SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1998.
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from __________ to __________
Commission file number 0-18122
ANTENNAS AMERICA, INC.
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(Exact name of small business issuer as specified in its charter)
Utah 87-0454148
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization No.)
4860 Robb Street, Suite 101,
Wheat Ridge, Colorado 80033
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(Zip Code)
(303) 421-4063
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(Issuer's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes __X__ No _____
As of June 30, 1998, the Registrant had outstanding 75,339,422 shares of its
common stock, par value $.0005.
Transitional Small Business Disclosure Format (Check One):
Yes _____ No __X__
<PAGE>
ANTENNAS AMERICA, INC.
FORM 10-QSB
JUNE 30, 1998
TABLE OF CONTENTS
Page No.
Part I
Item 1. Financial Statements
Balance Sheet as of June 30,1998.................................3
Statements of Operations for the Three
and Six Months Ended June 30, 1998 and 1997......................4
Statements of Cash Flows for the Six Months
Ended June 30, 1998 and 1997.....................................5
Note to Financial Statements.....................................6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition....................7
Results of Operations............................................7
Financial Condition..............................................7
Year 2000 Compliance.............................................8
Forward Looking Statements.......................................9
Part II
Item 5. Other Information...............................................10
Item 6 Exhibits and Reports on Form 8-K................................10
2
<PAGE>
ANTENNAS AMERICA, INC.
BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
ASSETS
Current assets:
Cash $ 19,185
Accounts receivable, trade 301,312
Inventories 434,601
Prepaid expenses 89,030
Deferred tax asset 102,000
------------
Total current assets 946,128
Property and equipment, net 461,318
Other assets:
Deferred tax asset, non-current 155,302
Intangible assets 46,332
Deposits 14,425
------------
Total assets $ 1,623,505
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - bank $ 166,686
Notes payable - others 210,748
Current portion of leases payable 45,405
Accounts payable and accrued expenses 504,741
------------
Total current liabilities 927,580
Leases payable 71,200
Notes payable - officer 136,501
------------
Total liabilities 1,135,281
Stockholders' equity:
Common stock, $.0005 par value, 250,000,000
shares authorized, 75,339,422 shares issued
and outstanding 37,670
Additional paid-in capital 922,900
Common stock options outstanding 10,000
Accumulated deficit (482,346)
------------
Total stockholders' equity 488,224
Total liabilities and stockholders' equity $ 1,623,505
============
See accompanying note to financial statements.
3
<PAGE>
ANTENNAS AMERICA, INC.
STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales, net $ 573,839 $ 744,606 $1,416,622 $1,359,982
Cost of sales 321,512 401,787 815,976 699,103
---------- ---------- ---------- ----------
Gross profit 252,327 342,819 600,646 660,879
Selling, general and administrative
expenses 400,991 266,649 723,408 518,389
---------- ---------- ---------- ----------
Income (loss) from operations (148,664) 76,170 (122,762) 142,490
Other income (expense):
Interest expense (21,086) (18,975) (38,100) (33,873)
---------- ---------- ---------- ----------
Income (loss) before income taxes (169,750) 57,195 (160,862) 108,617
Income tax expense (benefit) (57,717) 19,446 (54,693) 36,929
---------- ---------- ---------- ----------
Net income (loss) $(112,033) $ 37,749 $(106,169) $ 71,688
========== ========== ========== ==========
Shares outstanding 75,339,422 75,189,422 75,339,422 75,189,422
</TABLE>
See accompanying note to financial statements.
4
<PAGE>
ANTENNAS AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Net income (loss) $(106,169) $ 71,687
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 53,423 16,800
Noncash expense for issuance of stock options 20,000 -
Interest added to note payable 4,816 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 26,373 (247,780)
(Increase) decrease in inventory 73,953 (81,480)
(Increase) decrease in deferred tax asset (54,693) 36,929
(Increase) decrease in prepaid expenses 6,710 (3,505)
(Increase) decrease in other assets (3,813) (9,833)
Increase (decrease) in accounts payable and
accrued expenses 59,722 8,778
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Total adjustments 186,491 (280,091)
Net cash provided by (used in) operating activities 80,322 (208,404)
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Cash flows from investing activities:
Patent acquisition costs (13,735) (7,981)
Acquisition of plant and equipment (60,408) (66,899)
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Net cash used in investing activities (74,143) (74,880)
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Cash flows from financing activities:
Repayment of bank note (84,044) -
Proceeds of new borrowing - 272,551
Repayment of notes and leases payable (41,088) (33,311)
Proceeds from equipment refinancing 8,160 -
Repayment of officer loans (1,000) -
Proceeds from officer loan - 7,151
Proceeds from exercise of options, net 69,336 -
Common stock subscriptions - 15,000
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Net cash provided by (used in) financing activities (48,636) 261,391
--------- ---------
Decrease in cash (42,457) (21,893)
Cash and cash equivalents, beginning of period 61,642 55,636
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Cash and cash equivalents, end of period $ 19,185 $ 33,743
========= =========
Supplemental cash flow information:
Cash paid for interest $ 29,008 $ 33,661
Cash paid for income taxes $ - $ -
Non-cash investing and financing activities:
Capital lease obligations incurred $ 41,601 $ -
Issuance of common stock options $ 40,000 $ -
Tax benefit related to stock options $ 5,100 $ -
</TABLE>
See accompanying note to financial statements.
5
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ANTENNAS AMERICA, INC.
NOTE TO FINANCIAL STATEMENTS
JUNE 30, 1998
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments necessary to present fairly the
financial position of the Company as of June 30, 1998, and the results of
operations and cash flows for the periods presented. All such adjustments are of
a normal recurring nature. The results of operations for the periods presented
are not necessarily indicative of the results for the full year.
The accounting policies followed by the Company are set forth in Note 1 to
the Company's financial statements in Form 10-KSB for the year ended December
31, 1997. These financial statements should be read in conjunction with the
financial statements and notes included in the Form 10-KSB.
6
<PAGE>
ANTENNAS AMERICA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE PERIOD ENDED JUNE 30,1998
Results Of Operations
The Company's net loss for the three and six months ended June 30, 1998 was
$112,033 and $106,169, respectively, as compared with net income of $37,749 and
$71,688, respectively, for the three and six months ended June 30, 1997.
Operating results for the period were affected by several factors including the
transition to a new antenna system for one of the Company's largest O.E.M.
customers, the maintenance of production overhead despite the seasonal lag in
sales of the local TV antenna systems, increased marketing costs, increases in
general and administrative expenses incurred to support the Company's ongoing
higher sales levels, and contractual investor relations consulting fees of
$30,000 and certain one-time related costs amounting to an additional $37,000.
Sales were $537,839 and $1,416,622, respectively, for the three and six
month periods ended June 30, 1998, as compared to $744,606 and $1,359,982,
respectively, for the three and six month periods ended June 30, 1997. The 4%
increase in revenues year to date and the decrease in revenues in the second
quarter were affected by the anticipated seasonal decrease in sales of the
Company's local TV antennas and the transition to and subsequent lower cost of a
new antenna system for one of the Company's largest O.E.M. customers. Sales of
the new product were delayed in the second quarter due to the lead time required
for certain components to build the product.
Gross profit margin (gross profit divided by net sales) for the three
months and six months ended June 30, 1998 decreased from 46% to 44% and from 49%
to 42%, respectively, as compared to the three and six months ended June 30,
1997. This decrease is primarily attributable to the pass-through purchases of
certain components required by the Company's O.E.M. customers to manufacture and
assemble the customers' proprietary wireless products that include the Company's
conformal antenna system. Historically, the Company has only sold its
proprietary antenna system to its customers. However, as the Company expands its
manufacturing capabilities, it is anticipated that its customers will request
more turnkey assembly of components not manufactured by the Company. This will
result in an overall lower gross profit margin as compared to prior periods.
Financial Condition
Compared to December 31, 1997, the Company's total assets as of June 30,
1998, decreased $3,566 to $1,623,505. Liabilities decreased $11,833 to
$1,135,281. Shareholders' equity improved from $479,957 to $488,224. The
issuance and exercise of common stock options increased equity by $114,436 which
was offset by the net loss for the period of $106,169.
As of June 30, 1998, the Company continues to operate on a positive cash
flow basis from its operations. However, due to the seasonal nature of several
of the new products introduced by the Company in the same period last year, the
Company is adjusting its operation to a more seasonal revenue stream. Management
is in the process of determining the best way to increase the Company's
capitalization to better meet the fluctuations and demand of the Company's new
and existing products.
7
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Year 2000 Compliance
Year 2000 compliance is the ability of computer hardware and software to
respond to the problems posed by the fact that computer programs traditionally
have used two digits rather than four digits to define an applicable year. As a
consequence, any of the Company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
interruption of operations, including temporary inability to send invoices or
engage in normal business activities or to operate equipment such as telephone
systems, facsimile machines and production machinery. The Company currently is
working with its equipment suppliers to confirm that this equipment is Year 2000
compliant. The Company believes that this review will be completed prior to
year-end and that the cost of this review will be not be material. Until this
review has been completed, the Company has no estimate of the cost to correct
any deficiency in Year 2000 compliance for this equipment. The Company has
completed its review of its accounting software and has confirmed that that
software is Year 2000 compliant.
8
<PAGE>
FORWARD LOOKING STATEMENTS
This report contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the Company believes that the expectations
reflected in the forward looking statements and the assumptions upon which the
forward looking statements are based are reasonable, it can give no assurance
that such expectations and assumptions will prove to be correct. See the
Company's Annual Report on Form 10- KSB for additional statements concerning
important factors, such as demand for products, manufacturing costs and
competition, that could cause actual results to differ materially from the
Company's expectations.
9
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
Pursuant to Rule 14a-4(c) under the Securities Exchange Act of 1934, as
amended, the Company hereby notifies its stockholders that the proxies solicited
by the Company in connection with the Company's annual meeting to be held in
1999 will confer discretionary authority to vote on matters raised by
stockholders for which the Company did not have notice on or before March 23,
1999. In addition, if the Company receives notice on or before March 23, 1999 of
a matter that a stockholder intends to raise at the annual meeting of
stockholders to be held in 1999, the proxies solicited by the Company may
exercise discretion to vote on each such matter if the Company includes in its
proxy statement advice on the nature of the matter raised and how the Company
intends to exercise its discretion to vote on each such matter. However, the
Company may not exercise discretionary voting authority on a particular proposal
if the proponent of that proposal provides the Company with a written statement,
on or before March 23, 1999, that the proponent intends to deliver a proxy
statement and form of proxy to holders of at least the percentage of the
Company's voting shares required under applicable law to carry the proposal (the
"Required Percentage"), which would be a majority of the Company's outstanding
common stock or a majority of the shares of common stock represented at the
meeting, depending on the nature of the proposal, if the proponent includes the
same statement in its proxy materials filed under Rule 14a-6, and if the
proponent, immediately after soliciting the holders of the Required Percentage,
provides the Company with a statement from any solicitor or any other person
with knowledge that the necessary steps have been taken to deliver a proxy
statement and form of proxy to the holders of the Required Percentage.
Item 6. Exhibits And Reports On Form 8-K
(a) Exhibits.
None
(b) Reports on Form 8-K.
* A Form 8-K was filed on May 15, 1998 reporting
the Company's May 14, 1998 press release
announcing the results of operations for the
first quarter of 1998.
* A Form 8-K was filed on May 20, 1998 reporting
the Company's April 24, 1998 press release
announcing that the Company had been notified
by the U.S. Patent office that the pending patent
application of an antenna assembly that includes
use of an antenna circuit and associated cable
as part of the antenna had been allowed.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act Of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ANTENNAS AMERICA, INC.
Date: August 14, 1998 By: /s/ Randall P. Marx
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Randall P. Marx
Chief Executive Officer
and Principal Financial Officer
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