Form 10-QSB for AMERICAN ACCESS TECHNOLOGIES, INC. filed on November 15, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[XX] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 For the quarterly period ended
September 30, 1999
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
Lake Mary Florida, 37 Skyline Drive Suite 1101
(Address of principal executive offices of registrant)
(407) 333-1446
(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, 1999 was 4,063,700.
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Audited
Financial
ASSETS 30-Sep-99 Statements
------ UNAUDITED Dec. 31, 1998
--------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 471,877 $ 637,776
Investments 2,796,561 2,825,177
Accounts receivable, net of allowance 1,346,623 806,960
Note receivable, related party 500,000 500,000
Inventories 347,095 297,440
Prepaid expenses and other current assets 235,812 60,466
Cost in excess of contract sales 346,598 --
----------- -----------
Total current assets 6,044,566 5,127,819
Property, Plant and Equipment, net of accumulated depreciation 1,447,593 1,313,630
Building Under Construction 823,568
Patent Costs 63,075 34,962
Total assets $ 8,378,801 $ 6,476,411
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Line of credit $ 75,746 $ 296,002
Accounts payable and accrued expenses:
Compensation due to officers/directors/stockholders 13,432 111,235
Other 288,716 355,390
----------- -----------
Total current liabilities 377,894 762,627
----------- -----------
Deferred Income Taxes 69,000 69,000
Stockholders' Equity:
Series A 10% Senior Convertible Preferred stock,
$.001 par value; authorized 1,000,000 shares; issued and
outstanding 11,239 and 50,000 respectively shares at liquidation value 1,123,900 5,000,000
Common stock, $.001 par value; authorized 10,000,000
shares; issued and outstanding 4,061,900 and 3,265,470 respectively shares 4,053 3,265
Additional paid-in capital 7,829,687 1,512,625
Unrealized losses on securities held for investment (100,517)
Deficit (925,215) (871,106)
----------- -----------
Total stockholders' equity 7,931,908 5,644,784
----------- -----------
Total liabilities and stockholders' equity $ 8,378,802 $ 6,476,411
=========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
30-Sep-99 9/30/1998 30-Sep-99 30-Sep-98
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales
Formed metal $ 3,076,368 $ 3,139,564 $ 968,159 $ 1,196,380
Zone cabling termination cabinet 1,031,203 479,999 316,455 162,948
----------- ----------- ----------- -----------
Total Net Sales 4,107,571 3,619,563 1,284,614 1,359,328
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of sales 1,748,673 1,725,103 611,805 635,551
Selling, general and administrative 2,266,525 1,944,704 731,585 682,422
----------- ----------- ----------- -----------
Total Cost and Expenses 4,015,198 3,669,807 1,343,390 1,317,973
----------- ----------- ----------- -----------
Net Operating Income (Loss) 92,373 (50,244) (58,776) 41,355
----------- ----------- ----------- -----------
Other Income (Expense):
Interest income 273,274 13,091 120,817 6,823
Interest expense (16,875) (102,649) (3,496) (34,214)
Other income 50,699 233,363 13,864 4,758
----------- ----------- ----------- -----------
Total Other Income (Expense) 307,098 143,805 131,185 (22,633)
----------- ----------- ----------- -----------
Net Income Before Taxes 399,471 93,561 72,409 18,722
----------- ----------- ----------- -----------
Income Taxes (Credit) (15,170)
----------- ----------- ----------- -----------
Net Income 414,641 93,561 72,409 18,722
=========== =========== =========== ===========
Net Income Per Common Share $ (0.05) $ (0.05) $ 0.02 $ (0.02)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Nine Nine
Months Months
Ended Ended
09/30/99 09/30/98
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 414,641 $ 93,562
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 232,171 224,690
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (539,663) (394,837)
Inventories (49,655) 23,734
Prepaid expenses and other assets (175,346) 160,016
Costs in excess of contract sales (346,599) --
Increase (decrease) in:
Compensation due to officers/directors/stockholders (97,803) 616,684
Accounts payable and accrued expenses (66,675) (426,348)
----------- -----------
Net cash provided by operating activities (628,929) 297,501
----------- -----------
Cash Flows from Investing Activities:
(Increase) Decrease Notes Receivable -- (500,000)
Proceeds from investment changes (34,840) --
Patent costs (28,113) (26,217)
Acquisition of property and equipment (net of sales and retirements) (366,132) (31,208)
Costs for building under construction (823,568) --
----------- -----------
Net cash provided by investing activities (1,252,653) (557,425)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of common Stock 1,935,939 480,000
Proceeds from line of credit (220,256) --
Payments on loans and capital lease obligations -- --
----------- -----------
Net cash used in financing activities 1,715,683 480,000
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (165,899) 220,076
Cash and Cash Equivalents, Beginning 637,776 638,134
----------- -----------
Cash and Cash Equivalents, Ending $ 471,877 $ 858,210
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 16,875 $ 102,649
=========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 Unaudited
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements at
September 30, 1999 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
September 30, 1999 and results of operations for the three and nine months ended
September 30, 1999 and 1998. 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, 1998 included in the company's Registrations
Statement Form SB-2 filing and 10-KSB.
2. Nature of Business and Summary of Significant Accounting Policies.
BUSINESS
American Access Technologies, Inc. develops specialized products for the
telecommunications industry. The company manufactures and distributes several
models of Zone Cabling Termination Cabinets to the telecommunications industry.
The product helps manage and route wiring and cabling used in voice, computer
and data transmission systems throughout the world.
Omega Metals, Inc., a wholly-owned subsidiary of American Access, shears and
molds metal and manufactures metal-formed products for customers principally in
Florida and Georgia. Omega manufactures the company's product.
On August 17, 1999, American Access acquired the equipment, outstanding sales
agreements and quotes, inventory, goodwill and product name and logo, and the
company website for Genco, Inc., a manufacturer of generator enclosures, for
$550,000 in legended AATK common stock at $20 per share and forgiveness of all
accounts receivable that exist to Omega Metals. The Company currently is
fulfilling backorders in excess of $550,000. American Access also is installing
a powder coating system that was purchased for $375,000. To date, booked orders
in-house for the process are in excess of $1.5 million.
COMMON STOCK
The Registration Statement on April 6 became effective for the Series A
10% Senior Convertible Preferred Stock, of which there were 50,000 shares
outstanding at a gross of $5,000,000. Through September 30, 1999, 78.3% of the
preferred stock, $3,876,100 has been converted resulting in 288,456 common stock
shares being issued. A total of 286,511 shares were sold on the open market.
American Access Technologies trades on the Nasdaq Stock Market, Inc., as a Small
Cap listing.
The Registration Statement on April 7 became effective for the offering
of 720,000 shares of common stock upon the exercise of 720,000 $8 warrants. At
the beginning of the quarter ending September 30, 1999 there were 86,750
unexercised warrants. During the quarter ending September 30, 1999, 33,375 were
exercised, leaving a balance of 53,375.
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.
<PAGE>
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
computation of earnings per share is reflected in the following schedule:
<TABLE>
<CAPTION>
Computation of Net Loss Per Common Share Nine Months Ended Three Months Year Ended
Sept. 30, 1999 Ended Sept. Dec. 31, 1998
30, 1999
<S> <C> <C> <C>
Net Income (Loss) $ 342,237 $ 138,395 $ (492,814)
Cumulative Preferred Stock Dividend (61,195) (61,195) (104,167)
Beneficial Conversion Preferred Stock (468,750)
----------
Dividend (781,250)
-----------
$ (187,708) $ 77,200 $(1,378,231)
----------- ----------- -----------
Weighted Average Common Shares 3,450,539 3,633,575 2,992,500
Outstanding
Common Shares Issued to Acquire Omega Metals, Inc. 226,470
------------
Total Weighted Average Number Common Shares and 3,450,539 3,633,575 3,218,970
----------- --------- ------------
Equivalent
Net Loss per Common $ (.05) $ .02 $ (.43)
----------- ---------- ------------
Share
</TABLE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NINE MONTHS ENDED SEPT. 30, 1999 COMPARED WITH THE NINE MONTHS ENDED SEPT. 30,
1998
REVENUES
Revenues for the nine months ended September 30, 1999 increased by
$665,332 or 29.4% to $2,925,567 as compared to $2,260,235 for the nine months
ended September 30, 1998. The parent company, American Access Technologies,
Inc., was still in the development stage for the third quarter ended September
30, 1998, and revenues were only $317,051 . In 1999 for the nine months ended
September 30, revenues increased by $397,696 to $714,747. The company's
subsidiary, Omega Metals Inc., also had an increase in revenues of $267,636.
COSTS AND EXPENSES
Direct costs represent the cost incurred by the Company to have its
products manufactured and assembled. These costs represented 42.4% of revenues
for the nine months ended September 30, 1999, and 48.2% of revenues for the nine
months ended September 30, 1998. The decrease is attributed to a change in the
customer mix. Revenues generated during the nine month period ended September
30, 1999 required less direct labor and material costs per sales dollar than for
the previous year's nine months ended September 30, 1998.
Selling, General and Administrative expenses increased by $272,658 to
$1,534,940 for the nine months ended September 30, 1999 compared to $1,262,282
for the nine months ended September 30, 1998. This increase was the result of
costs associated with the continued growth of the company including marketing
and promotional costs, management costs, and professional fees associated with
the required SEC filings. Startup costs related to the company's Building
Industry Consulting Service International (BICSI) licensed training agreements
school have also been expensed as incurred.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities utilized cash of $409,355 during the
nine months ended September 30, 1999 as compared to providing $180,796 during
the nine months ended September 30, 1998.
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
these revenues in addition to existing cash and cash equivalents remaining from
proceeds of it private offering, and cash received from the exercise of warrants
will be sufficient to meet its capital and liquidity needs for the next 12
months. The Company also believes that resources required to fulfill purchase
orders will be available through bank borrowings or factoring, if required. The
company's primary customers are established corporations with credit ratings
that will support such credit arrangements.
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 has
launched a manufacturer's rep program to assist in the distribution of
its products. The web site presence maintained by the Company is being
enhanced to provide critical installation instructions and more
comprehensive information about our product.
2. The Company has arranged for uninterrupted manufacture of its products
by purchasing the manufacturer in October, 1998, in order to minimize
the financial requirements necessary for production. We are expanding
the job base at our wholly-owned subsidiary Omega Metals, and have
increased plant capacity in an expansion. Backorders acquired in the
$550,000 purchase of Genco, Inc. assets, total in excess of the
purchase price of the assets. The $375,000 expenditure for a powder
coating system, currently being installed, has already generated in
excess of $1.5 million in orders for the process.
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, and
technological obsolescence.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 17, 1999, a class action complaint was filed against the company
and its primary market maker Capital International Securities Group, in United
States District Court, Eastern District of New York, prompted by the stock's
price decline in August, 1999. The company has retained the law firm of Foley &
Lardner to litigate the matter.
<PAGE>
ITEM 2:
CHANGES IN SECURITIES AND USE OF PROCEEDS
COMMON STOCK
The Registration Statement on April 6 became effective for the Series A
10% Senior Convertible Preferred Stock, of which there were 50,000 shares
outstanding at a gross of $5,000,000. Through September 30, 1999, 78.3% of the
preferred stock, $3,876,100 has been converted resulting in 288,456 common stock
shares being issued. A total of 286,511 shares were sold on the open market.
American Access Technologies trades on the Nasdaq Stock Market, Inc., as a Small
Cap listing.
The Registration Statement on April 7 became effective for the offering
of 720,000 shares of common stock upon the exercise of 720,000 $8 warrants. At
the beginning of the quarter ending September 30, 1999 there were 86,750
unexercised warrants. During the quarter ending September 30, 1999, 33,375 were
exercised, leaving a balance of 53,375.
ITEM 5:
OTHER INFORMATION
In September, 1998, the Company , loaned $500,000 to Universal Beverages
Holdings Corp., a bottled water company. John Cooney, a director of the Company,
is also a director and shareholder of Universal Beverages. The secured loan
provides for interest at 15% per annum. Universal Beverage is in the process of
recapitalization. However, the loan is currently in default.
On August 3, 1999, American Access Technologies, Inc. and Herman Miller, Inc.
entered into a contract for an alliance to jointly promote the use of American
Access Technologies, Inc products in Herman Miller Ethospace and Systems Bridge
products.
On August 17, 1999, American Access acquired the equipment, outstanding sales
agreements and quotes, inventory, goodwill and product name and logo, and the
company website for Genco, Inc., a manufacturer of generator covers, for
$550,000 in legended AATK common stock at $20 per share and forgiveness of all
accounts receivable that exist to Omega Metals. The Company currently is
fulfilling backorders in excess of $550,000.
On September 10, 1999, American Access purchased for $350,000 a powder coating
system that will expand the Company's customer base and ensure highest quality
finish work. The system is currently being installed at the Company's expanded
production site in Keystone Heights. To date, booked orders in-house for the
process are in excess of $1.5 million.
ITEM 6:
EXHIBITS AND REPORTS
(a) EXHIBITS
The following exhibits are being filed as part of this report:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT NO. DESCRIPTION
----------- -----------
Material Contracts (Incorporated by Reference to
10.0 Exhibit 10.0 filed on Form 10-QSB Filed August 16,
1999.)
27.0 Financial Data Schedule
(b) REPORTS on FORM 8-K The Company on October 19, 1999, filed an 8-K
disclosing the pending class action lawsuit and the
resignation of two directors, herewith incorporated
by reference.
</TABLE>
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: August 16, 1999
AMERICAN ACCESS TECHNOLOGIES, INC.
(Registrant)
By: /s/ Bobby Story
----------------------------------------
Bobby Story
Acting Chief Financial Officer
By: /s/ John E. Presley
----------------------------------------
John E. Presley
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 587,392
<SECURITIES> 3,450,738
<RECEIVABLES> 1,282,887
<ALLOWANCES> 28,000
<INVENTORY> 339,243
<CURRENT-ASSETS> 6,486,861
<PP&E> 2,863,327
<DEPRECIATION> (1,567,152)
<TOTAL-ASSETS> 8,360,519
<CURRENT-LIABILITIES> 635,558
<BONDS> 0
0
5,000,000
<COMMON> 4,021
<OTHER-SE> 6,428,040
<TOTAL-LIABILITY-AND-EQUITY> 8,360,519
<SALES> 2,925,567
<TOTAL-REVENUES> 2,925,567
<CGS> 1,239,478
<TOTAL-COSTS> 2,774,418
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,374
<INCOME-PRETAX> 327,067
<INCOME-TAX> (15,170)
<INCOME-CONTINUING> 343,006
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 343,006
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
