<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1998
REGISTRATION NO. 333-47977
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
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 JULY 10, 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 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.
The Warrants entitle the holders thereof to purchase common stock at a
price of $2.40 per share.
------------------------
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, 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
51 and operates 31 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>
<CAPTION>
<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.
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 for the nine month period ended March 31, 1998 (unaudited), the year
ended June 30, 1997 (audited) and from the Company's inception (March 11, 1996)
(unaudited), 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>
(UNAUDITED) (AUDITED)
FOR THE NINE FOR THE YEAR (UNAUDITED)
MONTHS ENDED ENDED FROM INCEPTION
MARCH 31, 1998 JUNE 30, 1997 (MARCH 11, 1996)
----------------- ------------- ----------------
<S> <C> <C> <C>
OPERATING DATA
Fee Income............................................. $ 233,498 $ 118,852 $ 352,350
Operating income (loss)................................ (301,993) (485,338) (809,587)
Provision (savings) for taxes.......................... (81,680) (180,383) (265,402)
Net income (loss) retained............................. (214,134) (282,141) (515,192)
Per common share.......................................
Net income (loss).................................
Basic........................................ (0.10) (0.15) (0.40)
Assuming Dilution............................ (0.04) (0.07) (0.09)
Number of common shares...........................
Basic........................................ 2,816,250 2,253,000 2,816,250
Assuming Dilution............................ 6,791,250 5,433,000 6,791,250
BALANCE SHEET DATA
Working capital........................................ $ (115,003) $ 160,689
Total assets........................................... 1,283,793 1,103,983
Current liabilities.................................... 669,451 250,825
Long term debt......................................... 0 0
Shareholder equity..................................... 614,342 853,158
</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).
DEVELOPMENT STAGE COMPANY
The Company was incorporated on March 11, 1996, has minimal operating
history and operating revenues and must be considered in its development stages
embarking upon a new business venture. Accordingly, the Company has no
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 start-up nature 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.
AUDITOR'S REPORT
With respect to the audited and unaudited financial statements appearing
elsewhere in this Prospectus, the Company's independent accountants have
requested that the Company include an explanatory paragraph in the Notes to the
Financial Statements which states that financial statements have been prepared
under the assumption that the Company will continue as a going concern.
Additionally, this paragraph indicates that, absent access to additional capital
such as that contemplated by this offering, there is some doubt about the
Company's ability to continue as a going concern. See the Company's financial
statements located elsewhere in this Prospectus.
CONTINUING AND SUBSTANTIAL LOSSES; WORKING CAPITAL DEFICIT
The Company reported net operating losses for the year ended June 30, 1997
of $485,338 and for the period from its inception on March 11, 1996 to June 30,
1997 of $507,594. The Company reported a net operating loss for the nine months
ended March 31, 1998 of $301,993. In addition, as of March 31, 1998, the Company
had a retained deficit in stockholders' equity of $515,192. For the year ending
June 30, 1998, 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.
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
6
<PAGE>
<PAGE>
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.'
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.
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 Market'sm'. However, no assurance can be given that it will be
able to satisfy the criteria for initial or continued quotation on
7
<PAGE>
<PAGE>
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 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
8
<PAGE>
<PAGE>
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.
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
<PAGE>
<PAGE>
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 March
31, 1998. The following table should be read in conjunction with the financial
statements and related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1998
--------------
<S> <C>
Total current liabilities......................................................................... $ 669,451
Long-term debt.................................................................................... 0
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: 10,000,000 shares authorized; 2,816,250 shares
issued and outstanding...................................................................... 2,816
Additional paid-in capital................................................................... 1,126,718
Retained earnings (deficit).................................................................. (515,192)
--------------
Total capitalization.................................................................... $ 614,342
--------------
--------------
</TABLE>
10
<PAGE>
<PAGE>
DILUTION
Shareholders' equity in the Company at March 31, 1998 was approximately
$614,342, or $0.10 per share (on a fully diluted basis). Shareholders' equity is
determined by dividing the net worth of the Company (total assets less
liabilities), by the number of shares of Common Stock deemed to be outstanding
on such date. After giving effect to the conversion in full of all of the
Warrants (and the corresponding sale of the Shares being offered hereby) and the
receipt by the Company of the net proceeds therefrom, the pro forma
shareholders' equity of the Company at March 31, 1998, would have been
approximately $9,074,342 or $1.34 per share. This represents an immediate
dilution to the converting Warrant holders of $1.06 per share (44.16%). Dilution
is determined by subtracting pro forma shareholders' equity per share after the
conversion from the conversion price per share.
The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Shareholder Equity -- Before Conversion.................................. $ 614,342
Shareholder Equity -- After Conversion................................... 9,074,342
Increase............................................................ 8,460,000
Outstanding Shares -- Before Conversion.................................. 2,816,250
Outstanding Shares -- After Conversion................................... 6,378,750
Increase............................................................ 3,562,500
Fully Diluted Shares -- Before Conversion................................ 6,791,250
Fully Diluted Shares -- After Conversion................................. 6,791,250
Increase............................................................ 0
Equity per Share -- Before Warrant Conversions........................... .22
Equity per Share -- After Warrant Conversions............................ 1.42
Warrant Conversion Price................................................. 2.40
Dilution per Share....................................................... (.98)
Percent Dilution......................................................... 40.83%
Fully Diluted Equity per Share -- Before Conversion...................... 0.09
Fully Diluted Equity per Share -- After Conversion....................... 1.34
Warrant Conversion Price................................................. 2.40
Dilution per Share....................................................... (1.06)
Percentage Dilution...................................................... 44.16%
</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
<PAGE>
<PAGE>
SELECTED HISTORICAL AND FINANCIAL DATA
The following table sets forth summary historical financial data for the
Company for the six month period ended March 31, 1998 (unaudited), the year
ended June 30, 1997 (audited) and from the Company's inception March 11, 1996
(unaudited), 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>
UNAUDITED
FOR THE NINE AUDITED UNAUDITED
MONTHS ENDED FOR THE YEAR ENDED FROM INCEPTION
MARCH 31, 1998 JUNE 30, 1997 (MARCH 11, 1996)
-------------- ------------------ ----------------
<S> <C> <C> <C>
Operating Data
Net income.......................................... $ 233,498 $ 118,852 $ 352,350
Operating income (loss)............................. (301,993) (485,338) (809,587)
Provision (Savings) for taxes....................... (81,680) (180,383) (265,402)
Net income (loss) retained.......................... (214,134) (282,141) (515,192)
Per Common Share
Net Income (Loss)
Basic..................................... (0.10) (0.15) (0.40)
Assuming Dilution......................... (0.04) (0.07) (0.09)
Number of common shares
Basic..................................... 2,816,250 2,253,000 2,816,250
Assuming Dilution......................... 6,791,250 5,433,000 6,791,250
Balance Sheet Data
Working capital..................................... (115,003) 411,514
Total assets........................................ 1,283,793 1,103,983
Current liabilities................................. 669,451 250,825
Long term debt...................................... 0 0
Shareholder equity.................................. 614,342 853,158
</TABLE>
12
<PAGE>
<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 Condition 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 75 ATMs in
operation by the end of fiscal 1998 with an additional 150 ATMs in operation by
the end of fiscal 1999. 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 52 of these locations to
date and expects to sign at least an additional 23 before December 31, 1998. Of
these 52 locations, the Company currently has 31 machines installed and
operating. Generally, the Company has more machines signed than actually
installed and operating because it is always in the process of changing machine
locations in an ongoing effort to optimize usage. The Company has non-binding
agreements with suppliers for additional machines.
NINE MONTHS ENDED MARCH 31, 1998
Fee Income
For the nine months ended March 31, 1998, the Company had gross income of
$233,498, compared with $118,852 for the year ended June 30, 1997. The increase
was the result of having more equipment in place and all installed equipment
beginning to generate fee income.
Operating Expenses
For the nine months ended March 31, 1998, the Company had total operating
expenses of $240,237, compared with $234,382 for the year ended June 30, 1997.
The increase resulted from expanded operations and new installations.
Net Operating (Loss)
For the nine months ended March 31, 1998, the Company had a net operating
loss of $301,993, compared with $485,338 for the year ended June 30, 1997. The
increase was due to the repositioning of equipment to potentially more
profitable locations and changes to income resulting from the write-down of
previously capitalized location costs.
13
<PAGE>
<PAGE>
YEAR ENDED JUNE 30, 1997
Fee Income
For the fiscal year ended June 30, 1997, the Company had a gross income of
$118,852. The Company is still in its development stage and has received minimal
income from the use of its machines to date. The Company completed the
installation of its first machines in September 1996.
Operating Expenses
During the fiscal year ended June 30, 1997, the Company had total operating
expenses of $234,382. During the period from its inception through June 30, 1997
total operating expenses were $255,411. At this time, the remainder of the
expenses of the Company were for the acquisition of sites and testing of
equipment connected with the start of the Company. At full operation of the
first group of machines, minimal additional personnel will be required as the
Company presently outsources installation, repair and maintenance services at
this time. Additional expenses will include the transaction lease costs for the
sites, insurance costs, telephone costs, interconnect fees, maintenance and fit
cash fulfillment fees.
Net Operating (Loss)
During the fiscal year ended June 30, 1997, the Company had a net operating
loss after taxes of $(282,141). During the period from inception through June
30, 1997, the Company's losses were $(301,058). The investment in establishing a
location and installing equipment requires expenditures that will exceed short
term income generated from a site. Each location is expected to become
profitable as a result of the customer's continued dependence on the convenience
of obtaining cash on demand. There can be no assurance, however, as to the
profitability of any particular location.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended December 31, 1997 the Company received $150,802
from operating activities.
During the year ended June 30, 1997 the Company used $266,865 in working
capital and spent $563,210 on equipment to establish itself and its operations
as detailed in the attached financial statements. During the same period, the
Company raised $819,216 in equity through an offering of its securities and
arranged for a restricted line of credit for up to $1 million. The line of
credit is 'restricted' in that it is used solely for providing 'fit cash' for
operation of the ATM machines. The funds provided are not part of the Company's
general funds but are in a close secure loop between the bank and the Company.
The money used in the machines remains the property of the bank at all times,
and the Company never takes possession of it. The restricted line is settled on
a daily basis. At any time during the day, the bank could conceivably, through
Loomis, Fargo, take money out of a machine to satisfy the line, although it has
never done so and would not in the ordinary course of business.
The Company believes that if the Warrants are exercised, of which there can
be no assurance, the net proceeds from the exercise of the Warrants together
with the prior equity raised, its restricted line of credit and its anticipated
cash from operating activities it will be in a position to fully finance its
planned operations and expansion. In the event the Warrants are not exercised,
the Company will require additional financing in the future.
BUSINESS
GENERAL
The Company, a development stage corporation, 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 52 ATMs, 31
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
14
<PAGE>
<PAGE>
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.
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
15
<PAGE>
<PAGE>
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 American Security Bank, at a rate of prime plus 2%. 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.
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.
16
<PAGE>
<PAGE>
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.
17
<PAGE>
<PAGE>
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.
18
<PAGE>
<PAGE>
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.
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 750,000 (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, 330,000 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,
Chairman and Chief Executive 1997 $48,000 250,000
Officer............................ 1996 -- -- -- -- --
</TABLE>
19
<PAGE>
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
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 $19,425
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 $1.00 on the grant date, an exercise price between $1.00 and
$1.10 per share, a three-year option term, expected volatility of 200%, no
expected dividends and risk-free interest rates of 10%.
AGGREGATED OPTION EXERCISES AND HOLDINGS
No options issued by the Company were exercisable in fiscal 1997. 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/ -- --
Carmen Panizzi................................... -- -- 37,500/ -- --
Wayne Kight...................................... -- -- 25,000/ -- --
Norman Shapiro................................... -- -- 25,000/ -- --
Barry Haberman................................... -- -- 25,000/ -- --
Sondra Parker.................................... -- -- 25,000/ -- --
Frank Falco...................................... -- -- 25,000/ -- --
</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>
20
<PAGE>
<PAGE>
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 conditions then
existing, including, without limitation, the Company's financial condition,
capital requirements and business conditions.
As of July 8, 1998 there were 45 record holders of the Company's Common
Stock and 11 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. This Prospectus relates to the sale of such Shares to the holders of
the Warrants.
The Company will bear all of the expenses of registration of the Shares
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 payments such holders
may be required to make in respect thereof.
21
<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 a prior Offering, the Company sold Warrants to purchase 2,500,000 shares
of Common Stock, and the Company has also issued Warrants to purchase 1,062,500
shares of common stock in exchange for independent public relations services to
the Company. 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.
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
22
<PAGE>
<PAGE>
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 from March 11, 1996 (inception) to
the year ended June 30, 1997, appearing in this Prospectus have been prepared by
Jeffrey M. Moritz, C.P.A., independent auditor, as set forth in his 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.
23
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report............................................................................... F-2
Audited Financial Statements
Balance Sheet as of June 30, 1997..................................................................... F-3
Statement of Operations for the Year Ended June 30, 1997.............................................. F-4
Statement of Cash Flows for the Year Ended June 30, 1997.............................................. F-5
Statement of Shareholders' Equity..................................................................... F-6
Notes to Audited Financial Statements................................................................. F-7
Unaudited Financial Statements
Balance Sheet as of December 31, 1997................................................................. F-13
Statement of Operations for the Nine Months Ended March 31, 1998...................................... F-14
Statement of Cash Flows for the Nine Months Ended March 31, 1998...................................... F-15
Statement of Shareholders' Equity..................................................................... F-16
Notes to Unaudited Financial Statements............................................................... F-17
</TABLE>
F-1
<PAGE>
<PAGE>
JEFFREY M. MORITZ Thirty-Three Bassett Lane, 2nd Floor
Certified Public Accountant Hyannis, MA 02601
(508) 771-6500
Fax (508) 771-1119
E-mail: [email protected]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
To The Board of Directors
AMERICAN ATM CORP.
I have audited the accompanying balance sheet of American ATM Corp. (A
Development Stage Company) as of June 30, 1997 and the related statement of
income, cash flows and shareholders' equity for the year then ended. These
financial statements are the responsibility of the company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing
standards as applied to development stage companies. Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. Those standards also
require that the financial statements are prepared under the assumption that the
company will continue as a going concern (see Note 1). 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 as well as evaluating the overall financial statement
presentation. I believe my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American ATM Corp. (A
Development Stage Company) as of June 30, 1997 and the results of its operations
and cash flows for the period then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has sustained losses
during its short operating history and is subject to common risks including the
successful marketing of its current services, dependence on key individuals,
competition from substitute or larger companies, and the need to obtain the
necessary funds to sustain operations. These conditions raise doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Hyannis, Massachusetts
July 26, 1997
F-2
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
1997 1996
---------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Equivalents............................................................... $ 259,143 $163,001
Note Receivable.................................................................... 125,200 --
Subscriptions Receivable........................................................... -- 107,000
Accounts Receivable (Note 1)....................................................... 1,406 --
Accrued Interest Receivable (Note 4)............................................... 14,808 --
Advances Receivable................................................................ 2,801 --
Inventory.......................................................................... 2,500 --
Prepaid Expenses................................................................... 5,656 34,890
---------- --------
Total Current Assets.......................................................... 411,514 304,891
---------- --------
PROPERTY AND EQUIPMENT (Note 1).........................................................
Furniture and Equipment............................................................ 528,312 12,200
Capitalized Site Acquisition Costs................................................. 37,655 --
Software........................................................................... 9,443 --
Leasehold Improvements............................................................. 830 830
Less: Accumulated Depreciation..................................................... (69,780) (277)
---------- --------
Net Property and Equipment......................................................... 506,459 12,753
---------- --------
OTHER ASSETS............................................................................
Deferred Income Tax Benefit (Note 1)............................................... 183,722 3,339
Other Intangibles.................................................................. 2,288 2,365
---------- --------
Total Other Assets............................................................ 186,010 5,704
---------- --------
Total Assets............................................................. $1,103,983 $323,348
---------- --------
---------- --------
LIABILITIES AND EQUITY
CURRENT LIABILITIES.....................................................................
Notes and Advances Payable (Note 4)................................................ $ 230,470 $ --
Accounts Payable and Accrued Expenses.............................................. 17,671 6,157
Taxes Payable...................................................................... 2,685 1,108
---------- --------
Total Current Liabilities..................................................... 250,825 7,265
---------- --------
SHAREHOLDERS' EQUITY (Notes 2 and 6)....................................................
Capital Stock -- Preferred Authorized: 100,000 Shares at Par $10.00 Issued: 0
shares............................................................................ 0 0
Capital Stock -- Common Authorized: 10,000,000 Shares at Par $.001 Issued:
2,253,000 shares.................................................................. 2,253 1,543
Paid in Capital.................................................................... 1,151,963 333,457
Retained Earnings (Deficit)........................................................ (301,058) (18,917)
---------- --------
Total Shareholders' Equity.................................................... 853,158 316,083
---------- --------
Total Liabilities and Equity............................................. $1,103,983 $323,348
---------- --------
---------- --------
</TABLE>
The attached notes are an integral part hereof.
F-3
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
CUMULATIVE
FOR THE FROM
YEAR ENDED INCEPTION
JUNE 30, (MARCH 11,
1997 1996)
----------- -----------
<S> <C> <C>
FEE INCOME (Note 1)................................................................. $ 118,852 $ 118,852
DIRECT COSTS
ATM Location Costs............................................................. 301,561 302,621
Deposit Finance Charges (Note 6)............................................... 68,247 68,414
----------- -----------
Total Direct Costs........................................................... 369,808 371,035
----------- -----------
GROSS (LOSS)........................................................................ (250,956) (252,183)
----------- -----------
OPERATING EXPENSES
Payroll Related Expenses....................................................... 14,689 84,797
Salaries....................................................................... 81,497 15,485
Advertising.................................................................... 6,756 7,606
Insurance...................................................................... 11,234 11,374
Professional Fees.............................................................. 20,396 24,926
Consulting Fees................................................................ 12,000 17,000
Travel Expenses................................................................ 18,078 18,387
Rent........................................................................... 7,642 9,832
Utilities...................................................................... 26,568 28,550
Depreciation and Amortization.................................................. 11,475 11,771
Office Expenses................................................................ 18,154 19,495
Miscellaneous Expenses......................................................... 5,893 6,188
----------- -----------
Total Operating Expenses.................................................. 234,382 255,411
----------- -----------
NET OPERATING (LOSS)................................................................ (485,338) (507,594)
OTHER INCOME
Investment Interest Income..................................................... 22,814 22,814
----------- -----------
NET (LOSS) BEFORE PROVISION FOR TAXES............................................... (462,524 (484,780)
INCOME TAX BENEFIT (NOTE 2)......................................................... (180,383) (183,722)
----------- -----------
NET (LOSS) RETAINED................................................................. $ (282,141) $ (301,058)
----------- -----------
----------- -----------
PER COMMON SHARE
Net (Loss)
Primary.............................................................. (0.15) (0.24)
Fully Diluted........................................................ (0.07) (0.11)
Average Number of Common Shares................................................ 1,898,000 1,276,500
Fully Diluted.................................................................. 3,813,000 2,691,500
</TABLE>
The attached notes are an integral part hereof.
F-4
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
CUMULATIVE
FROM
FOR THE YEAR ENDED INCEPTION
JUNE 30, 1997 (MARCH 11, 1996)
------------------ ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) from Development Stage Operations.......................... (282,141) (301,058)
------------------ ----------------
Adjustments to Reconcile Net (Loss) to Net Cash Used by Operating
Activities..........................................................
Fixed Asset Depreciation and Amortization........................ 69,503 69,780
Change In Receivables............................................ (144,215) (144,215)
Change In Other Current Assets................................... 26,733 (8,156)
Change In Other Assets........................................... 77 (2,288)
Change In Notes and Advances Payable............................. 230,470 230,470
Change In Accounts Payable....................................... 11,514 17,671
Change In Other Current Liabilities.............................. 1,577 2,685
Change In Deferred Tax Benefit................................... (180,383) (183,722)
------------------ ----------------
Total Adjustments........................................... 15,276 (17,775)
------------------ ----------------
Net Cash Provided (Used) by Operating Activities...................... (266,865) (318,833)
CASH FLOWS FROM INVESTMENTS ACTIVITIES
Investment in Fixed Assets............................................ (563,210) (576,240)
------------------ ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of Common Stock.................................................. 819,216 1,154,216
Change in Subscriptions Receivable.................................... 107,000 0
------------------ ----------------
Net Cash from Financing Activities.................................... 926,216 1,154,216
------------------ ----------------
NET (DECREASE) IN CASH..................................................... 96,141 259,143
------------------ ----------------
------------------ ----------------
</TABLE>
The attached notes are an integral part hereof.
F-5
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (MARCH 11, 1996) TO JUNE 30, 1997
<TABLE>
<CAPTION>
$10 PREFERRED
$.001 COMMON STOCK STOCK TOTAL
------------------ OPTIONS/ --------------- PAID-IN RETAINED SHAREHOLDERS'
SHARES AMOUNT WARRANTS SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ------ ----------- ------ ------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance -- March 11, 1996 (Inception).... -- -- -- -- -- -- --
Sale of Organizers Stock............ 300,000 $ 300 $ 14,700 $ 15,000
Sales of Founders Shares to Private
Investors......................... 458,000 458 51,542 240,000
Sales of Shares to Private
Investors......................... 295,000 295 1,000,000 239,705 240,000
Securities Offering under Rule 504
Regulation D...................... 490,000 490 27,510 28,000
Net Loss to June 30, 1996........... $ (18,917) (18,917)
--------- ------ ----------- - -- ---------- --------- -------------
Balance -- June 30, 1996 1,543,000 1,543 1,000,000 0 0 333,457 (18,917) 316,083
--------- ------ ----------- - -- ---------- --------- -------------
Securities Offering under Rule 504
Regulation D...................... 650,000 650 2,000,000 638,566 639,216
Warrants Rescinded.................. (1,000,000)
Shares Issued in Exchange for
Equipment Leases (Note 6)......... 60,000 60 179,940 180,000
Options Issued as Part of Executive
and Director Compensation (Note
2)................................ 300,000
Options Issued as Part of Employee
Compensation...................... 30,000
Warrants Issued for Use by the Board
of Directors...................... 500,000
Net Loss to June 30, 1997........... (282,141)
--------- ------ ----------- - -- ---------- --------- -------------
Balance -- June 30, 1997................. 2,253,000 2,253 2,830,000 0 $0 $1,151,963 $(301,058) $ 1,135,299
--------- ------ ----------- - -- ---------- --------- -------------
--------- ------ ----------- - -- ---------- --------- -------------
</TABLE>
The attached notes are an integral part hereof.
F-6
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated in the State of Florida on March 11, 1996 and
commenced business on May 1,1996. The Company is an independent owner and
operator of automatic teller machines (ATM's) which provide individuals with
credit or debit cards the ability to obtain on the spot cash from their bank
accounts. These machines are located in high traffic and convenience locations.
DEVELOPMENT STAGE OPERATIONS
The Company has a short operating history and is considered in a
development stage. The Company is subject to risks common to companies in
similar stages of development. Principal among these risks are the successful
marketing of its current services, dependence on key individuals, competition
from substitute or larger companies, and the need to obtain the necessary funds
to sustain operations. Absent the continued growth in revenues from its current
services or access to those necessary funds to sustain the development stage,
there is doubt as to the ability of the company to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
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 or 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.
CONCENTRATION OF RISK
The fee income from the use of 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.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Repairs and 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.
Capitalized site acquisition costs represent the initial cost of obtaining
the leased space for each machine including the prepaid contract commissions to
the sales agents. In as much as each location is signed and the expenses paid
prior to the installation of the machine, the amortization of those costs are
deferred until the machine is on location. The term for amortization is
estimated to be two years as management has determined that to be the average
historical life of the site contracts.
The cost of these assets is charged against income using the straight-line
or declining balance method of depreciation. The estimated useful lives of
property and equipment are as follows:
The attached financial statements are an integral part hereof.
F-7
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997
<TABLE>
<S> <C>
Machinery and Equipment.............................. 7 Years
Furniture and Equipment.............................. 5 Years
Organizational Expenses.............................. 5 Years
Capitalized Site Acquisition Costs................... 2 Years
</TABLE>
INCOME TAX
The Company records deferred income taxes as the difference between book
and tax depreciation and all other temporary book and tax differences in
accordance with Statement of Accounting Standards No. 109 (Accounting for Income
Taxes). Deferred Taxes (Tax Benefits) are also recognized for operating losses
and tax credits that are available to offset future taxable income.
The Company has recorded deferred tax benefits of $183,722 reflecting the
benefit of $484,778 in tax loss carry forwards which expire in varying amounts
in 2011 and 2012. The realization of this tax benefit is dependent on generating
sufficient taxable income prior to the expiration of the loss carry forwards.
Although realization is not assured, management believes it is more likely than
not that all of the deferred tax asset will be realized. The amount of the tax
benefit could be reduced in the near term if estimates of future taxable income
during the carry forward period are reduced.
NOTE 2: SHAREHOLDERS' EQUITY
As of June 30, 1997, the company provided for two classes of stock as
follows:
10 Million Common Shares at a Par Value of $.001
100,000 Preferred Shares at a Par Value of $10.00
At the statement date, the company had issued 2,253,000 shares of Common
Stock. The Company had issued no shares of Preferred Stock (See Statement of
Shareholder Equity and Note 6)
The Company established a Director and Officer Stock Option Compensation
Plan on March 21, 1997. Under that plan, each member of the Board of Directors,
other than the President, receives options to purchase 10,000 restricted sale
shares for each year of service to the company, or part thereof, at 100% of
market price at the option issue date with an initial option price of $1.00.
These options expire after four years. The President receives options to
purchase 100,000 restricted sale shares for each year of service to the Company,
or part thereof, at 110% of market price at the option issue date with an
initial option price of $1.10. These options expire after three years.
The Company has issued options and warrants to purchase additional shares
of Common Stock as follows:
The attached financial statements are an integral part hereof.
F-8
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
DESCRIPTION NUMBER TERMS
- ------------------------------------ --------- ----------------------------------------------------
<S> <C> <C>
Issued as part of the public
offering.......................... 2,000,000 As part of an Offered Unit (See Note 6) One (1)
warrant for the right to purchase One (1) share at
$3.00.
Issued as part of the President's
stock option compensation plan.... 200,000 Issued at 110% of market price, currently stipulated
as $1.10 per share to expire in three years.
Issued as part of the Officers and
Director's stock option
compensation plan................. 130,000 Issued at 100% of market price, currently stipulated
as $1.00 per share to expire in four years.
Committed for public relations and
related services rendered......... 850,000 Issued a right to purchase at $3.00 per share.
</TABLE>
In applying FASB Statement 123 'Accounting for Stock Based Compensation' in
accounting for its compensatory stock option plan, had compensation cost been
determined for the options issued consistent therewith, the Company's net income
(loss) retained and net income (loss) per share would have changed by the
difference between the option price and fair market value as calculated by the
Black-Scholes option pricing model. Assuming fair market value at the date of
the grant of $1.00, an exercise price of between $1.00 and $1.10, three year
life on the options, expected volatility of 200%, no expected dividends and risk
free interest rates of 10%, the Company would have recorded compensation expense
totalling $18,697 from the inception of the plan through June 30, 1997. As such,
pro-forma net loss per share would be as follows:
<TABLE>
<S> <C>
Net Loss as reported.................................................... (282,141)
Additional compensation................................................. 18,697
Adjusted Net Loss....................................................... (300,838)
Loss Per Share reported................................................. (.15)
Adjusted Loss Per Share................................................. (.16)
</TABLE>
No options or warrants had been exercised as of June 30, 1997.
NOTE 3: COMMITMENTS AND CONTINGENCIES
LEASES
The Company has entered into a non-cancelable lease for its office and
warehouse space for three years commencing June 10, 1996 and ending June 30,
1999. The Company's future minimum annual lease liability under this agreement
is as follows:
<TABLE>
<S> <C>
Second Year Ending June 30, 1998....................... 11,102
Third Year Ending June 30, 1999........................ 11,657
</TABLE>
In addition, the Company is obligated for common area and equipment
maintenance charges.
TRANSACTION REPORTING AND TRANSFER SYSTEM
The Company has entered into an agreement with a third-party provider that
renders electronic transaction reporting and transfer services. This represents
the single most important component of the
The attached financial statements are an integral part hereof.
F-9
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997
Company operating requirements as it enables the Company to process the
information and transactions at its ATM machines. It also provides for the
deposit of fees earned and cash withdrawn directly to the company's bank
accounts. Under the terms of the agreement fees for these services require the
payment of a one time setup fee at the time of installation and ongoing monthly
fees predicated on the overall number of transactions. The agreement is for an
initial period of one year and is self-renewing. It may be cancelled by either
side on 30 days' notice.
NATIONAL ACCESS SYSTEM
As part of its electronic transaction processing system, the Company has
entered into a licensing agreement with a national access system. The system
facilitates the ability of the ATM customer to obtain electronic funds transfer
without the requirement of using a bank dedicated ATM system. The Company
receives revenue from the use of this system predicated on the number of access
transactions.
SITE LOCATION LEASES
The Company has contracted with site sales and placement agencies which
solicit and lease locations for automatic teller machines for a fee. Upon
acceptance by the Company of the location, the leases are assigned to the
Company by the agency for a one time fee. The term of the leases are generally
five (5) years and provide for a per transaction rental fee.
NOTE 4: ATM MACHINE FIT CASH FINANCING
The Company has contracted with an independent funding company to provide
the machine cash needs for its ATM locations for five years. The funding source
has agreed to furnish a minimum of $350,000 and a maximum of $1 Million for this
purpose. Under the terms of the agreement, the Company is obligated to pay
substantially all of the carrying expenses of the funds committed by the source
which includes twelve percent interest on the committed amount and the opening
overhead for wire transfer fees and bank charges incident to the Company
activities with the source. In addition, the Company contributes $1,000 monthly
toward other operating expenses. The Company has the right to offset the
interest charges with any interest or investment income earned by the unused
portion of the commitment. The annual minimum and maximum costs for this
arrangement are $43,000 and $121,000 respectively. The amount of interest
charges earned by the Company on the unused portion of the commitment was $1,986
for the year ended June 30, 1997.
NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is the amount at which an asset or
obligation could be exchanged in a current transaction between willing parties,
other than in a forced liquidation. Fair value estimates are made at a specific
point in time based on the type of facial instrument and relevant market
information.
Because no quoted market price exists for a significant portion of these
financial instruments, the fair values are derived based on management's best
judgment with respect to current economic conditions. Many of the estimates
involve uncertainties and matters of significant judgment and cannot be
determined with precision.
The fair value information provided is indicative of the estimated fair
values of the financial instruments and should not be interpreted as an estimate
of the value of the Company taken as a whole.
The attached financial statements are an integral part hereof.
F-10
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO AUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
CARRYING VALUE FAIR VALUE
-------------- ----------
<S> <C> <C>
Financial Assets:
Cash and Equivalents........................................ $259,143 $259,143
Accounts Receivable......................................... 144,215 144,215
Other Receivables........................................... 8,156 8,156
Financial Liabilities:
Accounts Payable............................................ 20,356 20,356
Short Term Debt............................................. 230,470 230,470
Long Term Debt.............................................. 0 0
</TABLE>
NOTE 6: PUBLIC OFFERING AND OTHER COMMON STOCK ISSUINGS
PUBLIC OFFERING
The Company completed its public offering under Regulation D Rule 504 of
the Securities Act of 1933 (as amended) to raise additional working capital of
$1,000,000. This effort included the sale of 700,000 of Common Stock and
2,000,000 Common Stock Purchase Warrants with purchase rights at $3.00 per
share. The Company has retained counsel to prepare and file a Registration
Statement with the Securities and Exchange Commission to register the shares
underlying the purchase warrants. The fees are expected to be approximately
$90,000. As at June 30, 1997 the fees incurred amounted to $30,284 and had been
charged to Paid In Capital.
CAPITALIZED LEASES
On July 15, 1996 the Company entered into lease finance arrangements with a
primary vendor of equipment for automatic teller machines. The terms of the
financing called for a $2,000 down payment, sixty monthly payments of $350 per
machine principal and interest plus sales tax. The Company's future minimum
annual liability under this agreement would have been:
<TABLE>
<S> <C>
Year Ending June 30, 1997................................................ $33,390
Year Ending June 30, 1998................................................ 44,520
Year Ending June 30, 1999................................................ 44,520
Year Ending June 30, 2000................................................ 44,520
Year Ending June 30, 2001................................................ 44,520
Thereafter............................................................... 11,130
</TABLE>
On January 23, 1997 the Company entered into an agreement and subsequently
liquidated the obligations under the leases and purchased the machines for a
single payment of 60,000 shares of Common Stock. The transaction was valued at
$180,000.
The attached financial statements are an integral part hereof.
F-11
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-12
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED BALANCE SHEET
AS OF MARCH 31, 1998
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and Equivalents........................................................................... $ 497,247
Note and Advances Receivable................................................................... 3,401
Accounts Receivable (Notes 1).................................................................. 20,193
Accrued Interest Receivable.................................................................... 18,616
Inventory...................................................................................... 2,500
Prepaid Expenses............................................................................... 12,491
----------
Total Current Assets...................................................................... $ 554,448
PROPERTY AND EQUIPMENT (Note 1)
Furniture and Equipment........................................................................ 549,202
Capitalized Site Acquisition Costs............................................................. 43,623
Software....................................................................................... 10,693
Leasehold Improvements......................................................................... 830
Less: Accumulated Depreciation................................................................. (142,635)
----------
Net Property and Equipment................................................................ 461,713
OTHER ASSETS
Deferred Income Tax Benefit (Note 1)........................................................... 265,402
Other Intangibles.............................................................................. 2,230
----------
Total Other Assets........................................................................ 267,632
----------
Total Assets......................................................................... $1,283,793
----------
----------
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Notes and Advances Payable (Note 2)............................................................ 649,000
Accounts Payable and Accrued Expenses.......................................................... 18,593
Taxes Payable.................................................................................. 1,858
----------
Total Current Liabilities................................................................. 669,451
SHAREHOLDERS' EQUITY (Notes 3, 7 and 9)
Capital Stock -- Preferred Authorized: 100,000 Shares at Par $10.00
Issued: 0 Shares.................................................. 0
Capital Stock -- Common Authorized: 10,000,000 Shares at Par $.001
Issued: 2,816,250 Shares.......................................... 2,816
Paid in Capital................................................................................ 1,126,718
Retained (Deficit)............................................................................. (515,192)
----------
Total Shareholders' Equity................................................................ 614,342
----------
Total Liabilities and Equity......................................................... $1,283,793
----------
----------
</TABLE>
The attached notes are an integral part hereof.
F-13
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
FOR THE CUMULATIVE
NINE MONTHS ENDED FROM INCEPTION
MARCH 31, 1998 (MARCH 11, 1996)
----------------- ----------------
<S> <C> <C>
FEE INCOME (Note 1)............................................. $ 233,498 $ 352,350
DIRECT COSTS
ATM Location Costs......................................... $ 252,461 555,082
Deposit Finance Charges (Note 5)........................... 42,793 111,207
--------- ----------
Total Direct Costs.................................... 295,254 666,289
--------- ----------
GROSS LOSS AFTER DIRECT COSTS................................... (61,756) (313,939)
--------- ----------
OPERATING EXPENSES
Salaries................................................... 60,824 145,621
Payroll Related Expenses................................... 9,006 24,491
Advertising................................................ 602 8,208
Insurance.................................................. 13,030 24,404
Professional Fees.......................................... 20,012 44,938
Consulting Fees............................................ 17,000 34,000
Travel Expenses............................................ 7,018 25,405
Rent....................................................... 11,487 21,319
Utilities.................................................. 1,207 29,757
Depreciation and Amortization.............................. 73,597 85,368
Office Expenses............................................ 20,255 39,750
Miscellaneous Expenses..................................... 6,199 12,387
--------- ----------
Total Operating Expenses.............................. 240,237 495,648
--------- ----------
NET OPERATING LOSS.............................................. (301,993) (809,587)
OTHER INCOME
Investment Interest Income................................. 6,179 28,993
--------- ----------
NET LOSS -- BEFORE PROVISION FOR TAXES.......................... (295,814) (780,594)
INCOME TAX BENEFIT (Note 1)..................................... (81,680) (265,402)
--------- ----------
NET LOSS -- RETAINED............................................ $(214,134) $ (515,192)
--------- ----------
--------- ----------
LOSS PER SHARE (Note 8)
Basic...................................................... (0.10) (0.40)
Assuming Dilution.......................................... (0.04) (0.09)
</TABLE>
The attached notes are an integral part hereof.
F-14
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
FOR THE CUMULATIVE
NINE MONTHS ENDED FROM INCEPTION
MARCH 31, 1998 (MARCH 11, 1996)
----------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss from Development Stage
Operations................................ $(214,134) $ (515,192)
----------------
Adjustments to Reconcile Net Loss to Net
Cash Provided by Operating Activities
Fixed Asset Depreciation and
Amortization......................... $ 72,855 142,635
Change in Notes, Advances and Accounts
Receivable........................... 102,005 (42,210)
Change in Other Current Assets........ (6,835) (14,991)
Change in Other Assets................ 58 (2,230)
Change in Notes and Advances
Payable.............................. 418,530 649,000
Change in Accounts Payable............ 922 18,593
Change in Other Current Liabilities... (827) 1,858
Change in Deferred Tax Benefit........ (81,680) (265,402)
----------------- ----------------
Total adjustments................ 505,028 487,253
----------------- ----------------
Net Cash Provided (Used) by Operating
Activities................................ 290,894 (27,939)
CASH FLOWS FROM INVESTMENT ACTIVITIES
Investment in Fixed Assets................. (28,108) (604,348)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of Common Stock (Net of Costs)........ (25,245) 1,128,971
----------------- ----------------
NET INCREASE (DECREASE) IN CASH................. $ 237,541 $ 496,684
----------------- ----------------
----------------- ----------------
</TABLE>
The attached notes are an integral part hereof.
F-15
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (MARCH 11, 1996) TO MARCH 31, 1998
(SEE NOTE 3)
<TABLE>
<CAPTION>
$.001 COMMON STOCK $10 PREFERRED
------------------------------- STOCK TOTAL
OPTIONS/ --------------- PAID-IN RETAINED SHAREHOLDERS'
SHARES AMOUNT WARRANTS SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ------ ---------- ------ ------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE -- MARCH 11, 1996
(INCEPTION)...................... -- -- -- -- -- -- --
Sale of Organizers Stock...... 300,000 $ 300 $ 14,700 $ 15,000
Sales of Founders Shares to
Private Investors........... 458,000 458 51,542 52,000
Sales of Shares to Private
Investors................... 295,000 295 1,000,000 239,705 240,000
Securities Offering under Rule
504 Regulation D............ 490,000 490 27,510 28,000
Net Loss to June 30, 1996..... $ (18,917) (18,917)
--------- ------ ---------- -- -- ---------- --------- -------------
BALANCE -- JUNE 30, 1996........... 1,543,000 1,543 1,000,000 0 0 333,457 (18,917) 316,083
--------- ------ ---------- -- -- ---------- --------- -------------
Securities Offering under Rule
504 Regulation D............ 650,000 650 2,000,000 638,566 639,216
Warrants Rescinded............ (1,000,000)
Shares Issued in Exchange for
Equipment Leases (Note 7)... 60,000 60 179,940 180,000
Options Issued as Part of
Executive and Director
Compensation (Note 3)....... 300,000
Options Issued as Part of
Employee Compensation (Note
3).......................... 30,000
Warrants Issued for Use by the
Board of Directors (Note
3).......................... 850,000
Net Loss to June 30, 1997..... (282,141) (282,141)
--------- ------ ---------- -- -- ---------- --------- -------------
BALANCE -- JUNE 30, 1997........... 2,253,000 2,253 3,180,000 0 0 1,151,963 (301,058) 853,158
--------- ------ ---------- -- -- ---------- --------- -------------
5 for 4 Forward Stock Split... 563,250 563 795,000 (563)
Prepaid SB-2 Registration
Costs....................... (24,682) (24,682)
Net Loss to March 31, 1998.... (214,134) (214,134)
--------- ------ ---------- -- -- ---------- --------- -------------
BALANCE -- MARCH 31, 1998.......... 2,816,250 $2,816 3,975,000 0 0 $1,126,718 $(515,192) $ 614,342
--------- ------ ---------- -- -- ---------- --------- -------------
--------- ------ ---------- -- -- ---------- --------- -------------
</TABLE>
The attached notes are an integral part hereof.
F-16
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
AS OF MARCH 31, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated in the State of Florida on March 11, 1996 and
commenced business on May 1, 1996. The Company is an independent owner and
operator of automatic teller machines (ATM's) which provide individuals with
credit or debit cards the ability to obtain on the spot cash from their bank
accounts. These machines are located in high traffic and convenience locations.
Development Stage Operations:
The Company has a short operating history and is considered in a
development stage. The Company is subject to risks common to companies in
similar stages of development. Principal among these risks are the successful
marketing of its current services, dependence on key individuals, competition
from substitute or larger companies, and the need to obtain the necessary funds
to sustain operations. Absent the access to those necessary funds there is some
doubt as to the ability of the Company to continue as a going concern. The
financial satements do not include any adjustments that might result from the
outcome of this uncertainty.
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 or 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.
Concentration of Risk:
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.
Cash and Cash Equivalents:
The Company considers all highly-liquid, short-term investments with an
original maturity of three months or less to be cash equivalents.
The Company deposits the majority of its cash in two commercial banks
located in Florida and with a national brokerage firm. 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 cash equivalents.
Accounts Receivable:
As part of the agreement with one of the private lenders who provides ATM
fit cash, the Company has the right to an offset of the interest charged with
any interest or investment income earned by the unused portion of the
commitment. The lender is obligated, under the agreement, to invest the unused
The attached financial statements and accountants report are an integral part
hereof.
F-17
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF MARCH 31, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
portions in short term or overnight investments. At the statement date, the
balance in Accounts Receivable includes $22,850 of unpaid offset. (See Notes 5
and 9)
Property, Equipment and Capitalized Costs:
Property and equipment 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.
Capitalized site acquisition costs represent the initial cost of obtaining
the leased space for each machine including the prepaid contract commissions to
the sales agents. In as amuch as each location is signed and the expenses paid
prior to the installation of the machine, the amortization of those costs are
deferred until the machine is on location. The term for amortziation is
estimated to be two years as management has determined that to be the average
historical life of the sites.
The cost of these assets is charged against income using the straight-line
or declining balance method of depreciation. The estimated useful lives of
property and equipment are as follows:
<TABLE>
<S> <C>
Machinery and Equipment.................................................. 7 Years
Furniture and Equipment.................................................. 5 Years
Organizational Expenses.................................................. 5 Years
Capitalized Site Acquisition Costs....................................... 2 Years
</TABLE>
The Company has no current policy regarding the impairment of long lived
assets as no event or changes in circumstances indicate that the Company's
assets carrying values may not be recoverable.
Advertising:
The Company expenses advertisings incurred. For the six months ended March
31, 1998 advertising expense was $602.
Income Tax:
The Company records deferred income taxes as the difference between book
and tax depreciation and all other temporary book and tax differences in
accordance with Statement of Accounting Standards No. 109 (Accounting for Income
Taxes). Deferred Taxes (Tax Benefits) are also recognized for operating losses
and tax credits that are available to offset future taxable income.
The Company has recorded deferred tax benefits of $265,402 reflecting the
benefit of $780,594 in tax loss carry forwards which expire in varying amounts
in 2011 and 2013. The realization of this tax benefit is dependent on generating
sufficient taxable income prior to the expiration of the loss carry forwards.
Although realization is not assured, management believes it is more likely than
not that, as a result of the anticipated future earnings, all of the deferred
tax asset will be realized. The amount of the tax benefit could be reduced in
the near term if estimates of future taxable income during the carry forward
period are reduced.
The attached financial statements and accountants report are an integral part
hereof.
F-18
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF MARCH 31, 1998
NOTE 2: NOTES AND ADVANCES PAYABLE
The following notes and obligations were outstanding as at March 31, 1998:
<TABLE>
<S> <C>
Advances Payable -- Bank
Secured by specific Fit Cash balances located in the ATM machines..... $321,030
Advances Payable -- Private Lender
Secured by specific Fit Cash balances located in the ATM machines..... 17,970
Advances Payable -- Private Lenders
Secured by specific Fit Cash balances located in the ATM machines..... 260,000
Notes Payable -- Shareholder............................................ 50,000
--------
Total Note and Advances -- All Short Term.......................... $649,000
--------
--------
</TABLE>
NOTE 3: SHAREHOLDERS' EQUITY (See Note 9)
As of March 31, 1998, the Company provided for two classes of stock as
follows:
10 million Common Shares at a Par Value of $.001
100,000 Preferred Shares at a Par Value of $10.00
At the statement date, the Company had issued 2,816,250 shares of Common
Stock including those issued for the forward split of December 11, 1997 actually
delivered on January 5, 1998. Common shares are voting and dividends are paid at
the discretion of the Board of Directors. The Company had issued no shares of
Preferred Stock. (See Statement of Shareholder Equity)
The Company established a Director and Officer Stock Option Compensation
Plan on March 21, 1997. Under that plan, each member of the Board of Directors,
other than the President, receives options to purchase 10,000 restricted sale
shares for each year of service to the Company, or part thereof, at 100% of
market price at the option issue date with an initial option price of $1.00.
These options expire after four years. The President receives options to
purchase 100,000 restricted sale shares for each year of service to the Company,
or part thereof, at 110% of market price at the option issue date with an
initial option price of $1.10. These options expire after three years.
The Company has issued options and warrants to purchase additional shares
of Common Stock as follows (adjusted for the forward split of December 11,
1997):
<TABLE>
<CAPTION>
DESCRIPTION NUMBER TERMS
- --------------------------------------------- --------- -------------------------------------------
<S> <C> <C>
Issued as part of the public offering........ 2,500,000 As part of an Offered Unit (See Note 6) One
(1) warrant for the right to purchase One
(1) share at $2.40
Issued as part of the President's stock
option compensation plan................... 250,000 Issued at 110% of market price, currently
stipulated as $.88 per share to expire in
three years
Issued as part of the Officers and Director's
stock option compensation plan............. 162,500 Issued at 100% of market price, currently
stipulated as $.80 per share to expire in
four years
</TABLE>
The attached financial statements and accountants report are an integral part
hereof.
F-19
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF MARCH 31, 1998
NOTE 3: SHAREHOLDERS' EQUITY -- (CONTINUED)
In applying FASB Statement 123 'Accounting for Stock Based Compensation' in
accounting for its compensatory stock option plan, had compensation cost been
determined for the options issued consistent therewith, the Company's net income
(loss) retained and net income (loss) per share would have changed by the
difference between the option price and fair market value as calculated by the
Black-Scholes option pricing model. Assuming fair market value at the date of
the grant of $.80, an exercise price of between $.80 and $.88, three year life
on the options, expected volatility of 200%, no expected dividends and risk free
interest rates of 10%, the Company would have recorded compensation expense
totalling $18,697 from the inception of the plan through June 30, 1997 and an
additonal $48,076 through March 31, 1998. As such, pro-forma net loss per share
would be as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
JUNE 30, 1997 MARCH 31, 1998
------------- -----------------
<S> <C> <C>
Net Loss as reported................................................ (282,141) (214,134)
Additonal compensation.............................................. 18,697 48,076
Adjusted Net Loss................................................... (300,838) (262,210)
Loss Per Share reported............................................. (.15) (.08)
Adjusted Loss Per Share............................................. (.16) (.09)
</TABLE>
The Company has also reserved 1,062,500 warrants to purchase shares of
Common Stock at $2.40 per share to be used at the discretion of the Board of
Directors (adjusted for the forward split of December 11, 1997).
No options or warrants had been exercised as of December 31, 1997.
On December 11, 1997 the company completed a 5 for 4 forward stock split
issuing five shares for each four owned by shareholders of record on December
22, 1997. (See Note 9)
NOTE 4: COMMITMENTS AND CONTINGENCIES
Leases:
The Company has entered into a non-cancelable lease for its office and
warehouse space for three years commencing June 10, 1996 and ending June 30,
1999. The Company's future minimum annual lease liability under this agreement
is as follows:
<TABLE>
<S> <C>
Second Year Ending June 30, 1998........................................... 11,102
Third Year Ending June 30, 1999............................................ 11,657
</TABLE>
In addition, the Company is obligated for common area and equipment
maintenance charges.
Transaction Reporting and Transfer System:
The Company has entered into an agreement with a third-party provider that
renders electronic transaction reporting and transfer services. This represents
the single most important component of the Company's operating requirements as
it enables the Company to process the information and transactions at its ATM
machines. It also provides for the deposit of fees earned and cash withdrawn
directly to the Company's bank accounts. Under the terms of the agreement fees
for these services require the payment of a one time setup fee at the time of
installation and ongoing monthly fees predicated on the overall number of
transactions. The agreement is for an initial period of one year and is
self-renewing. It may be canceled by either side on 30 days notice.
The attached financial statements and accountants report are an integral part
hereof.
F-20
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF MARCH 31, 1998
National Access System:
As part of its electronic transaction processing system, the Company has
entered into a licensing agreement with a national access system. The system
facilitates the ability of the ATM customer to obtain electronic funds transfer
without the requirement of using a bank dedicated ATM system. The Company
receives revenue from the use of this system predicated on the number of access
transactions.
Site Location Leases:
The Company has contracted with site sales and placement agencies which
solicit and lease locations for automatic teller machines for a fee. Upon
acceptance by the Company of the location, the leases are assigned to the
Company by the agency for a one time fee. The term of the leases are generally
five (5) years and provide for a per transaction rental fee.
NOTE 5: ATM MACHINE FIT CASH FINANCING
The Company has contracted with an independent funding company to provide
some of the machine cash needs for its ATM locations for five years. The funding
source has agreed to furnish a minimum of $350,000 and a maximum of $1 million
for this purpose. Under the terms of the agreement, the Company is obligated to
pay substantially all of the carrying expenses of the funds committed by the
source which includes twelve percent interest on the committed amount and the
operating overhead for wire transfer fees and bank charges incident to the
Company's activities with the source. In addition, the Company contributes
$1,000 monthly toward other operating expenses. The Company has the right to
offset the interest charges with any interest or investment income earned by the
unused portion of the commitment. The annual minimum and maximum costs for this
arrangement are $54,000 and $132,000 respectively. (See Notes 1 and 9)
The Company has contracted with another private lender to provide
additional machine cash needs for its ATM locations. The funding source has
agreed to furnish a maximum of $260,000 of which $65,000 may also be used for
working capital. Under the terms of the agreement, the Company is obligated to
pay substantially all of the carrying expenses of the funds committed by the
source which includes ten percent interest on the committed amount and the
operating overhead for wire transfer fees and bank charges incident to the
Company's activities with the source. In addition, the Company contributes
$1,000 annually toward other operating expenses. The annual maximum costs for
this arrangement are $27,000.
In June of 1997, the Company also contracted with a financial institution
to provide some of the machine cash needs for its ATM locations. In an agreement
with the national access provider and the Company, the funding source has agreed
to furnish Fit Cash for machines in territories where the institution operates
up to a maximum of one hundred (100) machines or a total of up to $4 million.
The Company is obligated to pay interest at a floating rate of prime plus two
percent on the daily outstanding balance of the funds in the machines.
NOTE 6: FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is the amount at which an asset or
obligation could be exchanged in a current transaction between willing parties,
other than in a forced liquidation. Fair value estimates are made at a specific
point in time based on the type of financial instrument and relevant market
information.
The attached financial statements and accountants report are an integral part
hereof.
F-21
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF MARCH 31, 1998
Because no quoted market price exists for a significant portion of these
financial instruments, the fair values are derived based on management's best
judgment with respect to current economic conditions. Many of the estimates
involve uncertainties and matters of significant judgment and cannot be
determined with precision.
The fair value information provided is indicative of the estimated fair
values of the financial instruments and should not be interpreted as an estimate
of the value of the Company taken as a whole.
<TABLE>
<CAPTION>
CARRYING
VALUE FAIR VALUE
-------- ----------
<S> <C> <C>
Financial Assets:
Cash and Equivalents............................................. $497,297 $497,297
Accounts Receivable.............................................. 20,193 20,193
Financial Liabilities:
Accounts Payable................................................. 18,593 18,593
Short Term Debt.................................................. 669,451 669,451
Long Term Debt................................................... 0.00 0.00
</TABLE>
NOTE 7: PUBLIC OFFERING AND OTHER COMMON STOCK ISSUINGS
Public Offering:
The Company completed its public offering under Regulation D Rule 504 of
the Securities Act of 1933 (as amended) to raise additional working capital of
$1,000,000. This effort included the sale of 1,893,000 of Common Stock and
2,000,000 Common Stock Purchase Warrants with purchase rights at $3.00 per
share. These Warrants were adjusted for the forward split of December 11, 1997
to 2,500,000 Purchase Warrants at $2.40 per share. The Company has retained
counsel to prepare and file a Registration Statement with the Securities and
Exchange Commission to register the shares underlying the purchase warrants and
all other outstanding options.
Capitalized Leases:
On July 15, 1996 the Company entered into lease finance arrangements with a
primary vendor of equipment for automatic teller machines. The terms of the
financing called for a $2,000 down payment, sixty monthly payments of $350 per
machine principal and interest plus sales tax. The Company's future minimum
annual liability under this agreement would have been:
<TABLE>
<S> <C>
Year Ending June 30, 1997................................................ $33,390
Year Ending June 30, 1998................................................ 44,520
Year Ending June 30, 1999................................................ 44,520
Year Ending June 30, 2000................................................ 44,520
Year Ending June 30, 2001................................................ 44,520
Thereafter............................................................... 11,130
</TABLE>
On January 23, 1997 the Company entered into an agreement and subsequently
liquidated the obligations under the leases and purchased the machines for a
single payment of 60,000 shares of Common Stock. The transaction was valued at
$180,000.
The attached financial statements and accountants report are an integral part
hereof.
F-22
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF MARCH 31, 1998
NOTE 8: EARNINGS PER SHARE
A reconciliation of the numerators and denominators used in the
computations of basic and diluted earnings per share are as follows:
<TABLE>
<CAPTION>
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNTS
----------- ------------- ---------
<S> <C> <C> <C>
Net income (loss) retained................................... $(214,134)
Basic earnings per share
Income (loss) available to common shareholders.......... $(214,134) 2,816,250 $(.08)
Effect of Dilutive Securities
Warrants:
Issued with public offering........................ 2,500,000
Officers and directors............................. 412,500
Other.............................................. 1,062,500
-------------
Diluted earnings per share
Income (loss) available to common shareholders and
assumed conversions................................... $(214,134) 6,791,250 $(.03)
</TABLE>
NOTE 9: SUBSEQUENT EVENTS
Private Placement:
In December, the Company entered into an agreement to raise capital through
a private placement totaling $3,200,000 on a 'best efforts -- all or nothing'
basis. The offering provided for the sale of $2 million of Common Stock and $1.2
million of 6% Convertible Preferred Stock. The agreement called for an offshore
transaction in accordance with Regulation S of the Securities Act that permits
the sale only to 'accredited investors' as defined in the Act.
Under the terms of the agreement, the common shares will be issued at a
discount to the bid price at the time of the Offering but not less than $6 or
more than $10 per share. The preferred shares are issued at $100 per share and
are convertible into common shares at the same price per share as that of the
common at any time during the five year period commencing with their issuance.
The underwriting costs for the offering include a cash commission of 5% of
the gross proceeds from the offering plus common stock warrants for 10% of the
common shares issued and 10% of the shares of common necessary for the
convertible provisions of the preferred shares. They are exercisable at the same
price as the price of the common issued under the offering for up to five years
from the closing date. In addition to the above, the company has retained
counsel to prepare the necessary underlying documents.
The impact on the private placement on Earnings Per Common
Share -- Assuming Dilution and Net Book Value Per Share -- Assuming Dilution and
Conversion is as follows:
<TABLE>
<CAPTION>
BEFORE AFTER
------ ------
<S> <C> <C>
Earnings Per Common Share -- Assuming Dilution....................................... $(.020) $(.015)
Net Book Value Per Share -- Assuming Dilution and Conversion......................... $ 1.45 $ 1.89
</TABLE>
The purpose of this private placement is to provide needed cash reserves
for the acquisition of companies in industries which have been targeted by the
Board of Directors. As yet no agreement has been reached with any such
acquisition.
The attached financial statements and accountants report are an integral part
hereof.
F-23
<PAGE>
<PAGE>
AMERICAN ATM CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF MARCH 31, 1998
NOTE 9: SUBSEQUENT EVENTS -- (CONTINUED)
At the date of this financial statements no shares have been sold under
this agreement.
ATM Fit Cash Financing:
During January, the Company terminated its agreement with its initial cash
provider by transferring all of the machine balances to the financial
institution now providing a majority of the fit cash requirements and the
payment of those balances to the provider. At the statement date, the Company
and the provider were negotiating any final balance due and the final balance of
the interest cost offset receivable. Management has elected to reduce the
balance of the offset receivable to coincide with the balance due.
Stock Split:
On December 11, 1997 the Board of Directors adopted a plan to forward split
the common shares. Under the plan, the Company will issue five shares of Common
for each four shares held by shareholders of record on December 22, 1997. The
Shares were issued on January 5, 1998.
The attached financial statements and accountants report are an integral part
hereof.
F-24
<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................................................................................................... 14
Management................................................................................................. 18
Plan of Distribution....................................................................................... 21
Description of Securities.................................................................................. 22
Shares Eligible for Future Sale............................................................................ 22
Legal Matters.............................................................................................. 23
Experts.................................................................................................... 23
Additional Information..................................................................................... 23
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 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 and 700,000 shares of Common Stock.
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-1
<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.
In August 1997, in exchange for services rendered, the Company issued to
Omega Funding, Inc. warrants to purchase 35,000 shares of Common Stock, in the
aggregate, for $2.40 per share.
In August 1997, in exchange for services rendered, the Company issued to
Rajiv Vobra warrants to purchase 20,000 shares of Common Stock, in the
aggregate, for $2.40 per share.
In August 1997, in exchange for services rendered, the Company issued to
Humphrey, Ltd. Warrants to purchase 70,000 shares of Common Stock, in the
aggregate, for $2.40 per share.
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.
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 Jeffrey M. Moritz, C.P.A.
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.
II-2
<PAGE>
<PAGE>
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.
II-3
<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 July 9, 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
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ MORI AARON SCHWEITZER Chairman of the Board, July 9, 1998
......................................... Chief Executive Officer,
(MORI AARON SCHWEITZER) President and Treasurer
/s/ SONDRA PARKER Vice President and Director July 9, 1998
.........................................
(SONDRA PARKER)
* Secretary and Director July 9, 1998
.........................................
(WAYNE KIGHT)
* Director July 9, 1998
.........................................
(NORMAN SHAPIRO)
/s/ BARRY HABERMAN Director July 9, 1998
.........................................
(BARRY HABERMAN)
*By: /s/ Mori Aaron Schweitzer
.........................................
MORI AARON SCHWEITZER
ATTORNEY-IN-FACT
</TABLE>
II-4
STATEMENT OF DIFFERENCES
The service mark symbol shall be expressed as..........................'sm'
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------
<C> <S> <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 Jeffrey Moritz, C.P.A.
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>
WELLS FARGO ARMORED SERVICE CORPORATION
AUTOMATED TELLER MACHINE CONTRACT
WEST PALM BEACH
---------------
BRANCH SERVING
15026
SUPERCEDES NEW
-----
THIS AGREEMENT, made this 19th day of August, 1996, by and between WELLS
FARGO ARMORED SERVICE CORPORATION (herein called "Wells Fargo Armored"), a
Delaware corporation, at 6165 Barfield Road, Suite 200, Atlanta, Georgia 30328,
and
AMERICAN ATM CORPORATION (hereinafter called "Customer"), a
- ---------------------------------------------
(name of customer)
5061 NORTH DIXIE HWY
- --------------------------------------------------, ----------------------------
(State of incorporation, partnership, individual) (address)
BOCA RATON, FL 33431
- --------------------------------------------------, ----------------------------
(attention)
WITNESSETH:
In consideration of the mutual covenants and agreements herein contained
and of the payments hereinafter mentioned, the parties agree as follows:
1. SERVICES
Wells Fargo Armored shall provide to Customer Automated Teller Machine
("ATM") services as described in the Service and Compensation Schedule Rider
attached hereto between the parties to be performed at Customer's locations and
at the rates set forth in the Service and Compensation Schedule Rider. The term
"currency" as used in this Agreement shall mean bills and/or coins.
Customer may elect to have rendered by Wells Fargo Armored pursuant to this
Agreement the following services at the rates set forth in the Service and
Compensation Schedule Rider:
a. Cash Resupply - The transportation of the currency in packages, bags or
cartridge-like containers to the ATM, the replacement of currency dispensed by
an ATM and the return of leftover currency from the ATM to the Customer or
Customer's designated agent. This service does not include packaging currency in
readiness for placement in an ATM or loading currency in cartridge-like
containers prior to transportation to the ATM.
b. Balancing - The reconciliation of ATM dispensed currency totals with
leftover currency in the ATM and totals recorded by the ATM and/or Customer's
accounting records.
c. Deposit Collection - The removal and transportation to Customer of
sealed deposit envelopes, order forms, notices, magnetic debit and credit cards
and other valuable items from the ATM.
d. Malfunction On-Call Service - Corrective action and repairs, exclusive
of hardware maintenance or repair, to restore an ATM to its proper operating
mode.
2. LIABILITY AND INDEMNITY
a. The responsibility for the safekeeping of Customer's currency shall
commence when receipted for by Wells Fargo Armored and shall terminate when (i)
currency is placed in Customer's ATM, or (ii) if placement is cancelled by
Customer or otherwise impossible, the currency has been returned to Customer or
Customer's designated agent and a receipt obtained therefor. The responsibility
for the return of leftover currency and Deposit Collections shall commence when
removed by Wells Fargo Armored for the Customer's ATM until returned to Customer
or Customer's designated agent and a receipt obtained therefor.
b. Subject to Paragraph 2(c) and 2(e) of this Agreement, the liability of
Wells Fargo Armored for any loss destruction or damage arising out of or in
connection with the services provided to Customer pursuant to this Agreement
shall not exceed the lower of (i) the liability limits for the services stated
in the Service and Compensation Schedule Rider; (ii) the total shipment value
declared by Customer, or (iii) the amount of loss, destruction or damage
actually sustained. The service liability obligations assumed by Wells Fargo
Armored and the rates charged by Wells Fargo Armored are based, in part, upon
the shipment values declared by Customer who has exclusive knowledge of the
actual value of the contents of each package, bag or cartridge picked up from
Customer. Customer shall record the shipment value of each package, bag or
cartridge picked up by Wells Fargo Armored in a receipt book or other receipting
form.
c. Wells Fargo Armored's liability under this Agreement is limited solely
to (i) losses of currency from robbery, kidnapping and entry of ATMs with the
use of keys and/or combinations issued to Wells Fargo Armored's employees under
this Agreement, and (ii) breakage, loss or damage to currency cartridges (or the
currency therein), due to the provable sole negligence or dishonesty of Wells
Fargo Armored employees while the currency or cartridge is in its sole care,
custody and control. CUSTOMER AGREES THAT WELLS FARGO ARMORED DOES NOT UNDERTAKE
THE OBLIGATION OF AN ABSOLUTE INSURER IN THE PERFORMANCE OF THIS AGREEMENT.
d. Notwithstanding anything to the contrary contained in this Agreement,
Wells Fargo Armored shall not be liable and Customer agrees to defend and does
hereby indemnify and hold harmless Wells Fargo Armored, its officers, employees,
underwriters and insurers from and against any and all claims, actions, damages,
liabilities, losses and expenses, including reasonable attorneys fees, arising
out of or in connection with any claims due to ATM losses of currency or other
valuable items arising out of or in connection with currency dispensed due to
ATM malfunction, currency dispensed due to mistake or fraudulent instruction
manually or electronically transmitted to the ATM. ATM equipment hardware
malfunction, mistakes in verification, nominal unexplained currency shortages
which Customer has previously experienced, the failure of Customer's patrons
(consumers) to seal deposit envelopes giving rise to claims for alleged
differences in the amount said to have been deposited and the amount actually
received by Customer, access to the ATM by third parties for hardware
maintenance or any other reason without Wells Fargo Armored's employees being
present, access by Customer's employees with duplicate keys and combinations, or
the use of magnetic debit and credit cards, not in Wells Fargo Armored's
possession, burglary and damage from breakage and vandalism.
e. In the event of the loss, destruction or damage of any Deposit
Collection or part thereof, the Customer agrees to reconstruct the lost, damaged
or destroyed items and to take such actions as may be necessary to assure the
maximum amount of reconstruction of such items, including without limitation,
requesting depositors of any negotiable instrument (including checks) to issue
duplicates thereof and in the event such depositor shall refuse to do so, then
Customer will assert any rights it may have against such depositors, XXXXXXXX
event shall Wells Fargo Armored be liable for the failure of the depositors of
lost, destroyed or damaged items to reissue same. Customer agrees to defend and
does hereby indemnify and hold harmless Wells Fargo Armored, its officers,
employees, underwriters and insurers from and against any and all claims,
actions, damages, liabilities, losses and expenses, including reasonable
attorney fees, arising out of or in connection with any claims by Customer's
depositors for any difference in the amount said to have been deposited in
Customer's ATM(s) and the amount actually received by Customer for any
Deposit Collection.
3. MODIFICATION OF AGREEMENT
This Agreement may be altered, amended or superceded only by a printed
rider signed by an officer of Wells Fargo Armored and an authorized
representative of Customer and changes made in any other manner are void. Any
practice or custom of Customer or Wells Fargo Armored at variance with the
provisions of the Agreement shall not constitute a waiver of such provisions
unless such practice or custom shall be agreed upon in writing and such writing
shall be made an amendment to this Agreement.
4. ACCEPTANCE AND VERIFICATION
Wells Fargo Armored agrees to accept currency in sealed packages, bags
and/or sealed cartridges from Customer or Customer's designated bank. Wells
Fargo Armored may refuse to accept any package, bag or cartridge that is not
securely locked and sealed, and that is not accompanied by a written receipt
which contains a statement of the value of the currency in the package, bag or
cartridge. Wells Fargo Armored's receipt verifying the count of currency shall
be binding and conclusive as to the amount received. Customer shall prepare
cartridges to prevent damage while in transit and Customer's release of the
cartridges shall be proof that the cartridges were suitably prepared for
transportation and placement in the ATM.
The terms and conditions on the reverse hereof and those in any duly
executed rider between the parties are a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above mentioned.
AMERICAN ATM CORPORATION WELLS FARGO ARMORED SERVICE CORPORATION
- ------------------------------------
(Customer)
Print Name: Mori Aaron Schweitzer Print Name: Roger Markle
------------------------- -----------------------------
By: Mori Aaron Schweitzer By: Roger Markle
--------------------------------- -------------------------------------
Title: President Title: Assistant Vice President
------------------------------ ----------------------------------
WFA 1357 REV. 2/93
<PAGE>
<PAGE>
ADDENDUM TO ARMORED CAR SERVICES CONTRACT
This Addendum is an amendment/modification of the Armored Car Services
Contract dated 8-19-96, No. 15026, between LOOMIS FARGO & COMPANY (Armored Car
Service) and AMERICAN ATM., CORP. (ATM Owner), and said contract is hereby
amended/modified only to the extent provided herein.
In modification of the referenced contract, Armored Car Service agrees to
the following conditions relating to the replenishment of cash to the ATMs of
ATM Owner which are funded by American Security Bank of Ville Platte, Inc.
(American Security Bank):
1. Armored Car Service recognizes and agrees that American Security
Bank does by this Agreement become a party to the referenced
contract to the extent and only to the extent that Armored Car
Service shall owe a legal duty to American Security Bank as
enumerated herein. American Security Bank shall not be responsible
for any fees, charges, or other liabilities incurred by ATM Owner
under the contract.
2. American Security Bank will notify the Armored Car Service of a
scheduled replenishment for ATM terminals by faxing an ATM FUNDING
WORKSHEET (see attached). The worksheet will conform to the Armored
Car Service of the specific terminals to replenish along with the
specific amounts for each terminal. The replenishment cycle will
have already been communicated to the ATM Company by the Armored Car
Service hence, terminals listed on the ATM FUNDING WORKSHEET will be
replenished within the agreed upon replenishment cycle. Information
as to the Bank and vault location will be provided on the ATM
FUNDING WORKSHEET.
3. The Armored Car Service will pick-up the wired funds from the
appropriate bank vault as indicated on the ATM FUNDING WORKSHEET.
The Armored Car Service representative will sign a shipping manifest
at the bank vault verifying receipt of the cash. On the next
business day following the receipt of the cash, the Armored Car
Service will fax a copy of the signed shipping manifest to American
Security Bank at 1-800-989-9303.
4. The Armored Car Service representative will deliver funds to the
ATMs as instructed on the ATM FUNDING WORKSHEET. ATM terminals must
be funded according to the ATM FUNDING WORKSHEET. The Armored Car
Service will be responsible for replenishing each terminal, as well
as balancing each terminal per replenishment. The Armored Car
Service will be responsible for
<PAGE>
<PAGE>
completing an ATM BALANCING SHEET for each ATM balanced. An ATM
BALANCING SHEET will be provided to the Armored Car Service (see
attached). An Armored Car Service may elect to utilize its own
balancing sheet as long as its balancing sheet contains all of the
relevant information found in American Security Bank's balancing
sheet. On the next business day, the Armored Car Service will fax a
copy of the ATM BALANCING SHEET to American Security Bank at
1-800-989-9303.
5. If at any time and for any reason funds designated for ATM
funding need to be returned to American Security Bank, the Armored
Car Service will be responsible for depositing these funds into an
account as designated by American Security Bank only. American
Security Bank will provide the Armored Car Service with preprinted
deposit tickets for this purpose and for new customers, will use
counter deposit tickets until the preprinted deposit tickets are
mailed to the Armored Car Service. Each deposit ticket will identify
the terminal number and amount for each terminal for which the
Armored Car Service is depositing funds for. On the next business
day, the Armored Car Service will fax a copy of the deposit slip to
American Security Bank at 1-800-989-9303.
6. The Armored Car Service will be responsible for forwarding all
original documents and faxing certain documents as referenced in
paragraphs 3, 4 and 5, to American Security Bank. The following is a
list of these original documents, documents to be sent via
facsimile, mailing address and facsimile telephone number:
Mailing Address:
---------------
American Security Bank
175 Gwinnett Drive
Suite 330
Lawrenceville, GA 30045
ATTN: Reconciliation
Original Documents to be Mailed:
--------------------------------
Shipping Manifest from Bank Vault
ATM Balancing Sheet
Deposit Tickets
Detailed as well as summary journals from each ATM terminal
Facsimile Number:
-----------------
1-800-989-9303
ATTN: Reconciliation
<PAGE>
<PAGE>
Documents to be faxed next business day as referenced in Paragraphs 3, 4 & 5:
- -----------------------------------------------------------------------------
Shipping Manifest from Bank Vault
ATM Balancing Sheet
Deposit Tickets
7. A Certificate of Insurance will be provided to American Security
Bank by the Armored Car Service.
8. Armored Car Service understand that the funds used to replenish
ATM Owner's ATMs are the property of and belong to American Security
Bank, and recognizes and agrees to the following:
A. Armored Car Service will at no time honor any request by
ATM Owner to move cash from one ATM terminal to another.
B. Armored Car Service will at no time honor any request by
ATM Owner to fund or replenish any terminal without written
confirmation from American Security Bank.
C. Armored Car Service will at no time allow ATM Owner or
any employees, agents, or assigns to access stored cash in
any terminal and will not provide keys/combinations to any
terminal to said parties. Armored Car Service is responsible
for ATM cash while any necessary technical service/repairs
are being conducted within the vaulted section of the ATM
terminal.
<PAGE>
<PAGE>
DATE: 9-8-97
-------------
BY: [SIGNATURE ILLEGIBLE]
------------------------------------
LOOMIS, FARGO & CO.
----------------------------------------
(Armored Car Service)
TITLE: District Sales Rep.
---------------------------------
BY: [SIGNATURE ILLEGIBLE]
------------------------------------
AMERICAN ATM CORP.
----------------------------------------
(ATM Owner)
TITLE: V.P.--ATM Operations
----------------------------------
AMERICAN SECURITY BANK OF
VILLE PLATTE, INC.
BY: [SIGNATURE ILLEGIBLE]
------------------------------------
TITLE: Operations Manager
----------------------------------
<PAGE>
<PAGE>
[Letterhead of Jeffrey H. Moritz]
July 9, 1998
I have issued my audit report dated July 26, 1997 accompanying financial
statements of American ATM Corp. for the year ended June 30, 1997 contained in
Amendment No. 1 to the Registration Statement and Prospectus. I consent to the
use of the aforementioned report in the Registration Statement and Prospectus,
and the use of my name as it appears under the captions 'Experts', 'Summary
Historical and Pro Forma Financial Data', and 'Selected Financial Data'.
JEFFREY H. MORITZ
- -----------------
Jeffrey H. Moritz
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Unaudited Balance Sheet and Unaudited Statement of Operations,
dated March 31, 1998, of American ATM Corp. and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 497,247
<SECURITIES> 0
<RECEIVABLES> 42,210
<ALLOWANCES> 0
<INVENTORY> 2,500
<CURRENT-ASSETS> 554,448
<PP&E> 604,348
<DEPRECIATION> 142,635
<TOTAL-ASSETS> 1,283,793
<CURRENT-LIABILITIES> 669,451
<BONDS> 0
<COMMON> 2,816
0
0
<OTHER-SE> 611,526
<TOTAL-LIABILITY-AND-EQUITY> 1,283,793
<SALES> 0
<TOTAL-REVENUES> 233,498
<CGS> 0
<TOTAL-COSTS> 295,254
<OTHER-EXPENSES> 240,237
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (295,814)
<INCOME-TAX> (81,680)
<INCOME-CONTINUING> (295,814)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (214,134)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.04)
<PAGE>
