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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON _______________
File No. __________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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AMERICAN ACCESS TECHNOLOGIES INC.
---------------------------------
(Name of small business issuer in its charter)
Florida 3661 59-3410234
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(State of Incorporation) (Primary Standard (IRS Employer
Industrial Classification I.D. Number)
Number)
238 N. Westmonte Drive, Suite 210, Altamonte Springs FL 32714 (407) 865-7696
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(Address and telephone number of principal executive offices)
238 N. Westmonte Drive, Suite 210, Altamonte Springs, FL 32714
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(Address of principal place of business)
Victor Murray, President
American Access Technologies, Inc.
238 N. Westmonte Drive, Suite 210
Altamonte Springs, FL 32714
(407) 865-7696
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(Name, address and telephone number of agent for service)
Copies to;
Joel Bernstein, Esq.
P. O. Box 330072
Miami, FL 33233
(305) 751-3008
Fax:(305) 751-4928
Approximate date of proposed commencement of sale to the public: From time to
time after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================
Proposed
Amount of Proposed Maximum
Shares Maximum Aggregate Amount of
Title of Each Class of To be Offer Price Offering Registration
Securities to be Registered Registered Per Unit(1) Price Fee
- --------------------------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock 1,030,000(2) $11.68 $12,030,400 $3,645.58
Warrants to purchase 630,000(3)
Common Stock
==================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee based
upon the average of the bid and asked price in the over the counter
market on December 19, 1997.
(2) Includes 630,000 shares issuable on exercise of Warrants. The number of
shares and warrants may be increased by operation of anti-dilution
provisions contained in the Warrants.
(3) No fee pursuant to Rule 457(g).
The Company hereby amends the 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 Acts of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 3
AMERICAN ACCESS TECHNOLOGIES, INC.
1,030,000 SHARES OF COMMON STOCK
WARRANTS EXPIRING FEBRUARY 11, 2000 TO PURCHASE
630,000 SHARES OF COMMON STOCK
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. See "Risk Factors"
beginning on page 6 for a discussion of certain risk factors that should be
considered by prospective investors of the securities offered hereby.
The security holders named under "Selling Security Holders" have
advised the Company that they may from time to time sell or otherwise dispose of
Warrants to purchase Common Stock of the Company or shares of the Common Stock
to which this Prospectus relates (of which 630,000 shares are issuable upon
exercise of the Warrants) at prices then prevailing in the over-the-counter
market or otherwise at prices then obtainable. The Company will not receive any
of the proceeds from the sale of Common Stock or Warrants by such security
holders other than amounts received upon exercise of the Warrants in accordance
with their terms (see "Description of Securities - Warrants" elsewhere in this
Prospectus). Such security holders, and any securities dealers or brokers to or
through which they effect sales of the above shares of Common Stock or Warrants,
may be deemed to be underwriters with respect to such securities within the
meaning of the Securities Act of 1933, and any profits realized by such persons
may be deemed to be underwriting commissions.
The Company is not aware of any public market for the Warrants of the
Company.
The Company's Common Stock is quoted on the OTC Electronic Bulletin
Board under He symbol AATK. On December 9, 1997, the closing bid quotation for
the Common Stock on the OTC Electronic Bulletin Board was $11.75.
Costs and expenses in connection with the registration of the
securities offered hereby, estimated at $27,061, are to be borne by the
Company. Brokers' commissions, taxes and other selling expenses are to be borne
by the selling security holders and are not expected to exceed normal selling
expenses for sales in the over-the-counter market.
THE DATE OF THIS PROSPECTUS IS _________________, 1997.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information and the financial statements, including the notes
thereto, appearing elsewhere in this Prospectus.
SECURITIES REGISTERED
<TABLE>
<S> <C>
Shares of Common Stock which may be offered by the
Selling Security Holders.............................................1,030,000
Warrants which may be offered by the Selling Security Holders............630,000
Shares of Common Stock to be outstanding assuming all shares to
which this Prospectus relates are sold...............................3,600,000
</TABLE>
BUSINESS
The Company is a Florida corporation which was incorporated in 1996 to
develop, design and manufacture products for the telecommunications industry.
The Company's first product, a zone cabling termination cabinet, to facilitate
the laying of cable for telecommunications systems, specifically designed for
the telecommunications cabling approach known as "Zone Cabling", introduced in
January 1997.
The telecommunications industry in general is one that is continually
and rapidly expanding. Trends toward increased high speed data systems,
corporate networking and desktop personal computing, have created the need for
higher speed cabling, new ways to connect cabling and higher speed switching.
The Company's Zone Cabling Termination Cabinet ("ZCTC") was introduced
to the telecommunications industry in January 1997. This product acts as a
mini-telephone closet that fits into the ceiling the grid system and is
supported to the building structure by threaded rods, disguising its appearance
and providing a high degree of concealment, esthetic appearance as well as
security. The cabinet's design allows the mounting of telecommunications
apparatus on a removable equipment mounting plate located on the enclosure
access door. The product acts as a consolidation, distribution and termination
point for the system, as well as a multi-user outlet. Use of the ZCTC in
conjunction with "Zone Cabling" facilitates installation and moves, adds and
changes.
The Company's goal is to become a leading supplier of structured
telecommunications cabling system components. The Company's offices are located
at 238 N. Westmonte Drive, Suite 210, Altamonte Springs, FL 32714. Its telephone
number is (407) 865-7696.
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DIVIDENDS
The Company has not paid any cash dividends and does not expect to pay
cash dividends in the foreseeable future.
SUMMARY FINANCIAL INFORMATION
The summary financial data set forth below is derived from and should
be read in conjunction with the financial statement, including the notes
thereto, appearing elsewhere in this Prospectus.
Statement of Operations Data:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30 December 31
----------------- -----------------
1997 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 173,545 -- -- --
Loss from continuing operations (256,899) -- (66,248) --
Income from discontinued operations -- 9,627 4,606 15,137
Net income (loss) (256,899) 9,627 (61,642) 15,137
Net income (loss) per common share (.09) -- (.02) .01
Weighted average number of shares 3,011,875 2,850,000 2,850,000 2,850,000
</TABLE>
Balance Sheet Data:
<TABLE>
<CAPTION>
September 30, 1997
--------------------------------------
Actual Pro Forma(1)
-------- ------------
<S> <C> <C>
Working capital $225,695 $485,695
Total assets 354,623 614,623
Total liabilities 75,060 75,060
Stockholders' equity 279,563 539,563
</TABLE>
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(1) Gives effect to the issuance of 86,667 shares of Common Stock in
exchange for an aggregate net consideration of approximately $260,000
which occurred after September 30, 1997. See "Recent Financing".
RISK FACTORS
The Securities offered herein involve a high degree of risk.
Accordingly, before deciding to purchase, investors should carefully consider
the following risk factors along with the other matters discussed herein.
Losses Incurred During Start-up of Operations; Modified Accountant's
Report. The Company began its business described herein in October 1996 and has
recently introduced its first
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product. As with many start-up company's, expenses are currently in excess of
revenues as the Company continues to invest its resources into continuing
product development and marketing. Accordingly, the Company is subject to the
risks of any new business and the likelihood of success of the Company must be
considered in light of the problems, expenses, difficulties and complications of
a new business and the highly competitive environment in which the Company
operates. There can be no assurance that the Company will be able to achieve and
sustain profitable operations in the future. The Company's independent certified
public accountants have modified their report on the Company's financial
statement to reflect doubt as to the Company's ability to continue as a going
concern. See "Financial Statements" contained herein.
Need for Additional Funds. The Company will require substantial
additional funding to further develop its products, marketing and operations.
There can be no assurance that such additional funds would be available when
needed or that they would be available on attractive terms or that raising
additional funds would not result in substantial reduction in the value of the
Company's shares.
No Assurance of Commercial Success; Uncertainty of Market Acceptance.
The Company's products compete in the highly competitive market for
telecommunications products. The Company's prospects for success will therefore
depend on its ability to successfully market its products to distributors who
may be inhibited from doing business with the Company because of their
commitment to other products. As a result, demand and market acceptance for the
Company's produces is subject to a high level of uncertainty. The Company
currently has limited financial, personnel and other resources to undertake the
extensive activities that will be necessary to produce and market its products.
There is no assurance that the Company will be able to formalize expanded
marketing arrangements or that its marketing efforts will result in substantial
additional revenues. See "Business".
Dependence Upon Key Management. The Company is dependent upon the
members of management set forth herein. Accordingly, the Company will be
adversely affected if the services of such persons ceased to be available to the
Company.
Competition; Product Obsolescence. The markets for the technology and
products developed by the Company are characterized by rapid changes and
evolving industry standards often resulting in product obsolescence or short
product life cycles. As a result, certain companies may be developing
technologies or products of which the Company is unaware which may be
functionally similar, or superior, to some or all of those being developed by
the Company. These companies may have substantially greater financial,
technical, personnel and other resources than the Company and may have
established reputations for success in developing and sales of their products.
The ability of the Company to compete will depend on its ability to continually
enhance and improve such products and technology, to adapt its products to be
compatible with specific products manufactured by others, and to successfully
develop and market new products and technology. There is no assurance that the
Company will be able to compete successfully, that its competitors or future
competitors will not develop technologies or products that render the
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Company's products and technology obsolete or less marketable or that the
Company will be able to successfully enhance its products or technology or adapt
them satisfactorily.
Protection of Proprietary Information. The Company has applied for a
patent on its Zone Cabling product. There is no assurance that any patents will
be obtained. If obtained, there is no assurance that any patents will afford the
Company commercially significant protection of its technologies or that the
Company will have adequate resources to enforce its patents. The Company also
intends to seek foreign patent protection. With respect to foreign patents, the
laws of other countries may differ significantly from those of the United States
as to the patentability of the Company's products or technology. Moreover, the
degree of protection afforded by foreign patents may be different from that in
the United States. Patent applications in the United States are maintained in
secrecy until patents issue, and since publication of discoveries in the
scientific or patent literature tends to lag behind actual discoveries by
several months, the Company cannot be certain that it will be the first creator
of inventions covered by any patent applications it makes or the first to file
patent applications on such inventions.
No Cash Dividends. The Company has not paid, nor does it presently
contemplate the payment of, any cash dividends on its Common Stock.
USE OF PROCEEDS
The proceeds received by the Company upon any exercise of Warrants will
be used for general corporate purposes. Such proceeds would aggregate $5,040,000
if all the Warrants were exercised in full.
MARKET FOR SECURITIES
The Company's Common Stock is traded in the over-the-counter market and
is included in the NASD Electronic Bulletin Board under the symbol AATK. Trading
began on August 15, 1997.
The following is the range of high and low bid prices for the Company's
Common Stock for the periods indicated
<TABLE>
<CAPTION>
High Low
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<S> <C> <C>
August 15, 1991 through
September 30, 1997 $7.625 $2.50
</TABLE>
The above represents inter-dealer quotations which do not include
retail mark-ups, markdowns, or commissions, and do not necessarily represent
actual transactions.
The approximate number of record holders of the Company's Common Stock
as of December 3, 1997 was approximately 41.
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RECENT FINANCING
Since September 30, 1997, the Company issued 86,667 shares of its
Common Stock to holders of outstanding Common Stock Purchase Warrants and
received proceeds of $260,000.
DIVIDEND POLICY
The Company has not paid any dividends on its Common Stock, and it is
not anticipated that any dividends will be paid in the foreseeable future. The
Board of Directors intends to follow a policy of retaining earnings, if any, to
finance the growth of the Company. The declaration and payment of dividends in
the future will be determined by the Board of Directors in light of conditions
then existing, including the Company's earnings, financial condition, capital
requirements and other factors.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
The Company was formed in October 1996 to acquire the assets of Vic
Murray and Associates, Inc. (VMA). The purchase of VMA was for the primary
purpose of obtaining the pending patent for the Zone Cabling Termination
Cabinet, the product which the Company has since developed and marketed.
Shortly after the acquisition of VMA, the Company made a determination
to discontinue the operations and business activities of VMA, which was a
manufacturer's representative of various products. Accordingly, all of the
operations of VMA have been reflected as discontinued operation in the
accompanying statements of operations. The following discussion and analysis
reviews the operations by the Company in 1995, 1996 and 1997. The 1995 and 1996
periods reflect the historical operations of VMA as discontinued operations, as
described above. The operations of the Company with regard to the development
and sale of these Zone Cabling Termination Cabinet are reflected in the
historical operations for 1997. The following discussion and analysis should be
read in conjunction with a discussion about risk factors and the consolidated
financial statements of the Company, included elsewhere in this Prospectus.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH THE YEAR ENDED DECEMBER 31,
1995 REVENUES
Revenues for 1996 and 1995 were zero, because the Company did not
commence sales of its Zoning Cabling Termination Cabinet until 1997. All other
revenues relating to the activities of VMA are reflected in discontinued
operations, net of costs and expenses.
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COSTS AND EXPENSES
Management and consulting fees paid to officers/directors/stockholders
consists of fees paid for the personal services rendered by these officers, who
are also directors and stockholders of the Company. These costs amounted to
$46,154 for 1996.
Product development costs include research, development and legal costs
associated with registering and maintaining the patent held by the Company for
its product. Such costs totaled $6,601 for 1996.
General and administrative expenses include the general overhead costs
of operating the Company, as well as marketing cost, such as trade shows and
advertising. These expenses totaled $12,301 in 1996.
Interest expense represents the interest cost incurred in the debt
outstanding during 1996. This expense amounted $1,192 for 1996.
Costs and expenses for 1995 were zero, because all of the costs and
expenses incurred by the Company have been presented in discontinued operations,
and applied against the revenue generated from the discontinued operations of
VMA.
INCOME FROM DISCONTINUED OPERATIONS
Income from discontinued operations represents the net operating
results of VMA. Such net income, which represents the net results of operations
of VMA, decreased $10,531 for the year ended December 31, 1996, as compared to
the same period ended December 31, 1995. The decrease was attributable primarily
to the cessation of operations.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THE NINE MONTHS
ENDED SEPTEMBER 30, 1996
REVENUES
Revenues for the nine months ended September 30, 1997 increased by
$173,545 or 100%, to $173,545, compared to $0 for the nine months ended
September 30, 1996. This increase resulted from the initial distribution of the
Company's product, which occurred in the second quarter of 1997. There were no
revenues generated in the third quarter of 1997 as the Company was primarily
involved in training distributor's personnel in the operation, functioning and
marketing of the Company's product. There were no revenues generated by the
Company in the comparable period for 1996.
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COSTS AND EXPENSES
Direct costs represent the cost incurred by the Company to have its
product manufactured and assembled by outside contractors. These costs
represented 27% of revenues for the nine months ended September 30, 1997.
Management and consulting fees increased by $220,185, or 100% to
$220,185 for the nine months ended September 30, 1997 compared to $0 for the
nine months ended September 30, 1996. This increase resulted from the fees paid
and accrued to the officers of the Company, who are also directors and
stockholders for the same period of 1997.
Product development costs incurred in the nine months ended September
30, 1997 increased by $3,996, or 100%, to $3,996, compared to $0 for the same
period of 1996 This increase the costs incurred in the Company's continuing
efforts to modify and update its design to vendor specifications.
General and administrative expenses increased by $101,915 or 100%, to
$101,915 for the nine months ended September 30, 1997 compared to $0 for the
nine months ended September 30, 1996. This increase resulted from start up of
operations.
Interest expense increased $8,358, or 100% to $8,358 for the nine
months ended September 30, 1997, as compared to $0 for the comparable period of
1996. This increase resulted from a short-term obligation and the resulting
interest incurred on this debt.
NET LOSS FROM CONTINUING OPERATIONS
Loss from continuing operations increased $256,899 or 100% to $256,899
for the nine months ended September 30, 1991 compared to $0 for the same period
ended September 30, 1996. This increase was primarily due to start up of
operations.
DISCONTINUED OPERATIONS
Income for discontinued operations represents the net operating results
of Vic Murray & Associates.
Such net income, which represents the net results of operations of Vic
Murray & Associates, decreased $9,627 for the nine months ended September 30,
1997, as compared to the same period ended September 30, 1996. The decrease was
attributable to the cessation of operations.
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LIQUIDITY AND CAPITAL RESOURCES
The Company required cash for operating activities of approximately
$21,000 during the year ended December 31, 1996 and required $253,815 during the
nine months ended September 30, 1997. The use of cash in both periods is
primarily due to the Company's expenditures for start up operations and
promotion and distribution of its products.
Cash used in investing activities, which includes patent development
and acquisition of fixed assets, was approximately $13,000 for the year ended
December 31, 1996 and $34,000 for the nine months ended September 30, 1997. This
primarily involved purchases of office furniture and computers.
The Company received $100,000, from a short-term note payable during
the year ended December 31, 1996. This note was repaid in the first quarter of
1997. The Company completed a private placement of its stock which provided
proceeds of over $590,000 to the Company, The Company was provided with cash
from financing activities of approximately $95,800 for the year ended December
31, 1996 and $495,000 for the nine months ended September 30, 1997.
The Company believes that its existing cash and equivalents remaining
from proceeds of its private offering, together with an expected increase in
revenue from operations, will be sufficient to meet its capital and liquidity
needs for the next 12 months.
BUSINESS
COMPANY BACKGROUND
The Company's founder, Vic Murray, began working in the electrical,
cable and industrial supply business in 1945. As a Manufacturer's
Representative, he worked for such high profile companies as Graybar Electric
Company and Florida Electric Supply. Mr. Murray opened Vic Murray & Associates
as an independent manufacturer's representative in 1977 and such firm was
incorporated as Vic Murray & Associates, Inc. (VMA). VMA developed agency
relationships with electrical engineers, electrical contractors, municipalities,
power companies and distribution companies throughout the State of Florida. The
Company acquired VMA in exchange for Company common stock in 1996 and ceased its
manufacturer's representative business in order to engage exclusively in the
business described herein,
As a direct result of the break-up of the AT&T monopoly, thousands of
technology, service and equipment companies began to develop revolutionary
telecommunications products and services.
These companies could now fairly compete for business within the
rapidly evolving multi-billion dollar telecommunications industry.
Simultaneously, the computer industry evolved
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at a rapid pace as well. The telecommunications industry was forever changed and
for the first time in this industry, a myriad of new business opportunities
emerged.
Richard Murray was directed to research and evaluate the industry to
determine in which categories of supply and support they would specialize. The
decision was made to focus on wire management for voice, data, fiber optic, CCTV
and CATV applications. With the birth of new and revolutionary high speed
telecommunications technology and equipment, wiring and wire management would
become a critical part of the telecommunications industry.
Along with other specialists throughout the United States, the Murray's
quickly realized that designers of new buildings and renovations did not
consider adequate spacing and design requirements in order to accommodate the
telecommunications wiring. Although wire and wire management is a critical
portion of telecommunications, in some cases, the design engineers actually had
forgotten to include it in the project design. These engineering and industry
oversights create significant and expensive changes in structure design
resulting in the loss of usable or otherwise rentable spaces. Additionally,
excessive future moves, adds and changes (MAC's), of personnel offices,
telephones, data terminals and other cable termination points were generally
given little consideration.
BACKGROUND FOR PRODUCT DEVELOPMENT
Until now, Wire Management Systems have not evolved as rapidly as the
Telecommunications Industry as a whole. Industry leaders began to realize that
with the advent of technologically advanced equipment, systems, new methods of
conveyance (e.g. Fiber Optics) and the demand for connection to the "Information
Super Highway", the established methods of wiring and wire management were
outdated.
Telecommunication wiring originates outside the building and is routed
into the building through either an underground, direct buried or aerial service
entrance facility. An internal room within the building is designated as the
Entrance Facility (EF) and is normally located either on the first or in a
basement floor level. This space can also be used as the Equipment Room (ER). If
this space serves as the ER and houses the EF, it may also contain the main hub
of backbone pathways and cables that feed the various Telecommunications Closets
(TC) throughout the building. This main hub location is known as the Main
Cross-connect (MC). As a minimum, each and every floor of the building has a
Telephone Closet (TC). The TC functions to connect backbone cables to horizontal
cables (Horizontal Cross-connect - HC) or backbone cables to backbone cables.
TCs that contain backbone cables and pathways from the MC and from another TC
are called an Intermediate Cross-connect (IC). From the MC, high pair count
backbone cables are fed to every floor's designated TC (IC or HC). Cabling is
distributed to each floor through vertical and horizontal backbone cables and
pathways located in the center of the building that are usually surrounded by
firewalls. Every station location, (phone, fax, data, computer etc., located at
each Work Area - WA) is required to have two horizontal cables that run from the
WA back to the TC which in turn is fed back to the IC or MC. ANSI/TIA/EIA 568-A
telecommunications
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standards require two drops per WA. This wiring from the TC to the workstation
is generally referred to a "star" topology. Therefor each cable drop is a
"direct run" from the Work Area to the Telecommunications Closet and its
associated Horizontal Cross-connect.
This method of wiring and wire management provides for very little
cabling system flexibility to accommodate future moves, adds or changes (MAC
service orders).
The MC services the whole building and is generally located in a common
area. The TC is also located in common areas within each floor. The HC could be
as far as 295 ft. (90 meters) away from each termination point in the Work Area.
For uncatagorized voice wiring, the maximum backbone cable length is 800 meters.
This means that a massive amount of wire is required for telecommunication
applications. It is not unusual for a high rise building of 40 floors to have
200 - 300 Miles of wiring. The old method of zone cabling, requires very
expensive modular furniture for cable distribution within the office environment
in order to meet the multitude of industry standards and regulations. In some
applications, even modular furniture may not meet industry guidelines. The
Company's products are specifically designed to provide cabling solutions.
Today the telecommunications industry methods of information conveyance
must be able to handle more traffic than ever before. Wire and wire management
must be able to provide voice, data, video and low-voltage communications
faster, cheaper, cleaner, longer runs, using less space, while at the same time
accommodating long term considerations for expensive moves, adds and changes
(MAC's). Utilizing old methods of zone cabling, each and every move, add and
change for each workstation drop requires that a new "home run" be installed
back to the TC-HC. The Zone Cabling Termination Cabinet eliminates that need by
placing the telecommunications equipment close to the workstation and in an
inconspicuous location. Zone cabling moves, add's and changes are not only
expensive but time consuming and inconvenient. Cabling, wire management and
telecommunications technology is rapidly evolving. The industry leaders began to
address the need for new cabling methods and equipment. These companies,
industry associations and individual experts have joined together to create new
and revolutionary standards. Companies such as Lucent Technologies, Ortronics,
AT&T, Krone, Belden, Siecor, Hubbell, Leviton Telcom, Superior Modular Products
and American Access Technologies, Inc., in conjunction with various standards
organizations and telecommunications standards committee's, are developing and
introducing innovations in wire/cabling design, connections, consolidation,
distribution and termination points, providing for telecommunication signals to
be transmitted cheaper, faster, longer and clearer utilizing less space. This
method of cabling is called "Open Office Architecture'"
"Open Office Architecture" or more commonly called "Zone Cabling", is a
design allowed by ANSI/TIA/EIA Telecommunications Systems Bulletin 75. The
purpose of this design is to horizontally extend the location of the
consolidation point closer to the individual Work Areas. These locations of
consolidation points are called Zones.
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ZONE CABLING
Zone Cabling is officially defined as an "Interconnection in the
horizontal cabling which allows work station drops to be reconfigured frequently
without disturbing the horizontal cable run".
Zone Cabling is used in open office areas, hotels, convention centers,
entertainment and theme parks, hospitals, government buildings, schools,
industrial complexes, data centers, banks, and any other area where a flexible
cable layout is required to support collaborative work or provide service to an
area of high density and common use. Zone Cabling is used to support office
areas where reconfiguration of work areas is required due to a high rate of
rearrangements and/or reconfigurations (Moves, Adds and Changes are often
referred to as Churns).
PRODUCT AND PRODUCT DEVELOPMENT
The Company determined that it needed to expand in this market place as
rapidly as possible. The Company was reorganized and is now named American
Access Technologies, Inc. The purpose of the Company is to identify, design,
develop, and manufacture new products for any and all telecommunications cabling
applications with a specific focus on zone cabling. The Company consulted with
many of the leading telecommunications specialists and engineers and all were in
agreement. No one had developed a device that met all of the industry standards
and could effectively and efficiently be utilized as a zone cabling
consolidation/distribution/termination point. However, some sort of device was
absolutely required to complete the "Open Office Architecture"/Zone Cabling
design. American Access Technologies, Inc. performed the necessary research and
verified that no such Zone Cabling Termination Cabinet existed. In fact, such
research indicated that no one was even developing such a zone device.
The Company has designed a consolidation/distribution/termination point
enclosure called Zone Cabling Termination Cabinet, (ZCTC) and currently holds a
Utility Patent Pending for such enclosure that may be installed in the ceiling,
above the ceiling, on or in the wall or on or in the floor structure. The
ceiling ZCTC is uniquely utilized as a consolidation/distribution/termination
enclosure that fits into the suspended ceiling the and system. The ZCTC provides
easy access to the horizontal cabling backbone, reduces material and
installation effort, and minimizes office disruption and down time of systems
while at the same time enhances telecommunication security and reduces the floor
and wall space requirements for termination apparatus. The floor ZCTC provides
the same application solution in a floor installation.
The Company believes its ZCTC products are the only enclosures
manufactured that can function as a consolidation, distribution, termination
pointer multi-user outlet in a zone cabling system and still comply with all
industry and government guidelines, standards and regulations. The ZCTC products
provides an enclosure that can be utilized for any and all low voltage wiring
systems including but not limited to voice, data, video, HVAC, building
controls, security, and fire/life/safety wiring systems. The ZCTC was designed
to accommodates all manufacturers
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equipment including Category 3, 4 and 5 Jack Panels, Patch Panels, and Punch
Panels as well as fiber optic cables.
PRODUCT APPLICATION
The ZCTC will reduce the amount of wire needed for home runs from the
workstation to the TC-HC. These individual home runs will now run from the Work
Area to the ZCTC which is now located closer to the station termination
(modular jack). The ZCTC will be located within a controlled work environment
which is readily accessible located in the ceiling the grid system. The ZCTC is
designed to physically accommodate all of the newly developed "Open Office
Architecture" wiring equipment and distribution connections. This enclosure is
mounted in a standard 2ft. x 4 ft. ceiling the grid system but is physically
attached to the building structure to support the weight of the equipment
installed within the enclosure. The equipment access door opens from below the
ceiling the for easy maintenance, installations or MAC'S. Specially trained
technicians will no longer be required to effectuate MAC'S. The new wiring and
distribution equipment is of the modular plug-in type (not one time use)
creating less down time, loss of productivity and can be easily re-routed and
reused. The initial installation of the ZCTC is approximately the same as the
old method of Distribution Cabling. However, the Company believes the short term
and long term cost savings are very significant. It estimates that the ZCTC will
reduce short term and long term costs by:
Fire Stopping-reduced cable penetration resulting in reduced material
cost.
Cable reuse-Cable can be re-routed for re-use.
Labor-Zone Cabling Termination Cabinet allows shorter cable runs for
MAC's
The Zone Cable Termination Cabinet (ZCTC) provides better utilization
of the common area TC's. and provides the building owners more usable space.
The ZCTC provides for more efficient utilization of horizontal cables and it
significantly reduces the physical mass of cables to be run throughout the
building.
It also moves the point of connection closer to the Work Area making
it easier to effect changes and modifications without disturbing the work force.
Ceiling the is attached to the exposed "underside" of the enclosure disguising
its appearance thereby providing an degree of concealment and security for the
horizontal cable consolidation/distribution/termination point. It offers greater
security to the communication system since it is obscured, out of reach and
can easily be monitored by closed circuit TV. Breaking down communications
into zones is a sensible and cost effective alternative to the conventional
methods of cabling a building.
The benefits include: Reduced employee disruption, reduced system down
times, lower hourly rate for qualified technicians.
15
<PAGE> 16
STANDARDS
The standards, regulations and various Industry association guidelines
are very specific. The Company believes its Zone Cabling Termination Cabinet
(ZCTC) is the only product that meets the standards/requirements of the
telecommunications industry Building Industrial Consulting Services
International (BICSI), National Electric Code regulations NEC 300-22 B & C,
American National Standards Institute/Telephone Industry Association/Electrical
Industry Association publication 568 A, as well as the Zone Cabling guidelines
as specified in the newly released Telecommunications Systems Bulletin - TSB 75.
The Zone Cabling Termination Cabinet (ZCTC) is the only product known to the
Company that meets or exceeds these regulations and guidelines and has and
Underwriters Laboratories listing of UL 1863. This product is the only product
that has been tested by Underwriters Laboratories for this application.
Therefore, Underwriters Laboratories has assigned this product to a new category
listing. This listing is identified as UL 1863 (Telecommunications Cabinets)
under 31RF, and is further identified as a Type 12 rated enclosure for Plenum
type installations. The ZCTC is also listed as UL2043. The ZCTC is currently the
only enclosure manufactured to these standards.
MARKETING
The primary focus of marketing efforts is to "PARTNER" with major
equipment manufacturers and telecommunications distributors since the Company's
products are designed to enhance the sales the manufacturer and distributor.
Since the Company's products enable the placement of telecommunications
equipment into ZONES and still comply with all of the industry guidelines and
building regulations, each of these companies can use the Company's enclosure to
sell more of their products. By partnering with the Company each manufacturer
and/or distributor has opportunity to gain a larger share of their respective
markets. The Company is providing various support programs and materials that
enhances its partners marketing plan.
The Company has developed several collateral marketing pieces. These
collateral material pieces range from one page to an eight page full color
product and application brochure. Our printed materials and World Wide Web Site
currently serves as our primary marketing tools. All of these marketing/media
materials provide Company information, product information, engineering
specifications, drawings, application for use, installation instruction,
features and benefits tailored to each individual market need. Additionally the
World Wide Web Site provides marketing support materials that can be downloaded
and printed at individual locations throughout the world. Questions and answers
can be transmitted via e-mail feedback capability, query analysis for tracking
of inquiries, lead generation for the distributors, distribution of marketing
materials to end users not normally addressed by the individual distributors.
The largest and most recognized telecommunications training and
certification organization (BICSI) is currently using the ZCTC line of products
as an integral part of their Zone Cabling Training and Certification course.
16
<PAGE> 17
The Company is participating with its partners in trade shows as a
component in their individual booths and hospitality suites. However, the
Company will individually participate in three or four trade shows per year. Two
of the shows are focused around standards, training and certifications. The
remaining two shows are industry product shows. The Company attended SUPERCOMM
97 that was held in New Orleans in June 1997. The Company believes that certain
of its partner relationships were as a result of its show presence.
The end users of the Company's products contract with specialized,
BICSI Certified Registered Communications Distribution Designers (RCDD),
qualified engineers and contracting firms. These specialist design, specify,
purchase and install cabling of all types, switches and all other
telecommunications equipment as required by the end user. All product purchases
are made through authorized distributors with the exception of certain companies
who can purchase extremely large quantities as a private label type product.
The market potential for the Zone Cabling Termination Cabinet is
believed to be large and can be generally classified within two categories-
"New Installation" and "Refurbishment of Existing Facilities".
DISTRIBUTION AND SALES
American Access Technologies has entered into a national distribution
contract with ANIXTER Internationals, Inc.
Anixter International Inc. (NYSE: AXE), 1996 revenues $2.5 billion.
Anixter International is a leading value-added provider of integrated
cabling and networking solutions that support business information and network
infrastructure requirements. Anixter teams with customers to implement these
solutions by combining a variety of customized pre- and post-sale services,
products from the world's leading manufacturers, and superior logistics
management through a global network of 37 countries with 205 domestic operating
locations. Anixter International also owns approximately 19 percent of ANTEC
(NASDAQ: ANTC).
American Access Technologies has negotiated distribution agreements
with the following Regional distributors:
CED-American Electric, Inc. (Data Voice)
Founded over 100 years ago as a private Company and has grown to over
400 locations spread over 48 states and Canada. CED gross revenues in 1996
exceed $500 million and they employee over 3,500 people in their service area.
They stock over 25,000 separate inventory items with well in excess of 1 million
warehousing facilities.
State Electric Supply
17
<PAGE> 18
State Electric was founded in 1954 in Dunbar, West Virginia, as a
private Company and has grown to over 22 locations spread over seven states.
State Electric Supply gross revenues in 1996 of over $125 million, and
employees over 500 people in their service area.
Core Data Comm, a Regional Distributor specializing in
telecommunications.
American Access Technologies, Inc., is currently negotiating with
several National Distributors. There can be no assurance of any additional
distribution agreements.
COMPETITION
The market for telecommunications products is highly competitive and
subject to rapid technological change, regulatory developments and emerging
industry standards. The Company believes that the principal competitive factors
in its markets are conformance to standards, reliability, safety, product
features, price, performance and quality of customer support. There can be no
assurance that the Company will compete successfully in the future with respect
to these or other factors.
MANUFACTURING
The Company has developed all of its products utilizing computer
assisted design drawings (CADD). Master copies of its products are safeguarded
at the home office and certain copies are available to outsource firms.
At present, the Company outsources it's product prototyping,
production, manufacturing, assembly and packaging to Omega Metals, Inc., located
in Keystone Heights, Florida. As a contract manufacturer, Omega Metals
specializes in providing complete manufacturing and assembly services. As part
of their complete services package, Omega Metals provides manufacturing as well
as consulting services, product prototype development plus short and/or long run
manufacturing for the products designed by the Company. After product prototypes
are reviewed, modified and accepted by the Company, Omega Metals manufactures
the products, provides complete product assembly, performs manufacturing quality
assurance, packages the products and ships as specified by the Company.
Employing the most current computer controlled equipment on the market,
they have a manufacturing capacity of approximately five (5,000) thousand units
per month and have additional space for expansion as the need arises. Their
manufacturing capability is not limited to only precision metal fabrication as
they also provide on site state of the art high-tech surface coatings such as
Iridizing, Powder Coating, Silk Screening and specialized production painting.
The Company does not have a long-term supply contract with Omega
Metals, Inc. However, the Company believes that other companies are qualified to
manufacture its products if Omega Metals, Inc. is terminated as a supplier for
any reason.
18
<PAGE> 19
FUTURE PRODUCT DEVELOPMENT
As the Company identified the specific product needs of the
telecommunications industry they developed products to address these needs.
Products designed to date have been accepted by the major Standards and Code
Authorities throughout the United States. The products assist equipment
manufacturers in marketing their own products.
The Company's first design was a low-voltage Zone Cabling Termination
Cabinet which mounts within the ceiling the grid system. The Company developed
accessory equipment to permit cable penetrations and maintain fire rating.
The second phase was to develop a cabinet that serves as a termination,
distribution and/or consolidation point within a raised floor data center. This
unit has been developed with a prototype. It is estimated that this unit will be
in production within the next six months.
The third phase includes a high-voltage termination cabinet that mounts into
the ceiling the grid system to house active electronics, including computer
hubs, routers and switches. This unit will accommodate Fiber Optics as well as
conventional copper wiring. We anticipate that this unit will be U.L. listed
and into production within the next six months.
There can be no assurance that any new products will be successfully
developed or marketed.
INTELLECTUAL PROPERTY
The Company has filed with the United States Department of Commerce,
Patent and Trademark Office application for patent, pending No. 08785006, for
Zone Cabling Termination Cabinet and Communications Cable Interconnection
Apparatus and Associated Method for an Open Office Architecture. The patent
application contains approximately 67 various claims associated with zone
cabling techniques.
The Company is preparing a formal filing under the Patent Cooperation
Treaty for European filing and will have foreign applications filed before
January 1998.
There can be no assurance that any patents will be granted on the
Company's products or, if granted, that they will provide meaningful
protection against competing products which may be introduced.
GOVERNMENT REGULATION - INDUSTRY STANDARDS
The markets for the Company's products are characterized by the need to
meet governmental and industry standards. In the U.S., the Company's products
must comply with various regulations established by the Federal Communications
Commission and Underwriters Laboratories, as well as
19
<PAGE> 20
standards established by Bell Communications research and local building codes.
The ZCTC has been approved by Underwriters Laboratories for low voltage
communications and meets or exceeds the national electrical code requirements
when used with appropriate fire foam kits in association with cable access
penetration models
The Company maintains membership in trade organizations such as the
Telecommunications Industry Association, International Association of Electrical
Inspectors and Building Industrial Consulting Services International.
EMPLOYEES
As of December 3, 1997 substantially all of the activities of the
Company are undertaken by its three officers, who are engaged pursuant to
Executive Management Agreements, and two commission sales representatives. See
"Executive Compensation - Executive Management Agreements".
LEGAL PROCEEDINGS
The Company is not involved in any material legal proceeding.
FACILITIES
The Company's executive offices in Altamonte Springs, Florida comprise
3,000 square feet and are leased on a 3 year lease expiring December 31, 1999 at
a rent of $3,133 per month. The current lease tend expires on December 31, 1999.
MANAGEMENT
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
----------------- ---- ---------
<S> <C> <C>
Victor E. Murray 73 President
Richard A. Murray 43 Vice President, Director
Bobby E. Story 56 Secretary, Treasurer, Director
John W. Cooney 62 Director
Victor D. Phillips 55 Director
</TABLE>
VICTOR E. MURRAY, President and Director, has a 30 year track record of
success in the Electrical Engineering field with experience in distribution,
manufacturing and marketing. He has worked with companies such as Florida
Electrical Supply, Graybar Electric, James & Associates and Ralston, Lowe, Inc.
The clients he has served range from engineers and contractors to power
companies and municipalities. Employment history for the past five (5) years is:
20
<PAGE> 21
October 1996 to Present: President - American Access Technologies, Inc.
January 1, 1995 to October 1996: President - Vic Murray & Associates,
Inc.
April 1977 to December 31, 1994: Vic Murray & Associates, Inc.
Manufacturer's Representative
RICHARD A. MURRAY, Vice President-Sales and Director, has over 15 years
experience in the electrical field specializing in such area as Ozone
Generation, electrical switching and telecommunications. He has over 2 years
high level military training in sensitive electrical technologies. Mr. Murray
was Vice President of Sales for COOL WAY. Employment history for the past five
(5) years is:
October 1996 to Present: Vice President - American Access Technologies,
Inc.
January 1, 1995 to October 1996: Vice President - Vic Murray &
Associates, Inc.
April 1977 to December 31, 1994: Vic Murray - associates - associate,
manufacturer's representative specializing in the telecommunications supplies,
wiring, and equipment.
BOBBY E. STORY, Secretary/Treasurer, CFO and Director, has been a
former practicing CPA and real estate developer during the past 30 years. He
worked for Arthur Young & Company CPA (now Ernst & Young, LLP), Treasurer for
Condey Corporation an international developer located in Winter Park, Florida,
and directed the real estate operations in Florida for Drexel Burnham Lambert &
Company. He functions as the Chief Financial Officer for the corporation.
Employment history for the past five (5) years is:
October 1996 to Present: Sec/Treasury, CFO - American Access
Technologies, Inc.
August 1996 to October 1996: Financial Advisor - Self employed.
March 1996 to August 1996: George S. May Co. Project Manager
April 1987 to March 1996: NACEX, Inc. Controller, Vice President
Finance
JOHN W. COONEY, Director, is a certified public accountant. He was
Senior Tax Partner at Coopers Lybrand, LLP, until he retired in 1986. He has
practiced as a tax and financial consultant since then. Employment history for
the past five (5) years is:
January 1987 to Present: Operates J. W. Cooney, CPA as a sole
proprietorship.
VICTOR D. PHILLIPS, Director, is a member of the Company's Active
Advisory and Consulting Board. He has been in the telecommunications industry
for over 30 years, certified as
21
<PAGE> 22
a Registered Communications Distribution Designer, teaches as a certified BICSI
instructor, past National President of BICSI and is currently President of
Information Transport Systems Designers International which provides consulting,
design, inspection and project management services. Mr. Phillips is a member of
the International Association of Electrical Inspectors and is a communications
inspector and member of the Florence County Board of Appeals in Florence, South
Carolina. Employment history for the past five years is:
August 1991 to Present: President of Information Transport Systems
Designers.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation paid to the
Company's chief executive officer for the last three completed fiscal years. No
executive officer of the Company received compensation of $100,000 or more
during any such year.
<TABLE>
<CAPTION>
Name and Other Annual
Principal Position Year Total Income Bonus Compensation
- ------------------ ---- ------------ ----- ------------
<S> <C> <C> <C> <C>
Victor E. Murray, President* 1995 $51,576 -0- -0-
1996 $25,501 -0- -0-
</TABLE>
*paid by Vic Murray and Associates, Inc.
DIRECTOR COMPENSATION
At present, director fees are paid to Victor D. Phillips at the rate of
$250 per meeting plus travel and lodging expenses. No other fees are paid for
director services.
EXECUTIVE MANAGEMENT AGREEMENTS
On October 21, 1996 three officers of the Company have entered into
management agreements with the Company. The individuals and their titles are as
follows:
Victor E. Murray President
Bobby E. Story Chief Financial Officer
Richard A. Murray Vice President
Their combined responsibilities are to organize policies and procedures
for business operations, secure short and long term financing, develop products
and/or services, develop market and sell products and/services, provide (legal,
accounting and industry specific) services to properly organize and profitably
operate the Company.
22
<PAGE> 23
Each officer is authorized a management fee of $5,000.00 per month
however, each will be paid $693.00 per week. The unpaid balance due each officer
will accrue. Accrued compensation will be paid as directed by the board of
directors but shall be paid on or before December 31, 1998. State or federal
taxes on compensation paid are the sole responsibility of each officer
individually.
The term of the agreements are on a month to month basis and may be
terminated by either party by giving notice of at least 30 days prior to
anticipated termination.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Victor E. Murray, President, is the father of Richard A. Murray, Vice
President of the Company. They co-invented the primary product of the Company,
the Zone Cabling Termination Cabinet and subsequently assigned all rights to the
patent to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of December 5, 1997, the beneficial
ownership of the Company's Common Stock by (i) the only persons who own of
record or are known to own, beneficially, more than 5% of the Company's Common
Stock; (ii) each director and executive officer of the Company; and (iii) all
directors and officers as a group.
<TABLE>
<CAPTION>
Percent of
Number of Outstanding
Name Shares Common Stock(1)
<S> <C> <C>
Victor E. Murray 400,000 12.65%
Richard A. Murray 400,000 12.65%
Bobby E. Story 390,000 12.34%
Steven K. Robinson 200,000 6.73%
Steve R. Jones 200,000 6.73%
John W. Cooney 50,000 1.58%
Victor D. Phillips -0- -0-
Bridge Bank Ltd. 800,000 25.2%
Cede & Co. 186,947 5.9%
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C> <C>
Officers and Directors
as a group (5 persons) 1,240,000 41.75%
</TABLE>
(1) Based upon 2,970,000 shares outstanding
Does not include warrants to purchase Common Stock at $8.00 per share
as follows: Victor E. Murray - 70,000 shares; Richard A. Murray - 70,000 shares;
Steven K. Robinson - 70,000 shares; Bobby E. Story - 70,000 shares; and Capital
International Securities Group, Inc. - 350,000 shares.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue 10,000,000 shares of Common Stock
with $.001 par value. The holders of the Common Stock are entitled to one vote
per each share held and have the sole right and power to vote on all matters on
which a vote of stockholders is taken. Voting rights are non-cumulative. The
holders of shares of Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors, out of funds legally available therefore
and to share pro-rata in any distribution to stockholders. The Company
anticipates that any earnings will be retained for use in its business for the
foreseeable future. Upon liquidation, dissolution, or winding up of the Company,
the holders of the Common Stock are entitled to receive the net assets held by
the Company after distributions to the creditors. The holders of Common Stock do
not have any preemptive right to subscribe for or purchase any shares of any
class of stock. The outstanding shares of Common Stock and the shares offered
hereby will not be subject to further call or redemption and will be fully paid
and non-assessable
STOCK PURCHASE WARRANTS
Each Stock Purchase Warrant will entitle the registered holder to
purchase one share of the Company's Common Stock for $8.00. The exercise prices
of the Warrants and the number of shares issuable upon exercise of such Warrants
will be subject to adjustment to protect against dilution in the event of stock
dividends, stock splits, combinations, subdivisions and reclassification.
Warrants may be exercised by payment of the exercise price in United States
funds by cash or certified or bank check. No fractional shares of Common Stock
will be issued in connection with the exercise of Warrants. Warrants may not be
exercised unless a registration statement pursuant to the Securities Act, as
amended, covering the underlying shares of Common Stock is current and such
shares have been qualified, or there is an exemption from qualification
requirements under the securities laws of the state of residence of the holder
of the Warrants. In the event that there is no such registration statement or
exemption from registration, the holder will not be able to exercise the
Warrants.
24
<PAGE> 25
Unless extended by the Company at its discretion, the Warrants will
expire at 3:00 p.m. Eastern time on February 11, 2000. In the event a holder of
Warrants fails to exercise the Warrants prior to their expiration, the Warrants
will expire and the holder thereof will have no further rights with respect to
the Warrants.
The Warrants may be exercised upon surrender of the Warrant
certificate on or prior to the expiration date at the offices of the warrant
agent, with the exercise form on the reverse side of the Warrant certificate
completed and executed as indicated, accompanied by full payment of the exercise
price (by certified check or bank draft payable to the Company) to the warrant
agent for the number of Warrants being exercised. The Warrant Holders do not
have the rights or privileges of holders of Common Stock.
No Warrant will be exercisable unless at the time of exercise the
Company has filed a current registration statement with the Commission covering
the shares of Common Stock issuable upon exercise of such Warrant and such
shares have been registered or qualified or deemed to be exempt from
registration or qualification under the securities laws of the state of
residence of the holder of such Warrant. While it is the Company's intention to
do so, there can be no assurance that it will be able to do so.
SELLING SECURITY HOLDERS
The following security holders may offer Warrants and/or shares of
Common Stock issuable upon exercise of such Warrants:
<TABLE>
<CAPTION>
Number of
Warrants
or Shares Number of
Which may Warrants
be Offered and Shares
Number of Pursuant to be Owned
Warrants to this After the
Name and Company Affiliation Owned Prospectus Offering*
- ---------------------------- ----- ---------- ---------
<S> <C> <C> <C>
Capital International Securities Group, Inc. 350,000 350,000 -0-
Bobby E. Story, Secretary, Treasurer, Director 70,000 70,000 390,000
Victor E, Murray, President 70,000 70,000 400,000
Richard A, Murray, Vice President, Director 70,000 70,000 400,000
Steven K. Robinson 70,000 70,000 200,000
</TABLE>
25
<PAGE> 26
The following security holder may offer shares of Common Stock:
<TABLE>
<CAPTION>
Number
Of Shares
Which may be Number of
Offered Shares
Number of Pursuant to be Owned
Shares to this After the
Name Owned Prospectus Offerings
---- ----- ---------- ---------
<S> <C> <C> <C>
Steven R. Jones 200,000 200,000 -0-
Steven K. Robinson 200,000 200,000 -0-
</TABLE>
*Assuming all Warrants and/or Shares are sold.
LEGAL MATTERS
The validity of the securities offered hereby is being passed upon for
the Company by Joel Bernstein, 9701 Biscayne Boulevard, Miami, Florida.
EXPERTS
The financial statements appearing in this Prospectus and Registration
Statement have been audited by Rachlin Cohen & Holtz, CPA's, independent
certified public accountants, as set forth in their report thereon appearing
elsewhere herein and in the Registration Statement, 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 Securities and Exchange Commission a
Registration Statement on Form SB-2 under the Securities Act with respect to the
securities offered hereby. This Prospectus, filed as a part of the Registration
Statement, does not contain certain information set forth in or annexed as
exhibits to the Registration Statement, and reference is made to such exhibits
to the Registration Statement for the complete text thereof. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement and to the exhibits filed as
part thereof, which may be inspected and copied at the public reference
facilities of the Commission in Washington, D.C., and at the Commission's
regional offices at 500 West Madison Street, Chicago, IL 60604; 7 World Trade
Center, New York, NY 10048; and 5757 Wilshire Boulevard, Los Angeles, CA 90034;
and copies of such material can be obtained from the Public Reference Section of
the Commission, 450 5th Street, N.W., Washington, DC 20549, at prescribed rates
and are available on the World Wide Web at: http://www.sec.gov.
26
<PAGE> 27
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity (Deficiency) F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - F-13
</TABLE>
<PAGE> 28
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
American Access Technologies, Inc.
We have audited the consolidated balance sheet of American Access Technologies,
Inc. as of December 31, 1996 and the related consolidated statements of
operations, stockholders' equity (deficiency) and cash flows for the years ended
December 31, 1996 and 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Access
Technologies, Inc. as of December 31, 1996, and the results of their operations
and their cash flows for the years ended December 31, 1996 and 1995, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As more fully discussed in
Note 2 to the consolidated financial statements, the Company is in the
development stage and has incurred net losses and reflects a deficit accumulated
during the development stage as of and for the year ended December 31, 1996 and
reflects a stockholders' deficiency as of December 31, 1996. This condition
raises substantial doubt as to the ability of the Company to continue as a going
concern. Management's plans with regard to this matter are also described in
Note 2 to the consolidated financial statements. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
RACHLIN COHEN & HOLTZ
Miami, Florida
November 20 , 1997
F-1
<PAGE> 29
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 268,800 $ 61,760
Inventory 23,395 $ --
Prepaid expenses 8,560 2,874
Stock subscription receivable (subsequently collected) -- 900
--------- ---------
Total current assets 300,755 65,534
--------- ---------
Property and Equipment 31,572 8,227
--------- ---------
Other Assets:
Patent costs 13,583 8,083
Other assets 3,714 8,138
Note receivable 5,000 5,000
--------- ---------
Total other assets 22,297 21,221
--------- ---------
Total assets $ 354,623 $ 94,982
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Note payable, stockholder $ -- $ 100,000
Accounts payable and accrued expenses:
Management, consulting fees, interest and reimbursements
to Officers, Directors, Stockholders 67,573 40,308
Other 7,487 11,439
Due to stockholder -- 1,000
--------- ---------
Total current liabilities 75,060 152,747
--------- ---------
Commitments and Other Matters -- --
Stockholders' Equity (Deficiency):
Preferred stock, $.001 par value; authorized 1,000,000
shares; none issued -- --
Common stock, $.001 par value; authorized 10,000,000
shares; issued and outstanding 3,083,333 and 1,400,000
shares, respectively 3,083 1,400
Additional paid-in capital 599,627 7,083
Deficit accumulated during the development stage (323,147) (66,248)
--------- ---------
279,563 (57,765)
--------- ---------
Total liabilities and stockholders' equity (deficiency) $ 354,623 $ 94,982
========= =========
</TABLE>
See notes to financial statements.
F-2
<PAGE> 30
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31, Cumulative
------------- ------------ from
1997 1996 1996 1995 Inception
--------- ------- -------- -------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues $ 173,545 $ -- $ -- $ -- $ 173,545
--------- ------- -------- -------- ---------
Costs and Expenses:
Direct costs 47,160 -- -- -- 47,160
Management and consulting fees,
officers/ directors/stockholders 220,185 -- 46,154 -- 266,339
Product development 3,996 -- 6,601 -- 10,597
Marketing and promotion 48,831 -- -- -- 48,831
General and administrative 101,915 -- 12,301 -- 114,216
--------- ------- -------- -------- ---------
422,087 -- 65,056 -- 487,143
--------- ------- -------- -------- ---------
Loss before Interest Expense (248,542) -- (65,056) -- (313,598)
Interest Expense 8,358 -- 1,192 -- 9,550
--------- ------- -------- -------- ---------
Loss from Continuing Operations (256,899) -- (66,248) -- (323,147)
Income from Discontinued Operations -- 9,627 4,606 15,137 19,743
--------- ------- -------- -------- ---------
Net Income (Loss) $(256,899) $ 9,627 $(61,642) $ 15,137 $(303,404)
========= ======= ======== ======== =========
Income (Loss) Per Common Share:
Continuing Operations $ (0.09) $ -- $ (0.02) $ --
Discontinued Operations -- 0.00 -- 0.01
--------- ------- -------- --------
Net Income (Loss) $ (0.09) $ 0.00 $ (0.02) $ 0.01
========= ======= ======== ========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 31
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
Deficit
Capital Accumulated
Common Stock in During the
---------------------- Excess Development
Shares Amount of Par Stage Total
--------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995:
Issuance of common stock for receivable ($.001 per share) 1,400,000 $ 1,400 $ -- $ -- $ 1,400
Net income -- -- -- 15,137 15,137
Stockholder distribution -- -- -- (15,137) (15,137)
--------- ------- -------- --------- ---------
Balance, December 31, 1995 1,400,000 1,400 -- -- 1,400
Year Ended December 31, 1996:
Contributed capital -- -- 7,083 -- 7,083
Net loss -- -- -- (61,642) (61,642)
Stockholder distribution -- -- -- (4,606) (4,606)
--------- ------- -------- --------- ---------
Balance, December 31, 1996 1,400,000 1,400 7,083 (66,248) (57,765)
Nine Months Ended September 30, 1997 (Unaudited):
Issuance of common stock for cash ($.001 per share) 1,450,000 1,450 -- -- 1,450
Sale of common stock in private placement ($1.50
per share, net of related costs) 400,000 400 492,577 -- 492,977
Exercise of placement agent warrants ($3.00 per share) 33,333 33 99,967 -- 100,000
Retirement of common stock issued to officer (200,000) (200) -- -- (200)
Net loss -- -- -- (256,899) (256,899)
--------- ------- -------- --------- ---------
Balance, September 30, 1997 (Unaudited) 3,083,333 $ 3,083 $599,627 $(323,147) $ 279,563
========= ======= ======== ========= =========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 32
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31, Cumulative
----------------- ------------ from
1997 1996 1996 1995 Inception
--------- ------- --------- -------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $(256,899) $ 9,627 $ (61,642) $ 15,137 $(303,404)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation 4,427 -- -- -- 4,427
Changes in operating assets and liabilities:
(Increase) decrease in:
Prepaid expenses (5,686) -- (2,874) -- (8,560)
Inventory (23,395) -- -- -- (23,395)
Other assets 4,425 -- (8,138) -- (3,713)
Increase in accounts payable and accrued expenses 23,313 -- 51,638 306 75,257
--------- ------- --------- -------- ---------
Net cash provided by (used in)
operating activities (253,815) 9,627 (21,016) 15,443 (259,388)
--------- ------- --------- -------- ---------
Cash Flows from Investing Activities:
Increase in note receivable -- -- (5,000) -- (5,000)
Patent development (5,500) -- -- -- (5,500)
Acquisition of property and equipment (27,772) (1,667) (8,227) -- (35,999)
Loan receivable from stockholder (1,000) (5,999) -- (1,197) (2,197)
--------- ------- --------- -------- ---------
Net cash used in investing activities (34,272) (7,666) (13,227) (1,197) (48,696)
--------- ------- --------- -------- ---------
Cash Flows from Financing Activities:
Proceeds from (repayment of) note payable (100,000) -- 100,000 -- --
Proceeds from sale of stock and exercise of warrants 594,227 -- 500 -- 594,727
Repayment of stock subscription receivable 900 -- -- -- 900
Distribution to stockholder -- -- (4,606) (15,137) (19,743)
--------- ------- --------- -------- ---------
Net cash provided by (used in)
financing activities 495,127 -- 95,894 (15,137) 575,884
--------- ------- --------- -------- ---------
Net Increase (Decrease) in Cash 207,040 1,961 61,651 (891) 267,800
Cash, Beginning 61,760 109 109 1,000 1,000
--------- ------- --------- -------- ---------
Cash, Ending $ 268,800 $ 2,070 $ 61,760 $ 109 $ 268,800
========= ======= ========= ======== =========
Supplemental Disclosure of Cash Flow Information:
Interest paid 9,550 --
Non-cash investing and financing activities:
Investment in subsidiary by means of
payable to stockholder $ -- $ 1,000
Issuance of common stock for receivable -- 900
Patent contributed to Company by
certain stockholders -- 7,083
</TABLE>
See notes to financial statements.
F-5
<PAGE> 33
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND CAPITALIZATION
American Access Technologies, Inc. ("the Company") was incorporated
on October 21, 1996 under the laws of the State of Florida. The
Company's Certificate of Incorporation, as amended on November 25,
1996, authorizes the Company to issue and have outstanding at any
one time 10,000,000 shares of common stock, par value $.001 per
share and 1,000,000 shares of preferred stock, par value $.001 per
share. The Company was organized to acquire all of the voting
common stock of Vic Murray & Associates, Inc. ("VMA"). VMA was
incorporated on December 19, 1994 under the laws of the State of
Florida.
The Company is authorized to issue 1,000,000 shares of preferred
stock, par value $.001. The Board of Directors of the Company has
the authority, without further action by shareholders, to issue the
preferred stock in one or more series, and to fix for any series
the dividend rate, redemption price, liquidation or dissolution
preferences, conversion rights, voting rights and other preferences
and privileges. As of December 31, 1996 and September 30, 1997, the
Company has not designated any series of preferred stock and no
shares of preferred stock have been issued or are outstanding.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary. All
intercompany accounts and transactions have been eliminated.
BUSINESS
American Access Technologies, Inc. develops specialized products
for the telecommunications industry. The Company recently
introduced its first proprietary product, a Zone Cabling
Termination Cabinet (the "product") which it plans to manufacture
and distribute to the telecommunications industry. The product is a
device that is used in voice, computer and data transmission
systems throughout the world.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Although these
estimates are based on management's knowledge of current events and
actions it may undertake in the future, they may ultimately differ
from actual results.
DEVELOPMENT STAGE ENTERPRISE
As noted above, the Company was incorporated on October 21, 1996.
To date, the Company has been principally engaged in organizational
activities, the promotion of its product and raising capital.
Planned operations, as described above, have commenced but revenue
generated to date is not considered significant in relation to the
Company's business plan. Accordingly, the Company is considered to
be in the development stage, and the accompanying financial
statements represent those of a development stage enterprise.
F-6
<PAGE> 34
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for major
betterments and additions are charged to the asset accounts, while
replacement, maintenance and repairs which do not extend the life
of the respective assets are charged to expense currently.
Commencing in January 1997, depreciation is computed on the
straight-line method at rates based on the estimated useful lives
of the assets.
PATENT
The Company has capitalized certain incremental costs incurred
related to acquiring a patent on the Company's product. This patent
was pending at December 31, 1996 and September 30, 1997, and
therefore, amortization of the patent has not commenced.
PRODUCT DEVELOPMENT COSTS
Costs in connection with the development of the Company's product
are comprised of design, production, consulting and other related
professional fees. These costs have been charged to expense as
incurred.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share has been computed based upon the
weighted average number of shares of common stock outstanding
during the periods. The sale of common stock effected in February,
1997 has been treated as the equivalent of a stock split and
accordingly, such shares have been considered outstanding for all
periods. The number of shares used in the computation was 2,850,000
for the years ended December 31, 1996 and 1995 and 3,011,875 and
2,850,000 for the nine months ended September 30, 1997 and 1996
respectively. Fully diluted earnings per share, assuming exercising
of the warrants granted is not presented as the effect of
conversion is anti-dilutive.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash balances at
financial institutions that, from time to time, exceed federally
insured limits. The Company believes that such risks are minimized
as a result of the size and stature of the financial institution in
which the Company maintains its account.
UNAUDITED INFORMATION
The accompanying consolidated financial statements as of and for
the nine months ended September 30, 1997 and 1996 are unaudited.
However, in the opinion of management, such statements reflect all
adjustments (consisting of normal recurring accruals and
adjustments) necessary for a fair presentation of consolidated
financial position, results of operations and cash flows. The
results of operations for the nine months are not necessarily
indicative results to be expected for the entire year.
F-7
<PAGE> 35
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 2. BASIS OF PRESENTATION
As described above, the Company was incorporated on October 21, 1996,
and since that time has been primarily involved in organizational
activities, developing a strategic plan for the marketing and
distribution of its product and raising capital. Planned operations
have commenced, but little revenue has been generated to date.
Accordingly, the Company is considered to be in the development stage
and the accompanying financial statements represent those of a
development stage enterprise.
The accompanying consolidated financial statements have been presented
in accordance with generally accepted accounting principles, which
assume the continuity of the Company as a going concern. However, as
discussed above, the Company is in the development stage and, therefore
has generated little revenue to date. As reflected in the accompanying
consolidated financial statements, the Company has incurred a loss from
continuing operations and reflects a deficit accumulated during the
development stage of $66,248 as of and for the period ended December
31, 1996, and reflects a stockholders' deficiency of $57,765 as of
December 31, 1996. This condition raises substantial doubt as to the
ability of the Company to continue as a going concern.
Management's plans with regard to this matter encompass the following
actions:
1. BUSINESS PLAN
The Company has adopted a business plan intended to define the
Company's strategy for growth. The Company will distribute its
product in the industrial and commercial markets through
manufacturer's representatives and distributors. During the next
twelve months, the Company anticipates that it will have various
contracts in place with major telecommunications companies
throughout the majority of the United States.
2. EQUITY INFUSION BY MEANS OF PROPOSED PRIVATE PLACEMENT OF
SECURITIES
The Company is planning to raise additional working capital by
means of additional debtor equity offerings, including private
placement financing of its securities (see Note 11).
The eventual outcome of the success of management's plans cannot be
ascertained with any degree of certainty. The accompanying consolidated
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
NOTE 3. BUSINESS COMBINATION
On October 21, 1996, the Company acquired all of the common stock of
VMA. Certain stockholders of the Company are related to the stockholder
of VMA. The acquisition has been accounted for in a manner similar to
the pooling of interests method and, accordingly, has been given
retroactive effect in these consolidated financial statements.
F-8
<PAGE> 36
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Estimated
Useful Life September 30, 1997 December 31,
(Years) (Unaudited) 1996
------- ----------- ----
<S> <C> <C> <C>
Office furniture and equipment 3-5 $35,999 $8,227
Less accumulated depreciation 4,427 -
------- ------
$31,572 $8,227
======= ======
</TABLE>
NOTE 5. NOTE RECEIVABLE
The Company has a $5,000 note receivable due from an investment banker.
The note is due February 23, 1997 and has no interest rate. The note
represent an advance to an investment banker for services rendered in
connection with his efforts to obtain financing for the Company. The
note will become part of the cost of the private placement of
securities as discussed in Note 11 and will be charged to stockholders'
equity in a manner equivalent to an offering cost.
NOTE 6. NOTE PAYABLE, STOCKHOLDER
The Company has a $100,000 note payable to Bridge Bank, Ltd. The note
bears interest at 15% and matures on December 31, 1997. The loan is
collateralized by an aggregate of 510,000 shares of outstanding common
stock owned by certain stockholders and is personally guaranteed by one
of the stockholders. At the time of the financing, the Company sold to
the bank 400,000 shares of common stock at $.001 per share, the same
price per share paid by the other founding stockholders of the Company.
This obligation was repaid in February, 1997.
NOTE 7. INCOME TAXES
The Company accounts for income taxes under the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109, Accounting for Income
Taxes. SFAS No. 109 requires the recognition of deferred tax
liabilities and assets for temporary differences, operating loss
carryforwards, and tax credit carryforwards existing at the balance
sheet date. The Company plans to file a consolidated income tax return
with its subsidiary. An effective tax rate of 34% was used to calculate
the deferred income taxes.
A temporary difference is a difference between the tax basis of an
asset or liability and its reported amount in the financial statements
that will result in taxable or deductible amounts in future years when
the asset is recovered or the liability is settled. Deferred taxes
represent the future tax return consequences of these differences.
As of December 31, 1996, the Company had net operating loss
carryforwards for federal income tax reporting purposes amounting to
approximately $51,600 which expire in varying amounts to the year 2011.
F-9
<PAGE> 37
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 7. INCOME TAXES (Continued)
The Company has not recognized any benefit of such net operating loss
carryforwards in the accompanying consolidated financial statements in
accordance with the provisions of SFAS No. 109 as the realization of
this deferred tax benefit is not considered to be more likely than not.
A 100% valuation allowance has been recognized to offset the entire
effect of the Company's net deferred tax assets. The Company's net
deferred tax asset position is composed primarily of the Company's tax
loss carryforwards.
The components of the deferred tax asset were as follows:
<TABLE>
<CAPTION>
September 30,1997 December 31,
(Unaudited) 1996
----------- ----
<S> <C> <C>
Deferred tax asset $ 69,000 $ 17,600
Less valuation allowance (69,000) (17,600)
-------- --------
Net deferred tax asset $ - $ -
======== ========
</TABLE>
As of December 31, 1995, VMA was a "S Corporation" for federal income
tax purposes. The tax liability for income generated and benefit for
losses incurred passed directly to the stockholders. Accordingly, no
provision or liability for federal income taxes has been included in
the accompanying consolidated financial statements.
NOTE 8. COMMON STOCK
WARRANTS
As of December 31, 1996, the Company had outstanding warrants to
purchase 420,000 shares of the Company's common stock at exercise
prices of $6.00 per share. On February 11, 1997, these warrants
were rescinded and the Board of Directors authorized the issuance
of 700,000 warrants to purchase one share common stock per warrant
at an exercise price of $8.00 per share expiring on February 11,
2000.
SUBSEQUENT SALES OF COMMON STOCK
On February 11, 1997, the Company authorized the sale of an
additional 1,450,000 shares of common stock, at a price of $.001
per share. Of these additional shares, 1,400,000 shares were sold
pro-rata to the existing stockholders and 50,000 shares were sold
to a member of the Board of Directors.
NOTE 9. RELATED PARTY TRANSACTIONS
NOTE PAYABLE, STOCKHOLDER
The Company has a note payable to a stockholder. (See Note 6.)
Interest charged to operations in connection with this note payable
to stockholder was $1,192 for the year ended December 31, 1996 and
$8,358 for the nine months ended September 30, 1997.
F-10
<PAGE> 38
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 9. RELATED PARTY TRANSACTIONS
DUE TO STOCKHOLDER
The Company has an amount due to a certain stockholder. This amount
was paid during the nine months ended September 30, 1997.
MANAGEMENT AGREEMENTS
The Company entered into management agreements with four
stockholders dated October 21, 1996 on a month-to-month basis not
to exceed eighteen months. The agreements provide for compensation
of $60,000 per year per stockholder.
CONSULTING AGREEMENT
The Company entered into a consulting agreement with one of its
stockholders dated October 21, 1996 on a month-to-month basis. The
agreement provides for compensation of $60,000 per year (see Note
14).
NOTE 10. LEASE COMMITMENTS
The Company leases its administrative facilities under an operating
lease, which expires in 1999. Future minimum rentals due under the
lease are approximately as follows for the years ending December 31:
<TABLE>
<S> <C>
1997 $ 37,600
1998 37,600
1999 37,600
--------
$112,800
========
</TABLE>
NOTE 11. PRIVATE PLACEMENT OF SECURITIES
The Company is in the process of raising additional capital through a
private placement offering of its securities as of December 31, 1996.
The proposed private placement offering will consist of a minimum of
50,000 units and a maximum of 100,000 units, each unit consisting of
four shares of common stock, being offered by the Company on a "best
efforts" basis at a price of $6.00 per unit through a Placement Agent.
Upon sale of the units, the Company would receive minimum gross
proceeds of $300,000 up to maximum gross proceeds of up to $600,000,
before payment of commissions and other offering costs. The Placement
Agent is to receive a stipulated commission and certain expense
allowance and administrative fee, and will also be issued warrants to
purchase 120,000 shares of common stock at $3 per share.
F-11
<PAGE> 39
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 11. PRIVATE PLACEMENT OF SECURITIES (Continued)
During the nine months ended September 30, 1997, the Company sold
100,000 units for $6.00 per unit for net proceeds totaling $492,977.
The sale of the units resulted in the issuance of 400,000 shares of
common stock.
Additionally, in September 1997, the Company issued 33,333 shares of
common stock resulting from the exercise of the Placement Agent
warrants at $3.00 per share. The remaining placement agents warrants
were exercised in October 1997 (see Note 14).
NOTE 12. DISCONTINUED OPERATIONS
The Company acquired all the voting common stock of Vic Murray &
Associates, Inc. in order to acquire the patent developed by the
stockholder of Vic Murray & Associates, Inc. and his son. All assets
were transferred to the Company at their historical cost. No further
business was conducted in Vic Murray & Associates, Inc., therefore Vic
Murray & Associates, Inc. is accounted for on a retroactive basis as a
discontinued operation in the accompanying consolidated financial
statements.
Summarized information for the discontinued operations, were as
follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------ -----------------------
1997 1996 1996 1995
------ ------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues $ -- $93,005 $106,145 $133,574
Costs and Expenses -- 83,378 101,539 118,437
Net Income -- 9,627 4,606 15,137
</TABLE>
NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair value. These instruments include
cash, accounts payable and notes payable. Fair values were assumed to
approximate carrying values for these financial instruments since they
are short-term in nature and their carrying amounts approximate fair
values or they are receivable or payable on demand.
F-12
<PAGE> 40
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 14. SUBSEQUENT EVENTS
CONTRACTS WITH DISTRIBUTORS
As of September 30, 1997, the Company had entered into Stocking
Distributor Agreements with six distributors. The agreements set
forth terms whereby the distributors may purchase products from the
Company for resale to their customers within the U.S. and to Canada
and Mexico when the Company releases its products for sale in such
countries. The prices for the products covered by the agreements
are based upon the intention of the distributors to purchase a
minimum number of units during the next twelve months after
execution of the agreements (an aggregate of approximately 50,000
units as of September 30, 1997 and 8,000 units as of December 31,
1996). Revenue from these future sales will be recorded at such
time as the units are shipped to the distributors. The agreements
are for a term of one year and are automatically renewed each year
thereafter unless either party gives written notice of its intent
to cancel the arrangement, and contain, among other things, a
warranty effective for one year after the date of sale.
STOCKHOLDERS' EQUITY
Issuances of common stock subsequent to September 30, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
Additional
Paid-In
Common Stock Shares Amount Capital
------------ --------- ------ --------
<S> <C> <C> <C>
Balance, September 30, 1997 3,083,333 $3,083 $599,627
Exercise of placement agent warrants ($3.00 per share) 86,667 87 259,913
--------- ------ --------
Balance, October 31, 1997 3,170,000 $3,170 $988,311
========= ====== ========
</TABLE>
RESIGNATION OF OFFICERS AND RETIREMENT OF COMMON STOCK AND WARRANTS
In August 1997, an officer and shareholder of the Company resigned.
The consulting agreement between the officer and the Company was
modified. The modified agreement stipulates that the officer return
200,000 shares of common stock which was originally sold to the
officer for $.001 per share. The Company also canceled 70,000
warrants at $8.00 per share which were held by the officer.
On December 9, 1997 the Company executed a Management Termination
Agreement with another officer. Under the terms of the agreement,
the officer has returned 200,000 shares of common stock. The common
stock was originally sold to the officer for $.001 per share. The
officer has agreed to abide by certain terms regarding
non-disclosure of information and trade secrets which are effective
for two years subsequent to the date of the agreement.
F-13
<PAGE> 41
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Reference is hereby made to the provisions of Section 607.0850 of the
Florida Business Corporation Act which provides for indemnification of directors
and officers under certain circumstances.
Reference is hereby made to Article IV of Registrant's Amended and
Restated Articles of Incorporation which is filed as Exhibit 3(a).
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the
issuance and distribution of the securities offered hereby.
<TABLE>
<S> <C>
Registration Fee $ 3,646
Printing Expenses* 500
Legal Fees and Expenses* 10,000
Accounting Fees and Expenses* 8,346
Blue Sky Fees and Expenses* 3,000
Transfer Agent Fees and Expenses* 1,000
Misc.* 569
-------
Total $27,061
</TABLE>
*Estimated
Item 26. Recent Sales of Unregistered Securities.
The following provides information of all sales of outstanding stock
which were not registered under the Securities Act of 1933.
In connection with the Registrant's organizational activities,
2,800,000 shares of common stock were issued to founders and officers, Victor
Murray, Richard Murray, Steven J. Robinson, Bobby E. Story and Steve Jones for
par value of $.001 per share. Messrs. Robinson and Jones subsequently returned a
total of 400,000 shares to the Company for cancellation. The Company also issued
each of the foregoing persons a stock purchase warrant for 70,000 shares. Mr.
Jones' warrant was subsequently cancelled.
The Company issued 50,000 shares of common stock to John W. Cooney, a
director, for $.001 per share on February 11, 1997.
II-1
<PAGE> 42
In February 1997 the Company sold 800,000 shares of common stock to
Bridge Bank, Ltd. at par value of $.001 per share.
The Company issued a stock purchase warrant to Capital International
Securities Group, Inc. for 350,000 shares exercisable for $8.00 per share on
February 11, 1997.
From February 12 to April 11, 1997 the Company undertook a private
offering pursuant to Regulation D, Rule 504 and sold 400,000 shares of common
stock for $600,000. The Company issued 120,000 stock purchase warrants in
connection with the private offering, exercisable at $3.00 and such shares were
issued on exercise of the warrants.
None of the securities discussed above were registered under the
Securities Act of 1933, exemption being claimed in each case pursuant to Section
4(2), Regulation D or as overwise specified. All of such securities were not
solicited by advertising or any general solicitation and, except such securities
issued pursuant to Rule 504, contain a restrictive legend.
Item 25. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3(a) Amended and Restated Articles of Incorporation of the Registrant*
3(b) Bylaws of the Registrant*
3(c) Form of Stock Purchase Warrant expiring February 11, 2000*
5.1 Opinion of counsel
8.1 Executive Management Agreements of Victor E. Murray, Richard A. Murray and Bobby E. Story*
23 Consent of counsel is contained in Exhibit 5.1
23.1 Consent of Independent Certified Public Accountants
24 Powers of Attorney*
</TABLE>
* To be filed by Amendment.
Item 26. Undertakings.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities
II-2
<PAGE> 43
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant 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
registrant will, unless in the opinion of its counsel, the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the questions whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
2. That for the purpose of determining any liability under the
Securities Act of 1935, each such post-effective amendment 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.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
II-3
<PAGE> 44
SIGNATURES
In accordance with 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 of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Altamonte Springs and State of Florida on December 24, 1997.
AMERICAN ACCESS TECHNOLOGIES, INC.
By /s/ Victor E. Murray
-------------------------------------------
President/ principal executive officer
In accordance with the requirements of the Securities Act of 1933, this
amendment to registration statement was the following persons in the capacities
and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Victor E. Murray President and Director December 24, 1997
(Principal Executive Officer)
Richard A. Murray Vice President and Director "
Bobby E. Story Treasurer, (Principal Accounting "
Officer)
John W. Cooney Director "
Victor D. Phillips Director "
</TABLE>
<PAGE> 1
EXHIBIT 5.1
Law Offices
JOEL BERNSTEIN
AREA CODE 305
P. O. BOX 330072 TELEPHONE: 751-3008
MIAMI, FLORIDA 33233 FACSIMILE: 751-4928
December 24, 1997
American Access Technologies, Inc.
238 N. Westmonte Drive
Altamonte Springs, FL 32714
Gentlemen:
I have acted as special counsel to American Access Technologies, Inc., a Florida
corporation (the "Corporation"), in connection with the offering of 1,030,000
shares of Common Stock and 630,000 Common Stock Purchase Warrants. The offering
of the shares and warrants is to be made pursuant to Registration Statement on
Form SB-2 to be filed with the Securities and Exchange Commission (the
"Registration Statement").
I have acted as special counsel to the Corporation in connection with the
preparation of the above-referenced Registration Statement.
Please be advised that I am of the opinion that the Corporation's Common Stock
and Common Stock Purchase Warrants have been duly authorized by the Corporation,
the Common Stock Purchase Warrants have been validly issued and when such
warrants are exercised in accordance with the terms and conditions set forth in
the Registration Statement, the Common Stock will be validly issued by the
Corporation and fully paid and non-assessable.
I consent to the use of my name in the Registration Statement in the section of
the Prospectus entitled "Legal Matters" and the filing of this letter as an
exhibit to the Registration Statement.
Yours very truly,
/s/ JOEL BERNSTEIN
------------------------
JB:jk
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated November 20, 1997 (which
contains an explanatory paragraph that describes a condition that raises
substantial doubt as to the ability of the Company to continue as a going
concern) relating to the financial statements of America Access Technologies,
Inc. appearing in such Prospectus. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
RACHLIN COHEN & HOLTZ
Miami, Florida
December 23, 1997
