|-------------------------|
UNITED STATES | OMB |
SECURITIES AND EXCHANGE COMMISSION | APPROVAL |
Washington, D.C. 20549 |OMB Number:3235-0416 |
|Expires: May 31, 2000 |
FORM 10-QSB |Estimated average burden |
|hours per response:9708.0|
(Mark One) |-------------------------|
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from_________ to ________
Commission File No. 0-10841
American Millennium Corporation, Inc.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New Mexico 85-0273340
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1010 Tenth Street, Suite 100, Golden, CO 80401
----------------------------------------------
(Address of principal executive offices)
(303) 279-2002
---------------------------
(Issuer's telephone number)
303 N. Baker Street, Suite #200, Mount Dora, FL 32757
- --------------------------------------------------------------------------------
(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. 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: 17,690,922 at January 14,
2000.
Transitional Small Business disclosure Format (check one): Yes [ ] No [X]
<PAGE>
AMERICAN MILLENNIUM CORPORATION, INC.
FORM 10-QSB
INDEX
PAGE
Part I-Financial Information
Item 1-Financial Statements (unaudited)
Balance Sheet - October 31, 1999 (unaudited) ......................... 2
Statements of Operations - Three Months
Ended October 31, 1999 and 1998 (unaudited) ......................... 3
Statements of Cash Flows - Three Months ended
October 31, 1999 and 1998 (unaudited) ............................... 4
Notes to Financial Statements ........................................ 5
Item 2-Management's Discussion and Analysis or Plan of Operation ........... 7
Part II-Other Information
Item 6 -Exhibits and reports on Form 8-K ................................... 9
1
<PAGE>
- -----------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
- -----------------------------------------------------------------------------
Item 1. Financial Statements
AMERICAN MILLENNIUM CORPORATION, INC.
BALANCE SHEET (Unaudited)
October 31, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................... $ 1,258
Accounts receivable, less allowance of $640 ................. 30,952
Inventory ................................................... 3,737
Prepaid expenses ............................................ 6,250
------------
TOTAL CURRENT ASSETS ...................................... 42,197
------------
PROPERTY AND EQUIPMENT, NET ................................... 49,018
------------
OTHER ASSETS
Available-for-sale equity security .......................... 14,390
Security deposits ........................................... 500
------------
TOTAL OTHER ASSETS ........................................ 14,890
------------
TOTAL ASSETS .................................................. $ 106,105
============
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accounts payable ............................................ $ 171,519
Accrued payroll and related taxes ........................... 89,908
Accrued expenses and other liabilities ...................... 410,656
Notes payable to officers, 6% annual interest ............... 89,974
Notes payable to related parties, 6% interest ............... 73,850
Notes payable to shareholders ............................... 62,000
Advances from officers ...................................... 38,665
------------
TOTAL CURRENT LIABILITIES ................................. 936,572
------------
COMMITMENTS AND CONTINGENCIES (NOTE 6)
DEFICIENCY IN ASSETS
Preferred stock, 10,000,000 shares authorized; none issued .... -
Common stock, $.001 par value, 60,000,000 shares authorized;
16,943,472 shares issued and outstanding .................... 16,944
Additional paid-in capital .................................... 11,318,788
Accumulated deficit ........................................... (12,177,549)
Accumulated other comprehensive income ........................ 11,350
------------
TOTAL DEFICIENCY IN ASSETS ................................ (830,467)
------------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS .................... $ 106,105
============
See accompanying notes.
2
<PAGE>
AMERICAN MILLENNIUM CORPORATION, INC
STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended
October 31,
1999 1998
------------ ------------
REVENUES ....................................... $ 36,148 $ 85,594
COST OF REVENUES ............................... 35,247 24,314
------------ ------------
GROSS PROFIT ................................... 901 61,280
------------ ------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consulting - officers and directors .......... 132,899 184,225
Consulting - others .......................... 4,600 94,528
Professional ................................. 31,228 69,654
Salaries ..................................... -- 14,220
Travel ....................................... 14,093 16,796
Other ........................................ 77,961 12,513
------------ ------------
TOTAL SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES .................. 260,781 391,936
------------ ------------
OTHER INCOME ................................... -- 2,165
------------ ------------
LOSS FROM OPERATIONS BEFORE INCOME TAXES ....... (259,880) (328,491)
INCOME TAXES ................................... -- --
------------ ------------
NET LOSS ....................................... (259,880) (328,491)
============ ============
BASIC AND DILUTED NET LOSS PER COMMON SHARE .... (0.02) (0.03)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (BASIC AND DILUTED) ....... 14,730,132 12,500,728
============ ============
See accompanying notes.
3
<PAGE>
AMERICAN MILLENNIUM CORPORATION, INC
STATEMENTS OF CASH FLOWS (Unaudited)
For the Three Months Ended
October 31,
1999 1998
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) ....................................... $(259,880) $(328,491)
Adjustments to reconcile net (loss) to
net cash used provided by
operating activities:
Depreciation ................................... 2,800 3,424
Common stock exchanged for services ............ 33,000 200,490
(Increase) decrease in assets:
Accounts receivable ............................ (10,587) --
Inventory ...................................... 2,237 --
Prepaid expenses ............................... -- 14,940
Employee advances .............................. -- (835)
Increase (decrease) in liabilities:
Accounts payable ............................... 6,258 (16,020)
Accrued payroll and related taxes .............. -- (91,016)
Accrued expenses and other liabilities ......... 88,990 116,963
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES ........ (137,182) (100,545)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Disbursements
Acquisition of property and equipment ............ -- (3,000)
--------- ---------
DISBURSEMENTS FROM INVESTING ACTIVITIES ........ -- (3,000)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES ....... -- (3,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts
Proceeds from advances to officers ............... -- 67,189
Proceeds from note payable - shareholder ......... 50,000 --
Proceeds from sale of common stock ............... 79,510 --
Proceeds from related parties .................... 9,000 64,120
--------- ---------
RECEIPTS FROM FINANCING ACTIVITIES .............. 138,510 131,309
Disbursements
Payments on related party notes .................. (1,600) --
Payments on note payables to officers ............ (5,431) --
--------- ---------
DISBURSEMENTS FROM FINANCING ACTIVITIES ......... (7,031) --
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES ... 131,479 131,309
--------- ---------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS ................................. (5,703) 27,764
CASH AND CASH EQUIVALENTS - BEGINNING .............. 6,961 1,176
--------- ---------
CASH AND CASH EQUIVALENTS - ENDING ................. $ 1,258 $ 28,940
========= =========
SUPPLEMENTAL DISCLOSURES:
Interest paid ..................................... $ -- $ --
Income taxes paid ................................. $ -- $ --
Common stock issued in payment of prepaid
interest on note payable .......................... $ 6,250 $ --
See accompanying notes.
4
<PAGE>
NOTE 1. GENERAL BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
General
The accompanying unaudited financial statements of the Company have been
prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the
Securities and Exchange Commission and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the Company has made all
adjustments necessary for a fair presentation of the results of the interim
periods, and such adjustments consist of only normal recurring adjustments. The
results of operations for such interim periods are not necessarily indicative of
results of operations for a full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NOTE 2. 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.
NOTE 3. RELATED PARTY TRANSACTIONS
In August 1999, the Company issued 100,000 shares of common stock to its
President and Chief Executive Officer for services, for a value of $20,000,
under a Consultant Services Plan.
NOTE 4. COMMON STOCK
Stock Issued for Services
On August 8, 1999, the Company issued 65,000 shares of common stock
pursuant to an S8 offering as compensation for services to an outside
consultant. These shares were valued at a stated value of .20 per share for a
total value of $13,000.
Other Stock Issuance
On September 24, 1999, the Company accepted a bridge loan of $50,000 and
authorized the issuance of 25,000 shares of its restricted common stock in
payment of interest on the loan. Total value of these shares was $6,250, which
has been recorded as prepaid interest.
On September 10, 1999,the Company accepted an investment memorandum prepared by
Jack Augsback & Company for a private offering to be made in accordance with
the exemption from registration under Regulation D, Rule 506 of the Securities
Act of 1933. On October 21, 1999, the Board of Directors authorized the issuance
of 350,000 shares of restricted common stock to five investors pursuant to this
offering. The Company received net proceeds of $79,510 from the sale of these
shares after issuance costs of $20,490.
5
<PAGE>
NOTE 5. 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
$259,880 and $328,491 for the periods ending October 31, 1999 and 1998,
respectively. In addition, the Company has used substantial working capital in
its operations. As of October 31, 1999, current liabilities exceed current
assets by $894,375.
Sales are expected to fund day-to-day operations and marketing activities
related to digital, wireless and wireline communications endeavors. Additional
capital is being raised by further issuance of the Company's common stock
through the private offering of stock under Regulation D, Rule 506.
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 6. COMMITMENTS AND CONTENGENCIES
Rents and Leases
The Company moved its executive offices to Golden, Colorado in December 1999.
Under the terms of a lease agreement dated December 8, 1999, between the Company
and Sucia Corporation, LLC, the Company is to occupy the Golden offices for a
term of 36 months beginning on the first day of December 1999 with a monthly
rent of $2,400.
NOTE 7. SUBSEQUENT EVENTS
On December 7, 1999, the Company announced that it is expanding its engineering
operations, which includes moving its present Denver office into a 2,417 square
foot office and engineering lab located in Golden, Colorado near Denver. The
Company will hire or outsource eight new positions including engineers,
technicians, and administrative personnel.
On December 21, 1999, the Board of Directors agreed to a settlement offer
regarding restricted shares of the Company's common stock that were issued to
two individuals in August, 1997 as part of a Stock and Asset Purchase Agreement.
Each individual received 400,000 shares of restricted stock. The agreement was
amended in October 1997 to reflect a lower valuation of the assets to be
acquired in exchange for the stock issued. Accordingly, it was necessary to
reduce the number of shares to which these two individuals were entitled to
117,275 shares each. Although the Company requested the return of the original
shares in exchange for issuance of the appropriate number of shares, those
shares were never returned and upon the expiration of their restriction period,
the individuals sought to have the restriction removed to enable them to sell
the shares. The Company sought an injunction to prevent the sale of these
shares. A temporary injunction was issued on October 27, 1998. Under the terms
of the Settlement Agreement, each individual will return the certificate for
400,000 shares and each will be issued a certificate for 117,275 unrestricted
shares of common stock.
6
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations
SAFE HARBOR STATEMENT
Certain statements in this Form 10-QSB, including information set forth
under Item 2 - Management's Discussion and Analysis or Plan of Operations
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the Act). American Millennium
Corporation, Inc. desires to avail itself of certain 'safe harbor' provisions of
the Act and is therefore including this special note to enable us to do so.
Forward-looking statements in this Form 10-QSB or hereafter included in other
publicly available documents filed with the Securities and Exchange Commission,
reports to our stockholders and other publicly available statements issued or
released by us involve known and unknown risks, uncertainties and other factors
which could cause our actual results, performance (financial or operating) or
achievements to differ from the future results, performance (financial or
operating) or achievements expressed or implied by such forward-looking
statements. Such future results are based upon management's best estimates based
upon current conditions and most recent results of operations.
Sales
During the three months ended October 31, 1999, revenues decreased approximately
58% compared to the same period in 1998. The decline is attributable to the
re-focus of our business. In the period ended October 31, 1998, the Company was
still developing its product, thus its revenues were derived from reimbursement
of joint development costs. In 1999, we began marketing our products resulting
in the sale or lease of our satellite subscriber communicators and related
airtime. During the quarter ended October 31, 1999, we placed approximately 35
additional units in service. Our goal is to develop new products that grow
revenue and earnings in the Company's competitive markets. Although we do not
currently have the funds to support an expanded marketing and sales effort, our
personnel and outside sales service providers will continue aggressive marketing
efforts of our products. Additionally, through the year 2000, we will continue
to market our services at industry trade shows.
Cost of Revenues
Cost of revenues increased approximately 45% in the three-month period ended
October 31, 1999, as compared to October 31, 1998. This increase is primarily
due to the nature of revenues earned. The decrease in sales along with the
increase in cost of revenues caused gross profit to decrease to almost nothing.
Payroll, Payroll Taxes and Related Benefits
Payroll, payroll taxes, and related benefits declined in the three months ended
October 31, 1999, as compared to October 31, 1998. This is attributable to the
fact that we had two employees during the prior three months ended October 31,
1998.
General and Administrative
There was an approximate 33% decrease in selling, general and administrative
expenses compared to the three-month period a year ago. The general, selling
and administrative costs decreased due to our re-focus on newly identified core
business and concentrated efforts to reduce overhead costs.
Consulting and Professional
Consulting and professional fees decreased 52% from $348,407 to $168,727 for the
three months ended October 31, 1999 and 1998, respectively. The large decrease
is primarily from the fact that we decreased consulting and professional
services related to public relations and concentrated on developing and
marketing our products.
7
<PAGE>
Net Loss
The net loss was reduced to $259,880 or $.02 per share as compared to $328,491,
or $.03 per share, for the three months ended October 31, 1999 and 1998
respectively. Net loss was reduced largely because of our re-focusing our
business on digital, wireless and wireline telecommunications business and our
efforts to generally reduce expenses.
Liquidity and Capital Resources
As a result of net losses incurred, we have used substantial working capital in
our operations. As of October 31, 1999, current liabilities exceeded current
assets by $894,375 compared to $439,099 as of October 31, 1998.
Conditions have existed to limit our ability to market our 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.
Our 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. We anticipate that during the year 2000 revenues will
increase 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. We will continue to market our
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 150
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.
We further believe that we will realize revenues from our initiatives in
other areas including the monitoring of railcars and intermodal containers.
Additionally, we anticipate other sources of revenue unrelated to our reseller
contract with ORBCOMM USA L.P. (ORBCOMM) to begin as proprietary paging
technology is deployed.
We reached an agreement with Brasil Wireless Systems Company, SA to jointly
solicit sales and engineering support and to market communications technology
within South American markets. The agreement calls for a joint effort to share
hardware, software, and engineering resources for product deployment within the
designated markets.
On September 10, 1999, we accepted the investment memorandum prepared by Jack
Augsback & Company for the private offering being made in accordance with the
exemption from registration under Regulation D, Rule 506 of the Securities Act
of 1933. On October 21, 1999, the Board of Directors authorized the issuance of
350,000 restricted shares of restricted common stock to five investors pursuant
to this offering and raised net proceeds of $79,510.
8
<PAGE>
- -----------------------------------------------------------------------------
PART II - OTHER INFORMATION
- -----------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - None
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: January 17, 2000 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: January 17, 2000 By: /s/Andrew F. Cauthen
Andrew F. Cauthen, Director,
Chief Executive Officer, President
(Principal Executive Officer)
DATED: January 17, 2000 By: /s/Bruce R. Bacon
Bruce R. Bacon, Director,
Vice President of Engineering,
Chief Technology Officer
DATED: January 17, 2000 By: /s/Shirley M. Harmon
Shirley Harmon, Director
DATED: January 17, 2000 By: /s/James C. Statham
James C. Statham, Director,
Chief Operations Officer
DATED: January 17, 2000 By: /s/Stephen F. Watwood
Stephen F. Watwood, Director,
Chairman of the Board, Vice
President of Business Development
DATED: January 17, 2000 By: /s/Thomas W. Roberts
Thomas W. Roberts, Treasurer
(Principal Financial Officer)
DATED: January 17, 2000 By: /s/Renee C. Riegler
Renee C. Riegler, Secretary
(Corporate Secretary)
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY OF FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED OCTOBER 31, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> AUG-1-1999
<PERIOD-END> OCT-31-1999
<CASH> 1,258
<SECURITIES> 0
<RECEIVABLES> 31,592
<ALLOWANCES> 640
<INVENTORY> 3,737
<CURRENT-ASSETS> 42,197
<PP&E> 63,110
<DEPRECIATION> 14,092
<TOTAL-ASSETS> 106,105
<CURRENT-LIABILITIES> 936,572
<BONDS> 0
0
0
<COMMON> 16,944
<OTHER-SE> (847,411)
<TOTAL-LIABILITY-AND-EQUITY> 106,105
<SALES> 36,148
<TOTAL-REVENUES> 36,148
<CGS> 35,247
<TOTAL-COSTS> 35,247
<OTHER-EXPENSES> 260,781
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (259,880)
<INCOME-TAX> 0
<INCOME-CONTINUING> (259,880)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (259,880)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
