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, 1999.
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.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0454148
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization No.)
4860 Robb Street, Suite 101,
Wheat Ridge, Colorado 80033
- ---------------------------- -------------------------------
(Zip Code)
(303) 421-4063
------------------------------------------------
(Issuer's telephone number, including area code)
----------------------------------------------------
(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 August 10, 1999, the Registrant had outstanding 75,391,289 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, 1999
Table of Contents
Page No.
Part I
Item 1. Financial Statements
Balance Sheets as of June 30,1999 (unaudited) and
December 31, 1998............................................3
Statements of Operations for the Three and Six Months Ended
June 30, 1999 and 1998 (unaudited)...........................4
Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 1998 (unaudited)...........................5
Notes 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..........................................8
Part II
Item 5. Other Information...................................................9
Item 6. Exhibits and Reports on Form 8-K....................................9
2
<PAGE>
Part I
Item 1. Financial Statements
Antennas America, Inc.
Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(unaudited)
----------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 62,489 $ 17,555
Accounts receivable, less allowance for doubtful accounts 223,356 336,732
Inventory 465,374 300,366
Prepaid expenses 16,960 21,938
----------------------------------
Total current assets 768,179 676,591
Property and equipment, at cost, net of accumulated
depreciation 399,976 404,814
Other assets:
Deferred tax asset, noncurrent 385,270 335,373
Intangible assets, net of accumulated amortization 36,516 40,539
Deposits and other long term assets 24,316 23,588
==================================
Total assets $1,614,257 $1,480,905
==================================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 639,493 $ 351,793
Notes payable-others 379,947 97,799
Note payable-bank - 209,892
Notes payable-officers 43,674 33,274
Current portion of capital lease obligations 68,302 62,657
Accrued expenses 72,769 77,548
----------------------------------
Total current liabilities 1,204,185 832,963
Other long-term obligations - 6,000
Capital lease obligations, less current portion 27,830 60,027
Notes payable-others, less current portion - 116,345
Notes payable-officers, less current portion 105,756 110,948
----------------------------------
Total liabilities 1,337,771 1,126,283
Commitments
Stockholders' equity:
Common stock, $.0005 par value, 250,000,000 shares
authorized, 75,391,289 and 75,371,847 shares issued and
outstanding June 30, 1999 and December 31, 1998, respectively 37,696 37,686
Additional paid-in capital 944,829 937,839
Accumulated deficit (706,039) (620,903)
----------------------------------
Total stockholders' equity 276,486 354,622
==================================
Total liabilities and stockholders' equity $1,614,257 $1,480,905
==================================
</TABLE>
See accompanying notes.
3
<PAGE>
Antennas America, Inc.
Statements of Operations
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1999 1998 1999 1998
------------------------------ ------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Sales, net $ 1,188,635 $ 573,804 $ 1,663,478 $ 1,416,552
Cost of sales 865,161 380,374 1,206,651 940,196
------------------------------ ------------------------------
Gross profit 323,474 193,430 456,827 476,356
General and administrative expenses 278,788 342,129 531,121 599,188
------------------------------ ------------------------------
Income (loss) from operations 44,686 (148,699) (74,294) (122,832)
Other income (expense):
Interest expense (35,597) (21,086) (60,838) (38,100)
Other income 29 35 99 70
------------------------------ ------------------------------
Total other income (expense) (35,568) (21,051) (60,739) (38,030)
------------------------------ ------------------------------
Income (loss) before income taxes 9,118 (169,750) (135,033) (160,862)
Provision for (benefit from) income taxes 3,500 (57,717) (49,897) (54,693)
------------------------------ ------------------------------
Net income (loss) $ 5,618 $ (112,033) $ (85,136) $ (106,169)
============================== ==============================
Net income (loss) per share $0.00 $0.00 $0.00 $0.00
Weighted average shares outstanding 75,387,718 74,077,713 75,382,773 73,989,333
</TABLE>
See accompanying notes.
4
<PAGE>
Antennas America, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended June 30,
1999 1998
-------------------------------
(unaudited)
<S> <C> <C>
Operating activities
Net loss $ (85,136) $ (106,169)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 54,005 53,423
Noncash expense for issuance of stock and options 1,000 20,000
Accrued interest on notes payable added to principal 9,471 4,816
Accrued salary added to note payable 4,777 -
Amortization of note discount 2,500 -
Deferred tax benefit (49,897) (54,693)
Changes in operating assets and liabilities:
Decrease in accounts receivable 113,376 26,373
(Increase) decrease in inventory (165,008) 73,953
Decrease in prepaid expenses 4,978 6,710
Increase in other assets (728) (3,813)
Increase in accounts payable and accrued expenses 276,921 59,722
-------------------------------
Net cash provided by operating activities 166,259 80,322
Investing activities
Patent acquisition costs - (13,735)
Acquisition of plant and equipment (45,144) (60,408)
-------------------------------
Net cash used in investing activities (45,144) (74,143)
Financing activities
Reductions in revolving credit line (209,892) (84,044)
Proceeds from new short term debt 200,000 -
Repayment of notes and leases payable (66,289) (41,088)
Proceeds from equipment refinancing - 8,160
Proceeds from equipment refinancing - 69,336
Repayment of officer loans - (1,000)
-------------------------------
Net cash used in financing activities (76,181) (48,636)
-------------------------------
Net increase (decrease) in cash 44,934 (42,457)
Cash, beginning of period 17,555 61,642
===============================
Cash, end of period $ 62,489 $ 19,185
===============================
Supplemental cash flow information:
Cash paid for interest $ 47,691 $ 33,284
</TABLE>
See accompanying notes.
5
<PAGE>
Antennas America, Inc.
Notes to Financial Statements
June 30, 1999
Note 1. Basis of Presentation
The accompanying unaudited financial statement have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended June
30, 1999 and 1998 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. For further information, refer to
the financial statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1998.
Note 2. Reclassifications
Certain amounts in the June 30, 1998 financial statements have been
reclassified to conform with the June 30, 1999 presentation.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Antennas America, Inc.
For the Period Ended June 30, 1999
Results of Operations
Sales were $1,188,635 for the three month period ended June 30, 1999,
as compared to $573,804 for the three month period ended June 30, 1998. The 107%
increase in revenues resulted from the sales of the new local TV antennas
systems sold under the GE brand name through Jasco Products and shipments under
the contract from Thomson Consumer Electronics local TV antenna system under the
RCA brand name. Sales for the six month period ended June 30, 1999 were
$1,663,478 compared to $1,416,552 for the same period in 1998. The increase in
shipments pursuant to the Thomson contract in the second quarter were offset by
the delay in shipments of the company's new local TV antenna until the second
quarter of 1999 which were originally scheduled for the fourth quarter of 1998.
The Company had net income of $5,618 for the three months ended June
30, 1999 as compared with a loss of $112,033 for the three months ended June 30,
1998. The improved results were caused by higher sales as described above
combined with a 19% reduction in operating expenses. For the six month period
ended June 30, 1999, the Company incurred a loss of $85,136 compared to a loss
of $106,169 for the same period in 1998. The lower loss was due to the increased
sales and decreased operating expenses.
Interest expense increased for the three month period ended June 30,
1999 from the same period in 1998 by $14,511 and by $22,738 for the six month
period ended June 30, 1999 compared to 1998 due to higher interest rate charges,
a loan agreement with a vendor to ramp up the Company's new local TV antenna
production and additional amounts outstanding under capital leases.
Financial Condition
Compared to December 31, 1998, the Company's total assets as of June
30, 1999 increased by $133,352 to $1,614,257. The increase was primarily due to
the increase in inventory due to the higher sales from the Thomson contract.
The note payable to the bank as of December 31, 1998 was an asset-based
revolving credit line which bore interest at prime plus 6% (13.75%). This line
was discontinued by the bank as of January 31, 1999 and the Company then entered
into an accounts receivable purchase agreement with another division of the same
bank on February 1, 1999. Under the new arrangement, the bank will purchase 85
percent of approved accounts receivable from the Company, thereby reducing the
amount of accounts receivable by the amount of funds received by the Company
from the sale of those receivables.
The financing cost for this new arrangement is 1% of the receivable for
the first 10 days and 1/15 of 1% each day thereafter until the account is paid
in full. The maximum amount charged is 9% of the receivable. As of June 30,
1999, the Company showed $60,692 as accounts receivable relating to the unsold
15 percent of the accounts receivable which belong to the Company but which are
held by the bank as a reserve until the bank has been paid for the account
receivable by the customer.
Liabilities increased $211,488 to $1,337,771. The increase was
primarily due to a $287,700 increase in accounts payable related to the
previously discussed increase in inventory to accommodate the new sales. The
previously outstanding note payable to the bank was repaid using funds from the
new account purchase arrangement. In addition, effective February 16, 1999, an
agreement was entered into with one of the Company's distributors whereby the
distributor advanced the Company $200,000 at an interest rate of 12% until March
1, 2000, and at 14% thereafter, and the Company granted the distributor options
to purchase 500,000 shares of stock at a price of $.03 per share. The options
were valued in the transaction at $6,000. This amount was recorded as a discount
to the note and will be amortized using the straight line method over the life
of the note. The note will be paid back through a reduced price on product and
interest will be paid monthly. The funds advanced were used for working capital
purposes.
7
<PAGE>
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 or
equipment using internal programs 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.
To date, the Company has reviewed its financial accounting software and
system and has determined it is fully Year 2000 compliant. The Company has also
been informed by vendors that major pieces of office and production equipment
used by the Company are Year 2000 compliant.
The Company has initiated a review of its relationships with suppliers
and vendors to determine if there will be an impact to the Company's operations
due to a Year 2000 issue with a vendor's or supplier's system. The Company does
not rely on any sole source vendors, and most items can be obtained from
alternate sources if a preferred supplier is not able to meet the Company's
needs. To date, no vendors or suppliers have indicated that they anticipate any
Year 2000 issues, so no contingency plans have been required to be developed for
any vendors that may not be Year 2000 compliant. The Company anticipates that
its contingency plans that may be needed will include utilizing alternate
suppliers and vendors. Using alternate vendors may not be efficient for some
products though, due to required set up time for a new vendor. Costs to date to
become Year 2000 compliant and expected costs in the future are not anticipated
to be significant.
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.
8
<PAGE>
PART II
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 a reasonable time before
the Company's mailing of proxy materials for that meeting. Based on current
planning for scheduling the annual meeting, notice must be received on or before
September 1, 1999 in order for the Company not to have discretionary authority.
In addition, if the Company receives notice on or before September 1, 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 September 1, 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.
Financial Data Schedule
(b) Reports on Form 8-K.
None.
9
<PAGE>
SIGNATURE
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 11, 1999 By: /s/ Randall P. Marx
---------------------------------
Randall P. Marx
Chief Executive Officer
and Principal Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000826326
<NAME> Antennas America, Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUL-30-1999
<EXCHANGE-RATE> 1
<CASH> 62,489
<SECURITIES> 0
<RECEIVABLES> 241,700
<ALLOWANCES> 18,344
<INVENTORY> 465,374
<CURRENT-ASSETS> 768,179
<PP&E> 670,356
<DEPRECIATION> 270,380
<TOTAL-ASSETS> 1,614,257
<CURRENT-LIABILITIES> 1,204,185
<BONDS> 0
0
0
<COMMON> 37,696
<OTHER-SE> 238,790
<TOTAL-LIABILITY-AND-EQUITY> 1,614,257
<SALES> 1,663,478
<TOTAL-REVENUES> 1,663,478
<CGS> 1,206,651
<TOTAL-COSTS> 531,121
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,838
<INCOME-PRETAX> (135,033)
<INCOME-TAX> (49,897)
<INCOME-CONTINUING> (85,136)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (85,136)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
