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 March 31, 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.
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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
- ---------------------------- -----------------------
(Zip Code)
(303) 421-4063
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(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 May 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
March 31, 1999
Table of Contents
Page No.
Part I
Item 1. Financial Statements
Balance Sheets as of March 31,1999
(unaudited) and December 31, 1998....................... 3
Statements of Operations for the Three Months Ended
March 31, 1999 and 1998 (unaudited).........................4
Statements of Cash Flows for the Three Months Ended
March 31, 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>
March 31, December 31,
1999 1998
(unaudited)
----------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 27,638 $ 17,555
Accounts receivable, less allowance for doubtful accounts 121,286 336,732
Inventory 307,453 300,366
Prepaid expenses 26,034 21,938
----------------------------------
Total current assets 482,411 676,591
Property and equipment, at cost, net of accumulated
depreciation 385,453 404,814
Other assets:
Deferred tax asset, noncurrent 388,769 335,373
Intangible assets, net of accumulated amortization 38,527 40,539
Deposits and other long term assets 23,588 23,588
==================================
Total assets $1,318,748 $1,480,905
==================================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 326,860 $ 351,793
Notes payable-others 402,636 97,799
Note payable-bank - 209,892
Notes payable-officers 43,456 33,274
Current portion of capital lease obligations 63,540 62,657
Accrued expenses 61,773 77,548
----------------------------------
Total current liabilities 898,265 832,963
Other long-term obligations 3,000 6,000
Capital lease obligations, less current portion 43,109 60,027
Notes payable-others, less current portion - 116,345
Notes payable-officers, less current portion 104,506 110,948
----------------------------------
Total liabilities 1,048,880 1,126,283
Commitments
Stockholders' equity:
Common stock, $.0005 par value, 250,000,000 shares
authorized, 75,382,957 shares issued and outstanding 37,686 37,686
Additional paid-in capital 943,839 937,839
Accumulated deficit (711,657) (620,903)
----------------------------------
Total stockholders' equity 269,868 354,622
==================================
Total liabilities and stockholders' equity $1,318,748 $1,480,905
==================================
</TABLE>
See accompanying notes.
3
<PAGE>
Antennas America, Inc.
Statements of Operations
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
--------------------------------------
(unaudited)
<S> <C> <C>
Sales, net $ 474,844 $ 842,749
Cost of sales 341,490 559,822
--------------------------------------
Gross profit 133,354 282,927
Selling, general and administrative expenses 252,334 257,055
--------------------------------------
Income (loss) from operations (118,980) 25,872
Other income (expense):
Interest expense (25,241) (17,014)
Other income 70 35
--------------------------------------
Total other income (expense) (25,171) (16,979)
--------------------------------------
Income (loss) before income taxes (144,151) 8,893
Provision for (benefit from) income taxes (53,397) 3,024
--------------------------------------
Net income (loss) $ (90,754) $ 5,869
======================================
Net income (loss) per share $0.00 $0.00
Weighted average shares outstanding 75,382,957 73,839,422
</TABLE>
See accompanying notes.
4
<PAGE>
Antennas America, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
-----------------------------------
(unaudited)
<S> <C> <C>
Operating activities
Net income (loss) $ (90,754) $ 5,869
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 26,581 25,815
Accrued interest on notes payable added to principal 4,677 2,384
Accrued salary added to note payable 3,527 -
Amortization of note discount 1,000
Deferred tax expense (benefit) (53,396) 3,024
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 215,446 (58,026)
Increase in inventory (7,087) (1,016)
Increase in prepaid expenses (4,096) (2,237)
Increase (decrease) in accounts payable and accrued expenses (43,708) 69,599
-----------------------------------
Net cash provided by operating activities 52,190 45,412
Investing activities
Patent acquisition costs - (10,123)
Acquisition of plant and equipment (5,208) (57,645)
-----------------------------------
Net cash used in investing activities (5,208) (67,768)
Financing activities
Proceeds (reductions) from revolving credit line (209,892) 2,914
Proceeds from new short term debt 200,000 -
Repayment of notes and leases payable (27,007) (18,920)
Repayment of officer loans - (1,000)
-----------------------------------
Net cash used in financing activities (36,899) (17,006)
-----------------------------------
Net increase (decrease) in cash 10,083 (39,362)
Cash, beginning of period 17,555 61,642
===================================
Cash, end of period $ 27,638 $ 22,280
===================================
Supplemental cash flow information:
Cash paid for interest $ 18,802 $ 11,942
</TABLE>
See accompanying notes.
5
<PAGE>
Antennas America, Inc.
Notes to Financial Statements
March 31, 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 month periods ended March 31,
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. Agreement with Distributor
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 at $6,000 which was recorded as
additional paid-in capital and a reduction to the face value of the note. The
discount is being 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.
Note 3. Reclassifications
Certain amounts in the March 31, 1998 financial statements have been
reclassified to conform with the March 31, 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 March 31, 1999
Results of Operations
Sales were $474,844 for the three month period ended March 31, 1999, as
compared to $842,749 for the three month period ended March 31, 1998. These
results reflect a decrease in sales for local TV antennas due to the ramp-up of
production for the Company's new line of local TV antennas. This ramp-up of
production was completed during the first quarter of 1999 and orders for these
new antennas have been booked for regular shipments beginning in the second
quarter.
The Company's net results for the three months ended March 31, 1999
were a loss of $90,754 as compared with net income of $5,869 for the three
months ended March 31, 1998. The decrease in results for the three month period
ended March 31, 1999 is attributable to the 42% decrease in revenues and the
decrease in gross profit from 34% in 1998 to 28% in the current period. Gross
profit decreased due to a higher percentage of labor costs due to the ramp-up
phase of the production for the new line of TV antennas.
Interest expense increased to $24,241 from $17,014 due to additional
capital lease obligations and new borrowings received in February 1999 as
discussed below.
Financial Condition
Compared to December 31, 1998, the Company's total assets as of March
31, 1999 decreased by $162,157 to $1,318,748. Assets decreased primarily due to
the decrease in accounts receivable. Approximately 65 percent of the decrease in
receivables was due to the decrease in sales for the quarter. The remaining
decrease in accounts receivable was due to the change in financing methods
during the quarter.
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%. As of March 31, 1999, the Company
showed $17,642 as accounts receivable relating to the unsold 15 percent of the
accounts receivables sold 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 decreased $72,403 to $1,053,880. 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. Because this review is not completed, the Company has not yet developed a
contingency plan for any vendors that may not be Year 2000 compliant. The
Company anticipates that its contingency plan 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. This vendor and
supplier review and a related contingency plan is expected to be completed in
the first half of 1999. 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
plant for scheduling the annual meeting, notice must be received on or before
June 1, 1999 in order for the Company not to have discretionary authority. In
addition, if the Company receives notice on or before June 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 June 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.
On January 6, 1999, the Company filed a Current
Report on Form 8-K/A amending a Current Report on
Form 8-K concerning an event occurring on December 7,
1998.
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: May 13, 1999 By: /s/ Randall P. Marx
--------------------------------
Randall P. Marx
Chief Executive Officer
and Principal Financial Officer
10
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
27 Financial Data Schedule
11
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000826326
<NAME> Antennas America, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1.000
<CASH> 27,638
<SECURITIES> 0
<RECEIVABLES> 139,630
<ALLOWANCES> 18,344
<INVENTORY> 307,453
<CURRENT-ASSETS> 482,411
<PP&E> 630,420
<DEPRECIATION> 244,967
<TOTAL-ASSETS> 1,318,748
<CURRENT-LIABILITIES> 898,265
<BONDS> 0
0
0
<COMMON> 37,686
<OTHER-SE> 232,182
<TOTAL-LIABILITY-AND-EQUITY> 1,318,748
<SALES> 474,844
<TOTAL-REVENUES> 474,844
<CGS> 341,490
<TOTAL-COSTS> 252,334
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,171
<INCOME-PRETAX> (144,151)
<INCOME-TAX> (53,397)
<INCOME-CONTINUING> (90,754)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,754)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
