AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1998
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.
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(Name of small business issuer in its charter)
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Florida 3661 59-3410234
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(State of Incorporation) (Primary Standard Industrial (IRS Employer I.D. Number)
Classification Number)
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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.A.
11900 Biscayne Blvd. #604
Miami, FL 33181
(305) 892-1122
Fax:(305) 892-0822
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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/
CALCULATION OF REGISTRATION FEE
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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
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Common Stock 1,308,238(2) $20.50 $26,818,879 $7,911.57
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(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 3, 1998.
(2) Includes 670,000 shares issuable on exercise of Warrants and 588,235 shares
which may be issued upon Conversion of Convertible Preferred Stock. The
number of shares may be increased by operation of anti-dilution provisions
contained in the Warrants and Preferred Stock.
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.
AMERICAN ACCESS TECHNOLOGIES, INC.
1,308,238 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 5 for a discussion of certain risk factors that should be considered by
prospective investors of the securities offered hereby.
The security holders named under "Plan of Distribution - Selling
Security Holders" have advised the Company that they may from time to time sell
or otherwise dispose of shares of the Common Stock to which this Prospectus
relates (of which 670,000 and 588,235 are issable upon Conversion of outstanding
Convertible Preferred Stock. 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 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 , may be deemed to be underwriters with respect to
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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 exercise price of the 570,000 of the Warrants is $8.00 per share. If all of
these Warrants are exercised in full the Company would receive proceeds of
$4,560,000. The Warrants expire on February 11, 2000. The Exercise price of
100,000 Warrants is $25.00 per share. If all of these Warrants are exercised the
company would receive $2,500,000. These Warrants expire on October 14, 2003.
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 the symbol AATK. On December 3, 1998, the closing bid quotation for
the Common Stock on the OTC Electronic Bulletin Board was $20.50.
Costs and expenses in connection with the registration of the
securities offered hereby, estimated at $32,226, 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 _________________, 1998.
THE COMPANY INTENDS TO FURNISH ITS SHAREHOLDERS WITH ANNUAL REPORTS CONTAINING
AUDITED FINANCIAL STATEMENTS CERTIFIED BY ITS INDEPENDENT PUBLIC ACCOUNTANTS AND
QUARTERLY REPORTS CONTAINING UNAUDITED FINANCIAL STATEMENTS FOR EACH OF THE
FIRST THREE QUARTERS OF EACH FISCAL YEAR.
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
Shares of Common Stock which may be offered by the Selling Security
Holders................................................................1,308,230
Shares of Common Stock to be outstanding assuming all shares to which
this Prospectus relates are sold.......................................4,564,700
BUSINESS
The Company is a development stage Florida corporation which was
incorporated on October 21, 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 Company's independent
certified public accountants have included an explanatory paragraph in their
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report on the Company's financial statements to express substantial doubt as to
the Company's ability to continue as a going concern.
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.
In November 1998 the Company acquired Omega Metals, Inc. ("Omega")
which firm has and will continue to provide product prototyping, production,
manufacturing, assembly and packaging operations to the company.
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.
DIVIDENDS
The Company has not paid any cash dividends on its Common Stock and
does not expect to pay cash dividends on its Common Stock in the foreseeable
future.
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.
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."
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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 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 several patents on its Zone Cabling products. On
April 26, 1998, the company was informed by the Patent and Trademark office of
its approval of the patent for cabling termination cabinet. On June 5, 1998, the
company was informed of its pending patent approval of the communications cable
interconnection apparatus and associated method for an open office architecture.
There is no assurance that any patents will afford theCompany 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.
POTENTIAL LACK OF LIQUIDITY
The Company's common stock currently trades on the OTC Bulletin Board under the
symbol: AATK. Stocks trading on the OTC Bulletin Board generally attract a
smaller number of market makers and a less active public market and may be
subject to significant volatility. The company has made application to The
NASDAQ Stock Market for listing on Small Capital Market. No assurance that this
application will be approved. Sales of substantial amounts of shares of the
Company's common stock in the public market pursuant to exercise of the warrants
herein and additional capital financing transactions which may be undertaken by
the Company in the future could adversely affect the market price of the
Company's common stock and the Company's ability to raise equity capital in the
future and may make it more difficult for an investor to liquidate his
investment in the Company.
NO CASH DIVIDENDS
The Company has not paid, nor does it presently contemplate the payment of, any
cash dividends on its Common Stock.
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USE OF PROCEEDS
No assurance can be given that any or all of the Warrants will be
exercised. Accordingly, as far as can be determined as of the date of the
Prospectus, the proceeds received by the Company upon any exercise of Warrants
will be used for general corporate purposes and for working capital which may
include payment of salaries, rent, research and development, purchase of
inventory and marketing expenses. Such proceeds would aggregate 7,060,000 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
High Low
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August 15, 1991 through
September 30, 1997 $7.625 $ 2.50
October 1, 1997 through
December 31, 1997 $12.00 $ 7.20
January 1, 1998 through
March 31, 1998 $12.25 $11.00
April 1, 1998 through
June 30, 1998 $18.50 $12.25
July 1, 1998 through
September 30, 1998 $21.50 $19.00
October 1, 1998 through
December 3, 1998 $20.50 $17.75
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, 1998 was approximately 618.
RECENT FINANCING
During the July-August Capital International Securities, Inc. exercised
60,000 $8.00 warrants w/ $480,000 proceeds to the corporation. (see form 10-QSB
September 30, 1998)
During October-December the company issued 50,000 shares of 10% Series
A Senior Convertible Preferred Stock with gross proceeds of $5,000,000 (reg. D,
SEC 506).
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On November 11, 1998 the company issued 226,470 shares of Common Stock.
This was done in exchange for all the issued Common Stock of Omega Metals, Inc.
(see form 10-QSB September 30, 1998)
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.
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.
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. In November 1998 the company acquired Omega Metals,
Inc. of Keystone Heights Florida.
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 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.
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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 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 uncategorized 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
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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.
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
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controls, security, and fire/life/safety wiring systems. The ZCTC was designed
to accommodates all manufacturers 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.
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
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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.
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).
11
<PAGE>
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
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.
On November 12, 1998, the Company has acquired all the outstanding
common stock of Omega Metals, Inc.(Omega), in exchange for 226,470 shares of the
Company's Common Stock. Omega has been a contact manufacturer of various
products used in the telecommunications industry.
Omega is a precision sheet metal fabrication and assembly company
located in Northeast Florida midway between Jacksonville and Gainesville. The
company was established in 1981, serving a diverse client base of over 300,
including engineering, technology and electronic companies, mostly in the
Southeastern markets. Clients include the likes of Carlisle Industries, CSX
Railroad and the U.S. military.
Omega Metals, Inc. operates from its 30,000 sq. ft. manufacturing
facility situated on 3 acres of land that it owns. The manufacturing process is
run by a state-of-the-art computer control system. Manufacturing services
include precision stamping, bending, assembly, painting and silk screening.
Quality control at Omega Metals is based on the Department of Defense military
standard MIL-1-45208A. Inspection equipment is strictly maintained to assure
consistent quality.
12
<PAGE>
Diversified facilities and equipment allow Omega Metals, Inc. to handle
a broad range of customer requirements. Strict attention to quality assures our
customers of consistent production and conformity to their specific
requirements.
Omega's manufacturing capacity of approximately five (5,000) thousand
units per month and has additional property 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.
By acquiring Omega with its 50 employees, the Company adds valuable
Long term management skills in the person of Erik Wiisanen and John Presley.
Omega will continue to operate as a wholly owned Subsidiary with their sales and
manufacturing intact. Omega has acquired 6 acres adjacent to their property and
plans a first quarter plant expansion of 30,000 sq. ft to supplement their
assembly capabilities.
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. On April 26, 1998, the company was informed by the Patent
and Trademark Office of its approval for patent of its Cabling Termination
cabinet. On June 5, 1998 the company was informed of its approval for patent of
a communication cable interconnection apparatus and associated method for an
open office architecture. Both programs are for utility patent.
The Company has made a formal filing under the Patent Cooperation
Treaty, Paris, France.
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. See "Litigation."
13
<PAGE>
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 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". Omega employs
approximately 50 persons, including 5 in management,2 in marketing and sales,3
in engineering and approximately 40 in production and distributions.
LITIGATION
The Company is defendant in a suit filed in January 1998 in the 18th
Judicial Circuit Court of Florida by Steve R. Jones who was the Company's
President from April 1997 to August 1997. Mr. Jones seeks rescission of a
consulting agreement he signed with the Company in August 1997, a declaration
that certain provisions of such agreement relating to non-competition, trade
secrets, non-disclosure and conflict of interest are no longer applicable to Mr.
Jones, damages for failure of the Company to make consulting payments of $7,500
per quarter to Mr. Jones and the present value of his stock options which he
agreed to surrender to the Company (200,000 options at $8.00 per share) and the
value of 200,000 shares of the Company's common stock which he surrendered
pursuant to the consulting agreement. The Company believes it was justified in
not paying Mr. Jones' consulting fees due to Mr. Jones' failure to perform the
consulting services assigned to him. Mr. Jones, through his attorney, has also
indicated that Mr. Jones is the inventor, or a co-inventor, of the Company's
Zone Calling Termination Cabinet. The Company does not believe that Mr. Jones is
the inventor or a co-inventor of such product and such issue is not included in
the litigation with Mr. Jones. If it were determined that Mr. Jones was the
inventor or co-inventor of the Company's product, such fact could cause the
invalidity of any patent issued to the Company on such product.
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.
Omega operates out of a company owned facility consisting of
approximately 30,000 square feet of manufacturing/office complex located in Clay
County, Florida, situated on approximately 3 acres of land. The building and
land is owned by the corporation.
MANAGEMENT
The directors, executive officers, and key employees of the Company are
as follows:
<TABLE>
<CAPTION>
Name Age Position
----------------- --- ---------
<S> <C>
Victor E. Murray 73 President, Director
Richard A. Murray 43 Vice President, Director
Bobby E. Story 56 Secretary, Treasurer, Director
John W. Cooney 62 Director
Victor D. Phillips 55 Director
John Presley 59 Director, President Omega Metals, Inc.
Erik Wiisanen 52 Secretary, Treasurer, V. P Marketing, Omega Metals, Inc.
</TABLE>
14
<PAGE>
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:
October 1996 to February 1997 and August 1997 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
Condev 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.
15
<PAGE>
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 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.
Mr. John Presley, Director and President of Omega Metals, Inc. is a
graduate registered professional Engineer. He graduated from the University of
Florida in January of 1961 with a BSME and attended a number of Colleges for
graduate work. He worked in many industries as an engineer and Manager before
founding Omega metals in 1981. He retired for a short time in 1985 when he sold
the company. He took the company back in 1990. During his absence, he developed
industrial real estate. He has agreed to continue his management for 2 years.
Erik Wiisanen-Vice-President-Marketing of Omega.
Mr. Wiisanen graduated from Cornell University in 1965. He worked in
Banking until 1970 and was a representative for shipping interests until helping
found Omega Metals in 1981. He has been in charge of sales since 1981.
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-
1997 $60,000 -0- -0-
1998 $60,000 -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 November 11, 1998 two officers of Omega Metals, Inc. have entered
into management agreements with Omega Metals, Inc. The individuals and their
titles are as follows:
John Presley Director, President, Omega
Erik Wiisanen Secretary/Treasurer, V.P. Marketing, Omega
16
<PAGE>
Their combined responsibilities are to organize policies and procedures
for business operations, 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.
Each officer is authorized a management fee of $10,417.00 per
month.
The term of the agreements are for two (2) years. It may be terminated
by action of the Board of Directors for cause on thirty days prior notice.
INDEMNIFICATION
FLORIDA BUSINESS CORPORATION ACT
Subsection (1) of Section 607.0850 of the Florida Business Corporation
Act ("BCA") empowers a corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including an employee benefit plan), against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Subsection (2) of Section 607.0850 of the BCA empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
under similar standards, except that no indemnification may be made in respect
to any claim, issue or matter as to which such person shall have been adjudged
to be liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which such action or
suit was brought, or any other court of competent jurisdiction, shall determine
that despite the adjudication of liability, but in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
BCA Section 607.0850 further provides that indemnification provided for
by Section 607.0850 shall not be deemed exclusive of any other rights to which
the indemnified party may be entitled and empowers the corporation to purchase
and maintain insurance on behalf of a director, officer, employee or agent of
the corporation against any liability asserted against him and incurred by him
in the capacities set forth above, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liabilities under Section 607.0850.
ARTICLES OF INCORPORATION
Article 4 of the Company's Articles of Incorporation provides that the
Company shall indemnify those persons entitled to be indemnified, to the fullest
extent permitted by law.
17
<PAGE>
SECURITIES AND EXCHANGE COMMISSION POLICY
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Company, the Company has been informed 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.
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 3, 1998, 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>
Number of Percent of Outstanding
Name Shares Common Stock(1)
<S> <C> <C>
Victor E. Murray 400,000 12.28%
Richard A. Murray 400,000 12.28%
Bobby E. Story 390,000 11.98%
John Presley 113,235 3.47%
John W. Cooney 50,000 1.68%
Victor D. Phillips 4,500 .14%
Bridge Bank, Ltd. 437,000 13.42%
Cede & Co. 1,027,133 31.54%
Officers and Directors
as a group (6 persons) 1,357,735 41.69%
</TABLE>
(1) Based upon 3,256,470 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.
18
<PAGE>
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
Preferred Stock
The Board of Directors has the authority to cause the Company to issue
without any further vote or action by the stockholders, up to 1,000,000 shares
of Preferred Stock, in one or more series, and to designate the number of shares
constituting any series, and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, voting rights, rights and terms
of redemption, redemption price or prices and liquidation preferences of such
series. The issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the stockholders. The issuance of Preferred Stock with voting and
conversion rights may adversely affect the voting power of the holders of Common
Stock, including the loss of voting control.
In October and November 1998, the Company issued 50,000 shares of Series A
10% Senior Convertible Preferred Stock as the Convertible Preferred Stock with
the rights, privileges and designations of the Convertible Preferred Stock which
includes:
Conversion. Preferred Stock will be convertible into shares of Common Stock
at any time after the sixth month anniversary of the initial issuance of
Preferred Stock, at the option of the holder. Preferred Stock will be
automatically converted into Common Stock upon delivery of written notice by the
Company at any time after the fifth anniversary of the final issuance (November
16, 1998). For the purposes of conversion, each share of Preferred Stock will be
valued at $100 and will be converted into Common Stock at a price of the lower
of (x) $17 per share (subject to adjustment under certain circumstance) and (y)
80% of the average closing bid price for Common Stock in the 15 trading days
preceding conversion (or if converted in connection with a firm underwritten
public offering, 80% of the per share price applicable in such offering).
Liquidation Preference. $100 per Preferred Share, plus accumulated dividends.
A sale or change of control of the Company will be considered a liquidation for
the purposes of entitling the holders of Preferred Stock to receive their
liquidation preference.
Dividends. Dividends will cumulate on each Share at a rate of 10% per annum,
based upon a base value of $100 per share of Preferred Stock, and be payable in
cash or stock (at the option of the Company) upon conversion of such share.
Preferred Stock will also receive dividends on an as converted basis, when and
if dividends are declared on the Common Stock.
Voting Rights. The Preferred Stock will vote, on an as converted basis, with
the Common Stock. Without the consent of the holders of a majority of the
outstanding shares of Preferred Stock, the Company may not (i) issue other
series of preferred stock that are pari passu with, or junior to, to Preferred
Stock, (ii) amend the terms of the Preferred Stock, (iii) amend any of the terms
of the Company's Amended and Restated Articles of Incorporation or By-laws if
such amendment would have an adverse effect on upon the rights of the holders of
Shares or (iv) issue any Preferred Stock other than in connection with the
Offering or the transfer of any Preferred Stock issued in the Offering.
Board Representation. The Holders of Preferred Stock will have the right,
voting as a separate class, to elect two of seven members of the Company's Board
of Directors and, following the occurrence of a Majority Voting Event (see
19
<PAGE>
"Events of Non-Compliance" below) will have the right, voting as a separate
class, to elect six of eleven members of the Company's Board.
Events of Non-Compliance. An Event of Non-Compliance will occur upon (i) the
Company's failure to comply with the terms of the Preferred Stock, (ii) the
acceleration of any indebtedness of the Company or any of its subsidiaries or
(iii) the Company (A) becoming insolvent, (B) applying for, or consenting to,
the appointment of a receiver or trustee appointed, (C) has a trustee or
receiver appointed which is not discharged within 60 days or (D) has a
bankruptcy proceeding commenced against it. Upon the occurrence of an Event of
Non-Compliance, the Company is obligated to notify the holders of Preferred
Stock. Within forty five days of such notice, each holder of Preferred Stock
will have the right to tender Preferred Stock to the Company for redemption at a
price per share equal to (x) 1.1 times (y) the sum of $110 plus all accrued an
unpaid dividends accrued on such Preferred Share through and including the date
of redemption; provided that if the Event of Non-Compliance ceases within such
forty-five day period, the tenders shall be null and void, and the tendered
shares shall be returned to the tendering holders. If a majority of the
Preferred Stock outstanding before the occurrence of the Event of Non-Compliance
are so tendered, and the Company fails to redeem all of the Preferred Stock so
tendered (unless the Event of Non-Compliance ceased before the Company was so
required to redeem such shares), then the holders of a majority of the
outstanding Preferred Stock will have the right to declare a Majority Voting
Right Event, giving the holders of Preferred Stock the right to elect a majority
of the members of the Company's Board of Directors.
Exchange Privileges. If the Company issues any securities convertible into
Common Stock other than pursuant to the Offering (either alone or as part of a
unit) each Holder of Preferred Stock shall have the right to exchange such
Preferred Stock, at any time within twenty days following notice of the proposed
issuance from the Company, for such convertible securities (or units) to be so
issued, at the price payable in connection with such issuance, with the
Preferred Stock being valued at $100 per share plus all accrued and unpaid
dividends thereon.
See "Management's Discussion and Analysis of Results of Operations and
Financial Condition".
PLAN OF DISTRIBUTION/
SELLING SECURITY HOLDERS
PLAN OF DISTRIBUTION
The shares offered hereby may be sold from time to time directly by the
Selling Security Holders. Alternatively, the Selling Security Holders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Security Holders may be effected in
one or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such securities as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Security Holders in connection with such sales of securities. The securities
offered by the selling Security Holders may be sold by one or more of the
following methods, without limitations: (a) a block trade in which a broker or
dealer so engaged will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers, and (d)
face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the Selling
Security Holders may arrange for other brokers or dealers to participate. The
Selling Security Holders and intermediaries through whom such securities are
sold may be deemed "underwriters" within the meaning of the Act with respect to
the securities offered, and any profits realized or commissions received may be
deemed underwriting compensation.
At the time a particular offer of securities is made by or on behalf of
a Selling Security Holder, to the extent required, a Prospectus will be
distributed which will set forth the number of securities being offered and the
terms of the Offering, including the name or names of any underwriters, dealers
or agents, if any, the purchase price paid by any underwriter for shares
20
<PAGE>
purchased from the Selling Security Holder and any discounts, commissions or
concessions allowed or reallowed or paid to dealers and the proposed selling
price to the public.
The following security holders may offer shares of Common Stock
issuable upon exercise of Warrants:
<TABLE>
<CAPTION>
Number of Number of Shares
Warrants which may be offered Number of Shares to be Owned
Name and Company Affiliation Owned Pursuant to this Prospectus after the Offering*
- ---------------------------- ----- --------------------------- -------------------
<S> <C> <C> <C>
Capital International Securities Group, Inc. 315,000 315,000 -0-
Bobby E. Story 70,000 70,000 390,000
Victor E. Murray 70,000 70,000 400,000
Richard A. Murray 70,000 70,000 400,000
Steven K. Robinson 70,000 70,000 149,000
Merrill Weber & Co. 25,000 25,000 -0-
</TABLE>
The following security holder may offer shares of Common Stock:
<TABLE>
<CAPTION>
Number of Shares Which may be Number of Shares to be Owned
Name Number of Shares Owned Offered Pursuant to this Prospectus After the Offerings
- ---- ---------------------- ----------------------------------- -------------------
<S> <C> <C> <C>
John Presley 25,000 25,000 88,235
Erik Wiisanen 25,000 25,000 88,235
</TABLE>
The following Security Holders may offer shares of Common Stock issuable upon
Conversion of Preferred Stock:
Common Shares
Name after Conversion**
- ---- ------------------
EP Opportunity Fund, LLC 117,647
Tallisman Capital Opportunity Fund, Ltd 117,647
Cranshire Capital 105,882
Lionhart Aurora Fund, Ltd 82,353
Melvin Olshansky 11,765
G-Bar Limited Partnership 11,765
Orestes Lugo 2,941
Robert Weber IRA 2,941
Berkley Corp 11,765
Kopin Capital, Ltd 23,529
S. Robert Production, LLC 35,294
Robert Lehman 5,882
Scott J. Bakal 2,941
Leonard Leventhal, TST 5,882
Howard Todd Horberg 4,706
ICN Capital, Ltd 41,176
Kevin Shape 4,118
Group Total 588,235
*Assuming all Shares are sold.
**Assuming conversion rate of $17.00 per share
21
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby is being passed upon for
the Company by Joel Bernstein Esq. P.A., 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.
22
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
TABLE OF CONTENTS
PAGE
----
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet F-1
Statements of Operations F-2
Statements of Cash Flows F-3
Notes to Financial Statements F-4
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Assets
Condensed from
UNAUDITED Audited Financial
Pro Forma Historical Statements
Consolidated Sept. 30, 1998 Dec. 31, 1997
------------ -------------- -------------
<S> <C> <C> <C>
Current Assets:
CASH AND CASH EQUIVALENTS $5,314,507 $38,840 $442,555
NOTE RECEIVABLE 500,000 500,000
ACCRUED INTEREST RECEIVABLE 6,250 6,250
ACCOUNTS RECEIVABLE 864,295 139,538 11,436
INVENTORY 344,888 84,506 21,586
PREPAID EXPENSES 10,842 5,630 3,547
----------------------------------------------------
Total Current Assets 7,040,782 774,764 479,124
Property, Plant, and Equipment:
FURNITURE AND EQUIPMENT 2,787,073 46,072 41,903
ACCUMULATED DEPRECIATION (1,633,812) (14,984) (6,626)
----------------------------------------------------
Total Property, Plant, & Equip 1,153,261 31,088 35,277
Other Assets
PATENT COST 26,217 26,217 22,583
OTHER ASSETS 3,797 3,797 3,598
----------------------------------------------------
Total Other Assets 30,859 30,014 26,181
----------------------------------------------------
Total Assets $8,224,902 $835,866 $540,582
====================================================
Liabilities and Stockholders' Equity
Current Liabilities:
ACCOUNTS PAYABLE $300,146 $43,113 $17,705
ACCRUED EXPENSES 93,459 28,883 83,120
LOANS PAYABLE CURRENT 858,448 269,851
----------------------------------------------------
Total Current Liabilities 1,252,053 71,996 100,825
Long Term Liabilities
LOANS PAYABLE LESS CURRENT PORTION 222,255
COMMITMENTS AND CONTINGENCIES ---- ----
Stockholders' Equity:
PREFERRED STOCK
$ .001 par value; authorized, 60,000 shares; 49,650 issued 4,965
COMMON STOCK
$ .001 par value; authorized 10,000,000 shares; issued &
outstanding, 3,030,000 shares at 9/30/98, 2,970,000 at 12/31/97 5,030 3,030 2,970
ADDITIONAL PAID IN CAPITAL 5,963,762 1,409,430 929,490
DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE (648,590) (648,590) (492,703)
RETAINED EARNINGS 1,425,427
----------------------------------------------------
Total Stockholders' Equity 6,745,629 763,870 439,757
----------------------------------------------------
Total Liabilities and Stockholders' Equity $8,224,902 $835,866 $540,582
====================================================
</TABLE>
See accompanying notes to financial statements.
F-1
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months Cumulative
Ended Ended Ended Ended From
09/30/98 09/30/97 09/30/98 09/30/97 Inception
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Income
Revenues $162,948 $4,533 $480,000 $173,545 $711,621
-------------------------------------------------------------------------------
Costs and Expenses
DIRECT COSTS 57,376 610 192,091 47,160 257,572
MARKETING & PROMOTIONS 5,949 33,082 52,596 33,143 91,417
PRODUCT DEVELOPMENT 5,029 755 21,130 3,996 38,803
GENERAL & ADMINISTRATIVE 154,838 117,888 383,161 418,679 985,886
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Costs & Expenses 223,192 152,335 648,978 502,978 1,373,678
-------------------------------------------------------------------------------
Operating Income (Loss) (60,244) (147,802) (168,978) (329,433) (662,057)
-------------------------------------------------------------------------------
Other Income (Expense)
Interest Income 6,823 0 13,091 0 17,083
Interest Expense 0 0 0 (2,414) (3,621)
-------------------------------------------------------------------------------
Total Other Income (Expense) 6,823 0 13,091 (2,414) 13,462
-------------------------------------------------------------------------------
Income (Loss) from continuing operations (53,421) (147,802) (155,887) (331,847) (648,595)
Income from discontinued operations 0 0 0 0 4,606
-------------------------------------------------------------------------------
Net Income ( Loss) ($53,421) (147,802) ($155,887) ($331,847) ($643,989)
===============================================================================
--------------------------------------------------------------
Net Income ( Loss) Per Common Share ($0.02) ($0.05) ($0.05) ($0.11)
==============================================================
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Nine
Months Months Cumulative
Ended Ended from
9/30/98 9/30/97 Inception
-------------------------------------------------
<S> <C> <C> <C>
Cash Flows from operating activities:
Net income (loss) ($155,887) ($331,847) ($643,984)
-------------------------------------------------
Adjustments to reconcile net income (loss)
to net cash provided by (use in)
operating activities:
Depreciation and amortization 8,358 4,427 14,984
Common stock issued for services 75,000
(Increase)/ decrease in assets:
Accounts receivable (128,102) 900 (139,538)
Interest receivable (6,250) 0 (6,250)
Inventory (62,920) (23,396) (84,506)
Prepaid expenses (2,083) (5,687) (5,630)
Other (3,834) (1,076) (7,432)
Increase (decrease) in liabilities:
Accounts payable
and accrued expenses: (28,829) 23,313 71,888
-------------------------------------------------
Total adjustments (223,660) (1,519) (81,484)
-------------------------------------------------
Net cash provided by (used in)
operating activities (379,547) (333,366) (725,468)
-------------------------------------------------
Cash flows from investing activities:
Increase (decrease) note receivable (500,000) 0 (500,000)
Expenditures for development of patent (14,500)
Acquisition of property and equipment (41,903)
Purchase of furniture and fixtures (4,168) (27,772) (4,168)
Net cash provided by (used in)
-------------------------------------------------
investing activities (504,168) (27,772) (560,571)
-------------------------------------------------
Cash flows from financing activities:
Increase (decrease) notes payable 0 (101,000)
Proceeds from issuance of common stock and
exercise of warrants 480,000 669,177 1,330,777
Repayment of loan payable, stockholder (1,000)
Distribution to stockholder (4,606)
Other (400)
Net cash provided by (used in)
-------------------------------------------------
financing activities 480,000 568,177 1,324,771
-------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (403,715) 207,039 38,732
Cash and Cash equivalents, Beginning 442,555 61,761 108
-------------------------------------------------
-------------------------------------------------
Cash and Cash equivalents, Ending $38,840 $268,800 $38,840
=================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $9,550
======
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 Unaudited
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements at Sept.
30, 1998 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and reflect all adjustments which, in the opinion of management, are
necessary for a fair presentation of financial position as of Sept. 30, 1998 and
results of operations for the nine months ended Sept. 30, 1998 and 1997 and
cumulative. All adjustments are of a normal recurring nature. The results of
operations for interim periods are not necessarily indicative of the results to
be expected for a full year. The statements should be read in conjunction with
the consolidated financial statements and footnotes thereto for the year ended
December 31, 1997 included in the company's Registrations Statement Form SB-2
filing.
2. Nature of Business and Summary of Significant Accounting Policies.
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.
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 consolidated financial
statements represent those of a development stage enterprise.
COMMON STOCK
On June 30, 1998, 20,000 warrants were exercised, at $8.00 per warrant, which
resulted in 20,000 common stock shares being issued. On August 16, 1998 an
additional 40,000 warrants were exercised at $8.00 per share. The company has
remaining 570,000 warrants to purchase common stock at an exercise price of
$8.00 per share as of September 30, 1998.
NET LOSS PER COMMON SHARE
In 1997, the Company adopted Statements of Financial Accounting Standards (SFAS)
No. 128, "Earnings per Share" which requires the presentation of both basic and
diluted earnings (loss) per share.
Basic net loss per common share has been computed based upon the weighted
average number of shares of common stock outstanding during the periods. The
shares of common stock issued in connection with the stock split effected in
February 1997, have been considered outstanding for all periods. In addition,
the shares of common stock issued to a Director in February 1997, prior to an
initial registration of the Company's common stock and at a price at that time
have been treated as outstanding during the entire period, pursuant to the
Securities and Exchange Commission Staff Accounting Bulletins. The number of
shares used in the computation were 3,030,000 and 3,083,000 for 1998 and 1997
respectively. Diluted net loss per common share, assuming exercising of the
warrants granted, is not presented as the effect of conversion is anti-dilutive.
3. Contingencies
F-4
<PAGE>
PENDING LITIGATION
The Company is a defendant in a suit filed in January 1998 in
the 18th Judicial Circuit Court of Florida by Steve R. Jones, the Company's
President from April to August 1997, which seeks damages of $17,000 and a
declaratory judgment as to the enforceability of a consulting agreement with the
Company. The Company is vigorously defending the case and does not believe it
has any liability to the plaintiff. The case is in the early stages, and there
can be no assurance of the ultimate outcome.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 AND NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH THE
NINE MONTHS ENDED SEPTEMBER 30, 1997.
REVENUES
Revenues for the three months ended September 30, 1998 increased by
$158,415 to $162,948 as compared to $4,533 for the three months ended September
30, 1997. Revenues for the nine months ended September 30, 1998 increased by
$306,455 or 176.6% to $480,000 compared to $173,545 for the nine months ended
September 30, 1997. The initial distribution of the Company's product did not
occur until the second 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.
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 35.2% of revenues for the three months ended September 30, 1998,
13.5% of revenues for the three months ended September 30, 1997, 40.0% of
revenues for the nine months ended September 30, 1998 and 27.2% of revenues for
the nine months ended September 30, 1997.
Product development costs incurred in the three months ended September
30, 1998 was $5,029 and for the nine months ended September 30, 1998 was $21,130
as compared to $3,996 for the same nine month period in 1997. This increase in
costs occurred in the Company's continuing efforts to modify and update its
design to vendor specifications.
Marketing and Promotion expenses decreased by $27,133 to $5,949 for the
three months ended September 30, 1998 compared to $33,082 for the three months
ended September 30, 1997. The expenses of $52,596 for the nine months ended
September 30, 1998 was an increase of $19,453 over expenses for the same nine
months ended September 30, 1997, which only totaled $33,143. This was a result
of the company's effort to continue to develop and market their product.
General and Administrative expenses increased by $36,950 to $154,838
for the three months ended September 30, 1998 compared to $117,888 for the three
months ended September 30, 1997. This increase was the result of costs
associated with the continued development growth of the company including
efforts in the pending acquisition of Omega Metals, Inc. Expenses for the nine
months ended September 30, 1998 decreased by $35,518 to $383,161 as compared to
total expenses to $418,679 for the nine months ended September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company required cash for the operating activities of $379,547
during the nine months ended September 30, 1998 as compared to $333,366 during
the nine months ended September 30, 1997. The major source of cash for the nine
months ended September 30, 1998 was funded from financing activities through the
exercising of warrants to purchase common stock of $480,000. The use of cash is
due primarily to support expenditures for start up operations and manufacture,
promotion and distribution of its products.
F-5
<PAGE>
The Company's operating and capital requirements in connection with its
operations have been and will continue to be significant. Based on its current
plans, the Company anticipates that revenues earned from product sales will be
the primary source of funds for operating activities. The Company believes that
revenues in addition to existing cash and cash equivalents remaining from
proceeds of it private offering, will be sufficient to meet its capital and
liquidity needs for the next 12 months. The Company also believes that cash
required to fulfill purchase orders will be available through bank borrowings or
factoring, if required. The company's primary customers are substantial
corporations with credit ratings that will support such credit arrangements.
The Company is still in the process of emerging from the development
stage and, therefore, has generated little revenue to date. As reflected in the
accompanying financial statements, the Company incurred a net loss of $53,421
for the quarter ended September 30, 1998 compared to a net 1oss of $147,802 for
the same quarter in 1997. Management's plans include the following:
1. The Company has arranged for marketing in association with
manufacturers and distributors of telecommunications equipment,
which will enable the Company to obtain orders for its products
with a minimal expenditure of the Company's resources. The Company
is presently organizing a manufacture's rep program to assist in
the distribution of their equipment.
2. The Company has arranged for manufacture of its products by an
outside supplier in order to minimize the financial requirements
necessary for production. The Company is intending to purchase
this manufacturer. The status of this acquisition is discussed in
the Other Matters note included in this filing.
3. The company believes that it can acquire working capital through
sale of additional securities (including exercise of outstanding
warrants), or borrowings, including bank borrowing, in view of the
nature of its customer base. Nevertheless, the Company continues
to be subject to a number of risk factors, including the
uncertainty of market acceptance for its product line, the need
for additional funds, competition, technological obsolescence and
the difficulties faced by start up companies in general.
SUBSEQUENT EVENTS
On November 11, 1998 the company completed purchase of all the issued
common stock of Omega Metals, Inc. The company utilizes Omega Metals, Inc. as
its source of most of its manufactured products. The transaction included an
exchange of 226,470 restricted common stock shares being issued.
Since October 1, 1998 and to November 13, 1998, the company has had a
private placement of its Series A 10% Senior Convertible Preferred Stock in
process. There are 60,000 shares authorized at a par value $.001. During this
period 49,650 shares have been sold for $4,965,000. The series A Preferred shall
be valued at $100.00 per share ("convertible value"), and, if converted, the
series A Preferred shall be converted into common (the "Conversion Stock") at
the price per share equal to the then applicable Conversion Price. The holders
of Series A Preferred shall have the right, at their option, to convert any or
all of such shares into conversion stock at any time on or after the earlier of
(i) the four month anniversary of the earliest Issuance Date of any share of
Series A Preferred or (ii) first date upon which the shelf registration
statement registering the conversion stock is declared effective by the
Securities and Exchange Commission.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
From October 1, through November 13, 1998 Registrant sold
49,650 shares of Series A 10% Senior Convertible Preferred Stock and received
net proceeds of $4,456,297. Filed as Exhibit 4.1 hereto is the Articles of
Amendment of Amended and Restated Articles of Incorporation of American Access
Technologies, Inc, including the terms in which such preferred stock is
convertible into common stock. The shares were placed by Merrill Webber
F-6
<PAGE>
Securities, Inc. and Capital International Securities Group, Inc., members NASD,
and such firms were issued warrants to purchase 99,300 shares of the
Registrant's common stock at $25 per share, subject to adjustment in certain
circumstances. The shares were sold to accredited pursuant to exemption from
registration pursuant to Rule 506 of Regulation D.
ITEM 5. OTHER INFORMATION
-----------------
On November 11, 1998 Registrant acquired all of the outstanding shares
of stock of Omega Metals, Inc. of Keystone Heights, Florida, in exchange for
226,470 shares of Registrant's common stock pursuant to an Agreement and plan of
Reorganization which is filed as an exhibit hereto. Omega Metals, Inc. is a
specialty metals manufacturer and is the supplier for Registrant's zone cabling
termination cabinets products.
ITEM 6. EXHIBITS AND REPORTS
--------------------
As of the date of this filing, it is impractical for Registrants to
provide the Financial Statements and their entirety and pro forma financial
information required to be filed in connection with the acquisition of Omega
Metals, Inc. and such Financial Statements and pro forma financial information
will be filed by amendment no later than sixty days after filing hereto.
However, we have included the pro forma Balance Sheet under the following
provisions:
Pro Forma Presentation
The accompanying pro forma balance sheet as of September 30, 1998 gives effect
to (a) receipt of the net proceeds of $4,965,000 from the private placement of
the convertible preferred stock, and (b) acquisition of the net assets of Omega
Metals, Inc., expected to be accounted for on the pooling of interests method,
as if these transactions had taken place on September 30, 1998.
F-7
<PAGE>
-----------------
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than those contained in this
prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company.
-----------------
This Prospectus does not constitute an offer of any securities other than
those to which it relates or an offer to sell or a solicitation of any offer to
buy any securities in any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction. The delivery of this Prospectus at any
time does not imply that the information herein is correct as of any time
subsequent to its date. Notwithstanding the foregoing, the Company has
undertaken to amend this Prospectus in the event of any fundamental changes in
the affairs of the Company.
TABLE OF CONTENTS
Prospectus Summary .............................................................
Risk Factors ...................................................................
Use of Proceeds ................................................................
Market for Securities
Recent Financing
Dividend Policy
Management's Discussion and
Analysis of Results of Operation
and Financial Condition
Business .......................................................................
Management .....................................................................
Indemnification ................................................................
Certain Relationships and Related Transactions .................................
Security Ownership of Certain Beneficial
Owners and Management .........................................................
Description of Securities ......................................................
Plan of Distribution/Selling Security Holders ..................................
Legal Matters ..................................................................
Experts ........................................................................
Additional Information .........................................................
Index to Financial Statements ..................................................
UNTIL ____________, 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THE DISTRIBUTION DESCRIBED HEREIN, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS WITH RESPECT TO THE OFFERING HEREIN.
AMERICAN ACCESS
TECHNOLOGIES, INC.
-----------------
PROSPECTUS
-----------------
<PAGE>
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.
Registration Fee $ 7,912
Printing Expenses* 1,500
Legal Fees and Expenses* 10,000
Accounting Fees and Expenses* 8,000
Blue Sky Fees and Expenses* 3,000
Transfer Agent Fees and Expenses* 1,000
Misc.* 600
Total $32,012
*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,
2,000,000 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. Exemption from registration is
claimed under Section 4(2) of the Securities Act of 1933, as amended.
Shareholders, as directors and/or officers are "accredited investors" defined in
Rule 501.
The Company issued 50,000 shares of common stock to John W. Cooney, a
director, for $.001 per share on February 11, 1997. Exemption form registration
is claimed under Section 4(2) of the Securities Act of 1933, as amended.
Shareholders, as directors and/or officers are "accredited investors" defined in
Rule 501.
II-1
<PAGE>
On December 2, 1996 the Company sold 400,000 shares and on February
1997 the Company sold 400,000 shares of common stock to Bridge Bank, Ltd. at par
value of $.001 per share. Exemption from registration is claimed under Rule 504
of Regulation D, which does not require investors to be accredited or
sophisticated.
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. Exemption is claimed under Section 4(2) of the Securities
Acts of 1933, as amended. Holder, a member of NASD, is sophisticated.
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. Exemption from registration is claimed under
Rule 504 of Regulation D, which does not require investors to be accredited or
sophisticated.
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.
Exhibit No. Description
- ----------- -----------
3(a) Amended and Restated Articles of Incorporation of the Registrant
(Incorporated by reference to Exhibit 3(a) to Amendment No. 1 to
Registrant's Registration Statement on Form SB-2 - File No. 333-43589).
3(b) Bylaws of the Registrant (Incorporated by reference to Exhibit
3(b) to Amendment No. 1 to Registrant's Registration Statement on Form
SB-2 - File No. 333-43589).
3(c) Form of $8.00 Stock Purchase Warrant expiring February 11, 2000
(Incorporated by reference to Exhibit 3(c) to Amendment No. 1 to
Registrant's Registration Statement on Form SB-2 - File No. 333-43589).
3(d) Form of $3.00 Stock Purchase Warrant expiring February 11, 2000
(Incorporated by reference to Exhibit 3(d) to Amendment No. 1 to
Registrant's Registration Statement on Form SB-2 - File No. 333-43589).
3(e) Articles of Amendment to Articles of Incorporation (Incorporated
by reference to Exhibit 4.1 to Registrant's Quarterly Report on Form
10Q-SB for quarter ended September 30, 1998).
3(f) Form of Stock Purchase Warrant expiring October 14, 2003.
5.1 Opinion of counsel
8.2 Composite Exhibit of Stocking Distributor Agreements with Anixter,
Inc., State Electric Supply Company, and DataCom, Inc. (Incorporated by
reference to Exhibit 8.2 to Amendment No. 1 to Registrant's
Registration Statement on Form SB-2 - File No. 333-43589).
8.3 Value Added Reseller Agreement with DataStar Computer Systems, Inc.
(Incorporated by reference to Exhibit 8.3 to Amendment No. 1 to
Registrant's Registration Statement on Form SB-2 - File No. 333-43589).
8.4 Engagement letter dated November 27, 1996 between Registrant and
Capital International Securities Group, Inc. (Incorporated by reference
to Exhibit 8.4 to Amendment No. 1 to Registrant's Registration
Statement on Form SB-2 - File No. 333-43589).
8.5 Composite Exhibit of Management Agreements with Vic Murray and Sons,
Steve R. Jones, Steven K. Robinson and Nacex, Inc. Incorporated by
reference to Exhibit 8.5 to Amendment No. 1 to Registrant's
Registration Statement on Form SB-2 - File No. 333-43589).
8.6 Consulting Agreement dated August 28, 1997 between Registrant and Steve
R. Jones. (Incorporated by reference to Exhibit 8.6 to Amendment No. 1
to Registrant's Registration Statement on Form SB-2 - File No.
333-43589).
8.7 Management Termination Agreement dated December 9, 1997 between Steven
K. Robinson and Registrant. (Incorporated by reference to Exhibit 8.7
to Amendment No. 1 to Registrant's Registration Statement on Form SB-2
- File No. 333-43589).
8.8 Purchase Agreement dated October 21, 1996 between Registrant and Victor
E. Murray. (Incorporated by reference to Exhibit 8.8 to Amendment No. 1
to Registrant's Registration Statement on Form SB-2 - File No.
333-43589).
8.9 Promissory Note dated December 2, 1996. (Incorporated by reference to
Exhibit 8.9 to Amendment No. 1 to Registrant's Registration Statement
on Form SB-2 - File No. 333-43589).
8.10 Agreement and Plan of Reorganization dated November 11, 1998 relating
to the acquisition of Omega Metals, Inc. (Incorporated by reference to
Exhibit 2.1 to Registrant's Form 10Q-SB for the Quarter ended September
30, 1998.
8.11 Registration Rights Agreement relating to Registrant's Series A 10%
Senior Convertible Preferred Stock.
8.12 Employment Agreements between Omega Metals, Inc. and John Presley and
Erik Wiisanen.
8.13 Letter of Intent to Purchase additional land from Troy Fornshell and
Anna Fornshell.
11.1 Statement Re: Computation of Net Loss per Common Share.
23 Consent of counsel is contained in Exhibit 5.1
23.1 Consent of Independent Certified Public Accountants.
27.0 Financial Data Schedule.
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>
(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>
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 11, 1998.
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 signed by 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 11, 1998
(Principal Executive Officer)
Richard A. Murray Vice President and Director "
Bobby E. Story Treasurer, (Principal Accounting "
Officer), Director
Victor D. Phillips Director "
</TABLE>
II-4
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
Warrant Certificate No. Number of Warrants
AMERICAN ACCESS TECHNOLOGIES, INC.
Stock Purchase Warrant
VOID AFTER 3:00 P.M., EAST COAST TIME, ON OCTOBER 14, 2003
REGISTERED HOLDER: ________________ Number of Warrants: _________________
This is to certify that, for value received, the Registered Holder, or assigns,
is entitled, subject to the terms and conditions hereinafter set forth, at or
before 3:00 P.M. on October 14, 2003, or such later time as may be determined by
the Corporation, to purchase shares of the common stock of American Access
Technologies, Inc. (the "Corporation") from the said corporation, for the
purchase price of $25.00 per share and to receive a certificate or certificates
for the common stock so purchased upon presentation and surrender to the
Corporation of this warrant with payment of the purchase price for each share
purchased. (a) The Corporation covenants and agrees that all shares which may be
delivered upon the exercise of this warrant will, upon delivery, be free from
all taxes, liens, and charges with respect to the purchase thereof, and shall be
fully paid and nonassessable. The Corporation covenants and agrees that it will
from time to time take all such action as may be requisite to assure that the
par value per share of its common stock is at all times equal to or less than
the current price per share pursuant to this warrant. (b) The number of shares
purchasable upon the exercise of this warrant and the purchase price per share
shall be subject to adjustment from time to time as set forth herein. (c) If the
outstanding shares of common stock of the Corporation are increased, decreased,
or changed into, or exchanged for a different number or kind of shares or
securities through reorganization, merger, re-capitalization, reclassification,
stock split, stock dividend, stock consolidation, or similar type of
reorganization transaction, an appropriate and proportionate adjustment shall be
made in the number and kind of shares as to which this warrant relates. Such
adjustment shall be made without change in the total price applicable to the
unexercised portion of this warrant, but with a corresponding adjustment in the
price of each share subject to the warrant. (d) If there shall be any adjustment
as provided above, the Corporation shall forthwith cause written notice to be
sent to the initial holder of this warrant at the address of such holder shown
on the books of the Corporation, which notice shall be accompanied by a
statement setting forth in reasonable detail the facts requiring any such
adjustment and the warrant price and number of shares purchasable after such
adjustment, as the case may be. (e) This warrant shall not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Corporation
unless and until this warrant shall be exercised. (f) This warrant and the
shares the holder hereof may purchase have not and will not be registered under
the Securities Act of 1933 or any applicable state securities law. The
Corporation may condition the exercise of this warrant or its transfer upon the
availability of an exemption from registration under all applicable securities
laws.
IN WITNESS WHEREOF, the Corporation has caused this warrant to be executed by
the signatures of its duly authorized Officers and its corporate seal hereunto
affixed.
by:____________ Date_______ Corporate Seal
President
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and effective as of
November 11, 1998 between OMEGA METALS, INC., a Florida corporation (the
"Corporation"), and ERIK WIISANEN, an individual ("Executive").
WHEREAS, Executive has been in the employ of the Corporation as its
Vice President-Marketing; and
WHEREAS, the Corporation desires to assure the continuation of
Executive's services in connection with its business and that of its
subsidiaries and affiliates;
THEREFORE, in consideration of the premises and covenants herein set
forth, it is agreed as follows:
1. Employment. Corporation hereby employs Executive and Executive
accepts such employment on the terms and conditions set forth herein.
1.1 Executive covenants to perform in good faith his
employment duties as outlined herein, devoting his full productive time,
energies and abilities to the proper and efficient management of the business of
the Corporation and its subsidiaries and affiliates and for their exclusive
benefit.
1.2 Executive shall not, without the prior written consent of
the Corporation, directly or indirectly, during the term of this Agreement: (I)
render services of business, professional or commercial nature to any other
person or entity, whether for compensation or otherwise, similar or relating to
the business of the Corporation or its subsidiaries and affiliates, or (ii)
engage in any activity competitive with or adverse to the Corporation's business
or welfare, whether alone, as a partner or member, or as an officer, director,
Executive or 5% or greater shareholder of a corporation.
2. Term of Employment. Subject to the provisions set forth herein, the
term of Executive's employment hereunder shall continue for two (2) years.
3. Duties. Executive shall be employed and perform duties similar to
those that he is now performing on behalf of Corporation, or such other
activities within his area of expertise which the Corporation determines.
<PAGE>
4. Compensation. For all services he may render to the Corporation
during the term of this Agreement, including services as officer, director or
member of any committee of the Board of Directors of the Corporation and its
subsidiaries, Executive shall receive the following compensation:
4.1 Executive shall receive a base salary at the rate of
$125,000 per year.
4.2 (a) The Corporation agrees to pay to the Executive a
profit participation (his "Profit Participation") equal to ten percent (10%) of
the net profits of the Corporation in excess of $1,200,000 ("Net Profits") for
each fiscal year of the Corporation during the term of this Agreement.
The Profit Participation with respect to a fiscal year shall be paid to
the Executive within 120 days after the end of the fiscal year.
(b) The Net Profits of the Corporation and its
subsidiaries shall be determined by the independent public accountants regularly
retained by the Corporation, in accordance with generally accepted accounting
principles consistently applied, and their determination shall be final and
conclusive. Such Net Profits shall be determined after eliminating all capital
gains and losses and deducting all proper expenses and charges on income and the
profit participations payable pursuant to this Agreement with respect to such
fiscal year.
(c) As to the fiscal year in which this Agreement is
executed and the fiscal year in which this Agreement expires, if it expires
other than on the last day of the Corporation's fiscal year, the Profit
Participation is to be pro rated, and the sum to which the Executive will be
entitled as his Profit Participation for any such fiscal year will be the amount
obtained by multiplying what the profit participation would have been for the
full fiscal year by a fraction, the numerator of which will be the number of
full calendar months of the fiscal year during which the Executive rendered
services pursuant to this Agreement and the denominator of which will be 12.
5. Benefits. During the term of this Agreement, Executive shall be
entitled to the following executive benefits:
5.1 Executive shall be entitled to reasonable vacation time
without reduction in salary.
5.2 During the period of his employment, Executive shall be
reimbursed for reasonable traveling and other business expenses reasonably
incurred in connection with the performance of his duties hereunder, subject to
reasonable verification as required in order for the Corporation to comply with
applicable laws and regulations and accounting practices.
2
<PAGE>
5.3 Executive shall be entitled to all other benefits of
employment generally available to members of management of the Corporation.
6. Termination. The employment of Executive may be terminated at any
time by:
(i) Mutual agreement; or
(ii) Action of the Board of Directors, on thirty days' prior
written notice, in the event of illness or disability or Executive resulting in
failure to discharge his duties under this Agreement for ninety or more
consecutive days or for a total of one hundred eighty or more days in a period
of twelve consecutive months; or
(iii) Action of the Board of Directors, if it shall be
established that Executive is in material default in the performance of his
obligations, services or duties hereunder (other than for illness or incapacity)
or has materially breached any provision of this Agreement and such default or
breach has continued for twenty (20) days after written notice of such
non-performance or breach.
7. Insurance. Executive agrees that the Corporation may procure
insurance on his life, in such amounts as the Corporation may in its discretion
determine, and with the Company or any of its subsidiaries or affiliates named
as the beneficiary under such policy or policies. Executive agrees that upon
request from the Corporation he will submit to a physical examination and will
execute each such application or other documents as may be required for the
procurement of such insurance.
8 Trade Secrets. Executive agrees that he will not, during or after the
termination of his employment with the Corporation, furnish or make accessible
to any person, firm, corporation or any other entity any trade secrets,
technical data, customer list, sales representatives, or know-how acquired by
him during the term of his employment with the Corporation which relates to the
business, practices, methods, processes, programs, equipment or other
confidential or secret aspects of the business of the Company, or its
subsidiaries or affiliates or any portion thereof, without the prior written
consent of the Corporation, unless such information shall have become public
knowledge, other than being divulged or made accessible by Executive.
3
<PAGE>
9 Non-disclosure. During the term of his employment and for two (2)
years after its termination, Executive will not, directly or indirectly,
disclose the names of the Corporation's customers, prospects or sales
representatives or those of its subsidiaries and affiliates or attempt to
influence such customers or representatives to cease doing business with the
Company or its subsidiaries or affiliates.
Executive shall communicate and make known to the Corporation all
knowledge possessed by him which he may legally impart relating to any methods,
developments, designs, processes, programs, services, and ideas which concern in
any way the business or prospects of the Corporation and its subsidiaries and
affiliates from the time of entering his employment until the termination
thereof.
10 Conflict of Interest. Executive agrees that during the term of his
employment and any extensions thereof, he will comply with the policy of the
Corporation with respect to the Corporation entering into, directly or
indirectly, any transactions with any business organization or other entity in
which he or any member of his family has a direct or indirect interest.
11 Miscellaneous.
11.1 The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement. The rights granted both parties herein are
cumulative and the election of one shall not constitute a waiver of such party's
right to assert all other legal remedies available under the circumstances.
11.2 Any notice to be given to the Corporation under the terms
of this Agreement shall be addressed to the Corporation, at the address of its
principal place of business, and any notice to be given to Executive shall be
addressed to him at his home address last shown on the records of the
Corporation, or such other address as either party may hereafter designate in
writing to the other. Any notice shall be deemed duly given when mailed by
registered or certified mail, postage prepaid, as provided herein.
11.3 The provisions of the Agreement are severable, and if any
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
4
<PAGE>
11.4 The rights and obligations of the Corporation under this
Agreement shall inure to the benefit of and be binding upon the successors and
assignees of the Corporation.
11.5 This Agreement supersedes all prior agreements and
understandings between the parties hereto, oral or written, and may not be
modified or terminated orally. No modification, termination or attempted waiver
shall be valid unless in writing, signed by the party against whom such
modification, termination or waiver is sought to be enforced.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
OMEGA METALS, INC.
/s/ Victor E. Murray
By: ___________________________
/s/ Erik Wiisanen
___________________________
Omega/Employ.EW
ERIK WIISANEN
5
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and effective as of
November 11, 1998 between OMEGA METALS, INC., a Florida corporation (the
"Corporation"), and JOHN PRESLEY, an individual ("Executive").
WHEREAS, Executive has been in the employ of the Corporation as its
President; and WHEREAS, the Corporation desires to assure the continuation of
Executive's services in connection with its business and that of its
subsidiaries and affiliates;
THEREFORE, in consideration of the premises and covenants herein set
forth, it is agreed as follows:
1. Employment. Corporation hereby employs Executive and Executive
accepts such employment on the terms and conditions set forth herein.
1.1 Executive covenants to perform in good faith his
employment duties as outlined herein, devoting his full productive time,
energies and abilities to the proper and efficient management of the business of
the Corporation and its subsidiaries and affiliates and for their exclusive
benefit.
1.2 Executive shall not, without the prior written consent of
the Corporation, directly or indirectly, during the term of this Agreement: (I)
render services of business, professional or commercial nature to any other
person or entity, whether for compensation or otherwise, similar or relating to
the business of the Corporation or its subsidiaries and affiliates, or (ii)
engage in any activity competitive with or adverse to the Corporation's business
or welfare, whether alone, as a partner or member, or as an officer, director,
Executive or 5% or greater shareholder of a corporation.
2. Term of Employment. Subject to the provisions set forth herein, the
term of Executive's employment hereunder shall continue for two (2) years.
3. Duties. Executive shall be employed and perform duties similar to
those that he is now performing on behalf of Corporation, or such other
activities within his area of expertise which the Corporation determines.
4. Compensation. For all services he may render to the Corporation
during the term of this Agreement, including services as officer, director or
member of any committee of the Board of Directors of the Corporation and its
subsidiaries, Executive shall receive the following compensation:
<PAGE>
4.1 Executive shall receive a base salary at the rate of
$125,000 per year.
4.2 (a) The Corporation agrees to pay to the Executive a
profit participation (his "Profit Participation") equal to ten percent (10%) of
the net profits of the Corporation in excess of $1,200,000 ("Net Profits") for
each fiscal year of the Corporation during the term of this Agreement.
The Profit Participation with respect to a fiscal year shall be paid to
the Executive within 120 days after the end of the fiscal year.
(b) The Net Profits of the Corporation and its
subsidiaries shall be determined by the independent public accountants regularly
retained by the Corporation, in accordance with generally accepted accounting
principles consistently applied, and their determination shall be final and
conclusive. Such Net Profits shall be determined after eliminating all capital
gains and losses and deducting all proper expenses and charges on income and the
profit participations payable pursuant to this Agreement with respect to such
fiscal year.
(c) As to the fiscal year in which this Agreement is
executed and the fiscal year in which this Agreement expires, if it expires
other than on the last day of the Corporation's fiscal year, the Profit
Participation is to be pro rated, and the sum to which the Executive will be
entitled as his Profit Participation for any such fiscal year will be the amount
obtained by multiplying what the profit participation would have been for the
full fiscal year by a fraction, the numerator of which will be the number of
full calendar months of the fiscal year during which the Executive rendered
services pursuant to this Agreement and the denominator of which will be 12.
5. Benefits. During the term of this Agreement, Executive shall be
entitled to the following executive benefits:
5.1 Executive shall be entitled to reasonable vacation time
without reduction in salary.
5.2 During the period of his employment, Executive shall be
reimbursed for reasonable traveling and other business expenses reasonably
incurred in connection with the performance of his duties hereunder, subject to
reasonable verification as required in order for the Corporation to comply with
applicable laws and regulations and accounting practices.
5.3 Executive shall be entitled to all other benefits of
employment generally available to members of management of the Corporation.
6. Termination. The employment of Executive may be terminated at any
time by:
2
<PAGE>
(i) Mutual agreement; or
(ii) Action of the Board of Directors, on thirty days' prior
written notice, in the event of illness or disability or Executive resulting in
failure to discharge his duties under this Agreement for ninety or more
consecutive days or for a total of one hundred eighty or more days in a period
of twelve consecutive months; or
(iii) Action of the Board of Directors, if it shall be
established that Executive is in material default in the performance of his
obligations, services or duties hereunder (other than for illness or incapacity)
or has materially breached any provision of this Agreement and such default or
breach has continued for twenty (20) days after written notice of such
non-performance or breach.
7. Insurance. Executive agrees that the Corporation may procure
insurance on his life, in such amounts as the Corporation may in its discretion
determine, and with the Company or any of its subsidiaries or affiliates named
as the beneficiary under such policy or policies. Executive agrees that upon
request from the Corporation he will submit to a physical examination and will
execute each such application or other documents as may be required for the
procurement of such insurance.
8 Trade Secrets. Executive agrees that he will not, during or after the
termination of his employment with the Corporation, furnish or make accessible
to any person, firm, corporation or any other entity any trade secrets,
technical data, customer list, sales representatives, or know-how acquired by
him during the term of his employment with the Corporation which relates to the
business, practices, methods, processes, programs, equipment or other
confidential or secret aspects of the business of the Company, or its
subsidiaries or affiliates or any portion thereof, without the prior written
consent of the Corporation, unless such information shall have become public
knowledge, other than being divulged or made accessible by Executive.
3
<PAGE>
9 Non-disclosure. During the term of his employment and for two (2)
years after its termination, Executive will not, directly or indirectly,
disclose the names of the Corporation's customers, prospects or sales
representatives or those of its subsidiaries and affiliates or attempt to
influence such customers or representatives to cease doing business with the
Company or its subsidiaries or affiliates.
Executive shall communicate and make known to the Corporation all
knowledge possessed by him which he may legally impart relating to any methods,
developments, designs, processes, programs, services, and ideas which concern in
any way the business or prospects of the Corporation and its subsidiaries and
affiliates from the time of entering his employment until the termination
thereof.
10 Conflict of Interest. Executive agrees that during the term of his
employment and any extensions thereof, he will comply with the policy of the
Corporation with respect to the Corporation entering into, directly or
indirectly, any transactions with any business organization or other entity in
which he or any member of his family has a direct or indirect interest.
11 Miscellaneous.
11.1 The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement. The rights granted both parties herein are
cumulative and the election of one shall not constitute a waiver of such party's
right to assert all other legal remedies available under the circumstances.
11.2 Any notice to be given to the Corporation under the terms
of this Agreement shall be addressed to the Corporation, at the address of its
principal place of business, and any notice to be given to Executive shall be
addressed to him at his home address last shown on the records of the
Corporation, or such other address as either party may hereafter designate in
writing to the other. Any notice shall be deemed duly given when mailed by
registered or certified mail, postage prepaid, as provided herein.
11.3 The provisions of the Agreement are severable, and if any
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
11.4 The rights and obligations of the Corporation under this
Agreement shall inure to the benefit of and be binding upon the successors and
assignees of the Corporation.
4
<PAGE>
11.5 This Agreement supersedes all prior agreements and
understandings between the parties hereto, oral or written, and may not be
modified or terminated orally. No modification, termination or attempted waiver
shall be valid unless in writing, signed by the party against whom such
modification, termination or waiver is sought to be enforced.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
OMEGA METALS, INC.
/s/ Victor Murray
By: ___________________________
/s/ John Presley
___________________________
Omega/Emplyjp
JOHN PRESLEY
5
MEMO OF UNDERSTANDING
This memo is made and entered into this 11th day of November, 1998 by and
between American Access Technologies, Inc. and Troy Fornshell and his wife Anna
Fonshell pertaining to the purchase by American Access of their approximately 6
acres of property, legal description is:
Part of SE 1/4 of Sec. 3, TWP 8S, Reg 23E., Clay County, Florida Warranty Deed
recorded in O.R. Book 1085, page 337 et seq.
Upon completion of the Rezoning actions, the Company agrees to buy the above
described property Troy and Anna agree to sell, their approximately 6 acre
homestead for the amount of 80,000.00 dollars. The price will be paid 40,000.00
dollars at closing, with proceeds to retire the existing mortgage and balance to
sellers.
Parties acknowledge that the property has been rezoned to industrial by Board of
County Commissioners, Clay County; however, the county master plan must be
changed by the State of Florida.
The remaining 40,000.00 dollars is to be paid within 60 days if the rezoning
action clears Tallahassee. The sellers will have 30 days to turn over the
property.
The closing must be on or before January 15, 1999.
/s/ Troy Fonshell /s/ Anna Fonshell
Troy Fornshell Anna Fornshell
American Access Technologies, Inc.
/s/ B. E. Story
by:______________
Signature
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 March 25, 1998 (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 American Access Technologies,
Inc. appearing in such Prospectus. We also consent to the reference to us under
the headings "Experts" in such Prospectus.
RACHLIN COHEN & HOLTZ
Miami, Florida
December 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 38,840
<SECURITIES> 0
<RECEIVABLES> 139,538
<ALLOWANCES> 0
<INVENTORY> 84,506
<CURRENT-ASSETS> 774,674
<PP&E> 46,072
<DEPRECIATION> (14,984)
<TOTAL-ASSETS> 835,866
<CURRENT-LIABILITIES> 71,996
<BONDS> 0
0
0
<COMMON> 3,030
<OTHER-SE> 760,840
<TOTAL-LIABILITY-AND-EQUITY> 835,866
<SALES> 162,948
<TOTAL-REVENUES> 162,948
<CGS> 57,376
<TOTAL-COSTS> 223,192
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (53,421)
<INCOME-TAX> 0
<INCOME-CONTINUING> (53,421)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (53,421)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
