UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10 - QSB
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2000.
Antennas America, Inc.
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(Exact name of small business issuer as specified in its charter)
Utah
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(State or Other Jurisdiction of Incorporation)
000-18122 87-0454148
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(Commission File Number) (IRS Employer Identification Number)
4860 Robb Street, Suite 101
Wheat Ridge, Colorado, 80033-2163
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(Address of principal executive offices including zip code)
(303) 421-4063
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(Small Business Issuer telephone number, including area code)
Not Applicable
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(Former Name or Former Address, 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 8, 2000, the Registrant had outstanding 143,151,781 shares of its
common stock, par value $0.0005.
Transitional Small Business Disclosure Format (Check One):
Yes _____ No __X__
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[GRAPHIC OMITTED]Antennas America, Inc.
FORM 10-QSB
June 30, 2000
Table of Contents
<TABLE>
<CAPTION>
Page No.
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 (unaudited) and December 31, 1999.............3
Consolidated Statements of Operations for the Three and Six Months Ended
June 30, 2000 and 1999 (unaudited).....................................................4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000
and 1999 (unaudited).............................................,,,...................5
Notes to Consolidated Financial Statements....................................................6
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations.........................................................................8
Financial Condition...........................................................................9
Forward Looking Statements...................................................................10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................................................10
</TABLE>
2
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Antennas America, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
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(unaudited)
Assets
<S> <C> <C>
Current assets:
Cash $ 88,637 $ 177,679
Accounts receivable, net 2,537,309 324,481
Inventory, net 1,745,842 579,713
Prepaid expenses 13,426 139
-----------------------------------
Total current assets 4,385,214 1,082,012
Property and equipment, net 386,666 369,381
Other assets:
Intangible assets including goodwill, net 12,275,178 40,491
Deposits 32,627 16,085
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Total assets $ 17,079,685 $1,507,969
===================================
Liabilities and stockholders' equity Current liabilities:
Bank line of credit $ 853,792 $ -
Accounts payable 3,048,372 357,474
Current portion of notes payable-others 3,000,000 114,143
Current portion of notes payable-officers - 33,274
Current portion of capital lease obligations 31,590 54,846
Accrued expenses 160,085 70,528
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Total current liabilities 7,093,839 630,265
Capital lease obligations, less current portion 6,111
Notes payable-others, less current portion - 125,653
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Total liabilities 7,098,654 762,029
Commitments
Stockholders' equity:
Common stock 63,945 47,545
Additional paid-in capital 11,350,924 1,891,686
Accumulated deficit (1,433,838) (1,193,291)
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Total stockholders' equity 9,981,031 745,940
-----------------------------------
Total liabilities and stockholders' equity $ 17,079,685 $1,507,969
===================================
</TABLE>
See accompanying notes.
3
<PAGE>
Antennas America, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
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(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Sales, net $ 2,901,115 $ 1,188,635 $ 3,870,670 $ 1,663,478
Cost of sales 2,390,685 865,161 3,183,407 1,206,651
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Gross profit 510,430 323,474 687,263 456,827
Operating expenses:
Selling, general and administrative expenses 582,090 278,788 926,442 531,121
Amortization of purchased intangibles 85,569 - 85,569 -
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Total operating expenses 667,659 278,788 1,012,011 531,121
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Income (loss) from operations (157,229) 44,686 (324,748) (74,294)
Other income (expense):
Interest expense (10,039) (35,597) (19,761) (60,838)
Other income 30,477 29 103,962 99
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Total other income (expense) 20,438 (35,568) (84,201) (60,739)
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Income (loss) before income taxes (136,791) 9,118 (240,547) (135,033)
Provision for (benefit from) income taxes - 3,500 - (49,897)
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Net income (loss) $ (136,791) $ 5,618 $ (240,547) $ (85,136)
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Net income (loss) per share (basic and diluted) $0.00 $0.00 $0.00 $0.00
====================================================================
Weighted average shares outstanding 119,580,689 75,387,718 108,738,644 75,382,773
====================================================================
</TABLE>
See accompanying notes.
4
<PAGE>
Antennas America, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
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(unaudited)
<S> <C> <C>
Operating activities
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Net loss $ (240,547) $ (85,136)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 144,056 54,005
Non-cash expense for issuance of stock and options 500 1,000
Accrued interest on notes payable added to principal 3,218 9,471
Accrued salary added to note payable - 4,777
Amortization of note discount 500 2,500
Deferred tax benefit - (49,897)
Changes in operating assets and liabilities:
Accounts receivable 48,931 113,376
Inventory 42,265 (165,008)
Prepaid expenses (12,635) 4,978
Other assets and deposits (12,641) (728)
Accounts payable and accrued expenses (426,742) 276,921
Other (31,617) -
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Net cash provided by (used in) operating activities (484,712) 166,259
Investing activities
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Patent acquisition costs (1,186) -
Acquisition of businesses, net of cash acquired (2,744,994) -
Purchase of plant and equipment (49,827) (45,144)
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Net cash used in investing activities (2,796,007) (45,144)
Financing activities
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Repayment of notes and capital lease obligations (250,187) (66,289)
Proceeds from private placement, including warrant exercises, net 3,436,138 -
Proceeds from exercise of options, net 39,000 -
Repayment of notes payable - officers (33,274) -
Reductions in notes payable - others - (209,892)
Proceeds from distributor note payable - 200,000
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Net cash provided by (used in) financing activities 3,191,677 (76,181)
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Net increase (decrease) in cash (89,042) 44,934
Cash, beginning of period 177,679 17,555
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Cash, end of period $ 88,637 $ 62,489
=======================================
Supplemental cash flow information:
-----------------------------------
Cash paid for interest $39,021 $ 47,691
Non-cash financing activities:
Acquisition of stock in exercise of warrants and options for
issuance of newly issued shares of common stock $562,000 $ -
</TABLE>
See accompanying notes.
5
<PAGE>
Antennas America, Inc.
Notes to Consolidated Financial Statements
June 30, 2000
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States 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 accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments considered necessary for a fair presentation have
been included. 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, 1999 and to the Company's current report on Form 8-K/A
filed August 7, 2000.
The Company operates in a single business segment providing end-to-end wireless
business solutions, generating revenues primarily from sales to independent
distributors in the United States.
Operating results for the three and six month periods ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2000 or any future period.
Note 2. Consolidation Policy
The accompanying unaudited consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary corporation, Winncom
Technologies, Corp., after elimination of all material intercompany accounts,
transactions, and profits.
Note 3. Acquisition of Winncom Technologies, Inc.
On May 24, 2000, Antennas America, Inc. purchased, through its
subsidiary, Winncom Technologies, Corp., the outstanding shares of Winncom
Technologies, Inc. Winncom designs, assembles, distributes and services wireless
network products and systems for data and voice transmission using radio
technology, primarily through third party distributors located in the United
States. The acquisition has been accounted for as a purchase, and accordingly,
the operations for Winncom have been included in the Company's consolidated
statement of operations from May 24, 2000 (the date of acquisition) forward.
Antennas America provided $12.0 million in aggregate consideration, consisting
of $3 million in cash, a $1.5 million non-interest bearing promissory note
payable in 90 days from the closing date, a $1.5 million non-interest bearing
promissory note payable in 180 days from the closing date and $6 million in
shares of Antennas America common stock (6,946,053 shares).
The purchase price has been allocated to specifically identifiable assets
acquired. The Company is in the process of obtaining an external valuation of
the approximately $12.3 million of intangible assets acquired. Management
estimates that the useful lives of the intangible assets acquired will range
from 10 to 20 years, with an expected average life of 15 years. The related
amortization is reflected as a pro forma adjustment to the pro forma
consolidated results of operations presented in the summary below, as well as in
the above financial statements for the period since acquisition.
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<PAGE>
The following unaudited pro forma summary presents the consolidated
results of operations of the Company as if the acquisition of Winncom had
occurred at the beginning of fiscal 1999 and 2000, respectively, and does not
purport to be indicative of what would have occurred had the acquisition been
made as of the beginning of those years or of results which may occur in the
future.
Six months ended June 30
(unaudited)
2000 1999
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Net sales $ 9,652,968 $ 4,232,149
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Net income (loss) $ (225,179) $ (151,575)
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Income (loss) per share $ 0.00 $ 0.00
=================================
The pro forma net income for both years includes $410,732 of acquisition
amortization.
Note 4. Equity Transactions
During the latter six months of 1999 through January 2000, the Company
undertook a private placement offering of units for $.0525 per unit with each
unit consisting of one share of the Company's restricted common stock and one
redeemable common stock purchase warrant to purchase one share of the Company's
common stock. A minimum of 6,000,000 units and maximum of 22,000,000 units were
authorized, and the maximum offering was sold for a total of $1,155,000. The
warrants included in the units entitle the holder to purchase one share of
common stock at an exercise price of $.175 per share and became exercisable on
March 14, 2000, the date a registration statement on Form SB-2 relating to the
resale of the common stock sold in this private placement and of the common
stock underlying the warrants was declared effective by the Securities and
Exchange Commission. All 22,000,000 warrants were exercised by the holders by
June 30, 2000. As of June 30, 2000, the financial statements include
approximately $3.5 million of equity related to private placement transactions
(purchase of shares and exercise of warrants) received in 2000, and related
offering expenses of approximately $51,000.
On March 30, 2000, as approved by the Board of Directors, two officers
who are also directors, and one other director, exchanged previously owned
shares of the Company's common stock for their warrants acquired in the private
placement. These transactions resulted in the Company receiving 219,320 shares
of stock valued at $483,875 as payment for 2,765,000 shares underlying the
outstanding warrants. The value of the 219,320 shares of common stock received
by the Company in this transaction was based on the average closing price of the
Company's common stock on the five days prior to March 30, 2000, which was
$2.2062.
On March 30, 2000, a director of the Company also used previously owned
stock to exercise vested options. These options had a total exercise price of
$78,125. Based on the same average closing price as used in the warrant exercise
transaction, a total of 35,412 shares of previously owned stock was given to the
Company as payment of the exercise price for the 900,000 new shares of common
stock underlying the options. The shares of common stock acquired by the Company
in these exchange transactions were valued at a total of $562,000 which is equal
to the 5-day average closing price multiplied by the number of previously owned
shares that were exchanged and which is also equal to the aggregate exercise
price for the shares underlying the warrants and options that were exercised in
these transactions. The Company received 254,732 shares from these transactions.
7
<PAGE>
During July and August 2000, the Company undertook a private placement
offering of up to 16,000,000 units, with each unit consisting of one share of
the Company's restricted common stock at a price of $0.50 per share plus one
redeemable common stock purchase warrant to purchase one share of the Company's
common stock at an exercise price of $1.50 per share. As of August 8, 2000,
15,262,000 units had been subscribed, and $6,574,000 in cash, representing
13,148,000 shares, had been received related to the offering. Related offering
expenses are estimated to be approximately $70,000.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
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Sales were $2.9 million for the three month period ended June 30, 2000,
as compared to $1.2 million for the three month period ended June 30, 1999. The
142% increase was due to the addition of Winncom revenues, offset by a decrease
in antenna revenues related to the Thompson Consumer Electronics contract for
local TV antenna systems under the RCA brand name that began during the second
quarter of 1999 and was completed in the first quarter of 2000. Sales for the
six month period ended June 30, 2000 were $3.9 million compared to $1.7 million
for the same period in 1999. This 129% increase was due to the addition of
Winncom revenues, with six month antenna revenues comparable to 1999 levels.
Gross profit margins decreased from 27% for the three and six months
periods in 1999 to 18% for the three and six month periods in 2000. The primary
factors contributing to the change in margins were the high percentage of
Winncom radio sales at lower gross margins, and a higher percentage of local TV
antenna system sales, which generally have lower gross margins due to the
competitive nature of the consumer electronics market.
Selling, general and administrative expenses for the three months ended
June 30 increased from $279,000 in 1999 to $582,000 in 2000. This increase
occurred primarily as a result of adding the Winncom operation in 2000, as well
as increased costs associated with the Company's transition to a total wireless
solutions provider. The same reasons drove the general and administrative
expenses increase from $531,000 for the six month period ended June 30,1999 to
$926,000 for the six month period ended June 30, 2000. Expenses for both the
three and six months ended June 30, 2000 included $86,000 of amortization of
acquisition related intangible assets.
Interest expense decreased by $26,000 for the three month period ended
June 30, 2000, and by $41,000 for the six month period ending June 30, 2000, due
to the repayment on January 31, 2000 of the note payable to a distributor which
had been initiated on February 16, 1999 and the cancellation of the accounts
receivable purchase agreement with the bank on March 10, 2000, offset by
interest on the Winncom line of credit in 2000. Also, during the time the bank
agreement was in effect during 2000, there were fewer accounts purchased by the
bank resulting in lower interest charges. The private placement proceeds
received since late 1999 reduced the need for additional cash through the bank
agreement.
Although a benefit from income taxes in the amount of $50,000 was
recorded for the six months ended June 30, 1999, no tax benefit was recorded for
the three or six months ended June, 2000. Since the third quarter of 1999, the
Company has recorded a full valuation reserve against current net operating
losses.
8
<PAGE>
Financial Condition
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During the last six months of 1999 through January 2000, the Company
undertook a private placement offering of units, with each unit consisting of
one share of restricted common stock and one redeemable common stock purchase
warrant to purchase one share of common stock, for $.0525 per unit. A minimum of
6,000,000 units and maximum of 22,000,000 units were authorized, and the maximum
offering was sold for a total of $1,155,000. The warrants included in the units
entitle the holder to purchase one share of common stock at an exercise price of
$.175 per share and became exercisable on March 14, 2000. The warrants were
called for redemption by the Company at the price of $.001 on April 6, 2000. All
warrants were exercised prior to the redemption date.
During the first six months of 2000, the Company received approximately
$3.5 million (including $2.9 million in the second quarter) of gross proceeds in
funding from the private placement, primarily from the exercise of warrants
which is reflected in the financial statements. Expenses relating to the private
placement in this quarter were $51,000. The funds received during the second
quarter were used primarily for the Winncom acquisition. A small portion of
these funds were used to pay outstanding debt and for working capital.
Compared to December 31, 1999, the Company's total assets as of June
30, 2000 increased by $15.6 million to $17.1 million. Winncom assets accounted
for substantially all of this increase. Antenna inventory decreased because of a
high level of finished goods on hand at December 31, 1999 which were shipped in
January, as well as the completion of the Thomson Consumer Electronics contract
during the first quarter.
Liabilities increased from $0.8 million at December 31, 1999 to $7.1
million at June 30, 2000. Winncom liabilities accounted for substantially all of
this increase. Antenna liabilities decreased as a result of lower inventory
purchases in the second quarter of 2000 and the payoff of notes payable with
proceeds from the private placement. The outstanding note payable to a
distributor with an original balance of $200,000 was paid in full on January 31,
2000. In addition, another note payable to a vendor was paid in full on March
31, 2000 for $100,000.
The Company entered into an accounts receivable purchase agreement with
a bank on February 1, 1999. Under this arrangement, the bank would purchase 85%
of approved accounts receivable from the Company. The financing cost for this
arrangement was 1% of the receivable for the first 10 days and 1/15 of 1% each
day thereafter until the account is paid in full. This arrangement was canceled
with the bank effective March 10, 2000.
Current operations are being funded through cash flow from operations
and the proceeds from the private placement transactions. Additional funding may
be needed to complete business expansion through acquisitions and for working
capital purposes due to internal growth within the Company's core operations if
all available funds are used for acquisitions.
9
<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.
PART II. OTHER INFORMATION
Item 6. Exhibits And Reports On Form 8-K
(a) Exhibits.
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Financial Data Schedule
(b) Reports on Form 8-K.
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Report on Form 8-K was filed on June 8, 2000, with
respect to the closing of the acquisition of Winncom
Technologies, Inc.
Report on Form 8-K/A was filed on August 7, 2000, to
include the financial information related to the
acquisition of Winncom Technologies, Inc.
10
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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 14, 2000 By: /s/ Randall P. Marx
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Randall P. Marx
Secretary, Director
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