Form 10-QSB for AMERICAN ACCESS TECHNOLOGIES, INC.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[XX] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 For the quarterly period ended
March 31, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to ________________
* * * * * * * * * * * * * * * * * * * * * *
Commission File No. 000-24575
AMERICAN ACCESS TECHNOLOGIES INC.
A Florida corporation
(Exact name of registrant as specified in charter, and state incorporated)
* * * * * * * * * * * * * * * * * * * * * *
Employer Identification No. 59-3410234
37 Skyline Drive, Suite 1101, Lake Mary, Florida 32746
(Address of principal executive offices of registrant)
(407) 333-1446
(Registrant's telephone number, including area code)
* * * * * * * * * * * * * * * * * * * * * *
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ].
The number of shares of AMERICAN ACCESS TECHNOLOGIES INC. Common Stock (Par
Value $0.001) outstanding at March 31, 1999 was 4,314,773
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
Mar. 31, 2000 Mar. 31, 1999
------------- -------------
<S> <C> <C>
Net Sales
Formed metal $ 1,051,939 $ 954,309
Zone cabling termination cabinets
and generator enclosures 458,477 335,753
----------- -----------
Total Net Sales 1,510,416 1,290,062
----------- -----------
Costs and Expenses:
Cost of sales 756,155 501,777
Selling, general and administrative 1,067,611 676,576
----------- -----------
Total Cost and Expenses 1,823,766 1,178,353
----------- -----------
Net Operating Income (Loss) (313,350) 111,709
----------- -----------
Other Income (Expense):
Interest income 19,969 80,243
Interest expense (1,649) (5,610)
Other income 304 17,399
----------- -----------
Total Other Income (Expense) 18,624 92,032
----------- -----------
Net Income Before Taxes (294,726) 203,741
Income Taxes (Benefit) -- (15,170)
----------- -----------
Net Income $ (294,726) $ 218,911
=========== ===========
Net Income Per Common Share $ (.07) $ (.11)
=========== ===========
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ (294,726) $ 218,911
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 104,172 74,402
Changes in operating assets and liabilities:
Decrease in:
Accounts receivable (84,476) (76,072)
Inventories (122,178) (33,154)
Prepaid expenses and other assets (19,126) (9,056)
Costs in excess of contract sales - (118,777)
Increase (decrease) in:
Accounts payable and accrued expenses (131,024) (104,466)
---------- ---------
Net cash used in operating activities (547,358) (48,212)
---------- ---------
Cash Flows from Investing Activities:
Proceeds from investment changes 833,344 2,825,177
Acquisition of property and equipment (net of sales and retirements) (159,926) (165,466)
---------- ---------
Net cash provided by investing activities 673,418 2,659,711
---------- ---------
Cash Flows from Financing Activities:
Acquisition of treasury stock (109,074) -
Proceeds from issuance of stock 40,000 -
Payments on loans and capital lease obligations (73,812) (7,972)
---------- ---------
Net cash used in financing activities (142,886) (7,972)
---------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents (16,826) 2,603,527
Cash and Cash Equivalents, Beginning 714,109 637,776
---------- ---------
Cash and Cash Equivalents, Ending $ 697,283 $3,241,303
============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 1,649 $ 5,610
============ ============
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS Mar. 31, 2000
------ UNAUDITED Dec. 31, 1999
-------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 697,283 $ 714,109
Investments -- 833,344
Accounts receivable, net of allowance 1,099,389 1,014,913
Note receivable, related party 602,917 585,615
Inventories 692,772 570,594
Prepaid expenses and other current assets 64,131 62,307
------------ ------------
Total current assets 3,156,492 3,780,882
Property, Plant and Equipment 2,641,458 2,547,483
Goodwill 369,465 407,686
Patent Costs 62,561 62,561
------------ ------------
Total assets $ 6,229,976 $ 6,798,612
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable 283,807 375,788
Retirement plan 75,000 75,000
Line of credit -- 73,812
Compensation due to officers/directors/stockholders -- 66,394
Accrued expenses 117,085 90,004
------------ ------------
Total current liabilities 475,892 680,998
------------ ------------
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 -- 1,060,000
Common stock, $.001 par value; authorized 10,000,000
shares; issued and outstanding 3,265,470 shares 4,314 4,094
Additional paid-in capital 10,380,803 9,144,508
Deficit (3,639,846) (3,208,875)
------------ ------------
Total stockholders' equity 6,745,271 6,999,727
Treasury stock, 155,100 and 136,100 common shares at cost (990,917) (881,843)
Stock subscription receivable, net of allowance (270) (270)
------------ ------------
Total Stockholders Equity 5,754,084 6,117,614
------------ ------------
Total liabilities and stockholders' equity $ 6,229,976 $ 6,798,612
============ ============
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 Unaudited
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements at March
31, 2000 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and reflect all adjustments which, in the opinion of management, are
necessary for a fair presentation of financial position as of March 31, 2000 and
results of operations for the three months ended March 31, 2000 and 1999 and
cumulative. All adjustments are of a normal recurring nature. The results of
operations for interim periods are not necessarily indicative of the results to
be expected for a full year. The statements should be read in conjunction with
the consolidated financial statements and footnotes thereto for the year ended
December 31, 1999 included in the company's Form 10-KSB.
2. Nature of Business and Summary of Significant Accounting Policies.
BUSINESS
American Access Technologies, Inc. develops specialized products for the
telecommunications industry. The company manufactures and distributes several
models of Zone Cabling Termination Cabinets (the "Product") to the
telecommunications industry. The Product helps manage and route wiring and
cabling used in voice, computer and data transmission systems throughout the
world.
Omega Metals, Inc. ("Omega"), a wholly-owned subsidiary of the Company, shears
and molds metal and manufactures metal-formed product for customers principally
in Florida and Georgia. Omega manufactures the Company's Product. The Company
also acquired the assets of Genco, Inc. a generator enclosure manufacturer, in
August 1999.
In January 2000, American Access entered into a joint venture arrangement with
Vulcan Microsystems for the construction of a Business to Business e-commerce
Internet portal. Subsequently, Vulcan's owners, Bill Wetmore and Erik Gray were
retained as consultants for the project. The joint venture, AATK.com, will act
as distributor of its own, and for other telecommunications manufacturing
companies' products featured on the Internet site. The site is scheduled for
completion during the third quarter of 2000. The Company owns a 76% interest in
AATK.com, a limited liability company.
NET LOSS PER COMMON SHARE
In 1997, the Company adopted Statements of Financial Accounting Standards (SFAS)
No. 128, "Earnings per Share" which requires the presentation of both basic and
diluted earnings (loss) per share.
Basic net loss per common share has been computed based upon the weighted
average number of shares of common stock outstanding during the periods. The
shares of common stock issued in connection with the stock split effected in
February 1997, have been considered outstanding for all periods. In addition,
the shares of common stock issued to a Director in February 1997, prior to an
initial registration of the Company's common stock and at a price at that time
have been treated as outstanding during the entire period, pursuant to the
Securities and Exchange Commission Staff Accounting Bulletins. The computation
of earnings per share is reflected in the following schedule:
<TABLE>
<CAPTION>
Computation of Net Loss Per Common Share Three Months ended Three Months ended
Mar. 31, 2000 Mar. 31, 1999
<S> <C> <C>
Net Income (Loss) (294,726) 218,911
Cumulative Preferred Stock (14,631) (125,000)
5
<PAGE>
Beneficial Conversion Preferred Stock Dividend 0 (468,750)
--------- ----------
$(309,357) $ (374,839)
--------- ----------
Total Weighted Average Number of Common Shares and Equivalents 4,237,934 3,265,470
---------- ----------
Net Loss per Common Share $ $
---------- ----------
(.07) (.11)
---------- ----------
</TABLE>
3. Contingencies and Commitments
LEASES
Pursuant to forming AATK.com,, the joint venture with Vulcan
Microsystems, Inc. for the creation of a Business-to-Business e-commerce portal,
the Company guaranteed payment for the lease of the Sun Microsystems server to
be used to power the portal site. The equipment acquisition cost was $186,229
with lease payments made to Imperial Bank in the amount of $6,350.41 per month
for 36 months.
LEGAL PROCEEDINGS
The company is involved in litigation that could potentially
develop into a class action filing precipitated by the fall of the price of
common stock in August, 1999. The suit was filed in United States District
Court, Eastern District of New York. Plaintiff alleges in the Amended Complaint
that the defendant participated in a conspiracy to inflate the price of the
Company's common stock for the purpose of allowing "insiders" to enrich
themselves by selling personal holdings at the inflated price. Then Company
denies not only any wrongdoing, but most of the material factual allegations as
well, and intends to vigorously defend this case. To date, the Company has paid
for legal services as incurred, and dealings with our attorneys have not
included the advancing of any legal fees for indemnification of defendants who
are principals of the Company. However, there is no guarantee that expenses for
indemnification of Company principals will not occur in the future. Company
defendants have signed Conflict Waivers and Undertaking to Repay Expenses for
Defense for indemnification under Florida Statutes Section 607.0850(6).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1999
REVENUES
Revenues for the three months ended March 31, 2000 increased by
$220,354 or 17.1% to $1,510,416 as compared to $1,290,062 for the three months
ended March 31, 1999. American Access Technologies Inc. and Omega Metal Inc.
both had increases in revenues in the first quarter ended March 31, 2000.
COSTS AND EXPENSES
Direct costs represent the cost incurred by the Company to have its
products manufactured and assembled. These costs represented 50.06% of revenues
for the
5
<PAGE>
three months ended March 31,2000, and 38.9% of revenues for the three months
ended March 31, 1999. The increase in the direct costs is mainly attributed to
sales of generator enclosures representing 45% of the parent's revenues in the
first quarter. These sales were for fulfillment of the previous owner Genco Inc.
commitments and quotes. Future sales of these enclosures should result in
greater profit margins.
Selling, General and Administrative expenses increased by $391,035 to
$1,067,611 for the three months ended March 31, 2000 compared to $676,576 for
the three months ended March 31, 1999. This increase was the result of costs
associated with the continued development growth of the company including
marketing and promotion, management costs, and professional fees associated with
the required filings. Approximately $200,000 of this increase was for consulting
costs in connection with the development of a business- to-business e-commerce
Internet portal. The site is being developed under a joint venture arrangement
with Vulcan Microsystems, which is further discussed in Part II, Other
Information.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities utilized cash of $547,358 during the
three months ended March 31, 2000 as compared to utilizing cash of $48,212
during the three months ended March 31, 1999.
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 a source of funds for operating activities. The Company believes that
revenues in addition to existing cash and cash equivalents from proceeds of it
May 2 private offering, will be sufficient to meet its capital and liquidity
needs for the next 12 months. The Company also believes that cash required to
fulfill purchase orders will be available through bank borrowings or factoring,
if required. The company's primary customers are substantial corporations with
credit ratings that will support such credit arrangements.
Management's plans include the following:
1. The Company has revamped its sales strategy. A new team of regional
managers and project managers, coordinated by a vice president of
sales, spend more field time working as support for our distributors,
Value Added Resellers, and end-users. We have put a premium on
educating our team and our representatives in the merits of zone
cabling. We realize that our competition is actually "the old way of
doing things." Part of our new strategy is education about the
benefits of zone cabling over traditional home run cabling.
2. We will market through our B2B e-commerce portal, currently under
construction.
3. Our President and Vice President of Sales continue to meet with Herman
Miller Inc. to ensure a smooth and effective joint marketing project.
4. The Company has streamlined bookkeeping procedures.
5. The Company completed all capital expenditures in 1999. We have moved
from an acquisition and expansion phase into one of focused growth for
sales and revenue.
6. American Access has implemented a Qualified Stock Option Incentive
Plan for employees and directors, which must be approved by
shareholders at the 2000 annual meeting.
7. The Company has acquired additional working capital through a Stock
Purchase Agreement with Crescent International, Ltd. Up to $15 million
of Company common stock can be sold to Crescent, at the Company's
request, and which Crescent has agreed to purchase, subject to
limitations and conditions.
SUBSEQUENT EVENTS
On May 2, 2000, the Company entered into a Stock Purchase Agreement
with Crescent International, Ltd. "the Investor") in which the Company may sell
its common stock from time to time, and the Investor shall purchase up to $15
million. The Company on May 2 sold $1.9 million in stock at $4.6766 per share.
The sale price is the lowest three-day average bid price during the 22 days
preceding the sales, less an 8% discount. Subsequent purchases of up to
6
<PAGE>
$1,150,000 may be requested. The Company will pay a 1% fee on the total at the
initial purchase. In addition, there will be a 1% fee on each sale. A 10%
commission will be paid to the financial consultants the Company employs.
PART II. OTHER INFORMATION
The Registration Statement on April 6, 1999 became effective for the
Series A 10% Senior Convertible Preferred Stock, of which there were 50,000
shares outstanding at a gross of $5,000,000. Through March 31, 2000, 100% of the
Preferred Stock, $5,000,000 has been converted resulting in 505,515 common stock
shares being issued, all of which were sold on the open market. American Access
Technologies began trading on the Nasdaq Stock Market, Inc., as a Small Cap
listing, on April 13, 1999.
In January 2000, the Board of Directors of the Company (the "Board")
authorized the 2000 Employee Stock Option Plan and the 2000 Directors Stock
Option Plan. The Employee plan rewards participants who, in the judgment of the
Company are or will become responsible for the direction and financial success
of the Company. The plan provides increased incentive to make significant
contributions to the long-term performance and growth of the Company. The
adoption of the Stock Option Plans have not yet been ratified by the
stockholders. Additionally, 420,000 warrants to purchase the common stock at $8
were issued to five people who served in management or as a director during 1999
in its entirety.
In January 2000, American Access entered into a joint venture
arrangement with Vulcan Microsystems for the construction of a
Business-to-Business e-commerce Internet portal. Subsequently, Vulcan's two
principals were retained as technology consultants for the project, whereby they
were issued warrants to purchase 200,000 shares of the Company's common stock
for one year. The Company will act as distributor its own and for other
telecommunications manufacturing companies' products featured on the Internet
site. The site is scheduled for completion during the third quarter of 2000.
ITEM 6. EXHIBITS AND REPORTS
--------------------
(b) EXHIBITS
The following exhibits are being filed as part of this report:
Exhibit No. Description
8.2 Joint Venture Agreement with Vulcan Microsystems; Incorporated
by Reference as an Exhibit filed on Form 8-K Feb. 11, 2000
8.3 Consulting Agreement with Erik Gray and Bill Wetmore;
Incorporated by Reference as an Exhibit filed on Form 8-K Feb.
11, 2000
8.4 Employee Stock Option Plan; Incorporated by Reference to Form
10-KSB filed with the Securities and Exchange Commission on
April 18, 2000.
8.5 Director's Stock Option Plan; Incorporated by Reference to
Form 10-KSB filed with the Securities and Exchange Commission
on April 18, 2000.
8.6 Stock Purchase Agreement with Crescent International, Ltd.;
Incorporated by Reference to Form 8-K, filed with the
Securities and Exchange Commission on May 5, 2000.
8.7 Registration Rights Agreement with Crescent International Ltd;
Incorporated by Reference to Form 8-K, filed with the
Securities and Exchange Commission on May 5, 2000.
8.8 Agreement for issuance of Incentive and Early Put warrants to
Crescent International Ltd.; Incorporated by Reference to Form
8-K, filed with the Securities and Exchange Commission on May
5, 2000.
8.9 Closing Statement to Stock Purchase Agreement with Crescent
International Ltd.; Incorporated by Reference to Form 8-K,
filed with the Securities and Exchange Commission on May 5,
2000.
7
<PAGE>
27.0 Financial Data Schedule
(c) Exhibits on Form 8-K Incorporated By Reference, as filed with
the Securities and Exchange Commission on February 11,2000,
and as a subsequent event on May 5, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 15, 2000
AMERICAN ACCESS TECHNOLOGIES, INC.
(Registrant)
By: /s/ Bobby Story
-------------------------------------
Bobby Story
Treasurer
Chief Financial Officer
By: /s/ John E. Presley
--------------------------------------
John E. Presley
President
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 697,283
<SECURITIES> 0
<RECEIVABLES> 1,188,389
<ALLOWANCES> 89,000
<INVENTORY> 692,772
<CURRENT-ASSETS> 3,156,492
<PP&E> 4,443,092
<DEPRECIATION> (1,801,634)
<TOTAL-ASSETS> 6,229,976
<CURRENT-LIABILITIES> 475,892
<BONDS> 0
0
0
<COMMON> 4,314
<OTHER-SE> 5,749,770
<TOTAL-LIABILITY-AND-EQUITY> 6,229,976
<SALES> 1,510,416
<TOTAL-REVENUES> 1,510,416
<CGS> 756,155
<TOTAL-COSTS> 1,823,766
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,649
<INCOME-PRETAX> (294,726)
<INCOME-TAX> 0
<INCOME-CONTINUING> (294,726)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (294,726)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
