
FINANCIAL CONDITION
JUNE 30, 1998 COMPARED TO JUNE 30, 1997
The Company's free cash position at June 30, 1998 increased $121,000 to
$172,000. The increase is essentially attributable to the receipt of $370,000 in
debt financing from related parties plus the receipt of $125,000 in notes
receivable as offset by the acquisition of property and other assets of $92,000
and the cash used in operating activities of $272,000. Restricted cash of
$208,000 at June 30, 1997 was used to repay the terminated line of credit
liability in December 1997.
The Company had an operating cash flow deficit of $272,000 in 1998 and
$397,000 in 1997 which is a decrease of $31.5%. These cash flow deficits result
from the Company's policy of expanding its business which entails incurring
costs without the generation of sufficient immediate revenues to offset
14
<PAGE>
<PAGE>
operating costs and expenditures. The placement of a machine at a location may
take up to six months to generate enough revenues to cover all of its direct
costs. The Company expects this negative cash flow from operative activities
trend to continue as long as it is in the process of expanding its business.
Accounts payable, accrued expenses and other current liabilities increased
$41,000 (110.8%) to $78,000 at June 30, 1998 due to the incurrence of $30,000 in
legal and accounting costs associated with the proposed registration statement.
Stockholder's equity decreased from $624,000 at June 30, 1997 to $40,000 at
June 30, 1998 resulting from the loss in 1998 of $626,000.
JUNE 30, 1997 COMPARED TO JUNE 30, 1996
The Company's free cash position of $51,000 at June 30, 1997 was $112,000
less than its cash position of $163,000 at June 30, 1996. This reduction is the
result of the Company's uses of cash in operations plus its acquisition of
property assets and a note receivable which in the aggregate exceeded its source
of funds during fiscal 1997. The Company's sources of funds in 1997 were
primarily the sale of its securities for $746,000 in cash. Restricted cash
increased $208,000 as a result of obtaining a line of credit for the cash in the
Company's machines. The line required that all of the cash in the machines was
restricted as to its use and was pledged as collateral for any outstanding
balance under the line of credit.
The Company loaned a consultant $175,000 in 1997. The balance outstanding
at June 30, 1997 of $125,000 was repaid in 1998.
The Company acquired $526,000 of property assets of which $346,000 was paid
for in cash and $180,000 was paid for by the issuance of 75,000 shares of the
Company's common stock as satisfaction for the outstanding obligation.
The Company's accrued expenses, accounts payable and current liabilities
increased $15,000 essentially due to the accrual of $20,000 in professional fees
and $5,000 in interest in 1997 and a reduction in accrued salaries of $15,000.
Stockholders' equity increased $435,000 to $624,000 at June 30, 1997 from
$189,000 in 1996 even though the Company sustained a loss of $616,000. The
increase is from the receipt of cash proceeds from the sale of the Company's
securities and from stock subscriptions receivable coupled with the issuance of
the Company's common stock for debt and services rendered of $305,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a working capital deficit at June 30, 1998 of $136,000 and
had working capital of $142,000 and $281,000 in June 30, 1997 and 1996,
respectively. The Company's primary sources of working capital have been (i) the
proceeds from its lines of credit, (ii) proceeds from related party
indebtedness, (iii) the rental cash agreement, and, (iv) the issuance of its
securities for cash, as payment for debt and as payment for services rendered.
The Company from its inception in March 1996 through December 1996 issued
2,741,250 shares of its common stock and 2,500,000 warrants for $1,161,500 in
cash (before costs associated therewith). In December 1996 the Company issued
1,062,500 warrants to acquire a like number of shares of its common stock at
$2.40 per share as payment for $85,000 in consulting fees. In December 1996 the
Company issued to its CEO options to acquire 250,000 shares of its common stock
at $0.88 per share partially as incentive and partially as payment of $40,000 in
salary waived by this officer. In January 1997, the Company issued 75,000 shares
of its common stock as payment for $180,000 in capital lease obligations.
Currently, the Company's cash requirements include (i) the funding for its
existing and new machines, (ii) the costs associated with opening, maintaining
and operating machines at new locations, and, (iii) ongoing selling, general,
administrative and other operating expenses. Management believes that the
Company's cash liquidity position will be enhanced primarily from the
realization of the estimated net proceeds of $8,460,000 from the exercise of all
of the currently outstanding warrants. If the Company is not successful in its
attempt to have the warrant holders exercise, the Company will not be able to
generate sufficient cash funds from its operations to meet its obligations as
they mature. These conditions, among others, raise substantial doubt about the
Company's ability to continue as a
15
<PAGE>
<PAGE>
going concern. Even if the Company is successful (or partially successful) in
its effort to convert the warrants into common shares for $8,460,000 in cash,
the Company may need additional financing thereafter. There can be no assurance
that the Company will be able to obtain financing on a favorable or timely
basis. The type, timing and terms of financing elected by the Company will
depend upon its cash needs, the availability of other financing sources and the
prevailing conditions in the financial markets. Moreover, any statement
regarding the Company's ability to fund its operations from expected cash flows
is speculative in nature and inherently subject to risks and uncertainties, some
of which cannot be predicted or quantified.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issue Statement of Financial
Accounting Standards No. 130 -- 'Reporting Comprehensive Income', No.
131 -- 'Disclosures about Segments of an Enterprise and Related Information',
No. 132 -- 'Employer's Disclosure about Pension and Other Postretirement
Benefits', and No. 133 -- 'Accounting for Derivative Instruments and Hedging
Activities'. Adoption of these standards, which is required in fiscal years
beginning after December 15, 1997, is not expected to have an effect on the
Company's financial statements, financial position or results of operations. The
Company has reviewed all other recently issued accounting pronouncements to
determine their effects, if any, on the results of operations or financial
position of the Company. Based on that review, the Company believes that none of
these pronouncements will have a significant effect on the Company's current or
future earnings or operations.
YEAR 2000
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Management of the
Company does not anticipate that any significant modification or replacement of
the Company's software will be necessary fir its computer systems to properly
utilize dates beyond December 31, 1999 or that the Company will incur
significant operating expenses to make any such computer system improvements.
The Company is not able to determine, however, whether any of its suppliers,
lenders, or service providers will need to make any such modifications or
replacements or whether the failure to make such software corrections will have
an effect on the Company's operations or financial condition.
INFLATION
Inflation has not had a significant effect on the Company's operations or
financial position and management believes that the future effects of inflation
on the Company's operations and financial position will be insignificant.
16
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<PAGE>
BUSINESS
GENERAL
The Company is an independent owner and operator of automatic teller
machines ('ATM') which provides individuals the mechanism to use their bank
debit card, MasterCard, Visa, Discover, Diners, American Express Card or other
cards to obtain on-the-spot cash from their bank savings or checking accounts
for a fee. The Company presently owns 32 ATMs, 25 of which are operating, with
lease contracts for additional locations. Generally, the Company has more
machines signed than actually installed because it is always in the process of
changing machine locations in an ongoing effort to optimize usage. This
differential varies from time to time so is difficult to quantify accurately. In
addition, it continues to actively pursue additional locations. The Company
plans to select locations in regional and local shopping malls, grocery and
convenience stores, and other high traffic retail locations. The Company's ATMs
and lease contracts are concentrated in the states of Florida, New York, New
Jersey and Maine.
The Company provides its services and places its ATMs in locations,
pursuant to agreements with the owners of businesses. The Company provides a
benefit to business operators and their customers in that ATMs increase traffic
by causing customers to enter a location with the potential of increasing sales.
In addition, cash eliminates the risk of check acceptance and the cost of check
guard services and credit card discounts. Offering in-store service of
electronic banking may give merchants a powerful differentiator with respect to
competitors. Also, replacing credit cards and checks with cash at the register
speeds up the checkout process, provides lower labor cost per customer
transaction and creates happier customers.
ATMs also provide convenience to their users. Consumers can access their
cash from more locations while shopping and in-store locations provide customer
with additional security.
The Company's growth strategy is to increase the number of ATMs it operates
to approximately 75 by the end of 1998 and an additional 150 machines by the end
of 1999. The Company intends to expand to other geographic locations. The
Company may need additional financing in order to achieve its growth strategy,
and there can be no assurance that such additional financing will be available
or, if available, will be on favorable terms. Moreover, if the Company is able
to obtain such financing and increases its operations in accordance with its
growth strategy, there can be no assurance that the additional ATMs will be
sufficiently profitable to sustain their continued operation in the sites in
which they are located.
TYPES OF ATM SYSTEMS
There are two types of ATM systems, off-line and on-line. If the system is
off-line, the transaction is recorded on a tape and then transported by courier
from the machine, once a day to be processed, and the customers' account is
updated within one day. If the ATM system is on-line, the transaction is
processed immediately and the customer's account is updated and credited for a
deposit or debited for a cash withdrawal. All of the Company's ATMs are on-line
machines.
LEASE AGREEMENTS WITH BUSINESS OPERATORS
The Company provides its services and places ATMs at locations pursuant to
agreements with the owners of business premises. Such agreements typically have
initial terms of five years, with renewal clauses. These agreements also provide
that the Company may cancel the agreement if the ATMs fail to meet minimum
income expectation levels. There can be no assurance that any of the agreements
will be renewed after their initial terms. These owners typically receive a
rental fee based on a percentage of cash dispensed transactions and such fee
increases as the number of transactions increase.
SERVICES OFFERED
Most ATM transactions are cash withdrawals from the customer's bank
checking account, particularly in a retail location. ATMs perform a wide range
of banking services, including deposits, withdrawals, payments to creditors and
access to bank accounts. The Company's ATMs currently permit a user to withdraw
cash of up to $300 per transaction, provide bank balances and receipts.
17
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<PAGE>
The Company provides a system whereby retail customers may use their bank
debit card, to obtain cash advances. In a typical credit card transaction, the
amount of the cash advance together with a service fee is charged to the
individual's bank debit card, MasterCard, Visa, Discover, Diners, American
Express Card or other debit card. Upon authorization of the transaction by
either the bank who issued the credit card, the credit card company or a
designated agent, the ATM machine dispenses the amount of cash requested and
approved. The customer is guided through the process by instructions and
messages that appear on the LCD display. Such messages prompt identification
number, the amount of the advance requested and informs the customer of the
status of the customer's request, and the approval or disapproval of the
transaction by the credit card company or bank. If approved, the proper amount
of cash is dispensed by the ATM to the customer. The customer then takes the
cash, credit card and receipt and leaves. Total elapsed time is usually under
one minute per customer.
The Company also outsources a 24 hour telephone support system to provide
assistance to customers and to report problems of any machine at any location.
The communications system is made up of a network of long distance telephone
lines, as well as a number of dedicated telephone circuits. The Company is
highly dependent upon the proper functioning of its telecommunications and
computer equipment. While management strives to provide reasonable backup
provisions, there can be no assurance that certain events caused by outside
parties, such as telephone companies, credit card processors and banks, which
are beyond the reasonable control of the Company, will not initially disrupt the
Company's business.
SERVICE AND MAINTENANCE
The ATM machines are currently serviced and kept in good working order by
Independent Field Service, Lefbure Corporation and Solutions Plus under service
contracts. The service contractors clean and maintain the ATMs and respond to
'trouble' calls made by a business owners and ATM users. The ATM technicians are
not responsible for cash replenishment.
The Company utilizes custom software that continuously monitors the ATM
transactions from each ATM as well as the expenses relating to that ATM,
including commissions payable to business owners. This software permits the
Company to generate detailed financial information by ATM location allowing the
Company to monitor the profitability of each location.
CASH REPLENISHMENT
The Company's ATMs are replenished with funds from American Securities Bank
as well as through private funding sources and its own working capital. The
agreement with American Securities Bank allows the Company to replenish its ATM
cash through a rental agreement with American Security Bank, at a rate of prime
plus 2% of the amount of cash leased. The Company plans to transfer all of its
funding to American Security Bank at an annual cost savings of 4% of average
total fit cash. Each machine holds anywhere from $5,000 to $20,000 and are
replenished with funds either once or twice a week, as needed.
The Company has retained the services of Loomis, Fargo Armored Car Service
(successor to Wells Fargo) ('Loomis, Fargo') to transport the funds to the ATMs;
replace the currency dispensed by the ATMs; return leftover currency from the
ATM to the Company; reconcile the ATM dispensed currency totals with leftover
currency in the ATM and totals recorded by the ATM and/or the Company's records;
and repair and restore an ATM to its proper operating mode, exclusive of
hardware maintenance or repair. The Company pays Loomis, Fargo approximately
$325 per ATM per month assuming 4.3 calls per month and approximately $55 for
each additional call. However, these prices will fluctuate with different
locations.
'Fit cash' is used to refer to cash which is loaded into cassettes and
placed in the ATM machines. Fit cash is high quality cash which is 'fit' for
dispensing in a mechanical cassette. 'Average fit cash' refers to the average
amount of cash in the machines during any given time period.
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COMPETITION
The ATM business is and can be expected to remain highly competitive. While
the Company's principal competition comes from national and regional banks, the
Company also competes with independent ATM companies. All of these competitors
offer services similar to or substantially the same as those offered by the
Company. Most of these competitors are larger, more established and have greater
financial and other resources than the Company. Such competition could prevent
the Company from obtaining or maintaining desirable locations for its machines
or could cause the Company to reduce its user fees generated by its ATMs or
could cause the Company's profits to decline. The independent ATM business has
become increasingly competitive since entities other than banks have entered the
market and relatively few barriers exist to entry.
GOVERNMENT REGULATION
The Company is subject to potential regulation by the Federal Banking Acts.
In the event that the Company develops nationwide operations, it may be subject
to regulations of state authorities in those states in which it operates.
EMPLOYEES
The Company currently employs 3 persons on a full time basis. It is
anticipated that the Company's personnel requirements will not grow
substantially in either the administrative or service areas. The Company
contracts with independent contractors to install and service its ATM's.
PROPERTIES
The Company currently has a three year lease for approximately 1,050 square
feet of office space at 5061 North Dixie Highway, Boca Raton, Florida 33431. The
current term of the lease expires on June 30, 1999. The Company believes it will
be able to either enter into a new lease after its current lease expires or find
new space to lease. The Company believes that this facility is adequate to
satisfy its needs for the foreseeable future.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- -----------------------------------------------------
<S> <C> <C>
Mori Aaron Schweitzer..................... 66 Chairman of the Board, Chief Executive Officer,
President and Treasurer
Sondra Parker............................. 62 Vice President, Director
Wayne Kight............................... 47 Secretary, Director
Carmen Panizzi............................ 36 Vice President ATM Operations
Norman Shapiro............................ 66 Director
Barry J. Haberman......................... 53 Director
</TABLE>
Of these directors and officers, Mr. Schweitzer and Ms. Panizzi devote full
time to the Company's operations.
The business experience of each of the directors and executive officers of
the Company for at least the previous five years is as follows:
Mori Aaron Schweitzer is the founder of the Company and has been
President, Chief Executive Officer, Treasurer and a director of the Company
since its inception in March 1996. Since 1981, Mr. Schweitzer has been a
private investor. Mr. Schweitzer graduated from Brooklyn Law School in 1956
and is a member of the bar of the State of New York. He has also served on
the advisory boards of the Bank of Los Angeles and on the United States
National Bank of San Diego.
Sondra Parker has been Vice President and a Director of the Company
since July 1996. Since 1991, Ms. Parker has been the advisor to and
administrator of a private family trust. From 1975 to 1991, Ms. Parker was
a branch manager of First Nationwide Bank (formerly known as Washington
Federal of Miami Beach, Florida), Commonwealth Savings and Loan Association
and Great Western Bank (formerly known as Centrust Bank).
Wayne Kight has been Secretary and a Director of the Company since its
inception in March 1996. Mr. Kight has been vice president of Homeowners
Financial Corp., a service company, since September 1994. From 1992 to
1993, he was a loan officer for Paine Webber Mortgage Finance, Inc. in
Columbia, Maryland. From 1982 to 1992, Mr. Kight was president of Bertram &
Daniels, Inc., financial & leasing consultants, in Coral Springs, Florida.
Mr. Kight received a law degree from Woodrow Wilson College of Law,
Atlanta, Georgia, in 1978 and a B.A. in Business Administration, from
Georgia State University in Atlanta, Georgia in 1974.
Norman Shapiro has been a Director of the Company since its inception
in March 1996. Since 1983, Mr. Shapiro has been a builder, developer and
property manager of Steckmar National Realty Corporation. Prior to that
time, Mr. Shapiro was Operations Manager for Olympia and York (Quebec). Mr.
Shapiro has been a director of Hillsboro Medical Associates, Inc. and
Hillsboro Professional Center, Inc. since 1983. Mr. Shapiro graduated from
the University of Montreal in 1954 and received a degree in Practical
Mechanical Engineering.
Barry J. Haberman has been a Director of the Company since its
inception in March 1996. Mr. Haberman is a retired investor and since has
served as a director of the Palm Beach Country Land Use and Planning Board.
Mr. Haberman received a B.A. in Accounting and Economics from City College
of the City of New York in 1968.
Carmen Panizzi has been Vice President of ATM Operations for the
Company since December 1996. Mrs. Panizzi was employed by the South Palm
Beach County Jewish Federation as an Administrative Campaign Secretary from
1993 to 1996. From 1992 to 1993 she served as the assistant to the General
Manager of JCB Credit Card in Frankfurt, Germany. She is a 1980 graduate of
the SPRACH UND Dolmetcherschule (College for Languages) in Giessen,
Germany.
DIRECTOR COMPENSATION
Directors of the Company who are not salaried officers will receive a fee
of $100 for attending each Board meeting or meeting of a committee of the Board
of which they are a member. In addition, all directors will be reimbursed for
their reasonable out-of-pocket expenses in connection with attending meetings of
the Board or any committee thereof.
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OPTION PLAN
In August 1996, the Board of Directors adopted and in June 1997 the
stockholders approved the Option Plan. The Option Plan provides for the grant of
incentive stock option ('ISOs'), intended to qualify for preferential tax
treatment under Section 422 of the Internal Revenue Code 1986, as amended, and
nonstatutory stock options ('NSOs') that do not qualify for such treatment. Only
employees (including officers and directors who are also employees) of the
Company or any of its subsidiaries are eligible to receive grants of ISOs.
Employees, officers, directors, consultants, contractors and advisers of the
Company or any subsidiary are eligible to receive grants of NSOs. The purpose of
the Option Plan is to attract and retain exemplary directors, employees, agents
and consultants. No options can be granted under the Option Plan at less than
100% of the fair market value of the Company's securities on the date of grant.
The Option Plan provides that a maximum of 687,500 (corrected for the
forward split) shares of Common Stock may be issued upon the exercise of options
granted under the Option Plan. If any option granted under the Option Plan
expires or terminates for any reason without having been exercised in full, then
the unpurchased shares subject to that option will be available for additional
option grants. As of the date of this Prospectus, 412,500 options have been
granted under the plan.
The Option Plan is administered by the Board of Directors of the Company
which determines, in its discretion, among other things, the recipients of
grants, whether a grant will consist of ISOs or NSOs, or a combination thereof,
and the number of shares of stock to be subject to such options. The Board of
Directors of the Company may, in its discretion, delegate its powers, duties and
responsibilities under the Option Plan to a committee consisting of two or more
directors who are 'disinterested persons' within the meaning of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended.
LIMITATIONS ON PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
The Florida Business Corporation Act, in general, allows corporations to
indemnify their directors and officers against expenses (including attorneys'
fees), judgments, fines and settlement amounts actually and reasonably incurred
by such person in connection with suits or proceedings, if the person acted in
good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation. In the case of the criminal
action, the director or officer must have had no reasonable cause to believe
that person's conduct was unlawful. Under current law, no indemnification may be
made if in connection with a proceeding, or in the right of the corporation in
which the director or officer was adjudged to be liable to the corporation.
The Company will enter into an indemnification agreement with each of its
directors and officers.
EXECUTIVE COMPENSATION
The Company has not paid any compensation exceeding $100,000 to its
executive officers from inception through the date of this Prospectus. The
following table sets forth the annual compensation for Mr. Schweitzer, the
Company's Chief Executive Officer, who receives a salary of $60,000 per year:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------------------------------
AWARDS
ANNUAL COMPENSATION ---------- PAYOUTS
---------------------------------- SECURITIES ------------
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSTION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ------------------------------------- ------- ------- ------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mori Aaron Schweitzer, 1996 $17,000(1)
Chairman and Chief Executive 1997 60,000(2) 250,000(1)
Officer............................ 1998 18,000(2) -- -- -- --
</TABLE>
- ------------
(1) Mr. Schweitzer waived $40,000 of his accrued salary in December 1996 for
which he received stock options.
(2) In 1998, Mr. Schweitzer waived $42,000 of his annual $60,000 salary, which
was contributed to capital.
21
<PAGE>
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
No new options were granted in fiscal 1998. During fiscal 1997, the
following stock options were granted:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------
PERCENTAGE
NUMBER OF OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED EXERCISE GRANT DATE
OPTIONS EMPLOYEES OR BASE PRESENT
NAME GRANTED IN FY PRICE EXPIRATION DATE VALUE(1)
- -------------------------------------- ---------- ---------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Mori Aaron Schweitzer................. 250,000 61% $0.88 per share 3/16/00 $9,425
Carmen Panizzi........................ 37,500 9% $0.80 per share 3/16/01 2,914
Wayne Kight........................... 25,000 6% $0.80 per share 3/16/01 1,943
Norman Shapiro........................ 25,000 6% $0.80 per share 3/16/01 1,943
Barry Haberman........................ 25,000 6% $0.80 per share 3/16/01 1,943
Sondra Parker......................... 25,000 6% $0.80 per share 3/16/01 1,943
Frank Falco........................... 25,000 6% $0.80 per share 3/16/01 1,943
</TABLE>
- ------------
(1) Calculated using the Black-Scholes option pricing model, assuming fair
market value of $0.80 on the grant date, an exercise price between $0.80 and
$0.88 per share, a three-year option term, expected nolatitity of 200%, no
expected dividends and risk-free interest rates of 10%.
AGGREGATED OPTION EXERCISES AND HOLDINGS
137,500 options issued by the Company were exercisable in fiscal 1998. The
following table lists the number of underlying securities and value at year-end
of unexercised options held by the Company's executive officers:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED IN-
UNDERLYING THE MONEY
SHARES OPTIONS AT FY-END OPTIONS AT FY-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------------------------------------- ----------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Mori Aaron Schweitzer............................ -- -- 250,000/ -- $ 500,000
Carmen Panizzi................................... -- -- 37,500/ -- 75,000
Wayne Kight...................................... -- -- 25,000/ -- 50,000
Norman Shapiro................................... -- -- 25,000/ -- 50,000
Barry Haberman................................... -- -- 25,000/ -- 50,000
Sondra Parker.................................... -- -- 25,000/ -- 50,000
Frank Falco...................................... -- -- 25,000/ -- 50,000
</TABLE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
In October 1996, the Company completed an offering of 2,500,000 Warrants
and 700,000 shares of Common Stock pursuant to Rule 504 under the Securities
Act. These securities are traded on the over-the-counter Bulletin Board and the
over-the-counter market 'pink sheets.' At June 29, 1998, the bid and asked
prices of the Company's common stock were both $2 1/8 respectively.
Over-the-counter quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commissions and may not represent actual transactions. The
following table sets forth the range of high and low bid information for the
quarterly periods indicated, as provided by Prophet Information Services, Inc.
through America On-line:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1997:
September 30............................................................ $ 7 1/8 $4
December 31............................................................. 16 3/8 5
1998:
March 31................................................................ 12 5 1/4
June 30................................................................. 5 3/4 2
</TABLE>
DIVIDEND POLICY
The Company does not anticipate paying any cash dividends on its common
stock in the foreseeable future because it intends to retain its earnings to
finance the expansion of its business. Thereafter, declaration of any dividends
will be determined by the Board of Directors in light of
22
<PAGE>
<PAGE>
conditions then existing, including, without limitation, the Company's financial
condition, capital requirements and business conditions.
As of September 30, 1998 there were 30 record holders of the Company's
Common Stock and 13 record holders of the Warrants.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of Stock as of the date of this Prospectus and as adjusted
to reflect the exercise of the Warrants (i) each person who is known by the
Company to beneficially own more than 5% of the Common Stock, (ii) each director
of the Company, (iii) each of the Company's named executive officers and (iv)
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER(1) AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------------------------------- ----------------------------------------- ----------------
<S> <C> <C>
Mori Aaron Schweitzer................................ 550,000(2) 22.19%
Wayne Kight.......................................... 37,500(3) 1.33%
Carmen Panizzi....................................... 37,500(4) 1.33%
Norman Shapiro....................................... 78,750(3) 2.80%
Barry Haberman....................................... 65,000(3) 2.31%
Sondra Parker........................................ 25,000(4) *
All directors and executive officers as a group...... 793,750 31.0%
</TABLE>
- ------------
* Less than 1%
(1) The address for each person listed is c/o the Company, 5061 North Dixie
Highway, Boca Raton, FL 33431.
(2) Includes 250,000 shares underlying options currently exercisable at $0.88
per share.
(3) Includes 25,000 shares underlying options currently exercisable at $0.80 per
share.
(4) All of which underly options currently exercisable at $0.80 per share.
PLAN OF DISTRIBUTION
The Company will receive proceeds from the issuance of the Shares upon the
exercise of the Warrants at $2.40 per share. If the Warrants are exercised in
full, the Company will receive approximately $8,550,000 of gross proceeds
therefrom. The Company cannot be certain that any of the Warrant holders will
exercise their Warrants.
This Prospectus relates to the sale of such Shares by the Company to the
holders of the Warrants. This Prospectus may not be used for resale of Shares of
Common Stock underlying any of the Warrants without an appropriate amendment
setting forth the required information relating to distribution and selling
securityholders. Any exercising Warrant holder may notify the Company in writing
that it intends to resell shares of Common Stock. Upon receipt of such a notice
the Company will provide such securityholder with a Selling Securityholders'
Questionnaire. The securityholder will then be required to complete the
questionnaire and return it to the Company. Within 90 days of receipt of the
questionnaire, the Company will use its best efforts to amend this Prospectus to
permit resale of the number of shares indicated in the questionnaire.
The Company will bear all of the expenses of registration of the Shares
(including any amendments) under the federal and state securities laws,
including legal and filing fees. Such expenses payable by the Company are
currently estimated to be $90,000.
Pursuant to certain agreements, the Company has agreed to indemnify the
holders of the Warrants against certain liabilities, including certain potential
liabilities under the Securities Act, or to contribute to any payments such
holders may be required to make in respect thereof.
23
<PAGE>
<PAGE>
DESCRIPTION OF SECURITIES
The following description of the Common Stock of the Company and the
Company's Certificate of Incorporation and Bylaws is a summary and is qualified
in its entirety by the provisions of the Certificate of Incorporation and Bylaws
which are included as exhibits to the Registration Statement of which this
Prospectus is a part, and by the provisions of the Florida Business Corporation
Act.
GENERAL
The Company's authorized capital consists of 10,000,000 shares of Common
Stock, par value $.001 and 100,000 shares of Preferred Stock, $10.00 par value.
COMMON STOCK
As of March 31, 1998, the Company had outstanding 2,816,250 shares of
Common Stock. Each share of Common Stock is entitled to one vote at all meetings
of shareholders. Shareholders are not permitted to cumulate votes in the
election of directors. All shares of Common Stock are equal to each other with
respect to liquidation rights and dividend rights. There are no preemptive
rights to purchase any additional shares of Common Stock. In the event of
liquidation, dissolution or winding up the Company, holders of the Common Stock
will be entitled to receive, on a pro rata basis, all assets of the Company
remaining after satisfaction of all liabilities and preferences of outstanding
Preferred Stock, if any. The outstanding shares of Common Stock are duly and
validly issued, fully paid and nonassessable.
PREFERRED STOCK
The Company is authorized to issue 100,000 shares of voting Preferred
Stock, $10.00 par value. No shares are presently issued our outstanding.
WARRANTS
In October 1996, the Company conducted an unregistered Offering under Rule
504, in which the Company sold Warrants to purchase 2,500,000 shares of Common
Stock. The Company has also issued Warrants to purchase 1,062,500 shares of
common stock in the aggregate in exchange for independent public relations
services to the Company in August and December of 1997 and January and March of
1998, respectively. Each such Warrant expires three (3) years from the date
thereof, and is exercisable for one share of the Company's common stock at an
exercise price of $2.40 per share. The Warrants are exercisable at the earlier
of (i) one (1) year from the date of the last sale of the Warrants in the
offering in which the Warrants issued or (ii) upon the effectiveness of a
Registration Statement under the Securities Act in which the Shares underlying
the Warrants are registered. The exercise price and number of shares deliverable
upon exercise of the Warrants are subject to anti-dilution adjustments under
certain circumstances.
The Warrants may be exercised upon surrender to the Company's transfer
agent of the applicable Warrant certificate or prior to expiration of the
applicable Warrant exercise period, with the form of election to purchase on the
reverse side of the certificate executed as indicated, and accompanied by
payment of the full exercise price for the number of Warrants being exercised.
Payment may be made in cash or by certified or official bank check payable to
the order of the company.
OPTIONS
The Company has issued options to purchase 412,500 shares of common stock,
at prices of $0.80 and $0.88, to its officers, directors and key employees
pursuant to the 1996 Stock Option and Incentive Plan. This plan was approved by
the Company's stockholders in 1997.
TRANSFER AGENT
The Company has appointed American Securities Transfer & Trust, Inc.
('AST'), as its transfer agent and registrar for the Company's securities. The
address of AST is 1825 Lawrence Street, Denver, CO 80202-1817.
24
<PAGE>
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
6,378,750 shares of Common Stock, assuming exercise of all Warrants. Of these
shares, 5,050,000 will be freely tradable without restriction (except) for
restrictions imposed by certain state regulatory authorities) or registration
under the Securities Act, except that any shares purchased by an 'affiliate' of
the Company (as defined in the rules and regulations promulgated under the
Securities Act) will be subject to the resale limitations under Rule 144 under
the Securities Act. The remaining 1,328,750 shares of outstanding Common Stock
were issued and sold by the Company in private transactions in reliance upon
exemptions from registration under the Act. Such shares may be sold only
pursuant to an effective registration statement filed by the Company or an
applicable exemption, including the exemption contained in Rule 144 promulgated
under the Act.
In general, under Rule 144 as currently in effect, a shareholder, including
an affiliate of the Company may sell shares of Common Stock after at least one
year has elapsed since such shares were acquired from the Company or an
affiliate of the Company. The number of shares of Common Stock which may be sold
within any three-month period is limited to the greater of one percent of the
then outstanding Common Stock or the average weekly trading volume in the Common
Stock during the four calendar weeks preceding the date on which notice of such
sale was filed under Rule 144. Certain other requirements of Rule 144 concerning
availability of public information, manner of sale and notice of sale must also
be satisfied. In addition, a shareholder who is not an affiliate of the Company
(and who has not been an affiliate of the Company for 90 days prior to the sale)
and who has beneficially owned shares acquired from the Company or an affiliate
of the Company for over two years may resell the shares of Common Stock without
compliance with the foregoing requirements under Rule 144.
No predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of the Common Stock prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock, or the perception that such sales may
occur, could have a material adverse effect on prevailing market prices.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Bondy & Schloss LLP, New York, New York.
EXPERTS
The financial statements of the Company as at June 30, 1998 and 1997 and
for the two years then ended, appearing in this Prospectus have been Weinick
Sanders Leventhal & Co. LLP, independent certified accountants, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
SB-2 (together with all amendments and exhibits thereto, the 'Registration
Statement') under the Securities Act, with respect to the shares being offered
in this offering. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain items of which are omitted in
accordance with the rules and regulations of the Commission. The omitted
information may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661. Such material can also be obtained at
the Commission's Web site at http://www.sec.gov. Copies of such material can be
obtained from the public reference section of the Commission at prescribed
rates. Statements contained in this Prospectus as to the contents of any
contract or other document field as an exhibit to the Registration Statement are
not necessarily complete and in each instance reference is made to the copy of
the document filed as an exhibit to the Registration Statement, each statement
made in this Prospectus relating to such documents being qualified in all
respect by such reference. For further information with respect to the Company
and the securities being offered hereby, reference is hereby made to such
Registration Statement, including the exhibits thereto and the financial
statements, notes, and schedules filed as a part thereof.
25
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Accountants Report............................................................................. F-2
Financial Statements
Balance Sheets as at June 30, 1998 and 1997........................................................... F-3
Statements of Operations for the Years Ended June 30, 1998 and 1997................................... F-4
Statements of Stockholders' Equity for the Years Ended June 30, 1998 and 1997......................... F-5
Statements of Cash Flows for the Years Ended June 30, 1998 and 1997................................... F-6
Notes To Financial Statements......................................................................... F-7 to F-12
</TABLE>
F-1
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
AMERICAN ATM CORP.
We have audited the accompanying balance sheets of American ATM Corp. as at
June 30, 1998 and 1997, and the related statements of operations, cash flows,
and stockholders' equity for the two years ended June 30, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American ATM Corp. as at
June 30, 1998 and 1997, and the results of its operations and its cash flows for
the two years ended June 30, 1998, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has a working capital deficiency of $135,766 at June 30, 1998 and
has incurred losses since inception. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
New York, New York
September 22, 1998
F-2
<PAGE>
<PAGE>
AMERICAN ATM CORP.
BALANCE SHEET
(NOTE 1)
<TABLE>
<CAPTION>
JUNE 30,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Equivalents (Note 2).................................................... $ 171,958 $ 51,343
Cash in Machines -- Restricted (Notes 2 and 3)................................... -- 207,800
Accounts Receivable.............................................................. 16,818 3,392
Note Receivable.................................................................. -- 125,200
Prepaid Expenses and Other Current Assets........................................ 13,851 9,458
---------- ----------
Total Current Assets........................................................ 202,627 397,193
---------- ----------
PROPERTY ASSETS (Notes 2 and 5):
Furniture and Equipment.......................................................... 290,702 530,302
Software......................................................................... 8,693 7,443
Leasehold Improvements........................................................... 830 830
---------- ----------
300,225 538,575
Less: Accumulated Depreciation................................................... (85,899) (58,381)
---------- ----------
Net Property Assets.............................................................. 214,326 480,194
---------- ----------
Deferred Offering Costs (Note 2)...................................................... 69,682 --
Other Assets (Note 2)................................................................. 2,711 3,788
---------- ----------
$ 489,346 $ 881,175
---------- ----------
---------- ----------
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Lines of Credit Payable (Notes 2 and 3).......................................... $ 260,000 $ 217,648
Accounts Payable................................................................. 22,824 14,472
Taxes Payable (Notes 2 and 5).................................................... 6,339 2,685
Accrued Professional Fees........................................................ 49,230 20,000
---------- ----------
Total Current Liabilities................................................... 338,393 254,805
---------- ----------
Long-term Debt (Notes 2 and 4)........................................................ 110,000 --
---------- ----------
Deferred Rent......................................................................... 1,000 2,000
---------- ----------
Commitments and Contingencies (Note 9)................................................ -- --
Stockholders' Equity (Notes 2 and 6):
Preferred Stock, $10.00 Par Value, Authorized and Unissued -- 100,000 Shares
Common stock $.001 Par Value, Authorized -- 10,000,000 Shares, Issued and
Outstanding -- 2,816,250 shares.................................................. 2,816 2,816
Additional Paid-in Capital....................................................... 1,318,400 1,276,400
Accumulated Deficit.............................................................. (1,281,263) (654,846)
---------- ----------
Total Stockholders' Equity.................................................. 39,953 624,370
---------- ----------
$ 489,346 $ 881,175
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<PAGE>
AMERICAN ATM CORP.
STATEMENT OF OPERATIONS
(NOTE 1)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
------------------------------------------------------------
1998 1997
---------------------------- ----------------------------
<S> <C> <C>
FEE INCOME (Note 2)........... $ 323,100 $ 118,852
DIRECT COSTS:
Location Expenses........ 391,610 339,226
Financing Costs.......... 51,404 68,247
------------ ------------
Total Direct
Costs............. 443,014 407,473
------------ ------------
GROSS LOSS.................... (119,914) (288,621)
OPERATING EXPENSES:
Selling.................. 94,220 181,797
General and
Administrative......... 204,481 166,986
Loss on Disposal of
Equipment (Note 2)..... 206,119 --
Total Operating
Expenses............... 504,820 348,783
------------ ------------
Loss From Operations.......... (624,734) (637,404)
------------ ------------
OTHER INCOME (deductions):
Interest Expense......... (18,921) --
Interest Income.......... 20,238 22,814
------------ ------------
Total Other Income
(Deductions)...... 1,317 22,814
------------ ------------
Loss Before Income Taxes...... (623,417) (614,590)
Provision for Income Taxes
(Notes 2 and 5)............. 3,000 1,000
------------ ------------
NET LOSS...................... $ (626,417) $ (615,590)
------------ ------------
------------ ------------
NET LOSS PER SHARE (Note 2)... $ (0.22) $ (0.26)
------------ ------------
Weighted Average Share
Outstanding................. 2,816,250 2,342,160
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<PAGE>
AMERICAN ATM CORP.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(NOTE 1)
<TABLE>
<CAPTION>
$10 PAR VALUE
$.001 PAR VALUE PREFERRED
COMMON STOCK STOCK STOCK ADDITIONAL
------------------ -------------- SUBSCRIPTIONS PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT RECEIVABLE CAPITAL DEFICIT
--------- ------ ----- ------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance -- July 1, 1996................ 1,928,750 $1,929 -- $-- $(107,000) $ 333,071 $ (39,256)
Securities Offering Under Rule 504
Regulation D.................... 812,500 812 -- -- -- 638,404 --
Shares Issued in Exchange For
Equipment Leases (Note 6)....... 75,000 75 -- -- -- 179,925 --
Receipt of Proceeds of Stock
Subscriptions................... -- -- -- -- 107,000 -- --
Compensatory Element Attributable
to Stock Option Grant as Payment
of Officer's Salary............. -- -- -- -- -- 40,000 --
Issuance of Warrants for
Consulting Services Rendered
(Note 6)........................ -- -- -- -- -- 85,000 --
Net Loss For the Year Ended June
30, 1997........................ -- -- -- -- -- -- (615,590)
--------- ------ ----- ------ ------------- ---------- -----------
Balance -- June 30, 1997............... 2,816,250 2,816 -- -- -- 1,276,400 (654,846)
Stockholders' Wavier of
Salary-Contributed to Capital
(Note 6)........................ -- -- -- -- -- 42,000 --
Net Loss For the Year Ended June
30, 1998........................ -- -- -- -- -- -- (626,417)
--------- ------ ----- ------ ------------- ---------- -----------
Balance -- June 30, 1998............... 2,816,250 $2,816 -- $-- $ -- $1,318,400 $(1,281,263)
--------- ------ ----- ------ ------------- ---------- -----------
--------- ------ ----- ------ ------------- ---------- -----------
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Balance -- July 1, 1996................ $ 188,744
Securities Offering Under Rule 504
Regulation D.................... 639,216
Shares Issued in Exchange For
Equipment Leases (Note 6)....... 180,000
Receipt of Proceeds of Stock
Subscriptions................... 107,000
Compensatory Element Attributable
to Stock Option Grant as Payment
of Officer's Salary............. 40,000
Issuance of Warrants for
Consulting Services Rendered
(Note 6)........................ 85,000
Net Loss For the Year Ended June
30, 1997........................ (615,590)
-------------
Balance -- June 30, 1997............... 624,370
Stockholders' Wavier of
Salary-Contributed to Capital
(Note 6)........................ 42,000
Net Loss For the Year Ended June
30, 1998........................ (626,417)
-------------
Balance -- June 30, 1998............... $ 39,953
-------------
-------------
</TABLE>
See notes to financial statements.
F-5
<PAGE>
<PAGE>
AMERICAN ATM CORP.
STATEMENT OF CASH FLOWS
(NOTE 1)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
JUNE 30,
-----------------------
1998 1997
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.......................................................................... $(626,417) $(615,590)
--------- ----------
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation.................................................................... 82,661 58,181
Loss on Disposal of Equipment................................................... 206,119 --
Contribution to Capital of Stockholder's Salary................................. 42,000 --
Issuance Of Warrants and Options for Services Rendered.......................... -- 125,000
Deferred Rent................................................................... (1,000) --
Increase (Decrease) in Cash Flows as a Result of Changes in Asset and Liability
Account Balances:
Accounts Receivable.......................................................... (13,426) (3,392)
Prepaid Expenses and Other Current Assets.................................... (4,393) 25,432
Other Assets................................................................. 1,000 (1,500)
Accounts Payable............................................................. 8,352 10,315
Accrued Expenses and Other Current Liabilities............................... 32,884 4,577
--------- ----------
Total Adjustments....................................................... 354,197 218,613
--------- ----------
Net Cash Used in Operating Activities............................................. (272,220) (396,977)
--------- ----------
CASH FLOWS FROM INVESTMENTS ACTIVITIES
Acquisition of Property Assets.................................................... (22,835) (345,545)
Restricted Cash................................................................... 207,800 (207,800)
Note Receivable................................................................... 125,200 (125,200)
--------- ----------
Net Cash Provided By (Used in) Investing Activities............................... 310,165 (678,545)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Sale of Securities and Subscriptions Receivable..................... -- 746,216
Proceeds from Stockholders' Notes Payable......................................... 110,000 --
Proceeds from (Repayments of) Funding from Lines of Credit........................ 42,352 217,648
Deferred Offering Costs........................................................... (69,682) --
--------- ----------
Net Cash Provided By Financing Activities......................................... 82,670 963,864
--------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents.............................. 120,615 (111,658)
Cash and Cash Equivalents at Beginning of Year.................................... 51,343 163,001
--------- ----------
Cash and Cash Equivalents at End of Year.......................................... $ 171,958 $ 51,343
--------- ----------
--------- ----------
SUPPLEMENTAL SCHEDULES OF NON-CASH OPERATING AND FINANCING ACTIVITIES
Property and Equipment Acquired Under Capital Leases.............................. $ -- $ 200,000
--------- ----------
--------- ----------
Warrants and Stock Options Issued for Services Rendered........................... $ -- $ 125,000
--------- ----------
--------- ----------
Common Stock Issued in Satisfaction of Capital Lease Obligation................... $ -- $ 180,000
--------- ----------
--------- ----------
Stockholder/Officer's Waived Salary Contributed to Capital........................ $ 42,000 $ --
--------- ----------
--------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid..................................................................... $ 35,223 $ 63,323
--------- ----------
Taxes Paid........................................................................ $ 549 $ --
--------- ----------
--------- ----------
</TABLE>
See notes to financial statements.
F-6
<PAGE>
<PAGE>
AMERICAN ATM CORP.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 -- GOING CONCERN
The Company was incorporated in Florida in March 1996 as a development
stage company. The Company left the development stage in September 1996 when it
commenced operations of its business which is an independent owner and operator
of automatic teller machines (ATMs) at leased locations. The ATMs provide
individuals with credit or debit cards the ability to obtain on the spot cash
from their bank accounts.
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. The Company has sustained substantial losses from
operations since inception through June 30, 1998 of $1,281,263 of which $94,114
was incurred while the Company was in the development stage. The accompanying
financial statements reflect a working capital deficiency of $135,766 at June
30, 1998. The Company's source of funds have been the proceeds from the sale of
its common stock, its lines of credit and notes to stockholders. The Company
presently has a rental agreement with a bank for the use of the bank's cash in
its ATMs which replaced a funding agreement with a private lender.
Management is currently undertaking to register with the Securities and
Exchange Commission 3,562,500 shares of the Company's common stock all of which
underlie common stock purchase warrants (warrants). Upon the successful
completion of the registration of the shares, the Company will call the warrants
which should, if all warrant holders exercise, result in $8,550,000 cash
proceeds to the Company. Management's plan is to use these funds to expand its
business and operations which will result in significant revenue increases and
reductions in financing and other operating costs which will result in the
Company being able to meet its obligations as they become due.
These conditions, among others, raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying financial statements
do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) USE OF ESTIMATES
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent liabilities or assets at the date of the financial
statements and the amounts of revenues or expenses during the reporting period.
(B) CONCENTRATION OF RISK AND REVENUE RECOGNITION
The fee income from ATM machines represents 100% of the Company's operating
revenues. The Company records its fees on a daily basis from the service charges
it assesses directly to the user for monetary transactions. In addition, the
Company recognizes its proportionate share of the transaction fees charged by
the national network to its participating banks reported to the Company by its
electronic reporting vendor. Fee income from ATM processing is limited by the
hours of operation at the sites leased by the Company. In some states, the
amount and nature of fees charged is limited or restricted by regulation, and in
some states private ATM machines are not permissible.
The Company deposits the majority of its cash in commercial banks and with
a national brokerage firm in money market accounts. From time to time, cash
balances in the commercial banks exceed federally insured limits. To date , the
Company has not experienced any losses in such accounts and believes it is not
exposed to any significant credit risk on its cash and equivalents.
F-7
<PAGE>
<PAGE>
AMERICAN ATM CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998
(C) CASH AND EQUIVALENTS
The Company considers all highly-liquid, short-term investments with an
original maturity of three months or less to be cash equivalents. Cash
equivalents at June 30, 1998 and 1997 were $76,253 and $27,808, respectively.
(D) PROPERTY ASSETS
Property assets are stated at cost. Repairs or maintenance, which do not
extend the useful life of the assets, are charged to expense as incurred. As the
equipment is retired or otherwise disposed of, the asset and the related
accumulated depreciation are removed from the accounts and any resulting profit
or loss is reflected in income. The Company expenses its site acquisition costs
to operations as they are incurred due to the short length of the site leased
and the parties' unilateral ability to terminate the lease with minimal notice.
Depreciation is provided primarily over the estimated useful lives of the
assets using the straight-line method. The estimated useful lives of the assets
are seven years for machinery and equipment and five years for furniture and
fixtures. Leasehold improvements are being amortized over the life of the lease.
Deprecation expense charged to operations was $82,584 and $58,104 in 1998 and
1997, respectively.
(E) ORGANIZATION COSTS
Organization costs which are included in other assets were $211 net of
accumulated amortization of $172 at June 30, 1998 and are being amortized over a
sixty months period. Amortization charged to operations was $77 in both years.
(F) DEFERRED OFFERING COSTS
The Company in 1998 incurred $69,862 of costs associated with the
registration of 3,562,500 shares of its common stock underlying purchase
warrants. Upon the successful completion of the registra-tion these costs will
be charged to additional paid-in capital. If the proposed offering is not
successful these costs will be charge to operations.
(G) ADVERTISING
The Company expenses advertising costs as incurred. Advertising charged to
operations in 1998 and 1997 was $3,302 and $6,756, respectively.
(H) INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109
('SFAS 109'), 'Accounting for Income Taxes' at its inception. Under SFAS 109,
the deferred tax provision is determined under the liability method. Under this
method, deferred tax assets and liabilities are recognized based on differences
between the financial statement carrying amount and the tax basis of assets and
liabilities using presently enacted tax rates.
(I) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company at its inception adopted Statement of Financial Accounting
Standards No. 121 ('SFAS No. 121'), 'Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of'. The statement requires that
the Company recognize and measure impairment losses of
F-8
<PAGE>
<PAGE>
AMERICAN ATM CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998
long-lived assets, certain identifiable intangibles, value long-lived assets to
be disposed of and long-term liabilities.
The Company reviews long-lived assets and certain identifiable intangibles
held and used for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may be recoverable.
In January 1998, management determined that 20 ATMs became obsolete and
restoration costs were not fiscally feasible. The ATMs were sold in February
1998, essentially for the cost to remove them from their various locations which
sale resulted in a charge to operations of $206,119.
At June 30, 1998, the carrying values of the Company's other assets and
liabilities approximate their estimated fair values.
(J) PER SHARE DATA
Net loss per share was computed by the weighted average number of shares
outstanding during each year. On December 11, 1997 the Board of Directors
approved a stock split of five (5) common shares for each four (4) common shares
outstanding for shareholders of record on December 22, 1997. The accompanying
financial statements and the computation of net loss per share retroactively
reflect the December 1997 stock split as if it had occurred on July 1, 1996.
NOTE 3 -- FINANCING
In June 1996, the Company entered into a financing agreement with a private
lender, whereby the lender agreed to advance funds to the Company under a line
of credit with a minimum of $350,000 to a maximum of $1,000,000 in advances. The
funds were for the sole purpose of the cash needs used in the operation of the
Company's ATMs. Interest on the used and unused portion of the line of credit
was 12% subject to a reduction for the amount of income the lender earned on
investing the unused portion of the line. The lender had a lien on all cash in
the ATM's which at June 30, 1997 was $207,800. The outstanding amount under this
line of credit at June 30, 1997 was $217,648 (net of interest receivable on the
unused portion of the line). Interest charged to operations in 1997 was $68,247
of which $49,926 was on the unused portion of the line. Interest is classified
in the accompanying financial statement as a direct cost of fee income. The
weighted average interest rate as at and during the year ended June 30, 1997 was
12%. The highest month-end balance outstanding under the line was $279,980.
Prior to the beginning of the rental agreement, the Company's average and
highest month-end outstanding balance under its financing agreement were
$141,151 and $244,580, respectively. Interest at 12% charged to operations in
1998 under this facility was $25,700.
In January 1998, the Company terminated the agreement with this lender and
entered into a rental agreement with a commercial bank. The rental agreement as
memorialized on August 18, 1998 provides for the Company to rent from the bank
the cash that is used in the operation of the Company's ATMs. The monthly rental
charge for the cash varies and is determined by the amount of cash utilized in
the machines at a rate of 2% over the bank's prime lending rate. The lessor bank
also earns a portion of the transaction fees that each ATM transaction
generates. The Company is responsible to maintain insurance with the bank as
loss payee for loss or theft of the machine cash. Although the Company controls
the location of each ATM and determines the amount of cash in each ATM, the
Company may not handle the rented cash. Only armored transport service carriers
under the bank's direct control may handle the rented cash. The maximum amount
of cash rented under the present lease agreement was $418,119 and the average
cash rented was $234,088. Rent for the cash charged to operations was $25,752.
At June 30, 1998, the amount of rented cash in the Company's ATM's was $258,520.
The Company is contingently liable for any loss of the rented cash for which it
has adequate insurance coverage.
F-9
<PAGE>
<PAGE>
AMERICAN ATM CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998
The Company entered into a funding agreement on December 30, 1997 for
$260,000 with a corporation whose president is a stockholder of the Company. The
funding agreement, as amended on June 1, 1998, requires interest at 10% to be
paid monthly. The agreement has no termination date and accordingly is
classified as a current liability. The loan is collateralized by the Company's
ATMs whose undepreciated cost was $204,316 at June 30, 1998. The Company's CEO
has personally guaranteed 25% of this obligation. The maximum and average
borrowings outstanding under this line of credit was $260,000 and interest
charged to operations in fiscal 1998 was $13,521 (10.0%).
NOTE 4 -- LONG-TERM DEBT
Commencing in December 1997 through May 1998, the Company borrowed $110,000
from two stockholders. The original terms of the 12% interest bearing notes were
approximately seven months. The stockholders subsequently extended the due dates
of all the notes to December 31, 1999 and accordingly such indebtedness is
included in long-term debt at June 30, 1998.
NOTE 5 -- INCOME TAXES
The Company has net operating loss carryforwards available of approximately
$1,114,000 at June 30, 1998 expiring through 2013 which upon recognition may
result in future tax benefits of approximately $379,000. At June 30, 1998 and
1997, management is unable to determine if the utilization of the future tax
benefit was more likely than not and, accordingly, the asset has been fully
reserved.
The Company's income tax provision consists of the following:
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Federal.................................................................... $ -- $ --
State and local taxes...................................................... 3,000 1,000
------ ------
Income tax provision....................................................... $3,000 $1,000
------ ------
------ ------
</TABLE>
A reconciliation of the statutory income tax effect rate is as follows:
<TABLE>
<CAPTION>
1998 1997
------------------ ------------------
<S> <C> <C> <C> <C>
Federal statutory rate........................... ($212,000) (34.0%) ($209,000) (34.0%)
State and local taxes, net of federal tax
benefit........................................ 2,000 0.3 1,000 0.2
Non-deductible expenses.......................... 15,000 2.4 16,000 2.6
Reserve for net operating loss carryforward tax
asset.......................................... 198,000 31.8 193,000 31.4
-------- ----- -------- -----
Effective tax rate............................... $ 3,000 0.5% $ 1,000 0.2%
-------- ----- -------- -----
-------- ----- -------- -----
</TABLE>
NOTE 6 -- STOCKHOLDERS' EQUITY
(A) SALE OF SECURITIES
In 1997, the Company completed its sale of 875,000 shares of its common
stock and 2,500,000 warrants (as adjusted for the December 11, 1997 stock split)
to accredited investors for $689,216 (net of offering costs).
In January 1997, the Company issued 75,000 shares of its common stock in
satisfaction of a $180,000 capital lease obligation for machinery.
F-10
<PAGE>
<PAGE>
AMERICAN ATM CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998
(B) CONTRIBUTION OF CAPITAL
The Company's CEO waived $42,000 of his annual $60,000 salary in 1998 and
such wavier was recorded as a contribution to additional paid-in capital in the
accompanying financial statements.
(C) WARRANTS
In connection with the sale of securities in 1996 and 1997, the Company
sold warrants at $0.008 each to acquire 2,500,000 shares of the Company's common
stock (as adjusted for the December 1997 stock split) at $2.40 per share.
Effective December 28, 1996, five consultants received warrants to purchase
an aggregate of 1,062,500 shares of the Company's common stock at $2.40 per
share (as adjusted for the December 1997 stock split) for services previously
rendered. The fair value of the warrants issued and the services rendered (as
determined by the Board of Directors and the consultants) was $85,000 which was
charged to operations as public relations costs.
(D) REGISTRATION OF SECURITIES
The Company intends to file with the Securities and Exchange Commission a
registration statement on Form SB-2 to register 3,562,500 shares of its common
stock all of which underlie warrants to acquire a like number of common shares
at $2.40 per share. The Company intends to call the warrants as soon as
practicable after the registration statement becomes effective. The proceeds to
be received by the Company, if all of the warrants are exercised, would be
$8,550,000 before estimated offering costs of $90,000.
(E) COMMON STOCK SPLIT
The Company's Board of Directors approved a split of its outstanding common
shares of five (5) shares for each four (4) shares outstanding on December 11,
1997.
(F) STOCK OPTIONS
The Company has implemented a shareholder approved stock option plan in
1996. The Plan provides for the total issuance of 687,500 common shares. At June
30, 1998 options to acquire 412,500 shares had been issued under the Plan, which
are all intended to comply with Section 422 of the Internal Revenue Code of
1986, as amended. At June 30, 1998 and 1997, the Company had options for 412,500
common shares issued and unexercised -- all of which were granted on December
16, 1996 -- at exercise prices ranging from $.80 to $.88. At June 30, 1998 and
1997, 137,500 and -0- shares under options were exercisable at prices ranging
from $.80 to $.88 per share. The Company's CEO was issued a portion of options
as payment for his decision to forego $40,000 in salary for calander 1996. This
transaction was reflected in the accompanying financial statements as a charge
to operations and a credit to additional paid-in capital of $40,000.
Assuming the fair market value of the stock at the date of grant to be $.80
per share, the life of the options to be three years, the expected volatility at
200%, expected dividends of none, and the risk-free interest rate of 10%, the
Company would have recorded compensation expense of $55,703 and $30,172
F-11
<PAGE>
<PAGE>
AMERICAN ATM CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1998
for 1998 and 1997 as calculated by the Black-Scholes option pricing model. As
such, pro-forma net loss and loss per share would be as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
JUNE 30,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Net loss as reported................................................ ($626,417) ($615,590)
-------- --------
-------- --------
Additional compensation............................................. $ 55,703 $ 30,172
-------- --------
-------- --------
Adjusted net loss................................................... ($682,120) ($645,762)
-------- --------
-------- --------
Loss per share as reported.......................................... ($0.22) ($0.26)
------ ------
------ ------
Adjusted loss per share............................................. ($0.24) ($0.28)
------ ------
------ ------
</TABLE>
NOTE 7 -- RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130 -- 'Reporting Comprehensive Income', No.
131 -- 'Disclosures about Segments of an Enterprise and Related Information',
No. 132 -- 'Employer's Disclosures about Pension and Other Postretirement
Benefits' and No. 133 -- 'Accounting for Derivative Instruments and Hedging
Activities'. Management does not believe that the effect of implementing these
new standards will be material to the Company's financial position, results of
operations and cash flows.
NOTE 8 -- YEAR 2000
The Company recognizes the need to ensure its operation will not be
adversely affected by Year 2000 software failures. The Company is communicating
with suppliers, customers and others with which it does business to coordinate
Year 2000 conversion. The cost of achieving compliance is estimated to be a
minor increase over the cost of normal software upgrades and replacements.
NOTE 9 -- COMMITMENTS AND CONTINGENCIES
(A) CONTINGENCIES
The Company is contingently liable for cash in the machines which it rents
from a bank. The amount of rented cash at June 30, 1998 was $258,520.
(B) LEASES
The Company is a lessee under a operating real property lease for office
space which expires on June 30, 1999. Rent expense charged to operations in 1998
and 1997 was $11,307 and $11,000. Future minimum annual rental under the lease
is $12,000.
The Company also leases space for its ATMs under operating leases. Although
the stated term of each lease is from one to five years, either party may cancel
the lease with minimal notice. Rent charged to operations in 1998 and 1997 was
$52,801 and $26,356, respectively. Additionally, the Company has agreements with
electronic transaction reporting and transfer system service providers which are
a crucial component of the Company's operations. These agreements typically
require payment based upon the number of transactions processed by the provider.
(C) CONSULTING AND EMPLOYMENT AGREEMENTS
The Board of Directors authorized compensation for the Company's CEO and
Chairman at $60,000 per year plus 2% of defined operating profits commencing
January 1, 1997. During 1998 this officer waived payment of $42,000 of his
salary which was reflected as a contribution to additional paid-in capital. The
Company has a three year agreement with a consultant for public relations and
financial services. The consultant will receive $96,000 over the term of the
agreement which expires in 1999.
F-12
<PAGE>
<PAGE>
============================= =============================
NO UNDERWRITER, DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................................... 3
Summary Historical Financial Information................................................................... 5
Risk Factors............................................................................................... 6
Use of Proceeds............................................................................................ 10
Capitalization............................................................................................. 10
Dilution................................................................................................... 11
Dividend Policy............................................................................................ 11
Selected Historical and Financial Data..................................................................... 12
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 13
Business................................................................................................... 17
Management................................................................................................. 20
Plan of Distribution....................................................................................... 23
Description of Securities.................................................................................. 24
Shares Eligible for Future Sale............................................................................ 25
Legal Matters.............................................................................................. 25
Experts.................................................................................................... 25
Additional Information..................................................................................... 25
Index to Financial Statements.............................................................................. F-1
</TABLE>
------------------------
UNTIL , 1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
AMERICAN ATM CORP.
3,562,500 SHARES OF
COMMON STOCK $.001 PAR VALUE,
WHICH UNDERLY COMMON STOCK PURCHASE WARRANTS
-------------------------
PROSPECTUS
-------------------------
, 1998
============================= =============================
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses incurred in connection
with the issuance and distribution of the securities being registered hereby
expected to be incurred by the Company:
<TABLE>
<S> <C>
SEC registration fee.................................................. $ 4,425.00
State securities law fees and expenses................................ 20,000
Printing and engraving expenses....................................... 20,000
Legal fees and expenses............................................... $ 30,000
Accounting fees and expenses.......................................... $ 10,000
Transfer Agent fee.................................................... $ 3,000
Miscellaneous......................................................... $ 2,575
----------
Total............................................................ $ 90,000
----------
----------
</TABLE>
All amounts in the above table are estimated except the SEC registration
fee.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850 of the Business Corporation Act of the State of Florida
(the 'FBCA') provides that a corporation shall have the power to indemnify
directors and officers as well as other employees and agents against liability
incurred in connection with any proceeding to which such person is a party by
virtue of the fact that he is a director, officer, employee or other agent of
the Corporation, including amounts paid in settlement in connection with any
proceeding, including any appeal thereof (other than an action by or in the
right of the corporation, a 'derivative action'), if they acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses incurred in connection with
the defense or settlement of such actions, and the statute requires court
approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. The statute provides
that it is not exclusive of other indemnification that may be granted by a
corporation's bylaws, disinterested director vote, stockholder vote, agreement
or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following paragraphs set forth certain information with respect to all
securities sold by the Company within the past three years without registration
under the Securities Act of 1933, as amended (the 'Securities Act'). The
information includes the names of the purchasers, the date of issuance, the
title and number of securities sold and the consideration received by the
Company for the issuance of these shares.
In April, 1996, the Company conducted a public offering of unregistered
securities, pursuant to Rule 504 of Regulation D, of 490,000 shares of Common
Stock to the following persons, each in the amount indicated opposite the
person's name:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- --------------------------------------------------------------------------- ----------------
<S> <C>
IBT Alabaster Corp. ....................................................... 70,000
Gerald A. Adler............................................................ 15,750
Cecile Axelrod............................................................. 35,000
James N. Blair............................................................. 4,375
Camden Research Group Inc. ................................................ 70,000
Coltmill Ltd. ............................................................. 70,000
Anne Goldberg.............................................................. 35,000
William S. Greenewalt...................................................... 4,375
</TABLE>
(table continued on next page)
II-1
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- --------------------------------------------------------------------------- ----------------
<S> <C>
Steven M. Kaplan........................................................... 4,375
Henry Leshman.............................................................. 35,000
Arlen G. Loselle........................................................... 4,375
Pearl Marks................................................................ 70,000
Third ARA Holding Ltd. .................................................... 70,000
Stacey R. Woloshin......................................................... 1,750
</TABLE>
In October 1996, the Company conducted a public offering of unregistered
securities, pursuant to Rule 504 of Regulation D, of 2,500,000 Common Stock
Purchase Warrants, at a price of $0.01 per warrant, and 700,000 shares of Common
Stock at a price of $1.00 per share. The following persons purchased shares
and/or warrants each in the amount indicated opposite the person's name:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- --------------------------------------------------------------------------- ----------------
<S> <C>
Atlantic Title & Trust Co. ................................................ 20,000
Stanley Basist............................................................. 10,000
Brad Blumenthal............................................................ 25,000
Richard Brown.............................................................. 50,000
Chelsea Associates......................................................... 50,000
Robin Collet & Olivia Collet JTN........................................... 10,000
Elisa Dembrowski........................................................... 5,000
Bruce A. Glotzer SEP IRA................................................... 12,500
Anne Goldberg & Seymour Goldberg........................................... 7,500
Daniel J. Hathy............................................................ 15,000
Larry Allen Hathy.......................................................... 20,000
Michael Kahan.............................................................. 25,000
Richard Knoll.............................................................. 25,000
Henry Leshman.............................................................. 25,000
Lextel Construction Ltd. .................................................. 35,000
Matt Lichtenberg........................................................... 50,000
Mona Morris................................................................ 10,000
Naomi Owide................................................................ 25,000
Hector Pagan Jr. .......................................................... 5,000
Port Abstract Holding Corp. ............................................... 50,000
Steve Savage............................................................... 20,000
Scaramanga Brothers Inc. .................................................. 25,000
Silver Ltd. ............................................................... 25,000
Ivan Jay Steinhardt........................................................ 5,000
Donald Ian Tendell......................................................... 50,000
Walter Weidenbaum.......................................................... 50,000
John Wilkes................................................................ 50,000
-------
700,000
-------
-------
</TABLE>
The following shares of Common Stock were issued by the Company, prior to
its 5-for-4 forward stock split, without registration under the Securities Act
by reason of the exemption from registration afforded by the provisions of
Section 4(2) thereof, as transactions by an issuer not involving a public
offering:
In March 1996, the Company issued 300,000 shares of Common Stock to
Mori Aaron Schweitzer for $15,000.
In March 1996, the Company issued 60,000 shares of Common Stock to
Nina Anthony for $3,000.
II-2
<PAGE>
<PAGE>
In March 1996, the Company issued 20,000 shares of Common Stock to
Bernard Murtaugh for $1,000.
In May 1996, the Company issued to Wayne Kight, 10,000 shares of
Common Stock for $5,000.
In April and May 1996, the Company issued to Norman Shapiro 43,000
shares of Common Stock for $4,500.
In April 1996, the Company issued to Barry Haberman 33,000 shares of
Common Stock for $4,000.
In May 1996, the Company issued to Frank Falco 25,000 shares of Common
Stock for $25,000.
On March 16, 1997, the Company issued to Mori Aaron Schweitzer options to
purchase up to 200,000 shares of Common Stock at a price equal to 110% of the
market price of the stock.
On March 16, 1997, the Company issued to its officers and directors options
to purchase 130,000 shares of Common Stock in the aggregate, at a price of $1.00
per share.
In August 1997, in exchange for services rendered, the Company issued to
Omega Funding, Inc. warrants to purchase 160,000 shares of Common Stock, in the
aggregate, for $2.40 per share (as adjusted for the 5:4 stock split).
In August 1997, in exchange for services rendered, the Company issued to
Rajiv Vobra warrants to purchase 120,000 shares of Common Stock, in the
aggregate, for $2.40 per share (as adjusted for the 5:4 stock split).
In August 1997, in exchange for services rendered, the Company issued to
Humphrey, Ltd. Warrants to purchase 220,000 shares of Common Stock, in the
aggregate, for $2.40 per share (as adjusted for the 5:4 stock split).
In December 1997, in exchange for services rendered, the Company issued to
Omega Fundings, Inc. warrants to purchase 125,000 shares of Common Stock, in the
aggregate, for $2.40 per share (as adjusted for the 5:4 stock split).
In December 1997, in exchange for services rendered, the Company issued to
Smarter PR, Inc. warrants to purchase 125,000 shares of Common Stock, in the
aggregate, for $2.40 per share (as adjusted for the 5:4 stock split).
In December 1997, in exchange for services rendered, the Company issued to
Transglobal Trade Link, Inc. warrants to purchase 100,000 shares of Common
Stock, in the aggregate, for $2.40 per share (as adjusted for the 5:4 stock
split).
In January 1998, the Company issued warrants to purchase 625,000 shares of
Common Stock, in the aggregate, for $2.40 per share to each warrant holder of
record on December 22, 1997, in order to adjust the number of warrants held by
each holder for the 5:4 stock split, as provided in the Warrant Agreement.
In March 1998, the Company issued warrants to purchase 87,500 shares of
Common Stock, in the aggregate, to Omega Funding, Inc. (31,250 shares), Smarter
PR, Inc. (31,250 shares) and Transglobal Trade Link, Inc. (25,000 shares), for
$2.40 per share. But for a clerical error, these warrant holders would have held
their warrants of record on December 22, 1998, the record date for the 5:4 stock
split. Upon discovery of the error, the Company adjusted their holdings by
issuing the additional warrants.
II-3
<PAGE>
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES.
(a) Exhibits
<TABLE>
<C> <S>
3.1 Certificate of Incorporation, as amended.**
3.2 By-laws.**
4.1 Specimen Certificate for Shares of Common Stock*.
4.2 Director and Officer Stock Option Compensation Plan*.
5.1 Opinion and Consent of Bondy & Schloss LLP.**
10.1 Lease by and between the Company and Cinderella Properties, dated .**
10.2 ATM Funding Agreement, by and between the Company and American Security Bank, dated June 6,
1997.**
10.3 Strategic Partnership Joint Effort Agreement by and between the Company and Atlantic
International Entertainment, Ltd., dated September 30, 1997.**
10.4 Automated Teller Machine Contract, by and between the Company and Wells Fargo (now known as
Loomis, Fargo), dated August 19, 1996, together with Addendum thereto dated September 8, 1997.**
10.5 Employment Agreement by and between the Company and Mori Aaron Schweitzer, dated March 16, 1996.
23.1 Consent of Weinick Sanders Levanthal LLP.
23.5 Consent of Bondy & Schloss LLP (included in item 5.1 above).**
24 Powers of Attorney (included on Company signature page).**
27 Financial Data Schedule
</TABLE>
- ------------
* To be filed by amendment.
** Previously filed.
---------------------------
(b) Financial Statement Schedules
All supplemental schedules are omitted because they are not required or
because the information is shown in the financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purpose of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The Registrant further undertakes to:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 19(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
'Calculation of Registration Fee' table in the effective registration
statement.
(iii) Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
II-4
<PAGE>
<PAGE>
SIGNATURES
In accordance with to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing of Form SB-2 and has authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boca Raton, State of Florida on October 8, 1998.
AMERICAN ATM CORP.
By: /S/ MORI AARON SCHWEITZER
...................................
MORI AARON SCHWEITZER,
CHAIRMAN OF THE BOARD, CHIEF
EXECUTIVE OFFICER,
PRESIDENT AND TREASURER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/S/ MORI AARON SCHWEITZER Chairman of the Board, October 8, 1998
......................................... Chief Executive Officer,
(MORI AARON SCHWEITZER) President and Treasurer
* Vice President and Director October 8, 1998
.........................................
(SONDRA PARKER)
* Secretary and Director October 8, 1998
.........................................
(WAYNE KIGHT)
* Director October 8, 1998
.........................................
(NORMAN SHAPIRO)
* Director October 8, 1998
.........................................
(BARRY HABERMAN)
*By: /s/ MORI AARON SCHWEITZER
.........................................
MORI AARON SCHWEITZER
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER PAGE
- ------ ----
<S> <C> <C>
3.1 -- Certificate of Incorporation, as amended**......................................................
3.2 -- By-laws**.......................................................................................
4.1 -- Specimen Certificate for Shares of Common Stock*................................................
4.2 -- Director and Officer Stock Option Compensation Plan*............................................
5.1 -- Opinion and Consent of Bondy & Schloss LLP**....................................................
10.1 -- Lease by and between the Company and Cinderella Properties, dated .**...................
10.2 -- ATM Funding Agreement, by and between the Company and American Security Bank, dated June 6,
1997.**..........................................................................................
10.3 -- Strategic Partnership Joint Effort Agreement by and between the Company and Atlantic
International Entertainment, Ltd., dated September 30, 1997.**...................................
10.4 -- Automated Teller Machine Contract, by and between the Company and Wells Fargo (now known as
Loomis, Fargo), dated August 19, 1996, together with Addendum thereto dated September 8,
1997**...........................................................................................
10.5 -- Employment Agreement, by and between the Company and Mori Aaron Schweitzer, dated March 16,
1996.............................................................................................
23.1 -- Consent of Weinick Sanders Levanthal LLP........................................................
23.2 -- Consent of Bondy & Schloss LLP (included in item 5.1 above)**...................................
24 -- Powers of Attorney (included on Company signature page)**.......................................
27 -- Financial Data Schedule.........................................................................
</TABLE>
- ------------
* To be filed by amendment.
** Previously filed.
<PAGE>
<PAGE>
1
EMPLOYMENT AGREEMENT
AGREEMENT, dated March 16, 1996, by and between American ATM Corp., a
Florida corporation ("Company"), and Mori Aaron Schweitzer ("Employee");
WHEREAS, the Company is engaged in the business of ownership and operating
Automated Teller Machines ("ATMs");
WHEREAS, the Company and the Employee wish to enter into an Employment
Agreement in order to retain Employee's ongoing services as the President,
Treasurer and Chief Operating Officer of the Company or in such capacities as
the Company's Board from time to time determines;
WHEREAS, Employee is employed by the company in a confidential
relationship wherein Employee, in the course of his employment with the Company,
will become familiar with and aware of information as to the specific manner of
doing business and the customers of the Company and its affiliates and future
plans with respect thereto, all of which will be established and maintained at
great expense to the Company; this information is a trade secret and constitutes
the valuable goodwill of the Company.
WHEREAS, employee recognizes that the Company's business is dependent upon
a number of trade secrets, including locations, trade contacts, supplies,
techniques, methods and data. The protection of the trade secrets is of critical
importance to the successful operation of the Company;
WHEREAS, the Company will sustain great loss and damage if during the
terms of this Agreement or Employee's employment with the Company, or for a
period of two (2) years immediately following the termination of the Agreement
or Employee's employment, for whatever reason, Employee should violate the
provisions of Articles III or IV of this Agreement. Further, monetary damages
for such losses would be extremely difficult to measure.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
ARTICLE I
Employment and Duties
A. The Company hereby employs Employee as its President, Treasurer and Chief
Operating Officer. Additional or different duties, titles or positions,
however, may be assigned to Employee or may be taken from Employee from
time to time by the Board of Directors ("Board") of the Company. Employee
hereby accepts this employment upon the terms and conditions herein
contained and agrees to devote his time, attention and efforts to promote
and further the business and services of the Company. The Company and
Employee agree that
<PAGE>
<PAGE>
2
Employee is contemplating forming one or more corporations relating to
business ventures which would not directly or indirectly compete with the
Company's business and which will require a portion of Employee's time,
attention and efforts. Further, that Employee is a member of the Board of
Directors of other publicly trading companies. Employee's time, attention
and efforts directed at such contemplated endeavor is acceptable to the
Company. Employee shall faithfully adhere to, execute and fulfill all
policies established by the Company. The Prior Agreements are hereby
superseded, terminated and shall have no further force or effect nor shall
they be legally binding upon either Employee or the Company.
B. Employee shall perform such duties, assume such responsibilities and
devote such time, attention and energy to the business of the Company as
the Board shall from time to time require and, except as provided in
paragraph A above, shall not, during the term of his employment hereunder,
be engaged in any other business activity pursued for gain, profit or
other pecuniary advantage if such activity interferes with Employee's
duties and responsibilities hereunder. However, the foregoing limitations
shall not be construed as prohibiting Employee from making personal
investments in such form or manner as will neither require his services in
the operation or affairs of the companies or enterprises in which such
investments are made nor violate the terms of Paragraphs 3 or 4 hereof.
C. All funds received by Employee on behalf of the Company, if any, shall be
held in trust for the Company and shall be delivered to the Company as
soon as practicable.
ARTICLE II
Compensation
2.01 Salary and Draw. From and after the effective date of this Agreement, the
Employee shall receive a salary ("Salary") from the Company in an amount equal
to $60,000.00 per year.
The Employee's Salary shall be payable pursuant to a draw schedule
consisting of twenty-four (24) semi-monthly payments ("Draw"), each such payment
being in an amount equal to 1/24 of $60,000.00 or $2,500.00.
2.02 Expense Reimbursement. The Company shall reimburse Employee for all
reasonable travel, entertainment and other expenses related to his employment by
or promotion of the Company. Employee shall provide a written accounting an
explanation of all expenses for which reimbursement is sought on a monthly basis
and the Company shall reimburse all such expenses within ten (10) days following
receipt of each written accounting.
2.03 Bonuses. The Employee shall be entitled to receive such bonuses as the
Board shall determine from time to time in accordance with Company policy and at
the sole discretion of the Board.
<PAGE>
<PAGE>
3
2.04 Plan Participation. The Employee shall be entitled to participate in any
and all stock option, stock bonus, pension, profit sharing, retirement or other
similar plans adopted by the Company.
2.05 Other. The Employee shall be entitled to such fringe benefits as the
Company shall establish for its employees generally which shall include with
respect to the Employee at least two weeks paid vacation annually, an automobile
allowance, life insurance, disability pay and such other benefits as the Company
shall adopt, subject to the discretion of the Company to add or delete such
standard benefits as the Board deems appropriate, from time to time.
2.06 Stock Compensation. The Employee shall be entitled to receive bonuses in
the form of Common Stock of the Company in an amount to be determined annually
by the Compensation Committee of the Board of Directors.
In the event the Employee's employment by the Company is terminated on or
before December 31, 2005 and following a "change in control of the Company", as
defined in section 5.02C below, any stock bonus provided for above shall be
deemed to be earned in full and shall be paid by the Company no later than ten
days following such change in control.
The Company undertakes and agrees to file, at such time as the issuance of
the stock bonus described above becomes probable but in any event not later than
the day prior to issues of such shares, a registration statement on Form S-8
registering the shares issuable pursuant to the stock bonus provisions hereof.
The Company further agrees to file such amendments and take such other actions
as may be necessary to maintain the effectiveness of such registration statement
so long as shares remain issuable pursuant to such stock bonus agreement. If,
for any reasons, registration on Form S-8 is not available or has not been
undertaken as required above, the Employee shall have a right to demand
registration of the shares issuable pursuant to such arrangement whereupon the
Company shall bear all expenses and take all reasonable steps to file and
maintain an effective registration statement relating to the sale of such shares
by the Employee.
ARTICLE III
Non-Competition Agreement
A. Employee will not, during the period of this Agreement or of his
employment by or with the Company, whichever period is longer, and for a
period of two (2) years immediately following the termination of this
Agreement or his employment, whichever is longer, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership,
corporation or business of whatever nature (I) call upon any customer of
the Company (including, but not limited to, any customer obtained for the
Company by Employee) for the purpose of soliciting or selling any products
or services in competition with those of the Company or its affiliates;
(ii) call upon any employee of the Company or any of its affiliates for
the purpose or with the intent of enticing them away from
<PAGE>
<PAGE>
4
or out of the employ of the Company or any reason whatever; (iii)
establish, enter it, be employed by or, advise, consult with or become a
part of, any company, partnership, corporation or other business entity or
venture, or in any way engage in business for himself or for others, in
competition with the Company or its affiliates within one hundred (100)
miles of the home office of the Company and/or any affiliated company
location, such location having a permanent and known facility wherein the
Employee has served in any capacity and wherever Employee has performed
duties or had management responsibility on behalf of the Company or its
affiliates; or (iv) during or after the term of his employment with the
Company, disclose the Company's customers or any other trade secrets of
the Company whether in existence or proposed, to any person, firm
partnership, corporation or business for any reason or purpose whatsoever.
B. Because of the difficulty of measuring economic losses to the Company and
its affiliates as a result of his breach of the foregoing covenant and
because of the immediate and irreparable damage that would be caused to
the Company and its affiliates for which it would have no other adequate
remedy, Employee agrees that the foregoing covenant may be enforced by the
Company and its affiliates in the event of breach by him by injunctions
and restraining orders.
C. It is agreed by the parties that the foregoing covenants in this Paragraph
3 are necessary to protect the goodwill and business interests of the
Company and its affiliates and impose a reasonable restraint on Employee
in light of the activities and business of the Company and its affiliates
on the date of the execution of this Agreement and the future plans of the
Company; but it is also the intent of the Company and Employee that such
covenants be construed and enforced in accordance with the activities and
business of the Company and its affiliates on the date of the termination
of the employment of the Employee.
D. The covenants in this Paragraph 3 are severable and separate and the
unenforceability of any specific covenant shall not affect the provisions
of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial
restriction set forth are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the
court deems reasonable and the Agreement shall thereby be reformed.
E. All of the covenants in this Paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement and the
existence of any claim or cause of action of Employee against the Company
or its affiliates, whether predicated in this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of such
covenants. It is specifically agreed that the period of two (2) years
stated at the beginning of this Paragraph 3, during which the agreements
and covenants of Employee made in this Paragraph 3 shall be effective,
shall be computed by excluding from such computation any time during which
Employee is in violation of any provision of this Paragraph 3 and any time
during which there is pending in any court of competent jurisdiction any
action (including any appeal from any final judgment) brought by any
person, whether or not a party to this Agreement, in which action the
Company or its affiliates seeks to enforce the agreements and
<PAGE>
<PAGE>
5
covenants of Employee or in which any person contests the validity of such
agreements and covenants or their unenforceability or seeks to avoid their
performance or enforcement.
ARTICLE IV
Non-Disclosure Agreement and Proprietary Information.
A. The Employee recognizes and acknowledges that the information, techniques,
processes, formulas, developments, experimental work, work in progress,
business, list of the Company's customers and any other trade secret or
other secret or confidential information relating to Company's business as
they may exist from time to time are valuable, special and unique assets
of Company's business. In addition, Employee recognizes that Company is
continually engaged in research and development of new inventions and
improvements to the information, techniques, processes, formulas,
developments, trade secrets, and other secrets and confidential matters
relating to Company's business. Therefore, Employee agrees as follows:
1. That Employee will hold in strictest confidence and not disclose,
reproduce, publish or use in any manner, whether during or subsequent to
his employment, without the express authorization of the Board of
Directors of the Company, any information, manufacturing technique,
process, business customer lists, trade secrets or any other secrets or
confidential matter relating to any aspect of the Company's business as
designated from time to time by the Board of Directors of Company, except
as such disclosure or use may be required in connection with Employee's
work for the Company.
2. That upon request or at the time of leaving the employ of the Company, the
Employee will deliver to the Company, and not keep or deliver to anyone
else, any and all notes, memoranda, documents and, in general, any and all
material relating to the Company's business.
3. The Employee shall (without any additional compensation) promptly disclose
in writing to the Board of Directors of the Company all ideas, formulas,
programs, systems, devices, processes, business concepts, discoveries and
inventions (hereinafter referred to collectively as "discoveries"),
whether or not patentable, which the Employee, while employed by the
Company, conceives, makes, develops, acquires or reduces to practice,
whether alone or with others and whether during or after usual working
hours, and which are related to the Company's business or interest, or are
used or usable by the Company, or arise out of or in connection with the
duties performed by the Employee hereunder; and the Employee hereby
transfers and assigns to the Company, all rights, title and interests in
and to said discoveries, including any and all domestic and foreign
contractual agreements entered into by Employee during the term of this
Agreement and any renewals thereof. On request of the Company, the
Employee shall (without any additional compensation), from time to time
during or after the expiration or termination of their employment, execute
such further instruments (including, without limitation, royalties,
licenses and/or interest whatsoever and assignments thereof) and do all
such other acts and things as may be deemed necessary or desirable by the
Company to protect and/or enforce its rights in respect of said
discoveries. All expenses of filing and/or
<PAGE>
<PAGE>
6
prosecuting any interest in such discovery shall be borne by the Company,
but the Employee shall cooperate in filing and/or prosecuting any such
interest or violation in rights thereto.
4. That the Board of Directors of the Company may from time to time designate
other subject matters requiring confidentiality and secrecy which shall be
deemed to be covered by the terms of this Agreement.
B. In the event of a breach or threatened breach by the Employee of the
provisions of this Paragraph 4, the Company shall be entitled to an
injunction:
1. Restraining the Employee from disclosing, in whole or in part, any
information as described above or from rendering any services to any
person, firm, corporation association or other entity to whom such
information, in whole or in part, has been disclosed or is threatened to
be disclosed; and/or
2. Requiring that Employee deliver to Company all information, documents,
notes, memoranda and any and all discoveries or other material as
described above upon Employee's leave of the employ of the Company.
Nothing herein shall be construed as prohibiting the Company from pursuing
other remedies available to the Company for such breach or threatened
breach, including the recovery of damages from the Employer.
ARTICLE V
Term: Terminations
5.01 Term. The term of this agreement shall begin on March 1, 1996 and continue
until December 31, 2005, unless further extended or sooner terminated as herein
provided. On December 31, 2005, and on the last day of December of each year
thereafter, the term of the Employee's employment shall be automatically
extended one (1) additional year unless, on or before sixty (60) days in advance
of such last day of December, the Company shall have delivered to the Employee
or the Employee shall have delivered to the Company written notice that the term
of the Employee's employment hereunder will not be extended.
5.02 Termination. This Agreement and Employee's employment may be terminated in
any one of the following ways:
A. The death of Employee shall terminate the Agreement
B. The Company may terminate the Agreement after thirty (30) days
written notice ("Notice of Termination") to Employee if, because of
illness or physical or mental disability or other incapacity which
continues for a period in excess of twelve (12) months, Employee is
unable to perform his duties under this agreement.
C. The Employee may terminate his employment hereunder (i) for Good
Reason or (ii) of his health should become impaired to an extent
that makes his continued performance
<PAGE>
<PAGE>
7
of his duties hereunder hazardous to his physical or mental health
or his life, provided that the Employee shall have furnished the
Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request, the
Employee shall submit to an examination by a doctor selected by the
Company and such doctor shall have concurred in the conclusion of
the Employee's doctor.
For purposes of this agreement, "Good Reason" shall mean (i) a change in
control of the Company (as described below), (ii) a failure by the Company to
comply with any material provision of this Agreement which has not been cured
within ten (10) days after notice of such noncompliance has been given by the
Employee to the Company, or (iii) any purported termination of the Employee's
employment by the Company which is not effected pursuant to the provisions
hereof (and for purposes of this Agreement no such purported termination shall
be effective).
For purposes of this Agreement, a "change in control of the Company" shall
mean a change in control that would be required to be reported in response to
Item 1(a) of Form 8-K under the Securities Exchange Act of 1934 (the "Exchange
Act"); provided that, without limitation, such a change in control shall be
deemed to have occurred if (i) any "person" (as that term is used in Sections
13(d) and 14(d) of the Exchange Act), other than the Company, Mori Aaron
Schweitzer, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 15% or more of the combined voting power of the Company's then
outstanding securities, (ii) during any period of two consecutive years during
the term of this Agreement, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors representing
at least two-thirds of the directors then in office who were directors at the
beginning of the period or (iii) during the term of this Agreement Employee
stands for re-election as a member of the Board and is not so elected; provided,
however, that the foregoing events shall not be deemed to be a "change of
control" if the transactions, transactions or elections causing such change
shall have been approved by the affirmative vote of at least a majority of the
members of the Board of Directors of the Company in office immediately prior to
the "change of control".
D. In the event the Company terminates, or attempts to terminate, the
employment of the Employee other than as provided above, or the
Company otherwise is in breach of the terms of this Agreement, upon
determination of a court of competent jurisdiction or an arbitration
or other similar panel that such breach has occurred, the Employee
shall be entitled to receive from the Company, and the Company
agrees to pay or reimburse the Employee for, all legal fees, costs
and other damages, including back-pay and benefits if applicable,
incurred as a result of such breach or wrongful termination.
5.3 Compensation Upon Termination or During Disability
<PAGE>
<PAGE>
8
A. During any period that the Employee fails to perform his duties
hereunder as a result of incapacity due to physical or mental
illness ("disability period"), the Employee shall continue to
receive his full salary at the rate then in effect for such period
until his employment is terminated pursuant to section 5.02B hereof,
provided that payments so made to the Employee during the first 360
days of the disability period shall be reduced by the sum of the
amounts, if any, payable to the Employee at or prior to the time of
any such payment under disability benefit plans of the Company and
which were not previously applied to reduce any such payment.
B. If the Employee's employment is terminated by his death, the Company
shall pay to the Employee's spouse, or if he leaves no spouse, to
his estate, commencing on the next succeeding day which is the
fifteenth day or last day of the month, as the case may be, and
semimonthly thereafter on the fifteenth and last days of each month,
until a total of six payments has been made, an amount on each
payment date equal to the semimonthly salary payment payable to the
Employee pursuant to Section 2.01 hereof at the time of his death.
C. If the Employee's employment shall be terminated pursuant to Section
5.02B, the Company shall pay the Employee his full salary through
the date of termination, at the rate in effect at the time Notice of
Termination is given, plus all outstanding expenses payable pursuant
to section 2.02 hereof and the Company shall have no further
obligations to the Employee under this Agreement.
D. If the Employee shall terminate his employment under clause (ii) of
Section 5.02C hereof, the Company shall pay the Employee his full
salary through the date of termination at the rate in effect at the
date of termination, plus all outstanding expenses payable pursuant
to section 2.02 hereof.
E. If the Employee shall terminate his employment for Good Reason of if
the Company shall terminate the Employee's employment in breach
hereof or within one year of a "change in control of the Company",
for any reason other than death or disability under section 5.02A or
B, then:
1. the Company shall pay the Employee his full salary
through the date of termination at the rate in effect at
the time of termination;
2. in lieu of any further salary payments to the Employee
for periods subsequent to the date of termination, the
Company shall pay as severance pay to the Employee an
amount equal to $300,000.00 or five times employee's
highest rate of pay whichever is higher, such payment to
be made in a lump sum on or before the tenth day
following the date of termination.
3. In addition to any rights which the Executive may have
under stock option plans of the Company, the Company
shall pay to the Executive in cash an
<PAGE>
<PAGE>
9
amount equal to the product of three times the
difference between (i) and (ii) below, provided that
(ii) exceeds (i). For purposes hereof, (i) shall be the
aggregate exercise price of all options held by the
Executive on the date of termination and (ii) shall be
the number of options held by the Executive on the date
of termination multiplied by the greater of the closing
bid price of the Company's common stock on the date of
termination or the price per share paid in connection
with any tender offer or other purchase which resulted
in the change in control.
4. the Company shall maintain in full force and effect, for
the continued benefit of the Employee for three (3)
years from the date of termination, all employee benefit
plans and programs in which the Employee was entitled to
participate immediately prior to the date of termination
provided that the Employee's continued participation is
possible under the general terms and provisions of such
plans and programs. All such benefit plans and programs
shall be maintained at the level and value provided
immediately prior to the date of termination. In the
event that the Employee's participation in any such plan
or program is barred, the Company shall arrange to
provide the Employee with benefits substantially similar
to those which the Employee would otherwise have been
entitled to receive under such plans and programs from
which his continued participation is barred. In lieu of
continued participation in such benefit plans and
programs, the Employee may notify the Company of his
election to receive, and the Company shall pay to the
Employee, in a lump sum, the product of (i) the current
annual cost of such benefits provided by the Company to
the Employee, multiplied by (ii) three (3) (the "Cash
Benefit Package"). If the Employee elects to receive the
Cash Benefit Package in lieu of continued participation
in benefit plans and programs, the Company shall deliver
to the Employee, on or before the tenth day following
the later of the date of termination or receipt of a
written notice to such effect from the Employee, payment
in full of the Cash Benefit Package along with a written
summary of the benefit costs utilized in computing the
Cash Benefit Package.
Except as required above, the Company shall not be required to maintain in
force for the benefit of the Employee any employee benefit plans or programs
following the date of termination.
F. The Employee shall not be required to mitigate the amount of
any payment provided for in this Section 5.03 by seeking other
employment or otherwise.
ARTICLE VI
Representations of Employee
Employee has represented and hereby represents and warrants to the Company
that he is not subject to any restriction or non-competition covenant in favor
of a former employer or any
<PAGE>
<PAGE>
10
other persons or entity and that the execution of this Agreement by Employee and
his employment by the Company or its affiliates and the performance of his
duties hereunder will not violate or be a breach of any agreement with a former
employer or any other person or entity. Further, Employee agrees to indemnify
the Company and its affiliates for any claim, including, but not limited to,
attorney's fees and expenses of investigation, by any such third party that such
third party may now have or may hereafter come to have against the Company or
its affiliates based upon or arising out of any non-competition agreement or
invention and secrecy agreement between Employee and such third party.
ARTICLE VII
Miscellaneous
7.01 Complete Agreement. This Agreement is not a promise of future employment.
There are no oral representations, understandings or agreements with the Company
or any of its officers, directors or representatives covering the same subject
matter as this Agreement. This written Agreement is the final, complete and
exclusive statement and expression of the agreement between the Company and
Employee and of all the terms of this Agreement and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements. Upon the effective date of this agreement, the Prior
Agreement shall be terminated and superseded in its entirety. This written
agreement may not be later modified except by a further writing signed by the
Company and Employee, and no term of this Agreement may be waived except by
writing signed by the party waiving the benefit of such terms.
7.02 No Waiver. No waiver by the parties hereto of any default or breach of any
terms, condition or covenant of this Agreement shall be deemed to be a waiver of
any subsequent default or breach of the same or any other term, condition or
covenant contained herein.
7.03 Assignment: Binding Effect. Employee understands that he has been selected
for employment by the Company on the basis of his personal qualifications,
experience and skills. Employee agrees, therefore, that this Agreement and the
rights to his services may be assigned by the Company at any time without notice
to him, but that he cannot assign all or any portion of this Agreement. Subject
to the preceding two sentences, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors, and
assigns. It is further understood and agreed that the Company may be merged or
consolidated with another entity and that any such entity shall automatically
success to the rights, powers and duties of the Company hereunder.
7.04 Notice. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
To the Company: American ATM Corp.
5061 N. Dixie Highway
Boca Raton, FL 33431
<PAGE>
<PAGE>
11
To Employee: Mori Aaron Schweitzer
2253 NW 62nd Drive
Boca Raton, FL 33496
Notice shall be deemed given and effective three (3) days after the deposit in
the Unites States mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this Section 7.04.
7.05 Severability: Headings. If any portion of this Agreement is held invalid or
inoperative, the other portions of this Agreement shall be deemed valid and
operative and, so far as is reasonable and possible, effect shall be given to
the intent manifested by the portion held invalid or inoperative. The paragraph
headings herein are for reference purposes only and are not intended in any way
to describe, interpret, define or limit the extent or intent of this Agreement
or of any part hereof.
7.06 Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration in the City of
Boca Raton, Florida in accordance with the rules then existing of the American
Arbitration Association and judgement upon the award may be entered in any Court
having jurisdiction thereof.
<PAGE>
<PAGE>
12
7.07 Governing Law. This Agreement shall in all respects be construed according
to the laws of the State of Florida.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
date herein first set forth.
AMERICAN ATM CORP.
WITNESSED BY: /s/ Wayne Kight
------------------------
/s/ [ILLEGIBLE] Wayne Kight
- -------------------------------- Corporate Secretary
EMPLOYEE:
WITNESSED BY: /s/ Mori Aaron Schweitzer
------------------------
Mori Aaron Schweitzer
Employee
/s/ [ILLEGIBLE]
- --------------------------------
<PAGE>
<PAGE>
CONSENT OF WEINICK SANDERS LEVENTHAL & CO., LLP
(INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS)
We consent to the use in Amendment No. 2 to the Registration Statement No.
333-47977 on Form SB-2 under the Securities Exchange Act of 1933 of our report
dated September 22, 1998 on the balance sheets of American ATM Corp. as at June
30, 1998 and 1997 and the related statements of operations, changes in
stockholders' equity and cash flows for the years ended June 30, 1998 and 1997,
and to the reference to our firm under the heading "Experts" in the Prospectus.
New York, N.Y.
October 9, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains information extracted from the Company's financial
statements as at and for the year ended June 30, 1998 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 171,958
<SECURITIES> 0
<RECEIVABLES> 16,818
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 202,627
<PP&E> 300,225
<DEPRECIATION> (85,899)
<TOTAL-ASSETS> 489,346
<CURRENT-LIABILITIES> 338,393
<BONDS> 110,000
<COMMON> 2,816
0
0
<OTHER-SE> 37,137
<TOTAL-LIABILITY-AND-EQUITY> 489,346
<SALES> 0
<TOTAL-REVENUES> 323,100
<CGS> 0
<TOTAL-COSTS> 443,014
<OTHER-EXPENSES> 504,820
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (18,921)
<INCOME-PRETAX> (623,417)
<INCOME-TAX> 3,000
<INCOME-CONTINUING> (626,417)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (626,417)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> 0
<PAGE>
