SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[XX] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 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 September 30, 2000 was 4,740,947
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AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
September 30, 2000
UNAUDITED December 31, 1999
------------ -----------------
<S> <C> <C>
Current Assets:
Cash & cash equivalents $ 868,019 $ 714,109
Investments, including restricted cash of $300,000 -- 833,344
Accounts receivable, net of allowance 787,238 1,014,913
Notes receivable - other 345,000 520,000
Notes receivable - related parties 320,000 --
Accrued interest receivable 34,653 65,615
Inventories 728,792 570,594
Prepaid expenses and other current assets 68,696 46,738
------------ ------------
Total current assets 3,152,398 3,765,313
------------ ------------
Property, plant and equipment, net of accumulated depreciation 2,840,764 2,547,483
Goodwill 293,024 407,686
Patent costs & domain name 183,394 62,561
Utility deposits 13,075 15,569
------------ ------------
Total assets $ 6,482,655 $ 6,798,612
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit $ -- $ 73,812
Accounts payable 336,349 449,119
Accrued expenses 94,792 16,673
Compensation due to officers/directors/stockholders -- 66,394
Retirement plan -- 75,000
Note payable - current portion 65,000 --
------------ ------------
Total current liabilities 496,141 680,998
------------ ------------
Long-Term Liabilities:
Note payable - noncurrent portion 40,000 --
------------ ------------
Total liabilities 536,141 680,998
------------ ------------
Commitments, Contingencies, Other Matters and Subsequent Events -- --
Stockholders Equity:
Series A 10% senior convertible preferred stock
$.001 par value; authorized 1,000,000 shares; issued and
outstanding 10,600 shares at liquidation value (subsequently converted
into 505,515 shares of common stock) -- 1,060,000
Common stock, $.001 par value; authorized 30,000,000 and 10,000,000
shares; issued and outstanding 4,740,947 and 4,094,239 shares 4,741 4,094
Additional paid-in capital 11,924,261 9,144,508
Deficit (4,491,229) (3,208,875)
------------ ------------
7,437,773 6,999,727
Treasury stock, 63,500 and 136,100 shares, at cost (285,390) (881,843)
Stockholder notes receivable - net of allowance (1,205,869) (270)
------------ ------------
Total stockholders' equity 5,946,514 6,117,614
------------ ------------
Total liabilities and stockholders' equity $ 6,482,655 $ 6,798,612
============ ============
</TABLE>
See notes to consolidated financial statements.
2
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AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales
Formed metal $ 2,606,290 $ 3,076,368 $ 765,020 $ 968,159
Zone cabling termination cabinet 1,315,071 1,031,203 258,918 316,455
----------- ----------- ----------- -----------
3,921,361 4,107,571 1,023,938 1,284,614
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of sales 1,967,031 1,748,673 546,209 611,805
Selling, general and administrative 3,002,268 2,266,525 1,059,414 731,585
----------- ----------- ----------- -----------
4,969,299 4,015,198 1,605,623 1,343,390
-----------
Income (Loss) Before Other Income (Expense) (1,047,938) 92,373 (581,685) (58,776)
----------- ----------- ----------- -----------
Other Income (Expense)
Interest income 52,003 273,274 24,191 120,817
Interest expense (1,739) (16,875) (41) (3,496)
Other income 51,564 50,699 12,354 13,864
Pre-development costs-B2B (200,000) -- -- --
----------- ----------- ----------- -----------
(98,172) 307,098 36,504 131,185
----------- ----------- ----------- -----------
Net Income (Loss) before Income Taxes (1,146,110) 399,471 (545,181) 72,409
Income Tax (Benefit) -- (15,170) -- --
----------- ----------- ----------- -----------
Net Income (Loss) $(1,146,110) $ 414,641 $ (545,181) $ 72,409
=========== =========== =========== ===========
Basic Net Income (Loss) Per Common Share $ (0.25) $ (0.12) $ (0.11) $ (0.06)
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AMERICAN TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
2000 1999
------------- -------------
<S> <C> <C>
Cash Flows form Operating Activities
Net income (loss) $(1,146,110) $ 414,641
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 341,769 232,171
changes in operating assets & liabilities:
(Increase) decrease in:
Accounts receivable 227,675 (539,663)
Accured interest receivable 30,962 --
Inventories (158,198) (49,655)
Prepaid expenses and other assets (21,958) (175,346)
Costs in excess of contract sales -- (346,599)
Increase (decrease) in:
Compensation due to officers/directors/stockholders (66,394) (97,803)
Retirement plan payable (75,000) --
Accounts payable and accrued expenses (34,651) (66,675)
----------- -----------
Net cash provided (used) by operating activities (901,905) (628,929)
----------- -----------
Cash Flows from Investing Activities:
Proceeds from (acquisition of) investments 833,344 (34,840)
Decrease in note receivable - other 175,000 --
Patent costs -- (28,113)
Acquisition of property and equipment (net of sales and retirements) (516,221) (366,132)
Loans to officers (320,000) --
Reduction in utility deposits 2,494
Purchase of domain name (125,000) --
Costs for building under construction -- (823,568)
----------- -----------
Net cash provided (used) by investing activities 49,617 (1,252,653)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 1,584,156 1,935,939
Proceeds from line of credit -- (220,256)
Payments on line of credit (73,812) --
Increase in note payable 115,000 --
Payments on note payable (10,000) --
Purchase of treasury stock (609,146) --
----------- -----------
Net cash provided (used) in financing activities 1,006,198 1,715,683
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents 153,910 (165,899)
----------- -----------
Cash and Cash Equivalents, Beginning 714,109 637,776
----------- -----------
Cash and Cash Equivalents, Ending $ 868,019 $ 471,877
=========== ===========
Supplemental Disclosure of Cash Flow Information
Cash paid for interest $ 1,739 $ 16,875
=========== ===========
Non cash financing and investing transactions
Conversion of preferred stock to common stock $ 1,060,000 --
Loan of treasury stock to related party 1,205,869 --
</TABLE>
See notes to consolidated financial statements.
<PAGE>
AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 Unaudited
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements at
September 30, 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
September 30, 2000 and results of operations for the nine months ended September
30, 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. is a telecommunications network solutions
provider that manufactures and distributes several models of patented Zone
Cabling Termination Cabinets (the "Product"). The Product helps manage and route
both copper and fiber optic wiring and cabling used in voice, video, computer
and data transmission systems for telecommunications networks. The cost savings
over time for moves, adds and changes to networks using our products, averages
up to 70 percent.
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. Since adding a powder-coating system in March 2000,
Omega is capable of professional finish work using that process. Omega
manufactures the Company's Product.
The Company has begun to forge successful liaisons for private labeling of its
proprietary products, customizing our units for a variety of clients.
.
We believe the telecommunications industry is now recognizing the need for zone
cabling with the increased need for fiber backbone and high speed networks
supporting voice and data streams, particularly computer and Internet
applications. Although our product is suitable for traditional copper cabling,
the surge in popularity of Gigabit Ethernet speed and fiber optics networks is
particularly well-served by our zone cabling products. The new awareness is
evidenced by the strong first six weeks sales figures for zone cabling products
in our fourth quarter.
Our Business-to-Business e-commerce web presence is a wholly-owned subsidiary,
Zonecabling.com, Inc. Our strategy would have contractors specify a zone cabling
solution, for which we can provide a complete package of equipment and design
through our alliances. Strategy for the operations of the B2B is still evolving.
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. Diluted
loss per share has not been presented as it would be anti-dilutive. The
computation of earnings per share is reflected in the following schedule:
5
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<TABLE>
<CAPTION>
Computation of Net Loss Nine Months ended Nine Months ended Three Months ended Three Months ended
Per Common Share Sept. 30, 2000 Sept. 30, 1999 Sept. 30, 2000 Sept. 30, 1999
<S> <C> <C> <C> <C>
Net Income (Loss) $ (1,146,510) $ 414,641 $ (545,581) $ 72,409
Cumulative Preferred 0 (61,195) 0 0
Stock Dividend
Beneficial Conversion 0 (796,200) 0 (327,450)
--------------- ------------- -------------- --------------
Preferred Stock
Dividend $ (1,146,510) $ (442,754) $ (545,581) $ (255,041)
--------------- ------------ -------------- --------------
Total Weighted Average 4,509,526 3,650,539 4,740,947 3,933,575
--------------- ------------ -------------- --------------
Number of Common Shares
and Equivalents
Net Loss per Common Share $ (0.25) $ (0.12) (0.11) $ (0.06)
--------------- -------------- -------------- --------------
</TABLE>
NOTES RECEIVABLE RELATED PARTY
In May and June 2000, the Company authorized loans to three directors, who also
are officer-employees of American Access or its subsidiaries, and who secured
the loans with personal assets unrelated to these transactions. The secured
loans were to enable these directors to cover margin calls precipitated by a
drop in the price of the Company's common stock. On May 31,Director and Company
President John Presley and Director Erik Wiisanen each executed a promissory
note and security agreement for $60,000, payable to the Company on or before
December 31, 2000, with interest at the rate of 10 percent paid in arrears. On
June 8, 2000, Director and Chief Financial Officer Bobby Story executed two
promissory notes and a security agreement for a total of $260,000, payable to
the Company on or before December 31, 2000, with interest at the rate of 10
percent paid in arrears. Although the Company agreed to loan $260,000,
ultimately only $200,000 was borrowed. In October 2000, Mr. Presley and Mr.
Wiisanen executed additional promissory notes with identical terms for $10,000
each, payable to the Company on or before April 30, 2001. These transactions
were approved by disinterested directors in accordance with the Florida Business
Corporation Act.
LOAN OF TREASURY STOCK TO RELATED PARTY
The Company on June 14, 2000 loaned 197,600 share of restricted Treasury stock
to Officer and Director Bobby Story to cover a margin call. This loan is also
secured with personal assets. The shares are to be returned to the company at
the earlier of the date the common stock price reaches $15 or June 14, 2001.
This transaction was approved by disinterested directors in accordance with the
Florida Business Corporation Act. This transaction is included in stockholder
notes receivable, a component of stockholders' equity.
STOCK SUBSCRIPTION RECEIVABLE
During June 1999, an individual affiliated with the private placement agent
exercised options to purchase 270,000 shares of Company common stock at $8.00
per share for a total of $2,160,000. The Company accepted as payment for theses
shares three notes receivable totaling $2,160,000. The notes receivable, as
amended, are due on December 31,
6
<PAGE>
2001, and bear interest at 10%. The Company can require the notes to be paid in
full sooner if the Company stock price equals or exceeds $35.
The Company has recorded these notes receivable, net of an allowance, for
collectivity in stockholder notes receivable, a component of stockholders'
equity.
3. Contingencies and Commitments
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. The Company denies not only any
wrongdoing, but most of the material factual allegations as well, and intends to
vigorously defend this case. We have filed a motion to dismiss with the New York
Courts. 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).
The Company on September 14, 2000 was served as a defendant in a
lawsuit filed by Vulcan Microsystems, Inc. ("Vulcan") in the Circuit Court of
the Eleventh Judicial Circuit for Miami-Dade County Florida. Vulcan alleges that
American Access breached the terms and committed other misdeeds in connection
with the companies' letter of intent to establish a joint venture to engage in
e-commerce. Vulcan is seeking in excess of $15,000 damages. American Access
intends to vigorously defend its position and is filing a counterclaim against
Vulcan to include damages in excess of $15,000.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH THE NINE MONTH
ENDED SEPTEMBER 30, 1999
REVENUES
Revenues for the nine months ended September 30, 2000 decreased by
$186,210 or 4.5% to $3,921,361 as compared to $4,107,571 for the nine months
ended September 30, 1999. Revenues for the three months ended September 30, 2000
decreased by $260,676 or 20.3% to $1,023,938 as compared to $1,284,614 for the
three months ended September 30, 1999. We attribute the decrease in revenues to
our shift in focus from our Genco line to increased production of our
proprietary zone cabling produst. New product developement also accounted for a
portion of the decrease. We expect these figures to more than rebound in the
fourth quarter.
COSTS AND EXPENSES
Direct costs represent cost incurred by the Company to have its products
manufactured and assembled. These costs represent 50.2 % of revenues for the
nine months ended September 30, 2000 and 42.6 % of revenues for the nine months
ended September 30, 1999.
7
<PAGE>
Selling, General and Administrative expenses increased by $ 735,743 to $
3,002,268 for the nine months ended September 30, 2000 as compared to $2,266,525
for the nine months ended September 30, 1999. Selling, General and
Administrative expenses increased by $327,829 to $1,059,414 as compared to
$731,585 for the three months ended September 30, 1999. This increase was the
result of costs associated with the continued development and growth of the
company including marketing and promotion, management costs, and professional
fees associated with the required filings. Several new products that are in
development for potential private brand customers have also added to the SG&A in
the short term. Approximately $200,000 of this increase was for consulting costs
in connection with the pre-development of a business-to-business e-commerce
Internet portal.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities utilized cash of $901,905 during the
nine months ended September 30, 2000 as compared to utilizing cash of $628,929
during the nine months ended September 30, 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 a
source of funds for operating activities. The Company believes that additional
capital including those from proceeds of it May 2 private offering, will be
needed 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. There are no guarantees that the company will
be able to secure additional capital as needed.
Management's plans include the following:
1. We have bifurcated our marketing efforts into our B2B e-commerce
portal and our traditional channels of distribution through
manufacturers' representatives. We are building strategic alliances
for our B2B site, and have added a national accounts manager to our
sales team. Active participation in Government Services contracts is
also part of our plan.
2. We are actively soliciting private label agreements, with several
contracts signed and others pending.
3. We are expanding our proprietary product line as the needs for zone
cabling become more apparent and defined. We maintain U.S. and
international patents on our products.
4. We have moved from an acquisition and expansion phase into one of
focused growth for sales and revenue. Our fourth quarter estimated
consolidated sales figures, in the month of October and the first two
weeks of November, have exceeded $770,000. Our consolidated sales for
the entire third quarter were $1,023,937.
5. To finance our focused sales growth, the Company believes it will need
additional capital in the next 12 months. Through a Stock Purchase
Agreement with Crescent International, Ltd. we may sell up to $15
million of the Company common stock, at the Company's request, and
which Crescent has agreed to purchase, subject to limitations and
conditions including a minimum average closing bid price of our stock
and a mininmum volume of shares sold. We are also seeking other
financing to include sales of securities, debt securities, line of
credit, and merger candidates.
6. We spent much of the third quarter developing new products based on
our patented, proprietary cabinets, to meet the needs of a growing
number of customers engaged in zone cabling. We are gearing up
production of our very profitable zone cabling units. Our Fourth
quarter sales of zone cabling cabinets, shipped, booked or confirmed
in the first six weeks of the quarter, total $344,000, an increase of
$85,082 over the whole of third quarter zone cabling sales at
$258,918.
SUBSEQUENT EVENTS
On March 31, 2000, McLean Ventures Corp. assumed the Company's rights and
duties to collect on a promissory note to the company by Universal Beverages
Inc., for $500,000. McLean paid $250,000 toward the interest and principal due
American Access, and executed a promissory note to the company for the balance
owing, $325,000. A third party personally guaranteed the note. The terms of the
note require payment of principal and 15% interest accrued annually, by October
31, 2000. The note by McLean went into in default, but by special request, has
been extended until November 15, 2000. We are working with the debtor to arrange
favorable terms in satisfaction of the note.
<PAGE>
PART II. OTHER INFORMATION
The SB-2 Registration Statement filed with the Securities and Exchange
Commission on May 2, 2000, a right granted pursuant to a Stock Purchase
Agreement with Crescent International Ltd. ("the Investor"), became effective
July 12, 2000. 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 $1,150,000 may be requested once the stock volume
complies with the terms of the agreement. 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 broker/dealer the Company employs as a
financial consultant.
ITEM 6. EXHIBITS AND REPORTS
--------------------
(b) EXHIBITS The following exhibits are being filed as part of this report:
Exhibit No. Description
8.2 Promissory note executed by director and officer-employee Erik
Wiisanen, executed October 30, 2000.
8.3 Promissory note executed by director and officer-employee John
Presley, executed October 30, 2000.
27.0 Financial Data Schedule
(c) Exhibits on Form 8-K are Incorporated By Reference, as filed
with the Securities and Exchange Commission on July 27, 2000
and as a subsequent event on October 5, 2000.
9
<PAGE>
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: November 14, 2000
AMERICAN ACCESS TECHNOLOGIES, INC.
(Registrant)
By: /s/ Joseph F. McGuire
----------------------------------------
Joseph F. McGuire
Treasurer
Chief Financial Officer
By: /s/ John E. Presley
----------------------------------------
John E. Presley
President
