UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
( X ) Quarterly report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934.
For the quarterly period ended March 31, 2000.
( ) Transition report pursuant to Section 13 or 15(d) of the Exchange
Act for the transition period from _____
____________ to ____________ .
Commission File Number: 333-72097
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
-----------------------------------------
(Exact name of registrant as specified in charter)
Nevada 74-2897368
(State of Incorporation) (I.R.S.Employer I.D. No)
7103 Pine Bluffs Trail, Austin, TX 78729
(Address of Principal Executive Offices)
(512) 249-2344
--------------
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES ( X ) NO ( )
Indicate the number of shares outstanding of each of the issuer's classes of
stock as of April 30, 2000.
18,192,888 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
<PAGE>
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets as of March 31, 2000 and December 31, 3
1999.....................................
Statements of Operations for the three months ended
March 31, 2000 and 1999................... 4
Statement of Stockholders' Equity (Deficit) for the three months
ended March 31, 2000...................... 5
Statements of Cash Flows for the three months ended
March 31, 2000 and 1999................... 6
Notes to Financial Statements............. 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..................... 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................ 13
Item 2. Changes in Securities.................................... 13
Item 3. Defaults Upon Senior Securities.......................... 13
Item 4. Submission of Matters to a Vote of Securities Holders.... 13
Item 5. Other Information........................................ 13
Item 6. Exhibits and Reports on Form 8-K......................... 13
Signatures
<PAGE>
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
March 31,
2000 December 31,
(Unaudited) 1999
-------------- ------------
ASSETS
CURRENT ASSETS
Cash $ 4,671 $ 43,613
Accounts receivable, net of allowance for
doubtful accounts of 29,022 and $25,500, respectively 41,404 70,226
-------------- ------------
Total Current Assets 46,075 113,839
-------------- ------------
Fixed assets, at cost, net of accumulated
depreciation of $3,400 and $150, respectively 35,115 3,986
Licenses, at cost, net of accumulated amortization
of $28,700 and $18,000, respectively 186,300 197,000
-------------- ------------
$ 267,490 $314,825
============== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 22,500 $ 24,147
Cap. Lease Payable - Current 11,460 -
Accrued Expenses 257,827 247,769
Shareholder Advances 25,000 -
------------ ------------
Total Current Liabilities 316,787 271,916
COMMITMENTS AND CONTINGENCIES
Capital Leases Obligation - Long Term 20,054 -
------------ ------------
Total Liabilities 336,841 271,916
------------ ------------
STOCKHOLDERS' DEFICIT
Common stock; authorized 30,000,000 nopar
common shares; 18,130,888 and 17,917,420
shares issued and outstanding, respectively 572,822 519,455
Deficit accumulated during the development stae (642,173) (476,546)
-------------- ------------
Total Stockholders' Deficit (69,351) 42,909
-------------- ------------
$267,490 $314,825
============== ============
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
<PAGE>
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
From Inception
On October 29,
Three-Months Three-Months 1998
Ended Ended Through
March 31, 2000 March 31,1999 March 31, 2000
---------------- --------------- ---------------
REVENUE
Revenues $126,165 $ - $ 516,564
Cost of goods sold 53,067 - 256,316
---------------- --------------- ---------------
Gross Profit 73,098 - 260,248
---------------- --------------- ---------------
EXPENSES
General and administrative 203,738 99,048 779,316
Sales and marketing 35,633 - 125,414
---------------- ---------------- ---------------
Total Expenses 239,371 99,048 904,730
---------------- ---------------- ---------------
Other Income (Expense) 646 - 2,309
---------------- --------------- ---------------
Net loss before provision for
income taxes (165,627) (99,048) (642,173)
Provision for income taxes - - -
---------------- --------------- ---------------
NET LOSS $(165,627) $(99,048) $(642,173)
================ ================ ===============
Weighted Average Loss Per Share
Basic and Diluted $ (0.01) $ (0.01)
================ ===============
Weighted Average Shares
Outstanding
Basic and Diluted 18,024,000 10,500,000
================ ===============
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
<PAGE>
AMERICAN COMMUNICATION ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE THREE-MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
Deficit
Accumulated
During the
Common Stock Development
Shares Amount Stage
Balance, December 31, 1999 17,917,420 $519,455 $(476,546)
Issuance of common stock for cash 100,000 25,000 -0-
Issuance of common stock for services
($.25/share) 113,468 28,367 -0-
Net Loss for the three-months ended
March 31, 2000 -0- -0- (165,627)
---------------------------------------
Balance, March 31, 2000 18,130,888 $572,822 $(642,173)
=======================================
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
<PAGE>
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
From Inception
Three-Months Three-Months On October 29,
Ended Ended 1998 Through
March 31, 2000 March 31,1999 March 31, 2000
-------------- -------------- ----------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Loss $(165,627) $(99,048) $(642,173)
Bad Debt Expense 3,522 - 29,022
Depreciation and Amortization 13,950 - 32,100
(Increase) Decrease in Receivables 25,300 - (70,426)
Increase (Decrease) in Payables
and Accrued expenses (1,646) 75,052 264,130
Accrued Payroll, Taxes 2,057 - 2,057
Accrued and Other Liabilities 8,000 - 8,000
Stock Issued for Services 28,367 - 107,722
-------------- -------------- ----------------
Net Cash Used by Operating
Activities (86,077) (23,996) (269,568)
-------------- -------------- ----------------
Cash Flows From Investing Activities
Purchase of fixed assets - - (4,136)
-------------- -------------- ----------------
Cash Flows From Financing Activities
Advances from stockholder 25,000 - 31,140
Issuance of common stock 25,000 - 200,100
Issuance of debt - 50,000 50,000
Payments of Capital Lease (2,865) - (2,865)
obligation --------------- -------------- --------------
Net Cash Provided by Financing
Activities 47,135 50,000 278,375
-------------- -------------- ----------------
Net (Decrease) Increase In Cash (38,942) 26,004 4,671
Cash at Beginning of Period 43,613 - -
-------------- -------------- ----------------
Cash at End of Period $ 4,671 $ 26,004 $ 4,671
============== ============== ================
Supplemental cash flow information:
Cash Paid For:
Interest $ - $ -
============== ==============
Income Taxes $ - $ -
============== ==============
Non-Cash Transactions:
Equipment purchased under capital $ 34,379
lease --------------
Stock issued for services $ 28,367
--------------
</TABLE>
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
<PAGE>
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
NOTE 1: BUSINESS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLOCIES
American Communications Enterprises, Inc. (the "Company") was
incorporated under the laws of the state of Nevada on October 29,
1998. The Company is considered to be in the development stage, as
defined in Financial Accounting Standards Board Statement No. 7. The
Company intends to purchase and operate radio stations throughout
the United States. The planned principal operations of the Company
have not commenced, therefore accounting policies and procedures
have not yet been established.
Basis of Presentation
The accompanying unaudited financial statements of the Company have
been prepared in accordance with generally accepted accounting
principals for interim financial information and the instructions to
Form 10-QSB and Rule 10-1 of Regulation S-X of the Securities and
Exchange Commission (the "SEC"). Accordingly, these financial
statements do not include all of the footnotes required by generally
accepted accounting principals. In the opinion of management, all
adjustments (consisting of normal and recurring adjustments)
considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the
year ended December 31, 2000. The accompanying financial statements
and the notes should be read in conjunction with the Company's
audited financial statements as of December 31, 1999 contained in
its Form 10KSB.
NOTE 2: RELATED PARTY TRANSACTIONS
Included in accrued expenses is approximately $250,000 in accrued
wages and related payroll taxes due to the President and
Vice-President of the Company under employment agreements.
During the Quarter the Company's borrowed from its President
$25,000, which is non-interest bearing, unsecured, and due on
demand.
NOTE 3: GOING CONCERN
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company has a working capital deficiency of $270,711, an accumulated
deficit of $642,173 as of March 31, 2000, and a net loss for the
<PAGE>
quarter then ended of $165,627. Accordingly its ability to continue
as a going concern is dependent on obtaining capital and financing
for its planned principal operations. The Company plans to secure
financing for its acquisition strategy through the sale of its
common stock and issuance of debt. However, there is no assurance
that they will be successful in their efforts to raise capital or
secure other financing. These factors among others may indicate that
the Company will be unable to continue as a going concern for a
reasonable period of time.
NOTE 4: TIME BROKERAGE AGREEMENT
The Company entered into a Time Brokerage Agreement (the Agreement)
with Watts Communications Inc. on June 1, 1999. The Agreement is for
12 months unless terminated earlier. The Agreement gives the Company
an irrevocable option to purchase substantially all of the assets of
Watts Communications Inc. (the Seller), subject to Federal
Communications Commission approval, and grants to the Company the
radio air time for four radio stations for the period of the
Agreement. In exchange for the purchase option and the airtime, the
Company will pay the Seller various monthly fees of approximately
$10,000 per month.
Under the Agreement, the Company will operate the four radio
stations and have the right to receive payment for any commercial or
program time sold during the term of the Agreement.
The sale of commercial and program time are included in revenues and
the monthly fees payable under the Agreement are included in Cost of
Revenues in these financial statements.
NOTE 5: COMMITMENTS
In January 2000, the Company executed a letter of intent to acquire
substantially all of the assets of a Texas corporation (the Seller),
which include two radio stations in Texas. The letter of intent
calls for the acquisition of substantially all of the assets of the
Seller, including the two radio stations, for approximately $750,000
made up of cash, notes, Company stock and/or other consideration.
This acquisition is contingent upon Federal Communications
Commission approval.
NOTE 6: SUBSEQUENT EVENTS
In April 2000, the Company executed a letter of intent to acquire
substantially all of the assets of a Nevada corporation (the
Seller), which includes two radio stations. The letter of intent
calls for the acquisition of substantially all of the assets of the
Seller, including the two radio stations, for approximately
$3,000,000 made up of cash, notes, Company stock and/or other
consideration.
This acquisition is contingent upon Federal Communications
Commission approval.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
OVERVIEW
The following discussion and analysis should be read in conjunction with the
balance sheet as of December 31, 1999 and the financial statements as of and for
the three months ended March 31, 2000 and 1999 included with this Form 10-QSB.
We are considered to be in the development stage as defined in Financial
Accounting Standards Board Statement No. 7, and we intend to provide branded,
interactive information and programming as well as merchandise to music
enthusiasts worldwide.
Readers are referred to the cautionary statement, which addresses
forward-looking statements made by the Company.
RESULTS OF OPERATIONS
For the quarter ended March 31, 2000 we generated revenues of approximately
$126,165 through the Time Brokerage Agreement with the Stations. Revenues
primarily consisted of commercial or program time sold. We generated no revenues
for the quarter ended March 31, 1999, as we hadn't yet commenced operations.
We incurred a net loss of approximately $165,627 for the quarter-ended Ended
March 31, 2000 as compared with a net loss of $99,048 for the quarter-ended
Ended March 31, 1999. Our operating expenses consist primarily of broadcast
operations, sales and marketing and general and administrative expenses. General
and administrative expenses increased to $203,738 for the quarter ended March
31, 2000 from $99,048 for the quarter ended March 31, 1999, and principally
includes payroll and related taxes; professional fees for consulting, business
development, legal and accounting; office supplies expense; travel expense and
organizational costs. Broadcast operating expenses of $53,067 for the quarter
ended March 31, 2000, and consisted primarily of those expenses incurred in
connection with the management of the Stations. Sales and marketing expenses of
$35,633 for the quarter ended March 31, 2000, and were incurred in connection
with the development of advertising revenues.
The results of operations for the period ended March 31, 2000 are not
necessarily indicative of the results for any future interim period or for the
year ending December 31, 2000. We expect to expand upon obtaining capital and
financing for our planned principle operations.
<PAGE>
Liquidity and Capital Resources
Our operating requirements have exceeded our cash flow from operations as we
continue to build our business. Operating activities during the quarter ended
March 31, 2000 used cash of $86,077. Operating activities were primarily funded
through proceeds from the sale of common stock of $25,000 and proceeds from the
issuance of debt of $25,000. At March 31, 2000 we had cash and cash equivalents
of $4,671.
During April 1999, we began offering subscriptions for the sale of up to
11,000,000 shares of our common stock at $0.05 per share, which was increased to
$0.25 in the third quarter of 1999. As of March 31, 2000, cash proceeds of
$200,000 were received through the sale of 1,566,667 shares in connection with
this offering. An additional 6,064,221 shares of common stock, valued at
approximately $373,000, were issued in exchange for services, satisfaction of
debt and a license agreement. We need the proceeds of this offering to expand
our operations and finance our future working capital requirements. Based upon
our current plans and assumptions relating to our business plan, we anticipate
that we may need to seek additional financing to fund our proposed acquisition
strategy.
CAUTIONARY STATEMENT
This Form 10-QSB, press releases and certain information provided periodically
in writing or orally by the Company's officers or its agents contain statements
which constitute forward-looking statements within the meaning of Section 27A of
the Securities Act, as amended and Section 21E of the Securities Exchange Act of
1934. The words expect, anticipate, believe, goal, plan, intend, estimate and
similar expressions and variations thereof if used are intended to specifically
identify forward-looking statements. Those statements appear in a number of
places in this Form 10-QSB and in other places, particularly, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things: (i)
the Company's liquidity and capital resources; (ii) the Company's financing
opportunities and plans and (iii) the Company's future performance and operating
results. Investors and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. The factors that might cause such differences include, among others,
the following: (i) any material inability of the Company to successfully
identify, consummate and integrate the acquisition of radio stations at
reasonable and anticipated costs to the Company; (ii) any material inability of
the Company to successfully internally develop its products; (iii) any adverse
effect or limitations caused by Governmental regulations; (iv) any adverse
effect on the Company's continued positive cash flow and abilities to obtain
acceptable financing in connection with its growth plans; (v) any increased
competition in business; (vi) any inability of the Company to successfully
conduct its business in new markets; and (vii) other risks including those
identified in the Company's filings with the Securities and Exchange Commission.
The Company undertakes no obligation to publicly update or revise the forward
looking statements made in this Form 10-QSB to reflect events or circumstances
after the date of this Form 10-QSB or to reflect the occurrence of unanticipated
events.
<PAGE>
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
ACE is involved in litigation from time to time in the ordinary course of
its business. In management's opinion, the outcome of all pending legal
proceedings, individually and in the aggregate, will not have a material adverse
effect on the Company.
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Securities Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
05/22/2000 /s/ Robert E. Ringle
Date
Robert E. Ringle,
Vice-President, Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,671
<SECURITIES> 0
<RECEIVABLES> 70,426
<ALLOWANCES> 29,022
<INVENTORY> 0
<CURRENT-ASSETS> 46,075
<PP&E> 38,515
<DEPRECIATION> 3,400
<TOTAL-ASSETS> 267,490
<CURRENT-LIABILITIES> 316,787
<BONDS> 0
0
0
<COMMON> 752,822
<OTHER-SE> (642,173)
<TOTAL-LIABILITY-AND-EQUITY> 267,490
<SALES> 0
<TOTAL-REVENUES> 126,165
<CGS> 53,067
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 239,371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (165,627)
<INCOME-TAX> 0
<INCOME-CONTINUING> (165,627)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (165,627)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
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