US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
COMMISSION FILE NUMBER: 0-28175
AFFORDABLE TELCOMMUNICATIONS TECHNOLOGY CORPORATION
---------------------------------------------------
Name of small business issuer in its charter
TEXAS 76-0548546
----- ----------
(State or Other Jurisdiction of (IRS Employer Identification
Incorporation) No.)
6227 Southwest Freeway, 77074
Houston, TX
----------------------- -----
(Address of principal executive (Zip Code)
offices)
(713) 988-8884
--------------
(Issuer's telephone number)
Securities registered under Section 12 NONE
(b) of the Exchange Act:
Title of each class Name or each exchange on which registered
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $.01
----------------
(Title of class)
Check whether the issuer: (i) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (ii) has been subject to the
filing requirements for the past 90 days.
Yes (XX) No
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
[XX]
The Registrant had no revenues during its recent fiscal year
ended December 31, 1999. The aggregate market value of the voting
stock held by non-affiliates(*) of the Registrant based on the
average bid and asked prices of $1.70 and $1.50 respectively, of
such common stock as of April 17, 2000, is approximately
$8,000,862, based upon an average of $1.60 multiplied by
5,000,538 shares of common stock as of such date held by non-
affiliates. As of April 14, 2000, the Registrant had a total of
9,720,538 shares of common stock, par value $.01 issued and
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
There are no documents incorporated by reference in this report
on Form 10- KSB
(*) Affiliates for the purposes of this Item refer to the
officers, directors and/or persons or firms owning 5% or more of
the Registrant's common stock, both record and beneficially.
Page 1 of 57
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business. 3
Item 2. Description of Property. 13
Item 3. Legal Proceedings. 13
Item 4. Submission of Matters to a Vote of Security 13
Holders.
PART II
Item 5. Market for Common Equity and Related Stockholder 14
Matters.
Item 6. Management's Discussion and Analysis or Plan of 14
Operation.
Item 7. Financial Statements. 17
Item 8. Changes In and Disagreements With Accountants on 18
Accounting and Financial Disclosure.
PART III
Item 9. Directors, Executive Officers, Promoters and 19
Control Persons.
Item 10. Executive Compensation. 20
Item 11. Security Ownership of Certain Beneficial Owners 21
and Management.
Item 12. Certain Relationships and Related Transactions. 21
Item 13. Exhibits and Reports on Form 8-K 22
PART I
Item 1. Description of Business
- --------------------------------------
Organization
Affordable Telecommunications Technology Corporation, a
Texas corporation, a development stage company, was incorporated
on July 10, 1997. (hereinafter the "Company" or the
"Registrant"). The Company is engaged in the business of serving
as a reseller and provider of wireless telecommunications
services, paging services and related services, and also plans on
providing an Automatic Meter Reading service (AMR). The Company
presently operates a retail stores in the Houston market under
the name "The Wireless Store", which store commenced operations
on September 1, 1998. The market for its telecommunication
products and services principally is the Texas Gulf Coast Area.
See "Business of the Company" below. The Company has a letter of
intent to acquire ten additional stores in Texas and Louisiana.
See the discussion of the "Pending Acquisition - Letter of
Intent" under "Business of the Company" below.
Business of the Company
Principal Products, Services and Markets
Affordable Telecommunications Technology Corporation, a
development stage company, has been in business since 1997. The
Company had only limited operations and did not generate its
first operating revenues until the third quarter of fiscal 1998,
following the opening of its retail store on September 1, 1998.
The Company presently markets and sells both prepaid and post-
paid (regular billing) wireless telecommunications products and
services, primarily in the Texas Gulf Coast area, through its
Houston, Texas retail store.
During the past five years, banks and retail stores have
made a strong push to expand consumer credit, and lowering credit
requirements. As a result, the institutions and retail outlets
extended credit to people who have overspent their income, and
find it difficult to make even minimal monthly payments. A recent
article in The Houston Chronicle reported that notwithstanding
the current expansion of the US economy, consumer debt and
personal bankruptcies have reached all-time highs. This is a
principal reason that why Company has determined to offer and
will continue to offer its products and services on a pre-paid
basis for customers requiring or desiring this availability.
With such a large number of prospects for prepaid cellular
services - a number that would increase substantially in the
event of any economic downturn - the potential untapped market
for these services among persons and firms without adequate
credit could be substantial. According to GTE MobilNet, eight out
of ten new applicants for service require a deposit as a
condition of sale of service. Yet, of these eight applicants,
only one pays the deposit, while the seven customers who did not
or could not pay the deposit, or approximately 2 million
customers within GTE's Houston service are potential users of
prepaid cellular telephone service offered by the Company.
Page 3
The Company believes that the primary source of new entrants
into its market area will be firms engaged in providing PCS to
cellular customers. Unlike current analog cellular technology
that has offered by AT&T, GTE MobileNet and Houston Cellular
Telephone Company , PCS transmits data by using digital
technology. Digital PCS technology has advantages over analog
cellular such as incoming caller ID; clearer voice quality, and
an ability to serve a larger number of users simultaneously.
The Company, on October 12, 1999, entered into a letter of
intent with Beeper Boutique, which owns and operates eight stores
in Texas and Louisiana, and has a present customer base of over
19,000 active pager subscribers. This acquisition, assuming the
successful completion, of which there can be no assurance, should
enable the Company to expand its service and customer base, and
enjoy certain economies of scale, and be able to provide service
from six different wireless carriers to a larger customer base.
See the discussion under "Letter of Intent" below.
The Company has contracts to market the wireless service
from the following wireless telecommunications service providers:
Nextel, Sprint PCS, Bell South Wireless, Houston Cellular
Telephone Company, Page-Mart, Comsat Mobile Communications and
Globalstar Telecommunications Co.
The Company has negotiated a joint venture with Link-Two
Communications Incorporated, which holds numerous radio paging
licenses that cover Southwest Texas. Link-Two offers nationwide
service with two-way digital messaging on a wide area network.
The purpose of the joint venture will be to establish one-way and
two-way paging, messaging and data service over a network
throughout Texas. The venture with Link-Two will enable the
Company to provide Automatic Meter Reading service (AMR) in its
market. This service will enable local utility providers to read
customer's meters without physical entry into a residence or
business. This AMR system is presently in a test period in
Southeast Texas, and the Company believes that the test will be
successful and lead to new revenue streams for the Company. The
technology for the AMR service was developed in Israel and has
proven successful in reducing costs for the utility users of such
service. AMR is also being marketed in other regions in the US,
and the Company is the sole provider in Southeast Texas.
In order to expand its market and customer base, the Company
has expanded its products and services offering the same to both
prepaid and regular customers, and believes that this should
enable the Company to appeal to market segments including small
business and middle-and-upper income users. The Company initially
offered its products and services primarily to individuals who
could not obtain adequate credit for service from major
telecommunication providers on satisfactory terms.
Through a recently announced venture between AirTouch
Cellular, the Company now offers Globalstar Telecommunications
satellite phone, which includes the Globalstar handsets,
accessories and service. The Globalstar service provides
customers with satellite telephone service world-wide and is
distributed and marketed throughout North America, with the
Company now offering this satellite communication service
throughout Texas.
In addition, the Company offers paging, messaging and
information products and services through third party networks,
including PageMart and Bell South Wireless Data.
Page 4
Distribution Methods of the Products and Services
The Company presently utilizes two principal methods, for
the distribution of its products and services in the Texas Gulf
Coast market, as described below. The Company plans efforts to
further develop multiple distribution channels in its market(s)
to enable the Company to provide more effective and extensive
marketing of products and services, which should also reduce its
reliance on any single distribution source. The Company's present
distribution methods for products and services are (i) direct
retail distribution and (ii) agreements with third party
independent distributors/dealers of wireless cellular services
and products.
In addition, the Company is actively seeking to increase its
base of new customers through retail stores that the Company
operates and acquires. While dealer and direct sales channels
remain important components of the Company's growth strategy, the
Company believes that retail stores produce the best combination
of lower customer acquisition costs and higher retention rates,
resulting in improved margins and profitability. See the
discussion below with respect to "Retail Sales" and "Letter of
Intent-Acquisition of Stores".
Retail Sales: The Company currently conducts its retail
operations through one retail location in Houston, Texas. The
plan is to expand to include retail stores strategically located
in smaller neighborhoods throughout the Texas Gulf Coast area in
order to capitalize on favorable demographics and retail traffic
patterns. The Company believes that its retail focus with an
increasing retail presence should help accomplish the following
goals, among others:
- - attracting and maintaining new customers from the consumer
market segment;
- - enabling new customers to receive personal product and service
instructions through trained professional wireless sales
representatives, which increases customer retention rates;
- - and reducing the incremental expense associated with new
customer subscription.
Dealers: The Company currently has dealer agreements with six
large wireless dealers as well as smaller Houston wireless
communication dealers, offering wireless services including
paging and PCS. In exchange for a wholesale price on activation's
and airtime, these dealers solicit customers for the Company's
prepaid cellular service. These agreements increases sales volume
for the dealers and provides a valuable source of new customers
for the Company.
Direct Sales: The Company has adopted plans to commence
distribution of its products and services through a direct sales
force, with the primary area covering the Houston and Texas Gulf
Coast area, which should increase its ability to achieve and
maintain a higher customer base.
The Company primarily uses its retail stores for the
distribution and sale of the telecommunication products and
services presently being offered. The Company also intends to
enter into dealer agreements with third parties who are
established dealers of cellular products and services in its
market in Texas, for the purpose of expanding its potential for
sales and marketing of such products and services.
Page 5
Status of any publicly announced new Products or Service
The status of all publicly announced products and services
are discussed fully under "Business of the Company".
Competitive Business Conditions--Small Business Issuer's
Competitive Position in the Industry and Methods of Competition
The paging industry is highly competitive and has few
barriers to entry. Companies in the industry generally compete on
the basis of price, coverage, speed and quality of transmission,
system reliability and service. Many of the Company's competitors
have substantially greater financial, technical and other
resources than the Company.
Several companies, including Paging Network ("PageNet") and
Mobile Telecommunications Technology Corp. ("Mtel"), currently
offer national paging services to their subscribers. The Company
will also compete will numerous other local, regional and
national paging companies. In addition, the United State Congress
and the FCC have authorized the use of newly allocated spectrum
for mobile and portable radio communications services, including
specifically for narrow band PCS. Through its auction process,
the FCC has issued narrowband PCS licenses, and the licensees are
in the process of constructing their facilities. Some of the
primary uses envisioned by narrowband licenses are advanced voice
paging and two-way acknowledgment paging.
It is expected that companies offering narrowband-advanced
paging will compete with one-way paging companies. In addition,
some companies may utilize their broadband PCS licenses to offer
paging services in conjunction with their product and service
offerings to users. There can be no assurance that additional
competitors will not enter markets served or proposed to be
served by the Company or that the Company will be able to compete
successfully.
The Company must be able to compete with large retail
chains, direct providers and others offering products and
services in the wireless telecommunication and paging industry.
There can be no assurance that it will be able to compete with
larger, more established providers, having far greater economic,
personnel and other resources, and operating histories.
Notwithstanding the foregoing, the Company believes that it will
indeed be successful in competing because its primary focus is to
market its products into the niche market for small and mid-sized
income users.
The Company believes that it has certain competitive
advantages. The Company charges no monthly access fee for its
prepaid service, unlike many of its competitors. The Company
offers a plan that provides customers with both equipment and
specified amount of time on a prepaid basis, giving the customer
the benefit of buying only what they want to spend on airtime
while (i) eliminating the Company's credit risk, (ii)
substantially reducing the Company's receivable reserves,
together with labor, software and overhead items required to
monitor receivable and (iii) making the float attributable to the
prepayments available to increase opportunities for internally-
financed growth, or otherwise maximize the shareholder returns.
The Company's size and relatively low overhead permit it to
respond more flexibly to market changes, either directly by
offering new services including PCS, voice paging and prepaid
home telephone service and voice mail services). Further, the
Company can adopt the flexible, informal and personal services
and procedures attractive to the credit-disadvantaged and other
individuals and small business.
Page 6
The Paging and Cellular Industry
Radio paging began more than 4 decades ago as an adjunct to
telephone answering services, delivering tone-only messaging to
subscribers. Beginning on the 1970's, cost-effective
technological innovations and regulatory reforms help accelerate
the use of paging services. Advances in microprocessor technology
facilitated dramatic reductions in the size and weight of pagers.
In 1982, the FCC increased the number of available channels for
paging, further stimulating the growth of the industry.
During the 1980's, the paging industry expanded
significantly. Factors contributing to the growth in the paging
industry include:
(i) a continuing shift toward service-based economy which
resulted in need to keep in contact at all times, for business
purposes; (ii) increasing mobility among workers and management;
(iii) increasing awareness of the benefits of mobile
communications for both business and personal use; (iv) a
reduction in the price of paging equipment and service; (v)
product distribution at the retail level; and (vi) increasing
availability of information service-based offerings.
In addition, the benefits of mobile and wireless
communications have gained widespread acceptance as a result of
the growth of cellular communications. The Company believes that
paging growth will continue to grow with the wireless
communication industry generally, because it believes paging is
the most cost-effective form of mobile communications. Since
paging is form of one-way communication, it is less expensive
than communicating by cellular telephones. Pagers and airtime
required to transmit an average message cost less than the
equipment and airtime for cellular telephones. in fact, some
users of cellular telephones use a pager in conjunction with
their telephones to screen incoming calls and to minimize usage-
based charges.
The availability of value added paging products and services
is creating demand within certain market segments which
previously had not been attracted by the benefits of basic paging
services alone. Demand for paging services is anticipated to
increase further as a result of technological advances which
permit messaging to be integrated into business tools (such as
laptop and palm computers) and into consumer products (such as
wristwatches).
The United States cellular telephone industry historically
operated as a regulated quasi-monopoly in virtually market, with
GTE MobilNet and Houston Cellular Telephone Company as the
dominant market participants in Houston, Texas. The industry,
however, is expanding and becoming more open to new entrants as a
result of the continuing emergence of new wireless communication
technologies, including the advance of digital technology.
Cellular industry growth has also been aided by nationwide
roaming agreements which have made it possible for customers to
use their cellular telephones nearly everywhere in the United
States. This ubiquity of service is one of the cellular
industry's greatest strengths as medium for communication, and
offers significant potential opportunities for future growth.
Page 7
The following table summarizes certain key domestic cellular
industry statistics published by the Cellular Telecommunications
Industry Association for the period December 31, 1992 through
December 31, 1999 (the latest date for which data is available).
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cellular Industry 1999 1998 1997 1996 1995 1994 1993 1992
Statistics
Total Service 40.0 33.1 27.4 23.6 19.1 14.2 10.9 7.8
Revenues
(dollars in
billions)
Cellular Customers 86 69.2 55.3 44.0 33.8 24.1 16.0 11.0
(in millions)
Customer Growth 24.6 24.0 20.0 30.0 40.0 50.8 45.1 46.0
(year-over-year in
Percent)
Average monthly 41.24 39.43 42.78 47.70 51.00 56.21 61.49 68.68
bill per Customer
(in dollars)
</TABLE>
Source: Cellular Telecommunications Industry Association Semi-
Annual Wireless Industry Survey
The total number of domestic US cellular customers grew by
approximately 24.6% during 1999, compared to 1998, and cellular
industry penetration as of December 31, 1999 was 31%, with
overall growth penetration growing between 1992 and 1999 at a
compounded annual rate of 400%. While the penetration rate has
increased, the average monthly cellular telephone bill has
declined. This decline can be attributed to an increase in
cellular telephone users who have limited incomes or use cellular
telephone service as a means of security after dark, as well as
intense price competition and the advent of new digital
technology replacing analog service, at sharply reduced rates.
The wireless industry gained almost 16.8 million new subscribers
by the end of 1999- a growth rate of nearly 24% in one year
according to the Cellular Telecommunications Industry Association
(CTIA).
Names of Principal Suppliers
The principal service providers offered by the Company
include Nextel, Sprint PCS, Bell South Wireless, Houston Cellular
Telephone Company, Comsat Mobile Communications and Globalstar
Telecommunications Co. for cellular service and Page-Mart, and
Houston Cellular Telephone Company for paging and wireless phone
service.
Licenses, Franchises, Concessions, Royalty Agreements or
Contracts
<TABLE>
<S> <C>
Nextel: Expiration 3/31/01 with
automatic renewal
Sprint PCS: Expiration 9/08/01 with
automatic renewal
Houston Cellular Telephone Company: Expiration 8/10/01 with
automatic renewal
PageMart: Expiration 5/05/00 with
automatic renewal
ComSat: Expiration 6/28/02 with
automatic renewal
Globalstar Satellite: Expiration 10/15/00 with
automatic renewal
GTE Wireless Incorporated: Expiration 3/09/01 with
automatic renewal
</TABLE>
Nextel pays a commission for each new subscriber that is
activated every month, from a low of $ 100 to a high of $ 250.
The Company also receives a residual of 5% of the subscribers'
future revenue stream. During the past year, the Company has
averaged 150 subscribers per month for the Nextel wireless
telephone/paging service, for which Nextel has paid the Company a
total of $142,000 in commissions.
Page 8
If a subscriber disconnects service within 6 months of commencing
service, Nextel will charge the Company back for the original
commission paid. Nextel also accrues cooperative advertising
funds of $ 30 per now subscriber per month. The Company must use
co-op advertising funds for advertising and promotions within 180
days of accrual, and claims for reimbursement must be submitted
within 90 days of the Company incurring the expense. This
contract with Nextel is non-exclusive, and Nextel may offer the
service and equipment to competing dealers and retail outlets.
Sprint MCI pays an Activation Retention Credit (ARC) for
each new subscriber that is activated every month. The commission
varies from a low of $ 5 to a high of $ 25, and the Company also
receives exclusivity credit of $ 10 per subscriber per month.
During the past year, the Company has averaged 55 subscribers per
month. Sprint PCS has paid $ 30,720 in commissions. If a
subscriber disconnects service within 31 days of connection,
Sprint PCS will charge the Company back for the original
commission paid. Sprint PCS also accrues cooperative advertising
funds of $ 35 per new subscriber per month and the Company must
use co-op advertising funds for advertising and promotions within
180 days of the accrual, and claims for reimbursement must be
submitted within 90 days of the Company incurring that expense.
This contract is non-exclusive.
Houston Cellular Telephone Company pays a commission for
each new subscriber that is activated every month. The commission
varies from a low of $ 100 to a high of $ 250. During the past 2
months that the Company has been offering this service, it has
averaged 30 subscribers per month. Houston Cellular Telephone
Company has paid $12.000.00 in commissions. If a subscriber
disconnects service within 3 months of connection, Houston
Cellular Telephone Company will charge the Company back for the
original commission paid. Houston Cellular Telephone Company also
accrues cooperative advertising funds of $ 30 per subscriber per
month. The Company must use co-op advertising funds for
advertising and promotions within 160 days of the accrual, and
claims for reimbursement must be submitted within 90 days on the
Company incurring the expense. This contract is non-exclusive.
GTE Wireless provides cellular airtime to the Company on a
prepaid basis under a resale agreement. The Company purchases
cellular airtime at a wholesale rate and then resells the airtime
to the public at a profit The cost to the Company is $ .25 per
minute, and the retail price to the public is $ .50 per minute,
which results in a gross profit to the Company of $.25 per minute
for prepaid cellular service. Since the inception of the prepaid
program, the Company has sold in excess of 100,000 minutes. This
contract is non-exclusive.
PageMart Wireless will from time to time sell one way paging
products and services to the Company. PageMart makes its local,
regional, nationwide and international one-way paging networks
available to the Company. The Company purchases access to the
network at a discounted rate and resells this service to the
general public at a profit. The Company bills the public
customers for access to the network on monthly, quarterly or
annual basis, with the customers prepaying for access to the
paging network. This contract is non-exclusive.
Comsat Personal Communications, Inc. has appointed the
Company as a non-exclusive agent to provide Comsat products and
services to the public. The Company receives a commission of $
100 for each unit sold, which commission is paid 60 days
following the sale of a unit. The Company is eligible for payment
of 5% commission for airtime revenue collected by Comsat from the
subscriber.
Page 9
Airtouch Satellite Services US, Inc. d/b/a. Globalstar
Satellite has appointed the Company as a non-exclusive agent to
provide Globalstar products and services to the public. The
Company receives a commission of $ 100 to S 200 for each unit
sold, which commission are paid 60 days following the sale of a
unit. If a subscriber disconnects service within 4 months of
connection and purchase, Airtouch Satellite Services will charge
the Company back for the original commission paid.
The Company is eligible for payment of 5% commission for monthly
airtime revenue collected by Airtouch Satellite Services from the
subscriber.
Bell South Wireless Data has appointed the Company as a
non-exclusive sales representative to solicit new subscribers to
utilize the Bell South (BSWD) two-way wireless data network. BSWD
will pay a commission for each new subscriber that is activated
every month, a commission varies from a low of $20 to a high of
$60. In addition, BSWD also accrues cooperative advertising funds
of $ 5 per new subscriber per month. The Company must use co-op
advertising funds for advertising and promotions within 180 days
of the accrual, and claims for reimbursement must be submitted
within 90 days of the Company incurring the expense. BSWD also
accrues Market Development funds of $ 15 per new subscriber and
the Company is eligible for payment of 4.5% residual for monthly
airtime revenue collected.
Status of any publicly announced new Products or Services
The Company is conducting final due diligence of its pending
acquisition of Beeper Boutique. The Company reasonably expects to
close the transaction on or before the second quarter of 2000.
Pending Acquisition - Letter of Intent
The Company is completing final due-diligence with respect to the
acquisition of the assets of Beeper Boutique. The assets of
Beeper Boutique are valued at $1,460,000, and present the closing
date is scheduled for May 31, 2000 or sooner. In connection with
the proposed acquisition the Company paid a fee of $ 25,000 to
Beeper Boutique on December 2, 1999; and an extension fee of $
35,000 to Beeper Boutique on December 13, 1999. In addition, the
Company agreed to assume up to $150,000 in accounts payable of
Beeper Boutique at closing.
The letter of intent contemplates the issuance of restricted
shares having a value of approximately 1,250,000 shares of
restricted common stock, based upon a value of $1.00 per share.
The vesting provisions, registration rights and the valuation on
a per share basis a subject to final negotiations. Cash
compensation may also be utilized together with or in lieu of
shares.
Beeper Boutique has agreed that the Company may elect to pay
the purchase price in cash, based upon the Company's ability to
raise sufficient capital at terms acceptable to the Company. In
the event that the cash option is elected the balance of the
shares held by Beeper Boutique and not theretofore registered may
be retired by payment to Beeper Boutique at $1.00 for each common
share within 12 months issuance.
The Company will assume assets, which may also be subject to
liabilities, such us lease obligations, inventory and subscribers
of the Beeper Boutique.
Page 10
Capital Requirements: The Company intends to structure a private
placement for the purpose of raising additional working capital
and to fund the growth of its business. The terms and conditions
of the private placement have not yet been determined and there
can be no assurance that the Company will be successful in
completing a private placement at terms acceptable to the
Company. See "Management's Discussion and Analysis", Item 6
below.
The Company has entered into a letter of intent to purchase
ten stores from Beeper Boutique, which stores operate in the
Texas Gulf Coast and Louisiana markets. Beeper Boutique presently
serves in excess of 19,000 customers for with paging services in
its markets and the Company believes that this acquisition will
enable it to significantly increase its customer base for its
full line of wireless services including the pager service
presently marketed by Beeper Boutique. While there can be no
assurance that the acquisition will be completed successfully,
the Company is presently in negotiations to complete this
acquisition following completion of its due diligence.
The Company also has entered into a signed letter of intent,
dated October 20, 1999 to acquire the assets of Intergo Company
d.b.a. Camera's Etc. Camera's Etc is a local South Texas company,
which specializes in marketing digital imaging products and
services to the oil and gas industry as well as the medical
institutions. Camera's Etc is owned by Kim T. Peterson, a
principal shareholder of the Company, and is managed by Norman
George, the Company's chief financial officer and a director. See
Item 11, "Security Ownership of Certain Beneficial Owners and
Management".
Proforma revenues for Camera's Etc last year were $ 400,000
with a small profit, and the Company believes that this
acquisition should enable the Company to offer third generation
wireless products including digital imaging services, with a
customer base of heavy industry purchasers of digital imaging
products.
The transaction to acquire Camera's Etc. will involve a
stock swap, with the Company issuing to Intergo Company d.b.a.
Camera's Etc 400,000 restricted shares of stock for the stock and
entire assets of the company. During November and December 1999,
the Company advanced $22,742 towards the operations of Intergo.
The Company took over operations and management of Interco
Company d.b.a. Camera's Etc on January 5, 2000 and the final
closing is expected before the end of April 2000.
In connection with the contemplated acquisition of Beeper
Boutique's assets, the Company will assume the leasehold
obligations on the ten Beeper Boutique stores located in Texas
and Louisiana. See the discussion under "Description of Property"
(Item 2) below, with regard to the stores of Beeper Boutique
including monthly rent and lease expiration. The Company believes
that the store facilities of Beeper Boutique are adequate to
permit the Company to expand its wireless equipment and service
business into the existing facilities.
See the discussion under "Management's Discussion and
Analysis", Item 2 below, and under "Description of Property",
Item 2 below, with respect to the Company's obligation to be
assumed upon the completion of the acquisition of Beeper Boutique
Need for any Government Approval is necessary and the small
Business Issuer has not yet received that Approval, discuss the
Status of the Approval within the Government Approval Process
At present, there are no specific regulations or approvals
required by or from the Federal or state government or any agency
for marketing the products and services offered by the Company,
and there are no present or anticipated regulations that have or
may have any effect upon the Company or its business. The Company
is a reseller of telecommunications products and services.
Page 11
Estimate of the Amount spent during each of the last two fiscal
Years on Research and Development Activities, and if applicable
the Extent to which the cost of such Activities are borne
directly by Customers
The Company's business activities involve the reselling of
products and services manufactured by third parties and as a
result, the Company has not incurred any research and development
costs. Further, in connection with the Link-Two joint venture for
AMR service, no R & D expense has been incurred by the Company,
nor are any anticipated, as the Company will be a reseller and
dealer of the AMR service.
Costs and Effects of Compliance with Environmental Laws (federal,
state and local)
The Company has no costs nor is there any effect from
environmental laws associated with the operation of the Company's
retail store business.
Recent Consulting Agreements
On February 11, 2000, the Company has entered into a
Consulting Agreement with National Financial Communications
Corporation d.b.a. OTC Financial Network to provide public
relations and communication services to the investment community
and general public. The Company issued 450,000 shares of
restricted stock for the services.
On March 16, 2000 the Company entered into a consulting
agreement with Affiliated Communications Company to provide
management consultant, strategic planning and advisory service to
the Company. The Company issued 500,000 shares of restricted
stock for the services.
Number of total Employees and Numbers of full Time Employees
The Company's present retail store in Houston, Texas,
employs 8 persons, including Mr. Bethke, who is the Company's
sole full-time salaried officer. See "Executive Compensation"
below.
Reports of Security Holders
The Company has not made any reports to security holders
during the past fiscal year.
Page 12
Item 2. Description of Property
- --------------------------------------
The Company presently leases 4,783 square feet of retail
store/office space at 6227 Southwest Freeway, Houston, Texas, for
$3,183.96 per month. The condition of the Company's leased
facilities in Houston, Texas are excellent, and are sufficient
for its use and operation of the Company's present level of
operations. The Company, as noted above, has entered into a
Letter of Intent to purchase ten retail stores from Beeper
Boutique, which stores are located in Texas and Louisiana.
Assuming the successful completion of the acquisition, the
Company will be assuming the leasehold obligations for each of
the ten Beeper Boutique stores. The following is a summary of the
information regarding each of the stores:
<TABLE>
<S> <S> <S>
Beeper Boutique Store Location Monthly Rent Lease Expiration
3333 Katy Freeway, Houston, TX $4,457.01 May 30,2000
Almeda Mall, Houston, TX $2,771.38 October 31, 2003
San Jacinto Mall, Houston, TX $2,924.42 January 31, 2001
Greenspoint Mall, Houlston, TX $2,883.33 January 31, 2003
Parksdale Mall, Beaumont, TX $3,837.44 January 31, 2001
Post Oak Mall, Bryan, TX $2,493.90 December 31, 2000
Northgate Mall, Lafayette, LA $1,238.33 September 30, 2002
Music City Mall, Odessa, TX $ 750.00 May 31, 2000
University Mall, Nachadoges, TX $1,000.00 July 31, 2001
Richland Mall, Waco, TX $2,358.03 December 31, 2001
</TABLE>
The Company believes that the above store facilities, assuming
successful completion of the Beeper Boutique acquisition, will be
sufficient for the foreseeable future.
Item 3. Legal Proceedings
- -------------------------
The Company is not a party to any litigation.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
None
Page 13
Part II
Item 5. Market for Common Equity and Related Stockholder Matters
- -----------------------------------------------------------------
The Company's common stock is traded on the NASDQ-OTC
Bulleting Board market. As of April 12, 2000, there were fifteen
market makers in the Company's stock. The following information
with respect to the high and low market prices was obtained from
the Company's records. Trading the in Company's shares commenced
on June 1, 1999
<TABLE>
<S> <C> <C>
Bid Price
1999 High Low
Quarter Ending June 30 $.38 $.13
Quarter Ending Sept. 30 $.88 $.38
Quarter Ending Dec. 31 $.75 $.13
2000
Quarter Ending Mar. 31 $ 2.48 $.13
Period ending April 14 $ 2.18 $1.81
</TABLE>
The Company is filing this Form 10-KSB, its first report
required to be filed since the effective date of the Company's
registration statement on Form 10-SB/12g, which was filed for the
purpose of enabling the Company's shares to commence trading on
the NASDAQ Bulletin Board. The Company's Form 10-SB/12g was
declared effective by the SEC in January 24, 2000, at which time
the Company's shares began trading on the OTC Bulleting Board.
Prior to that date the shares quoted on the "pink sheets". As of
March 31, 2000, there were 148 holders of the Company's common
stock. The Company has never paid a dividend and does not
anticipate that any dividends will be paid in the near future.
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -----------------------------------------------------------------
Results of Operations
During the Company's fiscal year ended December 31, 1998,
the Company had revenues of $72, 225 compared to revenues of $
294,893 during the 1999 fiscal year.
The Company incurred a net loss of $206,044 ($0.06 per
Share) during fiscal 1998, compared to a net loss of $473,477
($0.10 per Share) for the 1999 fiscal year.
There are no known trends, events or uncertainties that have
had or that are reasonably expected to have a material adverse
impact on the net sales or revenues or income from continuing
operation of the Company. There is an increasing trend toward use
of pagers and wireless cellular telephones and other wireless
equipment by all segments of the population, including prepaid
and regular use. The Company expects to benefit from this trend
in its Texas Gulf Coast market and, if it completes the
acquisition of Beeper Boutique, it expects that it will benefit
from the increased market in both South Texas and Louisiana.
The causes for the material changes from period to period in
one or more line items of the small business issuer's financial
statements is the direct result of the commencement of the
Company's store operations.
Page 14
There are no seasonal aspects that had a material effect on
the financial condition or results of operation of the Company.
Liquidity and Capital Resources
The Company, at December 31, 1999 had current assets of
$84,813, compared to current assets of $156,097 at December 31,
1998, a decrease of 46 % from current assets at December 31,
1998. The decrease in current assets is primarily the result of a
reduction in cash and deposits/prepaid expenses. The Company had
an increase in inventory during the year ended December 31, 1999.
The increase in inventory consists of wireless telephone
equipment including, cellular and paging equipment and
accessories, located at the Company's retail store.
The Company's current liabilities were $312,828 at
December 31, 1999, reflecting an increase of 116% from current
liabilities of $144,424 at December 31, 1998. This increase is
mainly the result of a short-term bank loan and an increase in
accounts payable.
The Company's non-current liabilities were $540,987 at December
31, 1999, which included long-term debt and capital leases and
loans payable-stockholders' compared to $586,964 at December 31,
1998, which represented long term debt and capital leases.
Subsequent to the year ended December 31, 1999, the Company re-
ceived from private investors $363,634 in consideration for the
issuance of 1,494,002 restricted shares of the Company. In addition
the Company issued 1,090,000 restricted shares for services and
future services.
There is a trend that the Company is aware of that could
adversely impact upon its liquidity, relating to the acquisition
under the Letter of Intent of the six Beeper Boutique retail
stores. Other than the expenses and impact upon liquidity from
the planned Beeper Boutique acquisition, which the Company hopes
to fund with its securities, cash flow from operations, and from
possible investment capital, the terms and conditions of which
the Company is presently unsure of, the Company has no plans for
any large capital expenditures.
There is also a trend in the wireless industry toward rapid
technological change and development, but such trend should not
adversely impact upon resellers and retail operators such as the
Company. As a result, the Company does not know of any trends,
events or uncertainties that have or are reasonably likely to
have a material impact on its short-term or long-term liquidity.
The Company's liquidity has been the result of operating revenues
as well as sales of the Company's securities to private
investors.
During late 1997 and early 1998, the Company issued a total
of 2,300,000 shares, at par value, to the Company's president and
its two directors, without cash consideration. In connection with
a private placement, the Company issued a total of 845,300 shares
for total consideration, net of commissions, equal to $339,830.
Further, during 1999, in connection with the private placement to
private investors, the Company issued 610,710 shares in
consideration of $217,590, net of commissions. In addition,
during 1998 and 1999, the Company issued a total of 495,000
shares for legal services, valued at $232,500. The Company
believes that such sales and the issuance of shares for legal
services were at the fair market price/value of the shares at the
respective dates of sale.
As discussed under "Business of the Company; Pending
Acquisition - Letter of Intent" above, in the event that the
Company completes the acquisition of Beeper Boutique, the Company
will have a material commitment for capital expenditures, which
will include cash necessary to fund the operations of Beeper
Boutique and Camera's Etc.
Page 15
The sources of such funds are presently projected to include the
following:investment from private investors, of which the Company
received $363,634 as noted above subsequent to the end of the
year ended December 31, 1999 in consideration for the issuance of
1,494,002 shares of restricted common stock; the planned private
placement to raise capital from investors at terms to be ne-
gotiated; revenues from operations; and institutional financing.
the Company is also dependent upon the issuance of shares for
services of third parties to the Company.
The Company does not know at present the terms and conditions of
further financing from investors or any institutional financing.
However, with respect to the operations of Beeper Boutique, the
current monthly revenues generated by Beeper Boutique are
approximately $305,0000 and its expenses are approximately
$265,000. Further, the operations of Camera's Etc. generated a
small positive cash flow of $2,000 per month.
Assuming the successful completion of the acquisition, in
addition to its obligations to fund the purchase of Beeper
Boutique as set forth above, the Company has agreed to assume the
lease obligations for the ten Beeper Boutique retail stores (See
"Description of Property", Item 2 above) as well as the following
obligations:
Obligations Assumed
All invoices due and payable by Beeper Boutique, dated
May, 2000 or later, and specifically for air time, equipment,
carrier charges, utilities and any miscellaneous expenses
relevant to the day-to-day operations of Beeper Boutique; all
guarantees by Beeper Boutique to customers except for any
obligation for the return of merchandise for 30 days after the
closing date or no later that May 1, 2000; the maintenance of
Beeper Boutique's bank accounts. The Company will assume assets,
which may also be subject to liabilities, such us lease
obligations, inventory and subscribers of the Beeper Boutique.
Beeper Boutique, as noted above, has monthly revenues that exceed
its expenses, and the operations of Beeper Boutique, upon
completion of the acquisition, will cover the obligations
referred to above.
Year 2000
The Year 2000 issue results from certain computer systems
and software applications that use only two digits (rather than
four) to define the applicable year. As a result, such systems
and applications may recognize a date of "00" as 1900 instead of
the intended year 2000, which could result in data
miscalculations and software failures. The Company has conducted
a preliminary assessment of its key computer systems and software
applications and believes they are Year 2000 compliant. The
Company is in the process of communicating with all key
suppliers, financial institutions and customers to identify and
coordinate the resolution of any Year 2000 issues that might
arise. Based on the initial assessment, the Company believes the
cost of addressing the Year 2000 issue should not have a material
impact on the Company's financial position or results of
operations.
Page 16
Item 7. Financial Statements
- ------------------------------
The financial statements for the fiscal years ended December
31, 1999 and 1998, are attached hereto.
Page 17
Item 8. Changes In and Disagreement With Accountants on
Accounting and Financial Disclosure.
- -----------------------------------------------------------
The Company's financial statements for the year ended December
31, 1998 at which date the Company was not a public entity, were
audited by the firm of Hilliard & Smith, P.C., as set forth in the
auditor's report dated February 26, 1999. In a letter to the
Company dated March 24, 2000, the accounting firm of Hilliard &
Smith, P.C. informed the Company that it was resigning from the
engagement and therefore would not perform the audit for the
Company for the year ended December 31, 1999. The accounting firm
of Hilliard & Smith, P.C. informed the Company that they were not
associated with the financial statements prepared by management
for the period ended September 30, 1999 and which were included
in the Company's Form 10-SB/12g. Such interim financial
statements have not been included in this annual report on Form
10-KSB The former accountant's report on the financial
statements were filed with the Form 10-SB/12g without
the accountant's consent. The former accounting firm by letter
dated March 30, 2000 consented to the use of its report dated
February 26, 1999 relating to the financial statements of the
Company for the year ended December 31, 1998 in the Company's
filings with the Securities and Exchange Commission. With regard
to the financial statements for the year ended December 31, 1998,
the Company does not believe that there were not any disagreements
with the former accountants on any matter of accounting principles,
or practices, financial disclosure or auditing scope or procedure.
As a result, the Company retained the accounting firm of Liebman,
Goldberg & Drogin, LLP, 591 Stewart Avenue, Suite 450, Garden
City, NY 11530. The reason for the resignation of the former firm,
Hilliard & Smith, P.C. was reported in the Form 12b-25, Notification
of Late Filing.
Page 18
Part III
Item 9. Directors, Executive Officers, Promoters and
Control Persons.
- ----------------------------------------------------
Directors and Executive Officers
<TABLE>
<S> <S> <C>
Name Age Title
Steven H. Bethke 41 President and Chairman
Jane Ellen Karp 56 Director
Norman George 60 Chief Financial Officer and
Director
</TABLE>
All directors hold office until the next annual meeting of
stockholders of the Company and until their successors have been
elected and shall qualify. Officers serve at the discretion of
the Board of Directors.
Mr. Bethke previously was employed as General Manager of
Houston Telephone and Paging (HT&P), from July, 1995 to
September, 1996. Prior to joining HT&P, he was employed as a
consultant to HT&P from January, 1995 to July, 1995. Prior to
joining HT&P as a consultant, he was employed by Everon America,
Inc. (which is the North American marketing company for Samson
Electronics LTD, a Korean electronics manufacturer, including
paging equipment) as North American Sales Manager from August
1994 to July, 1995. Mr. Bethke was Manager of Indirect
Distribution with MobileComm (a Bell South company) from June
1993 to August 1994. Prior to that time he was employed as
Manager of Distribution for Houston Cellular Telephone Company
from November 1988.
Ms. Karp, a Director, is presently President of Karp
Development Co., Inc., a real estate development concern in
Highland Beach, Florida, involved in the purchase, development,
design, and marketing of residential real estate in the
Northeast. Ms. Karp also sits on several Boards for various
charitable enterprises including Parkinson's Disease and City of
Hope Special Projects.
Mr. George, a Director and Chief Financial Officer of the
Company, was hired as Chief Financial Officer on September 1,
1998. Prior to joining the Company, he was self -employed with
ownership interest in numerous retail companies over the past
twenty-five (25) years. He formerly was employed for 10 years by
Peat, Marwick and Mitchell as a retail consultant. He is a
graduate of the University of Texas with a degree in Finance and
Accounting.
Page19
Item 10. Executive Compensation
- -------------------------------
The information set forth below concerns the compensation to the named
executive officers of the Company for each of the past three years. No executive
officer of the Company has an employment agreement with the Company and the tree
executive officers serve at the discretion of the Board of Directors.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <c <C>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities
Name and Annual Underlaying LTIP All other
Principal Compan- Stock Options/SAR's Payouts Compensation
Position Year Salary($) Bonus($) sation($) Award(s)$ (#) ($) ($)
Steven H.
Bethke 1999 $ 0 0 0 0 0 0
President
, CEO,
Director
Steven H.
Bethke 1998 $60,000 0 0 0 0 0 0
President
, CEO,
Director
Steven H.
Bethke 1997 $55,000 0 0 0 0 0 0
President
, CEO,
Director
Jane
Ellen 1999 0 0 0 0 0 0 0
Karp
Director
Jane
Ellen 1998 0 0 0 0 0 0 0
Karp
Director
Jane
Ellen 1997 0 0 0 0 0 0 0
Karp
Director
Norman
George, 1999 $8,000 0 0 0 0 0 0
CFO and
Director
Norman
George, 1998 0 0 0 0 0 0 0
CFO and
Director
Norman
George, 1997 0 0 0 0 0 0 0
CFO and
Director
</TABLE>
Page 20
Item 11. Security Ownership of Certain Beneficial Owners
and Management
- --------------------------------------------------------
As of April 15, 2000, the security ownership of the
following persons and entities, who were either executive
officers, directors of the Company or were known to the Company
to own more than five percent (5%) of the Company's outstanding
voting securities was as follows:
<TABLE>
<S> <C> <C> <C>
(1) (2) (3) (4)
Title of Name and Address of Amount and Nature Percent
Class Beneficial Owner of Beneficial of
Ownership Class(a)
Common Stock Steven H. Bethke 2,200,000 shares 20.6%
6227 Southwest
Freeway, Houston,TX
Common Stock Jane Ellen Karp 70,000 shares 0.72%
4600 S. Orange
Blvd.
Highland Beach, FL
Common Stock Norman George 250,000 shares 2.6%
11911 Carraige Hill
Dr.
Houston, TX
Common Stock CIT, LLC 700,000 shares 7.2%
Attn: Bonie
Musselwhite
Route 2, Box 51-A,
West, MS
Common Stock Kim T. Peterson 500,000 shares 5.1%
202 Forest Ave.
Post Office Box 547
Kewaskum, WI 53040-
9164
Common Stock Jerry Finberg 1,000,000 shares 10.3%
3102 Ouster Cove
Missouri City, TX
77459
</TABLE>
(a) Based upon 9,720,538 shares issued and outstanding at April
17, 2000.
(b) Mr. Bethke is the Company's president, CEO and chairman. Ms.
Karp is a director and Mr. George is the Company's chief
financial officer and a director.
Item 12. Certain Relationships and Related Transactions
- --------------------------------------------------------
During the fiscal years ended December 31, 1998 and 1997 the
Company had no transactions with related parties. The only
transactions during such years with its officers and directors
include the salary payable to its chief executive officer, Steven
H. Bethke, Norman George, CFO and Director and the issuance of
shares at par value during 1998, prior to the commencement of
trading in the shares, to Mr. Bethke and its director, Ms. Karp,
and Norman George, who also serves as the Company's chief
financial officer.
The Company entered into a signed letter of intent,
dated October 20, 1999 to acquire the assets of Intergo Company
d.b.a. Camera's Etc. Camera's Etc is owned by Kim T. Peterson, a
principal shareholder of the Company and is managed by Norman
George, the Company CFO and a director. Camera's Etc is a local
South Texas company, which specializes in marketing digital
imaging products and services to the oil and gas industry as well
as the medical institutions. See the discussion under
"Description of Business-Pending Acquisition", Item 1 above.
Page 21
The transaction to acquire Camera's Etc. will involve a
stock swap, with the Company issuing to Intergo Company d.b.a.
Camera's Etc 400,000 restricted shares of stock for the stock and
entire assets of Camera's Etc. The Company took over operations
and management of Interco Company d.b.a. Camera's Etc on January
5, 2000 and the final closing is expected before the end of April
2000.
Item 13. Exhibits and Reports on Form 8-K.
- -------------------------------------------
Exhibit No. Document Description
Page
3.1 Articles of Incorporation 42
3.2 Bylaws 48
23 Consents of Independent Public 57
Accountants
Page 22
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this Annual Report on Form 10-KSB
to be signed on its behalf by the undersigned, thereunto duly
authorized.
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
Date: April 14, 2000 By: /s/ Steven H. Bethke,
President
Page 23
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
Table of Contents
Page
Part I Financial Information
Balance Sheet at December 1999 25
Statement of Operations for the year ended December 26
1998 and 1999
Statements of Stockholders Deficit for the year ended 27
December 31, 1999 and 1998
Statements of Cash Flows for the year ended December 28
31, 1999 and 1998
Notes to Financial Statements 29
Page 24
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
Balance Sheet
<TABLE>
<S> <C>
ASSETS
December 31,
Current Assets: 1999
Cash $ 4,962
Accounts receivable 19,912
Inventory 59,939
------
Total current assets 84,813
------
Property and Equipment
Property and Equipment, at cost - net 643,265
-------
Other Assets:
Security deposits 21,739
Acquisition deposits 82,742
Organization expense, at cost - net 3,560
-------
Total other assets 108,041
-------
Total assets $836,119
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current portion of long term debt and $148,106
capital leases
Bank loan payable 110,000
Accounts payable, accrued expenses and 54,722
taxes payable
-------
Total current liabilities 312,828
-------
Long-Term Liabilities:
Loans payable - stockholders' 52,667
Long term debt and capital leases 488,320
-------
Total long-term liabilities 540,987
-------
Total liabilities 853,815
-------
Commitments and Contingencies
Stockholders' Deficit
Common stock, $.01 par value per share,
20,000,000 shares
authorized and 7,133,536 issued and
outstanding 71,335
Additional paid in capital in excess of 625,490
par value
Accumulated deficit (679,521)
Treasury stock (35,000)
-------
Total stockholders' deficit (17,696)
-------
Total liabilities and stockholders'deficit $836,119
========
</TABLE>
The accompanying notes are an integral part of these
financial statements
Page 25
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the year ended December 31,
<TABLE>
<S> <C> <C>
Revenues: 1999 1998
Sales $294,893 $72,225
Cost of Sales:
Purchases 165,654 42,535
------- ------
Gross profit 129,239 29,690
------- ------
Expenses:
Contract labor 300,582 79,831
Professional fees 43,906 30,137
Bad debts 4,700 -
Fees - other 16,714 -
Travel 3,179 -
Insurance 1,012 -
Rent 41,771 12,736
Office expense 13,446 -
Miscellaneous 11,805 17,025
Maintenance costs 4,753 865
Automobile expense 12,292 -
Depreciation 48,491 22,658
Utilities 5,930 -
Telephone 20,215 5,021
Contributions 2,137 -
Advertising 32,286 19,945
Miscellaneous taxes 599 -
Amortization expense 1,017 509
------- -------
Total expenses 564,835 188,727
------- -------
(Loss) from operations (435,596) (159,037)
------- -------
Interest expense - net 37,536 47,007
------- -------
(Loss) before other income and
Provision for income taxes (473,132) (206,044)
Provision for income taxes 345 -
------- -------
Net (loss)
$(473,477) $(206,044)
------- -------
Net (loss) per share of common stock
based upon 4,927,462 and 3,520,800
(weighted average) shares issued,
respectively $ (.10) $ (0.06)
</TABLE>
The accompanying notes are an integral part of these financial
statements
Page 26
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31,
<TABLE>
<S> <C> <C>
Cash Flows from Operating Activities: 1999 1998
Net (loss)
$(473,477) $(206,044)
Adjustment to reconcile net (loss) to net
cash
(used in) operating activities:
Depreciation and amortization expense 49,508 23,167
Common stock issued for services 15,522 26,755
(Increase) in accounts receivable (6,456) (13,456)
(Increase) in inventory (24,331) (35,608)
(Increase) decrease in deposits and 53,184 (57,683)
prepaid expense
(Increase) in security deposits (17,240)
Acquisition deposits (82,742)
Increase in accounts payable, accrued
expenses and taxes payable 42,164 12,558
------ ------
Net cash (used in) operating activities (443,868) (250,311)
------- -------
Cash Flows from Investing Activities:
Purchase of property and equipment 0 (36,838)
Organization costs 0 (5,086)
------- -------
Net cash (used in) investing activities 0 (41,924)
-------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 314,718 347,830
Expenses of stock issuance (8,000)
Decrease in loans payable (54,958)
Purchase of treasury stock 0 (35,000)
Increase in loan payable - 52,667
stockholder
Proceeds from loan payable 27,596 96,212
------ ------
Net cash provided by financing activities $394,981 $346,084
-------- --------
Net increase (decrease) in cash $(48,887) $ 53,849
Cash - January 1, $ 53,849 $ -
-------- --------
Cash - December 31, $ 4,962 $ 53,849
======== ========
Supplemental Disclosures:
Income tax $ - $ -
======= ========
Interest paid $37,536 47,007
======= ========
Supplemental Schedule of Non-Cash
Investing and
Financing Activities:
Property & equipment acquired from capital
leases $ - $677,576
Non-cash issuance of common stock $ 15,522 $ 26,755
======== ========
Total non-cash activities $ 15,522 $704,331
======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements
Page 27
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Capital
Common Stock in Total
Excess of Trea- Stock-
Shares Amount Par sury holder
Value Defict Stock Deficit
Balance - January 1, - $ - $ - $ - $ - -
1998
Issuance of shares to
Company's 2,000,000 20,000 - - - 20,000
president
Issuance of shares 100,000 1,000 - - - 1,000
board members
Issuance of shares to
Company's 200,000 2,000 - - - 2,000
president
Issuance of shares re:
Private placement 845,300 7,553 332,277 - - 339,830
Treasury Stock - - - - (35,000) (35,000)
Issuance of shares for 375,500 3,755 - - - 3,755
services
Net (loss) for the period - - - (206,044) - (206,044)
---------------------------------------------------------
Balance - December 31, 3,520,800 34,308 332,277 (206,044 (35,000)(125,541)
1998
Issuance of shares re: 1,552,200 15,522 - - - (15,552)
services
Issuance of shares 690,400 6,904 - - - 6,904)
Issuance of shares re:
Private placement 1,370,136 14,601 293,213 - - (307,814)
Net (loss) for the (473,477) (473,477)
period
----------------------------------------------------------
Balance - December 31, 7,133,536 $71,335 $625,490 $(679,521)$(35,000)$(17,696)
1999 ==========================================================
</TABLE>
Page 28
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
with
INDEPENDENT AUDITORS' REPORT
Page 29
Independent Auditors' Report
The Board of Directors
Affordable Telecommunications Technology Corporation
(a development stage company)
We have audited the balance sheet of Affordable Te-
lecommunications Technology Corporation (a development stage
company) as of December 31, 1999 and the related consolidated
statements of operations, stockholders' deficit and cash flows for
the two years then ended. These financial statements are the re-
sponsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based
on our audit. The Financial Statements of Affordable Telecommuni-
cations Technlogoy Corporation at December 31, 1998 was audited
by Hilliard & Smith, P.C., whose report dated February 26, 1999
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the 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 financial statements
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Affordable Telecommunications Technology Corporation (a
development stage company) as of December 31, 1999 and the
results of its operations and its cash flows for the two years
then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 2 to the Financial Statements, the Company has a stockholders'
deficit and is dependent upon its ability to continue to raise capi-
tal. The Company has also devoted a significant effort to develop
its retail location and marketing its communication products and
services. These facts raise substantial doubts about its ability to
continue as a going concern. Management's plans in regard to these
matters are described in Note 2.
/s/ Liebman Goldberg & Drogin, LLP
- ----------------------------------
Liebman Goldberg & Drogin, LLP
Garden City, New York
April 17, 2000
Page 30
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 1 - Operations:
Nature of Business:
Affordable Telecommunications Technology Corporation ("the
Company") was incorporated in the State of Texas on July 10,
1997. The Company presently operates a retail store in the
Houston market under the name "The Wireless Store", which store
commenced operations on September 1, 1998. The market for its
telecommunications products and services principally is the Texas
Gulf Coast area.
Note 2 - Summary of Significant Accounting Policies:
Basis of Presentation:
The accompanying financial statements are presented in conformity
with generally accepted accounting principles.
Going Concern:
The Company's financial statements are prepared in conformity with
generally accepted accounting principles, which contemplates contin-
uation of the Company as a going concern. The Company incurred a net
loss for the year ended December 31, 1999 of $473,477. The Company
has a deficit net worth of $17,396. These factors create uncertainty
whether the Company can continue as a going concern. Management
plans include rainsing additional capital through the issuance of
common stock, the two planned acquisitions discussed in Note 10 and
increased sales at its current location. The Company's ability to
continue as a going concern is dependent upon the implementation and
success of these plans. The financial statements do not include any
adjustment in the event that the Company is unable to continue as
a going concern.
Development Stage Activity and Operations:
During 1998, the Company was in development stage activity. Since
the Company now has continuing business revenues, financial infor-
mation does not include losses accumulated during the development
stage period.
Page 31
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 2 - Summary of Significant Accounting Policies (Continued):
Inventory:
Inventory is valued at the lower of cost (first-in, first-out
method) or market. In determining market value, allowances for
excess and obsolete items are provided. Cost was determined using
the average cost method. All items included in inventory at
December 31, 1999 are goods purchased for resale.
Earnings Per Share:
The Company adopted Financial Accounting Standards Board (FASB)
Statement No. 128, "Earnings per Share". The statement
established standards for computing and presenting earnings per
share (EPS). It replaced the presentation of primary EPS with a
presentation of basic EPS and also requires dual presentation of
basic and diluted EPS on the face of the income statement. Basic
loss per share was computed by dividing the Company's net loss by
the weighted average number of common shares outstanding during
the period. The weighted average number of common shares used
to calculate loss per common share during 1999 and 1998 was
4,927,462 and 3,520,800 respectively.
Property and Depreciation:
Property and equipment are stated at cost. Improvements or
betterments of a permanent nature are capitalized. Routine
maintenance and repairs are expensed as incurred. The Company in
1998 also acquired property under capital leases as described in
Note 3. Depreciation is provided using the straight-line method
over the estimated useful lives of the assets, ranging from 3 to
20 years. Depreciation for 1999 and 1998 totaled $48,491 and
$22,658 respectively.
The carrying amount of long-life assets is reviewed periodically.
If the asset carrying amount is not recoverable, the asset is
considered to be impaired and the value is adjusted.
Advertising Costs:
Advertising costs are expenses as incurred and were $32,286 and
$19,945 in 1999 and 1998 respectively.
Page 32
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 2 - Summary of Significant Accounting Policies (Continued):
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 reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those amounts.
Fair Value of Financial Instruments:
SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments", requires disclosure of the fair value information,
whether or not recognized in the balance sheet, where it is
practicable to estimate that value. The carrying value of cash,
cash equivalents, accounts receivable and notes payable
approximates fair value.
Revenue Recognition:
Presently, the Company's revenues are generated from the sale of
communication products from its retail location. The Company
also has capital leases on paging/communications equipment at
various locations within the Houston, Texas area and sells the
paging and communications services on a time billed basis. Most
of its revenues are derived from the sale of equipment and the
marketing of third party contracts for wireless services.
Loans Payable - Officers
The Company has received various advances from officers of the Com-
pany during the year totalling $52,667. Repayment is due in 2001
with interest to be computed at a future date. These loans may be
prepaid through the issuance of the Company's common stock.
Note 3 - Property, Equipment and Capital Leases:
The Company is the lessee of assets under capital leases expiring
in various years through 2003. The assets and liabilities under
capital leases are recorded at the lower of the present value of
the minimum lease payments or the fair value of the asset. The
assets are depreciated over the lower of their related lease
terms or their estimated productive lives.
Page 33
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 3 - Property, Equipment and Capital Leases (Continued):
Following is a summary of property held under capital leases, all
of which are stated at the fair value of the asset:
<TABLE>
<S> <C>
Seven 900 MHZ Base Station 300W Sysyems $ 652,012
Computer equipment 13,800
Fixtures and office furniture 24,144
Telephone equipment 6,035
Improvements 18,424
------
714,415
Less: accumulated depreciation 71,150
-------
Total $643,265
=======
</TABLE>
Minimum future lease payments remaining under capital leases as
of December 31, 1999 for each of the next five years and in the
aggregate are:
For the year ending December 31,
<TABLE>
<S> <C>
2000 $ 195,482
2001 189,935
2002 182,169
2003 60,723
Total minimum lease payments 628,309
Less: amount representing interst (105,202)
-------
Present value of net minimum lease payments $523,107
=======
</TABLE>
Page 34
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 3 - Property, Equipment and Capital Leases (Continued):
Interest rates on capitalized leases are 10.75% and are imputed
based on the lower of the Company's incremental borrowing rate at
the inception of each lease or the lessor's implicit rate of
return. In all instances, the Company's incremental borrowing
rate was used.
The leases contain the following provisions:
At the end of the initial five-year term, the lease for the seven
base stations allows the equipment to be purchased for $1.00 with
90 day written notice.
At the end of the initial three year term, the lease for computer
equipment, fixtures and office furniture contain three options:
(1) purchase of the equipment at market value, (2) return of the
equipment in good working order, (3) continuing rent at 50% of
the current rate.
At the end of the initial three-year term, the lease for
telephone equipment states that the Company is to return the
equipment to the lessor in good working order.
Notes 4 - Long-Term Debt:
Long-term debt consists of the following:
Due to Bank $ 110,000
Due in monthly installments of $540, interest included
at 10.75%, payable through August 2003, collateralized
by inventory, accounts receivable and equipment $15,220
Due in monthly installments of $482 interest included,
payable through September 30, 2003 $17,569
Page 35
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Notes 4 - Long-Term Debt (Continued):
<TABLE>
<S> <C>
Due in monthly installments of
$272 capital lease payment,
interest included, payable
through August 2001 for
telephone equipment 4,189
Due in monthly installments of
$15,181 capital lease payment,
interest included, payable
through June 2003 for seven 900
MHZ Base Station 300W Systems 524,006
Due in monthly installments of
$837 capital lease payment,
interest included, payable
through August 2001 for
computers, fixtures and
equipment 12,496
Due in monthly installments of
$1,621, interest included at
10.75%, payable through October
2003, collateralized by
inventory, accounts receivable
and equipment 62,946
-------
Total 636,426
Less: current maturities (148,106)
-------
Long-term debt $ 488,320
=======
</TABLE>
Annual maturities of long-term debt are as follows:
For the year ending December 31:
<TABLE>
<S> <C>
2000 $148,106
2001 163,864
2002 173,866
2003 150,590
-------
Total $636,426
</TABLE>
=======
Page 36
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 5 - Common Stock:
The Company is authorized to issue and sell up to 20,000,000
shares of common stock at an amount fixed by the board but at no
time less than par value which is currently set at $.01 per
share. Dividends may be declared and paid at the discretion of
the Company's Board of Directors. No dividends have been
declared in 1999.
The Company sold 845,300 shares of common stock through a
confidential private placement memorandum dated February 9,
1998. The memorandum was made pursuant to Regulation D, Rule
504 of the Securities and Exchange Commission and similar
limited offering exemptions provided by state laws to a limited
number of investors who meet the investor suitability standards
which were described in the document. The funds received from
the memorandum were designated for working capital and marketing
expense. The memorandum's deadline has been extended through
August 9, 1999.
At December 31, 1999, the Company had outstanding warrant to
purchase up to 500,000 shares of the Company's stock at $1.25
per share. The warrants can be exercised at any time up to June
2001.
Page 37
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 6 Income Taxes:
The tax benifit for the years ended December 31, 1999 and 1998
consists of the following componets:
<TABLE>
Years Ended December 31
<S> <C> <C>
Current
1999 1998
Federal $ - $ -
State - -
Deferred
Federal (160,580) (69,953)
State (1,183) -
------- ------
$(161,763) $(69,953)
========= ========
</TABLE>
The income tax (benefit) for the year does not bear the expected
relationship between pretax loss and federal corporate income tax
rate of 34% because of the effect of state and local income taxes
and the fact that certain other expenses are not deductible for
income tax purposes.
The reconciliation between the actual and expected federal tax
are as follows:
<TABLE>
Years Ended December 31
<S> <C> <C>
1999 1998
Federal corporate tax rate
of 34% applied to pretax (loss) $(160,982) $(69,953)
State and local income taxes, net
of federal income tax benefit (781) -
Effect of other non-deductible
expenses 50 -
------- -----
$(161,763) (69,953)
======== ======
</TABLE>
Defered income taxes as reported on the balance sheet consists
of:
<TABLE>
Year Ended December 31,
<S> <C> <C>
1999 1998
Deferred tax assets $161,763 $69,953
Deferred tax liabilities - -
Valuation allowance (161,763) $ -
------- ------
$ - $ -
</TABLE>
Deferred tax asset balances consist principally of the following:
<TABLE>
Year Ended December 31,
<S> <C> <C>
1999 1998
Net operating loss carryforwards $473,477 $205,744
======== ========
</TABLE>
Under Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"), deferred income
taxes reflect the net tax effects of temporary differences
between carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
The significant components of the Company's deferred tax
liability as of December 31, 1999 would be the timing difference
between depreciation for financial reporting purposes and
depreciation for tax purposes.
No deferred tax asset or liability provision if required at
December 31, 1999.
Note 7 - Deposit and prepaid Expense:
At December 31, 1998, the Company made payment of $50,000 to
their attorney for fees and expenses to go public as described
in Note 5.
Note 8 - Organizational Costs:
Organizational costs consist of miscellaneous expenses incurred
during the start-up of the Company totaling $5,086. These costs
will be amortized over a five-year period. Amortization expense
for 1999 and accumulated amortization as of December 31, 1999
are $509, respectively.
Note 9 - Commitments and Contingencies:
The Company is in its development stage as it has limited operating
history, has not generated significant revenues and has an accumulat-
ed deficit. The Company has devoted a significant amount of its
effort to develop its retail location and marketing and wireless
communication products and services. There can be no assurance that
the Company will be able to successfully market its services or gener-
ate significant revenues to operate profitably.
The predecessor accounting firm resigned from performing the audit for
the Company for 1999. They were unwilling to be associated with finan-
cial statements prepared by management for September 30, 1999. The
auditor's report included with the Form 10-SB filing by the Company
on November 9, 1999 incorrectly reported that the September 30, 1999
financial statements were audited when the financial statements were
unaudited. The Company believes that this was an innocent error and
the financial statements for September 30, 1999 were correct in sub-
stance except for the error.
Contractual Agreement:
In 1998, the Company entered into a joint venture agreement with
Link2 for wireless service. Under the agreement, the Company is
to provide retail locations and staff for pager service. Link2
is to provide the network operating system service, installation
and maintenance service for the infrastructure, all FCC legal
license service and satellite linking service. Revenue under
this agreement is to be shared equally. No revenue under this
agreement has been recognized in 1998.
Page 38
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 9 - Commitments and Contingencies:
Contractual Agreement:
The Company has entered into a resale contract with Spring PCS
in which 350 phones per quarter are to be ordered. In addition,
the Company has agreed to market and sell only the Spring PCS
product and not any other wireless PCS telecommunication product
or service.
Additionally, the Company has an agreement with GTE Wireless to
market and sell prepaid analog cellular telephone service.
Operating Lease:
The Company leases office space under an operating lease
expiring in 2003. The lease is subject to escalation clauses
for increases in the lessor's operating costs.
Minimum future rental payments under his non-cancelable
operating lease at December 31, 1999 are summarized as follows:
For the year ending December 31:
<TABLE>
<S> <C>
2000 $ 38,208
2001 39,163
2002 40,500
2003 23,625
-------
Total minimum rental payments $ 141,496
=======
</TABLE>
Rental expense for the year ended December 31, 1999 was $41,771.
Page 39
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 10 - Subsequent Event(Unaudited) Not Covered by Independent
Auditor's Report:
The Company signed a letter of intent on to acquire the assets
of Beeper Boutique, Ltd. for $1,460,000. The assets include
store leases, inventory and equipment of ten store locations.
The Company also agreed to assume up to $150,000 of liabilities.
In connection with the acquisition, the Company gave a deposit
of $25,000 and an extension fee payment of $35,000. Both of
these payments are non-refundable. Subject to final due
diligence, the Company anticipates completing the acquisition by
May 31, 2000. The acquisition includes the issuance of
1,250,000 restricted shares and additional payments of cash
compensation together with or in lieu of shares.
The Company has signed a letter of intent to acquire the assets
of Intergo Company d/b/a Cameras Etc. (retail store) from a prin-
cipal shareholder. Additionally,the chief financial officer is
the manager of the store. The Company took over operations in
January, 2000 and expects to complete the acquisition in April,
2000. All the assets will be acquired for 400,000 shares of
restricted stock. Additionally, during November and December
1999, the Company advanced $22,742 towards the operations of
Intergo.
Between January 1, 2000 and April 8, 2000, the Company issued
2,584,002 shares of common stock. The shares issued included
1,090,000 shares for services rendered and to be rendered and
1,494,002 shares to private investors for $363,634. Included in
shares issued for services were 950,000 shares to two non-related
consulting companies.
Page 40
EXHIBIT 3.1
Page 41
The State of Texas
Secretary of State
CERTIFICATE OF AMENDMENT
FOR
AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION
CHARTER NUMBER 014752379
THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS,
HEREBY CERTIFIES THAT THE ATTACHED ARTICLES OF AMENDMENT FOR THE
ABOVE NAMED ENTITY HAVE BEEN RECEIVED IN THIS OFFICE AND ARE
FOUND TO CONFORM TO LAW.
ACCORDINGLY THE UNDERSIGNED, AS SECRETARY OF STATE, AND BY VIRTUE
OF THE AUTHORITY VESTED IN THE SECRETARY BY LAW, HEREBY ISSUES
THIS CERTIFICATE OF AMENDMENT.
DATED DECEMBER 23, 1998
EFFECTIVE DECEMBER, 23 1998
Alberto R. Gonzales, Secretary of State
Page 42
STATF OFTEXAS
ARTICLES OF INCORPORATIOIN
pursuant to article 3.02
Texas Business Corporation Act
1. Name of Corporation: AFFORDABLE TELECOMMUNICATIONS
TECHNOLOGY CORPORATION
2. Period of the Corporation will be in perpetuity.
3, AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION will
engage in the lawful business of distributing and selling various
telecommunications technology, both retail and wholesale.
4. AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORPORATION is
authorized to issue 3,000,000 shares of class "A" common stock at
a par value of 0.01 (one) cent each.
5. The Corporation will not commence business until it has
received for the issuance of its shares consideration of value of
a stated sum which shall be at least one thousand dollars
($1000), consisting of money, labor done, or property actually
received.
6. The "registered agent" of the Corporation is Jerry Finberg.
The "registered office" is located at 4526 Sunburst, Bellaire,
Texas 77401
The Corporation will have two directors.
Steven H. Bethke Jerry Finberg
5935 Rutherglem 4526 Sunburst
Houston, Tx 77096 Bellaire, Tx 77401
The incorporator of AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY
CORPORATION
Is:
Jerry Finberg
4526 Sunburst
Bellaire, Tx 77401
Signed this 10th date of July, 1997 by
Jerry Finberg
Page 43
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following
articles of amendment to its articles of incorporation:
ARTICLE I
The name of the corporation is AFFORDABLE TELECOMMUNICATIONS
TECHNOLOGY CORPORATION, a corporation.
ARTICLE 11
The following amendments to the articles of incorporation were
adopted by the majority of the Directors of the corporation on
December 31,1999. No shares were issued as of said date.
4. Affordable Telecommunications Technology Corporation is
authorized to issue 3,000,000 shares of class "A" common stock at
a par value of 0.01 (one) cent each.
The amendment alters or changes number 4 of the original Articles
of Incorporation and the full text of each provision altered is
as follows:
"Affordable Telecommunications Technology Corporation is
authorized to issue 20,000,000 shares of common stock at a par
value of .01 (one) cent each."
6. The "registered agent" of the Corporation is Jerry Finberg.
The "registered office" is located at 6227 Southwest Freeway,
Houston, Texas 77074.
The amendment alters or changes number 6 of the original Articles
of Incorporation and the full text of each provision altered is
as follows:
"The "registered agent" of the Corporation is Steven H. Bethke.
The "registered office" is located at 6227 Southwest Freeway,
Houston, Texas 77074.
DATED this 21st day of December 1998.
AFFORDABLE TELECOMMUNICATIONS
TECHNOLOGY CORPORATION
By:_________________________
/s/ its Authorized Officer
STATE OF TEXAS
COUNTY OF HARRIS
Page 44
On this 21st day of December, 1998, personally appeared
STEVEN H. BETHIKE, Authorized Officer, known to me to be the
person who executed the foregoing ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION and acknowledged to me that he executed
the same for the purposes therein expressed.
Notary Public in and for the State of TEXAS
OFFICE OF
BEVERLY B. KAUFMAN
COUNTY CLERK
HARRIS COUNTY, TEXAS
This is to acknowledge receipt of certificate of operation under
Assumed Name which was filed in my
office for THE WIRELESS STORE
under the file number as shown on the cash register validation
above, and indexed in the Assumed Name Records as prescribed by
law.
The certificate shows AFFORDABLE TELECOMMUNICATIONS TECHMOLOCY
CORP.
to be the owner(s) of said business.
The period (not to exceed 10 years) during which the assumed name
will be used is shown as TEN YEARS
Whenever there is a change of ownership, a withdrawal certificate
shall be executed and duly acknowledged by the person or persons
so withdrawing from or disposing of their interest in said
business. Until such certificate has been filed, they shall
remain liable for all debts incurred in the operation of said
business.
Beverly B. Kaufman,
County Clerk, Harris County
____________________________
CHERYL D. KINDELL Deputy
Page 45
OFFICE OF
BEVERLY B. KAUFMAN
COUNTY CLERK
HARRIS COUNTY, TEXAS
This is to acknowledge receipt of certificate of operation under
Assumed Name which was filed in my office for
CAMERAS THE WIRELESS STORE,
under the file number as shown on the cash register validation
above, and indexed in the Assumed Name Records as prescribed by
law.
The certificate shows
AFFORDABLE TPLFCOMMUNICATION TECHNOLOGY CORPORATION
to be the owner(s) of said business.
The period (not to exceed 10 years) during which the assumed name
will be used is shown as MARCH 7, 2000 through MARCH 7, 2010.
Whenever there is a change of ownership, a withdrawal certificate
shall be executed and duly acknowledged by the person or persons
so withdrawing from or disposing of their interest in said
business. Until such certificate has been filed, they shall
remain liable for all debts incurred in the operation of said
business.
Beverly B. Kaufman
County Clerk, Harris County
___________________________
LEE F. Deputy
Page 46
Exhibit 3.2
Page 47
Bylaws
Of
Affordable Telecommunications Technology Corporation
adopted July 15, 1997
Page 48
BYLAWS
OF
Affordable Telecommunications Technology Corporation
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Texas
shall be located in Houston County of Harris. The Corporation may
have such other offices, either within or without the State of
Texas, as the Board of Directors may designate or as the business
of the Corporation may require from time to time.
ARTICLE II
SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders
shall be held on the is 15 day in the month of July in each year,
beginning with the year 1999, at the hour of one p.m., for the
purpose of electing Directors and for the transaction of such
other business as may come before the meeting. If the day fixed
for the annual meeting shall be a legal holiday in the State of
Texas, such meeting shall be held on the next succeeding business
day. If the election of Directors shall not be held on the day
designated herein for any annual meeting of the shareholders, or
at any adjournment thereof, the Board of Directors shall cause
the election to be held at a special meeting of the shareholders
as soon thereafter as conveniently may be.
SECTION 2. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by the President or by the
Board of Directors, and shall be called by the President at the
request of the holders of not less than Fifty percent (50%) of
all the outstanding shares of the Corporation entitled to vote at
the meeting.
SECTION 3. Place of meeting. The Board of Directors may designate
any place, either within or without the State of Texas, unless
otherwise prescribed by statute, as the place of meeting for any
annual meeting or for any special meeting. A waiver of notice
signed by all shareholders entitled to vote at a meeting may
designate an place, either within or without the State of Texas
unless otherwise prescribed by statute, as the place for the
holding of such meeting. If no designation is made, the place of
meeting shall be the principal office of the Corporation.
SECTION 4. Notice of meeting. Written notice stating the place
day and hour of the meeting and, in case of a special meeting,
the purpose or purposes for which the meeting is called, shall
unless otherwise prescribed by statute, be delivered not less
than (five) 5 nor more than (thirty) 30 days before the date of
the meeting, to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to
the shareholder at his address as it appears on the stock
transfer books of the Corporation, with postage thereon prepaid.
For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be
closed for a stated period, but not to exceed in any case fifty
(50) days.
Page 49
If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a
meeting of shareholders such books shall be closed for at least
(thirty) 30 days immediately preceding such meeting. In lieu of
closing the stock transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination
of shareholders, such date in any case to be not more than
(twenty) 20 day's and, in case of a meeting of shareholders, not
less than (twenty) 20 days, prior to the date on which the
particular action requiring such determination of shareholders is
to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or
shareholders entitled to receive payment of a dividend, the date
on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has
been made as provided in this section, such determination shall
apply to any adjournment thereof.
SECTION 6. Voting Lists. The officer or agent having charge of
the stock transfer books for shares of the Corporation shall make
a complete list of the shareholders entitled to vote at each
meeting of shareholders or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares
held by each. Such list shall be produced and kept open at the
time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the
meeting for the purposes thereof.
SECTION 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders. If less
than a majority of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the
meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by
the shareholder or by his or her duly authorized attorney-in-
fact. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. A meeting of
the Board of Directors may be held by means of a telephone
conference or similar communications equipment by which all
persons participating in the meeting can hear each other and
participation in a meeting under such circumstances shall
constitute presence at the meeting.
SECTION 9. Voting of shares. Each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to
a vote at a meeting of shareholders.
SECTION 10. Voting of shares by Certain Holders. Shares standing
in the name of another Corporation may be voted by such officer,
agent or proxy as the Bylaws of such Corporation may prescribe
or, in the absence of such provision, as the Board of Directors
of such Corporation may determine.
Shares held by an administrator, executor, guardian or
conservator may be voted by him either in person or by proxy,
without a transfer of such shares into his name. Shares standing
in the name of a trustee may be voted by him, either in person or
by proxy, but no trustee shall be entitled t vote shares held by
him without a transfer of such shares into his name. Shares
standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into his
name, if authority to do so be contained in an appropriate order
of the court by which such receiver was appointed.
Page 50
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name
of the pledgee, and thereafter the pledgee shall be entitled to
vote the shares so transferred. Shares of its own stock belonging
to the Corporation shall not be voted directly or indirectly,
that any meeting, and shall not be counted in determining the
total number of outstanding shares at any given time.
SECTION 11. Informal Action by shareholders, unless otherwise
provided by law, any action required to be taken at a meeting of
the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect
to the subject matter thereof.
ARTICLE III
BOARD OF DTRECTORS
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number of
directors of the Corporation shall be fixed by the Board of
Directors, but in no event shall be less than three (3). Each
director shall hold office until the next annual meeting of
shareholders and until his successor shall have been elected and
qualified.
SECTION 3. Regular meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw
immediately after, and at the same place as, the annual meeting
of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional
regular meetings without notice other than such resolution.
SECTION 4. Special meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or
any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix the place for
holding any special meeting of the Board of Directors called by
them.
SECTION 5. Notice. Notice of any special meeting shall be given
at least one (1) day previous thereto by written notice delivered
personally or mailed to each director at his business address, or
by telegram if mailed such notice shall be deemed to be delivered
when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any directors may waive
notice of any meeting. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where
a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 6. Quorum. A majority of the number of directors fixed by
section 2 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors,
but if less than such majority is present at a meeting, a
majority of the directors present may adjourn the meeting from
time to time without further notice.
SECTION 7. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors.
Page 51
SECTION 8. Action without a meeting. Any action that may be taken
by the Board of Directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so to
be taken, shall be signed before such action by all of the
directors.
SECTION 9. Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum of the Board of
Directors, unless otherwise provided by law. A director elected
to fill a vacancy shall be elected for the unexpired term of his
predecessor in office. Any directorship to be filled by reason of
an increase in the number of directors may be filled by election
by the Board of Directors for a term of office continuing only
until the next election of directors by the shareholders.
SECTION 10. Compensation. By resolution of the Board of
Directors, each director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors, and may be
paid a stated salary as a director or a fixed sum for attendance
at each meeting of the Board Of Directors or both. No such
payment shall preclude any director from serving the Corporation
in any other capacity and receiving compensation therefore.
SECTION 11. Presumption of Assent. A director of the Corporation
who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be authorized to be
executed, except in cases where the signing and execution thereof
shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the Corporation or
shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Board
of Directors from time to time.
SECTION 12. Vice President. In the absence of the president or in
event of his death, inability or refusal to act the vice
President shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the
restrictions upon the President. The vice President shall perform
such other duties as from time to time may be assigned to him by
the President or by the Board of Directors. If there is more than
one vice President, each vice President shall succeed to the
duties of the President in order of rank as determined by the
Board of Directors. If no such rank has been determined, then
each vice President shall succeed to the duties of the President
in order of date of election, the earliest date having the first
rank.
SECTION 13. Secretary. The secretary shall: (a) keep the minutes
of the proceedings of the shareholders and of the Board of
Directors in one or more minute books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal o the
Corporation and see that the seal of the Cor- oration is affixed
to all documents, the execution of which on behalf of the
Corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which
shall be furnished to the secretary by such shareholder; (e) sign
with the President certificates for shares of the Corporation,
the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock
transfer books of the Corporation; and (g) in general perform all
duties incident to the office of the secretary and such other
duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Page 52
SECTION 14. Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
Corporation; (b) receive and give receipts for moneys due and
payable to the Corporation from any source whatsoever, and
deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected
in accordance with the provisions of Article VI of these Bylaws;
and (c) in general perform all of the duties incident to the
office of Treasurer and such other duties as from time to time
may be assigned to him by the President or by the Board of
Directors. If required by the Board of Directors, the Treasurer
shall give a bond for the faithful discharge of his duties in
such sum and with such sureties as the Board of Directors shall
determine.
SECTION 15. Salaries. The salaries of the officers shall be fixed
from time to time by the Board of Directors, and no officer
presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as
the Secretary of the meeting before the adjournment thereof, or
shall forward such dissent by registered mail to the secretary of
the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor Of such action.
ARTICLE IV
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a
President, one or more vice Presidents, a secretary and a
Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the Board of
Directors, including a Chairman of t e Board. In its discretion,
the Board of Directors may leave unfilled for any such period as
it may determine any office except those of President and
Secretary. Any two or more offices may be held by the same
person, except for the offices of President and Secretary which
may not be held by the same person. Officers may be directors or
shareholders of the Corporation.
SECTION 2. Election and Term of Office. The officers of the
Corporation to be elected by the Board of Directors shall be
elected annually by the Board of Directors at the first meeting
of the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his
successor shall have been dully elected and shall have qualified,
or until his death, or until he shall resign or shall have been
removed in the manner hereinafter provided.
SECTION 3. Removal. Any officer or agent may be removed by the
Board of Directors whenever, in its judgment, the best interests
of the Corporation will be served thereby, but such removal shall
be with out prejudice to the contract rights, if any, of the
person so removed. Election of appointment of an officer or agent
shall not of itself create contract rights, and such appointment
shall be terminable at will.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be
filled by the Board of Directors for the unexpired portion of the
term.
SECTION 5. President. The President shall be the principal
executive officer of the Corporation and, subject to the control
of the Board of Directors, shall in general supervise and control
all of the business and affairs of the Corporation. He shall when
present, preside at all meetings of the shareholders and of the
Board of Directors, unless there is a Chairman of the Board, in
which case the Chairman shall preside.
Page 53
He may sign, with the Secretary or any other proper officer of
the Corporation thereunto authorized by the Board of Directors,
certificates for shares of the Corporation any deeds, mortgages,
bonds, contracts, or other instruments which the Board of
Directors has shall be prevented from receiving such salary by
reason of the fact that he is also a director of the Corporation.
ARTICLE V
INDEMNITY
The Corporation shall indemnify its directors, officers and
employees as follows:
(a) Every director, officer, or employee of the Corporation shall
be indemnified by the Corporation against all expenses and
liabilities, including counsel fees, reasonably incurred by or
imposed upon him in connection with any proceeding to which he
may become involved, by reason of his being or having been 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 the Corporation partnership, joint
venture trust or enterprise, or any settlement thereof, whether
or not he is a director, officer, employee or agent at the time
such expenses are incurred, except in such cases wherein the
director, officer or employee is adjudged guilty of willful
misfeasance or malfeasance in the performance of his duties;
provided that in the event of a settlement the indemnification
herein shall apply only when the Board of Directors approves such
settlement and reimbursement as being for the best interests of
the Corporation.
(b) The Corporation shall provide to any person who 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 the Corporation, partnership, joint
venture, trust or enterprise, the indemnity against expenses of
suit, litigation or other proceedings which is specifically
permissible under applicable law.
(c) The Board of Directors may, in its discretion, direct the
purchase of liability insurance by way of implementing the
provisions of this Article V.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract
or execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or
confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in
its name unless authorized by a resolution of the Board of
Directors. Such authority may be general or confined to specific
instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the Corporation, shall be
signed by such officer or officers, agent or agents of the
Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of
the Corporation in such banks, trust companies or other
depositories as the Board of Directors may select.
Page 54
ARTICLE VII
CEPTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing
shares of the Corporation shall be in such form as shall be
determined by the Board of Directors.Such certificates shall be
signed by the President and by the Secretary or by such other
officers authorized by law and by the Board Of Directors so to
do, and sealed with the corporate seal. All certificates for
shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation.
All certificates surrendered to the Corporation for transfer
shall be cancelled and no new certificate shall be issued until
the former certificate for a like number of shares shall have
been surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued
therefore upon such terms and indemnity to the Corporation as the
Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the
Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of the
Corporation and on surrender for cancellation of the certificate
for such shares. The person in whose name shares stand on the
books of the Corporation shall be deemed by the Corporation to be
the owner thereof for all purposes. Provided, however, that upon
any action undertaken by the shareholders to elect S Corporation
status pursuant to Section 1362 of the Internal Revenue Code and
upon any shareholders agreement thereto restricting the transfer
of said shares so as to disqualify said S Corporation status,
said restriction on transfer shall be made a part of the Bylaws
so long as said agreement is in force and effect.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st day of
January and end on the 31st day of December of each year.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provide by law and its
Articles of in Corporation.
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of
the Corporation and the state of in Corporation and the words,
"Corporate Seal."
Page 55
ARTICLE XI
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the
Corporation under the provisions of these Bylaws or under the
provisions of the Articles of InCorporation or under the
provisions of the applicable Business Corporation Act, a waiver
thereof in writing signed by the person or persons entitled to
such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws
may be adopted by the Board of Directors at any regular or
special meeting of the Board of Directors.
The above Bylaws are certified to have been adopted by the Board
of Directors of the Corporation on the 15 day of July 1997.
/s/ ____________________
Jerry Finberg - Secretary
Page 56
Exhibit 23
Consent of Lieberman, Goldberg & Drogin, LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use of our audit dated April 17, 2000 related to
the financial statements of Affordable Telecommunications Technology
Corporation for the year ended December 31, 1999 in the Annual Report on
Form 10-KSB.
/s/ Liebman, Goldberg & Drogin, LLP
- -------------------------------------
Liebman, Goldberg & Drogin, LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 4,962 53,849
<SECURITIES> 0 0
<RECEIVABLES> 19,912 13,456
<ALLOWANCES> 0 0
<INVENTORY> 59,939 35,608
<CURRENT-ASSETS> 84,813 156,087
<PP&E> 643,265 714,415
<DEPRECIATION> 48,491 22,658
<TOTAL-ASSETS> 836,119 856,929
<CURRENT-LIABILITIES> 312,828 144,424
<BONDS> 0 0
0 0
0 0
<COMMON> 71,335 34,308
<OTHER-SE> 625,490 332,227
<TOTAL-LIABILITY-AND-EQUITY> 836,119 856,929
<SALES> 294,893 72,225
<TOTAL-REVENUES> 294,893 72,225
<CGS> 165,654 42,535
<TOTAL-COSTS> 165,654 42,535
<OTHER-EXPENSES> 564,835 188,727
<LOSS-PROVISION> (435,596) (159,037)
<INTEREST-EXPENSE> 37,536 47,007
<INCOME-PRETAX> (473,123) (206,044)
<INCOME-TAX> 345 0
<INCOME-CONTINUING> (473,123) (206,044)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (473,123) (206,044)
<EPS-BASIC> (.10) (.06)
<EPS-DILUTED> (.10) (.06)
</TABLE>
