Form 10-QSB/A for AMERICAN ACCESS TECHNOLOGIES, INC. filed on February 4, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
Amendment 1
[XX] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 For the quarterly period ended
September 30, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to ________________
* * * * * * * * * * * * * * * * * * * * * *
Commission File No. 000-24575
AMERICAN ACCESS TECHNOLOGIES INC.
A Florida corporation
(Exact name of registrant as specified in charter, and state incorporated)
* * * * * * * * * * * * * * * * * * * * * *
Employer Identification No. 59-3410234
Altamonte Springs Florida 238 N. Westmonte Dr. Suite 210 32714
(Address of principal executive offices of registrant)
(407) 865-7696
(Registrant's telephone number, including area code)
* * * * * * * * * * * * * * * * * * * * * *
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X]. NO [ ].
The number of shares of AMERICAN ACCESS TECHNOLOGIES INC. Common Stock (Par
Value $0.001) outstanding at September 30, 1998 was 3,030,000
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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.
The Company's operating and capital requirements in connection with its
operations have been and will continue to be significant. Based on its current
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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.
RISKS ASSOCIATED WITH YEAR 2000 PROBLEM
Computer systems and/or software used by many companies may need to be
upgraded to accept four digit entries to distinguish 21st century dates from
20th century dates. As is the case with most other companies using computers in
their operations, the Company recognizes the need to ensure that its operations
will not be adversely impacted by software and/or system failures related to
such "Year 2000" problem. The Company has been reviewing its own internal
computer and related information and operational systems to assess the actions
required to assure Year 2000 compliance. Based on information currently
available, the Company believes that the costs associated with Year 2000
compliance, and the consequences of incomplete or untimely resolution of the
Year 2000 problem, will not have a material adverse effect on the Company's
business, financial condition and results of operations in any given year.
However, even if the internal systems of the Company are not materially affected
by the Year 2000 problem, the Company's business, financial condition and
results of operations could be materially adversely affected through disruption
in the operation of the enterprises with which the Company interacts.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 5, 1999
AMERICAN ACCESS TECHNOLOGIES, INC.
(Registrant)
By: /s/ Bobby E. Story
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Bobby E. Story
Secretary/Treasurer
Chief Financial Officer
By: /s/ Victor E. Murray
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Victor E. Murray
President
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