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 September 30, 1997.
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from to
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Commission file number 0-18122
ANTENNAS AMERICA, INC.
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(Exact name of small business issuer as specified in its charter)
Utah 87-0454148
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization No.)
4860 Robb Street, Suite 101,
Wheat Ridge, Colorado 80033
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(Zip Code)
(303) 421-4063
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(Issuer's telephone number, including area code)
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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.
Yes X No
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As of September 30, 1997 the Registrant had outstanding 73,189,422 shares of its
common stock, par value $.0005.
Transitional Small Business Disclosure Format (Check One):
Yes No X
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ANTENNAS AMERICA, INC.
FORM 10-QSB
SEPTEMBER 30, 1997
TABLE OF CONTENTS
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Page No.
Part I
Item 1. Financial Statements
Balance Sheet as of September 30,1997 3
Statements of Operations for the Three and Nine
Months Ended September 30, 1997 and 1996 4
Statements of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996 5
Note to Financial Statements 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 7 - 8
Forward Looking Statements 9
Part II
Item 6. Exhibits and Reports on Form 8-K 10
2
<PAGE>
ANTENNAS AMERICA, INC.
BALANCE SHEET
FOR THE PERIOD ENDED SEPTEMBER 30, 1997
ASSETS 9/30/97
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Current Assets:
Cash $ 36,195
Accounts Receivable $ 344,850
Inventories $ 306,617
Prepaid Expenses $ 36,070
Tax Asset (NOL) $ 221,212
-----------
$ 944,944
Machinery & Equipment net of
accumulated depreciation $ 313,035
Other assets:
Intangible assets net of
accumulated amortization $ 42,480
Deposits $ 14,362
-----------
Total Assets $ 1,314,821
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Loan Account $ 202,490
Notes Payable $ 226,309
Accounts Payable-Trade $ 300,156
Other accrued liabilities $ 17,610
Customer deposits $ 3,613
-----------
Total current liabilities $ 750,178
Notes payable, officers $ 132,896
-----------
Total liabilities $ 883,074
Shareholders' Equity
Common stock, $.0005 par value,
250,000,000 shares authorized,
73,189,422 shares issued and
outstanding. $ 36,595
Paid in capital $ 801,039
Subscriptions to common stock $ 18,500
Retained earnings (deficit) ($ 424,387)
-----------
Total Equity $ 431,747
Total Liabilities and Equity $ 1,314,821
3
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<TABLE>
<CAPTION>
ANTENNAS AMERICA, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NINE MONTHS ENDED THREE MONTHS ENDED
-----------------------------------------------------------------------
9/30/97 9/30/96 9/30/97 9/30/96
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales, Net $ 2,055,582 $ 1,496,055 $ 695,600 $ 533,108
Cost of Sales $ 1,112,106 $ 873,818 $ 383,584 $ 307,588
----------- ----------- ----------- -----------
Gross Profit $ 943,476 $ 622,237 $ 312,016 $ 225,520
Selling, General and
Administrative Expenses $ 763,309 $ 589,271 $ 274,339 $ 213,988
----------- ----------- ----------- -----------
Income from Operations $ 180,167 $ 32,966 $ 37,677 $ 11,532
----------- ----------- ----------- -----------
Other Income and (Expense):
Misc. Income $ 0 $ 807 $ 0 $ 26
Gain from Debt Cancellation $ 0 $ 49,118 $ 0 $ 6,591
Interest Expense ($ 49,429) ($ 42,515) ($ 15,555) ($ 9,848)
Net Income
before Income Taxes $ 130,738 $ 40,376 $ 22,122 $ 8,301
----------- ----------- ----------- -----------
Income Tax $ 44,450 $ 13,728 $ 7,521 $ 2,822
----------- ----------- ----------- -----------
Net Income $ 86,288 $ 26,648 $ 14,601 $ 5,479
----------- ----------- ----------- -----------
Average Shares Outstanding 73,189,422 72,539,422 73,189,422 72,539,422
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4
</TABLE>
<PAGE>
Antennas America, Inc.
Consolidated Statements of Cash Flows
For The Nine Months Ended September 30, 1997 and 1996
(Unaudited)
1997 1996
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Net income $ 86,288 $ 26,648
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,200 28,309
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (178,439) (11,832)
(Increase) decrease in inventory (110,769) (46,985)
(Increase) decrease in deferred tax asset 44,450 13,728
(Increase) decrease in prepaid expenses 3,127 (19,570)
(Increase) decrease in other assets 4,026 (2,037)
Increase (decrease) in accounts payable and
accrued expenses 87,529 (15,824)
Increase (decrease) in customer deposits 3,613 22,593
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Total adjustments (121,263) (31,618)
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Net cash provided by (used in) operating activities (34,975) (4,970)
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Cash flows from investing activities:
Patent acquisition costs (4,228) (8,108)
Acquisition of plant and equipment (173,398) (78,118)
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Net cash (used in) investing activities (177,626) (86,226)
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Cash flows from financing activities:
Common stock subscriptions 15,000 210,250
Repayment of officer loans (42,671) (24,488)
Purchase of officer's stock 0 (34,605)
Proceeds from note payable 272,551 36,000
Repayment of notes payable (51,720) (84,985)
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Net cash provided by financing activities 193,160 102,172
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Increase in cash (19,441) 10,976
Cash, beginning of period 55,636 15,911
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Cash, end of period $ 36,195 $ 26,887
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See accompanying note to financial statements.
5
<PAGE>
ANTENNAS AMERICA, INC.
NOTE TO FINANCIAL STATEMENTS
September 30, 1997
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements contain all adjustments necessary to present fairly the
financial position of the Company, as of September 30, 1997 and the results of
operations and cash flows for the periods presented. All such adjustments are of
a normal recurring nature. The results of operations for the periods presented
are not necessarily indicative of the results for the full year.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements in Form 10-KSB for the year ended December 31,
1996. These financial statements should be read in conjunction with the
financial statements and notes included in the Form 10-KSB.
6
<PAGE>
ANTENNAS AMERICA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
For the period ended September 30,1997
RESULTS OF OPERATIONS
---------------------
The Company's net income for the three and nine months ended September 30, 1997
was $14,601 and $86,288,respectively,as compared with $5,479 and $26,648 ended
September 30, 1996. The net income for the nine month period ended September 30,
1997 did not include any gain from debt cancellation as compared to the $49,118
gain from debt cancellation for the nine month period ended September 30, 1996.
Income from operations was $37,677 and $180,167, respectively, for the three and
nine month periods ended September 30, 1997 as compared with $11,532 and
$32,966, respectively for three and nine month periods ended September 30, 1996.
Sales were $695,600 and $2,055,582, respectively, for the three and nine month
periods ended September 30, 1997 as compared with $533,108 and $1,496,055,
respectively, for the three and nine month periods ended September 30, 1996,
which is an increase of 30% as compared with the three month period ended
September 30, 1996 and an increase of 37% as compared with the nine month period
ended September 30, 1996. These increases are due primarily to the sales of the
Freedom(TM) and Walldo(TM) VHF/UHF off-air antennas, and to the increase in
sales for the mobile disguised decal antenna series.
Gross profit margin (gross profit divided by net sales) for the three and nine
months ended September 30, 1997 was 45% and 46% respectively, as compared with
42% and 42% for the three and nine months ended September 30, 1996. The increase
is attributable to the improvement in the Company's production efficiency and to
the increase in the sales of its mobile products. Selling, general and
administrative expenses as a percentage of sales decreased from 40 to 39 percent
for the three month period and from 39 to 37 percent for the nine month period
even though total selling, general and administrative expenses increased for
both periods.
FINANCIAL CONDITION
-------------------
Compared to December 31, 1996 the Company's total assets as of September 30,
1997 increased $370,589 to $1,314,821, due primarily to the increase in sales,
accounts receivable and inventory. Liabilities increased from $613,775 to
$883,074, due to the ongoing use of the $500,000 line of credit with Norwest
Business Credit, Inc. Shareholders' equity improved from $330,457 to $431,747,
which is primarily a result of the net operating income for the period. As of
September 30, 1997 the company continues to operate on a positive cash flow
basis from its operations.
Despite the substantial increase in sales, sales for the three month period
ended September 30, 1997, were negatively impacted for two reasons. First, one
of the Company's competitors disseminated what the Company believes is a
misleading and inaccurate report regarding testing of the Company's new VHF/UHF
off-air antenna systems, which among other things, caused a delay in the
issuance of purchase orders for the products from at least one major electronics
retailer and negatively influenced the sales force of the Company's largest
distributor.
7
<PAGE>
FINANCIAL CONDITION (continued)
-------------------------------
Subsequently, the Company filed a suit against the competitor for, among other
things, consumer fraud, deceptive trade practices, and tortious interference
with prospective economic advantage. The lawsuit was filed in the United States
District Court for the Northern District of Illinois. The Company is seeking
damages for the circulation of the report, together with attorneys' fees and the
costs related to the delays in receiving purchase orders for the Company's
products.
Secondly, the Company's primary outsource supplier of plastic failed to notify
the Company for several weeks of its delay in the placement of the Company's
plastic order. This subsequently caused a delay in the production of the
Company's MMDS flat antenna systems scheduled for delivery in August/September.
The Company has now invested in new equipment for the in-house manufacture of
its plastic products and is now vertically integrated as it relates to the
Company's primary component manufacturing for its off-air, MMDS, and panel
antenna series. This investment is anticipated to allow the production of up to
22,000 plastic parts per month and, more importantly is anticipated to have a
positive effect on the company's gross margin.
Management anticipates a steady increase in the sales of its VHF/UHF off-air
Freedom(TM) and Walldo(TM) antennas not only as the result of its own marketing
efforts but also because of the growing marketing emphasis for off-air antennas
by the direct broadcast satellite (DBS) industry. Because consumers that
purchase 18" diameter satellite dish systems must use other means to receive
their local television stations' signals, DirecTV(R) and its partner US
Satellite Broadcasting (USSB) have each budgeted several million dollars for a
marketing campaign to help educate consumers nationwide about "antenna
solutions" for local off-air TV reception. Management believes that the Company
is well positioned to benefit from these above-referenced marketing efforts due
in some measure to the previously announced license granted to the Company by
DirecTV(R) for the Company to use DirecTV(R)'s DSS(R) trademark on the Company's
Freedom(TM) antenna.
8
<PAGE>
FORWARD LOOKING STATEMENTS
This report contains forward looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Although the Company believes that the expectations reflected in the
forward looking statements and the assumptions upon which the forward looking
statements are based are reasonable, it can give no assurance that such
expectations and assumptions will prove to be correct. See the Company's Annual
Report on Form 10-KSB for additional statements concerning important factors,
such as demand for products, manufacturing costs, and competition, that could
cause actual results to differ materially from the Company's expectations.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. Exhibits And Reports On Form 8-K
(a) Exhibits.
None
(b) Reports on Form 8-K.
One report on Form 8-K was filed by the Registrant July 14, 1997.
It reported the press release announcing a $500,000 credit
facility with Norwest Business Credit, Inc., a subsidiary of
Norwest Bank.
Another report on Form 8-K was filed July 18, 1997 reporting the
press release announcing the Company being licensed by
DIRECTV(R), a division of Hughes Electronics Corporation, to use
the DSS(R) trademark on the Company's new FREEDOM(TM) Antenna
system
A copy of the August 14, 1997, press release announcing the
results of operations for the second quarter of 1997 was also
reported on Form 8-K and filed August 15, 1997.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act Of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ANTENNAS AMERICA, INC.
Date: November 12, 1997 By: /s/ Randall P. Marx
----------------------------------------
Randall P. Marx
Chief Executive Officer
and Principal Financial Officer
11
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 36,195
<SECURITIES> 0
<RECEIVABLES> 344,850
<ALLOWANCES> 0
<INVENTORY> 306,617
<CURRENT-ASSETS> 738,094<F1>
<PP&E> 711,663<F2>
<DEPRECIATION> 134,937
<TOTAL-ASSETS> 1,314,821
<CURRENT-LIABILITIES> 750,178
<BONDS> 132,896
0
0
<COMMON> 36,595
<OTHER-SE> 395,152
<TOTAL-LIABILITY-AND-EQUITY> 1,314,821
<SALES> 2,055,582
<TOTAL-REVENUES> 2,055,582
<CGS> 1,112,106
<TOTAL-COSTS> 1,875,415
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (49,429)
<INCOME-PRETAX> 130,738
<INCOME-TAX> 44,450
<INCOME-CONTINUING> 180,167
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86,288
<EPS-PRIMARY> .001
<EPS-DILUTED> .001
<FN>
<F1>Includes deposits
<F2>Includes intangible assets
</FN>
</TABLE>
