As filed with the Securities And Exchange Commission on May 22, 1998
Registration Number _________
U.S. Securities And Exchange Commission
Washington, D.C. 20549
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ANTENNAS AMERICA, INC.
(Name of small business issuer in its charter)
Utah 4899 87-0454148
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
4860 Robb Street, Suite 101, Wheat Ridge, CO 80033-2163, (303) 421-4063
(Address and telephone number of principal executive offices)
4860 Robb Street, Suite 101, Wheat Ridge, CO 80033-2163 (Address of
principal place of business or intended principal place of business)
Randall P. Marx, 4860 Robb Street, Suite 101, Wheat Ridge, CO 80033-2163,
(303) 421-4063
(Name, address and telephone number of agent for service)
Copies to:
Alan L. Talesnick, Esquire
Francis B. Barron, Esquire
Bearman Talesnick & Clowdus Professional Corporation
1200 Seventeenth Street, Suite 2600
Denver, Colorado 80202
(303) 572-6500
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------
Title of each Proposed maximum Proposed maximum Amount of
class of securities Amount to be offering price aggregate offering registration
to be registered registered per share price fee
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.0005 par
value, issuable
upon exercise
of Stock Options 6,000,000 $.09 (1) $540,000 $160
Stock Options
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 based on the average of the closing bid and asked prices of
the Company's Common Stock on the OTC Bulletin Board on May 15, 1998 which is
within five business days of the date of filing of this registration statement
(May 22, 1998).
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
(ii)
<PAGE>
[Red Ink]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities And Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
(iii)
<PAGE>
PRELIMINARY PROSPECTUS DATED MAY 22, 1998
SUBJECT TO COMPLETION
ANTENNAS AMERICA, INC.
6,000,000 Shares Of Common Stock
This Prospectus relates to the transfer of 6,000,000 shares (the "Shares")
of the $.0005 par value common stock (the "Common Stock") of Antennas America,
Inc. (the "Company") by a certain holder of the Company's securities (the
"Selling Security Holder") that may acquire restricted shares of the Company's
Common Stock upon the exercise of options held by the Selling Security Holder in
transactions exempt from registration pursuant to federal and state securities
laws. See "SELLING SECURITY HOLDER". The Shares offered through this Prospectus
may be sold from time to time by the Selling Security Holder. The Company will
receive no proceeds from the sales of the Shares by the Selling Security Holder.
No underwriting arrangements have been entered into by the Selling Security
Holder. The distribution of the Shares by the Selling Security Holder may be
offered in one or more transactions that may take place in the over-the-counter
market, including ordinary brokers' transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such Shares
as principals, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. Usual and
customary or specifically negotiated brokerage fees or commissions may be paid
by the Selling Security Holder in connection with sales of the Shares by the
Selling Security Holder. See "SELLING SECURITY HOLDER".
The Company's Common Stock is quoted on the OTC Bulletin Board under the
symbol "ANTM". On May 15, 1998, the closing bid price of the Common Stock was
$.085 per share and the closing asked price was $.095 per share. That price
information is based on information obtained by the Company from the National
Quotations Bureau. Certain rules of the Securities And Exchange Commission (the
"Commission") may have a negative affect on the trading of the Common Stock. See
"RISK FACTORS-Regulation Of Trading In Low-Priced Securities May Discourage
Investor Interest".
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE, AND INVESTMENT THEREIN
INVOLVES A HIGH DEGREE OF RISK. FOR A DESCRIPTION OF CERTAIN RISKS REGARDING AN
INVESTMENT IN THE COMPANY, SEE "RISK FACTORS" PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION
NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The expenses of the offering described in this Prospectus, which are
payable by the Company, are estimated to be approximately $12,000.
The date of this Prospectus is __________, 1998.
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024 and at
the following Regional Offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, New York, New York
10048. Copies of such material also can be obtained at prescribed rates by
writing to the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, materials filed electronically by the
Company with the Commission are available at the Commission's World Wide Web
site at http://www.sec.gov.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS AND
CAUTIONARY STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act Of 1933, as amended (the "Securities Act"),
and Section 21E of the Exchange Act. All statements other than statements of
historical fact included in this Prospectus, regarding the Company's financial
position, business strategy, plans and objectives of management of the Company
for future operations and capital expenditures are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct.
Additional statements concerning important factors that could cause actual
results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed in the "RISK FACTORS" section and elsewhere in this
Prospectus. All written and oral forward-looking statements attributable to the
Company or persons acting on its behalf subsequent to the date of this
Prospectus are expressly qualified in their entirety by the Cautionary
Statements.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere in this Prospectus. As
used herein, the "Company" means Antennas America, Inc. Unless otherwise
indicated, all references to annual or quarterly periods refer to the Company's
fiscal year ending December 31.
THE COMPANY
General
The Company, formerly Westflag Corporation, which was formerly Westcliff
Corporation, was organized under the laws of the State of Utah on September 30,
1987 for the purpose of acquiring one or more businesses. In January 1989, the
Company completed its initial public offering of its securities resulting in net
proceeds to the Company of approximately $363,000. On April 12, 1989, the
Company merged with Antennas America, Inc., a Colorado corporation ("Antennas
Colorado") that had been formed in September 1988 and that had developed an
antenna design technique that would permit the building of flat (as compared to
parabolic) antenna systems. Pursuant to the merger, Antennas Colorado was merged
into the Company, all the issued and outstanding stock of Antennas Colorado was
converted into 41,951,846 shares of the Company's Common Stock, and the
Company's name was changed to Antennas America, Inc. The Company's operations
consist of the design, development, marketing and sale of a diversified line of
antennas and related wireless communication systems, including conformal and
phased array antennas.
Principal Offices
The Company's principal executive and administrative offices are located at
4860 Robb Street, Suite 101, Wheat Ridge, Colorado 80033. The telephone number
at that location is (303) 421-4063.
THE OFFERING
This Prospectus relates to the transfer of 6,000,000 shares of the Common
Stock that may be acquired by the Selling Security Holder upon the exercise of
the options held by the Selling Security Holder. The transfer of the Common
Stock by the Selling Security Holder covered by this Prospectus will be
completed, if at all, by the Selling Security Holder, and not by the Company. If
any of these shares is transferred by the Selling Security Holder, they will be
transferred on behalf of that person and it is anticipated that the shares may
be offered pursuant to direct sales to private persons and in open market
transactions. The Selling Security Holder may offer the shares to or through
registered broker-dealers who will be paid standard commissions or discounts by
the Selling Security Holder. The Selling Security Holder has no agreements with
any brokers to transfer any or all of the shares which may be offered hereby.
The Company will receive no proceeds from the sale or other transfer of the
Common Stock by the Selling Security Holder.
3
<PAGE>
SUMMARY SELECTED FINANCIAL DATA
The financial statements included in this Prospectus set forth information
regarding the Company for the years ended December 31, 1997 and 1996 and the
three months ended March 31, 1998 and 1997. The summary selected financial data
shown below is derived from, and is qualified in its entirety by, these
financial statements, which are contained in the "FINANCIAL STATEMENTS" section
of this Prospectus.
Year Ended Three Months Ended
December 31, March 31,
------------------------ ---------------------
1997 1996 1998 1997
----------- ----------- --------- ---------
Operating Results: (unaudited)
Sales, Net $3,012,266 $1,975,184 $842,784 $615,376
Net Income $134,500 $9,346 $5,869 $33,939
Net Income Per Share $0.00 $0.00 $0.00 $0.00
December 31, 1997 March 31, 1998
------------------------ ---------------------
Balance Sheet Data: (unaudited)
Total Assets $1,627,071 $1,687,917
Long Term Debt $3,127 $ -
Total Liabilities $1,147,114 $1,202,091
Accumulated Deficit $(376,177) $(370,308)
Total Shareholders' Equity $479,957 $485,826
4
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. BEFORE MAKING AN INVESTMENT IN THE COMPANY, PROSPECTIVE INVESTORS SHOULD
GIVE CAREFUL CONSIDERATION TO THE FOLLOWING RISK FACTORS AFFECTING THE BUSINESS
OF THE COMPANY AND ITS SECURITIES, TOGETHER WITH OTHER INFORMATION IN THIS
PROSPECTUS.
1. Operating History. From its inception in September 1987 through the
fiscal year ended December 31, 1992, the Company incurred losses from
operations. For the fiscal years ended December 31, 1993, 1994, 1995, 1996 and
1997, respectively, the Company operated at a profit. Although the Company
believes that it will be able to continue to operate profitably, as it has since
1993, there is no assurance that the operations of the Company will continue to
be profitable. See "FINANCIAL STATEMENTS".
2. Developments In Technology. The communications industry, and
particularly the microwave and satellite communications and antenna industries,
are characterized by rapidly developing technology. Changes in technology could
affect the market for the Company's products and necessitate additional
improvements and developments to the Company's products. There can be no
assurance that the Company's research and development activities will lead to
the successful introduction of new or improved products or that the Company will
not encounter delays or problems in connection therewith. The cost of completing
new technologies to satisfy minimum specification requirements and/or quality
and delivery expectations may exceed original estimates that could adversely
affect operating results during any financial period.
3. Patents. Kevin O. Shoemaker, the Company's Chief Scientist and Chairman
of the Board, is the record owner of a U.S. patent, subject to annual renewal
fees, valid through the year 2007, for microstrip antennas and multiple radiator
array antennas. Mr. Shoemaker also is the record owner of a U.S. patent for a
serpentine planar broadband antenna valid through the year 2011. This is the
design that the Company uses for some of its conformal antennas, including the
vehicular disguised decal antennas and related products. In addition, Mr.
Shoemaker and Randall P. Marx, the Company's Chief Executive Officer, are the
record owners of a patent relating to the technique and design of the Company's
FREEDOM(TM) and WALLDO(TM) local TV, VHF/UHF antenna systems. Furthermore, Mr.
Shoemaker and Mr. Marx have jointly applied for a patent for the process used to
manufacture certain of the Company's flat planar antennas. Mr. Shoemaker and Mr.
Marx each has permanently assigned to the Company all of the rights in these and
all other antennas that have been and will be developed while employed by the
Company. Although, when practical, the Company intends to file for patent
protection on all the products or processes that it feels are proprietary in
nature, it may not be able to obtain patent protection for all its products. The
inability of the Company to be able to patent all its products or processes may
be an impediment to its capability to exploit certain expanding markets. Even
with patents granted, they may not provide effective protection against
competitors.
4. Limited Financial Resources. The Company has limited financial resources
available to it, and this may restrict the Company's ability to grow. Additional
capital from sources other than the Company's cash flow may be necessary to
develop new products, and there is no assurance that such financing will be
available from any source. Management believes that it can sustain its current
business without additional funding, but it may not be able to increase the
Company's business as desired without additional funding.
5
<PAGE>
5. Competition. The communications industry is highly competitive, and the
Company competes with substantially larger companies in the production and sale
of antennas. In addition, these competitors have larger sales forces and more
highly developed marketing programs as well as larger administrative staffs and
more available service personnel. The larger competitors also will have greater
financial resources available to develop and market competitive products. The
presence of these competitors may be a significant impediment to any attempts by
the Company to develop its business. The Company believes, however, that it will
have certain advantages in attempting to develop and market its products
including a more cost-effective technology, the ability to undertake smaller
projects, and the ability to respond to customer requests more quickly than some
larger competitors. There is no assurance that these conclusions will prove
correct.
6. Availability Of Labor. The Company produces and assembles its products
at its own facility and is dependent on efficient workers for this function.
There is no assurance that efficient workers will continue to be available to
the Company at a cost consistent with the Company's budget.
7. Dependence On Key Personnel. The success of the Company is largely
dependent upon the efforts of its executive management, including Randall P.
Marx, the Chief Executive Officer of the Company. The loss of the services of
any of these persons could be detrimental to the Company as there is no
assurance that the Company could replace any of them adequately at an affordable
compensation level.
8. Government Regulation. The Company is subject to government regulation
of its business operations in general. Antennas that are designed only to
receive signals are not currently subject to regulation by the Federal
Communications Commission ("FCC"), but certain of the Company's new products are
subject to regulation by the FCC. There is no assurance that subsequent changes
in laws or regulations will not affect the Company's operations.
9. Inactive Trading Of The Common Stock; Possible Volatility Of Stock
Price. There is an extremely limited public market for the Common Stock, and
there is no assurance that this market will be sustained or will expand. See
"INACTIVE TRADING OF THE COMMON STOCK". The prices of the Company's securities
are highly volatile. In any event, due to the low price of the securities, many
brokerage firms may not effect transactions and may not deal with low priced
securities as it may not be economical for them to do so. This could have an
adverse effect on developing and sustaining the market for the Company's
securities. Further, there is no assurance that any investor will be in a
position to borrow funds using the Company's securities as collateral.
For the foreseeable future, trading in the Company's securities, if any,
will occur in the over-the-counter market and the securities will be quoted on
the OTC Bulletin Board. The closing quotes for the Common Stock on May 15, 1998
were $.085 bid and $.095 asked. The Company does not anticipate that its Common
Stock will qualify for listing on the Nasdaq Stock Market in the near future.
Accordingly, a holder of the Company's securities may be unable to sell its
securities when it wishes to do so, if at all. In addition, the free
transferability of these securities will be dependent on the securities laws of
the various states in which it is proposed these securities be traded.
10. Regulation Of Trading In Low-Priced Securities May Discourage Investor
Interest. The Commission has adopted rules that regulate broker-dealer practices
in connection with transactions in "penny stocks". Penny stocks generally are
6
<PAGE>
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system). If the
Company's securities are traded for less than $5 per security, then unless (i)
the Company's net tangible assets exceed $5,000,000 during the Company's first
three years of continuous operations or $2,000,000 after the Company's first
three years of continuous operations; or (ii) the Company has had average
revenue of at least $6,000,000 for the last three years, the respective security
will be subject to the Commission's penny stock rules unless otherwise exempt
from those rules. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prescribed by the Commission that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing before or with
the customer's confirmation. In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from such rules,
the broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. As long as the Company's Common
Stock is subject to the penny stock rules, the holders of the Company's Common
Stock may find it difficult to sell the Common Stock of the Company.
CAPITALIZATION
The following table sets forth the historical capitalization of the Company
as of March 31, 1998. This table should be read in conjunction with the
Financial Statements of the Company, the notes thereto and the other financial
data. See "FINANCIAL STATEMENTS".
Cash $22,280
Shareholders' Equity:
Common Stock, $.0005 par
value; 250,000,000 shares
authorized, 73,839,422
issued and outstanding $36,920
Additional paid-in capital $819,214
Accumulated deficit $(370,308)
Total Shareholders' Equity $485,826
Total Capitalization $485,826
7
<PAGE>
PRICE RANGE OF COMMON STOCK
Trading in the Company's securities is very limited. The Company's Common
Stock is traded in the over-the-counter market through the "pink sheets" and the
OTC Bulletin Board. The Company's securities are not quoted on any established
stock exchange or on the NASDAQ Stock Market. Because trading in the Company's
securities is so limited, prices are highly volatile. Quotations provided below
for the past two fiscal years and for the quarter ended March 31, 1998 are the
inter-dealer quotations provided by the National Quotations Bureau, without
retail markup, markdown or commission, and do not necessarily represent actual
transactions.
Common Stock
------------
Bid
---
Quarter Ended High Low
------------- ---- ---
March 31, 1996 .05 .02
June 30, 1996 .24 .04
September 30, 1996 .14 .03
December 31, 1996 .06 .03
March 31, 1997 .20 .06
June 30, 1997 .06 .04
September 30, 1997 .12 .03
December 31, 1997 .09 .04
March 31, 1998 .165 .05
On May 15, 1998, the closing bid price for the Company's Common Stock was
$.085 per share.
Number Of Shareholders Of Record
On April 15, 1998, the number of Shareholders of record of the Company was 340.
DIVIDEND POLICY
The Company has not declared or paid any cash dividends on its Common Stock
since its formation and does not presently anticipate paying any cash dividends
on its Common Stock in the foreseeable future. The Company currently intends to
retain any future earnings to finance the expansion and continued development of
its business.
BUSINESS OF THE COMPANY
General
Business Development. Antennas America, Inc., formerly Westflag
Corporation, which was formerly Westcliff Corporation, was organized under the
laws of the State of Utah on September 30, 1987 for the purpose of acquiring one
or more businesses. In January 1989, the Company completed its initial public
offering of 10,544,650 units at $.04 per unit resulting in net proceeds to the
Company of approximately $363,000. (The number of units and price per unit have
8
<PAGE>
been adjusted to reflect the Company's one-for-four reverse split in April 1989
that is described below). Each unit consisted of one share of common stock, one
Class A Warrant and one Class B Warrant. All the Class A and Class B Warrants
expired without exercise and no longer exist. In April 1989, the Company
effected a one-for-four reverse split so that each four outstanding shares of
common stock prior to the reverse split became one share after the reverse
split. Unless otherwise indicated, all references in this Prospectus to the
number of shares of the Company's common stock have been adjusted for the effect
of the one-for-four reverse split.
On April 12, 1989, the Company merged with Antennas America, Inc. a
Colorado corporation, Antennas Colorado, that had been formed in September 1988
and that had developed an antenna design technique that would permit the
building of flat (as compared to parabolic) antenna systems. Pursuant to the
merger, Antennas Colorado was merged into the Company, all the issued and
outstanding stock of Antennas Colorado was converted into 41,951,846 shares of
the Company's Common Stock, and the Company's name was changed to Antennas
America, Inc.
Business Of Issuer. The Company's operations consist of the design,
development, marketing and sale of a diversified line of antennas and related
wireless communication systems, including conformal and phased array antennas.
Principal Products
Conformal Antennas
A conformal antenna is one that is constructed so that it conforms
technically and physically to its product environment. The first product
introduced by the Company in this category was the disguised decal antenna,
which has been patented by the Company. This product, introduced in 1989
originally only for conventional automobile cellular phones, is an alternative
to the conventional wire type antenna and has been expanded to be used for
numerous mobile applications, including Cellular, UHF, VHF, ETACS, GSM, PCS,
SMR, Passive Repeaters and GPS. The antenna is approximately 3 1/2" x 3 1/2" and
typically installs on the inside of the vehicle so that it is not detectable
from the outside of the vehicle.
Several derivative products of this antenna design have been developed for
special applications and O.E.M. (original equipment manufacturer) customers. For
the fiscal year ended December 31, 1997, the patented decal antenna and other
conformal derivatives of the decal antenna accounted for approximately 60
percent of the Company's sales.
The Company began marketing several new conformal antenna systems in 1997,
including two off-air antennas to receive local TV broadcasts, a GPS (Global
Positioning Systems) antenna, and the Twinbooster passive repeater antenna
system to improve the performance of a cellular phone signal when used inside an
automobile.
GPS Antennas
The Company has developed a proprietary flat GPS system that integrates
with a GPS receiver. GPS receivers communicate with several globe-circling
satellites that will identify longitude and latitude coordinates of a location.
These satellite systems have been used for years by the military and more
recently in boats, planes, for surveying purposes, and even by hikers. Accurate
to within approximately 100 yards, there are several types of GPS systems, some
of which are the size of a car phone and are very easy to use. The Company
9
<PAGE>
anticipates marketing its GPS antenna products on an O.E.M. basis for the
purposes of fleet management and in-vehicle mapping systems.
Flat Panel and Phased Array Antennas
The flat panel and phased array antennas are flat antennas that typically
incorporate a group of constituent antennas all of which are equidistant from
the center point. These types of antennas are used to receive and/or transmit
data, voice and, in some cases, video from microwave transmitters or satellites.
The Company is currently developing and selling various versions of these
antennas to private, commercial and governmental entities. As described below,
the Company's three primary projects for this antenna design are (i) the
"off-air" antennas for local television reception with satellite and other TV,
(ii) the flat panel receive and transmit antennas for Micron Communications, a
subsidiary of Micron Technologies Inc. ("Micron"), and (iii) the MMDS phased
array antenna systems for the wireless cable market as described below.
Off-Air Antennas For Local Reception With Satellite And Other TV. Home
satellite television systems recently have become extremely popular and
affordable. The single biggest drawback to the 18" home TV satellite system is
that the viewer cannot receive local TV broadcasts from the satellite system.
U.S. federal law prohibits subscribers to satellite services from receiving
local channels or other network programming if those networks are available
using a VHF/UHF antenna. In order to receive local TV broadcasts, the viewer
must resort to installing outdated receive equipment which typically includes
"rabbit ears" or the conventional "yagi" roofmount antenna. In December 1996,
the Company introduced two new flat conformal antenna systems to provide local
TV reception where digital satellite systems are utilized. These antennas
combine the Company's conformal and phased array technology.
The Company's FREEDOM(TM) Antenna System is a flat VHF/UHF TV antenna that
provides local TV reception and attaches to the back of the satellite dish so
that it is virtually invisible when installed. Designed to be inconspicuous, the
FREEDOM(TM) Antenna is an ideal solution to the problem of local TV program
reception with the popular 18" dishes.
In July 1997, the Company was 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. Prior to issuing the license, DIRECTV(R) evaluated
the FREEDOM(TM) Antenna for performance. DIRECTV(R), which is the largest
provider of direct-to-home (DTH) digital programming, broadcasts directly from
satellites to the home via the popular, easily installed 18" satellite dish.
The WALLDO(TM) Antenna System is a flat VHF/UHF TV antenna, measuring 15
1/2"x 13" x 2", which attaches to the house or other structure and provides
local TV reception. This antenna is designed so that it conceals the fact that
an outdoor antenna has been installed. Both the FREEDOM(TM) and the WALLDO(TM)
antennas are omnidirectional and work in locations where a medium gain antenna
is required, which is generally within a 25 mile radius of the local TV
stations' transmitters. Because the WALLDO(TM) antennas can be attached to the
side of the house or to the other structures, the Company will market it as the
solution to the problem of antenna installations on rooftops where there may be
limitations due to zoning codes, covenants, or homeowner restrictions or where
there is the need for a more aesthetically pleasing solution. The Company has
not applied to DIRECTV(R) for licensing the WALLDO(TM) Antenna.
In March 1998, the Company announced that it had agreed with Jasco
Products, Inc. ("Jasco") based in Oklahoma City, Oklahoma for Jasco to market
10
<PAGE>
the Company's new local TV antennas. Under the arrangement, Jasco will market
the antennas to mass-market retail accounts within the United States under the
Emerson(R) name and will be responsible for the marketing and distribution of
the antennas, including product literature, in-store point of purchase displays,
and other related marketing services to these customers.
Flat Panel Antennas for Micron Communications. By modifying its existing
line of flat panel and phased array antenna designs, the Company has developed
and is in the process of submitting final prototype antennas for approval and
possible incorporation into Micron Communication's Microstamp(R) program.
Micron's Microstamp(R) product is a small remote intelligence device that can
store 256 bytes of data and communicate by remote antennas with a host computer
from up to 40 feet away. Typical applications for the Microstamp(R) product
include automatic fuel dispensing, airline baggage tracking, automated warehouse
solutions and personnel ID and access control.
MMDS Antennas For Wireless Cable. In 1995, the Company introduced three new
phased array antenna systems to the wireless cable market. Known in the industry
as MMDS (Multichannel, Multipoint Distribution Systems), these antenna systems
are direct competitors of cable TV and satellite TV. MMDS (wireless cable) is
similar to conventional cable with the exception that it uses a microwave
frequency to transmit the channels for home viewing. The signals can usually be
received approximately 30 miles from the transmitter by installing a receive
antenna on the subscriber's home.
As a result of the enactment of the U.S. 1996 Telecommunications Act,
telecommunications companies are now permitted to compete directly in the video
distribution market in the United States. This allows companies such as
BellSouth, Pacific Telesis, BellAtlantic and Nynex to use this technology to
deliver video programming to selected major markets.
The Company's MMDS antennas replace conventional grid antennas commonly
installed as the receiving antenna on customers' rooftops. The product offers
several features over conventional parabolic antennas in that it is flat, has a
higher efficiency allowing for a smaller size, and can be mounted in several
locations in the home such as windows, an eave or the chimney. Typically the
Company's phased array products perform on an equal basis to conventional
antennas with cost savings and substantial installation and maintenance savings
to the MMDS service provider. The Company sold over 1,000 of its MMDS antennas
through a distributor to BellSouth Corporation in 1997 for a test of BellSouth's
new digital MMDS system and is currently attempting to market its flat antenna
to other domestic and international wireless cable customers. The wireless cable
industry in general is experiencing delays in the roll out of the digital cable
systems. The Company is currently allocating few of its marketing and
manufacturing resources to this industry until it believes that there is a clear
direction with respect to wireless cable digital programming. At such time that
this trend reverses, the Company will aggressively market its existing products
to digital wireless cable providers.
Other Antennas
The Company is pursuing new business opportunities for the conformal and
phased array antennas by continuing to broaden and adapt its existing
technologies. Currently, the Company designs or manufactures antennas varying in
frequency from 27 MHz to 12 GHz. These antennas all use the Company's flat
antenna design to provide inconspicuous installation. All of the Company's
antennas are designed to be manufactured using existing design footprints. This
allows the Company to better use its engineering and technical staff, suppliers
11
<PAGE>
and production staff. This also allows the Company, in some cases, to use
existing tools, dies and radomes for more than one product.
Marketing And Distribution
The Company's commercial line of antennas is marketed by the Company
directly to distributors, installers and retailers of antenna accessories.
Current distribution consists of several domestic and international
distributors, including several hundred active retail dealers. The Company
markets its diversified proprietary designs to its existing and potential
customers in the commercial, government and retail market places. Potential
customers are identified through trade advertising, phone contacts, trade shows,
and field visits. The Company also provides individual catalog and specification
brochures describing existing products. The same brochures are utilized to
demonstrate the Company's capabilities to develop related products for O.E.M.
and other commercial customers. The Company introduced its web page,
www.antennas.com, in late 1997. This web page includes information about the
Company's products and background as well as financial and other
Shareholder-oriented information. The web page, among other things, is designed
to encourage both existing and potential customers to view the Company as a
potential source for diversified antenna solutions. The Company expects to
receive additional inquiries through the web page in 1998 that will be pursued
by the Company's in-house sales personnel. To help customers get answers quickly
about its products, the Company has established a toll-free telephone number
administered by our customer service personnel from 8:00 am to 5:00 pm MST. All
the Company's products are currently made in the U.S.A., which the Company
considers to be a marketing advantage over most of its competitors. Many of the
products developed by the Company are currently being marketed internationally.
The Company currently has 9 international distributors marketing its products in
12 countries.
Production
The Company made many changes to its production operations in 1997. In
anticipation of continued growth, investments were made in manufacturing
equipment and facilities as well as personnel. The manufacturing of the
Company's products is now more under the control of the Company than ever
before. The Company now produces most of the customized items it uses to
manufacture its products excluding cable, connectors and other generic
components. It is anticipated that these changes will allow the Company to be
more efficient and more responsive to customers, will lower the overall cost of
production, and will better allow the Company to take advantage of more
opportunities in the wireless communications market.
Research And Development
Research and development and software costs are charged to operations when
incurred and are included in operating expenses except when specifically
contracted by the Company's customers. Except for salaries of engineering
personnel involved in research and development, the Company's research and
development costs were not material in 1996 or 1997. The Company's research and
development personnel develop products to meet specific customer, industry and
market needs that the Company believes will compete effectively against products
distributed by larger companies. Quality assurance programs are implemented into
each development and manufacturing project, and the Company enforces strict
quality requirements on components received from non-Company manufacturing
facilities. There can be no assurance that the Company's research and
development activities will lead to the successful introduction of new or
improved products or that the Company will not encounter delays or problems in
connection therewith. The cost of completing new technologies to satisfy minimum
12
<PAGE>
specification requirements and/or quality and delivery expectations may exceed
original estimates that could adversely affect operating results during any
financial period.
Employees
The Company currently has 42 full time employees including Randall P. Marx,
Chief Executive Officer and Treasurer, Kevin O. Shoemaker, Chairman of the Board
and Chief Scientist, and Richard L. Anderson, Vice President of Administration
and Secretary. Each of Messrs. Marx, Shoemaker and Anderson is a director of the
Company.
Competition
The antenna and receiver industry is highly competitive, and the Company's
current and proposed products compete with products of larger companies that are
better financed, have established markets, and maintain larger sales
organizations and production capabilities. In marketing its products, the
Company has encountered competition from other companies, both domestic and
international, marketing more conventional antenna systems. Therefore, at the
present time the Company's market share of the overall antenna business is
small, but is significantly greater for the non-conventional antenna market. The
Company's antenna products are designed to be unique and in some cases are
patented. The Company's products normally compete with other products
principally in the areas of price and performance. However, the Company believes
that its unique antenna products work as well as conventional products in the
same design class of products, usually sell for approximately the same price or
less than competing antennas, are easier to install, and in most cases are more
desirable, primarily due to being less conspicuous.
Government Regulations
The Company is subject to government regulation of its business operations
in general, and the telecommunications industry also is subject to regulation by
federal, state and local regulatory and governmental agencies. Under current
laws and the regulations administered by the Federal Communications Commission,
there are no federal requirements for licensing antennas that only receive (and
do not transmit) signals. Current laws and regulations are subject to change and
the Company's operations may become subject to additional regulation by
governmental authorities. A change in either statutes or rules may have a
significant effect on government regulation of the Company's business.
Patents
Kevin O. Shoemaker, the Company's Chief Scientist and Chairman of the
Board, is the record owner of a U.S. patent, subject to annual renewal fees,
valid through the year 2007, for microstrip antennas and multiple radiator array
antennas. Mr. Shoemaker also is the record owner of a U.S. patent for a
serpentine planar broadband antenna valid through the year 2011. This is the
design that the Company uses for some of its conformal antennas, including the
vehicular disguised decal antennas, local broadcast antennas and other products.
In addition, Mr. Shoemaker and Randall P. Marx, the Company's Chief Executive
Officer, are the record owners of a patent relating to the technique and design
of the Company's FREEDOM(TM) and WALLDO(TM) local TV, VHF/UHF antenna systems.
Furthermore, Mr. Shoemaker and Mr. Marx have jointly applied for additional
patents which include the process used to manufacture certain of the Company's
flat planar antennas and conformal antennas, the technology required for certain
of the Company's conformal antennas to function, and the design of certain of
13
<PAGE>
the Company's products. Mr. Shoemaker and Mr. Marx each has permanently assigned
to the Company all of the rights in these and all other antennas that have been
and will be developed while employed by the Company.
Properties
The Company is the tenant on a three year lease which expires May 15,2000
on 5,100 square feet of office space and 17,500 square feet of production space
in Wheat Ridge, Colorado at a cost of $15,389.58 per month. The Company is
obligated to pay for all utilities, taxes and insurance on the production space.
The property is in good condition. The Company is currently looking for
additional warehouse and production space to support the continued growth of the
Company's operations.
Legal Proceedings
On February 9, 1998, Mega Circuits, Inc. ("MCI") filed suit against the
Company for payment of approximately $33,000 for components allegedly billed to
the Company, some of which were used for the Company's passive repeater antenna
system which the Company was forced to recall in 1996. In its answer, the
Company has denied any liability to MCI, asserted a number of defenses based on
MCI's failure to deliver proper products ordered by the Company, and has
asserted a counterclaim for damages for, among other things, the recall of
several thousand of the Company's passive repeater antennas in fiscal 1996. The
Company intends to vigorously defend the claim of MCI and to press its
counterclaim.
On August 6, 1997, the Company filed a lawsuit against a competitor, three
individuals, and another entity for false and/or misleading representations
regarding the Company's local TV antennas. The suit was filed in the United
States District Court for the Northern District of Illinois. The suit includes
related supplemental claims for consumer fraud under the Illinois Consumer Fraud
and Deceptive Trade Practices Act, deceptive trade practices under the Illinois
Deceptive Trade Practices Act, and tortious interference with prospective
economic advantage, unfair competition and trade disparagement under Illinois
common law. The lawsuit relates to a report which falsely disparages Antennas
America, Inc.'s local TV antennas. Two distributors of the Company's products,
Jasco Products Company, Inc. and MITO Corporation, joined the lawsuit as
plaintiffs. The defendants are in the process of answering the Complaint.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's working capital was $122,796 at December 31, 1997 as compared
to $14,986 at December 31, 1996. The $107,810 increase was due to higher
accounts receivable, inventory and a tax asset which were partially offset by
higher accounts payable and notes payable due to the increased sales and
operations during 1997. From December 31, 1997 to March 31, 1998, working
capital decreased by $42,908 to a total of $79,888. The decrease was primarily
due to an increase in accounts payable, partially offset by an increase in
accounts receivable. These increases are also attributable to the continued
increases in sales and operations.
The Company had total assets of approximately $1,627,071 as of December 31,
1997 as compared with $944,232 as of December 31, 1996. Total liabilities were
14
<PAGE>
$1,147,114 as of December 31, 1997 as compared with $613,775 as of December 31,
1996. The 72% increase in assets and 87% increase in liabilities is primarily
due to the increased sales and operations of the Company in 1997. Total assets
increased by $60,846 or 4%, and total liabilities increased by 54,977 or 5%,
from December 31, 1997 to March 31, 1998. These increases are both attributable
to continued increases in sales and operations.
The Company's net worth was $479,957 as of December 31, 1997 as compared
with $330,457 as of December 31, 1996. This increase results primarily from the
Company's 1997 net income. Net worth at March 31, 1998 was $485,826 with an
increase due to the period's earnings. As a result of past operations, the
Company has an income tax operating loss carryforward of $563,400. The Company
has determined the likelihood of continued profitability for the year ending
December 31, 1998 and has recorded a $197,509 benefit for net operating loss
carryforward as provided for in FAS 109 that it reasonably expects to utilize.
The Company's ability to generate sales revenues is dependent upon its
ability to pay for research and development and for materials and overhead
required in the production process. On May 23, 1997, the Company secured a
credit facility with Norwest Business Credit, Inc., a subsidiary of Norwest
Bank, Minneapolis, Minnesota. The credit facility is a $500,000 revolving loan
secured by the Company's accounts receivable, inventory and equipment which is
now scheduled to terminate May 31, 1999. The Company is using the proceeds from
the credit facility for working capital, capital expenditures associated with
its product development, and for general corporate purposes.
The Company's future capital requirements will depend upon many factors,
including the recruitment of key technical and management personnel, the need to
maintain adequate inventory levels to meet projected sales, the expansion of its
marketing and sales efforts, requirements of additional manufacturing equipment,
and the success of the Company's research and development efforts.
Results of Operations
Fiscal Year Ended December 31, 1997 Compared To Fiscal Year Ended December 31,
1996
For the year ended December 31, 1997, the Company's total revenues were
$3,012,266 as compared with $1,975,184 for the prior year. The 53% increase in
revenues is primarily attributable to introduction of the Company's new
FREEDOM(TM) and WALLDO(TM) off-air antenna products and the increase in sales of
the Company's mobile line of antenna solutions.
The Company's net income increased to $134,500 from $9,346 in 1996. The
sales of the Company's FREEDOM(TM) and WALLDO(TM) antennas and the increase in
international sales of the mobile line of antenna solutions are the primary
contributing factors to this increase.
The increase in selling, general and administrative expenses to $1,080,641
in 1997 from $744,673 in 1996 is attributable to the Company's increase in
operations and personnel related to the increase in revenue and development
activity for fiscal 1997 and 1998, a decrease in the outsourcing of certain
production functions of the Company, adding production space and personnel to
production and administrative positions, and the related costs associated with
these positions.
Interest expense increased by $14,212 for fiscal 1997 over fiscal 1996. The
increase is primarily attributable to the costs associate with the Company's
15
<PAGE>
increase in revenues, inventory and development activity in 1997 and the use of
the Company's line of credit to finance these activities.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
For the three month period ended March 31, 1998, the Company's total
revenues were $842,784 as compared to $615,376 for the same period in 1997. The
37% increase in sales is primarily due to the increased sales of the Company's
FREEDOM(TM) and WALLDO(TM) local TV antenna systems.
The Company's net income for the three months ended March 31, 1998 was
$5,869 compared with $33,939 for the three months ended March 31, 1997. The
decrease is attributable to a decrease in gross margin on sales for the period,
the expenses associated with the development of several new antenna systems to
be introduced in the second half of 1998, and increases in depreciation expense
resulting from an increased amount of manufacturing equipment.
The increase in selling, general and administrative expenses to $322,415
for the three months ended March 31, 1998 from $227,027 for the same period in
1997 is due to the Company's increase in operations and personnel, increases in
production and administrative functions and other costs related to these new
positions and changes.
Interest expense increased by $2,116 or 14% from the three months ended
March 31, 1997 to March 31, 1998 due to costs associated with the Company's
growth as well as new borrowings under the Company's line of credit.
MANAGEMENT
The directors and executive officers of the Company, their respective
positions and ages, and the year in which each director was first elected, are
set forth in the following table. Each director has been elected to hold office
until the next annual meeting of shareholders and thereafter until his successor
is elected and has qualified. Additional information concerning each of these
individuals follows the table.
Name Age Position with the Company Director Since
---- --- ------------------------- --------------
Randall P. Marx 46 Chief Executive Officer; 1990
Treasurer; and Director
Kevin O. Shoemaker 43 Chairman of the Board; Chief 1989
Scientist; and Director
Richard L. Anderson 49 Vice President; Secretary; 1994
and Director
Julie H. Grimm 31 Chief Financial Officer -
Bruce Morosohk 40 Director 1989
Sigmund A. Balaban 56 Director 1994
Donald A. Huebner 53 Director 1998
16
<PAGE>
Randall P. Marx has served as Chief Executive Officer since November 1991,
as a director since May 1990, and as Treasurer since December 1994. From May
1990 until November 1991, Mr. Marx advised the Company with respect to marketing
matters. From 1989 to 1991, Mr. Marx served as a consultant to three domestic
and international electronic companies. His responsibilities consisted primarily
of administration, finance, marketing and other matters. From 1983 until 1989
Mr. Marx served as President of THT Lloyd's Inc., Lloyd's Electronics Corp. and
Lloyd's Electronics Hong Kong Ltd., international consumer electronics
companies. THT Lloyd's Inc. purchased the Lloyd's Electronics business from
Bacardi Corp. in 1986. Prior to 1983, Mr. Marx owned a sales and marketing
company involved in the consumer electronics business.
Kevin O. Shoemaker has served as the Chairman of the Board of the Company
since 1989. He also served as Executive Vice President from May 1990 until
November 1991 and as President from November 1991 until April 1994. Mr.
Shoemaker's prior employment included serving as a design engineer for Martin
Marietta Aerospace, an aerospace defense contractor, and as a technical
specialist for Ball Aerospace Systems, an aerospace contractor.
Richard L. Anderson has served as a director of the Company since December
1994. From March 1, 1995 until December 31, 1995, he served as a part-time
consultant to assist with the general operations of the Company. Since January
1, 1996, Mr. Anderson has served as Vice President of Administration for the
Company, and as of March 2, 1998 he has held the position of Secretary. From
1990 to 1995, Mr. Anderson served as an independent financial contractor
underwriting residential and commercial real estate first mortgage credit
packages. From October 1985 until March 1990, Mr. Anderson served as Senior Vice
President, Administration of Westline Mortgage Corporation, a Denver, Colorado
based mortgage loan company that was a subsidiary of Bank Western Federal
Savings. Prior to October 1985, Mr. Anderson served as Vice President, Human
Resources for Midland Federal Savings.
Julie H. Grimm became Chief Financial Officer of the Company in May 1998
and an employee of the Company in April 1998. From 1997 to 1998, Ms. Grimm, a
Certified Public Accountant, was the Accounting Manager for Qwest
Communications, a telecommunications company based in Denver. From 1991 to 1997,
Ms. Grimm was employed by Harris Corporation, a Florida-based electronics
manufacturing company, as the Financial Audit Manager. Prior to 1991, Ms. Grimm
was with Ernst & Young, LLP, in Atlanta, Georgia, serving clients in the
manufacturing industry.
Bruce Morosohk has served as a director of the Company since 1989. He also
served as Secretary from 1988 until March 1998 and as Treasurer from November
1991 to December 1994. From 1980 until 1991, Mr. Morosohk was employed by R.
Greenberg and Associates, a private film production firm, serving as a cameraman
from 1981 to 1991, as manager of the Animation Department from 1988 to 1989, and
as Director of Animation from 1989 to 1991.
Sigmund A. Balaban has served as director of the Company since December
1994. Mr. Balaban has served as Vice President, Credit of Teknika Electronics of
Fairfield, New Jersey, since 1986 and as Senior Vice President and General
Manager of Teknika Electronics since 1992. In October 1995, Teknika Electronics
changed its name to Fujitsu General America, Inc. Fujitsu General America, Inc.
is a subsidiary of Fujitsu General, Ltd., a Japanese multiline manufacturer.
Donald A. Huebner has served as a director of the Company since May 15,
1998. Dr. Huebner has served as Department Staff Engineer of Lockheed
Martin Astronautics in Denver, Colorado since 1986. In this capacity, Dr.
17
<PAGE>
Huebner served as technical consultant for phased array and space craft antennas
as well as other areas concerning antennas and communications. Prior to joining
Lockheed Martin, Dr. Huebner served in various capacities with Ball
Communication Systems and Hughes Aircraft Company. Dr. Huebner also has served
as a part-time faculty member in the electrical engineering departments at the
University of Colorado at Boulder, California State University at Northridge,
and University of California, Los Angeles ("UCLA"). Dr. Huebner also has served
as consultant to various companies, including as a consultant to the Company
from 1990 to the present. Dr. Huebner received his Bachelor of Science in
Electrical Engineering from UCLA in 1966 and his Master's of Science in
Electrical Engineering from UCLA in 1968. Dr. Huebner received his Ph.D. from
UCLA in 1972 and a Master's in Telecommunications from the University of Denver
in 1996. Dr. Huebner is a member of a number of professional societies,
including the Antennas And Propagation Society and Microwave Theory And
Technique Society of the Institute of Electrical and Electronic Engineers.
Each of the Company's officers serves at the pleasure of the Company's
Board of Directors. There are no family relationships among the Company's
officers and directors except that Messrs. Shoemaker and Morosohk are
brothers-in-law.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth in summary form the compensation received
during each of the Company's three successive completed fiscal years ended
December 31, 1997 by the Chief Executive Officer and Chairman Of The Board of
the Company. No executive officer of the Company, including the Chief Executive
Officer and the Chairman Of The Board, received total salary and bonus exceeding
$100,000 during any of the three successive fiscal years ending December 31,
1997.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Restricted
Name and Other Annual Stock LTIP All other
Principal Position Fiscal Salary Bonus Compensation Awards Options Payouts Compensation
Year ($)(1) ($)(2) ($)(3) ($) (#) ($)(4) ($)(5)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Randall P. Marx 1997 $75,000 $10,100 -0- -0- -0- -0- -0-
Chief Executive Officer,
Treasurer and a Director 1996 75,000 -0- -0- -0- -0- -0- -0-
1995 75,000 10,030 -0- -0- -0- -0- -0-
Kevin O. Shoemaker 1997 $54,000 -0- -0- -0- -0- -0- -0-
Chairman Of The Board,
Chief Scientist, and a 1996 54,000 -0- -0- -0- -0- -0- -0-
Director
1995 54,000 -0- -0- -0- -0- -0- -0-
</TABLE>
- -----------------------
(1) The dollar value of base salary (cash and non-cash) received during the
year indicated.
(2) The dollar value of bonus (cash and non-cash) received during the year
indicated.
18
<PAGE>
(3) During the period covered by the Summary Compensation Table, the Company
did not pay any other annual compensation not properly categorized as salary or
bonus, including perquisites and other personal benefits, securities or
property.
(4) The Company does not have in effect any plan that is intended to serve as
incentive for performance to occur over a period longer than one fiscal year
except for the Company's 1997 Stock Option And Compensation Plan.
(5) All other compensation received that the Company could not properly
report in any other column of the Summary Compensation Table including annual
Company contributions or other allocations to vested and unvested defined
contribution plans, and the dollar value of any insurance premiums paid by, or
on behalf of, the Company with respect to term life insurance for the benefit of
the named executive officer, and, the full dollar value of the remainder of the
premiums paid by, or on behalf of, the Company.
1997 Stock Option And Compensation Plan. In November 1997, the Board of
Directors approved the Company's 1997 Stock Option And Compensation Plan (the
"Plan"). Pursuant to the Plan, the Company may grant options to purchase an
aggregate of 5,000,000 shares of the Company's Common Stock to key employees,
directors, and other persons who have or are contributing to the success of the
Company. The options granted pursuant to the Plan may be incentive options
qualifying for beneficial tax treatment for the recipient or they may be
non-qualified options. The Plan is administered by an option committee that
determines the terms of the options subject to the requirements of the Plan,
except that the option committee shall not administer the Plan with respect to
automatic grants of options to directors of the Company who are not also
employees of the Company ("Outside Directors"). The option committee may be the
entire Board or a committee of the Board. Outside Directors automatically
receive options to purchase 250,000 shares pursuant to the Plan at the time of
their election as an Outside Director. These options held by Outside Directors
are not exercisable at the time of grant. Options to purchase 50,000 shares
become exercisable for each meeting of the Board of Directors attended by each
Outside Director on or after the date of grant of the options to that Outside
Director. The exercise price for options granted to Outside Directors is equal
to the fair market value of the Company's Common Stock on the date of grant. All
options granted to Outside Directors expire five years after the date of grant.
On the date that all of an Outside Director's options have become exercisable,
options to purchase an additional 250,000 shares, which are not exercisable at
the time of grant, shall be granted to that Outside Director. Mr. Balaban, the
sole Outside Director on November 19, 1997, received options to purchase 250,000
shares, at an exercise price of $.08 per share, pursuant to the Plan on November
19, 1997. Grants of options pursuant to the Plan were conditioned upon the
approval of the Plan by the Company's Shareholders on or before November 18,
1998. The Plan was approved by the Company's shareholders on May 15, 1998 and
the options previously granted under the Plan may be exercised beginning 60 days
after that date.
Compensation Of Outside Directors. Outside Directors are paid $250 for each
meeting of the Board of Directors that they attend. For meetings in excess of
four meetings per year, Outside Directors will receive $50 per meeting. Pursuant
to the Plan, Outside Directors may elect to receive payment of the meeting fee
in the form of the Company's restricted Common Stock at a rate per share equal
to the fair market value of the Company's Common Stock on the date of the
meeting by informing the Company's Secretary, Chief Executive Officer or
President of that election on or before the date of the meeting. Directors also
will be reimbursed for expenses incurred in attending meetings and for other
expenses incurred on behalf of the Company. In addition, each director who is
not an employee automatically receives options to purchase shares of Common
Stock pursuant to the Plan. See above, "1997 Stock Option And Compensation
Plan".
19
<PAGE>
Prior to the adoption of the Plan in November 1997, the Company granted
options ("Outside Director Options") and shares ("Outside Director Shares") to
the Outside Directors commencing in January 1995. On January 3, 1995, Outside
Directors Options to purchase 250,000 shares at an exercise price of $.05 per
share were granted to each of Sigmund A. Balaban and Richard L. Anderson, who
both were Outside Directors at the time. The closing bid price for the Common
Stock was $.001 per share on January 3, 1995. All options granted to Mr. Balaban
become exercisable on July 14, 1998. Of the options granted to Mr. Anderson,
150,000 become exercisable on July 14, 1998, and the remaining 100,000 will not
become exercisable because Mr. Anderson is no longer an Outside Director. He
became an officer and employee of the Company in January 1996. These options
expire on January 3, 2000.
Outside Director Options to purchase an additional 250,000 shares were
issued to Mr. Balaban on December 26, 1996 at an exercise price of $.0475 per
share, which was the closing bid price on the date of grant. These options
become exercisable on July 14, 1998 and may be exercised until December 26,
2001.
For the period from January 1995 through the adoption of the Plan in
November 1997, Outside Directors were allowed to receive their meeting
attendance fees in the form of Common Stock based on the fair market value of
the Common Stock on the date of the meeting. Mr. Balaban and Mr. Anderson
elected to receive an aggregate of 44,128 shares pursuant to this arrangement.
The Outside Director Options and the Outside Director Shares granted prior to
May 15, 1998 were subject to shareholder approval. In addition, no Outside
Director Options granted prior to May 15, 1998 may be exercised until 60 days
after shareholder approval of those options. As indicated above, the Company's
shareholders approved those grants of Outside Director Options and Outside
Director Shares on May 15, 1998.
Option Grants. In addition to the automatic grant of options to the Outside
Director described above under "1997 Stock Option And Compensation Plan", stock
options have been granted pursuant to the Company's Plan on two occasions. On
November 19, 1997, each of three employees was granted options to purchase
100,000 shares, for an aggregate of 300,000 shares, at an exercise price of $.10
per share, contingent upon certain corporate goals being met. These options
expire on November 19, 1999. On April 14, 1998, options to purchase 50,000
shares at an exercise price of $.12 per share were issued to an employee of the
Company. These options become exercisable upon certain corporate goals being met
and expire on April 14, 2000. Also on April 14, 1998, the Board of Directors
approved the issuance of options to purchase up to 300,000 shares of common
stock at an exercise price of $.105 to Julie H. Grimm, who became an employee of
the Company on April 28, 1998 and who was elected Chief Financial Officer of the
Company on May 15, 1998. Of these options, options to purchase 100,000 shares
will become exercisable on July 27, 1998 (90 days after her employment
commenced) and the remaining options to purchase 200,000 shares will become
exercisable on April 28, 1999 (one year after her employment commenced). The
respective options terminate two years after they first become exercisable.
The Company currently is negotiating an employment agreement with Mr.
Anderson that is anticipated to provide for the issuance of options under the
Plan. See below, "-Employment Contracts And Termination Of Employment And
Change-In-Control Arrangements".
Employment Contracts And Termination Of Employment And Change-In-Control
Arrangements
Effective as of March 19, 1998, the Company entered into an Employment
Agreement with Kevin O. Shoemaker, the Chairman of the Board and Chief Scientist
20
<PAGE>
of the Company. The Employment Agreement provides for a two-year term at an
annual salary rate of not less than $66,000 per year. Mr. Shoemaker's annual
salary rate pursuant to the Employment Agreement will increase to $70,000 if Mr.
Shoemaker meets the criteria for receiving a bonus pursuant to the Employment
Agreement. Mr. Shoemaker is eligible to receive a bonus for a particular fiscal
year during the term of the Employment Agreement if the Company has net profits
of at least $300,000 for that fiscal year and if Mr. Shoemaker contributes a
reasonable amount of finished products to the Company's assortment of existing
products for that fiscal year. If these criteria are met, Mr. Shoemaker also
will receive a bonus in 1999 ranging from $10,000 if the Company has net profits
in the applicable fiscal year of at least $300,000 up to a bonus of $30,000 if
the Company has net profits in the applicable fiscal year of at least $900,000.
In connection with the Employment Agreement, Mr. Shoemaker agreed not to sell or
otherwise dispose of any shares of Common Stock prior to December 31, 1999
without the prior written consent of the Company.
The Company does not have any written employment contracts with respect to
any of its other executive officers. However, the Company does anticipate
entering into a written employment agreement with Randall P. Marx, the Company's
Chief Executive Officer and Richard L. Anderson, Vice President, Administration.
Both Messrs. Marx and Anderson's prior employment contracts expired December 31,
1997. The Company and Mr. Anderson currently are negotiating the terms of Mr.
Anderson's employment agreement. Although a definitive agreement has not yet
been entered into, it is anticipated that the agreement will provide that
options to purchase, subject to the restrictions described below, up to
1,000,000 shares of Common Stock will be issued to Mr. Anderson pursuant to the
Plan. The agreement is anticipated to provide that options to purchase 150,000
shares will become exercisable if the Company has net operating income ("NOI"),
determined after subtracting interest expense but before adding any income
related to forgiveness of indebtedness owed by the Company, of between $300,000
and $599,000 in 1998, options to purchase 300,000 shares will become exercisable
if 1998 NOI is between $600,000 and $899,999, and options to purchase 500,000
shares will become exercisable if 1998 NOI is at least $900,000. Options to
purchase an additional 150,000 shares will become exercisable if 1999 NOI is
between $400,000 and $699,999, options to purchase 300,000 shares will become
exercisable if 1999 NOI is between $700,000 and $999,999, and options to
purchase 500,000 shares will become exercisable if 1999 NOI is at least
$1,000,000. These options will become exercisable upon the determination of the
respective NOI and expire two years after becoming exercisable. The exercise
price for these options will be the greater of $.135 per share or the fair
market value of the Company's Common Stock on the date a definitive agreement is
reached.
In addition, the Company anticipates entering into a written employment
agreement with Julie H. Grimm, the Company's Chief Financial Officer. Although a
definitive agreement has not yet been reached, the Company anticipates that the
written agreement with Ms. Grimm shall provide for a two year contract period,
with an annual starting salary of $60,000. In addition, in connection with Ms.
Grimm's employment the Board issued to Ms. Grimm the option to purchase 300,000
shares of Common Stock at an exercise price of $.105 pursuant to the Plan. See
above "-Option Grants".
The Company has no compensatory plan or arrangement that results or will
result from the resignation, retirement, or any other termination of an
executive officer's employment with the Company or from a change-in-control of
the Company or a change in an executive officer's responsibilities following a
change-in-control, except that the Plan provides for vesting of all outstanding
options in the event of the occurrence of a change-in-control.
BENEFICIAL OWNERS OF SECURITIES
As of May 15, 1998, there were 73,839,422 shares of the Company's Common
Stock outstanding. The following table sets forth certain information as of May
15, 1998 with respect to the beneficial ownership of the Company's Common Stock
by each director, by all executive officers and directors as a group, and by
each other person known by the Company to be the beneficial owner of more than
five percent of the Company's Common Stock:
21
<PAGE>
Name and Address of Beneficial Owner Number of Shares Percent
Beneficially of Class
Owned
- ----------------------------------------------------------------------------
Richard L. Anderson 1,481,000 (1) 2.0
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Sigmund A. Balaban 1,053,700 (2) 1.4
10 Grecian Street
Parsippany, NJ 07054
Randall P. Marx 7,005,000 (3) 9.5
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Bruce Morosohk 5,491,117 (4) 7.4
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Kevin O. Shoemaker 6,434,474 (5) 8.7
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Donald A. Huebner 250,000 (6) *
6305 W. Apache Drive
Larkspur, CO 80118
Julie H. Grimm 300,000 (7) *
Antennas America Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
All Officers and Directors as a group 22,015,291(1)(2)(6)(7) 29.1
(seven persons)
Millennium Holdings Group, Inc. 6,000,000 (8) 7.5
2200 Corporate Boulevard, N.W., Suite 311
Boca Raton, FL 33431
Rocky Mountain Gastroenterology P.C. 4,750,000 6.4
Profit Sharing Trust
6550 West 38th Avenue, Suite 300
Wheat Ridge, CO 80033
- ----------------------------------
* Less than one percent.
(1) Includes 636,500 shares owned by the Lloyd Anderson Marital Trust B
Dated June 21, 1990, for which Richard L. Anderson serves as trustee; and
options under the Plan to purchase 150,000 shares for $.05 per share that expire
on January 3, 2000. See above, "Executive Compensation - Option Grants".
(2) Includes options under the Plan to purchase 250,000 shares at $.05 per
share until January 3, 2000, options under the Plan to purchase 250,000 shares
at $.0475 per share until December 26, 2001, and options under the Plan to
purchase 250,000 shares at $.08 per share until November 19, 2002, all of which
currently are exercisable, and options under the Plan to purchase 250,000 shares
at $.085 per share until May 15, 2003, none of which currently are exercisable.
(3) Includes 835,000 shares owned by the Harold and Theora Marx Living Trust, of
which Mr. Marx's parents are trustees. Mr. Marx disclaims beneficial ownership
of these shares.
(4) Does not include the following shares as to which Mr. Morosohk disclaims
beneficial ownership: (a) 6,434,474 shares owned by Kevin Shoemaker, Mr.
Morosohk's brother-in-law, and (b) an aggregate of 191,780 shares owned by Mr.
Morosohk's siblings and their respective spouses.
(5) Does not include 5,491,117 shares owned by Bruce Morosohk, Mr. Shoemaker's
brother-in-law, as to which shares Mr. Shoemaker disclaims beneficial ownership.
22
<PAGE>
(6) Consists of Outside Director Options under the Plan to purchase 250,000
shares at $.085 per share until May 15, 2003. As of May 15, 1998, the only
exercisable portion of these options are options to purchase 50,000 shares.
(7) Consists of options under the Plan to purchase 300,000 shares of Common
Stock for $.105 per share, with 100,000 to become exercisable on July 27, 1998
and expire on July 27, 2000, and the remaining 200,000 shares to become
exercisable on April 28, 1999 and to expire on April 28, 2001.
(8) Consists of currently exercisable options to purchase 2,000,000 shares
for $.06 per share until the earlier to occur of January 2, 2000 or 120 days
after the effective date of a registration statement covering the sale of the
shares underlying that option (the "Option Shares Registration Statement"),
2,000,000 shares for $.10 per share until the earlier to occur of January 2,
2000 or 365 days after the effective date of the Option Shares Registration
Statement, and 2,000,000 shares for $.30 per share until the earlier to occur of
January 2, 2000 or 365 days after the effective date of the Option Shares
Registration Statement.
DESCRIPTION OF SECURITIES
Common Stock
The Company's authorized capital consists of 250,000,000 shares of $.0005
par value Common Stock. The Company had 73,839,422 shares of Common Stock issued
and outstanding as of April 15, 1998, which were held by 340 shareholders of
record.
Each share of the Common Stock is entitled to share equally with each
other share of Common Stock in dividends from sources legally available
therefore, when, as, and if declared by the Board of Directors and, upon
liquidation or dissolution of the Company, whether voluntary or involuntary, to
share equally in the assets of the Company that are available for distribution
to the holders of the Common Stock. Each holder of Common Stock of the Company
is entitled to one vote per share for all purposes, except that in the election
of directors, each holder shall have the right to vote such number of shares for
as many persons as there are directors to be elected. Cumulative voting shall
not be allowed in the election of directors or for any other purpose, and the
holders of Common Stock have no preemptive rights, redemption rights or rights
of conversion with respect to the Common Stock. All outstanding shares of Common
Stock issued will be fully paid and nonassessable by the Company. The Board of
Directors is authorized to issue additional shares of Common Stock within the
limits authorized by the Company's Articles Of Incorporation and without
shareholder action.
All shares of Common Stock have equal voting rights and voting rights are
not cumulative. The holders of more than 50 percent of the shares of Common
Stock of the Company could, therefore, if they chose to do so, elect all the
directors of the Company.
Upon liquidation, dissolution or winding up of the Company, the assets of
the Company, after satisfaction of all liabilities, will be distributed pro rata
to the holders of the Common Stock.
The Company has not paid any cash dividends since its inception.
The Company has reserved a sufficient number of shares of Common Stock for
issuance upon the exercise of options under the Company's 1997 Stock Option And
Compensation Plan.
Transfer Agent And Registrar
The transfer agent and registrar of the Company is American Securities
Transfer & Trust, Inc.
23
<PAGE>
INACTIVE TRADING OF THE COMMON STOCK
Although the Company's Common Stock is publicly held, there currently is
not an active trading market for the Common Stock. See "RISK FACTORS - Inactive
Trading Of The Common Stock; Possible Volatility Of Stock Price".
To the extent that there is trading in the Company's Common Stock, of
which there is no assurance, the Common Stock trades in the over-the-counter
market and is quoted on the OTC Bulletin Board. It is not quoted on the Nasdaq
system or any exchange. The closing quotes for the Common Stock on May 15, 1998
were $.085 bid and $.095 asked. It should be assumed that even with this OTC
Bulletin Board quote, there is an extremely limited trading market - and very
little liquidity - for the Company's Common Stock.
SELLING SECURITY HOLDER
The Company is registering the transfer of an aggregate of 6,000,000 shares
(the "Shares") of Common Stock by the Selling Security Holder. The Selling
Security Holder may sell its Common Stock at such prices as it is able to obtain
in the market or as otherwise negotiated. The Company will receive no proceeds
from the sale of Common Stock by the Selling Security Holder. Additionally,
agents, brokers or dealers may acquire Shares or interests therein as a pledgee
and may, from time to time, effect distributions of the Shares or interests in
such capacity. The Selling Security Holder informed the Company that it does not
have any arrangements or agreements with any underwriters or broker/dealers to
sell the Shares, and intends to contact various broker/dealers to identify
prospective purchasers. Prior to this offering, the Selling Security Holder
beneficially owned 6,000,000 shares of Common Stock underlying options held by
the Selling Security Holder, or approximately 7.5 percent of the Company's
outstanding Common Stock. If the Selling Security Holder sells all the Shares
offered hereby, the Selling Security Holder will not own any shares of the
Company's Common Stock after this offering.
Millennium Holdings Group, Inc. ("Millennium"), the Selling Security
Holder, entered into a Consulting Agreement with the Company effective as of
December 31, 1997. The Consulting Agreement provides as follows: (A) Millennium
will provide consulting services to the Company during the term of the
agreement, (B) the initial term of the agreement will be for a period of one
year unless otherwise terminated, (C) the agreement may be renewed upon the
mutual consent of Millennium and the Company, (D) Millennium will be paid $5,000
per month during the term of the agreement, (E) the Company immediately will
issue Millennium options (the "Options") to purchase 6,000,000 shares of the
Company's restricted Common Stock, (F) 2,000,000 Options are exercisable at $.06
per share and expire upon the earlier to occur of January 2, 2000 or 120 days
after the effective date of a registration statement covering the sale of the
shares underlying that option, (G) 2,000,000 Options are exercisable at $.10 per
share and expire upon the earlier to occur of January 2, 2000 or 365 days after
the effective date of the Option Shares Registration Statement, and (H)
2,000,000 Options are exercisable at $.30 per share and expire upon the earlier
to occur of January 2, 2000 or 365 days after the effective date of the Option
Shares Registration Statement.
The following table sets forth the name of the Selling Security Holder, the
number of shares of Common Stock owned by the Selling Security Holder before the
offering, the number of shares of Common Stock to be sold by the Selling
Security Holder, the number of shares of Common Stock owned by the Selling
Security Holder after the offering, and the percentage of shares of Common Stock
owned after the offering.
24
<PAGE>
<TABLE>
<CAPTION>
Number Of Shares Percentage Of
Of Common Stock Number Of Number Of Shares Shares Owned
Name Owned Before Offering Shares To Be Sold Owned After Offering After Offering
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Millennium Holdings Group, Inc. 6,000,000 (1) 6,000,000 0 0
</TABLE>
(1) Consists of currently exercisable options to purchase 2,000,000 shares
for $.06 per share until the earlier to occur of January 2, 2000 or 120 days
after the effective date of a registration statement (the "Option Shares
Registration Statement") covering the sale of the shares underlying that option,
2,000,000 shares for $.10 per share until the earlier to occur of January 2,
2000 or 365 days after the effective date of the Option Shares Registration
Statement, and 2,000,000 shares for $.30 per share until the earlier to occur of
January 2, 2000 or 365 days after the effective date of the Option Shares
Registration Statement.
PLAN OF DISTRIBUTION
This Prospectus relates to the transfer of 6,000,000 shares of Common Stock
that may be acquired by the Selling Security Holder upon the exercise of the
options held by the Selling Security Holder. The transfer of the Common Stock by
the Selling Security Holder covered by this Prospectus will be completed, if at
all, by the Selling Security Holder, and not by the Company. If any of these
shares are transferred by the Selling Security Holder, they will be transferred
on behalf of that entity. It is anticipated that those securities may be offered
pursuant to direct sales to private persons and in open market transactions. The
Selling Security Holder may offer the shares to or through registered
broker-dealers who will be paid standard commissions or discounts by the Selling
Security Holder. The Selling Security Holder has no agreements with any brokers
to transfer any or all of the securities which may be offered hereby.
SECURITIES AND EXCHANGE COMMISSION POSITION
ON CERTAIN INDEMNIFICATION
Pursuant to Utah law, the Company's Board of Directors has the power to
indemnify officers and directors, present and former, for expenses incurred by
them in connection with any proceeding they are involved in by reason of their
being or having been an officer or director of the Company. The person being
indemnified must have acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Company. The
Company's Bylaws grant this indemnification to the Company's officers and
directors.
Insofar as indemnification for liability arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
Bearman Talesnick & Clowdus Professional Corporation, Denver, Colorado,
has acted as counsel for the Company in connection with this Offering, including
the validity of the issuance of the securities offered hereby.
25
<PAGE>
EXPERTS
The audited financial statements of the Company appearing in this
Prospectus have been examined by James E. Schiefley & Associates, P.C.,
independent certified public accountants, as set forth in their report appearing
in the FINANCIAL STATEMENTS section of this prospectus, and are included in
reliance upon such report and upon the authority of said firm as experts in
accounting and auditing.
26
<PAGE>
Index To Financial Statements And Financial Statement Schedules.
Independent Auditor's Report.................................................F-2
Consolidated Balance Sheets At December 31, 1997
and March 31, 1998 (unaudited)..........................................F-3
Consolidated Statements Of Operations For The Years Ended
December 31, 1997 and 1996 and For The Three Month Periods Ended
March 31, 1998 and 1997 (unaudited).....................................F-4
Consolidated Statements Of Changes In Stockholders' Equity
For The Years Ended December 31, 1997 and 1996 and For The Three
Month Period Ended March 31, 1998 (unaudited)...........................F-5
Consolidated Statements Of Cash Flows For The Years Ended
December 31, 1997 and 1996 and For The Three Month Periods Ended
March 31, 1998 and 1997 (unaudited).....................................F-6
Notes To Consolidated Financial Statements............................F-7 - F-12
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Antennas America, Inc.
We have audited the consolidated balance sheet of Antennas America, Inc. as
of December 31, 1997, and the related consolidated statements of income,
changes in stockholders' equity, and cash flows for each of the two years in
the period then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above,
present fairly, in all material respects, the financial position of Antennas
America, Inc. as of December 31, 1997 and the results of its operations and
cash flows for each of the two years in the period then ended, in conformity
with generally accepted accounting principles.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
March 6, 1998
F-2
<PAGE>
Antennas America, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS December 31, 1997 March 31, 1998
------ ----------------- --------------
Current assets: (Unaudited)
<S> <C> <C>
Cash $ 61,642 $ 22,280
Accounts receivable, trade 327,685 385,711
Inventories 508,554 509,570
Prepaid expenses 72,469 77,977
Deferred tax asset 102,000 98,976
---------- ----------
Total current assets 1,072,350 1,094,514
Property and equipment, at cost, net of
accumulated depreciation 407,355 441,865
Other assets:
Deferred tax asset, non-current 95,509 95,509
Intangible assets 41,245 45,417
Deposits 10,612 10,612
---------- ----------
Total Assets $1,627,071 $1,687,917
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - bank $ 250,730 $ 253,644
Notes payable - others 194,340 195,029
Current portion of long term debt 34,525 26,394
Current portion of leases payable 24,941 24,941
Accounts payable 415,377 508,774
Accrued expenses 29,641 5,844
---------- ----------
Total current liabilities 949,554 1,014,626
Long term debt 3,127 -
Leases payable 57,328 51,164
Notes payable - officer 137,105 136,301
---------- ----------
Total Liabilities 1,147,114 1,202,091
Commitments (Note 11)
Stockholders' equity:
Common stock, $.0005 par value, 250,000,000
shares authorized, 73,189,422 and 73,839,422
shares issued and outstanding on December
31, 1997 and March 31, 1998, respectively 36,595 36,920
Additional paid-in capital 801,039 819,214
Common stock subscriptions 18,500 -
Accumulated deficit (376,177) (370,308)
---------- ----------
Total stockholders' equity 479,957 485,826
---------- ----------
Total Liabilities and Stockholders' Equity $1,627,071 $1,687,917
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
Antennas America, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, March 31,
---------------------- ------------------------
1997 1996 1998 1997
----------- ---------- ---------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Sales, net $3,012,266 $1,975,184 $842,784 $615,376
Cost of sales 1,660,552 1,223,287 494,462 322,029
---------- ---------- -------- ---------
Gross profit 1,351,714 751,897 348,322 293,347
Selling, general and
administrative expenses 1,080,641 744,673 322,415 227,027
---------- ---------- -------- ---------
Income from operations 271,073 7,224 25,907 66,320
Other income (expense):
Interest expense (72,230) (58,018) (17,014) (14,898)
Other income 3,810 917 - -
---------- ---------- -------- ---------
Total other income (expense) (68,420) (57,101) (17,014) (14,898)
---------- ---------- -------- ---------
Net income before income taxes
and extraordinary item 202,653 (49,877) 8,893 51,422
Provision for income taxes (benefit) 68,153 (10,439) 3,024 17,483
Net income before extraordinary item 134,500 (39,438) 5,869 33,939
Extraordinary item:
Gain from debt cancellation net of income
taxes of $12,667 - 48,784 - -
---------- ---------- -------- ---------
Net income $134,500 $9,346 $5,869 $ 33,939
========== ========== ======== =========
Basic earnings per share
Net income before extraordinary item $0.00 $(0.00) $0.00 $0.00
Extraordinary item - - - -
Net income $0.00 $0.00 $0.00 $0.00
Weighted average shares outstanding 73,189,422 73,135,255 73,839,422 72,539,422
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
Antennas America, Inc.
Consolidated Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated Stock
ACTIVITY Shares Amount Capital (Deficit) Subscriptions Total
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 71,139,422 $35,570 $616,090 $(520,023) $13,750 $145,387
Shares issued for:
Subscriptions 1,375,000 687 13,063 - (13,750) -
Cash, net of $8,027 of costs 1,650,000 825 156,148 - - 156,973
Exercise of warrants 1,025,000 513 44,738 - - 45,251
Shares reacquired and cancelled (2,000,000) (1,000) (29,000) - (30,000)
Shares subscribed for services - - - - 3,500 3,500
Net income for the year - - - 9,346 - 9,346
---------- -------- -------- ---------- ------- --------
Balance, December 31, 1996 73,189,422 36,595 801,039 (510,677) 3,500 330,457
Exercise of stock option - - - - 15,000 15,000
Net income for the year - - - 134,500 - 134,500
---------- -------- -------- ---------- ------- --------
Balance, December 31, 1997 73,189,422 36,595 801,039 (376,177) 18,500 479,957
Issuance of subscribed shares 650,000 325 18,175 - (18,500) -
Net income for the period - - - 5,869 - 5,869
---------- -------- -------- ---------- ------- --------
Balance, March 31, 1998
(Unaudited) 73,839,422 $36,920 $819,214 $(370,308) $ - $485,826
========== ======== ======== ========== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
Antennas America, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, March 31,
---------------------- ----------------------
1997 1996 1998 1997
----------- ---------- --------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Net income $134,500 $ 9,346 $ 5,869 $ 33,939
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 54,735 35,467 25,815 8,400
Gain from debt cancellation - (48,784) - -
Interest added to note payable 10,323 14,397 2,384 -
Subscriptions for services - 3,500 - -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (161,274) 157,944 (58,026) (62,586)
(Increase) decrease in inventory (312,705) (33,533) (1,016) (22,571)
(Increase) decrease in deferred tax asset 68,153 2,228 3,024 17,483
(Increase) decrease in prepaid expenses (38,996) (29,828) (2,237) (23,337)
(Increase) decrease in other assets 13,500 (2,037) - -
Increase (decrease) in accounts payable and
accrued expenses 233,120 (94,490) 69,599 34,376
-------- -------- -------- --------
Total adjustments (133,144) 4,864 39,543 (48,235)
Net cash provided by operating activities 1,356 14,210 45,412 (14,296)
-------- -------- -------- --------
Cash flows from investing activities:
Patent acquisition costs (12,940) (8,996) (10,123) (3,762)
Acquisition of plant and equipment (245,315) (89,689) (57,645) (30,251)
-------- -------- -------- --------
Net cash (used in) investing activities (258,255) (98,685) (67,768) (34,013)
-------- -------- -------- --------
Cash flows from financing activities:
Stock issued for cash - 202,224 - -
Common stock subscriptions 15,000 - - -
Cost of share cancellation - (30,000) - -
Repayment of officer loans (8,500) (14,745) (1,000) -
Proceeds from officer loan 9,500 - - 7,651
Proceeds of new borrowing 293,330 36,000 2,914 -
Repayment of notes and leases payable (46,425) (69,279) (18,920) (4,368)
-------- -------- -------- --------
Net cash provided by (used in) financing
activities 262,905 124,200 (17,006) 3,283
-------- -------- -------- --------
Increase (decrease) in cash 6,006 39,725 (39,362) (45,026)
Cash and cash equivalents, beginning of period 55,636 15,911 61,642 55,636
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 61,642 $ 55,636 $ 22,280 $ 10,610
======== ======== ======== ========
Supplemental cash flow information:
Cash paid for interest $61,907 $62,290 $ 11,942 $ 12,822
Cash paid for income taxes $ - $ - $ - $ -
Non-cash investing and financing activities:
Conversion of accounts to notes payable $ - $145,059 $ - $ -
Abandonment of leasehold improvements $ - $1,677 $ - $ -
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements
Note 1. Organization and summary of significant accounting policies
Organization
The Company was incorporated in Colorado on September 6, 1988 and was
reorganized as a Utah corporation on April 12, 1989. The Company is engaged
in the business of manufacture and sale of antennas used for various
purposes. The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Antennas America Distributing
Company. All significant inter-company items have been eliminated.
Interim Financial Statements (Unaudited)
The interim financial data as of March 31, 1998 and for the three months
ended March 31, 1998 and 1997 is unaudited; however, in the opinion of the
Company, the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods. The results of operations for the three month period ending
March 31, 1998 are not necessarily indicative of the results for the year
ending December 31, 1998.
Inventory
Inventory is valued at the lower of cost or market on a first-in, first-out
basis. Inventories are reviewed annually and items considered to be
slow-moving or obsolete are reduced to estimated net realizable value.
Adjustments to reduce inventories to net realizable value have not been
significant. Inventory consists of the following at December 31, 1997:
Raw materials $282,308
Work in progress 156,936
Finished goods 69,310
--------
$508,554
========
Property and equipment
Property and equipment are stated at cost. Depreciation is provided for
using the straight line method over estimated useful lives of three to seven
years. When assets are retired or otherwise disposed of, the cost and the
related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is recognized in operations for the period. The cost
of repairs and maintenance is charged to operations as incurred and
significant renewals or betterments are capitalized.
Patent costs
Patent costs are stated at cost and amortized over ten years using the
straight-line method. Amortization expense amounted to $8,272 and $7,397 for
the years ended December 31, 1997 and 1996.
Research and development
Research and development costs are charged to expense as incurred. Such
costs were not material for the years ended December 31, 1997 and 1996.
F-7
<PAGE>
Revenue
Revenue is recorded when goods are shipped. Sales returns and allowances are
recorded after returned goods are received and inspected. The Company has
several major commercial customers who incorporate its products into other
manufactured goods and returns therefrom have not been significant. The
Company began sales of consumer goods in 1997 and has provided currently for
estimated product returns arising therefrom.
Income taxes
The Company records the income tax effect of transactions in the same year
that the transactions enter into the determination of income, regardless of
when the transactions are recognized for tax purposes. Income tax credits
are used to reduce the provision for income taxes in the year in which such
credits are allowed for tax purposes.
Deferred taxes are provided to reflect the income tax effects of amounts
included for financial purposes in different periods than for tax purposes,
principally accelerated depreciation for income tax purposes. Such amounts
have not been significant.
Cash
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents.
Earnings per share
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Account Standard No. 128 (FAS 128), "Earnings Per
Share." FAS 128 supersedes and simplifies the existing computational
guidelines under Accounting Principles Board ("APB") Opinion No. 15,
"Earnings Per Share."
The statement is effective for financial statements issued for periods ending
after December 15, 1997. Among other changes, FAS 128 eliminates the
presentation of primary earnings per share and replaces it with basic
earnings per share for which common stock equivalents are not considered in
the computation. It also revises the computation of diluted earnings per
share. The Company has adopted FAS 128 and there is no material impact to
the Company's earnings per share, financial condition, or results of
operations. The Company's earnings per share have been restated for all
periods presented to be consistent with FAS 128.
The basic income per share is computed by dividing the net loss for the
period by the weighted average number of common shares outstanding for the
period. Loss per share is unchanged on a diluted basis.
Earnings per share is computed using the weighted average number of shares
outstanding during the period.
Fair value of financial instruments
The Company's short-term financial instruments consist of cash and cash
equivalents, accounts and loans receivable, and accounts payable and
accruals. The carrying amounts of these financial instruments approximates
fair value because of their short-term maturities. Financial instruments that
potentially subject the Company to a concentration of credit risk consist
principally of cash and accounts receivable, trade.
F-8
<PAGE>
During the year the Company did not maintain cash deposits at financial
institutions in excess of the $100,000 limit covered by the Federal Deposit
Insurance Corporation. The Company has several major customers, (see Note 8)
the loss of any one of which could have a material negative impact upon the
Company. Additionally, the Company maintains a line of credit with one
financial institution. The maintenance of a satisfactory relationship with
this institution is of significant importance to the Company. The Company does
not hold or issue financial instruments for trading purposes nor does it hold
or issue interest rate or leveraged derivative financial instruments.
Estimates
The preparation of the Company's financial statements requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from these estimates. For the years ended December 31, 1997 and 1996, the
Company made estimates of the future utilization of its net operating loss
carryforward. These estimates account for the deferred tax asset of $197,509
at the balance sheet date.
Advertising costs
Advertising costs are charged to operations when the advertising is first
shown. Advertising costs charged to operations were $40,940 and $39,713 in
1997 and 1996, respectively.
Stock-based Compensation
The Company adopted Statement of Financial Accounting Standard No. 123 (FAS
123), "Accounting for Stock-Based Compensation", beginning with the Company's
first quarter of 1996. Upon adoption of FAS 123, the Company continued to
measure compensation expense for its stock-based employee compensation plans
using the intrinsic value method prescribed by APB No. 25, "Accounting for
Stock Issued to Employees", and has provided in Note 6 pro forma disclosures
of the effect on net income and earnings per share as if the fair value-based
method prescribed by FAS 123 had been applied in measuring compensation
expense.
New Accounting Pronouncements
FAS 130, "Reporting Comprehensive Income", establishes guidelines for all
items that are to be recognized under accounting standards as components of
comprehensive income to be reported in the financial statements. The
statement is effective for all periods beginning after December 15, 1997 and
reclassification of financial statements for earlier periods will be required
for comparative purposes. To date, the Company has not engaged in
transactions which would result in any significant difference between its
reported net loss and comprehensive net loss as defined in the statement.
Note 2. Property and Equipment.
Property and equipment consist of the following at December 31, 1997:
Machinery and equipment $ 431,781
Furniture and fixtures 115,068
Leasehold improvements 23,778
----------
570,627
Accumulated depreciation 163,272
----------
$ 407,355
==========
F-9
<PAGE>
Depreciation expense amounted to $49,934 and $28,070 respectively during the
years ended December 31, 1997 and 1996.
Substantially all of the Company's fixed assets secure debt described in
Notes 3 and 4.
Note 3. Notes payable and long-term debt
Notes payable to bank consists of a revolving credit line having a maximum
borrowing amount of $500,000. The line bears interest at prime plus 4.5%
(13%) at December 31, 1997, and is collateralized by accounts receivable,
inventory and otherwise unencumbered machinery and equipment. The line has
$249,270 of unused credit at December 31, 1997.
Notes payable to others at December 31, 1997 consist of uncollateralized
obligations to individuals and vendors as follows:
Amount due vendor with interest at 8% per $108,690
annum due on January 31, 1998
Amount due vendor with interest at 10% per 71,795
annum due on demand
Amount due individual without interest due 13,236
on demand
Other 619
--------
$194,340
========
Long term debt consists of the following:
Note payable to an individual for prior
salary and expenses due in weekly
installments of $625 without interest $ 21,489
Note payable for equipment purchase, due
in monthly installments of $1,161
including interest at 9.5% per annum 16,163
--------
37,652
Less Current portion 34,525
--------
$ 3,127
========
Maturities of long-term debt are as follows: 1999 - $3,127
Note 4. Leases payable
During 1997 the Company entered into financing type lease transactions with
leasing companies whereby the Company leased certain manufacturing
equipment. Scheduled maturities of the obligations as of December 31, 1997
are as follows:
Year Amount
1998 $ 34,329
1999 34,329
2000 30,700
--------
Minimum future lease payments 99,358
Less interest component (17,089)
--------
Present value of future net minimum lease payments 82,269
Less current portion (24,941)
--------
Due after one year $ 57,328
========
F-10
<PAGE>
Property recorded under capital leases includes the following as of December
31, 1997:
Machinery and equipment $ 86,678
Less accumulated amortization (6,191)
---------
Net assets subject to capital leases $ 80,487
=========
Note 5. Notes payable, officers
Notes payable to officers includes unpaid advances and salary accruals due to
two of the Company's officers including Randall P. Marx, the chief executive
officer, who accounts for approximately 65% of the balance owed. The advances
accrue no interest and are not expected to be repaid in the forthcoming year.
Note 6. Stockholders' equity
Effective January 1996, the Company authorized a stock bonus to one of its
officers for 350,000 shares of restricted common stock having a fair value of
$3,500. Additionally, the Company granted the officer an option to purchase
350,000 additional shares of restricted common stock at $.05 per share for a two
year period. The weighted average fair value at the date of grant for options
granted during 1996 was $.00 per option. The fair value of the options at the
date of grant was estimated using the Black-Scholes model with assumptions as
follows:
Market value $.01
Expected life 2
Interest rate 5.15%
Volatility .25%
Dividend yield 0.00%
No stock based compensation costs would be recorded by the Company as a result
of the foregoing.
During June and July of 1996, the Company sold 1,650,000 shares of its
restricted common stock to three individuals for cash aggregating $156,973 net
of associated costs of $8,027. Additionally, during the year the Company issued
1,375,000 shares subscribed in the prior year and issued 1,025,000 shares
pursuant to option agreements entered into in prior years. Proceeds to the
Company for the option shares amounted to $45,250 or $.044 per share. During
June 1996, the Company purchased from an officer and retired 2,000,000 shares of
restricted common stock for $30,000 or $.015 per share.
During the year ended December 31, 1997, the Company accepted stock
subscriptions from an officer for 300,000 of its restricted common stock. The
fair value of the stock subscribed at the subscription date amounted to $.05 per
share.
Note 7. Income taxes
The Company has not recorded a liability for federal income taxes payable
currently or deferred to future periods due to the existence of substantial net
operating loss carryforward amounts available to offset taxable income.
A reconciliation of federal income taxes computed by multiplying pre tax net
income by the statutory rate of 34% to the provision for income taxes is as
follows at December 31, 1997 and 1996:
F-11
<PAGE>
1997 1996
Tax computed at statutory rate $ 68,902 $ 3,935
State income tax 6,687 579
Surtax exemption (7,436) (2,286)
-------- --------
Provision for income taxes (benefit) $ 68,153 $ 2,228
======== ========
The Company has a net operating loss carryforward of approximately $563,400 that
will expire in years beginning in 2004 as follows:
2004 $ 39,400
2005 336,000
2006 188,000
--------
$563,400
========
The Company has determined that the likelihood of continued profitability for
the year ended December 31, 1998 and beyond is reasonably possible and has
recorded the benefit of the carryforward ($197,509) as provided for in FAS-109.
The determination of the current portion of the deferred tax asset is based upon
the Company's estimate of the expected utilization of the operating loss
carryforward during the 1998 fiscal year.
Note 8. Sales to major customers
The Company made sales in excess of 10% of its net sales to unrelated parties
for the year ended December 31, 1997 to two companies aggregating $2,279,467
(76%) and in 1996 to one company aggregating $1,126,312 (57%). Additionally, the
Company had open uncollateralized accounts receivable from these customers
aggregating $144,377 and $87,295 at December 31, 1997 and 1996, respectively.
Note 9. Gain from debt extinguishment
During the year ended December 31, 1996, the Company settled an aggregate of
$61,451 of outstanding trade accounts payable, salary and expenses without cash
expenditure.
Note 10. Commitments
Operating leases
The Company leases its facilities under operating leases through May 31, 1999.
Minimum future rentals payable under the leases are as follows:
Year Amount
1998 $56,218
1999 12,000
-------
$68,218
=======
Additionally, the Company rents certain equipment pursuant to short-term leasing
arrangements.
Rent expense amounted to $190,217 and $173,763 for the years ended December 31,
1997 and 1996, respectively.
F-12
<PAGE>
NO DEALER , SALESMAN OR OTHER PERSON
HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR T O MAKE ANY
REPRESENTATION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE ANTENNAS AMERICA, INC.
COMPANY. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE. 6,000,000 Shares of Common Stock
- -------------------------------------
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY................ 3
RISK FACTORS...................... 5
CAPITALIZATION.................... 7
PRICE RANGE OF COMMON STOCK....... 8
DIVIDEND POLICY................... 8
BUSINESS OF THE COMPANY........... 8
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS........ 14
MANAGEMENT........................ 16 --------------------------
EXECUTIVE COMPENSATION............ 18
BENEFICIAL OWNERS OF SECURITIES... 21
DESCRIPTION OF SECURITIES......... 23 PROSPECTUS
INACTIVE TRADING OF THE
COMMON STOCK..................... 24
SELLING SECURITY HOLDER........... 24 --------------------------
PLAN OF DISTRIBUTION.............. 25
SECURITIES AND EXCHANGE
COMMISSION POSITION ON
CERTAIN INDEMNIFICATION.......... 25
LEGAL MATTERS..................... 25
EXPERTS........................... 26
FINANCIAL STATEMENTS.............. F-1 ________, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification Of Directors And Officers
The Utah Business Corporation Act provides for indemnification by a
corporation of costs incurred by directors, employees, and agents in connection
with an action, suit, or proceeding brought by reason of their position as a
director, employee, or agent. The person being indemnified must have acted in
good faith and in a manner that the person reasonably believed to be in or not
opposed to the best interests of the corporation.
Under the Company's Articles of Incorporation and Bylaws, the Company is
required to indemnify its directors, officers, and other representatives of the
Company for costs incurred by each of them in connection with any action, suit,
or proceeding brought by reason of their position as a director, officer, or
representative.
Item 25. Other Expenses Of Issuance And Distribution.
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by the Registrant in connection with
the registration of the securities being offered. The Selling Security Holder
will not pay any of the following expenses.
Registration and filing fee.................................$ 160
Printing (*)................................................$ 1,000
Accounting fees and expenses (*)............................$ 1,000
Legal fees and expenses (*).................................$ 8,500
Registrar and transfer agent fee............................$ 200
Miscellaneous...............................................$ 1,140
----------------- -------
(*) Estimated
$12,000
=======
Item 26. Recent Sales Of Unregistered Securities
In December 1995, the Company accepted $13,750 from three individuals for
1,375,000 shares that were issued in 1996 pursuant to an exemption from
registration in accordance with Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act").
The Company sold 1,650,000 shares of Common Stock for an aggregate sales
price of $165,000 to a limited number of investors in an offering completed in
July 1996 pursuant to an exemption from registration in accordance with Rule 505
of Regulation D under the Securities Act.
In addition, at various times in 1996 the Company issued an aggregate of
1,025,000 shares of common stock upon the exercise of options in exempt
transactions pursuant to Section 4(2) of the Securities Act for an aggregate
exercise price of $45,250.
In March 1996, the Company issued 350,000 shares of common stock as a
stock bonus to an officer and director of the Company pursuant to an exemption
from registration under Section 4(2) of the Securities Act.
II-1
<PAGE>
In April 1997, the Company issued 300,000 shares of common stock to one
person upon the exercise of options in an exempt transaction under Section 4(2)
of the Securities Act for an aggregate exercise price of $15,000.
The Company issued to Millennium Holdings Group, Inc. ("Millennium")
6,000,000 options to purchase shares of Common Stock on December 31, 1997
pursuant to the terms the Consulting Agreement between the Company and
Millennium as described in this Registration Statement. Those options were
issued and the shares underlying the options will be issued in reliance on an
exemption from registration under Section 4(2) of the Securities Act.
Item 27. Exhibits.
The following is a complete list of Exhibits filed as part of this
Registration Statement, which Exhibits are incorporated herein.
Number Description
3.1a Articles of Incorporation of Westcliff Corporation, now known as
Antennas America, Inc. (the "Company"), are incorporated herein by
reference from the Company's Form S-18 Registration Statement dated
December 1, 1987 (File No. 33-18854-D).
3.1b Articles of Amendment of the Company dated January 26, 1988 are
incorporated herein by reference from the Company's Post-Effective
Amendment No. 3 to Form S-18 Registration Statement dated December
5, 1989 (File No. 33-18854-D).
3.1c Articles And Agreement Of Merger between the Company and Antennas
America, Inc. a Colorado corporation, dated March 22, 1989, are
incorporated herein by reference from the Company's Post-Effective
Amendment No. 3 to Form S-18 Registration Statement dated December
5, 1989 (File No. 33-18854-D).
3.2 Bylaws of the Company as amended and restated on March 25, 1998. (1)
5.1 Opinion of Bearman Talesnick & Clowdus Professional Corporation
concerning the legality of the securities being registered.
10.1a Industrial Lease dated April 10, 1998 between the Company and Five K
Investments.
10.1b Renewal and Extension of Lease dated April 10, 1998 between the
Company and Five K Investments.
10.1c Renewal and Extension of Lease dated April 10, 1998 between the
Company and Five K Investments.
10.1d Renewal and Extension of Lease dated April 10, 1998 between the
Company and Five K Investments.
II-2
<PAGE>
10.2 Employment Agreement dated as of March 19, 1998 between the Company
and Kevin O. Shoemaker. (1)
10.3 Consulting Agreement between the Company and Millennium Holdings
Group, Inc
10.4 1997 Stock Option and Compensation Plan is incorporated by reference
from Exhibit 99.1 to the Company's Proxy Statement dated April 17,
1998 concerning the Annual Meeting of Shareholders held on May 15,
1998.
10.5 Assignment of patent rights regarding Microstrip Antennas and
Multiple Radiator Array Antennas from Kevin O. Shoemaker to the
Company dated May 23, 1990.
10.6 Assignment of patent rights regarding Planar Serpentine Antennas
from Kevin O. Shoemaker to the Company dated May 23, 1980.
10.7 Agreement Of Assignment dated June 27, 1990 between Kevin O.
Shoemaker and the Company.
10.8 Form of Product Development Agreement executed by each of Randall P.
Marx and Kevin O. Shoemaker, respectively.
23.1 Consent of Bearman Talesnick & Clowdus Professional Corporation
(included in Option in Exhibit 5.1).
23.2 Consent of James E. Scheifley & Associates, P.C.
- --------------------------
(1) Incorporated herein by reference from the Company's Form 10-KSB for the year
ended December 31, 1997.
(2) Incorporated herein by reference from the Company's Form 10-KSB for the year
ended December 31, 1996.
Item 28. Undertakings.
1. The Company hereby undertakes:
(a) to file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement:
(1) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) to reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in Registration Statement (or the most recent
post-effective amendment thereof); and
II-3
<PAGE>
(3) to include any additional or changed material information on
the plan of distribution.
(b) That for determining liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering thereof;
(c) To file a post-effective amendment to remove from registration any of
the securities being registered which remain unsold at the end of the offering.
3. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the option of the Securities And Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or a controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or a controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Wheat
Ridge, State of Colorado, on May 21, 1998.
ANTENNAS AMERICA, INC.
By: /s/ Randall P. Marx
Randall P. Marx, Chief Executive Officer and
Principal Financial Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Signatures Title Date
/s/ Richard L. Anderson Director May 21, 1998
Richard L. Anderson
Director ______, 1998
Sigmund A. Balaban
/s/ Randall P. Marx Director May 21, 1998
Randall P. Marx
/s/ Bruce Morosohk Director May 21, 1998
Bruce Morosohk
/s/ Kevin O. Shoemaker
Kevin O. Shoemaker Director May 21, 1998
Director ______, 1998
Donald A. Huebner
<PAGE>
EXHIBIT INDEX
The following is a complete list of Exhibits filed as part of this
Registration Statement, which Exhibits are incorporated herein.
Number Description
3.1a Articles of Incorporation of Westcliff Corporation, now known as
Antennas America, Inc. (the "Company"), are incorporated herein by
reference from the Company's Form S-18 Registration Statement dated
December 1, 1987 (File No.
33-18854-D).
3.1b Articles of Amendment of the Company dated January 26, 1988 are
incorporated herein by reference from the Company's Post-Effective
Amendment No. 3 to Form S-18 Registration Statement dated December
5, 1989 (File No. 33-18854-D).
3.1c Articles And Agreement Of Merger between the Company and Antennas
America, Inc. a Colorado corporation, dated March 22, 1989, are
incorporated herein by reference from the Company's Post-Effective
Amendment No. 3 to Form S-18 Registration Statement dated December
5, 1989 (File No. 33-18854-D).
3.2 Bylaws of the Company as amended and restated on March 25, 1998. (1)
5.1 Opinion of Bearman Talesnick & Clowdus Professional Corporation
concerning the legality of the securities being registered.
10.1a Industrial Lease dated April 10, 1998 between the Company and Five K
Investments.
10.1b Renewal and Extension of Lease dated April 10, 1998 between the
Company and Five K Investments.
10.1c Renewal and Extension of Lease dated April 10, 1998 between the
Company and Five K Investments.
10.1d Renewal and Extension of Lease dated April 10, 1998 between the
Company and Five K Investments.
10.2 Employment Agreement dated as of March 19, 1998 between the Company
and Kevin O. Shoemaker. (1)
10.3 Consulting Agreement between the Company and Millennium Holdings
Group, Inc
10.4 1997 Stock Option and Compensation Plan is incorporated by reference
from Exhibit 99.1 to the Company's Proxy Statement dated April 17,
1998 concerning the Annual Meeting of Shareholders held on May 15,
1998.
<PAGE>
10.5 Assignment of patent rights regarding Microstrip Antennas and
Multiple Radiator Array Antennas from Kevin O. Shoemaker to the
Company dated May 23, 1990.
10.6 Assignment of patent rights regarding Planar Serpentine Antennas
from Kevin O. Shoemaker to the Company dated May 23, 1980.
10.7 Agreement Of Assignment dated June 27, 1990 between Kevin O.
Shoemaker and the Company.
10.8 Form of Product Development Agreement executed by each of Randall P.
Marx and Kevin O. Shoemaker, respectively.
23.1 Consent of Bearman Talesnick & Clowdus Professional Corporation
(included in Option in Exhibit 5.1).
23.2 Consent of James E. Scheifley & Associates, P.C.
- --------------------------
(1) Incorporated herein by reference from the Company's Form 10-KSB for the year
ended December 31, 1997.
(2) Incorporated herein by reference from the Company's Form 10-KSB for the year
ended December 31, 1996.
May 20, 1998
Antennas America, Inc.
4860 Robb Street, Suite 101
Wheat Ridge, Colorado 80033-2163
Gentlemen and Ladies:
We have acted as counsel for Antennas America, Inc. (the "Company") in
connection with the registration under the Securities Act of 1933, as amended,
of the transfer of 6,000,000 shares of the Company's $.0005 par value common
stock (the "Common Stock") on Form SB-2.
We have examined the Company's Articles Of Incorporation, as amended, its
Bylaws, as amended, and the record of its corporate proceedings with respect to
the registration described above. In addition, we have examined such other
certificates, agreements, documents and papers, and we have made such other
inquiries and investigations of law as we have deemed appropriate and necessary
in order to express the opinion set forth in this letter. In our examinations,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, photostatic, or conformed copies and the
authenticity of the originals of all such latter documents. In addition, as to
certain matters we have relied upon certificates and advice from various state
authorities and public officials, and we have assumed the accuracy of the
material and the factual matters contained therein.
Subject to the foregoing and on the basis of the aforementioned
examinations and investigations, it is our opinion that the 6,000,000 shares of
Common Stock whose transfer is being registered by the Company will be if and
when sold and delivered as described in the Company's Registration Statement on
Form SB-2 (the "Registration Statement") legally issued, fully paid and
nonassessable shares of the Company's Common Stock.
We hereby consent (i) to be named in the Registration Statement, and in the
prospectus that constitutes a part thereof, as the attorneys passing upon the
validity of the issuance of the Common Stock on behalf of the Company and, (ii)
to the filing of this opinion as an Exhibit to the Company's Registration
Statement.
This opinion is to be used solely for the purpose of the registration of
the Common Stock and may not be used for any other purpose.
Very truly yours,
/s/ Bearman Talesnick & Clowdus
Professional Corporation
BEARMAN TALESNICK & CLOWDUS
Professional Corporation
EXHIBIT 10.1a
INDUSTRIAL LEASE
(Gross)
1. PARTIES: This Lease dated, for reference purposes only, April 10, 1998
is made by and between Five K Investments Company (herein called "Lessor") and
Antennas America, Inc. (herein called "Lessee").
2. PREMISES: Lessor hereby 1eases to Lessee and Lessee leases from Lessor
for the term of two (2) years, the rental, and upon all of the conditions set
forth herein, that certain real property situated in the County of Jefferson,
State of Colorado, commonly known as approximately 7,500 square feet and
described as 4880 Robb Street, Units #5, #6, and #11, Wheat Ridge, Colorado
80033.
Said real property including the land and all improvements thereon, is
herein called "The Premises".
3. TERM:
3.1 Term: The term of this Lease shall be for two (2) years commencing
on May l6, 1998 and ending on May 15, 2000, unless sooner terminated
pursuant to any provision hereof.
3.2. Delay in Commencement: Notwithstanding said commencement date, if
forany reason Lessor cannot deliver possession of the Premises to Lessee on
said date, Lessor shall not be subject to any liability thereof, nor shall
such failure affect the validity of the Lease or obligations of Lessee
hereunder or extend the term hereof, but in such case Lessee shall not be
obligated to pay rent until possession of the Premises is tendered to
Lessee; provided, however, that if Lessor shall not have delivered
possession of the Premises within sixty (60) days from said commencement
date, Lessee may, at Lessee's option, by notice in writing to Lessor within
ten (10) days thereafter, cancel this Lease, in which event the parties
shall be discharged from all obligations hereunder. If Lessee occupies the
Premises prior to said commencement date, and Lessee shall pay rent for
such period at the initial monthly rates set forth below.
4. RENT: Lessee shall pay to Lessor as rent for the Premises equal monthly
payments of $4062.50 in advance; on the 1st day of each month of the term hereof
$2,096,80 as rent for 16 days in May 1998. Rent for any period during the term
hereof which is for less than one month shall be a pro rata portion of the
monthly installment. Rent shall be payable in lawful money of the United States
to Lessor at the address stated herein or to such other persons or at such other
places as Lessor may designate in writing.
5. SECURITY DEPOSIT: Lessee shall deposit with Lessor upon execution hereof
$4,062.50 as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies
all or any portion of said deposit, Lessee shall within ten (10) days after
written demand therefor deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount herein above stated and Lessee's failure
to do so shall be a material breach of this Lease. Lessor shall not be required
to keep said deposit separate from its general accounts. If Lessee performs all
of Lessee's obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option to
the last assignees, if any, of Lessee's interest hereunder) at the expiration of
the term hereof and after Lessee has vacated the Premises. No trust relationship
is created herein between Lessor and Lessee with respect to the said Security
Deposit.
<PAGE>
6. USE:
6.1 Use: The Premises shall be used and occupied only for office assembly
and warehouse and for no other purpose.
6.2 Compliance with Law:
(a) Lessor warrants to Lessee that the Premises, in its existing
state, but without regard to the use for which Lessee will use the
Premises, does not violate any applicable building code, regulation or
ordinance at the time this Lease is executed. In the event it is determined
that this warranty has been violated, then it shall be the obligation of
the Lessor, after written notice from Lessee, to promptly, at the Lessor's
sole cost and expense, rectify any such violation. In the event Lessee does
not give to Lessor written notice of the violation of this warranty within
ninety (90) days from the commencement of the term of this Lease, it shall
be conclusively deemed that such violation did not exist and the correction
of the same shall be the obligation of the Lessee.
(b) Except as provided in paragraph 6.2 (a), Lessee expense, comply
promptly with all applicable statutes, ordinances, rules, regulations,
orders, restrictions of record, and requirements in effect during the term
or any part of the term hereof regulating the use by Lessee of the
premises, Lessee shall not use nor permit the use of the Premises in any
manner that will tend to create waste or a nuisance or, if there shall be
more than one tenant in the building containing the Premises, shall tend to
disturb such other tenants.
6.3 Condition of Premises. Except as provided in paragraph 6.2 (a) Lessee
hereby accepts the Premises in their condition existing as of the date of the
execution hereof, subject to all applicable zoning, municipal, county and state
laws, ordinances and regulations governing and regulating the use of the
Premises, and accepts this Lease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto Lessee acknowledges that neither
Lessor nor Lessor's agent has made any representation or warranty as to the
suitability of the Premises for the conduct of Lessee's business.
7. MAINTENANCE REPAIRS AND ALTERATIONS:
7.1 Lessor's Obligations. Subject to the provisions of Paragraphs 6.2 (a)
and 9, and except for damage caused by any negligent or intentional act or
omission of Lessee, Lessee's agents, employees, or invites in which event Lessee
shall repair the damage, Lessor, at Lessor's expense, shall keep in good order,
condition and repair the foundations, exterior walls and the exterior roof of
the Premises. Lessor shall not, however, be obligated to paint such exterior,
nor shall Lessor be required to maintain the interior surface of exterior walls,
windows, doors or plate glass. Lessor shall have no obligation to make repairs
under this Paragraph 7.1 until a reasonable time after a receipt of written
notice of the need of such repairs. Lessee expressly waives the benefits of any
statute now or hereafter in effect which would otherwise afford Lessee the right
to make repairs at Lessor's expense or to terminate this Lease because of
Lessor's failure to keep the Premises in good order, condition and repair.
<PAGE>
7.2 Lessee's Obligations:
(a) Subject to the provisions of Paragraph 6.2 (a), 7.1 and 9, Lessee,
at Lessee's expense, shall keep in good order, condition and repair the
Premises and every part thereof (whether or not the damaged portion of the
Premises or the means of repairing the same are reasonably or readily
accessible to Lessee) including, without limiting the generality of the
foregoing, all plumbing, heating, air conditioning, ventilating, electrical
and lighting facilities and equipment within the Premises, fixtures,
interior wall and interior surface of exterior walls, ceilings, windows,
door, plate glass and skylights located within the Premises and Lease's
signs located in the Premises. Lessee expressly waives the benefits of any
statute now or hereafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor's expense or to terminate this Lease
because of Lessor's failure to keep the Premises in good order, condition
and repair.
(b) If Lessee fails to perform Lessee's obligation under this
Paragraph 7.2, Lessor at Lessor's option enter upon the Premises after ten
(10) days prior written notice to Lessee, and put the same in good order,
condition and repair and the cost thereof together with interest thereon at
the rate of fifteen (15%) percent per annum shall be due and payable, if
not so paid, as additional rent to Lessor together with Lessee's next
rental installment.
(c) On the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in the same condition as
received, broom clean, ordinary wear and tear excepted, Lessee shall repair
any damage to the Premises occasioned by the removal of its trade fixtures,
furnishings and equipment pursuant to Paragraph 7.3 (d), which repair shall
include the patching and filling of holes and repair of structural damage.
7.3 Alteration and additions:
(a) Lessee shall not, without Lessor's prior written consent, make any
alterations, improvement, addition, or Utility Installation in, or about
the Premises, except for nonstructural alterations not exceeding One
Thousand Dollars ($1,000.00) in cost. As used in this Paragraph 7.3, the
term "Utility Installation" shall mean bus ducting, power panels, wiring,
fluorescent fixtures, space heaters, conduits, air conditioning and
plumbing. Lessor may require that Lessee remove any or all of said
alterations, improvements, additions or utillty installations at the
expiration of the term, and restore the Premises to their prior condition.
Lessor may require Lessee to provide Lessor, at Lessee's sole cost and
expense a lien and completion bond in an amount equal to one and one half
times the estimated cost of such improvements, to insure Lessor against any
liability for mechanic's and materialmen's liens and to insure completion
of the work. Should Lessee make any alterations, improvements, additions or
Utility Installations without prior approval of Lessor, Lessor may require
that Lessee remove any or all such. (sic)
(b) Any alterations, improvements, additions or Utility Installations
in, or about the Premises that Lessee shall desire to make and which
requires the consent of the Lessor shall be presented to Lessor in written
form, with proposed detailed plans. If Lessor shall give its consent, the
consent shall be deemed conditioned upon Lessee acquiring a permit to do so
from appropriate governmental agencies, the furnishing of a copy thereof to
Lessor prior to the commencement of the work and the compliance by Lessee
of all conditions of said permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use
in the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee
<PAGE>
shallgive Lessor not less then ten (10) days notice prior to the
commencement of any work in the Premises, and Lessor shall have the right
to post demand, then Lessee shall, at its sole expense, defend itself and
Lessor against the same and shall pay and satisfy any such adverse judgment
that may be rendered thereon before the enforcement thereof against the
Lessor or the Premises upon the condition that, if Lessor shall require,
Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an
amount equal to such contested lien claim or demand indemnifying Lessor
against liability for the same and holding the Premises free from the
effect of such lien or claim. In addition, Lessor may require Lessee to pay
Lessor's attorney's fees and costs in participating in such action if
Lessor shall decide it is to its best interest to do so.
(d) Unless Lessor requires their removal, as set forth in Paragraph
7.3 (a), all alterations, improvements, additions and Utility Installations
(whether or not such Utility Installations constitute trade fixtures) of
Lessee which may be made on the Premises, shall become the Property of
Lessor and remain upon and be surrendered with the Premises at the
expiration of the term. Notwithstanding the provisions of this Paragraph
7.3 (d), Lessee's machinery and equipment, other than that which is affixed
to the Premises so that it cannot be moved without material damage to the
Premises, shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 7.2 (c).
8. INSURANCE; INDEMNITY:
8.1 Liability Insurance: Lessee shall, at Lessee's expense, obtain and keep
in force during the term of this Lease a policy of Combined Single Limit, Bodily
Injury and Property Damage Insurance insuring Lessor and Lessee against any
liability arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than One Million Dollars
($1,000,000.00). The policy shall contain cross liability endorsements and shall
insure performance by Lessee of the indemnity provisions of this Paragraph 8.
The limits of said insurance shall not, however, limit the liability of Lessee
hereunder. In the event that the Premises constitute a part of a larger
property, said insurance shall have a Lessor' s Protective Liability endorsement
attached thereto. If Lessee shall fail to procure and maintain such insurance,
Lessor may, but not be required to, procure and maintain the same but at the
expense of the Lessee. Not more frequently than each five (5) years if, in the
reasonable opinion of Lessor, the amount of liability insurance required
hereunder is not adequate, Lessee shall increase said insurance by more than
fifty percent (50%) greater than the amount thereof during the preceding five
years of the term of this Lease provided however, the failure of Lessor to
require any additional insurance coverage shall not be deemed to relieve from
any obligations under this Lease.
8.2 Property Insurance:
(a) Lessor shall obtain and keep in force during the term of this
Lease a policy of insurance covering loss or damage to the building,
Premises, but not Lessee's fixtures, equipment or tenant improvements in
the amount of the full replacement value thereof, provided protection
against all perils including within the classification of fire, extended
malicious mischief, special extended perils (all risk) but not plate glass
insurance. In addition, the Lessor shall obtain and keep in force during
the tern of this Lease a policy of rental income insurance covering a
period of six (6) months, with loss payable to Lessor which insurance shall
also cover all real estate taxes and insurance cost for said period. In the
event the Premises contains sprinklers, then the insurance coverage shall
include sprinkler leakage insurance.
<PAGE>
(b) If the Premises being leased herein are part of a larger property,
then Lessee shall not be responsible for paying any increase in the
property insurance caused by the acts or omission of other tenant of the
building of which the Premises are a part.
8.3 Insurance Polices: Insurance required hereunder shall be in companies
holding a General Policyholders Rating of B plus or better as set forth in the
most current issue of "Best Insurance Guide". Lessee shall deliver to Lessor
copies of polices of liability insurance required under Paragraph 8.1 or
certificates evidencing the existence of such amounts of such insurance with
loss payable clauses satisfactory to Lessor. No such policy shall be cancelable
or subject to reduction of coverage or other modifications except after ten (10)
days prior written notice of Lessor. Lessee shall, within ten (10) days prior to
the expiration of such policies, furnish Lessor with renewals or binders thereof
or Lessor may order such insurance and charge the cost therefor to Lessee, which
amount shall be payable by Lessee upon demand. Lessee shall not do or permit to
be done anything which shall invalidate the insurance policies referred to in
Paragraph 8.2.
8.4 Waiver of Subrogation: Lessee and Lessor each hereby waive any and all
rights of recovery against the other, or against the officers, employees, agents
and representatives of the other for loss of or damage to such waiving party or
its property of others under its control where such loss or damage is insured
against under any insurance policy in force at the time of such loss or damage.
Lessee and Lessor shall, upon obtaining the policies of insurance required
hereunder, give notice to the insurance carrier or carriers that the forgoing
mutual waiver of subrogation is contained in this Lease.
8.5 Indemnity: Lessee shall indemnify and hold harmless Lessor from and
against any and all claims arising from Lessee's use of the Premises, or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation Lessee's
part to be performed under the terms of this Lease or arising from any
negligence of the Lessee, or any of Lessee's agents, contractors, or employees,
and from and against all costs, attorney's fees, expenses and liabilities
incurred in the defenses of any such claim or any action or proceeding brought
thereon. Lessee upon notice from Lessor shall defend the same at Lessee's
expense by counsel reasonably satisfactory to Lessor. Lessee, as a material part
of the consideration to Lessor hereby assumes all risk of damage to property or
injury to persons in, upon or about the Premises arising from any cause, and
Lessee hereby waives all claims in respect thereof against Lessor.
8.6 Exemption of Lessor from Liability: Unless caused by Lessor's
negligence Lessee hereby agrees that Lessor shall not be liable for injury to
Lessee's business or any loss of income therefrom or for damage to the goods,
wares, merchandise or other property of Lessee, Lessee's employees, invitees,
customer, or any other person in or about the Premises nor shall Lessor be
liable for injury to the person of Lessee, Lessee's employees, agents or
contractors, whether such damage or injury is caused by or results from fire,
steam, electricity, water, or rain, or from the breakage, leakage, obstruction
or other defects of pipes, sprinklers, wires appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether the said
damage or injury results from conditions arising upon the Premises or upon other
portions of the building of which the Premises are a part of from other sources
or places and regardless of whether the cause of such damage or injury or the
means of repairing the same is inaccessible to Lessee Lessor shall not be liable
for any damages arising from any act or neglect of any other tenant, if any, of
the building in which the Premises are located.
<PAGE>
9. DAMAGE OR DESTRUCTION:
9.1 Partial Damage-Insured: Subject to the provision of Paragraph 9.3 and
9.4 if the Premises are damaged and such damage was caused by a casualty
required to be maintained pursuant to Paragraph 8.2, Lessor shall at Lessor's
expense, repair such damage as soon as reasonably possible, and this Lease shall
continue in full force and effect but Lessor shall not repair or replace
Lessee's fixtures, equipment or tenant improvements.
9.2 Partial Damage-Uninsured: Subject to the provisions of Paragraphs 9.3
and 9.4, if at any time during the term hereof the Premises are damaged except
by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at its expense) and such damage was caused by a casualty not covered
under an insurance policy required to be maintained by Lessor pursuant to
Paragraph 8.2, Lessor may at Lessor's option either (a) repair such damage as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (b) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage. In the event Lessor elects to give such notice of Lessor's
intention to cancel and terminate this Lease Lessee shall have the right within
ten (l0) days after the receipt of such notice to give written notice to Lessor
of Lessee's intention to repair such damage at Lessee's expense, without
reimbursement from Lessor, in which event this Lease shall continue in full
force and effect and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such ten (10)
day period, this Lease shall be canceled and terminated as of the date of the
occurrence of such damage.
9.3 Total Destruction: If at any time hereof the Premises are totally
destroyed from any cause, whether or not covered by the insurance required to be
maintained by Lessor pursuant to Paragraph 8.2 (including any total destruction
required by any authorized public authority) this Lease shall automatically
terminate as of the date of such total destruction, and neither party shall have
further right or obligations hereunder.
9.4 Damage Near End Of Term: If the Premises are partially destroyed or
damaged during the last six (6) months of the term of this Lease, Lessor or
Lessee may at Lessor's option cancel and terminate this Lease as of the date of
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of such damage.
9.5 Abatement of Rent: Lessee's Remedies:
(a) If the Premises are partially destroyed or damaged and Lessor and
Lessee repairs or restores them pursuant to the provisions of this
Paragraph 9, the rent payable hereunder for the period during which such
damage, repair or restoration continues shall be abated in proportion to
the degree to which Lessee's use of the Premises is impaired. Except for
abatement of rent if any Lessee shall have no claim against Lessor for any
damages suffered by reason of any such damage, destruction, repair or
restoration.
(b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9, and shall not commence such
repair or restoration within ninety (90) days after such obligations shall
accrue, Lessee may at Lessee's option, cancel and terminate this Lease by
giving Lessor written notice of Lessee's election to do so at any time
prior to the commencement to such repair or restoration. In such event,
this Lease shall terminate as of the date of such notice.
9.6 Termination-Advance Payments: Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
rent and any advance payments made by Lessee to Lessor. Lessor shall in addition
return to Lessee so much of Lessee's security deposit as has not therefore been
applied by Lessor.
9.7 Waiver: Lessee waives the provisions of any Colorado Civil Code
Sections which relate to termination of Lessee when the thing leased is
destroyed and agrees that such event shall be governed by the terms of this
Lease.
<PAGE>
10. PROPERTY TAXES:
10.1 Payment Of Property Taxes: Lessor shall pay all property taxes
applicable to the Premises.
10.2 Definition Of "Real Property" Tax: As used herein, the term "Real
Property Tax" shall include any form of assessment, license fee, commercial
rental tax, levy, penalty, or tax (other than inheritance or estate taxes),
imposed by any authority having the direct or indirect power to tax, including
any city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement district thereof, as against any legal
or equitable interest of Lessor in the Premises or in the real property of which
the Premises are a part, as against Lessor's right to rent or other income
therefrom, or as against Lessor's business of leasing the Premises or any tax
imposed in substitution, partially or totally, or any tax previously included
within the definition of real property tax, or any additional tax, the nature of
which was previously included within the definition of Real Property Tax.
10.3 Joint Assessment: If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
of all the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations assigned in
the assessor's work sheets or other information as may be reasonably available.
Lessor's reasonable determination hereof, in good faith, shall be conclusive.
10.4 Personal Property Taxes:
(a) Lessee shall pay, prior to delinquency, all taxes assessed against
and levied upon trade fixtures, furnishing, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment
and all other personal property to be assessed and billed separately from
the real property of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property.
11. UTILITIES:
Lessee shall pay for all gas, heat, light, power, telephone and other
utilities and service supplied to the Premises, together with any taxes thereon.
If any such services are not separately metered to Lessee, Lessee shall pay a
reasonable proportion to be determined by Lessor of all charges jointly metered
with other premises.
<PAGE>
12. ASSIGNMENT AND SUBLETTING:
12.1 Lessor's Consent Required: Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's written consent, which Lessor shall not unreasonably withhold
any attempted assignment, transfer, mortgage, encumbrance or subletting without
such consent shall be void, and shall constitute a breach of this Lease.
12.2 Lessee Affiliate: Notwithstanding the provisions of Paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, provided that said assignee assumes, in full, the
obligations of Lessee under this Lease. Any such assignment shall not, in any
way, effect or limit the liability of Lessee under the terms of this lease even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
12.3 No release of Lessee regardless of Lessor's consent, no subletting or
assignment shall release Lessee of Lessor's obligation or alter the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by any assignees of
Lessee or any successor of Lessee in the performance of any of the terms hereof,
Lessor may proceed directly against Lessee without the necessity of exhausting
remedies against said assignee. Lessor may consent to subsequent assignments or
subletting of this Lease or amendments or modifications to this Lease with
assignees of Lessee, without notifying Lessee, or any successor of Lessee, and
without obtaining its or their consent thereto and such action shall not relieve
Lessee of liability under this Lease.
12.4 Attorney's Fees: In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting of if
Lessee shall request the consent of Lessor for any act Lessee proposes to do,
then Lessee shall pay Lessor reasonable attorneys fees incurred in connection
therewith, such attorney's fees not to exceed $250.00 for each such request.
13. DEFAULTS; REMEDIES:
13.1 Defaults: The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where
such failure shall continue for a period of three (3) days after written
notice thereof from Lessor to Lessee.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by
Lessee, other than described in Paragraph 13.1(b) above, where such failure
shall continue for a period of thirty (30) days after written notice hereof
from Lessor to Lessee; provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days are reasonably required for
its cure, then Lessee shall not be deemed to be in default if Lessee
commenced such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
<PAGE>
(d)(i) The making by Lessee of any general arrangements for the
benefit of creditors; (ii) the filing by or against Lessee of a petition to
have Lessee adjudged a bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Lessee, the same is dismissed within sixty (60)
days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee's assets located at the Premises or of Lessee's
interest in this Lease where possession is not restored to Lessee within
thirty (30) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the Premises or
of Lessee's interest in this Lease where such seizure is not discharged
within thirty (30) days.
(e) The discovery by Lessor that any financial statement given to
Lessor by Lessee, any assignee of Lessee, any sub-tenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, and any of them, was materially false.
13.2 Remedies: In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice of demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event,
Lessor shall be entitled to recover from Lessee all expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorney's fees and any real estate commission actually paid; the worth at
the time of award by the court having jurisdiction thereof of the amount by
which the unpaid rent for the balance of the term after the time of such
award exceeds the amount of such rental loss for the same period that
Lessee proves could be reasonably avoided; that portion of the leasing
commission paid by Lessor pursuant to Paragraph 15 applicable to the
unexpired term of this Lease.
(b) Maintain Lessee's right to possession, in which case this Lease
shall continue in effect whether or not Lessee shall have abandoned the
Premises. In such event Lessor shall be entitled to enforce all of Lessor's
rights and remedies under this Lease, including the right to recover the
rent as it becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the State of Colorado.
13.3 Default by Lessor: Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after written notice by Lessee to Lessor and
to the holder of any first mortgage or deed of trust covering the Premises whose
name and address shall have theretofore been furnished to Lessee in writing
specifying wherein Lessor has failed to perform such obligation; provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(30) days required for performance, then Lessor shall not be in default if
Lessor commences performance within such thirty (30) day period and thereafter
diligently prosecutes the same to completion.
<PAGE>
13.4 Late Charges: There will be a late fee assessed for any rent payments
received beyond the 5th of each month of fifteen percent (15%).
14. CONDEMNATION:
If the Premises or any portion thereof are taken under the power of eminent
domain, or sold under the threat of the exercise of said power (all of which are
herein called "condemnation"), this Lease shall terminate as to the part so
taken as of the date condemning authority takes title or possession, whichever
first occurs. If more than ten (10%) percent of the floor area of the
improvements of the Premises, or more than twenty five (25%) percent of the land
area of the Premises which is not occupied by any improvements is taken by
condemnation Lessee may at Lessee's option to be exercised in writing only
within ten (10) days after Lessor shall be given Lessee written notice of such
taking (or in the absence of such notice within ten (10) days after the
condemning authority shall have taken possession) terminate this Lease as of the
date the condemning authority takes such possession. If Lessee does not
terminate this Lease in accordance with the foregoing, this Lease shall remain
in full force and effect as to the portion of the Premises remaining, except
that the rent shall be reduced in the proportion that the floor area taken bears
to the total floor area of the building situated on the Premises. Any award for
the taking of all or any part of the Premises under the power of eminent domain
or any payment made under threat of the exercise of such power shall be the
property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any award
for loss of, or damage to Lessee's trade fixtures and removable personal
property. In the event that this Lease is not terminated by reason of such
condemnation, Lessor shall to the extent of severance damages received by Lessor
in connection with such condemnation repair any damage to the Premises caused by
such condemnation, except to the extent that Lessee has been reimbursed therefor
by the condemning authority. Lessee shall pay amount in excess of such severance
damages required to complete such repair.
15. BROKER'S FEES:
Upon execution of this Lease by both parties, Lessor shall pay to N/A a
Licensed real estate broker, a fee as set forth in a separate agreement between
Lessor and said broker. Lessor further agrees that if Lessee exercises any
option granted herein or any option substantially similar thereto, Lessor shall
either to extend the term of this Lease, to renew this lease, to purchase said
Premises or any part thereof and any adjacent property which Lessor may own or
in which Lessor has an interest or any other option granted herein or if said
broker is the procuring cause of any other lease or sale entered into between
the parties pertaining to the Premises and/or any adjacent property in which
Lessor has an interest, then as to any of said transactions Lessor shall pay
said broker a fee in accordance with the schedule of said broker in effect at
the time of execution of this lease. Lessor agrees to pay said fee not only on
behalf of Lessor but also on behalf of any person, corporations, association, or
other entity having an ownership interest in said real property or any part
thereof, when such fee is due hereunder. Any transferee of Lessor's interest in
this Lease, by accepting as assignment of such interest shall be deemed to have
assumed Lessor's obligation under this Paragraph 15. Said broker shall be a
third party beneficiary of the provisions of this Paragraph.
16. GENERAL PROVISIONS:
16.1 Estoppel Certificates:
(a) Lessee shall at any time upon not less than ten (10) days prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (I) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full
force, and effect) and the date to which the rent and other charges are
paid in advance, if any and (ii) acknowledging that there are not, to
Lessee's knowledge, any uncured defaults on the part of Lessor hereunder or
specifying such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of
the Premises.
<PAGE>
(b) Lessee's failure to deliver such statement within such time shall
be conclusive upon Lessee (i) that this Lease is in full force and effect,
without modification except as may be represented by Lessor, (ii) that
there are no uncured defaults in Lessor's performance and (iii) that not
more than one month's rent has been paid in advance or such failure may be
considered by Lessor as a default by Lessee under this Lease.
(c) If Lessor desires to finance or refinance the Premises or any part
thereof, Lessee hereby agrees to deliver to any lender designated by Lessor
such financial statements of Lessee as may be reasonably required by such
lender. Such statements shall include the past three years' financial
statements of Lessee. All such financial statements shall be received by
Lessor in confidence and shall be used only for the purpose herein set
forth.
16.2 Lessor's Liability: The term "Lessor" as used herein shall mean only
the owner or owners at the time in question of the fee title or a Lessee's
interest in a ground lease of the Premises and except as expressly provided in
Paragraph 15, in the event any transfer of such title or interest, Lessor herein
named (and in case of any subsequent transfers the then grantor shall be
retrieved from and after the date of such transfer of all liability as respects
Lessor's obligations thereafter to be performed, provided that any funds in the
hands of Lessor or the grantor at the time of such transfer in which Lessee has
an interest shall be delivered to the grantee. The obligations contained in this
Lease to be performed by Lessor shall subject as aforesaid be binding on
Lessor's successors and assigns only during their respective periods of
ownership.
l6.3 Severability: The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provisions hereof.
16.4 Interest On Past Due Obligations: Except as expressly herein provided
in section 13.4, any amount due to Lessor not paid when due shall bear interest
at twelve percent (12%) per annum from the date due. These are for funds due to
Lessor past 1st month due. Payment of such interest shall not excuse or cure any
default by Lessee under this Lease, provided, however, that interest shall not
be payable on late charges incurred by Lessee nor on any amount upon which late
charges are paid by Lessee.
16.5 Time of Essence: Time is of the essence.
16.6 Captions: Article and paragraph captions are not a part hereof.
16.7 Incorporation Of Prior Agreements; Amendments: This Lease contains all
Agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest at
the time of the modification. Except as otherwise stated in this Lease, Lessee
hereby acknowledges that neither the Lessor or any employees or agents of said
persons has made any oral or written warranties or representations to Lessee
relative to the condition or use by Lessee of said Premises, and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
term of this lease, except as otherwise specifically stated in this Lease.
<PAGE>
16.8 Notices: Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal delivery or by certified mail and, if
given personally or by mail, shall be deemed sufficiently given if addressed to
Lessee or to Lessor at the address noted below the signature of the respective
parties, as the case may be either party may be notice to the other specify a
different address for notice purposes except that upon Lessee's taking
possession of the Premises, the Premises shall constitute Lessee's address for
notice purpose copy of all notices required or permitted to be given to Lessor
hereunder shall be concurrently transmitted to such party or parties as such
addresses as Lessor may from time to time hereafter designate by notice to
Lessee. Notices effective upon receipt of refusal of receipt.
16.9 Waivers: No waivers by Lessor of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to or approval of any act
shall not be deemed to render unnecessary to obtaining of Lessor's consent to or
approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by Lessee of any provision
hereof, other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
16.10 Recording: Lessee shall not record this Lease without Lessor's prior
written consent, and such recordation shall at the option of Lessor, constitute
a non-curable default of Lessee hereunder. Either party shall, upon request of
the other, execute, acknowledge and deliver to the other a short form
"memorandum" of this Lease for recording purposes.
16.11 Holding Over: If Lessee remains in possession of the Premises or any
part thereof after expiration of the term hereof, without the express written
consent of Lessor, such occupancy shall be a tenancy from month to month at a
rental equal to treble the last monthly rental, plus all other charges payable
hereunder, and upon all the terms hereof applicable to a month to month tenancy.
16.12 Cumulative Remedies: No remedy or election hereunder shall be deemed
exclusive, but shall wherever possible be cumulative with all other remedies at
law or in equity.
16.13 Covenants and Conditions: Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.
l6.14 Binding Effect-Choice of Law: Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
Paragraph 16.2, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of Colorado.
<PAGE>
16.15 Subordination:
(a) This Lease, at Lessor's option shall be subordinate to any ground
lease, mortgage, deed of trust or any other hypothecation for security now
or hereafter placed upon the real property of which the Premises are a part
and to any and all advances made on the security thereof and to all
renewals, modifications, consolidations, replacements and extensions
thereof. Notwithstanding such subordination, Lessee's right to quiet
possession of the Premises shall not be disturbed if Lessee is not in
default and so long as Lessee shall pay the rent and observe and perform
all provisions of this Lease unless this Lease is otherwise terminated
pursuant to its terms. If any mortgagee, trustee or ground Lessor shall
elect to have this Lease prior to the lien of its mortgage, deed of trust
or ground lease, and shall give written notice thereof to Lessee, this
Lease shall be deemed prior to such mortgage, deed of trust or ground
lease, whether this Lease is dated prior or subsequent to the date of said
mortgage, deed of trust or ground lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate such
subordination or to make this Lease prior to the lien of any mortgage, deed
of trust or ground lease, as the case may be and failing to do so within
ten (10) days after written demand does hereby make, constitute and
irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's
name, place and stead to do so.
16.16 Attorney's Fees: If either party named herein brings an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action on trial or appeal shall be entitled to reasonable attorney's
fees to be paid by the losing party as fixed by the court.
16.17 Lessor's Access: Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the same,
showing the same to prospective purchasers lender or lessees and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may, at any time place on or about the Premises any ordinary "For Sale"
signs, and Lessor may, at any time during the last one hundred twenty (120) days
of the term hereof, place on or about the Premises any ordinary "For Lease"
signs, all without rebate of rent or liability to Lessee.
16.18 Signs and Auctions: Lessee shall not place any sign upon the Premises
or conduct any auction thereon, without Lessor's prior written consent, except
that Lessee shall have the right, without the prior permission of Lessor, to
place ordinary and usual for rent or sublet signs thereon.
16.19 Merger: The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall at the option of Lessor terminate all and any existing
subtenancies or may, at the option of Lessor operate as an assignment to Lessor
of any or all of such subtenancies.
16.20. Corporate Authority: If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding upon said Corporation in accordance
with its terms. If Lessee is a corporation, Lessee shall, within thirty (30)
days after execution of this Lease deliver to Lessor a certified copy of a
resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.
16.21 Consents: Wherever in this Lease the consent of one
party is required to an act of the other party, such consent shall not be
unreasonably withheld.
16.22 Guarantor: In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under Paragraphs 16.1 and
16.20 of this Lease.
<PAGE>
16.23 Quiet Possession: Upon Lessee paying the fixed rent reserved
hereunder and observing, performing all of the covenants, conditions and
provisions on Lessee's part to be observed and performed hereunder, Lessee shall
have quiet possession of the Premises for the entire term hereof subject to all
of the provisions of this Lease.
16.24 Options: In the event that the Lessee under the terms of this Lease
has any option to extend the term of this Lease, or any option to purchase the
Premises, or any right of first refusal to purchase the Premises or other
property of Lessor, then each of such options and right are personal to Lessee
and may not be exercised or be assigned, voluntarily or involuntarily by or to
anyone other than Lessee except that it may be exercised by or assigned to any
of the entities described in Paragraph 12.2 hereof, for whom Lessee does not
need the consent of Lessor to assign this Lease. In the event that Lessee
hereunder has any multiple options to extend this Lease, a later option to
extend the Lease cannot be exercised unless the prior option has been so
exercised. No option may be exercised at a time when the Lessee is in default
under its obligations under this Lease.
16.25 Multiple Tenant Building: In the event that the Premises are part of
a larger building or group of buildings, then Lessee agrees that it will abide
by, keep and observe all reasonable rules and regulations which Lessor may make
from time to time for the management, safety, care and cleanliness of the
building and grounds, the parking of vehicles and the preservation of good order
therein as well as for the convenience of other occupants of the building
further, Lessee will promptly pay its pro rata share as reasonably determined by
Lessor of any maintenance or repair of such portion of the Premises or such
portion of the property of which the Premises are a part, which are common areas
or used by Lessee and other occupants thereof. The violations of any such rules
and regulations, or the failure to pay such pro rata share of costs, shall be
deemed a material breach of this Lease by Lessee.
16.26 No outside storage of any type is allowed.
16.27 Tenant is responsible for snow removal immediately outside this unit.
16.28 Hazardous Substances: Lessee covenants with Lessor to notify Lessor
of any and all hazardous substances (as defined below) generated or stored at
the Premises, to comply with all obligations imposed by applicable law, rules,
regulations or requirements of any governmental authority upon such generation
and storage of hazardous substances, to prohibit any generation, storage or
disposal of hazardous substances at the Premises except as permitted by the
Lease, to deliver promptly to Landlord true and complete copies of all notices
received by Tenant from any governmental authority with respect to the
generation, storage or disposal by Tenant of hazardous substances, to promptly
notify Landlord of any spills or accidents involving a hazardous substance, and
to permit reasonable entry onto the Premises by Landlord for verification of
Tenant's compliance with this covenant. Tenant agrees to utilize only
transporters approved. by the Environmental Protection Agency and State of
Colorado to deliver and remove hazardous substances from the Premises. Lessee
also agrees to indemnify and defend Lessor (with legal counsel reasonably
acceptable to Lessor) from and against any costs, fees or expenses (including,
without limitation, clean-up expenses, third party claims and environmental
impairment, expenses, loss of rent, and reasonable disposal of hazardous
substances). This indemnification by Lessee shall survive the termination or
expiration of this lease. "Hazardous substances" shall mean:
(a) "Hazardous substances as defined in the Comprehensive
Environmental Response, Compensation and Liability Act, as amended;
<PAGE>
(b) "PCB's" as defined in 40 C.F.R. 761, or analogous regulations
promulgated under the Toxic Substance Control Act, as amended;
(c) "Asbestos" as defined in 29 C.F.R. 1910.1001 et seq., and
analogous regulations promulgated under the Occupational Safety and Health
Act of 1970, as amended;
(d) Oil and Petroleum based products;
(e) Radioactive material or waste;
(f) Biological and other medical products and waste material; and,
(g) "Hazardous wastes" as defined in Resource Conservation and
Recovery Act, as amended as such. acts may be amended from time to time and
as such terms may be expanded by additional legislation of a general
nature.
At Landlord's option, in the sixty (60) days prior to the termination of
the Lease, Landlord may require at Tenant's expense, to provide an environmental
audit to Landlord for the Premises, where Landlord has a reasonable basis for
such request.
16.29 Exterior Maintenance including grounds, parking lot, the building
structure and roof, etc., are to be maintained by and at the expense of the
Lessor.
16.30 Lessee will pay for their own trash removal.
16.31 As it relates to 6.2 (b) as this paragraph relates to a multi-tenant
building, if it becomes necessary Lessor will make determinations as to the work
nuisance and will within a reasonable time present a plan to Lessee as to the
disposition of any issues that may arise. Lessee will not be unreasonable in
their review of the plan.
16.32 Lessee to accept this property in "as is" condition. It is Lessee's
responsibility to be aware of all zoning and permit requirements and to meet
those requirements adequately.
16.33 No pets other than those assisting handicapped persons may reside in
the Premises.
16.34 Option to Renew: Lessor hereby grants Lessee an option to renew the
Lease for one (1) additional period of one (1) year from such time as the lease
term expires. All terms and conditions of the Lease will remain the same during
the one (1) year Lease extension. Lessee must notify Lessor in writing, 180 days
prior to the termination of the Lease that they wish to renew their Lease.
16.35 180 days prior to Lease termination, Lessor or Lessor agents may show
space to other possible Tenants with Lessee present and during normal business
hours.
16.36 First Right Of Refusal on Additional Leased Space in Building: Lessee
will notify Lessor in writing within ten (10) days as to their desire to Lease
additional space after any letter of intent is presented to Lessee regarding any
upcoming vacant space in the building. Additional space term will be for two (2)
years minimum. The rental rate will be based on the market rate for the area.
Lessee to accept this space in "as is" condition.
<PAGE>
The. parties hereto have executed this Lease at the place on the dates
specified immediately adjacent to their respective signatures.
This Lease has been filled in and it has been prepared for submission to
your attorney for his approval.
Executed at Five K Investments Company
On April 21, 1998
By: /s/ Kirby Kunz
-----------------------------
Kirby Kunz (Property Manager)
Five K Investments Company
Address: 11445 West 1-70 Frontage Road North
Wheat Ridge, Colorado 80033
Lessor
By: /s/ Richard L. Anderson
-----------------------------------
Richard L. Anderson (Vice President)
Antennas America, Inc.
Executed at Antennas America Inc.
On April 21, 1998
Address: 4860 Robb Street. Suite #101
Wheat Ridge Colorado 80033
Lessee (Corporate Seal)
EXHIBIT 10.1b
RENEWAL AND EXTENSION OF LEASE
THIS LEASE RENEWAL AND EXTENSION made and entered into as of the 10th day
of April 1998, by and between Five K Investments Company ("Lessor") and Antennas
America, Inc. ("Lessee").
WITNESSETH
1. Lessor and Lessee heretofore entered into that LEASE dated the 8th
of May 1995, whereby Lessor leased to Lessee for an initial term of two (2)
years and five (5) months beginning the 15th day of December 1995 and ending the
15th day of May , 1998 that certain real property located in the city of Wheat
Ridge, County of Jefferson, State of Colorado, commonly described as Follows:
4860 Robb Street, Suite 101
Wheat Ridge, Colorado 80033
2. Lessor and Lessee do hereby renew and extend the term of the
aforesaid Lease for a period of two (2) years beginning the 16th day of May
1998, and ending the 15th day of May, 2000.
3. Rental during the renewal term shall be in the amount of six
thousand one hundred sixty four dollars and fifty-eight cents ($6,164.58) per
month, payable in accordance with the terms and provisions of the aforesaid
Lease.
4. Late Charges will be accessed after the 5th of each month.
5. Lessor hereby grants Lessee an option to renew the Lease for one (1)
additional period of one (1) year from such time as the Lease term expires.
Rental rate and all terms and conditions of this Lease will remain the same
during the one (1) year Lease extension. Lessee must notify Lessor in writing,
180 days prior to the termination of the Lease that they wish to renew their
Lease.
6. Lessor or Lessor agents may show space to other possible Tenants
with Lessee present and during normal business hours, 180 days prior to Lease
termination.
7. First Right Of Refusal On Additional Lease Space In Building: Lessee
will notify Lessor in writing within ten (10) days as to their desire to Lease
additional space after any letter of intent is presented to Lessee regarding any
upcoming vacant space in the building. Additional space term will be for two (2)
years minimum. The rental rate will be based on the market rate for the area.
Lessee will accept this space in "as is" condition.
8. Except as modified herein, all terms and provision of the aforesaid
LEASE shall remain in full force and effect during the renewal term.
<PAGE>
WITNESS our signatures as of the date first herein above written.
FIVE K INVESTMENTS COMPANY
LESSOR
By: /s/ Kirby Kunz
---------------------
Title: Property Manager
Date: 4-21-98
ANTENNAS AMERICA, INC
LESSEE
By: /s/ Richard L. Anderson
---------------------------
Title: Vice President
Date: 4-21-98
EXHIBIT 10.1c
RENEWAL AND EXTENSION OF LEASE
THIS LEASE RENEWAL AND EXTENSION made and entered into as of the 10th day
of April 1998, by and between Five K Investments Company ("Lessor") and Antennas
America, Inc. ("Lessee").
WITNESSETH:
1. Lessor and Lessee heretofore entered into that LEASE dated the 12th
of December, 1995 whereby Lessor leased to Lessee for an initial term of two (2)
years and one (1) year option to renew beginning the 15th day of February, 1996
and ending the 14th day of February, 1999 that certain real property located in
the city of Wheat Ridge, County of Jefferson, State of Colorado, commonly
described as follows:
4880 Robb Street Unit #1 and #2
Wheat Ridge, Colorado 80033
2. Lessor and Lessee do hereby renew and extend the term of the
aforesaid Lease for a period of fifteen months beginning the l5th day of
February, 1999 and ending the 15th day of May, 2000.
3. Rental during the renewal term shall be in the amount of two
thousand seven hundred sixty two dollars and fifty cents ($2,762.50) per month,
payable in accordance with the terms and provisions of the aforesaid Lease.
4. Late Charges will be accessed after the 5th of each month.
5. Lessor hereby grants Lessee an option to renew the Lease for one (1)
additional period of one (1) year from such time as the Lease term expires.
Rental rate and all terms and conditions of this Lease will remain the same
during the one (1) year Lease extension. Lessee must notify Lessor in writing,
180 days prior to the termination of the Lease that they wish to renew their
Lease.
6. Lessor or Lessor agents may show space to other possible Tenants
with Lessee present and during normal business hours, 180 days prior to Lease
termination.
7. Except as modified herein, all terms and provisions of the aforesaid
LEASE shall remain in full force and effect during the renewal term.
WITNESS our signatures as of the date first hereinabove written.
FIVE K INVESTMENTS COMPANY ANTENNAS AMERICA, INC.
LESSOR LESSEE
By: /s/ Kirby Kunz By: /s/ Richard L. Anderson
------------------- ----------------------------
Title: Property Manager Title: Vice President
Date: 4-21-98 Date: 4-21-98
EXHIBIT 10.1d
RENEWAL AND EXTENSION OF LEASE
THIS LEASE RENEWAL AND EXTENSION made and entered into as of the 10th day
of April 1998, by and between Five K Investments Company ("Lessor") and Antennas
America, Inc. ("Lessee").
WITNESSETH
1. Lessor and Lessee heretofore entered into that LEASE dated the 29th
of April, 1996, whereby Lessor leased to Lessee for an initial term of three (3)
years and beginning the 1st day of June, 1996 and ending the 31st day of May,
1999 that certain real property located in the city of Wheat Ridge, County of
Jefferson, State of Colorado, commonly described as follows:
4880 Robb Street Unit #3 and #9
Wheat Ridge, Colorado 80033
2. Lessor and Lessee do hereby renew and extend the term of the
aforesaid Lease for a period of eleven months and fifteen days beginning the lst
day of June, 1999 and ending the 15th day of May, 2000.
3. Rental during the renewal term shall be in the amount of two
thousand six hundred dollars ($2,600.00) per month, payable in accordance with
the terms and provisions of the aforesaid Lease.
4. Late Charges will be accessed after the 5th of each month.
5. Lessor hereby grants Lessee an option to renew the Lease for one (1)
additional period of one (1) year from such time as the Lease term expires.
Rental rate and all terms and conditions of this Lease will remain the same
during the one (1) year Lease extension. Lessee must notify Lessor in writing,
180 days prior to the termination of the Lease that they wish to renew their
Lease.
6. Lessor or Lessor agents may show space to other possible Tenants
with Lessee present and during normal business hours, 180 days prior to Lease
termination.
7. Except as modified herein, all terms and provisions of the aforesaid
LEASE shall remain in full force and effect during the renewal term.
WITNESS our signatures as of the date first herein above written.
FIVE K INVESTMENTS COMPANY ANTENNAS AMERICA, INC
LESSOR LESSEE/RICHARD L. ANDERSON
By: /s/ Kirby Kunz By: /s/ Richard L. Anderson
------------------- -----------------------
Title: Property Manager Title: Vice President
Date: 4-21-98 Date: 4-21-98
CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement"), is made and entered into as of this ___
day of ________________, 1997, by and between Millennium Holdings Group, Inc., a
New York Corporation with offices at 2200 Corporate Boulevard, N.W., Suite 311,
Boca Raton, FL 33431 ("Millennium" or the "Consultant") and Antennas America,
Inc., a Utah Corporation with offices at 4860 Robb Street, Suite 101, Wheat
Ridge, CO 80033 (the "Company" or "AAI") (together the "Parties").
WHEREAS, the parties desire to formalize the terms and conditions under
which Millennium shall provide consulting services to the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other valid consideration, receipt of which is hereby
acknowledged, the Parties agree as follows:
1. Term of Agreement and Renewal.
The Agreement shall remain in effect from the date of execution hereof
through the expiration of a one year period unless earlier terminated in
accordance with Section 11 below, and may be renewed upon the mutual consent of
the Parties.
2. Nature of Services to be Rendered.
Millennium shall use its best efforts and available resources to provide
the Company with corporate and financial consulting services requested by the
Company, including but not limited to introducing the Company to broker-dealers
in order to increase interest in the Company's common stock and to establish new
market makers in the Company's common stock, disseminating to the broker-dealer
and investment community information concerning the Company and its plans and
operations in order to establish and build upon a foundation of support for the
Company, establish and manage an investor, shareholder and broker-dealer
relations program for the Company, continually monitor and update the foregoing,
and perform other corporate and financial consulting services requested by the
Company. In order to pursue the foregoing in the manner anticipated, upon the
execution of this Agreement Millennium immediately will cause at least two of
its employees to visit the Company's facilities and Millennium will familiarize
itself with the Company's plans and operations. All materials concerning the
Company that are disseminated by Consultant shall be provided to the Company
prior to their dissemination and shall not be disseminated without the prior
consent of the Company.
3. Compensation.
(a) Cash Compensation. As Compensation for its consulting services
rendered hereunder, the Company shall pay to Millennium $5,000 per month during
the term of this Agreement. The first $5,000 payment for services to be rendered
shall be due and payable upon the execution of this Agreement and payments of
$5,000 per month shall be made on the same day of each month thereafter during
the term of this Agreement.
(b) Additional Compensation; Repurchase Right. (i) During the period
commencing on the date of this Agreement and expiring one year thereafter, as
1
<PAGE>
additional Compensation for its consulting services rendered hereunder, the
Company agrees to allow Millennium to purchase the following shares (the "Option
Shares") of the Company's stock pursuant to options (the "Options") granted
pursuant to the form of Option Agreement attached to and made a part of this
Agreement as Exhibit A:
(1) 2,000,000 shares of the Company's restricted common stock at $.06 per
share.
(2) 2,000,000 shares of the Company's restricted common stock at $.10 per
share.
(3) 2,000,000 shares of the Company's restricted common stock at $.30 per
share.
(ii) Upon the occurrence of any of the events (the "Termination
Events") described in Section 11(a), (b), or (c) below, in addition to any other
rights and remedies that the Company may have, the Company shall have the right
to repurchase from Millennium all or any part of the Options and/or Option
Shares at a price (the "Repurchase Price") of $.00025 per Option or Option
Share. The Company must exercise its right to repurchase the Options and/or the
Option Shares pursuant to this Section 3(b)(ii) within 60 days following the
later to occur of the Termination Event or the Company's having knowledge of the
Termination Event. The Company may exercise this right by providing to
Millennium written notice (the "Repurchase Notice") describing the number of
Options and Option Shares to be repurchased pursuant to this Section 3(b)(ii)
together with a check in the amount of the aggregate repurchase price for those
Options and Option Shares. Upon the giving of the Repurchase Notice pursuant to
this Section 3(b)(ii), the number of Options and Option Shares to be repurchased
pursuant to this Section 3(b)(ii) immediately shall be deemed cancelled on the
Company's option and stock transfer ledgers. Immediately upon the Company's
giving of the Repurchase Notice, Millennium shall deliver to the Company
certificates representing the aggregate number of Options and Option Shares
repurchased by the Company. The certificates representing the Options and the
Option Shares shall be imprinted with a legend setting forth or referring to the
repurchase rights and restrictions of this Section 3(b)(ii), which legend shall
be removed by the Company upon the request of Millennium following the
expiration of the Company's repurchase rights pursuant to this Section 3(b)(ii).
(c) Registration Rights.
(1) The Company will, no later than 60 days after the date (the
"Effective Date") of this Agreement, file with the Securities And Exchange
Commission (the "SEC") a registration statement under the Securities Act
of 1933, as amended (the "1933 Act"), covering the sale in the open market
by the Consultant of the Option Shares issuable upon the exercise of the
Options by the Consultant. The Company will undertake due diligence to
cause the registration statement to become effective with the SEC as soon
as possible after its filing.
(2) As to any registration statement, the Company's obligations
contained in this Section 3(c) shall be conditioned upon timely receipt by
the Company in writing of information as to the terms of the contemplated
transfer to be registered furnished by and on behalf of the Consultant,
and such other information as the Company reasonably may require from the
Consultant or any underwriter for any Option Shares for inclusion in the
registration statement. Such information shall be provided to the Company
in writing within 10 days after the request for that information by the
Company.
(3) All registration expenses incurred by the Company in connection
with any registration, qualification or compliance pursuant to this
Section 3(c), including reasonable printing expenses, fees and
disbursements of the Company's counsel, and registration and filing fees
relating to Option to be registered on behalf of the Company pursuant to
any registration statement required to be filed by the Company on behalf
of the Consultant pursuant to this Section 3(c), shall be borne by the
Company. All selling expenses, including commissions, allocable to the
sale of the shares of the Company Stock registered on behalf of the
Consultant shall be borne by the Consultant.
(4) In the case of a registration, qualification or compliance
effected by the Company on behalf of the Consultant pursuant to this
Section 3(c), the Company shall keep the Consultant advised in writing as
to the initiation of such registration, qualification, and compliance and
2
<PAGE>
as to the completion thereof. At its expense, the Company will keep such
registration, qualification or compliance effective for a period of one
year after the Effective Date or until the Consultant has completed the
distribution described in the registration statement relating thereto,
whichever first occurs.
(5) In the case of a registration, qualification or compliance
effected by the Company on behalf of the Consultant pursuant to this
Section 3(c), the Company shall take such action as may be reasonably
necessary to register or qualify the sale by the Consultant of Options
under the securities acts or blue sky laws of such jurisdictions as the
Consultant may reasonably request and to do any and all other acts and
things which may be necessary or advisable to enable the Consultant to
complete such proposed sale or other distribution by the Consultant of
Option Shares in any such jurisdiction; provided however, that in no event
shall the Company be obligated to register or qualify under the blue sky
laws of any state in which the Common Stock of the Company currently is
not qualified for resale, or be obligated to register or qualify the
securities in any jurisdiction which would require the Company to qualify
to do business or to file a general consent to service of process in any
jurisdiction where it shall not then be qualified.
(6) The Company will indemnify and hold harmless the Consultant
against any loss, claim, damage or liability (or action in respect
thereof) to which the Consultant may become subject, under the 1933 Act,
or otherwise, insofar as any such loss, claim, damage or liability (or
action in respect thereof) is caused by any untrue statement or alleged
untrue statement of any material facts contained in the registration
statement, any prospectus contained in the registration statement, or any
amendment or supplement thereto, or arises out of or is based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements made therein not
misleading. Notwithstanding the foregoing provisions of this paragraph,
the Company will not be liable in any such case to the extent that any
such loss, claim, damage, expense or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by the
Consultant or any agent or other representative of the Consultant.
(7) The Consultant will indemnify and hold harmless the Company and
any underwriter (as defined in the 1933 Act) for the Company and each
person, if any, who controls the Company or such underwriter against any
loss, claim, damage or liability (or action in respect thereof) to which
the Company or such underwriter or controlling person may become subject,
under the 1933 Act or otherwise, insofar as any such loss, claim, damage
or liability (or action in respect thereof) is caused by any untrue
statement or alleged untrue statement or omission or alleged omission made
in conformity with information furnished by the Consultant or any agent or
other representative of the Consultant or other representative of the
Consultant for use in the registration statement.
4. Warranties and Representations of the Consultant.
In order to induce the Company to enter into this Agreement, the
Consultant hereby makes the following unconditional warranties and
representations:
3
<PAGE>
(a) In connection with its execution of and performance under this
Agreement, the Consultant has not taken and will not take any action which would
cause it to become required to make any filings with or to register in any
capacity with the Securities and Exchange Commission (the "SEC"), the National
Association of Security Dealers, Inc. (the "NASD"), the securities commissioner
or department of any state, or any other regulatory or governmental body or
agency.
(b) Neither the Consultant nor any of its principals is subject to any
sanction or restriction imposed by the SEC, the NASD, any state securities
commission or department, or any other regulatory or governmental body or
agency, which would prohibit, limit or curtail the Consultant's execution of
this Agreement or the performance of its obligations hereunder.
(c) The Consultant will take no action causing it to be a "promoter"
pursuant to the 1933 Act or that would require disclosure in SEC filings,
without the Company's prior written consent.
(d) Millennium is not now a party to a consulting agreement with any other
corporation or entity involved in a business which is the same as or similar to
the Company's.
5. Warranties and Representations of the Company.
In order to induce the Consultant to enter into this Agreement, the
Company hereby makes the following unconditional warranties and representations:
(a) The Company is not subject to any restriction imposed by the SEC or by
operation of the 1933 Act, the Exchange Act of 1934, as amended (the "1934
Act"), or any of the rules and regulations promulgated under the 1933 Act or the
1934 Act which would prohibit its execution of this Agreement or the performance
of its obligations to the Consultant herein set forth.
(b) The Company has not been sanctioned by the SEC or any state securities
commissioner or department in connection with any issuance of its securities.
(c) The Company is not a party to any other contract or agreement with
terms similar to those contained herein.
(d) All payments required to be made to Millennium hereunder will be made
on time and in accordance with the payment terms and conditions set forth
herein.
(e) The Company acknowledges that Millennium does not guarantee its
ability to cause the consummation of any contract or merger or acquisition with
any corporate candidate.
6. Representations And Warranties Of Consultant Concerning The Options And
Option Shares.
For purposes of this Agreement, the Options and the Option Shares are
referred to collectively as the "Consultant Securities". Consultant hereby
represents and warrants, and, upon exercise of the Options, Consultant shall be
deemed to have represented and warranted, to the Company as follows concerning
Consultant's respective acquisition of the Options, and the Option Shares
issuable upon exercise of the Options:
(a) Consultant is acquiring the Consultant Securities for
investment purposes only and the Consultant Securities that Consultant is or
will be acquiring will be held by Consultant without sale, transfer or other
4
<PAGE>
disposition for an indefinite period unless the transfer of those securities is
subsequently registered under the federal securities laws or unless exemptions
from registration are available;
(b) Consultant's overall commitment to investments that are
not readily marketable is not disproportionate to Consultant's net worth and
Consultant's investment in the Consultant Securities will not cause such
overall commitments to become excessive;
(c) Consultant's financial condition is such that Consultant
is under no present or contemplated future need to dispose of any portion of
the Consultant Securities to satisfy any existing or contemplated undertaking,
need or indebtedness;
(d) Consultant has sufficient knowledge and experience in
business and financial matters to evaluate, and Consultant has evaluated, the
merits and risks of an investment in the Consultant Securities.
(e) The address set forth above is Consultant's true and correct
residence, and Consultant has no present intention of becoming a resident of
any other state or jurisdiction.
(f) Consultant confirms that all documents, records and books
pertaining to an investment in the Consultant Securities have been made
available or delivered to Consultant. Without limiting the foregoing,
Consultant has received and reviewed the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996 and Quarterly Reports on Form 10-QSB for
each of the quarters ended March 31, 1997 and June 30, 1997, and each of the
Company's Press Releases since December 31, 1996, and Consultant has had the
opportunity to discuss the acquisition of the Options and the Option Shares
with the Company, and Consultant has obtained or been given access to all
information concerning the Company that Consultant has requested.
(g) Consultant has had the opportunity to ask questions of, and
receive the answers from, the Company concerning the terms of the investment in
the Consultant Securities and to receive additional information necessary to
verify the accuracy of the information delivered to Consultant, to the extent
that the Company possesses such information or can acquire it without
unreasonable effort or expense.
(h) Consultant understands that the Options have not, and the Option
Shares issuable upon exercise of the Options will not be, registered under the
1933 Act or any state securities laws in reliance on an exemption for private
offerings, and no federal or state agency has made any finding or determination
as to the fairness of this investment or any recommendation or endorsement of
the sale of the Consultant Securities.
(i) The Consultant Securities that Consultant is or will be
acquiring will be solely for Consultant's own account, for investment, and are
not being purchased, and will not be purchased, with a view to or for the
resale, distribution, subdivision or fractionalization thereof. Consultant has
no agreement or arrangement for any such resale, distribution, subdivision or
fractionalization thereof.
(j) Consultant acknowledges and is aware of the following:
(i) The Consultant Securities constitute a speculative
investment and involve a high degree of risk of loss by Consultant of
Consultant's total investment in the Consultant Securities.
(ii) There are substantial restrictions on the transferability
of the Consultant Securities. The Consultant Securities cannot be
5
<PAGE>
transferred, pledged, hypothecated, sold or otherwise disposed of unless
they are registered under the 1933 Act or an exemption from such
registration is available and established to the satisfaction of the
Company; investors in the Company have no rights to require that the
Consultant Securities be registered except as set forth in Section 3(c) of
this Agreement; there is no right of presentment of the Consultant
Securities and there is no obligation by the Company to repurchase any of
the Consultant Securities; and, accordingly, Consultant may have to hold
the Consultant Securities indefinitely and it may not be possible for
Consultant to liquidate Consultant's investment in the Company.
(iii) Each certificate issued representing the Consultant
Securities shall be imprinted with a legend that sets forth a description
of the restrictions on transferability of those securities, which legend
will read substantially as follows:
"The securities represented by this Certificate have not
been registered or qualified under federal or state securities laws.
These securities may not be offered for sale, sold, pledged, or
otherwise disposed of unless so registered or qualified or unless an
exemption exists, the availability of which is to be established by
an opinion of counsel (which opinion and counsel shall both be
reasonably satisfactory to the Company)."
(iv) Each certificate or other document issued representing the
Options and the Option Shares shall be imprinted with, in addition to the
legend set forth in Section 6(j)(iii), a legend describing the Company's
right to repurchase the Options and the Option Shares pursuant to Section
3(b)(ii) of this Agreement, which legend will read substantially as
follows:
"The securities represented by this document are subject to
the right of the Company to repurchase these securities pursuant to
the Consulting Agreement effective as of October __, 1997 between
Millennium Holdings Group, Inc. and the Company."
The foregoing representations and warranties are true and accurate as of
the date hereof and shall survive delivery of this signed Agreement and any of
the Consultant Securities.
7. Waiver of Registration Obligations.
In the event of NASD-registered broker-dealer shall execute a letter of
intent to conduct a firm commitment underwriting of the Company's securities,
with anticipated gross proceeds of at least $1,000,000 and shall require that
all of the Company's shareholders waive registration rights, Millennium will
provide a written waiver of its registration right herein provided.
8. Expense Reimbursement.
Millennium shall be entitled to receive cash reimbursement, and the
Company shall provide cash reimbursement, of all reasonable cash out-of-pocket
expenses paid by Millennium on behalf of the Company in performance of its
duties hereunder. Such expenses shall include without limitation expenses for
communications, deliveries and travel. In no event, however, will Millennium
incur on behalf of the Company an expense or aggregate expenses in excess of
$100 without the prior written consent of the Company. Millennium shall provide
the Company with a monthly statement of such expenses and the Company agrees to
pay such pre-approved expenses within 30 days of receipt by the Company of the
statement of expenses.
6
<PAGE>
9. Indemnification of Millennium by the Company.
The Company shall indemnify and hold harmless Millennium and its
principals from and against any and all liabilities and damages in connection
with the Company's ownership and operation and, without limiting the foregoing,
shall pay the Consultant's legal fees and expenses if the Company is named as a
defendant in any proceedings brought in connection with the Company except if
such liabilities or damages are the result of the negligence or willful
misconduct of Consultant or its principals, agents, or representatives.
10. Indemnification of the Company by the Consultant.
Millennium shall indemnify and hold harmless the Company and its
principals from and against any and all liabilities and damages arising out of
actions taken by Millennium in connection with its services as a consultant,
which actions were not authorized by the Company, and, without limiting the
foregoing, shall pay the Company's legal fees and expenses if the Company is
named as a defendant in any proceedings brought in connection with the
Consultant.
11. Termination And Breach.
This Agreement shall be effective as of the date hereof when executed by
Consultant and AAI, and shall be for a term as defined in Section 1 of this
Agreement. AAI may terminate this Agreement immediately by delivering to
Millennium written notice of such termination in the event of the occurrence of
any of the following:
(a) Millennium or its principals are sanctioned by the SEC, NASD, or state
or federal securities or blue sky divisions for securities violations where it
can be determined that such sanction reasonably prohibits Millennium from
performing its duties hereunder;
(b) A material breach of any provision of this Agreement by Millennium;
(c) Millennium is not acting in a responsible manner with respect to its
activities as a financial consultant to AAI.
12. Arbitration.
Any and all conflicts, disputes and disagreements arising out of or in
connection with any aspect of the Agreement shall be subject to arbitration in
accordance with the rules of The American Arbitration Association then in
effect. Written Notice of Dispute shall be served by either Party upon the other
Party at its address set forth herein or such other address as it shall have
provided in writing for that purpose, and the arbitration date shall be set no
later than two months from the date such Notice is served. The dispute shall be
submitted to The American Arbitration Association in Denver, Colorado. The
Parties designate Jefferson County Court in Jefferson County, Colorado as the
court in which any arbitration award shall be subject to confirmation, and will
abide by such confirmation.
13. Entire Understanding/Incorporation of Other Documents.
This Agreement and the Exhibit hereto contain the entire understanding of
the Parties with regard to the subject matter hereof, superseding any and all
prior agreements or understandings whether oral or written, and no further or
additional agreements, promises, representations or covenants may be inferred or
construed to exist between the Parties.
7
<PAGE>
14. No Assignment or Delegation Without Prior Approval.
No portion of the Agreement or any of its provisions may be assigned, nor
obligations delegated, to any other person or party without the prior written
consent of the Parties except by operation of law or as otherwise set forth
herein.
15. Survival Agreement.
The Agreement and all of its terms shall inure to the benefit of any
permitted assignees of or lawful successors to either Party.
16. No Amendment Except in Writing.
Neither the Agreement nor any of its provisions may be altered or amended
except in a dated writing signed by the Parties.
17. Waiver of Breach.
No waiver of any breach of any provision hereof shall be deemed to
constitute a continuing waiver or a waiver of any other portion of the
Agreement.
18. Severability of the Agreements.
Except as otherwise provided herein, if any provision hereof is deemed by
arbitration or a court of competent jurisdiction to be legally unenforceable or
void, such provision shall be stricken from the Agreement and the remainder
hereof shall remain in full force and effect.
19. Governing Law.
The Agreement and its provisions shall be construed in accordance with and
pursuant to, and governed by, the laws of the State of Colorado, as applicable
to agreements to be performed solely within the State of Colorado, without
regard to its conflict-of-laws provisions then in effect.
20. No Construction Against Drafter.
The Agreement shall be construed without regard to any presumption or
other rule requiring construction against the Party causing the drafting hereof.
IN WITNESS WHEREOF, the Parties have executed the Agreement as of the date
first above written.
ANTENNAS AMERICA, INC. MILLENNIUM HOLDINGS GROUP, INC.
By:/s/ Randall P. Max By:/s/ Gary Schulthers
-------------------------------- -----------------------
Randall P. Marx, Chief Executive Gary Schultheis, President
Officer
8
ASSIGNMENT
WHEREAS, Kevin O. Shoemaker, of Morrison, Colorado, did obtain and is the
sole owner of Letters Patent of the United States of America entitled MICROSTRIP
ANTENNAS AND MULTIPLE RADIATOR ARRAY ANTENNAS, No. 4,914,445, dated April 3,
1990; and
WHEREAS, Antennas America, Inc., of 14045 W. 66th Avenue, Arvada, Colorado,
80004, a corporation duly organized under the laws of the State of Colorado, is
desirous of acquiring the entire interest in the same;
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00), the
receipt of which is hereby acknowledged, and other good and valuable
considerations, Kevin O. Shoemaker by these presents does sell, assign and
transfer unto the said Antennas America, Inc. the entire right, title, and
interest in and to the said Letters Patent aforesaid; the same to be held and
enjoyed by the said Antennas America, Inc., for its own use and behoof, and for
its legal representatives and assigns, to the full end of the term for which
said Letters Patent are granted, as fully and entirely as the same would have
been held by me had this assignment and sale not been made; together with all
claims for damages by reason of past infringement of said Letters Patent, with
the right to sue for and collect the same for its own use, and for the use of
its successors, assigns, or other legal representatives.
By: /s/ Kevin O. Shoemaker
-----------------------
Kevin O. Shoemaker
Executed this 23rd day of May, 1990.
STATE OF COLORADO )
)
COUNTY OF )
Before me personally appeared said Kevin O. Shoemaker and acknowledged the
foregoing instrument to be his free act and deed this 23rd day of May, 1990.
/s/ Andrea Peterson
-------------------
Notary Public
(SEAL) My Commission expires:
January 14, 1994
ASSIGNMENT
WHEREAS, Kevin O. Shoemaker, of Morrison, Colorado, has invented certain
new and useful improvements in PLANAR SERPENTINE ANTENNAS, for which he has made
application for Letters Patent of the United States of America, said application
being identified as Serial No. 471,858, filed January 29, 1990; and
WHEREAS, he now owns the entire right, title and interest therein; and
WHEREAS, Antennas America, Inc., of 14045 W. 66th Avenue, Arvada, Colorado,
80004, a corporation duly organized under the laws of the State of Colorado, is
desirous of acquiring the entire interest in the same;
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
certain other good and valuable considerations to him in hand paid, the receipt
of which is hereby acknowledged, the said Kevin O. Shoemaker by these presents
does sell, assign and transfer unto the said Antennas America, Inc., its
successors, legal representatives and assigns, the entire right, title and
interest in and to the said invention and the aforesaid application, for the
territory of the United States of America and for all foreign countries, and to
all Letters Patent, divisions, continuations, continuations-in-part, reissues,
and extensions to be obtained therefor, and covenants that he has full right so
to do, and agrees that he will communicate to said Antennas America, Inc., or
its representatives, all facts known to him respecting said invention whenever
requested; and he further agrees to cooperate with the assignee hereunder in the
obtaining and sustaining of any and all such Letters Patent, but at the expense
of said assignee.
The Commissioner of Patents and Trademarks is hereby authorized and
requested to issue any and all Letters Patent, solely in accordance with the
terms of this assignment, to Antennas America, Inc., its successors, legal
representatives and assigns, as the assignee of the entire right, title and
interest therein.
IN WITNESS WHEREOF, he has hereunto set his hand and seal on the date set
forth hereinafter.
/s/ Kevin O. Shoemaker
----------------------
Kevin O. Shoemaker
STATE OF COLORADO )
)
COUNTY OF )
On this 23rd day of May, 1990, personally appeared before me Kevin O.
Shoemaker, to me known and known to me to be the person whose name is subscribed
to the foregoing instrument, and acknowledged that he executed the same for the
purposes and consideration therein expressed.
/s/ Andrea Peterson
-------------------
Notary Public
SEAL My Commission expires:
January 14, 1994
AGREEMENT OF ASSIGNMENT
This Agreement Of Assignment (the "Agreement") is executed this 27th day of
June 1990 between Kevin O. Shoemaker ("Shoemaker") and Antennas America, Inc., a
Utah corporation ("AA").
Recitals
A. Shoemaker has developed, and continues to develop, various antennas and
antenna systems and related products and improvements (the "Inventions") for
various uses. Shoemaker has applied for letters patent covering certain of the
Inventions and anticipates filing applications for letters patent for additional
Inventions.
B. Both upon the formation of Antennas Colorado, Inc., a Colorado
corporation ("Antennas Colorado") , in September 1988, and upon consummation of
the merger between AA and Antennas Colorado in April 1989, and at various other
times both prior and subsequent thereto, Shoemaker has promised to assign to AA
all of his right, title, and interest in any Inventions to AA in return for the
receipt of stock of AA and other consideration.
C. Pursuant to this Agreement, Shoemaker desires to assign to AA, and AA
desires to receive from Shoemaker, all of Shoemaker's right, title, and interest
to and in all Inventions. Shoemaker previously has executed one or more
assignments covering a portion of the Inventions and it is anticipated that in
the future he will execute a number of other assignments, in the form specified
by the Company's patent counsel, covering part or all of the Inventions.
However, this Agreement is intended to document and confirm Shoemaker's
assignment of the Inventions until patent counsel has prepared the forms of
assignment that it deems appropriate.
Agreement
In consideration of securities of AA, other payments received from AA, the
time, effort, and assets others have contributed to AA, and other good and
valuable consideration, Shoemaker hereby agrees as follows:
1. Shoemaker hereby assigns to AA, its legal representatives, and assigns,
all of Shoemaker's interest in the Inventions, and any and all related products
or improvements, and in any letters patent issued therefor in the United States
or elsewhere, such interests to be held to the full end of the term for which
letters patent or any reissues, renewals, or extensions thereof are or may be
granted.
2. Shoemaker further assigns to AA, its legal representatives, and assigns,
all of Shoemaker's interest in any other inventions, products or improvements
relating to the Inventions or parts thereof, except for any letters patent
issued prior to April 1, 1989, and in any letters patent of the United States or
elsewhere which have been or may be issued therefor, which Shoemaker now owns or
may hereafter acquire.
3. Shoemaker assigns to AA, its successors and assigns, all of Shoemaker's
interest in any and all claims for damages and profits by reason of any past
infringement of letters patent issued with respect to the Inventions and the
right to sue therefor, such rights to be held to the full end of the term for
which such letters patent or any reissues, renewals, or extensions thereof are
or may be granted.
4. Upon the request of AA, and at the expense of AA, Shoemaker agrees to
perform all acts necessary to obtain patent protection for any Invention in the
<PAGE>
United States or elsewhere, which patent protection shall be for the benefit of
and accrue solely to AA. Upon the request of AA, Shoemaker will assign all his
right, title and interest in such patent protection to AA.
5. Shoemaker agrees to execute all other instruments or documents and to
perform all acts that may be necessary to carry into full effect the matters
contemplated by this Agreement.
6. Shoemaker agrees that AA may file this Agreement with the United States
Patent Office or any other office as evidence of the assignment of the
Inventions contemplated by this Agreement.
7. Shoemaker warrants and represents to AA as follows:
(a) The Inventions, rights, patents, property and interests assigned by
this Agreement are free of any and all liens, claims, security interests, and
other encumbrances of any nature or kind;
(b) Shoemaker has the right and power to make the assignments
contemplated by this Agreement, and he has made no prior transfer, sale, or
assignment of all or any part of the assigned rights, patents, property, or
other interests to any person or entity other than AA;
.(c) Shoemaker is the party named in any patent or application
for letters patent concerning any of the Inventions, and is the party who
made, or caused to be made, the application for the letters patent; and
(d) Any patents issued with respect to the Inventions as of the
date of this Agreement are valid, and in full force and effect as of the date
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first above written.
/s/ Kevin O. Shoemaker
----------------------
Kevin O. Shoemaker
ANTENNAS AMERICA, INC.
By: /s/ James H. Shook
-------------------------
James H. Shook, President
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
On this 27th day of June, 1990, before me did Kevin O. Shoemaker personally
appear and acknowledge the foregoing Agreement and instrument of assignment and
the signing thereof to be a voluntary act and deed.
My commission expires: 12/2/90
[Notarial Seal]
/s/ Gloria A. Mowery
--------------------
Notary Public
PRODUCT DEVELOPMENT AGREEMENT
______________________ , ______________ of Antennas America, Inc. hereby
confirms and agrees that he will assign to Antennas America, Inc. (the
"Company") all of the undersigned's rights and interest in, to or under any
product, concept or process that was conceived, designed, developed or commenced
by or under the auspices of the Company while the undersigned is or was employed
by the Company. In addition, the undersigned agrees to assign to the Company all
of the undersigned's right, title and interest in, to or under any patent
covering any of the foregoing. The undersigned acknowledges that this is part of
his continuing employment relationship with the Company, regardless of whether
covered by a written or other employment agreement, and that the Company is
relying on this in its business operations.
Dated: __________________ , 1998
ANTENNAS AMERICA, INC.
__________________________ By:
Employee Signature
-------------------------
__________________________
Employee printed name
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the inclusion in this Registration Statement of Antennas
America, Inc. on Form SB-2 of our report dated March 6, 1998, relating to the
Company's financial statements for the year ended December 31, 1997.
We also consent to the reference to us under the heading "Experts" in the
Registration Statement.
/s/ James E. Scheifley & Associates, P.C.
- -----------------------------------------
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
May 15, 1998
