UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 2000 ;
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or
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file #0-15797
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AT COMM CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware 95-3824750
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(State or other jurisdiction of (IRS Employer Identification No)
incorporation or organization)
577 Airport Blvd, Suite 700,
Burlingame, California 94010
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (650) 375-8188
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Indicate by check mark whether the registrant:
(1) Has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file
such reports). Yes _X_ No___
(2) Has been subject to such filing requirements for the past 90 days.
Yes_X_ No__
Issuer's number of common shares
outstanding at April 30, 2000 3,622,289 shares
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<PAGE>
AT COMM CORPORATION
INDEX
Page No.
PART I Financial Information
Item 1.
Condensed Consolidated Balance Sheets (unaudited)
March 31, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations (unaudited)
Three Months ended March 31, 2000 and March 31, 1999 4
Condensed Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31, 2000 and March 31, 1999 5-6
Notes to Condensed Consolidated Financial Statements 7-10
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-16
PART II Other Information
Item 6.
Exhibits and Reports on Form 8-K 17
Signatures 18
PAGE 2
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<TABLE>
AT COMM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<CAPTION>
March 31, 2000 December 31, 1999
-------------------- --------------------
<S> <C> <C>
Assets:
Current Assets
Cash & cash equivalents $ 16,903,699 7,844,328
Accounts receivable, net 577,604 892,816
Other receivables 6,980 6,041
Inventories 413,500 384,370
Prepaid expenses and other assets 276,392 140,157
-------------------- --------------------
Total current assets 18,178,175 9,267,712
Property, equipment and software, net 2,500,167 1,828,108
Notes receivable 100,000 100,000
Deposits & other assets 404,361 342,060
-------------------- --------------------
Total Assets $ 21,182,703 11,537,880
==================== ====================
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 376,040 297,959
Accrued expenses 1,100,591 594,341
Accrued compensation 616,784 395,289
Purchase deposits 32,989 34,330
Deferred revenue 1,554,119 1,536,161
Notes payable -- 3,444
Capital lease 15,723 15,335
-------------------- --------------------
Total current liabilities $ 3,696,246 2,876,859
Capital lease - net of current portion 18,752 22,990
Minority interest 100,089 105,913
Stockholders' equity
Preferred stock, $0.01 par value; 10,000,000 shares
authorized; 2,547,989 and 2,102,989 shares issued and
outstanding as of March 31, 2000 and December
31, 1999, respectively. 25,480 21,030
Common stock, $.01 par, 50,000,000 shares authorized,
3,615,492 and 3,403,914 shares issued and outstanding
as of March 31, 2000 and December 31,1999
respectively. 36,155 34,039
Additional paid-in capital 38,515,647 25,238,941
Deferred compensation (368,352) (5,066)
Accumulated other comprehensive loss (242,187) (165,703)
Accumulated deficit (20,599,127) (16,591,123)
-------------------- --------------------
Total stockholders' equity 17,367,616 8,532,118
-------------------- --------------------
Total liabilities and stockholders' equity $ 21,182,703 11,537,880
==================== ====================
<FN>
The accompanying notes are an integral part of these condensed consolidated financial statements.
</FN>
</TABLE>
PAGE 3
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<TABLE>
AT COMM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
Three months ended Three months ended
March 31, 2000 March 31, 1999
------------------- ---------------------
<S> <C> <C>
Revenues $ 1,264,534 1,314,165
------------------- ---------------------
Product costs 659,620 545,448
Research and development 3,161,784 1,431,708
Marketing, sales, general and administrative 1,708,095 815,387
------------------- ---------------------
5,529,499 2,792,543
------------------- ---------------------
Loss from operations (4,264,965) (1,478,378)
Other income, net 261,976 87,037
------------------- ---------------------
Loss before income taxes (4,002,989) (1,391,341)
Income taxes 5,015 3,125
------------------- ---------------------
Net loss (4,008,004) (1,394,466)
Preferred stock beneficial conversion
rights
5,482,500 -
------------------- ---------------------
Net loss applicable to common stockholders $ (9,490,504) (1,394,466)
=================== =====================
Per Share Information:
Basic net loss per share $ (2.68) (0.44)
=================== =====================
Number of shares used in per share
computation 3,542,710 3,177,763
=================== =====================
Diluted net loss per share $ (2.68) (0.44)
=================== =====================
Number of shares used in per share
computation 3,542,710 3,177,763
=================== =====================
<FN>
The accompanying notes are an integral part of these condensed consolidated financial statements.
</FN>
</TABLE>
PAGE 4
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<TABLE>
AT COMM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Three months ended Three months ended
March 31, 2000 March 31, 1999
-------------------- ---------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,008,004) (1,394,466)
Adjustments to reconcile net loss to net
Cash used in operations
Depreciation 149,161 109,300
Minority interest in net loss (3,374) (2,648)
Foreign exchange gain (65,906) --
Other 5,608 800
Change in operating assets and liabilities:
Accounts receivable, net 315,212 (23,566)
Other receivables (12,063) (4,443)
Inventories (29,131) (10,265)
Prepaids, deposits and other assets (212,302) (135,606)
Accounts payable and accrued expenses 807,877 69,575
Purchase deposits (1,341) (7,111)
Deferred revenue 17,958 (58,996)
-------------------- --------------------
Net cash used in operations (3,036,305) (1,457,426)
-------------------- --------------------
Cash flows from investing activities:
Acquisition of property, equipment and software (822,001) (357,272)
Cash from financing activities:
Repayment of capital lease obligation (3,834) --
Repayment of borrowings (3,461) (9,757)
Proceeds from sale of common stock 28,090 1,988
Proceeds from sale of preferred stock 12,889,662 --
-------------------- --------------------
Net cash provided by financing activities 12,910,457 (7,769)
-------------------- --------------------
Effect of exchange rate changes on cash 7,220 (8,791)
-------------------- --------------------
Net increase (decrease) in cash & cash equivalents 9,059,371 (1,831,258)
Beginning cash and cash equivalents 7,844,328 8,272,251
-------------------- --------------------
Ending cash and cash equivalents $ 16,903,699 6,440,993
==================== ====================
(continued)
PAGE 5
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AT COMM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended Three months ended
March 31, 2000 March 31, 1999
-------------------- --------------------
Supplemental cash flow information:
Interest paid $ 837 485
Income taxes paid 7,450 2,250
Noncash investing and financing activities:
Shares issued on stock option excercise in
exchange for surrender of common stock 29,319 --
==================== ====================
Conversion of preferred stock to common stock 2,000 --
==================== ====================
Beneficial conversion feature recorded
on issuance of preferred stock $ 5,482,500 --
==================== ====================
<FN>
The accompanying notes are an integral part of these condensed consolidated financial statements.
</FN>
</TABLE>
PAGE 6
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AT COMM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 : BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by the
Company, pursuant to the rules and regulations of the Securities and Exchange
Commission. The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected for the fiscal
year. In the opinion of management, the information contained herein reflects
all adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. For further information, refer to
the consolidated financial statements and footnotes thereto, included in the
Annual Report on Form 10-KSB, filed with the Securities and Exchange Commission
for the year ended December 31, 1999.
NOTE 2 : REVENUE RECOGNITION AND DEFERRED REVENUE
Revenue from product sales is recognized when evidence of the arrangement
exists, delivery has occurred, the fee is fixed or determinable, and collection
is probable. The Company provides reserves for estimated returns of product
sales and accrues for the estimated costs of providing customer support when
deemed necessary.
Revenue related to customer support and rate tariff table subscriptions is
deferred and recognized ratably over the period of the agreements. Support and
rate tariff table subscriptions entitle a customer to receive future releases
and enhancements of the related software products and/or to receive the current
local and long distance provider tariff rates for their call accounting systems
for the subscription period.
NOTE 3 : INVENTORIES
Inventories have been stated at the lower of first-in, first-out cost or market.
Inventories consist solely of purchased hardware and software products (finished
goods).
NOTE 4 : BANK LINE OF CREDIT
The Company maintains a $1,000,000 line of credit collateralized by eligible
accounts receivable. The line bears interest at prime plus 1.0% (10.0% as of
March 31, 2000) which the Company intends to renew upon expiration in May 2000.
No amounts were outstanding under the line as of March 31, 2000.
PAGE 7
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AT COMM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: @COMM FLANDERS NV
@Comm Flanders nv ("@Comm Flanders"), formerly Xiox Flanders N.V. was
incorporated in Belgium pursuant to an agreement between the Company and
Flanders Language Valley ("FLV") and is owned 94.9% by the Company and 5.1% by
FLV. The Company has committed to fund @Comm Flanders with approximately
$1,500,000 in 2000. The actual amount of funding provided by the Company will
depend on the business needs of @Comm Flanders and can be modified by a vote of
the Board of Directors.
NOTE 6: EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income or loss by
weighted average common shares outstanding during the period. Diluted earnings
per share reflects the net incremental shares that would be issued if preferred
stock were converted to common stock, outstanding warrants were exercised, and
dilutive outstanding stock options were exercised, using the treasury stock
method.
In the case of a net loss, it is assumed that no incremental shares would be
issued because they would be antidilutive. In addition, certain options and
warrants are considered antidilutive because the options' exercise price is
above the average market price during the period. Antidilutive shares are not
included in the computation of diluted earnings per share.
The shares used in per share computations for the periods ended March 31, 2000
and 1999 are as follows:
Three months ended March 31,
2000 1999
------------------ -----------------
Weighted average common
shares outstanding-basic 3,542,710 3,177,763
Dilutive incremental shares -- --
------------------ -----------------
Shares used in diluted per
share computations 3,542,710 3,177,763
================== =================
Excluded from the computation of diluted loss per share for March 31, 2000 are
warrants to acquire 40,000 shares of common stock, 2,547,989 shares of preferred
stock which are generally convertible to common stock on a one-to-one basis, and
927,182 shares associated with outstanding stock options. Excluded from the
computation of diluted loss per share for March 31,1999 are warrants to acquire
50,000 shares of common stock, 1,877,989 shares of preferred stock which are
generally convertible to common stock on a one-to-one basis, and 614,908 shares
associated with outstanding stock options.
PAGE 8
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AT COMM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: COMPREHENSIVE INCOME
Total comprehensive loss was $4,084,488 and $1,435,537 for the three months
ended March 31, 2000 and March 31, 1999, respectively. The difference between
net loss and comprehensive loss is the result of translation of the operations
of the Company's foreign subsidiary, which has a local functional currency.
NOTE 8: SEGMENT AND GEOGRAPHIC REPORTING
The Company has two reporting segments, telephone management products and the
development of a new product line that addresses the combined telecom and
datacom markets. The new product line did not generate any revenue in 2000 or
1999. The two segments have been aggregated because their long-term economic
characteristics will be similar. The nature of the product, the production
process, type of customer, and methods of distribution will also be similar.
Additionally, there were no unallocated corporate expenses in 2000 and 1999.
The revenues for At Comm products for the three months ending March 31, 2000 and
March 31, 1999 are as follows:
2000 1999
----------- -----------
Telephone management products $ 721,593 816,526
Service and support 542,941 497,639
----------- -----------
Total revenue $1,264,534 1,314,165
=========== ===========
The Company's assets are primarily located in the United States and are not
allocated to any specific segment. The Company does not measure the performance
of its segments based on any asset-based metrics; therefore, segment information
is not provided for assets.
The Company has not separately reported segment information on a geographic
basis, as international sales have not been material for the three months ending
March 31, 2000 and March 31, 1999.
PAGE 9
<PAGE>
AT COMM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative financial
instruments and hedging activities and requires the Company to recognize all
derivatives as either assets or liabilities on the balance sheet and measure
them at fair value. Gains and losses resulting from changes in fair value would
be accounted for depending on the use of the derivative and whether it is
designated and qualifies for hedge accounting. The Company will be required to
implement SFAS No. 133 for its fiscal year 2001, as amended by SFAS No. 137. The
Company does not expect that the adoption of SFAS No. 133 will have a material
effect on the Company's consolidated financial statements.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements, as amended by SAB 101A, which provides guidance on the recognition,
presentation, and disclosure of revenue in financial statements filed with the
SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue
and provides guidance for disclosures related to revenue recognition policies.
The Company has not determined the impact the adoption of SAB 101 will have on
its consolidated financial position or results of operations
NOTE 10: SUBSEQUENT EVENTS
On April 25, 2000 the Company called for redemption all of its outstanding
shares of Series A Preferred Stock at the close of business on May 23, 2000. The
redemption price is $5.00 per share of Series A Preferred Stock. The holders of
the Series A Preferred Stock have no right to convert their shares into Common
Stock at any time prior to the redemption date. Each outstanding share of Series
A Preferred Stock is convertible into one share of Common Stock.
PAGE 10
<PAGE>
AT COMM CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This 10-QSB, including, but not limited to the section on page 13
discussing risk factors, as well as the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act. Actual results could
differ materially from those projected in the forward-looking statements as a
result of many factors, including the risk factors set forth below. Words such
as "we" or "our" refer to the Company.
You can identify such forward-looking statements by noting the use of
forward-looking terms such as "believes," "expects," "plans," "estimates" and
other similar words. Certain risks, uncertainties or assumptions that are
difficult to predict may affect such statements. The following risk factors and
other cautionary statements could cause our actual operating results to differ
materially from those expressed in any forward-looking statement. We caution you
to keep in mind the following risk factors and other cautionary statements and
to refrain from placing undue reliance on any forward-looking statements, which
speak only as of the date of this document.
The following is management's discussion and analysis of certain significant
factors which have effected At Comm's financial position and operating results
during the periods included in the accompanying condensed consolidated financial
statements.
Results of Operations
First Quarter 2000 vs. 1999
Revenue for the three months ended March 31, 2000 was $ 1,264,534, a decrease of
4% or $49,631 versus the $1,314,165 recorded during the three months ended March
31, 1999. The decrease in revenue is attributed to lower demand for telephone
management product in the first quarter of 2000.
Total operating expenses for the three months ended March 31, 2000 were
$5,529,499, an increase of 98% or $2,736,956 versus the $2,792,543 of operating
expenses incurred during the three months ended March 31, 1999. Total product
costs as a percentage of revenue increased to 52% in the first quarter of 2000
from 42% in the first quarter in 1999, primarily due to variations in product
mix and increased labor costs.
Research and development expenses increased by 121% or $1,730,076 to $3,161,784
in the first quarter of 2000 compared to $1,431,708 in the first quarter of 1999
due to an increased investment in new product development. The Company expects
quarterly research and development spending to exceed 1999 levels throughout
2000.
Marketing, sales and general and administrative expenses in the first quarter of
2000 increased by 109% or $892,708 to $1,708,095 compared to $815,387 in the
first quarter of 1999, primarily due to an increase in marketing and sales
expenditures associated with new product business development.
Other income increased by $174,939 from the first quarter of 1999 primarily due
to income earned on cash equivalent investments of $196,907 in the first quarter
of 2000 versus $87,663 earned in the first quarter of 1999. The increase in cash
equivalent investments is a result of proceeds received from the Company's
Series B financing.
PAGE 11
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AT COMM CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company lost $4,264,965 from operations during the first quarter of 2000 and
reported a net loss after taxes of $4,008,004 versus a loss of $1,478,378 from
operations and a net loss after taxes of $1,394,466 in the comparable quarter of
1999. The Company attributes this primarily to increased research and
development expenses associated with its new product development in addition to
administrative and marketing expenses necessary to support this effort.
Liquidity and Capital
At March 31, 2000, the Company held cash and cash equivalents totaling
$16,903,699 and had working capital of $14,481,929 versus cash equivalents of
$7,844,328 and working capital of $6,390,853 at December 31, 1999. The Company
anticipates investing in excess of $1,500,000 in capital equipment during 2000,
consisting primarily of computer hardware and software and testing equipment.
Since December 31, 1999, capital equipment procurements have totaled $822,001.
The Company maintains a bank line of credit of $1,000,000. The bank line, when
utilized, is collateralized by certain current assets and property and
equipment. The line carries a variable interest rate based upon prime plus 1.0
(10.0% as of March 31, 2000) which the Company intends to renew upon expiration.
No amounts were outstanding under the line as of March 31, 2000.
During 1999, the Company raised approximately $7,5000,000 through the issuance
of the Company's Series B Preferred Stock to support development of our new
product line addressing the combined telecom and datacom markets. The Series B
Preferred Stock is convertible into Common Stock on a 1:1 basis, subject to
certain antidilution provisions, on the date of issuance. The purchase price of
the Series B Preferred Stock was less than the prevailing market price of the
Company's common stock resulting in a beneficial conversion feature of
$2,132,812, which has been reflected in the accompanying statement of operations
for the year ending December 31, 1999 as an increase in net loss applicable to
common shareholders.
A second closing occurred on February 7, 2000 in which approximately $12,900,000
of additional Series B preferred stock was sold to Flanders Language Valley and
other private investors. A total of 645,000 shares of Series B preferred stock
were sold at a purchase price of $20.00 per share. This was the second and final
closing of a $20,400,000 sale of 1,020,000 shares of Series B preferred stock.
The second closing was completed on the same terms as the first closing
following an amendment to the Stock Purchase and Investor Rights Agreement dated
December 30, 1999. The purchase price of the second closing of the Series B
Preferred Stock was less than the prevailing market price of the Company's
common stock resulting in a beneficial conversion feature of $5,482,500, which
will be reflected in the condensed consolidated statement of operations for the
quarter ending March 31, 2000 as a loss applicable to common shareholders.
In connection with this new product line, we have committed to fund @Comm
Flanders nv, our 94.9% owned subsidiary, with approximately $1,500,000 in 2000.
The actual amount of funding provided by the Company will depend on the business
needs of @Comm Flanders and can be modified by a vote of the Board of Directors.
PAGE 12
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AT COMM CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain Risk Factors Which May Impact Future Operating Results and Market Price
of Stock
Before you invest in our common stock, you should be aware an investment
in our common stock involves a high degree of risk, and that there are various
risks, including those described below. You should consider carefully these risk
factors, and the other information included in this prospectus before you decide
to purchase shares of our common stock.
Differing sales cycles may cause our operating revenues to fluctuate, which may
lower our stock price.
Our quarterly revenues are likely to fluctuate significantly in the
future due to a number of factors that affect telecommunications management
companies, many of which are outside our control. Factors that could affect our
revenue include:
o variations in the timing of orders and shipments of our products;
o variations in the size of the orders for our products;
o new product introductions by our competitors;
o delays in introducing new products.
Our stock price may be volatile and you may not be able to sell the shares at or
above the price you paid to purchase them.
The trading price of our common stock may be highly volatile and could
fluctuate in response to a variety of factors that affect telecommunications
management companies, including the following:
o actual or anticipated variations in quarterly operating results;
o announcements of technological innovations;
o new products or services offered by us or by our competitors;
o additions or departures of key personnel;
o changes in financial estimates by securities analysts;
o conditions or trends in the telecommunications industry;
o changes in the economic performance and/or market valuations of the
telecommunications industry;
o changes in the economic performance and/or market valuations of other
companies in the telecommunications industry;
o volatility generally associated with technology stocks; and
o other broader market trends unrelated to our operating performance.
In addition, our stock is commonly described as "thinly traded stock"
because our average daily trading volume (approximately 3,000 shares) is very
low in comparison to other publicly traded companies. The price of a thinly
traded stock like ours may fluctuate sharply whenever the volume of trades
exceeds the average volume. The dollar amount of the trades that would trigger
those fluctuations is low in comparison to the dollar amount that would trigger
similar fluctuations in the stock price of companies with a higher average
trading volume.
PAGE 13
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AT COMM CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
If we do not keep pace with rapid technological change, we may not be able to
produce new products and remain competitive.
The software industry is characterized by rapid technological change as
well as changes in customer requirements and preferences. In order to remain
competitive in this industry, we must quickly respond to such changes, including
the enhancement and upgrading of existing products and the introduction of new
products. We believe that our future results will depend largely upon our
ability to offer products that compete favorably with respect to price,
reliability, performance, range of useful features, continuing product
enhancements, reputation and training.
We cannot assure you that a market for our Town Square Communication System
product line will develop.
Although we believe that our Town Square family of products and
services, which combine voice, data, and Internet communications services, will
provide our small and medium enterprise and branch office customers with a
cost-effective, adaptable solution to their telecommunications needs, we cannot
assure you that a market for our equipment and services will develop. Among the
factors which may impede market acceptance of our equipment and services are:
o pricing competition from our competitors;
o quality and reliability of our Town Square hardware and software;
o possible advances in technology by our competitors; and
o consumer awareness of our Town Square Communication System product line as
an acceptable, low-cost alternative to traditional voice and data network
systems.
Most of our competitors have more resources than we do, which may harm our
ability to compete effectively with them.
Most of our competitors, as well as many potential competitors, have
substantially greater financial, marketing and technology resources than we do.
Telco Research, ISI-Infortext and Nortel Networks Corporation are our major
competitors in our Xiox Telemanagement Systems product line. Based on industry
sources, we believe that both Peregrine Telco and ISI-Infortext have revenues
that are at least twice as large as our revenues. Nortel Networks Corporation, a
public company, reported 1999 revenues of approximately $21 billion. Cisco
Systems, 3Com Corporation, Lucent Technologies and Nortel Networks Corporation
are our major competitors in our Town Square Communications Systems product
line. All four are public companies with reported 1999 revenues of approximately
$12 billion, $6 billion, $38 billion, and $21 billion respectively. In each
case, we believe our competitors have marketing and technological resources
commensurate with their revenues. We cannot be certain that we will be able to
compete successfully against either current or potential competitors or that
competition will not have a material adverse effect on our business,
consolidated results of operations and financial condition.
PAGE 14
<PAGE>
AT COMM CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
If we lose the business of our largest customer, our revenues may decrease and
our business may suffer.
One of our customers accounted for 12% of our revenue during 1999. The
loss or serious reduction in business from this customer could have a material
adverse effect on our business, consolidated results of operations and financial
condition in future periods.
If we lose our ability to sell our products through our network of dealers, our
revenues may decrease and our business may suffer.
We sell our products primarily through our network of authorized
dealers. Like other companies that sell products through a network of authorized
dealers, our ability to effectively distribute our products depends in part upon
the financial and business condition of our distribution network, which is
outside of our control. The loss of or a significant reduction in business with
any one of our major dealers could have a material adverse effect on our
business, consolidated results of operations and financial condition in future
periods.
We may not be able to expand our sales and distribution channels, which would
harm our ability to generate revenue
We believe that our future success is dependent upon our ability to
continue to expand our sales force and establish successful relationships with a
variety of international and domestic carriers, local competitive access
carriers, data and voice communication VARs, and selected PC manufacturers. If
we are not able to increase our direct sales staff and channel distribution
partners, we will not be able expand our business. We cannot be certain that we
will be able to reach agreement with additional channel distribution partners on
a timely basis or at all, or that these channel distribution partners will
devote adequate resources to marketing, selling and supporting our products. Our
inability to generate revenue from our sales offices and channel distribution
partners may harm our business, financial condition and results of operations.
If we do not increase our sales, our revenues may decrease and our business
may suffer.
Our future success, like the success of other telecommunications
management companies, will depend on deriving a substantial portion of our
revenues from sales of call accounting products to new customers as well as
updates and rate table renewals to existing customers. As a result, any factor
adversely affecting these sales, including market acceptance, product
performance and reliability, reputation, price competition and competing
products, as well as general economic and market conditions, could have a
material adverse effect on our business, consolidated results of operations and
financial condition.
PAGE 15
<PAGE>
AT COMM CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Our future ability to generate sales may depend on the interoperability of our
equipment with those of other vendors.
Our open, standards-based Town Square system is designed to interface
with support applications and devices from third party vendor in order to allow
our customers to take advantage of newer technology and support additional users
without the need to replace the entire system. If third party applications and
devices are not interoperable with our Town Square system, our customers may
seek other communications network solutions that can provide product
interoperability. This could seriously harm our business, financial condition
and prospects.
If our software products contain errors or defects, our revenues may decrease
and our business may suffer.
The software products we offer, like many software products, are
internally complex and, despite extensive testing and quality control, may
contain errors or defects ("bugs"), especially when first introduced. Defects or
errors could result in corrective releases to our software products, damage to
our reputation, loss of revenues, an increase in product returns, claims for
damages, or lack of market acceptance of our products, any of which could have a
material and adverse effect on our business, consolidated results of operations
and financial condition.
If we encounter delays or difficulties in developing our products, our
revenues may decrease and our business may suffer.
Delays or difficulties in the execution of product development may
occur within any telecommunications management company, including At Comm. These
delays or difficulties may result in the cancellation of planned development
projects and could have a material and adverse effect on our business,
consolidated results of operations and financial condition.
If we do not receive additional funding for our new product line, our
business may be adversely affected.
In 1997, we began a significant development effort in a new product
line addressing the combined telephony and data markets. Although we received
since 1997 approximately $32.9 million in funding for this development effort,
we will require additional funding before the new product line returns a profit.
The additional funding will be used for marketing, continued engineering, sales,
working capital, and to fund research and development activities. We cannot be
certain that we will be able to obtain the additional required funding, or that
the new product line will become profitable. Moreover, the introduction of the
new product line may result in a new group of competitors.
PAGE 16
<PAGE>
PART II - OTHER INFORMATION
AT COMM CORPORATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
The Company filed reports on Form 8-K on January 10, 2000 and Form 8-K/A on
March 7, 2000 pertaining to the sale of Preferred Stock.
The Company filed Form 8-K on May 12, 2000 pertaining to the redemption or
Series A Preferred Stock.
PAGE 17
<PAGE>
********************************************************************************
XIOX CORPORATION
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized officers of the registrant.
AT COMM CORPORATION
Registrant
Date: May 15, 2000
/s/ William H. Welling
----------------------------------------
William H. Welling, Chairman/CEO
(Duly Authorized Officer)
Date: May 15, 2000
/s/ Melanie D. Johnson
----------------------------------------
Melanie D. Johnson, VP Finance/CFO/Secretary
(Duly Authorized Officer)
PAGE 18
<PAGE>
May 15, 2000
Files Desk
Securities & Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
SUBJECT: At Comm Corporation
Commission File Number 0-15797
Dear SEC Representative:
Attached for filing pursuant to the Securities Exchange Act of 1934 (the "ACT" )
is At Comm Corporation's May 15, 2000 Edgar filing of a Financial Report for the
period ending March 31, 2000, under cover of the facing page of Form 10-QSB,
prepared pursuant to Securities and Exchange Commission Rule 15d-2.
Please acknowledge receipt of this filing.
Sincerely,
Melanie D. Johnson
Vice-President, Finance/CFO
At Comm Corporation
577 Airport Boulevard, Suite 700
Burlingame, CA 94010
Attachments
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the Company's
Condensed Consolidated Balance Sheets and Statements of Operations AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000782995
<NAME> At Comm Corporation
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 16,903,699
<SECURITIES> 0
<RECEIVABLES> 692,630
<ALLOWANCES> 115,026
<INVENTORY> 413,500
<CURRENT-ASSETS> 18,178,175
<PP&E> 4,860,957
<DEPRECIATION> 2,360,790
<TOTAL-ASSETS> 21,182,703
<CURRENT-LIABILITIES> 3,696,246
<BONDS> 0
0
25,480
<COMMON> 36,155
<OTHER-SE> 17,305,981
<TOTAL-LIABILITY-AND-EQUITY> 21,182,703
<SALES> 1,264,534
<TOTAL-REVENUES> 1,264,534
<CGS> 659,620
<TOTAL-COSTS> 5,529,499
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 837
<INCOME-PRETAX> (4,002,989)
<INCOME-TAX> 5,015
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,008,004)
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