AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 19, 1999
FILE NO. 333-70805
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2 AMENDMENT 1
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)
Florida 3661 59-3410234
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(State of Incorporation) (Primary Standard (IRS Employer I.D. Number)
Industrial Classification
Number)
238 N. Westmonte Drive, Suite 210, Altamonte Springs FL 32714 (407) 865-7696
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(Address and telephone number of principal executive offices)
238 N. Westmonte Drive, Suite 210, Altamonte Springs, FL 32714
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(Address of principal place of business)
Victor Murray, President
American Access Technologies, Inc.
238 N. Westmonte Drive, Suite 210
Altamonte Springs, FL 32714
(407) 865-7696
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(Name, address and telephone number of agent for service)
Copies to;
Joel Bernstein, Esq., P.A.
11900 Biscayne Blvd. #604
Miami, FL 33181
(305) 892-1122
Fax:(305) 892-0822
Approximate date of proposed commencement of sale to the public: From
time to time after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. /X/
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CALCULATION OF REGISTRATION FEE
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Proposed
Amount of Maximum Proposed Maximum Amount of
Title of Each Class of Shares To be Offer Price Aggregate Offering Registration
Securities to be Registered Registered Per Unit(1) Price Fee
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Common Stock 720,000(2) $20.50 $14,760,000 $4,353.00
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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 February 9, 1999.
(2) Includes 670,000 shares issuable on exercise of warrants.
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.
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[LOGO]
PROSPECTUS
March 19, 1999
720,000 SHARES OF COMMON STOCK
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American Access Technologies, Inc.
238 Westmonte Dr . Suite 210
Altamonte Springs, Florida 32714
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American Access designs, manufactures, and markets products that assist in
wiring buildings for telecommunications services. Our products make it easier to
add new computer, telephone, fax, and television lines. We're instrumental in
changing existing systems that are keeping pace with advancing technology.
Our subsidiary, Omega Metals, Inc, manufactures custom sheet metal products,
primarily for the telecommunications industry.
American Access common stock is traded on the OTC Electronic Bulletin Board
under the symbol AATK. On February 9, 1999, the closing bid quotation for the
common stock was $20.50 per share. The shares are being sold by the selling
security holders named under Plan of Distribution -Selling Security Holders.
American Access will not receive any of the proceeds from the shares of common
stock sold by the selling security holders.
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Our ZCTC-RF 0822 Floor Unit
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INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding our company, and the stock being issued on exercise of
outstanding warrants in this offering, and our financial statements and
accompanying notes appearing elsewhere in this prospectus.
The offering
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Common stock offered by selling security holders 720,000 shares
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Shares of common stock to be outstanding assuming all shares to which 4,514,705 shares
this prospectus relates are sold. Doesn't include shares that may be
issued upon conversion of our preferred stock. See "Risk Factors -
Conversion of Preferred Stock."
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Our company
American Access develops and sells products that place
telecommunications equipment in office buildings, hospitals, convention centers,
schools, and any building in need of an efficient system to route information.
Our first product, called a zone cabling termination cabinet, was introduced in
January 1997. This product is a cabinet in which telecommunications equipment
may be mounted. Cables and wires that allow computers, telephones and fax
machines to work are also plugged into this cabinet.
In November 1998, we acquired Omega Metals, Inc. This company is a
sheet metal fabrication and assembly plant that manufactures products for
American Access and for other companies, primarily in the telecommunications
industry.
Our markets and customers
The telecommunications industry is rapidly expanding as new technology
is introduced. The Internet allows a computer user to retrieve information sent
through cables from different locations worldwide. Office computers are linked
into a network by cables and wires so workers can use their own equipment to
view and contribute to co-workers' projects. Telephone systems carry the sound
of your voice through wires and cables. Our products make it easier to install
in buildings the cables, wires and equipment needed for people to communicate
today. And as telecommunications technology continues to advance, we make it
easier to change existing systems that are advancing with it.
We distribute through resellers who generally sell our products along
with other products used to install a telecommunications system.
Our strategies
Our objective is to become a leading supplier of
telecommunications cabling system components. Principal elements of our strategy
include the following:
o Pursue large customers directly and through our reseller
o relationship. Introduce new products on a timely basis.
RISK FACTORS
Investment in our common stock involves a high degree of risk. You
should consider the following discussion of risks as well as other information
in this prospectus before purchasing any of our common stock.
Except for historical information, the information in this prospectus,
and in our SEC reports, contains forward-looking statements about our expected
future business and performance. Our actual operating results and financial
performance may prove to be very different from what we might have predicted as
of the date of this prospectus. The risks described below address some of the
factors that may affect our future operating results and financial performance.
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We have a short operating history
We were incorporated in October 1996 and have a limited operating
history from which to evaluate our business and prospects. Our operating results
in the future will be subject to all of the risks and uncertainties inherent in
the development and maturation of a business. We have only owned Omega Metals
since November 1998.
Our products may not be commercially successful
To date, we have only sold limited amounts of our products in the
commercial marketplace. To be successful, we will have to sell more of our
products. However, for several reasons, we may not be able to generate
increasing sales. Potential customer may not be able to see the advantage of
using our products over the traditional way of cabling telecommunications
products. Our competitors introduce products that are more economical to use, or
that have better features, making them more attractive to buyers.
Our markets are highly competitive
The markets for our products are highly competitive and subject to
rapid change. These markets are sensitive to the introduction of new products
and the enhancement of existing ones. Industry participants also aggressively
market their products.
Competitors may be developing technologies or products that may be
similar or superior to ours. These competitors may have a better ability to
market their products.
To effectively compete, we need to make our business grow. By
generating greater revenues, we will have the resources to develop new products
in response to new technology. We will be able to meet customer demands, and to
sell products in a broad distribution channel. We cannot assure that we will be
able to grow sufficiently to compete effectively in this marketplace.
Operating losses
Our expenses are currently greater than our revenues. Our ability to
operate profitably depends on increasing our sales and achieving sufficient
gross profit margins. We cannot assure that American Access will operate
profitably. Omega Metals has operated profitably.
Dependence on key management
We only have a few key officer and directors. If any of them should
leave our company, this could have an adverse effect on our business and
prospects.
Competitors may copy our products
Although we have received patents in the United States on aspects of
our products, competitors may not be prevented from developing products
substantially equivalent to ours. Patents litigation entails high costs and can
take a long time. Therefore, our patent position may not prevent competition.
Additional shares could depress our stock price
If our stockholders sell substantial amounts of our common stock in the
public market, the market price of our common stock could fall. This would
include shares issued upon the exercise of outstanding warrants and the
conversion of our convertible preferred stock into common stock.
Conversion of preferred stock
We issued 50,000 of Series A 10% convertible preferred stock. Each
share is convertible into common stock. The number of share of common stock that
may be issued upon conversion of the convertible preferred stock depends upon
the market price of our common stock at the time of the conversion. The
following table shows the number of shares of common stock that could be issued
upon conversion of the 50,000 shares of the convertible preferred stock at the
following assumed market price of the common stock:
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MARKET PRICE OF NUMBER OF SHARES OF COMMON STOCK
COMMON STOCK ISSUED ON CONVERSION
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$21.25 or above 294,118
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$20.00 312,500
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$18.00 347,222
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$16.00 390,625
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$14.00 446,429
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$10.00 625,000
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$ 5.00 1,250,000
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Based on the market price of our common stock on February 9, 1999, the
following table shows how many shares of our common stock would be outstanding
if all of the convertible preferred stock was converted into common stock and
all of the outstanding warrants were converted into common stock and the
percentage of the total shares of common stock which would be represented:
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CLASS OF HOLDER NO. OF SHARES OF COMMON STOCK PERCENTAGE OF TOTAL
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Current common stock 3,256,470 77.16%
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$ 8.00 warrants 570,000 13.51%
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$ 25.00 warrants 100,000 2.37%
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Convertible preferred stock 294,118 6.97%
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TOTAL 4,220,588 100.0%
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The following table shows t he percentage of total outstanding common
stock that would be owned by the convertible preferred stockholders if their
stock was converted as indicated:
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MARKET PRICE PERCENT OF TOTAL
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$21.25 or above 6.97%
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$20.00 7.37%
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$18.00 8.12%
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$16.00 9.05%
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$14.00 10.21%
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$10.00 13.73%
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$ 5.00 24.15%
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Accordingly, the lower the market price of American Access common stock
at the time a preferred stockholder converts, the more common stock he gets.
Conversion and resale of such additional common stock may reduce the prevailing
market price of our common stock and, as a result, additional conversions of
preferred stock could result in even greater shares of common stock being
issued, the sale of which could further depress the market price of our common
stock.
Short sales could be encouraged
If more shares o f common stock are issued the lower the market price
of our common stock drops, then short sales could be encouraged by holders of
the convertible preferred stock and by others. Short sales would result in
further downward pressure on the market price of our common stock.
Substantial dilution due to increase in number of shares of common stock
outstanding
If lower price of the common stock results in substantial issue of
additional shares as a result of conversion of preferred stock into common
stock, the interest of holders of common stock would be subject to substantial
dilution.
Potential lack of liquidity
Our common stock trades on the OTC Electronic Bulletin Board. Stocks
trading on the OTC Electronic Bulletin Board generally attract a smaller number
of market makes and a less active public market, and may be subject to
significant volatility. It is more difficult to sell stock on the OTC Electronic
Bulletin Board.
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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 American Access 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. As of March 15, 1999, 620,000 $8.00
warrants are outstanding and 100,000 $25.00 warrants are outstanding. They will
mature February 11, 2000.
MARKET FOR SECURITIES
American Access 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
American Access common stock for the periods indicated
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High Low
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August 15, 1997 through September 30, 1997 $ 7.625 $ 2.50
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October 1, 1997 through December 31, 1997 $12.00 $ 7.20
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January 1, 1998 through March 31, 1998 $12.25 $11.00
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April 1, 1998 through June 30, 1998 $18.50 $12.25
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July 1, 1998 through September 30, 1998 $21.50 $19.00
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October 1, 1998 through December 31, 1998 $20.50 $17.75
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January 1, 1999 through February 28, 1999 $21.625 $18.875
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The above represents inter-dealer quotations which do not
include retail mark-ups, markdowns, or commissions, and do not necessarily
represent actual transactions.
About 622 investors were record holders of American Access
common stock on February 4, 1999.
RECENT TRANSACTIONS
During October-December 1998, American Access issued 50,000 shares of
10% Series A Senior Convertible Preferred Stock with net proceeds of
approximately $4,262,180 .
On November 11, 1998 the Company issued 226,470 shares of common stock
in exchange for all the issued common stock of Omega Metals, Inc.
DIVIDEND POLICY
American Access 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 using
retaining earnings, if any, to finance the growth of the company. The
declaration and payment of dividends in the future will be determined by the
Board of Directors in light of conditions then existing, including the company's
earnings, financial condition, capital requirements and other factors.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
American Access was formed in October 1996 to acquire the assets of Vic
Murray and Associates, Inc. American Assets purchased VMA to obtain the pending
patent for the Zone Cabling Termination Cabinet, which the company has since
developed and marketed.
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Shortly after the acquisition of VMA, American Access decided to
discontinue the operations and business activities of VMA, which was a
manufacturer's representative of various products. Today, we develop, design,
and manufacture products for the telecommunications industry. Our cabling
cabinets store and efficiently distribute the wiring for computer, telephone,
and television systems installed in office buildings, hospitals, schools,
conventions centers, and any building that needs an efficient system to route
information.
In November 1998, American Access acquired Omega Metals, Inc., a
precision sheet metal fabrication operation, which has and will continue to
provide product prototyping, manufacturing, assembling and packaging operations
to the company. Omega operates as a wholly owned subsidiary with sales and
manufacturing intact. The company for $80,000 has acquired six acres adjacent to
Omega's north Florida site for a plant expansion of 30,000 sq. ft. The capital
cost, which is estimated to be $450,000 to complete this expansion, will be
funded from cash flows and working capital.
In October and November 1998, American Access issued 50,000 shares of
Series A 10% senior convertible preferred stock with net proceeds of $4,262,180.
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 report.
RESULTS OF OPERATIONS
Revenues
Revenues for the year ended December 31, 1998 increased by $579,693 to
$4,936,204 as compared to $4,356,511 for the year ended December 31, 1997. The
major increase was a result of additional sales of zone cable termination
cabinets of $360,464.
Costs and expenses
Direct costs for the year ended December 31, 1998 represented 45.7% of
revenues. For the year ended December 31, 1997 these costs represented 51.3% of
revenues.
Selling, general and administrative expenses for the year ended
December 31, 1998 amounted to $3,076,952, which was an increase of $875,507 from
the December 31, 1997 totals of $2,205,436. The former owner of Omega Metals,
Inc. was paid a year end bonus of $792,300 for 1998 operations, prior to the
sale to American Access. This amount represents the major portion of the
increased costs between the two years. Marketing and promotion costs were also
greater for the year ending December 31, 1998, as compared to the year ending
December 31, 1997. This increase was a result of the company's continuing effort
to develop and market its products.
Liquidity and capital resources
Net cash [used] by operating activities was [$391,889] and [$267,214]
for the years ended December 31, 1998 and 1997 respectively. Net cash [used] by
operating activities during the year ended December 31, 1998 primarily consisted
of net losses, increases in accounts receivables, offset by depreciation and
amortization, gains on sales of investments and equipment, decrease in income
refund receivable and decrease in inventories. Net cash [used] by operating
activities during the year ended December 31, 1997 primarily consisted of net
losses, increase in income fund receivable and inventories, decrease in income
tax payable, offset by depreciation and amortization, common stock issued,
deferred income taxes and increase in accounts payable.
Net cash [used] by investing activities was [$3,285,999] and [$46,964]
for the years ended December 31, 1998 and 1997 respectively. In the year ended
December 31, 1998, the company used $85,635 to purchase equipment, $4,281,803
for the acquisition of investments and $500,000 in notes receivable. In the year
ended December 31, 1997, the company used $37,464 to purchase equipment.
Net cash provided by financing activities was $3,677,531 and $565,614
for the years ended December 31, 1998 and 1997 respectively. In the year ended
December 31, 1998, the company received proceeds of $480,000 from the sale of
common stock, $4,262,180 from the sale of preferred stock, $296,002 from the
line of credit. The company utilized $100,000 to reduce notes payable,
$1,256,625 in payments on capital lease obligations, which eliminated high
interest rates up to 14%, and the remaining amounts were used to finance the
company's business operations and investing activities. In 1997, the company
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received proceeds from the sale of common stock in the amount of $847,977. The
company utilized $276,772 in payments on capital lease obligations and the
remaining amounts were used to finance the business operations and investing
activities.
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 its 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 borrowing or
factoring, if required. The company's primary customers are substantial
corporations with credit ratings that will support such credit arrangements.
Management's plans include the following:
o 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 manufacturer's rep program to assist in the
distribution of its equipment.
o The company purchased Omega Metals on November 11, 1998. The main
reason for this acquisition was to reserve capacity for the manufacture
of American Access products. The combined operation provides a greater
diversification of facilities and equipment. Plans are under way for
expansion of this facility.
o 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. Between October 1, 1998 and December 10, 1998 the
company has had a private placement of its Series A 10% Senior
Convertible Preferred Stock in process. Of the 60,000 shares authorized
at a par value of $.001, 50,000 shares have been sold for gross
proceeds of $5,000.000. 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
In the first quarter of 1999, 9,000 restricted shares of common stock
were issued as compensation to three persons.
A large customer of Omega's, Carlisle, ceased operations recently. The
lost revenue has been replaced by Bill Shearer Inc. Omega manufacturers 10,000
ultraviolet light and sheet metal containers, called Eclipse, for the Ocala
company. It is expected that this production will increase to 4,000 units per
month in the near future.
RISKS ASSOCIATED WITH YEAR 2000 PROBLEM
Computer systems and software used by many companies may need to be
upgraded to accept four digit entries to distinguish 21st century dates from
20th century dates. Like most other companies using computers in their
operations, American Access needs to ensure that its operations will not be
adversely impacted by software or system failures related to the Year
2000problem. We have been reviewing our internal computer and related
information and operational systems to assure Year 2000 compliance. Based on
information currently available, we believe 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 our
business, financial condition and results of operations in any given year.
However, even if our internal systems are not materially affected by the Year
2000 problem, our business, financial condition and results of operations could
be materially adversely affected if the businesses with which we interact are
disrupted by Year 2000 problems.
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BUSINESS
Company background
American Access 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, incorporating it as Vic
Murray & Associates, Inc.. VMA developed agency relationships with electrical
engineers, electrical contractors, municipalities, power companies and
distribution companies throughout the State of Florida. American Access acquired
VMA in exchange for company common stock in 1996 and ceased its manufacturer's
representative business. We have chosen to engage exclusively in the business of
developing and manufacturing products that help manage the wires and cables
needed to route information by television, telephone, and computer.
In November 1998 we acquired Omega Metals, Inc. of Keystone
Heights Florida. Omega will continue to manufacture our products, maintaining
the high standards it has set for sheet metal fabrication in the
telecommunications industry and in all of its jobs.
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. The
telecommunications industry was forever changed. For the first time in this
industry, myriad new business opportunities emerged.
Richard Murray was directed to research and evaluate the
industry to determine in which categories of supply and support we would
specialize. The decision was made to focus on wire management for telephone,
computer and television systems. With the birth of revolutionary high speed
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
Murrays 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,
designers and engineers rarely considered future wiring and cable changes that
would have to be made when a business owner added or moved computers, telephones
and fax machines..
Background for product development
Until now, wire management systems have not evolved as rapidly
as the telecommunications industry. Industry leaders began to realize that with
the advent of technologically advanced equipment, systems, new methods of
conveyance and the demand for connection to the Internet, , 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 facility. The wiring is then distributed to each floor of a building
through areas known as telecommunications closets. From the closets, all wiring
is sorted and distributed as needed to all the workers' stations on that floor.
Every workstation, where phones, computers and fax machines are located, is
required to have two horizontal cables running from it to the telecommunications
closet. This traditional method of wiring is called star topology. It provides
very little flexibility when wires and cables need to be rerouted as additions
or changes are made at a workstation.
The telecommunications closet is located in a common area within each
floor. The cables distributed from it could be as far as 295 ft., (90 meters)
away from each workstation. For voice wiring, the maximum main cable length is
800 meters. This illustrates that a massive amount of wire is required for
telecommunications. It is not unusual for a 40-story building to have 200-300
miles of wiring. To meet the many industry standards and regulations, the old
method of cable distribution in and office environment requires very expensive
modular furniture, such as specially designed desks, to help route the miles of
wires. In some applications, even modular furniture may not meet industry
guidelines. American Access products meet industry standards and are real
solutions to cabling problems.
Today, we all rely on staying in touch. People communicate more with
computers, phones and fax machines. Much of our information comes from
television. To accommodate the growing telecommunications industry, more cables
and wires must be run to carry voice, data and video images faster, cheaper,
cleaner, in longer runs, and using less space. At the same time, future
additions and changes to a system must be considered. Old methods of wiring
require that a new line of cable be run from the user's desk, or workstation,
back to the telecommunications closet for each and every change. Our enclosure,
the Zone Cabling Termination Cabinet, eliminates the need for those new lines by
placing the telecommunications equipment close to the workstation and in an
inconspicuous location.
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Industry leaders have realized the need for new cabling methods and
equipment. These companies, industry associations, and individual experts have
joined to create revolutionary standards. Companies such as Lucent Technologies,
Ortronics, AT&T, Krone, Belden, Siecor, Hubbell, Leviton Telcom, Superior
Modular Products and American Access Technologies, Inc, have joined with various
organizations that set industry standards. Together we are developing and
introducing innovations in wire and cabling design and routing. This partnership
provides for efficient transmission of telecommunications signals into the zone
in a building where they are needed. This zone cabling is called Open Office
Architecture.
Open Office Architecture is endorsed under Telecommunications Systems
Bulletin 75, by the American National Standards Institute, by the Telephone
Industry Association and by the Electrical Industry Association. The purpose of
this design is to locate the bundled telecommunications cables closer to the
individual workstations.
Zone cabling is used in open office areas, hotels, convention centers,
entertainment and them parks, hospitals, government buildings, schools,
industrial complexes, data centers, banks, and any other area where a flexible
cable layout is required to support a changing or growing network for
communicating information.
AMERICAN ACCESSS PRODUCTS
The American Access product line capitalizes on the need for zone
cabling solutions. Our cabinets provide efficiency and flexibility, and are the
only fire-rated and Underwriter's Laboratories approved systems in the industry.
In 1996, we consulted with many of the leading telecommunications
specialists and engineers. All were in agreement. No one had developed a device
that met all of the industry standards and could effectively and efficiently
house and route telecommunications cables and wires. However some sort of device
was absolutely required to complete the Open Office Architecture design.
American Access researched and verified that no such enclosure existed. In fact,
our research revealed that no one was even developing such a device.
We designed an enclosure to house and distribute telecommunications
wiring and equipment in buildings. This enclosure is called a Zone Cabling
Termination Cabinet. We currently hold a patent pending for this cabinet that
may be installed in the ceiling, above the ceiling, on or in the wall or in the
floor structure. The ceiling unit fits into the suspended ceiling, providing
easy access to the wires and cables running to each workstation. Less cable is
used. Installation is easier and quicker, causing fewer disruptions and down
time for office workers. The floor and modular furniture units provide the same
solution as our ceiling unit installations. Our modular furniture units are
named EthoCom and ComDeck.
We believe that our products are the only enclosures manufactured that
can efficiently house telecommunications cables, distribute wiring to
workstations, and store unused cabling until it is needed, while complying with
all industry and government guidelines, standards and regulations. The cabinets
can be used for all low voltage wiring systems, including telephone, computer,
television, building controls, security and fire/life/safety wiring systems. The
cabinet was designed to accommodate all manufacturers' equipment.
Product application
The zone cabling cabinet will reduce the amount of wire running from
the workstation to the telecommunications closet. The wiring will now run from
the workstation to our cabinet, which is readily accessible through the ceiling
grid system, the floor, or through the modular furniture. The cabinet is
designed to accommodate all of the newly developed Open Office Architecture
wiring equipment. This ceiling enclosure is mounted in a standard 2ft. x 4ft.
ceiling grid system, but is physically attached to the building structure to
support the weight of the equipment installed within the enclosure. The
equipment is reached through a door that opens from below the ceiling for easy
maintenance, installations and changes. Specially trained, highly-paid
technicians will no longer be required to make those changes when systems grow
or are reconfigured. The new equipment just plugs in, creating less down time
and less loss of productivity. Cables are easily re-routed and reused. Less
cable is used, reducing the cost of materials and labor. Money is saved with the
initial installation and when systems are changed.
Our cabinets make better use of telecommunications closets, reducing
the mass of cables to be run throughout the building. Building owners are then
provided more usable space that generates rent.
11
<PAGE>
Product standards
The standards, regulations and various industry association
guidelines are very specific. They address the components of the product, the
product itself, the installation, and every aspect that may affect the safety of
people or property, including:
o Wire and cable lengths and widths, the minimum and maximum
allowed. For example, to wire for a telephone system, the maximum
main cable length is 800 meters.
o The ability of the product to withstand heat and fire damage.
o Markings. Each enclosure must be marked with the manufacturer's
name, trademark, or other descriptive marking. An enclosure may
also be designated with environmental ratings, such as rainproof,
watertight, corrosion resistant and dust-tight.
o The number of cables needed to run from the telecommunications
closet to the workstation.
o Voltage and grounding concerns;
o And the ability of the product to function as advertised.
American Access believes its Zone Cabling Termination Cabinet is the
only product that meets the standards and requirements of the telecommunications
industry including those of 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.
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. In conducting product tests, Underwriters
Laboratories lists, classifies, or recognizes products for their ability to
perform as designed. A UL listing is the highest category a product can achieve,
implying that as tested, all components of the product work as expected. Our
products achieved this highest level after testing.
Additional information
American Access has filed with the Securities and Exchange
Commission a registration statement on Form SB-2 under the Securities Act with
respect to the securities being offered. 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. Reference is made to such
exhibits to the registration statement for the complete text. For further
information with respect to American Access and the securities offered,
reference is made to the registration statement and to the exhibits filed as
part of it, 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:
o 500 West Madison Street, Chicago, IL 60604;
o 7 World Trade Center, New York, NY 10048; and
o 5757 Wilshire Boulevard, Los Angeles, CA 90034; and
o 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
o are available on the World Wide Web at: http://www.sec.gov.
American Access 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.
MARKETING
By providing patented and innovative solutions to telecommunications
cabling, American Access creates a new market in the industry. Our sales and
marketing goal is to establish our company, through education and alliances, as
the industry leader in this potentially huge marketplace. Our focus is to
partner with major equipment manufacturers and telecommunications distributors
since our products are designed to enhance their sales. Since our 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 our enclosure to sell more of their products. By
partnering with us, every manufacturer and distributor has opportunity to gain a
larger share of their respective markets. We also provide various support
programs and materials that enhance our partners' marketing plan.
We employ commissioned sales representatives firms, most of which are
in place across the country. Their job is to get our product lines specified by
architects, consultants, and engineers, and to handle the needs of the
distributors in their territories. They are fully trained in our product line.
To maintain these relationships, we are adding a national sales director
position. Once in place, regional managers will be added to oversee reps and
distributors in their territories.
12
<PAGE>
American Access has developed several brochures to assist in marketing.
These brochures range from one page to an eight-page full-color product and
application brochure.
We have also developed a World Wide Web site.
Our printed materials and web site currently serve as our primary
marketing tools. They 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, Building Industry Consultants Services
International, (BICSI) is currently using our line of products as an integral
part of their Zone Cabling Training and Certification course.
We also participate with our partners in trade shows as a component in
their individual booths and hospitality suites. We also individually participate
in three or four trade shows per year. Two of the shows focus on standards,
training and certifications. Two shows are industry product shows. We believe
that some of our partner relationships are the result of our show presence.
People in need of a telecommunications system contract with designers
and engineers, who design, specify, purchase and install cabling and equipment.
We sell our products to authorized distributors only, except for certain
companies that purchase extremely large quantities for private label.
Our cabinets are suitable for new installations and for upgrading
telecommunications systems in buildings. With an aggressive marketing plan in
place, to include partnering and a trained sales force, we believe that the
market potential for our products is enormous.
Distribution and sales
American Access Technologies has entered into a national distribution
contract with Anixter Internationals, Inc. (NYSE:AXE), which had 1996 revenues
of $2.5 billion.
Anixter International is an industry leader that teams with its
customers to design and implement telecommunication systems. A variety of
customized products and services is offered through a global network of 37
countries with 205 domestic operating locations.
American Access Technologies has negotiated distribution agreements
with the following regional distributors:
o CED-American Electric, Inc.
Founded over 100 years ago as a private company, CED-American Electric,
Inc. has grown to over 400 locations spread over 48 states and Canada. CED gross
revenues in 1996 exceed $500 million. More than 3,500 people were employed in
the service area. CED stocks over 25,000 separate inventory items.
o State Electric Supply
State Electric was founded in 1954 in Dunbar, West Virginia, as a
private company, which has grown to over 22 locations spread over seven states.
State Electric Supply grossed revenues in 1996 of over $125 million, and employs
over 500 people in the service area.
o Core Data Comm
Core Data Comm is 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. We believe that the principal competitive factors in our
markets are conformance to standards, reliability, safety, product features,
price, performance and quality of customer support. There can be no assurance
that American Access will compete successfully in the future with respect to
these or other factors.
13
<PAGE>
MANUFACTURING/OMEGA METALS, INC.
American Access has developed all of its products using computer
assisted design drawings. Master copies of its products are safeguarded at the
home office and certain copies are available to outsource firms.
On November 11, 1998, we acquired all the outstanding common stock of
Omega Metals, Inc., in exchange for 226,470 shares of our common stock. Omega
manufactures 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, and specialized painting .
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.
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 supplier, Tull Metals, has been its source for sheet metal
since 1981. No shortage has occurred during this time. Prices have been stable
during Omega's life. Sheet metal is currently plentiful in the marketplace, and
we are confident that Omega would have no problem replacing this supply at a
price consistent with Tull's price should that relationship end.
Omega's manufacturing capacity is approximately 5,000 units per month.
Manufacturing capability is not limited to only precision metal fabrication. On
site state-of-the-art high-tech surface coatings and specialized production
painting are also provided.
By acquiring Omega with its 50 employees, American Access adds the
valuable long term management skills of Erik Wiisanen and John Presley. Omega
will continue to operate as a wholly owned subsidiary with sales and
manufacturing intact. Omega has acquired 6 acres adjacent to the existing
property for a second quarter plant expansion of 30,000 sq. ft to supplement
assembly capabilities. The capital cost to complete this expansion will be
funded from cash flows and working capital.
FUTURE PRODUCT DEVELOPMENT
As American Access identifies the specific product needs of the
telecommunications industry, products are developed to meet 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.
Our first design was a low-voltage Zone Cabling Termination Cabinet
that mounts within the ceiling the grid system. We developed accessory equipment
to permit cable to penetrate walls and to maintain fire rating.
The second phase was to develop a raised floor cabinet that houses and
routes cables. A working prototype is currently available. This unit is expected
to 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. This unit will accommodate fiber optics as well as conventional copper
wiring. Fiber optics employ cables that allow information to travel at the speed
of light; much faster than traditional copper wiring. We anticipate that this
unit will be Underwriters Laboratories listed and into production within the
next six months. There can be no assurance that any new products will be
successfully developed or marketed.
14
<PAGE>
INTELLECTUAL PROPERTY
American Access has filed with the United States Department of
Commerce, Patent and Trademark Office an application for patent, pending No.
08785006, for Zone Cabling Termination Cabinet and communications cable
interconnection apparatus and associated method for Open Office Architecture.
The patent application contains approximately 67 various claims associated with
zone cabling techniques. On April 26, 1998, we were informed by the Patent and
Trademark Office of its approval for patent of our cabling termination cabinet.
On June 5, 1998 we were informed of approval for patent of a communication cable
interconnection apparatus and associated method for an open office architecture.
American Access has made a formal filing under the Patent Cooperation Treaty,
Paris, France. There can be no assurance that any patents will be granted on our
products or, if granted, that they will provide meaningful protection against
competing products which may be introduced.
GOVERNMENT REGULATION - INDUSTRY STANDARDS
Our products and those in the telecommunications industry must meet
governmental and industry standards. In the U.S., our 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. Our cabinet has been approved
by Underwriters Laboratories for low voltage communications. It meets or exceeds
the national electrical code requirements. We belong to trade organizations such
as the Telecommunications Industry Association, International Association of
Electrical Inspectors and Building Industrial Consulting Services International.
EMPLOYEES
As of February 4, 1999 substantially all of American Access
activities are undertaken by its three officers. See Note 14 of financial
statements. Omega employs approximately 50 persons, including 5 in management, 2
in marketing and sales,3 in engineering and y 40 in production and distribution.
LITIGATION
American Access is defendant in a suit filed by Steve R. Jones in
January 1998 in the 18th Judicial Circuit Court of Florida. Mr. Jones was the
company's president from April 1997 to August 1997. He seeks rescission of a
consulting agreement he signed with us in August 1997. Mr. Jones seeks damages
for failure of American Access to make to him consulting payments of $7,500 per
quarter. We believe we were justified in not paying Mr. Jones' consulting fees
due to Mr. Jones' failure to perform the consulting services assigned to him.
Our management believes it is only remotely likely that this pending litigation
will be material to our investors. Our independent auditors in Note 15 to the
enclosed financial statements disclose the range of loss by means of the damages
that the plaintiff is seeking, and also include an assertion that, because the
case is in its initial stages, management believes, based upon advice of
counsel, that the amount of liability, if any, is not presently susceptible to
reasonable estimation.
On March 17, 1999 this suit was settled in mediation. American Access
has granted Mr. Jones warrants to purchase 15,000 shares of common stock at
$22.875. No further liability will attach.
FACILITIES
American Access 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 are owned by the corporation.
15
<PAGE>
MANAGEMENT
The directors, executive officers, and key employees of the Company are as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
NAME AGE POSITION
------------------------------------------------------------------------------------
<S> <C> <C>
Victor E. Murray 73 President, Director
------------------------------------------------------------------------------------
Richard A. Murray 43 Vice president, Director
------------------------------------------------------------------------------------
Bobby 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, VP Marketing, Omega
------------------------------------------------------------------------------------
</TABLE>
VICTOR E. MURRAY, president and director, has a 3- 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 years is:
o October 1996 to February 1997 and August 1997 to present: President,
American Access Technologies, Inc.
o January 1, 1995 to October 1996: President, Vic Murray & Associates, Inc.
o April 1977 to December 31, 1994: Manufacturer's representative, Vic
Murray & Associates, Inc.
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
years is:
o October 1996 to present: Vice president, American Access Technologies,
Inc.
o January 1, 1995 to October 1996: Vice president, Vic Murray & Associates,
Inc.
o April 1977 to December 31, 1994: Associate manufacturer's representative,
specializing in telecommunications supplies, wiring and equipment.
BOBBY E. STORY, secretary/treasurer, chief financial officer and
director, is a former practicing certified public accountant and real estate
developer during the past 30 years. He worked for Arthur Young & Company CPA
(now Ernst & Young, LLP), as treasurer for Condev Corporation, an international
developer located in Winter Park, Florida, and he 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 years is:
o October 1996 to present: Secretary, treasurer, chief financial officer,
American Access Technologies, Inc.
o August 1996 to October 1996: Financial advisor, self employed.
o March 1996 to August 1996: George S. May Co., project manager.
o April 1987 to March 1996: Nacex, Inc. controller, vice president of
finance.
JOHN W. COONEY, director, is a certified public accountant. He was
senior tax partner at Coopers & Lybrand until he retired in 1986. He has
practiced as a tax and financial consultant since then. Employment history for
the past five years is:
o January 1987 to present: Operates J.W. Cooney, CPA as a sole
proprietorship.
VICTOR D. PHILLIPS, director, is a member of American Access Active
Advisory and Consulting Board. He has been in the telecommunications industry
for over 30 years, certified as a registered communications distribution
designer. He teaches as a certified instructor for Building Industry Consultants
Services, Inc., and is past national president of that international,
not-for-profit telecommunications association.. He 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:
o August 1991 to present: President of Information Transport Systems
Designers.
16
<PAGE>
JOHN PRESLEY, director of the company since November 1998, and
president of Omega Metals, Inc. is a graduate registered professional engineer.
He graduated from the University of Florida in January 1961 with a bachelor of
science degree in mechanical engineering and he attended a number of colleges
for graduate work. He worked in many industries as an engineer and manager
before founding Omega Metals in 1981.
ERIK WIISANEN is vice president of marketing for Omega. He 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 American
Access chief executive officer for the last four completed fiscal years. No
executive officer of the company received compensation of $100,000 or more
during any such year.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL POSITION YEAR TOTAL INCOME OTHER ANNUAL BONUS OTHER ANNUAL
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 $30,000 (paid in 1999) -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.
EMPLOYMENT AGREEMENTS
On November 11, 1998 two officers of Omega Metals, Inc. have entered
into employment agreements with Omega Metals, Inc. The individuals and their
titles are as follows:
John Presley President, Omega
Erik Wiisanen Secretary/Treasurer, V.P. Marketing, Omega
Each officer is authorized a salary of $125,000 per year plus a profit
participation of 10% of Omega's net profits in excess of $1,200,000 per year.
The terms of the agreements are for two years, ending November 14, 2000. They
may be terminated by action of the Board of Directors for cause on 30 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
17
<PAGE>
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.
Who we indemnify
Article 4 of American Access Articles of Incorporation provides that
the company shall indemnify those persons entitled to be indemnified, to the
fullest extent permitted by law.
Indemnification against public 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 American Access. They co-invented the company's primary product,
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 February 4, 1999 , the beneficial
ownership of American Access common stock based upon 3,265,470 shares
outstanding, by
o the only persons who own of record or are known to own, beneficially, more
than 5% of the company's common stock;
o each director and executive officer of the company; and
o all directors and officers as a group.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name Number of Shares Percent of Outstanding
Common stock
- ------------------------------------------------------------------------------------------------------
<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%
By Hugo Soto, secretary
N7788 West Bay St.
Nassau, Bahamas
- ------------------------------------------------------------------------------------------------------
Officer, Directors as group of 6 1,027,133 41.69%
- ------------------------------------------------------------------------------------------------------
</TABLE>
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
American Access 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. American Access 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 American Access to
issue without anyfurther 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, American Access 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.
Liquidated preference is $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
o issue other series of preferred stock that are pari passu with, or junior
to, to preferred stock,
o amend the terms of the preferred stock,
19
<PAGE>
o amend any of the terms of American Access 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
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 "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:
o the company's failure to comply with the terms of the preferred stock,
o (the acceleration of any indebtedness of the company or any of its
subsidiaries or
o (the company becoming insolvent, applying for, or consenting to, the
appointment of a receiver or trustee appointed, has a trustee or receiver
appointed which is not discharged within 60 days or has a bankruptcy
proceeding commenced against it.
Upon the occurrence of an Event of Non-Compliance, American Access is
obligated to notify the holders of preferred stock. Within 45 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 45- 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 we fail 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 American Access Board of Directors.
Exchange privileges
If American Access 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 it , at any time
within 20 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.
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, these 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
o ordinary broker's transactions,
o privately-negotiated transactions or
o through sales to one or more broker-dealers for resale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices.
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:
o 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;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
20
<PAGE>
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and
o 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
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.
21
<PAGE>
The following security holders may offer shares of common stock
issuable upon exercise of warrants:
<TABLE>
<CAPTION>
Number of Number of Shares Number of Shares
Shares and which may be offered to be Owned
Warrants Pursuant to this after the
Name and Company Affiliation Owned prospectus Offering*
---------------------------- ----- ---------- ---------
<S> <C> <C> <C>
Capital International Securities Group, Inc. 290,000 290,000 -0-
Bobby E. Story 460,000 70,000 390,000
Victor E. Murray 470,000 70,000 400,000
Richard A. Murray 470,000 70,000 400,000
Steven K. Robinson 219,000 70,000 149,000
Merrill Weber & Co. 100,000 100,000 -0-
</TABLE>
The following security holder may offer shares of common stock:
<TABLE>
<CAPTION>
Number of Shares Which Number of Shares to
Number of Shares may be Offered Pursuant be Owned After the
Name Owned to this Prospectus Offering*
---- ----- ------------------ ---------
<S> <C> <C> <C>
John Presley 113,235 25,000 88,235
Erik Wiisanen 113,235 25,000 88,235
</TABLE>
*Assuming all shares offered are sold.
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 reports 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.
22
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
TABLE OF CONTENTS
-----------------
PAGE
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6--F-19
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Stockholders
American Access Technologies, Inc.
We have audited the accompanying consolidated balance sheet of American Access
Technologies, Inc. and Subsidiary as of December 31, 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years ended December 31, 1998 and 1997. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Access
Technologies, Inc. and Subsidiary as of December 31, 1998, and the results of
their operations and their cash flows for the years ended December 31, 1998 and
1997, in conformity with generally accepted accounting principles.
As more fully discussed in Notes 15 and 18 of notes to consolidated financial
statements, (a) the Company is involved in certain pending litigation as to
which the amount of liability is not presently susceptible to reasonable
estimation; (b) the Company's major customer announced that it will cease
operations in February 1999 and, therefore, will not subsequently purchase
products from the Company; and (c) the Company's zone cabling product operations
have yet to generate a sufficient level of revenue in order to achieve
profitable operations.
RACHLIN COHEN & HOLTZ LLP
Fort Lauderdale, Florida
January 29, 1999
F-1
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents $ 637,776
Investments 2,825,177
Accounts receivable, net of allowance
for doubtful accounts of $28,000 806,960
Note receivable, related party 500,000
Inventories 297,440
Prepaid expenses and other current assets 60,466
-------------
Total current assets 5,127,819
Property, Plant and Equipment 1,313,630
Patent Costs 34,962
-------------
Total assets $ 6,476,411
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Line of credit 296,002
Accounts payable and accrued expenses:
Compensation due to officers/directors/stockholders 111,235
Other 355,390
-------------
Total current liabilities 762,627
-------------
Deferred Income Taxes 69,000
-------------
Commitments, Contingencies and Other Matters --
Stockholders' Equity:
Series A 10% Senior Convertible Preferred stock,
$.001 par value; authorized 1,000,000 shares; issued and
outstanding 50,000 shares at liquidation value 5,000,000
Common stock, $.001 par value; authorized 10,000,000
shares; issued and outstanding 3,256,470 shares 3,256
Additional paid-in capital 1,512,634
Deficit (871,106)
-------------
5,644,784
-------------
Total liabilities and stockholders' equity $ 6,476,411
=============
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net Sales
Formed metal $ 4,344,118 $ 4,124,889
Zone cabling termination cabinet 592,086 231,622
----------- -----------
4,936,204 4,356,511
----------- -----------
Costs and Expenses:
Cost of sales 2,257,169 2,235,326
Compensation and related benefits 1,415,473 868,515
Selling, general and administrative 1,661,479 1,336,921
----------- -----------
5,334,121 4,440,762
----------- -----------
Loss before Other Income (Expense) (397,917) (84,251)
----------- -----------
Other Income (Expense):
Interest income 89,731 3,992
Interest expense (139,527) (103,774)
Other income 158,346 5,259
Lease termination costs (239,447) --
----------- -----------
(130,897) (94,523)
----------- -----------
Loss before Income Taxes (528,814) (178,774)
Income Taxes (Credit) (36,000) 78,000
----------- -----------
Net Loss $ (492,814) $ (256,774)
=========== ===========
Net Loss Per Common Share $ (.43) $ (.08)
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Series A
Preferred Stock Common Stock
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 as previously reported -- $ -- 2,800,000 $ 2,800
Adjustment for pooling of interests -- -- 226,470 226
----------- ----------- ----------- -----------
Balance, December 31, 1996 as restated -- -- 3,026,470 3,026
Year Ended December 31, 1997:
Issuance of common stock to director for consulting services -- -- 50,000 50
Sale of common stock in private placement, net of related costs -- -- 400,000 400
Exercise of placement agent warrants -- -- 120,000 120
Retirement of common stock issued to officers -- -- (400,000) (400)
Net loss -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1997 -- -- 3,196,470 3,196
Year Ended December 31, 1998:
Sale of preferred stock in private placement, net of related costs 50,000 5,000,000 -- --
Exercise of warrants -- -- 60,000 60
Dividend related to beneficial conversion feature of preferred stock -- -- -- --
Net loss -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1998 50,000 $ 5,000,000 3,256,470 $ 3,256
=========== =========== =========== ===========
(TABLE CONTINUED)
Capital
in
Excess
of Par Deficit Total
------ ------- -----
<C> <C> <C>
Balance, December 31, 1996 as previously reported $ 7,083 $ (66,248) $ (56,365)
Adjustment for pooling of interests 59,774 725,980 785,980
----------- ----------- -----------
Balance, December 31, 1996 as restated 66,857 659,732 729,615
Year Ended December 31, 1997:
Issuance of common stock to director for consulting services 74,950 -- 75,000
Sale of common stock in private placement, net of related costs 487,577 -- 487,977
Exercise of placement agent warrants 359,880 -- 360,000
Retirement of common stock issued to officers -- -- (400)
Net loss -- (256,774) (256,774)
----------- ----------- -----------
Balance, December 31, 1997 989,264 402,958 1,395,418
Year Ended December 31, 1998:
Sale of preferred stock in private placement, net of related costs (737,820) -- 4,262,180
Exercise of warrants 479,940 -- 480,000
Dividend related to beneficial conversion feature of preferred stock 781,250 (781,250) --
Net loss -- (492,814) (492,814)
----------- ----------- -----------
Balance, December 31, 1998 $ 1,512,634 $ (871,106) $ 5,644,784
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (492,814) $ (256,774)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 256,159 228,089
Common stock issued for services -- 75,000
Unrealized gain / loss on investments 29,058 --
Gain on sale of investment (22,505) --
Gain on sale of equipment (137,238) --
Provision for doubtful accounts 28,000 --
Deferred income taxes (36,000) 74,000
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (270,624) (1,948)
Income tax refund receivable 137,899 (163,404)
Inventories 97,967 (94,125)
Prepaid expenses and other assets (18,229) 3,536
Increase (decrease) in:
Income tax payable -- (185,708)
Accounts payable and accrued expenses 36,438 54,120
----------- -----------
Net cash used in operating activities (391,889) (267,214)
----------- -----------
Cash Flows from Investing Activities:
Acquisition of investments (4,281,803) --
Proceeds from sale of investments 1,450,073 --
(Increase) decrease in notes receivable (500,000) 5,000
Patent costs (13,634) (14,500)
Acquisition of property and equipment (85,635) (37,464)
Proceeds from sale of equipment 145,000 --
----------- -----------
Net cash used in investing activities (3,285,999) (46,964)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from sale of preferred stock 4,262,180 --
Proceeds from sale of common stock and exercise of warrants 480,000 847,977
Payments on capital lease obligations (1,256,625) (276,772)
Repayment of note payable (100,000) (1,000)
Proceeds from issuance of common stock to founding stockholders -- 2,300
Proceeds from line of credit 296,002 --
Payments on loans (4,026) (6,491)
Retirement of common shares to officers -- (400)
----------- -----------
Net cash provided by financing activities 3,677,531 565,614
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (357) 251,436
Cash and Cash Equivalents, Beginning 638,133 386,697
----------- -----------
Cash and Cash Equivalents, Ending $ 637,776 $ 638,133
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for :
Interest $ 139,527 $ 102,432
=========== ===========
Income taxes $ 25,500 $ --
=========== ===========
Non-cash investing and financing activities:
Property, plant, and equipment acquired by means of capital leases $ -- $ 770,981
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Capitalization
American Access Technologies, Inc. ("the Company") was incorporated
on October 21, 1996, under the laws of the State of Florida. The
Company's Certificate of Incorporation, as amended on November 25,
1996, authorizes the Company to issue and have outstanding at any
one time 10,000,000 shares of common stock, par value $.001 per
share and 1,000,000 shares of preferred stock, par value $.001 per
share. The Company was organized to acquire all of the voting
common stock of Vic Murray & Associates, Inc. ("VMA").
On October 21, 1996, the Company acquired all of the common stock
of VMA. Certain stockholders of the Company are related to the
stockholder of VMA. This transaction has been accounted for as a
reorganization of entities under common control, and, accordingly,
the acquisition has been accounted for in a manner similar to the
pooling of interests method. Retroactive effect has been given to
this acquisition in the accompanying consolidated financial
statements.
In October 1996 and December 1996, the Company issued an aggregate
of 1,400,000 shares of common stock to the founding stockholders of
the Company for the par value thereof. On February 11, 1997, the
Board of Directors declared a stock dividend in the amount of one
share for each share of common stock then outstanding, with each
stockholder to pay the Company the par value thereof. As a result
of this stock dividend, the previously issued and outstanding
1,400,000 shares of common stock became 2,800,000 shares of common
stock, with the total consideration of $2,800 (par value) having
been paid therefor. Retroactive effect has been given to this stock
split in the accompanying consolidated financial statements, and
all references to the number of shares of common stock gives effect
to the stock split effected on February 11, 1997.
On October 2, 1998, the previously amended Articles of
Incorporation were further amended to provide for the issuance of
60,000 shares of Series A 10% Senior Convertible Preferred Stock.
The amendment further provides, among other things, that the
holders of the Series A Preferred shall be entitled to voting
rights equal to the votes that would be cast by the holders of the
number of shares of common into which the Series A Preferred could
be converted immediately prior to the taking of such votes,
including any shares which would be issuable in payment of accrued
and unpaid dividends. In addition, so long as the Series A
Preferred are outstanding, the holders of at least a majority of
the shares of then outstanding Series A Preferred shall be entitled
to elect two directors, and five directors shall be elected by the
holders of Common and Series A Preferred, voting together as a
single class.
F-6
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Organization and Capitalization (Continued)
The Series A Preferred has a liquidating preference equal to the
greater of $100.00 per share plus an amount equal to all accrued
and unpaid dividends or an amount equal to the property to be
distributed to the holders of Common Stock. The holders of the
Series A Preferred shall be entitled to receive cumulative
dividends at a rate of 10% payable in cash or common shares. If
dividends are declared on the common shares, the Series A Preferred
holders shall be entitled to receive the dividend as if the Series
A Preferred were converted into common shares immediately prior to
the record date.
The holders of the Series A Preferred shall have the right, at
their option, to convert any and all Series A Preferred shares into
common shares at the lower of $17.00 per share or eighty percent of
market value at any time on or after the earlier of the four month
anniversary of the earliest issuance date or the first date upon
which the shelf registration statement registering the underlying
common stock is declared effective by the Securities and Exchange
Commission.
Business
American Access Technologies, Inc. ("AAT") develops specialized
products for the telecommunications industry. The Company recently
introduced its first proprietary product, a Zone Cabling
Termination Cabinet (the "Product") which is manufactured and
distributed to the telecommunications industry. The Product is a
device that is used in voice, computer and data transmission
systems throughout the world.
Omega Metals, Inc. ("Omega"), a wholly-owned subsidiary of the
Company, shears and molds metal and manufactures metal-formed
products for customers principally in Florida and Georgia.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary. All
material intercompany accounts and transactions have been
eliminated.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Although these
estimates are based on management's knowledge of current events and
actions it may undertake in the future, they may ultimately differ
from actual results.
F-7
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
The Company recognizes revenue from product sales at the time the
product is shipped to the customer. The Company does not generally
grant return privileges to customers.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash
equivalents, and accounts receivable.
Cash
The Company maintains deposit balances at financial institutions
that, from time to time, may exceed federally insured limits. At
December 31, 1998, the Company had cash balances on deposit that
exceeded federally insured limit by a total of approximately
$327,000. The Company believes that such risks are minimized as
a result of the size and stature of the financial institutions
in which the Company maintains its accounts.
Accounts Receivable
The Company does business and extends credit based on an
evaluation of the customers' financial condition generally
without requiring collateral. Exposure to losses on receivables
is expected to vary by customer due to the financial condition
of each customer. The Company monitors exposure to credit losses
and maintains allowances for anticipated losses considered
necessary under the circumstances.
Termination of Development Stage
As noted above, the Company was incorporated on October 21, 1996.
Through November, 1998, the Company had been principally engaged in
organizational activities, the promotion of its product and raising
capital. Planned operations, as described above, had commenced but
revenue generated was not considered significant in relation to the
Company's business plan. Accordingly, the Company was considered to
be in the development stage, through the date of the acquisition of
Omega Metals, Inc., on November 11, 1998 (see Note 2).
Omega is a mature company which has been in the operating stage for
a number of years with an established history of revenue and
profits, significantly larger than those of AAT. Accordingly,
effective upon the acquisition of Omega, the Company is no longer
considered to be a development stage enterprise, and the
accompanying financial statements are presented as those of an
established operating enterprise.
Cash and Cash Equivalents
The Company considers all highly liquid investments, including
short-term securities, with an original maturity of three months or
less to be cash equivalents.
F-8
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash and Cash Equivalents (Continued)
Short-term securities (generally commercial paper maturing in
approximately 30 days) are stated at cost plus accrued income,
which approximates market value.
Inventories
Inventories, which are primarily composed of raw materials, parts,
supplies and certain product components, are stated at the lower of
cost or market, with cost determined using an average cost method.
Inventory costs for finished goods and work-in-process include
material, labor, production overhead, and outside services.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost and depreciated,
using the straight-line method over the estimated useful lives of
the assets. Gain or loss on disposition of assets is recognized
currently. Repairs and maintenance are charged to expense as
incurred. Major replacements and betterments are capitalized and
depreciated over the remaining useful lives of the assets.
Patent
The Company has capitalized certain incremental costs incurred
related to acquiring two patents on the Company's products. In
1998, one of the patents was finalized and issued by the United
States Patent Department. The Company then began amortizing the
cost of the patent over the patent's life, 18 years. The other
patent was still pending at December 31, 1998 and, therefore,
amortization of this patent has not commenced.
Product Development Costs
Costs in connection with the development of the Company's product
are comprised of design, production, consulting and other related
professional fees. These costs are charged to expense as incurred.
Advertising
Advertising costs are charged to expense as incurred. Advertising
costs incurred for the years ended December 31, 1998 and 1997 were
not material.
Income Taxes
The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes". SFAS No. 109 requires the
recognition of deferred tax liabilities and assets for temporary
differences, operating loss carryforwards, and tax credit
carryforwards existing at the date of the financial statements. An
effective tax rate of 37% was used to calculate the deferred income
taxes.
F-9
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes (Continued)
A temporary difference is a difference between the tax basis of an
asset or liability and its reported amount in the financial
statements that will result in taxable or deductible amounts in
future years when the asset is recovered or the liability is
settled. Deferred taxes represent the future tax return
consequences of these differences.
Reclassifications
Certain amounts in prior year financial statements have been
reclassified for comparative purposes to conform with the
presentation in the current year financial statements.
NOTE 2. ACQUISITION OF SUBSIDIARY
On November 11, 1998, the Company acquired 100% of the outstanding
common stock of Omega Metals, Inc. ("Omega") in exchange for 226,470
shares of the Company's common stock. This acquisition, which has been
accounted for using the pooling of interests method, has been given
retroactive effect in these financial statements.
Separate pre-acquisition revenue and net income of American Access and
Omega, as if the acquisition was consummated on October 31, 1998, were
as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenue:
Pre-acquisition
American Access $3,873,425 $4,194,889
Omega 480,000 231,622
Acquisition adjustments (200,000) (70,000)
------------ -------------
4,153,425 4,356,511
Post-acquisition 782,779 -
------------ -------------
$4,936,204 $4,356,511
============ =============
Net income (loss):
Pre-acquisition
American Access $ (155,887) $(426,455)
Omega 728,427 169,681
------------ -------------
572,540 (256,774)
Post-acquisition (1,065,354) -
------------ -------------
$ (492,814) $(256,774)
============ =============
</TABLE>
Post-acquisition losses include expenses incurred related to the
Company's acquisition of Omega, including bonuses paid to Omega
officers of approximately $800,000 and lease termination costs of
approximately $239,000.
F-10
<PAGE>
<TABLE>
<CAPTION>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 3. CASH AND CASH EQUIVALENTS
<S> <C>
Cash $606,308
Short-term securities 31,468
-----------
$637,776
===========
NOTE 4. INVESTMENTS
Corporate bonds $1,393,000
Stocks, rights, and warrants 836,490
Asset-backed securities 295,687
Certificate of deposit 300,000
-----------
$2,825,177
===========
NOTE 5. NOTE RECEIVABLE, RELATED PARTY
Note receivable, interest at 15%; due March 3, 1999, as extended;
secured by a chattel mortgage on certain equipment owned by debtor
company and guaranteed by a stockholder of the debtor company who is
also a major stockholder of the Company $500,000
===========
NOTE 6. INVENTORIES
Finished goods $ 52,439
Work-in-process 115,555
Raw materials 129,446
-----------
$297,440
===========
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
Estimated Useful
Lives (Years)
-------------
Land - $ 23,808
Building and improvements 30 351,997
Machinery and equipment 5-7 2,383,837
Vehicles 5 31,415
Tools 5 15,323
------------
2,806,380
Less accumulated depreciation 1,492,750
------------
$1,313,630
============
</TABLE>
F-11
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 7. PROPERTY, PLANT AND EQUIPMENT (Continued)
Depreciation expense for the years ended December 31, 1998 and 1997
was $254,902 and $228,088, respectively.
NOTE 8. OBLIGATIONS UNDER CAPITAL LEASES
In December 1998, the Company satisfied in full the obligations under
various capital leases, which had original terms extending to various
years through 2005, and which provided for implicit interest rates
ranging from approximately 10.5% to 14.5%. The aggregate sum paid was
approximately $1,284,000, of which approximately $239,000 represented
prepayment penalties. Management is considering instituting discussions
with the leasing companies involved with a view towards mitigating the
amount of these lease termination costs. Such amounts, if any, that
management is able to negotiate as a refund of these costs will be
recognized at such time as the amounts are received.
NOTE 9. LINE OF CREDIT
The Company has available a bank line of credit for $300,000, with
interest at 7.75%. The line is collateralized by a $300,000 certificate
of deposit.
NOTE 10. PROFIT SHARING PLAN
The Company has a 401(k) Profit Sharing Plan covering all non-leased
employees who meet minimum length of service and age requirements.
Employer contributions are made at the discretion of management, and
were $75,000 for each of the years ended December 31, 1998 and 1997.
Employees are vested for purposes of the contribution as follows:
Years of Service Percentage
---------------- ----------
Less than 1 0%
1-2 20
2-3 40
3-4 60
4-5 80
5 or more 100
F-12
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 11. INCOME TAXES
The provision for income taxes was computed on a consolidated return
basis for the year ended December 31, 1998. For the year ended December
31, 1997, the Company was not eligible to file a consolidated return
with Omega. Therefore, the income tax provision for 1997 has been
computed on a separate return basis.
As of December 31, 1998, the Company had consolidated net operating
loss carryforwards for federal income tax reporting purposes amounting
to approximately $1,059,000, which expire in varying amounts to the
year 2013.
The Company has not recognized any benefit of such net operating loss
carryforwards in the accompanying consolidated financial statements in
accordance with the provisions of SFAS No. 109 as the realization of
this deferred tax benefit is not considered more likely than not. A
100% valuation allowance has been recognized to offset the entire
effect of the Company's net deferred tax asset. The Company's net
deferred tax asset position is composed primarily of the Company's tax
loss carryforwards.
The components of the deferred tax asset were as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
---- ----
<S> <C> <C>
Deferred tax asset $ 392,000 $ 166,000
Less valuation allowance (392,000) (166,000)
--------- ---------
Net deferred tax asset $ - $ -
========= =========
The components of deferred income tax liabilities at December 31,
1998 are as follows:
Deferred income tax liability, long-term:
Depreciation $69,000
=========
</TABLE>
In accordance with certain provisions of the Tax Reform Act of 1986, a
change in ownership of greater than 50% of a corporation within a three
year period will place an annual limitation on the corporation's
ability to utilize its existing tax benefit carryforwards. The
Company's utilization of its tax benefit carryforwards may be
restricted in the event of possible future changes in the ownership of
the Company from the exercise of warrants or other future issuances of
common stock.
The Company's federal and state income tax returns have not been
examined by responsible taxing authorities for the past several years.
The final determination of the amount and timing of currently payable
income taxes is therefore subject to possible examination of these
unexamined years by such responsible taxing authorities.
F-13
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 12. PREFERRED STOCK
In November, 1998, the Company completed a $5,000,000 private placement
of 50,000 shares of its Series A 10% Senior Convertible Preferred
Stock, par value of $.001 per share, at $100.00 per share. The costs
associated with the completion of the private placement, $737,820, have
been recorded as a reduction of additional paid-in capital.
Additionally, the placement agent received warrants to purchase 100,000
shares of common stock at $25.00 per share, which expire October 14,
2003. The Series A Preferred are valued at $100.00 per share
("liquidation value"), and, if converted, the Series A Preferred shall
be converted into common shares (See Note 1) at the price per share
equal to the then applicable Conversion Price. This conversion feature
results in a discount between the market value of the common shares
that would be issued if the conversion option were exercised, and the
liquidation value of the preferred shares surrendered upon that
conversion. The resulting dividend is being amortized over the period
up to the date that exercise of the conversion feature is first
possible. As a result, $781,250 of the total $1,250,000 dividend has
been recognized in the accompanying 1998 financial statements; the
balance will be recognized in the 1999 financial statements.
As of December 31, 1998, dividends in arrears on the Series A
Preferred Stock amounted to $104,167.
NOTE 13. COMMON STOCK
Private Placement of Securities
During the period from February to April 1997, the Company raised
additional capital through a private placement offering of its
securities. The private placement offering consisted of a maximum
of 100,000 units, each unit consisting of four shares of common
stock being offered by the Company on a "best efforts" basis at a
price of $6.00 per unit through a Placement Agent. Upon sale of the
units, the Company received gross proceeds of $600,000, before
payment of commissions and other offering costs. The Placement
Agent received a stipulated commission of 10% of funds received
from the offering and certain expense allowance and administrative
fee of 3% and 2% of the funds received from the offering,
respectively, and was issued warrants to purchase 120,000 shares of
common stock at $3 per share.
The sale of these units resulted in the issuance of 400,000 shares
of common stock for net proceeds totaling $487,977.
Additionally, in September and October 1997, the Company issued
120,000 shares of common stock resulting from the exercise of the
Placement Agent warrants at $3.00 per share.
F-14
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 13. COMMON STOCK (Continued)
Issuance of Common Stock to Director for Services
In February 1997, the Board of Directors authorized the issuance of
50,000 shares of common stock to a newly elected director, with
payment of par value thereof. These shares have been recorded in
the accompanying consolidated financial statements at their
estimated fair value of $1.50 per share, as measured by the
offering price of the Company's common stock in the 1997 private
placement of securities which took place at or about that time (see
above). Inasmuch as these shares were issued to the director, the
estimated fair value of these shares ($75,000) has been charged to
expense in 1997 and included in management and consulting fees,
officers/directors/stockholder.
Resignation of Officers and Retirement of Common Stock and Warrants
In August 1997, the consulting agreement between an officer and the
Company was modified. The modified agreement stipulated that the
officer return 200,000 shares of common stock which was originally
sold to the officer for $.001 per share. The Company also cancelled
70,000 warrants at $8.00 per share which were held by the officer.
In December 1997, the Company dismissed the services of the officer
(see Note 15).
On December 9, 1997, the Company executed a management termination
agreement with another officer. Under the terms of the agreement,
the officer returned 200,000 shares of common stock. The common
stock was originally sold to the officer for $.001 per share. The
officer has agreed to abide by certain terms regarding
non-disclosure of information and trade secrets which are effective
for two years subsequent to the date of the agreement.
Warrants
On February 11, 1997, the Board of Directors authorized the
issuance of 700,000 warrants to purchase one share of common stock
per warrant at an exercise price of $8.00 per share expiring on
February 11, 2000. In August 1997, warrants to purchase 70,000
shares were cancelled in connection with the resignation of an
officer/stockholder (see above), resulting in remaining warrants to
purchase a total of 630,000 shares of common stock outstanding at
December 31, 1997.
On June 30, 1998, warrants to purchase 20,000 shares were
exercised, at $8.00 per share. On August 16, 1998 additional
warrants to purchase 40,000 shares were exercised at $8.00 per
share. The Company has remaining outstanding 570,000 warrants to
purchase common stock at an exercise price of $8.00 per share as of
December 31, 1998, 280,000 of which warrants are outstanding to
officer/directors.
Subsequent Issuance of Common Stock for Services
Subsequent to December 31, 1998, the Company issued 9,000 shares of
Company common stock to certain employees as an incentive for
services to be rendered in 1999. This will result in a charge to
compensation expense of approximately $180,000 in the first quarter
of 1999.
F-15
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 14. RELATED PARTY TRANSACTIONS
Management Agreements
The Company entered into management agreements with four
stockholders dated October 21, 1996, on a month-to-month basis not
to exceed eighteen months. The agreements provide for compensation
of $60,000 per year per stockholder. On December 9, 1997, one of
the agreements was terminated through a management termination
agreement (see Note 13). In 1998 the remaining management
agreements were terminated, and the three stockholders became
employees of the Company.
Consulting Agreement
The Company entered into a consulting agreement with one of its
stockholders dated October 21, 1996, on a month-to-month basis. The
agreement provides for compensation of $60,000 per year. This
agreement was modified on August 28, 1997, reducing the
compensation base to $30,000. In addition, the modified agreement
stipulated the return of 200,000 shares of common stock and
cancellation of 70,000 stock purchase warrants (see Notes 13 and
15).
NOTE 15. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
Pending Litigation
The Company is involved in litigation with a former
officer/stockholder of the Company in connection with a modified
consulting agreement with the Company (see Notes 13 and 14) whereby
he surrendered 200,000 shares of common stock and cancelled 70,000
stock warrants previously held. The former officer/stockholder
seeks rescission of the consulting agreement he signed with the
Company in August 1997, declaratory judgment regarding the
consulting agreement, damages for breaching the consulting
agreement and damages for fraud. The plaintiff is seeking damages
of $150,000 plus costs.
The Company denies that it has any liability to the individual and
has filed a motion to dismiss the case. Management plans to
vigorously defend the case. Because the case is in its initial
stages, management believes, based upon advice of counsel, that the
amount of liability, if any, is not presently susceptible to
reasonable estimation.
Major Customer and Subsequent Loss Thereof
The Company's subsidiary (Omega) has a customer which purchased
product that represented approximately 39% and 32% of sales of
formed metal products for the years ended December 31, 1998 and
1997, respectively. In January 1999, this customer announced that
it will cease operations as of February 1999 and, therefore, will
not purchase any products subsequent to that date.
F-16
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 15. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)
Employment Contracts
The Company entered into employment agreements with two members of
management of Omega. These agreements are for a term of two years
commencing in November 1998. The agreements provide, among other
things, for total annual compensation of $250,000 plus profit
participation equal to 10% of the net profits of Omega, as defined,
in excess of $1,200,000 annually.
Contracts With Distributors
In 1997, the Company entered into Stocking Distributor Agreements
with seven distributors. The agreements set forth terms whereby the
distributors may purchase products from the Company for resale to
their customers within the U.S. and Canada and Mexico when the
Company releases its products for sale in those countries. The
prices for the products covered by the agreements are based upon
the intention of the distributors to purchase a minimum number of
units as specified in the agreements. For 1997 and 1998, revenue
from these sales was not significant. Revenue from future sales
will be recorded at such time as the units are shipped to the
distributors. The agreements are for a term of one year and are
automatically renewed each year thereafter unless either party
gives written notice of its intent to cancel the arrangement, and
contain, among other things, a warranty effective for one year
after the date of sale.
In February 1998, the Company executed a value added reseller
agreement with another company, in order to actively market and
sell the product. The reseller will have exclusive rights in the
state of Texas to market the product through its direct sales. The
agreement stipulates that the reseller will purchase a minimum of
4,000 units in the next three years. Revenue from these future
sales will be recorded at such time as the units are shipped to the
customer.
Consulting Agreement
In December 1998, the Company entered into a consulting agreement
to acquire technical expertise in developing and marketing
products. The agreement is for a term of one year, commencing
January 1999, and is automatically renewed unless terminated by
either party. Annual fees are to be $80,000 in cash payable
semi-monthly, plus $40,000 in Company common stock, measured at
market. The common stock is to be distributed on or before December
31 of each year the contract is in force.
Land Purchase
The Company has entered into an agreement to purchase six acres of
land adjacent to the Omega manufacturing plant. The transaction,
which is to close during the first quarter of 1999, at a cost of
approximately $80,000, will allow the Company to build a
manufacturing facility of approximately 30,000 square feet to
supplement the assembly facilities.
F-17
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 15. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)
Lease Commitments
The Company leases its administrative facilities under an operating
lease, which expires in 1999. Future minimum rentals due under the
lease are approximately $40,000 for the year ending December 31,
1999.
Rent charged to operations amounted to approximately $45,000 in
1998 and $35,000 in 1997.
Major Vendors
The Company purchases sheet metal from a vendor that represented
approximately 77% of purchases for each of the years ended December
31, 1998 and 1997, respectively
NOTE 16. NET LOSS PER COMMON SHARE
In 1997, the Company adopted Statement 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 below the offering price at that
time (see Note 7) have been treated as outstanding during the entire
period, pursuant to the Securities and Exchange Commission Staff
Accounting Bulletins. The number of common shares issued in connection
with the acquisition of Omega (226,470) have been considered
outstanding shares for all periods. The number of shares used in the
computation were 3,218,970 and 3,309,470 for the years ended December
31, 1998 and 1997, respectively. Diluted net loss per common share,
assuming exercising of the warrants granted and convertible preferred
stock, is not presented as the effect of conversion is anti-dilutive.
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net Loss $ (492,814) $(256,774)
Cumulative Preferred Stock Dividend (104,167) -
Beneficial Conversion Preferred Stock Dividend (781,250) -
------------- -----------
Net Loss Allocated to Common Stockholders $(1,378,231) $(256,774)
============= ===========
</TABLE>
F-18
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair value. These instruments include
cash, accounts receivable, line of credit, and accounts payable. Fair
values were assumed to approximate carrying values for these financial
instruments since they are short-term in nature and their carrying
amounts approximate fair values or they are receivable or payable on
demand.
NOTE 18. SEGMENT INFORMATION
The Company adopted SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, in 1998 which changes the way the
Company reports information about its operating segments. The
information for 1997 has been restated from the prior year's
presentation in order to conform to the 1998 presentation.
The Company has two reportable segments, zone cabling products and
formed metal products. As discussed in Note 1, American Access, the
parent company, markets zone cabling products which are manufactured by
Omega. Omega manufactures formed metal products of varying designs for
customers, including American Access.
<TABLE>
<CAPTION>
1998 1997
------------------------------------- ------------------------------------
Zone Formed Zone Formed
Cabling Metal Cabling Metal
Products Products Total Products Products Total
-------- -------- ----- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Revenue from external customers(a) $ 592,086 $4,344,118 $4,936,204 $231,622 $4,124,889 $4,356,511
Intersegment revenue - 234,496 234,496 - 70,000 70,000
Interest revenue 89,731 - 89,731 3,992 - 3,992
Interest expense 2,110 376,864 378,974 2,424 101,350 103,774
Depreciation and amortization 14,701 241,458 256,159 6,742 221,463 228,205
Income tax expense (credit) - (36,000) (36,000) - 78,000 78,000
Segment profit (loss) (350,533) (142,281) (492,814) (426,455) 169,681 (256,774)
Segment assets $3,858,092 $2,618,319 $6,476,411 $540,582 $2,750,674 $3,291,256
</TABLE>
(a) See Note 15 regarding major customer and subsequent loss thereof.
F-19
<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 ____________, 1999 (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 $4,353
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 $28,453
*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.
On November 25,1996, 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.
American Access 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.
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 50,000 shares have been sold for a net profit of $4,262,180. . Merrill
Weber & Co., Inc. and Capital International Securities Group, Inc., members
NASD, were placement agents and received commissions of $575,000, expenses and
administrative fees of $80,981, and accounting fees of $10,000, and warrants to
purchase 100,000 shares of common stock for $25.00 per share which expire
October 14, 2003. The shares were issued to accredited investors, pursuant to
the exemption from registration under Rule 506 of Regulation D.
On November 11, 1998 the company completed purchase of all the issued
common stock of Omega Metals, Inc. from two persons. 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,
pursuant to the exemption from registration under Section 4(2) of the Securities
Act of 1933.
All of such securities were not solicited by advertising or any general
solicitation and, except such securities issued pursuant to Rule 504, contain a
restrictive legend.
Item 25. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3(a) Amended and Restated Articles of Incorporation of the Registrant
(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).
II-2
<PAGE>
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 (Incorporated
by reference to Exhibit 3(f) to Amendment No. 1 to Registrant's
Registration Statement on Form SB-2A-File No. 333-68791).
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 (Incorporated by reference to
Exhibit 8.11 to Amendment No. 1 to Registrant's Registration Statement
on Form SB-2A-File No.333-68791).
II-3
<PAGE>
8.12 Employment Agreements between Omega Metals, Inc. and John Presley and
Erik Wiisanen (Incorporated by reference to Exhibit 8.12 to Amendment
No. 1 to Registrant's Registration Statement on Form SB-2A- File No.
333-68791).
8.13 Letter of Intent to Purchase additional land from Troy Fornshell and
Anna Fornshell (Incorporated by reference to Exhibit 8.13 to Amendment
No. 1 to Registrant's Registration Statement on Form SB-2A-File No.
333-68791).
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.
</TABLE>
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 (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:
o To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
o 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.
o 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-4
<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 March 18, 1999.
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>
By /s/ Victor E. Murray President and Director, Principal March 18, 1999
Victor E. Murray Executive Officer
- ---------------------------------------------------------------------------------------------------------------------
By /s/ Richard A. Murray Vice President and Director March 18, 1999
Richard A. Murray
- ---------------------------------------------------------------------------------------------------------------------
By /s/ Bobby E. Story Treasurer, Principal Accounting March 18, 1999
Bobby E. Story Officer, Director
- ---------------------------------------------------------------------------------------------------------------------
By /s/ Victor D. Phillips Director March 18, 1999
Victor D. Phillips
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
II-5
Law Offices
JOEL BERNSTEIN, ESQ., P.A.
11900 Biscayne Blvd., Suite 604
Miami, Florida 33181
Telephone: 305.892.1122 Facsimile: 305.892.0822
March 16, 1999
American Access Technologies, Inc.
238 N. Westmonte Drive
Altamonte Springs, FL 32714
Gentlemen:
I have acted as special counsel to American Access Technologies, Inc.,
a Florida corporation (the "Corporation"), in connection with the offering of
720,000 shares of Common Stock. The offering of the shares is to be made
pursuant to Registration Statement on Form SB-2 to be filed with the Securities
and Exchange Commission (the "Registration Statement"). I have acted as special
counsel to the Corporation in connection with the shares.
Please be advised that I am of the opinion that the Corporation's
Common Stock to be offered pursuant to the Registration Statement has been duly
authorized by the Corporation. Upon issuance of 670,000 shares upon exercise of
warrants in accordance with the terms thereof, such shares will be validly
issued by the Corporation and fully paid and non-assessable. I consent to the
use of my name in the Registration Statement in the section of the Prospectus
entitled "Legal Matters" and the filing of this letter as an exhibit to the
Registration Statement.
Yours very truly,
s/Joel Bernstein
JB:jk
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY
STATEMENT RE: COMPUTATION OF NET LOSS PER COMMON SHARE
<TABLE>
<CAPTION>
Year Ended
December 31,
------------
1998 1997
---- ----
<S> <C> <C>
Net Loss $(492,814) $(256,774)
Cumulative Preferred Stock Dividend (104,167) -
Beneficial Conversion Preferred Stock Dividend (781,250) -
------------- ------------
$(1,378,231) $(256,774)
============= ============
Weighted Average Common Shares Outstanding 2,992,500 3,033,000
Adjustments to reflect Requirements of the
Securities and Exchange Commission SAB 83:
Common stock issued to director within the period - 50,000
Common Shares Issued to Acquire Omega Metals, Inc. 226,470 226,470
------------- ------------
Total Weighted Average Number of Common Shares and Equivalents 3,218,970 3,309,470
============= ============
Net Loss per Common Share $ (.43) $ (.08)
============= ============
</TABLE>
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 January 29, 1999
(which contains an emphasis paragraph that describes certain significant
uncertainties relating to the financial statements of America Access
Technologies, Inc. appearing in such Prospectus. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ RACHLIN COHEN & HOLTZ
RACHLIN COHEN & HOLTZ LLP
Fort Lauderdale, Florida
March 18, 1999
