U.S. Securities and Exchange Commission
Washington D. C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF
THE EXCHANGE ACT
For the transition period from_________ to ________
Commission File No. 0-10841
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AMERICAN MILLENNIUM CORPORATION, INC.
(Exact name of small business issuer as specified in its charter)
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New Mexico 85-0273340
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
303 N. Baker St., Suite 200, Mount Dora, Florida 32757
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(Address of principal executive offices)
(352) 735-0116
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(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has 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
(2) has been subject to such filing requirements for the past 90 days. (l) Yes X
No_ (2) Yes X No_
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 16,850,922 as of June 16,
1999.
Transitional Small Business disclosure Format (check one):
Yes ____ No ____
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PART I
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FINANCIAL INFORMATION
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Item 1. Financial Statements
(a) Financial Statements and Schedules
The following financial statements are included (with an index listing all such
statements) in a separate exhibit at the end of this Form 10-QSB:
Balance Sheet
Statements Operations
Statements of Cash Flows
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
(a) Plan of Operation
Organization
On February 12, 1999, the Company entered into a Consulting Agreement with
Wilson, Lombard and Partner (WLP). WLP is an investor relations firm with
experience in the dissemination of information about private and public
companies to prospective investors both domestically and internationally. Under
the terms of the agreement, WLP will furnish various services to the Company
including, but not necessarily limited to, acting as liaison between the Company
and its shareholders, advisor to the Company with respect to existing and
potential market-makers, broker-dealers, underwriters, and investors, as well as
advisor to the Company and as liaison as regards the financial media, analysts,
and other such members of the financial community. The term of the consultancy
is for a period of three (3) years from the date of the contract for which WLP
is to receive remuneration for performance of these services as follows:
a. 50,000 shares of the common stock of the Company restricted from sale
for one year from the date of issuance,
b. 150,000 free trading shares of common stock, and
c. options to purchase up to 200,000 shares of the common stock of the
Company at an exercisable price of $0.30 per share which shall be
restricted from sale for a period of one year.
In February 1999, the Company authorized the issuance of 1,275,000 shares of
common stock to officers and employees of the Company and in March 1999, the
Company authorized the issuance of 500,000 shares of common stock to an officer
of the Company as per the Employee Stock Incentive Plan adopted on January 26,
1999. These shares will bear a legend restricting the sale of said stock for a
period of one year from issuance. The Board of Directors adopted the January
26th resolution to provide for employee stock incentives whereby the Company
would issue to the present officers, directors and employees (or their assigns)
certain shares of the common stock of the Company restricted from sale for a
minimum of one year and further subject to any and all limitations on the sale
and/or transferability of the stock as per Rule 144 of the U.S. Securities and
Exchange Commission.
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Company Focus on Core Business
AMCI is a provider of hardware and software solutions to the wireless and
wireline telecommunications industries. AMCI has experience in a variety of
communications platforms including satellite, CDPD (cellular digital packet
data), cellular, various other radio frequency (RF) protocols, and wireline. The
business of AMCI is to bring solution oriented combinations of hardware and
software to the market to facilitate timely, accurate, and cost effective
one-way and two-way delivery of information to the rapidly expanding wireless
communications industry.
Every advance in communication technology has launched a new wave of
organizational effectiveness. Early modems allowed centralized mainframes to
provide remote transaction processing enabling airlines and banks to greatly
expand their service offerings. In the `80s, local area networks were key to new
business processes that integrated the pervasive inventory of personal computers
and the staff that used them. In the `90s, the Internet extended business
process integration throughout the supply chain and customer set.
Yet, there are critical assets that are still outside of the current integrated
management structures. These are critical pieces of production equipment that
are beyond the range of land-based communication networks. Recently, the
establishment of communication networks based upon Low Earth Orbit Satellites
(LEOS) allows communication with these remote and mobile assets and promises the
next wave of enterprise integration with its concomitant efficiency and
effectiveness. With LEOS, low cost, robust transceivers can tie virtually any
piece of equipment anyplace in the world into the enterprise management process.
AMCI is positioned to play a key role in the creation of the high-value
applications that power this new wave of organizational effectiveness. The
Company has developed prototype systems with over a dozen companies and has
learned the value equation necessary for success. Further, AMCI has been
established as a leading provider (VAR) of the ORBCOMM LEOS system and
management has a thorough understanding of its capabilities. We are positioned
to lead a significant customer set into a large-scale production rollout.
AMCI/ORBCOMM Reseller Contract
AMCI is a value-added reseller for ORBCOMM USA L.P. ORBCOMM is a "low earth
orbit" (LEO) satellite company which is a joint venture between Orbital
Sciences, Inc. and Teleglobe of Canada, Inc. To date, ORBCOMM has launched all
28 LEOs of its proposed "constellation" into orbit. Plans call for an additional
8-10 satellites to be launched later.
AMCI's contract with ORBCOMM allows AMCI to provide remote monitoring services
to the oil and gas industry, intermodal containers, and the U.S. rail industry
with the exception of railcars used exclusively for the transportation of
automobiles and trucks. This means that a railroad company, for example, can
determine where a particular refrigerated railcar with a high value load is
located by global position as well as the temperature inside the car, the
voltage output of the engine, and numerous other functions.
AMCI management believes that the overall competitive advantage that the Company
may hold as a reseller for the ORBCOMM system is most closely tied to the
competitive rates it can currently charge. Management is currently marketing the
ability to provide accurate, low cost monitoring to the above industries defined
in its reseller contract. This will provide the Company with recurring revenues
on a monthly basis.
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Additionally, the Company reached an agreement with Eco-Max Systems, Inc.
(Eco-Max) for an investment by Eco-Max to fund a joint technology investment
between the two companies. Eco-Max is a developer and manufacturer of rotary
powered generators, agricultural pumps, and marine propulsion systems that
utilize proprietary design features. The investment is intended to fund
development of specialized applications of AMCI's satellite monitoring
capabilities whereby such conditions as voltage output, fuel levels, flow rates,
and emissions output can be read from a webpage on the Internet.
Oil and Gas
AMCI has various initiatives underway with oil and gas producers as well as
manufacturers of gas compressors and control panels for those compressors. AMCI
currently has several satellite subscriber communicators (the industry term for
transceivers) activated and in field trials. These units are currently
monitoring a variety of assets in the United States. AMCI plans to market its
products and services in the international market place.
Much of oil and natural gas production occurs in largely remote areas; far
beyond the economic range of wired or terrestrially based wireless
communication. Key to the operation of these production sites are enormous
compressors used to extract, collect, and transfer the oil and gas to
transmission pipelines. The malfunction or failure of one of these compressors
is a red-alert event for the production operator. The economic loss can be
measured in thousands of dollars per hour of down time. There is high value in
reducing the duration of an outage.
To create this value, AMCI will program a commercially available satellite
transceiver or subscriber communicator (SC) to relay the vital signs of the
compressor to the ORBCOMM LEOS. This information will include the status of all
important components as well as the flow and pressure data for the pipeline.
Since there is a considerable variation of compressor package designs and
installation details, each installation requires AMCI programming and
interfacing expertise to capture the critical information.
Status, malfunction or failure information is sent from the compressor SC to one
of the LEOS. The LEOS relays the information to an ORBCOMM Gateway Earth Station
(GES), which, in North America, are always in view simultaneously. The
information passes through the ORBCOMM network and on to an AMCI service center
for analysis and alert communication to the operator. If the operator is large
enough to justify its own service center, AMCI will guide its development and
the satellite data will be routed directly to it.
Depending upon the nature of a malfunction, it may be possible to implement
corrective action through communication with the compressor SC. In this case,
control information is sent to the ORBCOMM network for routing to the next
appropriate LEOS and hence to the compressor SC. If "on-the-ground" service is
required, the failure data is analyzed by the operator to determine needed spare
parts and tools. Since travel times to remote units can be measured in hours,
accurate information of this nature is of great value. AMCI becomes a key and
ongoing link in the operator's value chain. AMCI shares in that value by
charging for our engineering, installation, and operating services as well as
receiving a recurring fee for the communication traffic we generate through
ORBCOMM.
The Company has entered into an agreement with Compressor Systems, Inc. (CSI) in
Midland, Texas to provide two satellite transceiver units as well as air time
for wireless remote monitoring of a mainline station and a natural gas well
located in the Permian Basin of West Texas. CSI is one of the nation's largest
single source providers of sales, leasing, engineering, fabrication, and
operator of gas compression equipment. CSI operates through 13 regional sales
offices and with over 120 technical service representatives located throughout
the U.S.
The two units contracted for by CSI were provisioned by AMCI to monitor the gas
well compressors and the mainline station compressor via the ORBCOMM satellite
system. CSI will receive daily reports that the units are running or not
running, as well as alarm reports whenever the units shut down unexpectedly. The
Company will provide a secure website on the Internet for CSI to view the
operating conditions and alarms.
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Transportation of High Value Products
Through proper programming and interface design, an SC can transmit information
vital to the successful delivery of perishable cargo. In addition to temperature
readings, it can monitor refrigeration system fuel levels and alert for any
intrusion into a railcar or container. Importantly, the SCs have an additional
feature installed to communicate the location of the transport. With a GPS
(Global Positioning System) module in the SC, the position of the railcar or
container can be constantly monitored. In addition to providing accurate
logistical information to the shipper, this information is key to the timely
repair of a failing refrigerator and protection of its cargo. The failing unit
can be intercepted at the next maintenance location on its route and be repaired
or have its cargo transferred to a working refrigeration unit.
This application provides another opportunity for AMCI. The stream of
information that flows through the AMCI service center must be properly
integrated into the transporter's existing IT system. Failure information must
be sent to the appropriate maintenance location and the transport service center
for supervision. Position data should be available to the shipper at all times.
Intrusion information must alert security services. All this data should arrive
in correct formats at the right IT server. Further, if communication back to the
SC is needed, transport personnel should be able to use their existing
applications to initiate it. AMCI has an opportunity to configure and supervise
the installation of off-the-shelf software packages that can manage this routing
and formatting. Further, we can operate such routing servers, consolidating the
needs of smaller customers.
Railroad Cars
AMCI has completed a testing phase of remote monitoring of a refrigerated
railcar under the provisions of a contract the Company has with Union Pacific
Railroad, the nation's largest rail company. The original contract called for a
prototype unit to be installed on a refrigerated railcar with cellular
capability for transmitting data, AMCI anticipates the data to be transmitted
via satellite in the next phase. AMCI has monitored via satellite and cellular
the location of a test railcar as well as the battery voltage and refrigerated
compartment temperature. AMCI has installed the second generation of equipment
on the railcar which exceeds the performance of the first generation equipment
and allows the Company to complete the contract's first phase and move toward
the next phase.
The next phase of the contract involves the outfitting of five refrigerated
railcars with pre-production models of the AMCI wireless equipment. Upon
successful completion of this phase with Union Pacific, Union Pacific has the
option to place orders in increment of 100 units.
Intermodal Containers
AMCI has held discussions with an intermodal container corporation regarding
AMCI's proposal to outfit a refrigerated container with a satellite transceiver
to monitor location and alarm functions such as door openings and temperature.
Following such a test, AMCI would submit a formal proposal for the monitoring of
the corporation's container fleet.
The LEOS Opportunity
These applications are exemplars of a large variety of related needs. Gas wells
as well as pipelines require monitoring. Oil wells, storage tanks and pumps are
also remote, critical production assets. Industrial chemical and compressed gas
storage tanks present another opportunity. In addition, refrigerated railcars,
refrigerated containers and other special cargo vehicles benefit from an onboard
SC and GPS unit. Complex powered vehicles such as locomotives, truck tractors,
test vehicles and heavy equipment can be better managed with LEOS communication.
Here, in addition to monitoring and tracking, the SC can provide reliable
messaging services for the equipment operator.
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There are further benefits from LEOS systems in many industries that have
worldwide operations. A system designed for North American operation can be
deployed for assets throughout the world. ORBCOMM is franchising the
installation of ground stations in all continents and developing "roaming"
arrangements that will yield a seamless worldwide network. New levels of
enterprise asset management and operational efficiency are sure to emerge from
this platform. Thus, even with a North American focus, AMCI can create value
worldwide.
Other Business of the Company
American Mobile Satellite
AMCI's a value-added reseller for Reston, Virginia based American Mobile
Satellite (AMS) (NASDAQ: SKYC). The reseller agreement provides AMCI the use of
AMS's geosnychronous satellite system. AMS provides seamless voice, data, and
point-to-multipoint dispatch services to virtually anywhere in North and Central
America, the Caribbean, and hundreds of miles of surrounding waters. AMS is
authorized by the FCC to provide L-band (1.5-1.6 GHz) mobile satellite service
in the U.S.
Proprietary Technology Applications
AMCI is also a value-added reseller for Dallas, Texas based PageMart. The
Company is expected to file a patent for certain proprietary applications of
paging technology. AMCI has developed certain proprietary technologies for the
monitoring of various types of assets utilizing both the ORBCOMM LEO system as
well as other Radio Frequency (RF) formats for GPS along with functional
manipulations aboard those assets. Due to the sensitive and proprietary nature
of this technology as well as the Company's intent to protect it to the extent
that is possible with patent applications, Management is unable to disclose
specific aspects of the systems. Nevertheless, Management believes that the
applications are both valuable and viable. The Company is presently in
discussion with several companies regarding licensing and/or joint venture
proposals within the scope of the technologies and their respective
applications.
AMCI has retained the services of Pittenger and Smith, a Denver, Colorado based
patent, trademark, and copyright law firm, to effect these applications. In
addition to ORBCOMM, American Mobile Satellite, PageMart and SPS Technologies
for which it is a value-added reseller, AMCI has business relationships with
Griffin Petroleum, Trimble Navigation, Union Pacific Railroad, Pacific Arepco,
and Hersey Measurement Company.
American Millennium Corporation, Inc./McLeodUSA Co-venture
AMCI has entered into a co-venture with McLeodUSA on a paging application
developed by AMCI. McLeodUSA (McLeod) is a Cedar Rapids, Iowa based local and
long distance telephone provider (known as a Competitive Local Exchange Carrier
or CLEC) that went public in 1996.
AMCI had originally proposed and co-developed a paging based voice mail
notification device so that McLeod could bypass the local exchange carrier
providing that service and, hence, realize substantial savings on its voice mail
costs. However, that project is currently inactive due to AMCI's focus on
building a revenue foundation of ORBCOMM satellite based system subscribers.
Presently, the Company's primary efforts are away from "hardware only sales" in
favor of applications that include recurring revenues from users of its ORBCOMM
based data systems.
Summary
In its role as a developer of digital, wireline, and wireless products, AMCI
provides solutions for its customers utilizing cutting edge technology in the
telecommunications industry, AMCI is currently presenting the uses of its
technologies to leaders in various industries. Management believes its unique
approach to recent technological developments allowing the interfacing of
multiple communication platforms should position AMCI to emerge as an industry
leader in the field of data transfer.
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Management believes that a significant market exists for potential applications
of AMCI's technology that involve remote monitoring and systems function
manipulations. Corporate management can monitor their equipment, production
levels, and track global position as well as control functions and have data
reported from the particular asset that can be downloaded onto a secure Internet
website which can then be accessed from anywhere in the world. The reports are
typically available and can be delivered in as little as 60 seconds after an
ORBCOMM satellite flies over the monitored asset, reads, and transmits the data
to an ORBCOMM Earth Station.
AMCI will continue to market these services to the rail, intermodal container,
and oil and gas industries with its ORBCOMM reseller contract. It will continue
to market its various patent pending paging technology solutions to the
telecommunications industry.
The ability to provide satellite monitoring for industries within AMCI's
reseller contract with ORBCOMM means that the Company is able to charge a
specified rate per month for each asset being monitored. The charge can range
from a few dollars per month to upwards of $100 per month, depending on the
amount of data and the frequency of reports required by the owner of the asset
being monitored. In addition to the potential of substantial hardware sales, a
strong growth of recurring revenues is a goal of the Company, these revenues
derived from monthly satellite and paging monitoring revenues will build value
for the shareholders and provide a basis for independent appraisals of AMCI's
network of subscribers.
AMCI currently has over 60 systems deployed in field operations. Companies
currently utilizing the system include Cross Timbers Oil Co., Hanover
Compressors, Walsh Engineering, Inc., Cabot Oil and Gas Corp., and Compressor
Systems, Inc. AMCI subscriber communicators are installed on Chevron wells
operated by Hanover.
Recent Business Activity
On April 30, 1999, the Company authorized to be issued to the following
companies/individuals in the respective amounts shares of the common stock of
the Company for payment of monies, as listed, loaned to the Company with each
certificate to bear a legend restricting the sale of said stock for a minimum of
one year from the date of issuance:
First Mercantile, Ltd. -- 200,000 shares -- $75,599.89
Eco-Max Systems, Inc. - 50,000 shares -- $19,300.00
Stephen F. and Phyllis Watwood - 50,000 shares -- $19,300.00
AMCI announced on April 29, 1999, that it had recently completed installation of
two petroleum site monitoring systems for Houston, Texas based Cabot Oil and Gas
Corp. The systems were installed on natural gas well compressors operated by
Cabot at remote sites in Texas and Oklahoma. Each site has a programmable
satellite "subscriber communicator" that can send and receive messages through
the ORBCOMM satellite system. This enables it to call out for alarm events as
well as receive polls for current status and commands to modify existing program
functions. Alarm events are time-stamped and a history log is maintained at a
password protected Internet site supplied by AMCI and accessible to Cabot.
On April 27, 1999, the Company introduced its SATELLITE MAILBOX(TM) that
provides a wireless solution allowing users to send and receive e-mail from
anywhere in the world. AMCI developed this product for the oil and gas mobile
work force so that they may stay in touch, through e-mail, regardless of their
location. The SATELLITE MAILBOX(TM) can be used in a vehicle, utilizing the
vehicle battery, or can be taken mobile, utilizing the unit's own onboard
battery. Each unit has its own unique e-mail address. The basic unit, which is
smaller than a laptop, comes packaged in a tough, damage resistant,
weather-tight enclosure with a detachable telescoping antenna, on-board battery
pack, and AC and DC charging cables.
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On April 22, 1999, the Company announced the appointment of Andrew F. Cauthen to
the positions of president, Chief Executive Officer, and director. Mr. Cauthen
brings to AMCI over 25 years of experience in organization, operations, and
management of corporations including telecommunications companies. He served as
president/CEO for a commercial properties company, Century Capital Property
Management Corp. For over 10 years he managed its growth to over one billion
dollars in assets with 200 employees and approximately 55 commercial properties
under management throughout the United States. He has been associated as an
executive with several companies, most recently as president and CEO of ZapCom
International, Inc., a division of Imagitel, Inc.
On April 13, 1999, the Board of Directors appointed Mr. Cauthen to the above
referenced positions after accepting the resignations of Stephen F. Watwood as
CEO, James C. Statham as president, and Terry G. Wigton as director. Mr. Watwood
remains as a director and chairman of the board and was appointed to the
position of executive vice president of business development. Mr. Statham
remains as a director and chief operations officer. Mr. Wigton's resignation as
chief financial officer was also accepted; he will continue in the positions of
executive assistant to the president and director of multinational business
development. The board also accepted the resignation of Renee C. Riegler as
assistant treasurer; she will continue to serve as corporate secretary.
On April 13, 1999, the Company authorized to be issued to the following
individuals in the listed amounts common stock of the company pursuant to a S-8
registration which was effected on May 18, 1999:
James Statham 250,000 shares
Bruce Bacon 50,000 shares
Terry Wigton 50,000 shares
Renee Riegler 50,000 shares
Phyllis Watwood 20,000 shares
William K. Parker 10,000 shares
Linda Moore 2,500 shares
Lynn Crawford 2,500 shares
Brusse Bevers 2,500 shares
The Company authorized to be issued to James Statham 250,000 shares and Renee
Riegler 50,000 shares of the common stock of the company for services rendered
beyond the normal course of business. Said certificate is to bear a legend
restricting the sale of said stock for a period for a minimum of one year from
the date of issuance and subject to the restriction of Securities and Exchange
Commission Rule 144.
In March of 1999, the Company announced its exhibition of products and
technologies at ENTELEC '99 in Houston, Texas and its attendance at the "CeBIT"
show in Hanover, Germany. ENTELEC is an annual conference and exposition for the
telecommunication and electrical segment of the energy industry. "CeBIT" is
billed as the largest trade fair in the world for Information Technology and
Telecommunication and draws attendees from over 60 countries.
On March 9, 1999, AMCI authorized the issuance of 142,957 shares of the common
stock of the Company to Brenda Lee Hamilton for compensation for legal services
pursuant to the S-8 registration filed on January 15, 1999. Per said S-8
registration filed on January 15, 1999, the Company authorized to be issued to
Brenda Lee Hamilton 10,677 shares on February 26, 1999 and 13,043 shares on
February 1, 1999.
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AMCI announced, on March 16, 1999, that it has implemented use of an enhanced
service to notify its customers of conditions or changes in the status of the
customer's asset being monitored. The Company implemented the use of an enhanced
notification service as a value-added feature to its satellite monitoring
service. By outsourcing the use of a call center, AMCI can offer its customers
the added security of being notified by a telephone call, fax, or pager message
of the status or change in conditions of the asset being monitored. The enhanced
service is performed by operators on duty 24 hours a day, seven days a week who
notify the customer in a manner customized to the customer's needs. Management
believes that this feature will expand the use of its monitoring service by
making data and information available without the use of a computer.
On March 2, 1999, the Company was listed for trading on the Berlin Stock
Exchange in Germany, Berliner Wertpapierborse. The Company's stock number is
919284 under the ticker symbol ARU. According to information published by the
exchange on its website, over 2,800 international companies are listed on the
exchange, including more than 1,000 U.S. companies. The Berlin Exchange is known
for showcasing young, innovative, high-tech companies.
The Company, on February 23, 1999, announced that it is marketing the new GSC
100 from Magellan. The handheld device allows a user to chart his/her position
anywhere in the world, send and receive e-mail, save up to 100 messages, and
store up to 150 addresses, according to Magellan. To send e-mail to any Internet
address, the user simply keys in the message and destination address on the
back-lit key pad and then sends the message up to one of 28 orbiting ORBCOMM
satellites. To receive e-mail, the user powers the unit up in order to "ask the
satellite" for messages, and an ORBCOMM satellite transmits the messages
directly to the GSC 100.
AMCI, on February 17, 1999, authorized to be issued to the individuals listed
below the designated amount of shares of the common stock of the company per the
Employee Stock Incentive Plan as adopted on January 26, 1999 with said
certificates to bear a legend restricting the sale of said stock for a period of
one year from issuance:
Stephen F. Watwood 500,000 shares
Bruce R. Bacon 500,000 shares
Renee C. Riegler 125,000 shares
Jose McClinton 62,500 shares
Shirley Harmon 62,500 shares
Phyllis Watwood 12,500 shares
Gloria Blundell 12,500 shares
On March 9, 1999, the Company authorized the issuance to James C. Statham, or
his assigns, 500,000 shares of the common stock of the company per the Employee
Stock Incentive Plan as adopted on January 26, 1999. Said certificate is to bear
a legend restricting the sale of said stock for a period of one year from
issuance.
On February 12, 1999, the Company entered into a Consulting Agreement with
Wilson, Lombard and Partner (WLP). WLP is an investor relations firm with
experience in the dissemination of information about private and public
companies to prospective investors both domestically and internationally. Under
the terms of the agreement, WLP will furnish various services to the Company
including, but not necessarily limited to, acting as liaison between the Company
and its shareholders, advisor to the Company with respect to existing and
potential market-makers, broker-dealers, underwriters, and investors, as well as
advisor to the Company and as liaison as regards the financial media, analysts,
and other such members of the financial community. The term of the consultancy
is for a period of three (3) years from the date of the contract for which WLP
is to receive remuneration for performance of these services as follows: 50,000
shares of the common stock of the Company restricted from sale for one year from
the date of issuance, 150,000 free trading shares of common stock, and options
to purchase up to 200,000 shares of the common stock of the Company at an
exercisable price of $0.30 per share which shall be restricted from sale for a
period of one year. Per said agreement, on February 16, 1999, the Company
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authorized to be issued to Karl Kotowski 150,000 shares of the common stock of
the company for compensation for consulting services pursuant to the Consulting
Agreement executed by the company and Karl Kotowski on February 12, 1999
(b) Management's Discussion and Analysis of Financial Condition and Results of
Operations
Sales
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During the six months ended April 30, 1999, sales declined approximately 59%
compared to the same period in 1998. The decline in sales is attributable to the
re-focus of the Company's business. The goal is to develop new products that
grow revenue and earnings in markets they compete in. The Company does not
currently have the funds to support a marketing and sales effort to further
expand.
Cost of Sales
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These costs declined approximately 70% in the nine-month period ended April 30,
1999, as compared to April 30, 1998. The decline in these costs can be
attributed primarily to the reduction of expenses to re-focus its business
products and cutting costs to stay competitive and the Company managed its cost
of sales more effectively.
Payroll, Payroll Taxes and Related Benefits
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Payroll, payroll taxes, and related benefits declined approximately 76% in the
nine months ended April 30, 1999, as compared to April 30, 1998. This is
attributable to the fact that the Company had two employees during the prior six
months ended April 30, 1999.
General and Administrative
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There was an approximate 73% decrease in other selling and administrative
expenses compared to the nine-month period a year ago. The general and
administrative costs decreased due to the Company's re-focus on its newly
identified core business. The focus is to perform with the new resources and
stay competitive. The current general and administrative projections will enable
the Company to take every advantage of the cost savings and still offer quality
products that are expected to be ready to launch in the near future.
Consulting and Professional
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Consulting and professional fees decreased 75% from $3,441,451 to $875,492 for
the nine months ended April 30, 1999 and 1998, respectively. The large decrease
is primarily from the fact that the Company decreased its consulting and
professional services.
Minority Interests
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The Company discontinued all operations in 1998 in which it had a minority
interest.
Net Loss
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The net loss was reduced to $948,864 or $.06 per share as compared to
$6,140,540, or $.39 per share, for the nine months ended April 30, 1999 and 1998
respectively. Net loss was reduced largely due to the discontinued operations of
the subsidiary, Lean Protein Foods, Inc., discontinued in the prior year because
of the Company re-focusing its business on digital, wireless and wireline
telecommunications business.
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Liquidity and Capital Resources
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As a result of the net loss incurred, the Company has used substantial working
capital in its operations. As of April 30, 1999, current liabilities exceeded
current assets by $511,116.
Conditions have existed to limit the ability of the Company to market its
products and services at amounts sufficient to recover an acceptable amount of
operating and administrative costs. However, newly instituted controls and new
products should reverse this condition.
The Company believes that a significant base of recurring revenues derived from
monthly satellite and paging monitoring charges will build value for the
shareholders. The Company's principal marketing efforts are directed toward the
oil and gas, intermodal container, and railroad industries which have a need for
monitoring of high value assets, with the majority of the effort being directed
toward the oil and gas industry. Marketing efforts are performed by the
Company's personnel and outside sales service providers. The Company has, and
will continue through 1999, marketed its services at industry trade shows. The
Company anticipates that during 1999 revenues are expected to begin to accrue
from the enrollment of subscribers based in its various initiatives underway
with oil and gas producers as well as manufacturers of gas compressors and
control panels for those compressors. The Company will continue to market its
services to those companies for deployment of its system on a fleet basis in
order to optimize upon subscriber enrollment. The Company currently has over 60
satellite subscriber communicators (the industry term for transceivers) deployed
in field operations. These units are currently monitoring a variety of assets
both domestically and abroad.
The Company further believes that it will realize revenues from its initiatives
in other areas including the monitoring of railcars and intermodal containers.
Additionally, the Company anticipates other sources of revenue unrelated to its
reseller contract with ORBCOMM to begin as proprietary paging technology
developed by the Company is deployed. Also, the Company is presently a
value-added reseller for both American Mobile Satellite Corporation and
PageMart. Currently, the Company is enjoined to strict covenants of
non-disclosure and confidentiality regarding certain uses of technology
developed by the Company. Nevertheless, the Company will make appropriate public
disclosures pertaining to the aforementioned technologies when or if agreements
are reached with the parties involved.
To satisfy its cash requirements for the next twelve months the Company is in
the process of preparing a private offering of the Company's common stock. The
offering is being made on a "best efforts" basis with the minimum required
subscription of $100,000 (100 units) and the maximum subscription of $1,500,000
(1,500 units). This offering is being made in accordance with exemptions from
registration under Regulation D, Rule 506 of the Securities Act of 1933. The
matters discussed in (a) and (b) above contain forward-looking statements as
defined under Rule 175 of the Securities Act and many factors could cause actual
results to differ materially from those in the forward looking statements.
- --------------------------------------------------------------------------------
PART II
-- ----------------------------------------------------------------------------
OTHER INFORMATION
- - ------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form S-8 and 8-K
(a) Exhibits
(3.1) Articles of Incorporation, as amended to date of this report
(incorporated by reference Form 8-K filed June 11, 1998, File
No. 000-10841-D; Form S-8 filed May 18, 1999, File No.
99630017)
(27) Financial Data Schedule
(99) Financial Statements
Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
AMERICAN MILLENNIUM CORPORATION, INC.
DATED: June 19, 1999 By: /s/ Andrew F. Cauthen
-----------------------------------------
Andrew F. Cauthen, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
DATED: June 19, 1999 By: /s/ Andrew F. Cauthen
---------------------------------------
Andrew F. Cauthen, Director,
Chief Executive Officer, President
(Principal Executive Officer)
DATED: June 19, 1999 By: /s/ Bruce R. Bacon
---------------------------------------
Bruce R. Bacon, Director,
Vice President of Engineering,
Chief Technology Officer
DATED: June 19, 1999 By: /s/ Shirley M. Harmon
--------------------------------------
Shirley Harmon, Director
DATED: June 19, 1999 By: /s/ James C. Statham
--------------------------------------
James C. Statham, Director,
Chief Operations Officer
DATED: June 19, 1999 By: /s/ Stephen F. Watwood
--------------------------------------
Director , Chairman of the Board,
Vice President of Business Development
DATED: June 19, 1999 By: /s/ Thomas W. Roberts
--------------------------------------
Thomas W. Roberts, Treasurer
(Principal Financial Officer)
DATED: June 19, 1999 By: /s/ Renee C. Riegler
--------------------------------------
Renee C. Riegler, Secretary
(Corporate Secretary)
11
<PAGE>
CONTENTS
--------
FINANCIAL STATEMENTS
Balance Sheet F-2
Statements of Operations F-3
Statements of Cash Flows F-4
Notes to Financial Statements F-5 to F-10
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MILLENNIUM CORPORATION, INC.
(UNAUDITED)
BALANCE SHEET
April 30, 1999
<S> <C> <C>
- -------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 592
Inventory 10,344
Accounts receivable 28,955
Prepaid expenses 64,122
- -------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 104,013
- -------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Equipment, furniture and fixtures 7,500
Transportation equipment 89,503
- -------------------------------------------------------------------------------------------
TOTAL PROPERTY, PLANT AND EQUIPMENT, AT COST 97,003
Accumulated depreciation 20,019
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET BOOK VALUE 76,984
- -------------------------------------------------------------------------------------------
OTHER ASSETS 3,040
- -------------------------------------------------------------------------------------------
TOTAL ASSETS $ 184,037
===========================================================================================
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accounts payable $ 158,433
Accrued payroll and related taxes 85,281
Accrued expenses and other liabilities (Note 2) 314,768
Advances from officer (Note 3) 56,646
- -------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 615,128
- -------------------------------------------------------------------------------------------
LONG-TERM NOTE PAYABLE TO OFFICER (NOTE 3) 20,500
- -------------------------------------------------------------------------------------------
TOTAL LIABILITIES 635,628
- -------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 7)
DEFICIENCY IN ASSETS (NOTE 6)
Preferred stock, 10,000,000 shares authorized;
none issued and outstanding
Common stock, $.001 par value, 60,000,000 shares authorized,
16,483,514 shares issued and outstanding 16,484
Additional paid-in capital 10,890,204
Deficit (11,358,279)
- -------------------------------------------------------------------------------------------
TOTAL DEFICIENCY IN ASSETS (451,591)
- -------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS $ 184,037
===========================================================================================
See accompanying notes.
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MILLENNIUM CORPORATION, INC.
(UNAUDITED)
STATEMENTS OF OPERATIONS RESTATED Resated
====================================================================================================================================
<S> <C> <C> <C> <C>
For the quarter For the nine For the quarter For the nine
ended months ended ended months ended
April 30, 1999 April 30, 1999 April 30, 1998 April 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUES
Sales $ 29,199 $ 128,693 $ 170,981 $ 311,162
Cost of sales 13,627 27,102 19,768 91,200
- ------------------------------------------------------------------------------------------------------------------------------------
Gross margin 15,572 101,591 151,213 219,962
- ------------------------------------------------------------------------------------------------------------------------------------
Consulting 256,165 613,637 288,283 3,133,050
Professional 108,167 261,855 75,288 308,401
General and administrative 25,973 89,880 366,718 430,756
Salaries and related 321 31,101 44,751 129,696
Selling 27,280 52,049 11,401 97,154
Depreciation 750 7,598 2,925 9,737
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 418,656 1,056,120 789,366 4,108,794
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (LOSS) - 5,665 - (5,200)
- ------------------------------------------------------------------------------------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS (403,084) (948,864) (638,153) (3,894,032)
- ------------------------------------------------------------------------------------------------------------------------------------
DISCONTINUED OPERATIONS, NET OF INCOME TAXES
Loss from discontinued operations, net of income taxes of $0 - - 74,840 330,091
Loss on disposal of 20% owned equity investment - - - 261,000
Loss from discontinued operations, attributable to minority interests - - (534,782) (507,011)
Estimated loss on disposition, net of income taxes of $0 - - 906 2,162,428
- ------------------------------------------------------------------------------------------------------------------------------------
LOSS FROM DISCONTINUED OPERATIONS - - (459,036) 2,246,508
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOSS $ (403,084) $ (948,864) $ (179,117) $ (6,140,540)
===================================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(PRIMARY AND FULLY DILUTED) 15,231,339 15,388,172 9,990,814 9,954,814
===================================================================================================================================
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS BEFORE LOSS FROM
DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEMS
(PRIMARY AND FULLY DILUTED) (0.03) (0.06) (0.06) (0.39)
===================================================================================================================================
LOSS PER COMMON SHARE (PRIMARY AND FULLY DILUTED) (0.03) (0.06) (0.02) (0.62)
===================================================================================================================================
See accompanying notes.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
AMERICAN MILLENNIUM CORPORATION, INC.
(UNAUDITED)
STATEMENTS OF CASH FLOWS RESTATED
=================================================================================================================
<S> <C> <C> <C>
For the nine months ended April 30, 1999 1998
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (948,864) $ (6,140,540)
Adjustments to reconcile net loss to net cash
used by operating activities:
Gain on asset dispositions -
Depreciation and amortization 7,598 9,737
Loss attributable to minority interest - 507,011
Loss from discontinued operations - 2,181,059
Stock exchanged for compensation and services provided 529,535 2,958,924
Loss on asset disposition - 5,200
(Increase) decrease in assets:
Accounts receivable (28,955) (65,138)
Inventory (10,344) -
Net current assets of discontinued operations - (398,244)
Prepaid expenses (23,247) (56,009)
Employee advances 65,921 (10,000)
Other assets (500) (7,717)
Increase (decrease) in liabilities:
Accounts payable 36,471 118,984
Net current liabilities of discontinued operations - 362,583
Accrued expenses and other liabilities 155,132 11,502
- -----------------------------------------------------------------------------------------------------------------
NET CASH USED BY OPERATING ACTIVITIES (217,253) (522,648)
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Disbursements
Purchase of property, plant and equipment (3,000) (52,738)
Other - (8,037)
- -----------------------------------------------------------------------------------------------------------------
DISBURSEMENTS FROM INVESTING ACTIVITIES (3,000) (60,775)
- -----------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (3,000) (60,775)
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts
Sale of common stock 100,000 70,740
Sale of common stock to minority interests - 394,059
Capital lease for equipment - 37,933
Proceeds from note payable 19,300 55,000
Proceeds from advances from officer 29,600 -
Proceeds from related parties 75,600 53,577
- -----------------------------------------------------------------------------------------------------------------
RECEIPTS FROM FINANCING ACTIVITIES 224,500 611,309
- -----------------------------------------------------------------------------------------------------------------
Disbursements
Payments on capital lease for equipment - (14,589)
Payments on notes payable to stockholders/officers (4,831) (1,500)
- -----------------------------------------------------------------------------------------------------------------
DISBURSEMENTS FROM FINANCING ACTIVITIES (4,831) (16,089)
- -----------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 219,669 595,220
- -----------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (584) 11,797
CASH AND EQUIVALENTS - BEGINNING 1,176 536
- -----------------------------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS - ENDING $ 592 $ 12,333
=================================================================================================================
SUPPLEMENTAL DISCLOSURES:
Common stock issued for acquisition of net assets of consolidated subsidiaries $ - $ 1,454,778
Common stock issued for acquisition of property, plant and equipment $ - $ 88,715
Common stock issued for acquisition of 20% owned subsidiary $ - $ 49,215
Common stock issued to extinguish partial debt due to officer $ 19,300 $ -
Common stock issued to extinguish note payable $ 19,300 $ -
Common stock issued to extinguish debt due to related party $ 75,600 $ 49,215
=================================================================================================================
See accompanying notes.
</TABLE>
F-4
<PAGE>
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
- --------
American Millennium Corporation, Inc. f/k/a Energy Optics, Inc. (Company), a New
Mexico corporation, was organized in 1979 and has provided engineering services
relating to research and development activities for outside parties as well as
internal product development.
A controlling interest (79.3%) of American Millennium Corporation, a Delaware
corporation, was acquired in October 1997. The remaining interest in AMC was
acquired under an Agreement and Plan of Merger dated May 27, 1998, and the
companies merged, with the parent as the surviving corporation. Upon completion
of the merger, the Company changed its name to American Millennium Corporation,
Inc.
Since the merger, operations have been focused primarily on digital, wireless
and wireline communications business.
Basis of Presentation
- ---------------------
The financial information presented has been prepared from the books and records
without audit. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
information for the periods indicated, have been included.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid debt instruments with an original
maturity of three months or less at the date of purchase to be cash equivalents.
Inventory
- ---------
Inventory is carried at cost, and consists of hardware and other materials for
on-site product installation.
Prepaid Expenses
- ----------------
Prepaid expenses consist of the following:
Legal Fees $ 9,960
Consulting Fees 54,162
--------
$ 64,122
========
Property and Equipment
- ----------------------
Equipment, furniture and fixtures are stated at cost. Depreciation of equipment
and leasehold improvements are provided over estimated useful lives ranging from
five years to seven years, using the straight-line method. Expenditures for
maintenance and repairs are charged to expense as incurred. Major improvements
are capitalized.
Income Taxes
- ------------
Income taxes are computed under the provisions of the Financial Accounting
Standards Board (FASB) Statement No. 109 (SFAS 109), Accounting for Income
Taxes. SFAS 109 is an asset and liability approach that requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences
of the difference in events that have been recognized in the Company's financial
statements compared to the tax returns.
F-5
<PAGE>
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Investment Tax and Research Tax Credits
- ---------------------------------------
Investment tax and research tax credits will be recognized as a reduction of the
provision for income taxes in the year in which utilized.
Concentrations of Credit Risk and Economic Dependence
- -----------------------------------------------------
The Company operates in the continental United States. The Company's ability to
collect the amounts due from customers may be affected by economic fluctuations.
The Company is economically dependent on ORBCOMM USA, L.P. (ORBCOMM) for whom it
is a value-added reseller. ORBCOMM provides satellite service for the Company's
tracking devices.
Use of Estimates
- ----------------
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
Reclassifications and Restatements
- ----------------------------------
Amounts in the prior year financial statements have been reclassified for
comparative purposes to conform with the presentation of the current year
financial statements. Additionally, retroactive effect has been given to the
merger for purposes of comparative financial statement presentation.
Research and Development Costs
- ------------------------------
Research and development costs are expensed as incurred.
Advertising costs
- -----------------
Advertising costs are expensed as incurred.
Basic Net Loss Per Common Share
- -------------------------------
Basic net loss per common share is computed by dividing the net loss by the
average number of common shares outstanding during each period. Available stock
options at April 30,1999, were anti-dilutive and not considered common stock
equivalents for purposes of computing loss per common share.
Impairment of Long-Lived Assets
- -------------------------------
During the fiscal year ended July 31, 1998, the Company adopted FASB Statement
No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of". SFAS 121 requires that impairment losses
are to be recorded when long-lived assets to be held and used are reviewed for
impairment whenever events or changes in circumstances indicate that the related
carrying amount may not be recoverable. When required, impairment losses on
assets to be held and used are recognized based on the fair value of the asset.
Long-lived assets to be disposed of, if any, are reported at the lower of
carrying amount or fair value less cost to sell.
F-6
<PAGE>
NOTE 2. ACCRUED EXPENSES
Accrued expenses and other liabilities consisted of the following:
Professional fees $ 48,364
Consulting services - officers 266,404
-------
$ 314,768
=========
NOTE 3. RELATED PARTY TRANSACTIONS
An officer of the Company advanced funds to the Company and paid expenses on
behalf of the Company. On April 30, 1999, the Company issued 50,000 shares of
restricted common stock with a recorded value of $19,300 as partial
extinguishment of amounts owed the officer. (See Note 4.) The balance due to
this officer at April 30, 1999, was $56,646.
Parties related by virtue of common control made advances to, and paid expenses
on behalf of, the Company. On April 30, 1999, the Company issued 200,000 shares
of restricted common stock with a recorded value of $77,200 to an assignee of
the related party in repayment of these advances. (See Note 4.) There was no
outstanding balance due to this related party at April 30,1999.
On April 13, 1999, the Company issued 400,000 of common stock valued at $43,725,
pursuant to an S-8 registration, to officers and directors of the Company as
compensation for profession services. Additionally, the Company issued 300,000
shares of restricted common stock with a recorded value of $23,188 to officers
and directors for services rendered beyond the normal course of business. See
Note 4.
On February 17, 1999, the Company issued 1,250,000 shares of restricted common
stock with a recorded value of $84,313 to officers and directors, as per the
Employee Stock Incentive Plan adopted January 26, 1999. On March 9, 1999, the
Company issued 500,000 shares of restricted common stock with a recorded value
of $35,500 to an officer and director, as per the Employee Stock Incentive Plan.
The long-term note payable to an officer for $20,500 is unsecured, due on June
23, 2000, and provides for annual interest at 8%. No interest has been accrued
on this note.
NOTE 4. COMMON STOCK
Stock Issued for Services
- -------------------------
During the period, the Company issued common stock pursuant to a Consultant
Services Plan. The Plan is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974 and is not qualified under Sec. 401 of
the Internal Revenue Code of 1986, as amended. Forms S-8 were filed on February
17, 1999, and May 18, 1999, with the Securities and Exchange Commission relative
to such issuances of stock. Shares have been recorded using the lower of the
average price on the date issued or maximum offering price unless otherwise
stated.
Pursuant to these S-8 registrations, the Company issued 150,000 shares of common
stock, valued at $53,250 on February 16, 1999, for compensation for consulting
services. On May 18, 1999, officers and directors were issued 400,000 shares of
common stock, with a recorded value of $43,725 for services rendered and other
consultants were issued 37,500 shares of common stock valued at $9,938 for
professional services.
F-7
<PAGE>
NOTE 4. COMMON STOCK (CONTINUED)
On April 18, 1999 the Company issued 300,000 shares of common stock, bearing a
legend restricting the sale of said stock for a period of one year from date of
issuance, with a recorded value of $23,188 to officers and directors for
services rendered beyond the normal course of business. The recorded value was
based on the average price of stock on the date issued.
Pursuant to a S-8 filed January 15, 1999, the Company issued 166,667 shares of
common stock, with a recorded value of $87,052.00 for legal services provided.
The value was based upon the average price on the dates of issue.
Employee Stock Incentive Plan
- -----------------------------
On February 17, 1999, the Company issued 1,250,000 shares of common stock, with
a recorded value of $84,313 to officers and directors, and 25,000 shares of
common stock, with a recorded value of $8,876 to employees. Additionally, on
March 9, 1999, the Company issued 500,000 shares of restricted common stock to
an officer of the Company. The recorded value of this issuance was $35,500. The
stock bears a legend restricting the sale of said stock for a period of one year
from date of issuance and was issued as per the Employee Stock Incentive Plan
adopted January 26, 1999.
Stock Issued for Extinguishment of Debt
- ---------------------------------------
On April 30, 1999 the company issued 50,000 shares of common stock, bearing a
legend restricting the sale of said stock for a period of one year from date of
issuance, for payment in full of a note payable. The recorded value of $19,300
was based on the average price of the stock on the date issued.
On April 30, 1999, the Company issued 50,000 shares of common stock, bearing a
legend restricting the sale of said stock for a period of one year from date of
issuance, with a recorded value of $19,300 as partial repayment of advances made
by an officer on behalf of the Company.
On April 30, 1999, the Company issued 200,000 shares of common stock, bearing a
legend restricting the sale of said stock for a period of one year from date of
issuance, with a recorded value of $77,200 to an assignee of a related party.
These shares were issued as repayment of advances to the Company made by a party
related by virtue of common control.
NOTE 5. STOCK OPTIONS
The Company had granted to Edward N. Laughlin, former president, director and
majority shareholder, stock options in return for advancing working capital to
the Company and providing prior year bank loan guarantees. These options expired
April 5, 1999.
On February 12, 1999, the Company entered into a Consulting Agreement with
Wilson, Lombard and Partner (WLP). WLP will furnish various services to the
Company including, but not necessarily limited to, acting as liaison between the
Company and its shareholders, advisor to the Company with respect to existing
and potential market-makers, broker-dealers, underwriters, and investors, as
well as advisor to the Company and as liaison as regards the financial media,
analysts, and other such members of the financial community. Under the terms of
the agreement, WLP is to receive remuneration for performance of services
including options to purchase up to 200,000 shares of the common stock of the
Company at an exercisable price of $.30 per share which shall be restricted from
sale for a period of one year.
F-8
<PAGE>
NOTE 6. OPERATING AND ECONOMIC CONDITIONS
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, conditions have limited the ability of the
Company to market its products and services at amounts sufficient to recover its
operating and administrative costs. The Company has incurred operating losses of
$948,864 and $6,140,540 for the periods ending April 30, 1999 and 1998,
respectively. In addition, the Company has used substantial working capital in
its operations. As of April 30, 1999, current liabilities exceed current assets
by $511,115.
Management plans to raise capital through a private offering of stock.. Sales
are to be used to fund day-to-day operations and marketing activities related to
digital, wireless and wireline communications endeavors.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts or
classifications of liabilities that might be necessary in the event the Company
cannot continue in existence.
NOTE 7. COMMITMENTS AND CONTENGENCIES
Rents and Leases
- ----------------
The Company moved its executive offices to Mount Dora, Florida in December 1998.
Under the terms of a sub-lease agreement dated November 30, 1998 between the
Company and Terry Farms, Inc., the Company is to occupy the Mount Dora offices
for a term of ten months beginning on the first day of December 1998 with the
monthly rent of $1,551.10.
NOTE 8. CHANGE IN OFFICERS
On April 13, 1999, Andrew F. Cauthen was appointed president, Chief Executive
Officer and director, upon the resignation of Stephen Watwood as CEO, James
Statham as president and Terry G. Wigton as director and chief finance officer.
Mr. Watwood will remain director and chairman of the board, and Mr. Statham will
remain as director. Mr. Wigton was appointed executive assistant to the
president and director of multinational business. Renee C. Riegler resigned as
assistant treasurer, however, she will continue to serve as corporate secretary.
NOTE 9. SUBSEQUENT EVENTS
On June 15, 1999, the Company announced that the services of Wall Street West
Communications, LLC had been retained. Wall Street West (WSW) is a Denver,
Colorado based stock research firm, holding company, and corporate news
information distributor. It is followed by more than 15,000 micro-cap investors,
according to WSW. WSW will provide the Company with an investor awareness
campaign. WSW is being compensated by Potter Financial, Inc., which is the firm
retained by AMCI to perform investor relations, with the common stock of the
Company. The terms of that compensation are fully disclosed on the disclaimer
published by WSW on its website at www.wallstreetwest.com.
On May 25, 1999, AMCI announced that it had completed installation of its
satellite communication equipment for remote monitoring of three large natural
gas compressors for Fort Worth, Texas based Cross Timbers Oil Co. The
compressors are at a remote site southeast of Ozone, Texas with Hanover
Compressors managing the monitoring service for Cross Timbers. The satellite
unit "calls out" should any of the compressors fail or shut down. The message is
delivered via the ORBCOMM system to the AMCI 24/7 call center which in turn
notifies Hanover that a shutdown has occurred.
F-9
<PAGE>
NOTE 9. SUBSEQUENT EVENTS (CONTINUED)
On May 14, 1999, the Company announced that it had completed installation of
five satellite monitoring systems for Walsh Engineering, Inc., based in
Farmington, New Mexico. The systems were installed on natural gas well
compressors operated by Walsh on remote sites in Colorado and New Mexico. The
"subscriber communicator" on each compressor will be enable the site to call out
for alarm events as well as receive polls for current status and commands to
modify existing program functions.
On May 4, 1999, the Company authorized to be issued to James A. Belknap 5,000
shares of the common stock of the company for technical consulting pursuant to
an S-8 registration filed on May 18, 1999.
The Company announced, on May 4, 1999, that Hanover Compressor Co. has accepted
an AMCI proposal to provide satellite monitoring of 20 natural gas compressors
installed on gas wells and pipeline stations. AMCI has been monitoring two
remote gas well compressors for Hanover since March 3, 1999. Current plans call
for the installation of equipment to monitor an additional 18 compressors within
60 days at various sites selected by Hanover. The 18 compressors are being
monitored for Chevron Corp.
F-10
<PAGE>
INDEX TO EXHIBITS
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY OF FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED APRIL 30, 1999, AND IF QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000350193
<NAME> AMERICAN MILLENNIUM CORP., INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-31-1998
<PERIOD-END> APR-30-1999
<EXCHANGE-RATE> 1
<CASH> 592
<SECURITIES> 0
<RECEIVABLES> 28,955
<ALLOWANCES> 0
<INVENTORY> 10,344
<CURRENT-ASSETS> 104,013
<PP&E> 97,003
<DEPRECIATION> (20,019)
<TOTAL-ASSETS> 184,037
<CURRENT-LIABILITIES> 615,128
<BONDS> 0
0
0
<COMMON> 16,484
<OTHER-SE> (468,075)
<TOTAL-LIABILITY-AND-EQUITY> 184,037
<SALES> 128,693
<TOTAL-REVENUES> 128,693
<CGS> 27,102
<TOTAL-COSTS> 27,102
<OTHER-EXPENSES> 1,056,120
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> (948,864)
<INCOME-CONTINUING> 0
<DISCONTINUED> (948,864)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (948,864)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
