As filed with the Securities And Exchange Commission on March 9, 2000
Registration Number: 333-96485
U.S. Securities And Exchange Commission
Washington, D.C. 20549
AMENDMENT NO. 1 TO
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ANTENNAS AMERICA, INC.
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(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
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(Address and telephone number of principal executive offices)
4860 Robb Street, Suite 101, Wheat Ridge, CO 80033-2163
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(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
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(Name, address and telephone number of agent for service)
Copies to:
Alan L. Talesnick, Esquire
Francis B. Barron, Esquire
Patton Boggs LLP
1660 Lincoln Street, Suite 1900
Denver, Colorado 80264
(303) 830-1776
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.
If any securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
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>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
Title of each class Proposed maximum Proposed maximum
Of securities to be Amount to be Offering price per Aggregate offering Amount of
Registered Registered Share Price Registration fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 22,000,000 $ .54 (1) $11,880,000 $3,136
- --------------------------------------------------------------------------------------------------------------
Common Stock, 22,000,000 $.175 $ 3,850,000 $1,016
issuable upon
exercise of warrants (2)
- --------------------------------------------------------------------------------------------------------------
Common Stock, 500,000 $ .03 $ 15,000 $ 4
issuable upon exercise
of options (3)
- --------------------------------------------------------------------------------------------------------------
Total shares being 44,500,000 -- $15,745,000 $4,156 (4)
registered
=============================================================================================================
</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
February 3, 2000 which is within five business days of the date of the
initial filing of this registration statement (February 9, 2000).
(2) Warrants to purchase these shares are exercisable at $.175 per share.
(3) Options to purchase these shares are exercisable at $.03 per share.
(4) Previously paid.
The Company hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the Company 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 or until the registration statement shall become effective on
such date as the SEC, acting pursuant to said Section 8(a), may determine.
<PAGE>
The information in this prospectus is not complete and may be changed.
The selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SELLING SHAREHOLDER
PROSPECTUS
PROSPECTUS DATED MARCH 9, 2000
SUBJECT TO COMPLETION
ANTENNAS AMERICA, INC.
44,500,000 Shares Of Common Stock
This prospectus relates to the transfer of 44,500,000 shares of common
stock of Antennas America, Inc. by the selling shareholders identified in this
prospectus. The common stock offered by this prospectus consists of the
following:
o 22,000,000 shares of common stock presently issued and outstanding
which were issued to the selling shareholders in private transactions;
and
o 22,500,000 shares of common stock issuable upon the exercise of
warrants and options which were issued to the selling shareholders in
private transactions.
We will not receive any of the proceeds for the sale of these shares by
the selling shareholders. We will receive approximately $3,865,000 if all of the
warrants and options are exercised.
The selling shareholders have not entered into any underwriting
arrangements. The sale of the shares by the selling shareholders may occur in
one or more transactions that may take place on the over-the-counter market,
including ordinary brokers' transactions, privately negotiated transactions, and
sales to one or more dealers for transfer of the shares as principals, at market
prices prevailing at the time of transfer, or at negotiated prices. Brokerage
fees or commissions may be paid by the selling shareholders in connection with
the sales of the common stock. The selling shareholders may transfer some or all
of the common stock in exchange for consideration other than cash, or for no
consideration, in the selling shareholders' sole discretion. This prospectus may
be used by the selling shareholders to transfer the common stock to affiliates
of the selling shareholders.
The Company's common stock is quoted on the OTC Bulletin Board under
the symbol "ANTM". On March 7, 2000, the closing price of the common stock was
$2.937 per share.
Investing in the common stock involves certain risks. See the "Risk
Factors" section beginning on page 2.
Neither the Securities Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is March ___, 2000.
<PAGE>
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TABLE OF CONTENTS
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Page
PROSPECTUS SUMMARY............................................................1
RISK FACTORS..................................................................2
PRICE RANGE OF COMMON STOCK...................................................5
DIVIDEND POLICY...............................................................5
THE COMPANY...................................................................6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.....................................................13
MANAGEMENT...................................................................15
EXECUTIVE COMPENSATION.......................................................17
BENEFICIAL OWNERS OF SECURITIES..............................................21
DESCRIPTION OF SECURITIES....................................................22
INACTIVE TRADING OF THE COMMON STOCK.........................................24
SELLING SECURITY HOLDERS AND PLAN OF DISTRIBUTION............................24
SECURITIES AND EXCHANGE COMMISSION POSITION
ON CERTAIN INDEMNIFICATION................................................25
LEGAL MATTERS................................................................26
EXPERTS......................................................................26
AVAILABLE INFORMATION........................................................26
FINANCIAL INFORMATION.......................................................F-1
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights information contained in this
prospectus. In addition to this summary, you should read this entire prospectus
carefully, including the "Risk Factors" section, the financial statements and
the notes to the financial statements. All information in this prospectus should
be considered before investing in the common stock.
The Company We design, develop, market and sell a diversified
line of antennas and related wireless communication
systems, including conformal and phased array
antennas.
Recent Developments We are currently in a transitional stage shifting the
focus of our business to a higher level of advanced
wireless solutions with the expansion and investment
into new technologies that include a new line of
antennas and our involvement in the wireless internet
business, both for laptop computers and home access.
We anticipate that our earnings will be negatively
impacted by the short-term costs associated with our
expansion, research and development, advertising and
other costs related to the new commercial products
and wireless services to be introduced. We also are
considering acquiring other companies to expand our
business more rapidly. We cannot predict that we will
be able to identify and come to agreement with
appropriate companies or that we will be able to
obtain the necessary financing to complete an
acquisition or acquisitions.
On March 8, 2000, we announced that Thomas A.
Milligan, P.E., had agreed to become our Advisory
Consulting Engineer to advise us on various wireless
projects, the first of which will be the Bluetooth
project. Mr. Milligan has 31 years of experience in
antenna design, testing and operation. He has been
employed at Lockheed Martin Astronautics for more
than 23 years and is the President of IEEE Antenna
and Propagation Society, 2000.
On February 28, 2000, we announced that Donald A.
Huebner, Ph.D., had agreed to become our Principal
Consulting Engineer, replacing Dr. Mohamed Sanad who
recently held that position. Dr. Huebner has been a
member of our Board of Directors since May 1998.
We also announced on February 28, 2000 that we had
entered into a joint design and manufacturing
agreement with TSI-USA to supply integrated two-way
transceiver, flat panel antenna systems for broadband
wireless Multipoint Distribution Services, Spread
Spectrum and other microwave frequency applications.
In January 2000, we completed a private placement of
22,000,000 shares of common stock with attached
warrants to purchase 22,000,000 shares of common
stock at an exercise price of $.175 per share. The
warrants expire one year after the effective date of
this prospectus unless they are repurchased by us
sooner according to their terms. We received net cash
proceeds of $1,005,471 for these shares and warrants,
which was received as cash of $1,083,548 and the
cancellation of an officer note of $71,452 reduced by
offering expenses of $78,077. This prospectus covers
the transfer of both the shares of common stock sold
in that offering and the shares that may be issued if
the warrants are exercised.
1
<PAGE>
On June 17, 1999, we announced that we had been
awarded a contract from Thomson Consumer Electronics
Company for the manufacture of a flat, low profile
local TV antenna under the RCA label.
On February 26, 1999, we announced that we completed
a new F antenna product that provides wireless access
to the internet and other critical data for laptop
computers.
The Offering The selling shareholders may sell a total of up to
44,500,000 shares, consisting of 22,000,000 shares of
common stock and 22,500,000 shares of common stock
issuable upon exercise of warrants and options.
The shares may be sold at market prices or other
negotiated prices. In addition, the selling
shareholders may, in their sole discretion, transfer
the shares in exchange for consideration other than
cash or for no consideration. The selling
shareholders have not entered into any underwriting
arrangements for the sale of the shares. See "Selling
Security Holders And Plan Of Distribution".
We will not receive any proceeds from the sale of
common stock by the selling shareholders. If the
warrants and options held by the selling shareholders
are exercised, we will receive the proceeds from
these exercises. We intend to use proceeds, if any,
for general and administrative expenses and working
capital.
Company Offices Our offices are located at 4860 Robb Street, Suite
101, Wheat Ridge, Colorado 80033; telephone number
(303) 421-4063.
RISK FACTORS
Prospective investors should carefully consider, together with the
other information herein, the following risk factors that affect our business.
We have a history of losses.
From inception in September 1987 through the fiscal year ended December
31, 1992, and again for the years ended December 31, 1998 and 1999, we incurred
losses from operations. We operated profitably during each of the fiscal years
ended December 31, 1993 through 1997. Profits for some of these years were
marginal, and we cannot assure that our operations in the future will be
profitable.
Our industry suffers rapid technological changes.
We do business in the antenna and wireless communications industries.
These industries are characterized by rapidly developing technology. Changes in
technology could affect the market for our products and necessitate additional
improvements and developments to our products. We cannot predict that our
research and development activities will lead to the successful introduction of
new or improved products or that we will not encounter delays or problems in
these areas. 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.
2
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Protection of product design may be insufficient to protect us against
competitors.
We attempt to protect our product designs by obtaining patents, when
available, and by manufacturing our products in a manner that makes reverse
engineering difficult. These protections may not be sufficient to prevent our
competitors from developing products that perform in a manner that is similar to
or better than our products. Competitors' success may result in decreased
margins and sales of our products.
Our limited financial resources could constrain our business expansion.
We have limited financial resources available which may restrict our
ability to grow. Additional capital from sources other than our cash flow may be
necessary to develop new products. We cannot predict that this financing will be
available from any source. We believe that we can sustain our current business
without additional funding, but we may not be able to increase our business as
desired without additional funding.
We could be adversely impacted by intense competition.
The communications and antenna industries are highly competitive, and
we compete with substantially larger companies in the production and sale of
antennas. 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 could significantly affect any attempts to develop our
business. However, we believe that we will have certain advantages in attempting
to develop and market our 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. We cannot be
certain that these conclusions will prove correct.
We depend on the availability of efficient labor.
We produce and assemble our products at our own facility and are
dependent on efficient workers for these functions. We cannot predict that
efficient workers will continue to be available to us at a cost consistent with
our budget.
We depend on key employees.
We are highly dependent on the services of our executive management,
including Randall P. Marx, our Chief Executive Officer. The loss of the services
of any of our executive management could have a material adverse effect on us.
New government regulation could increase our costs.
We are subject to government regulation of our business operations in
general. Certain of our new products are subject to regulation by the Federal
Communications Commission ("FCC") because they are designed to transmit signals.
Because current regulations covering our operations are subject to change at any
time, and despite our belief that we are in substantial compliance with
government laws and regulations, we may incur significant costs for compliance
in the future.
3
<PAGE>
There is an inactive trading of our shares and possible volatile prices.
Historically, there has been an extremely limited public market for our
shares, although most recently there has been significantly more volume. We
cannot predict that this market will be sustained or will expand. The prices of
our shares are highly volatile. Due to the low price of the shares, many
brokerage firms may not effect transactions and may not deal with low priced
shares as it may not be economical for them to do so. This could have an adverse
effect on sustaining the market for our shares. Further, we believe it is
improbable that any investor will be able to borrow funds using our shares as
collateral.
For the foreseeable future, trading in the shares, if any, will occur
in the over-the-counter market and the shares will be quoted on the OTC Bulletin
Board. On March 7, 2000, the low bid price for our common stock was $2.75, the
high asked price was $3.50 and the closing sale prie was $2.9375. Because of the
matters described above, a holder of our shares may be unable to sell shares
when he or she wishes to do so, if at all.
Penny stock regulation may discourage investors' interest.
The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks". Penny stocks generally are
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 our
shares are traded for less than $5 per share, then unless (1) our net tangible
assets exceed $5,000,000 during our first three years of continuous operations
or $2,000,000 after our first three years of continuous operations; or (2) we
had average revenue of at least $6,000,000 for the last three years, our shares
will be subject to the SEC'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 SEC 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 our shares are subject
to the penny stock rules, the selling shareholders may find it difficult to sell
our shares.
4
<PAGE>
No dividends with respect to our shares.
We have not paid any cash dividends with respect to our shares, and it
is unlikely that we will pay any dividends on our shares in the foreseeable
future. We currently intend that any earnings that we may realize will be
retained in the business for further development and expansion.
PRICE RANGE OF COMMON STOCK
Trading in our common stock is very limited. Our shares are traded in
the over-the-counter market through the OTC Bulletin Board and the "pink
sheets". Our trading symbol is "ANTM". Our shares are not quoted on any
established stock exchange or on the Nasdaq Stock Market. Because trading in our
shares is so limited, prices are highly volatile.
Quotations provided below for the past two fiscal years are the
inter-dealer quotations provided by the National Quotations Bureau and the OTC
Bulletin Board's Trading and Market Services, without retail markup, markdown or
commission. These quotations do not necessarily represent actual transactions.
Common Stock
Closing Bid Price
------------------------
Quarter Ended High Low
- ------------- ---- ---
March 31, 1998 $.17 $.05
June 30, 1998 .13 .08
September 30, 1998 .10 .04
December 31, 1998 .05 .02
March 31, 1999 .115 .035
June 30, 1999 .12 .04
September 30, 1999 .15 .07
December 31, 1999 .10 .155
On March 7, 2000, the closing sale price for our common stock was
$2.937 per share.
Number of shareholders of record
On February 1, 2000, the number of our shareholders of record was 350.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our shares since our
inception, and we do not anticipate paying any cash dividends on our shares in
the foreseeable future. We currently intend to retain any future earnings to
finance the expansion and continued development of our business.
5
<PAGE>
THE COMPANY
We design, develop, market and sell a diversified line of antennas and
related wireless communication systems, including conformal and phased array
antennas.
We were organized under the laws of the State of Utah on September 30,
1987 for the purpose of acquiring one or more businesses. Our prior name was
Westflag Corporation, which was formerly Westcliff Corporation. In January 1989,
we completed our initial public offering of 10,544,650 units at $.04 per unit,
resulting in net proceeds of approximately $363,000. (The number of units and
price per unit have been adjusted to reflect our one-for-four reverse split in
April 1989). 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, we 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 our
common stock have been adjusted for the effect of the 1989 one-for-four reverse
split.
On April 12, 1989, we merged with Antennas America, Inc., a Colorado
corporation, 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 America, Inc. was
merged into us, all the issued and outstanding stock of Antennas America, Inc.
was converted into 41,951,846 of our shares, and our name was changed to
Antennas America, Inc.
On February 26, 1999, we announced the completion of our new F antenna
product that provides wireless access to the internet and other critical data
for laptop computers. We utilized our experience in designing conformal antenna
systems for companies such as LoJack and Intermec to design a high-performance
antenna system for wireless computer access to the internet. We are aggressively
marketing this new antenna system to many cellular carriers and distributors of
PCMCIA modem cards. We intend to launch an advertising campaign later in the
year 2000 to supplement our efforts to inform potential end-users of wireless
data that the antenna is one of the most important features of any wireless
system.
On June 17, 1999, we announced that we had been awarded a contract from
Thomson Consumer Electronics Company to build a flat, low profile local TV
antenna system. The initial order was for approximately $2,000,000, with
delivery of products through September 1999. Since that time we have received
additional orders for approximately $258,000. There is no assurance that any
additional orders will be received although we believe that they will be
forthcoming.
On February 28, 2000, we announced that Donald A. Huebner, Ph.D., had
agreed to become our Principal Consulting Engineer to oversee our expanded
business focus into complete wireless solutions. Dr. Huebner has expertise both
in conformal antenna technology, which has been our core business to date, as
well as RF and telecommunications technology, which supports our expanded focus.
Dr. Huebner has been a member of our Board of Directors since May 1998. He has
been employed at Lockheed Martin Astronautics for 14 years and was previously
with Ball Communications and Hughes Aircraft Company.
We also announced on February 28, 2000 that we had entered into a joint
design and manufacturing agreement with TSI-USA to supply integrated two-way
transceiver, flat panel antenna systems for broadband wireless Multipoint
Distribution Services, Spread Spectrum and other microwave frequency
applications to TSI-USA, Inc., a subsidiary of TransSystem, Inc. This agreement
will allow us to integrate our flat panel technology with TSI's two-way
receivers.
6
<PAGE>
We currently have several new antenna systems under development for
many wireless applications, including the previously announced flat panel
antenna for broadband wireless Multipoint Distribution Services, Spread Spectrum
and other applications under a joint development agreement with TSI-USA. If we
are able to obtain sufficient financing, we intend to pursue one or more
potential acquisitions that would enable us to expand our business more rapidly.
We cannot predict that we will be able to obtain the necessary financing or that
any such acquisition could be completed even with sufficient financing.
On March 8, 2000, we announced that Thomas A. Milligan, P.E., had
agreed to become our Advisory Consulting Engineer to advise us on various
wireless projects, the first of which will be the Bluetooth project. Mr.
Milligan has 31 years of experience in antenna design, testing and operation. He
has been employed at Lockheed Martin Astronautics for more than 23 years and is
the President of IEEE Antenna and Propagation Society, 2000.
Principal Products
Conformal Antennas
A conformal antenna is one that is constructed so that it conforms
technically and physically to its product environment. We first introduced and
patented the disguised decal antenna. 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,
and the Company intends to use its experience in these applications for the new
Bluetooth wireless technology. For the year ended December 31, 1999, the
patented decal antenna and other conformal derivatives of the decal antenna
accounted for approximately 28 percent of our sales.
GPS Antennas
We have 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 by hikers. Accurate to within
approximately 100 yards, there are several types of GPS systems, some of which
are the size of a cellular phone and are very easy to use. We anticipate
marketing our GPS antenna products on an O.E.M. basis for the purposes of fleet
management and in-vehicle mapping systems.
Building on our vehicular and GPS antenna experience, we also developed
a proprietary, patented, amplified GPS/Cellular combination antenna that
integrates with a GPS receiver. We currently are selling this product to fleet
and asset management companies on a worldwide basis. Conventional GPS antenna
systems are mounted on the exterior of a vehicle or other asset. However, our
new product can be mounted on the interior of an automobile or truck, which
protects the antenna from weather, theft and vandalism.
F Antennas
In February 1999, we announced the introduction of a new antenna system
designed to provide wireless access to the internet and other data for laptop
computers. Utilizing our experience in designing conformal antenna systems, our
new F800 and F900 antennas are powerful yet flexible antenna systems which can
be installed directly on the computer and are connected to a wireless modem
inserted in the computer's PCMCIA slot. The main design parameter of the antenna
is its flexibility, creating an antenna that will function in several wireless
applications or installations without requiring modification of the fundamental
design of the antenna. We will market the new F800 and F900 series antenna
systems along with our existing commercial wireless channels to existing and new
OEM customers.
7
<PAGE>
Flat Panel And Phased Array Antennas
Our 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. We currently are developing and selling various
versions of these antennas to private, commercial and governmental entities,
including the previously announced flat panel antenna for broadband wireless
Multipoint Distribution Services, Spread Spectrum and other applications under a
joint development agreement with TSI-USA. Other projects for this type of design
technology are (1) the "off-air" antennas for local television and (2) the 2.4
GHz spread spectrum wireless communications antennas.
Off-Air Antennas For Local Reception With Satellite And Other TV
Systems. Home satellite television systems have become extremely popular and
affordable. The single biggest drawback to the 18" home TV satellite system was
that, until recently, viewers could not receive local TV broadcasts from the
satellite system. In order to receive free local TV broadcasts, viewers resorted
to installing outdated receive equipment which typically included "rabbit ears"
or the conventional "yagi" roofmount antenna. Our two flat conformal antenna
systems provide local TV reception where digital satellite systems are utilized.
These antennas combine our conformal and phased array technology. New federal
law allows viewers to receive local TV broadcasts from satellite systems, even
if those local broadcasts would be received using a VHF/UHF antenna. We do not
believe that this new law will have a negative impact on our antenna business
because the satellite systems are concentrating on the top 20 markets, leaving a
large market for our products because the satellite systems will not carry all
local channels in all markets, and because of the fees the satellite systems
charge for local channels.
Our 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 economical solution to the issue of local TV program
reception with the popular 18" dishes.
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
station's transmitters. Because the WALLDO(TM) antennas can be attached to the
side of the house or to the other structures, we 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.
New Low Profile Local TV Antennas. In January 1999, we began producing
and delivering three new low profile antennas to receive local TV broadcasts.
These antennas use a new electromagnetic antenna design to maximize installation
flexibility and yield longer range reception of off-air (VHF/UHF) signals.
Unlike conventional dipole antennas, this new design can receive signals in both
vertical and horizontal planes with minimum cross-polarization loss. This highly
efficient design allows for a low profile antenna solution that provides
numerous installation options. The antenna has a built-in switchable amplifier
and can be painted to match its environment. At the present time we are
marketing three versions of the new low profile antenna system: indoor/outdoor,
mid-range outdoor and long-range outdoor. The indoor/outdoor product is unique
in that when used indoors it is designed to fit inconspicuously in the more
popular home entertainment systems. The outdoor versions consist of a mid-range
and long-range outdoor antenna system. We will market the new low profile
antenna systems along with our other local TV antennas.
8
<PAGE>
MMDS Antennas For Wireless Cable. In 1995 we introduced three new
phased array antenna systems to the wireless cable market. Known in the industry
as MMDS (Multichannel, Multipoint Distribution Systems), these 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. Using the existing MMDS infrastructure, the
wireless cable business has transformed into a wireless provider of digital
data, telephony, and television services. The system uses new electronics to
interface with existing equipment, including antennas, and with commercial cable
modems to provide reliable, wireless high data throughput. We currently are
marketing our existing line of MMDS antennas and have entered into the
previously announced Joint Development Agreement with TSI-USA to develop an
integrated system including our flat panel antenna for broadband wireless
Multipoint Distribution Services, Spread Spectrum and other MMDS high speed
internet applications.
Other Antennas
We are pursuing new business opportunities for the conformal and phased
array antennas by continuing to broaden and adapt our existing technologies.
Currently, we design or manufacture antennas varying in frequency from 27 MHz to
12 GHz. These antennas all use our flat antenna design to provide inconspicuous
installation. All of our antennas are designed to be manufactured using existing
design footprints. This allows us to better use our engineering and technical
staff, suppliers and production staff. This also allows us, in some cases, to
use existing tools, dies and radomes for more than one product.
Marketing And Distribution
We market our commercial line of antennas directly to distributors,
installers and retailers of antenna accessories. Current distribution consists
of several domestic and international distributors, including several hundred
active retail dealers. We also market our diversified proprietary designs to our
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. We provide individual catalog and
specification brochures describing existing products. The same brochures are
utilized to demonstrate our capabilities to develop related products for O.E.M.
and other commercial customers. Our web site, www.antennas.com, includes
information about our products and background as well as financial and other
shareholder-oriented information. The web site, among other things, is designed
to encourage both existing and potential customers to view us as a potential
source for diversified antenna solutions. Inquiries through the web site are
pursued by our in-house sales personnel. To help customers get answers quickly
about our products, we have established a toll-free telephone number
administered by our customer service personnel from 8:00 a.m. to 5:00 p.m. MST.
All our products are currently made in the United States, which we consider to
be a marketing advantage over most of our competitors. Many of our products are
also marketed internationally. We currently have seven international
distributors marketing our products in 12 countries.
9
<PAGE>
In March 1998, we announced that we had agreed with Jasco Products Co.,
Inc., based in Oklahoma City, Oklahoma, for Jasco to be responsible for the
mass-marketing and distribution of our new local TV antennas to retail accounts
in the United States, including product literature, in-store point of purchase
displays, and other related marketing services to these customers. Jasco serves
as the exclusive distributor of Dishmate(TM), Optima(R) and MAX antennas to
consumer electronics retail customers in the U.S., Mexico and Central America.
Our distribution agreement with Jasco expires in October 2003, subject to
renewal for up to two additional years. Effective January 1, 1999, Jasco
obtained through Thomson Consumer Electronics the marketing and distribution
rights to the General Electric, or GE, brand of consumer electronic accessories
for the United States, Mexico and Central America. In October 1998, we announced
that some of our products, including the Dishmate(TM), Optima(R) and MAX local
TV antennas, would be marketed on a non-exclusive basis by Jasco under the GE
name beginning January 1, 1999.
Production
We currently produce most of the customized items that we use to
manufacture our products excluding cable, connectors and other generic
components. We anticipate that this control over the production process will
allow us to be more efficient and more responsive to customers, will lower the
overall cost of production, and will better allow us to take advantage of more
opportunities in the wireless communications market.
Research And Development
Research and development ("R&D") costs are charged to operations when
incurred and are included in operating expenses except when specifically
contracted by our customers. Except for salaries of engineering personnel
involved in R&D, our R&D costs have not been material in 1999 and 1998. We spent
approximately $137,000 on R&D during 1999 and approximately $81,000 during 1998.
Our R&D personnel develop products to meet specific customer, industry and
market needs that we believe will compete effectively against products
distributed by other companies. Quality assurance programs are implemented into
each development and manufacturing project, and we enforce strict quality
requirements on components received from other manufacturing facilities.
Historically, we have experienced delays in the development of new
products. For example, delays in the development of certain new products in 1998
subsequently led to a delay in the introduction of those products until the
first quarter of 1999. These delays had an adverse affect on revenues and
earnings for the period. We cannot guarantee that our R&D activities will lead
to the successful introduction of new or improved products or that we 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, which could adversely
affect operating results during any financial period.
Employees
We currently have 56 full time employees including Randall P. Marx,
Chief Executive Officer and Treasurer, and Richard L. Anderson, Vice President
of Administration and Secretary. Each of these employees is also a director of
the Company.
10
<PAGE>
Competition
The market for antennas and receivers is highly competitive, and our
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 our products, we have
encountered competition from other companies, both domestic and international,
which market more conventional antenna systems. At the present time our market
share of the overall antenna business is small, but is significantly greater for
the non-conventional antenna market. Our antenna products are designed to be
unique and in some cases are patented. Our products normally compete with other
products principally in the areas of price and performance. However, we believe
that our 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. Additionally, we have
demonstrated to our customers and potential customers that we are a reliable
source of manufacturing. In the Fall of 1999, we delivered an average of over
40,000 antennas per month. We believe that this is a distinct advantage over
some of our competitors. We currently have a cache of antenna designs ranging
from small microstrip antennas to large phased array designs that includes six
patents with three patents pending. We believe that these products can serve as
a starting point to cover most wireless frequencies up to 5.7 GHz.
Government Regulations
We are subject to government regulation of our 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 FCC, there are no federal
requirements for licensing antennas that only receive (and do not transmit)
signals. We believe that our antennas that also transmit signals are in
compliance with current laws and regulations. Current laws and regulations are
subject to change and our operations may become subject to additional regulation
by governmental authorities. We can be significantly impacted by a change in
either statutes or rules.
Patents
Kevin O. Shoemaker, one of our engineers, 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 we use for some of our
conformal antennas, including the vehicular disguised decal antennas and related
products. In addition, Mr. Shoemaker and Randall P. Marx, our Chief Executive
Officer, are the record owners of patents relating to the technique and design
of the FREEDOM(TM) and WALLDO(TM) local TV, VHF/UHF antenna systems, a patent
covering the process used to manufacture certain of our flat planar antennas, a
patent for the conformal FREEDOM(TM) antenna for the RCA style satellite dish
and a patent covering creating antennas from coaxial cable, which brings the
total number of our patents to six. Mr. Shoemaker and Mr. Marx each has
permanently assigned to us all of the rights in these and all other products
that have been and will be developed while employed by us. In addition, we have
filed provisional patents on three new antenna products in the name of Dr.
Mohamed Sanad, our former Principal Consulting Engineer, pursuant to a contract
with Dr. Sanad that entitles us to an assignment of the product from Dr. Sanad.
We seek to protect our proprietary products, information and technology through
reliance on confidentiality provisions, and, when practical, the application of
patent, trademark and copyright laws. We cannot assure that these applications
will result in the issuance of patents, trademarks or copyrights of our
products, information or technology.
11
<PAGE>
Properties
We are tenants 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 and
a three-year lease on another 2,500 square feet of production space which
expires on November 30, 2002 in Wheat Ridge, Colorado at a cost of approximately
$17,000 per month. We are obligated to pay for all utilities, taxes and
insurance on the production space. The property is in good condition.
Legal Proceedings
On August 6, 1997, we filed a lawsuit against Terk Technologies
Corporation, Neil Terk, Tom Jensen & Associates, Tom Jensen, and Robert A.
Hodge, Jr. for false and/or misleading representations regarding our local TV
antennas. Terk Technologies Corporation is one of our competitors. The lawsuit
was filed in the United States District Court for the Northern District of
Illinois. The lawsuit 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
we alleged falsely disparages Antennas America, Inc.'s local TV antennas. Two
distributors of our products, Jasco Products Company, Inc. and MITO Corporation,
joined the lawsuit as plaintiffs.
In May 1998, Terk Technologies Corporation filed a counterclaim against
us alleging that we engaged in false and/or misleading representations in
violation of federal and Illinois state statutes. The counterclaim seeks
unspecified damages, including costs and punitive damages. The counterclaim also
requests that we withdraw and correct alleged deceptive statements attributed to
us. We filed an answer to the counterclaim denying the allegations and denying
that we were responsible for the statements attributed to us.
In October 1998, the Court dismissed the action while allowing us to
file a pretrial order with the Court setting forth the basis for trying the
case. In January 1999, the case was reinstated. During 1999, we proceeded with
the discovery process with the defendants in this case. In December 1999, an out
of court agreement was reached with the defendants on a settlement and this case
is now considered closed.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity And Capital Resources
<TABLE>
<CAPTION>
December 31,
1999 1998
------------------ ------------------
Components of Working Capital (Deficit)
- ---------------------------------------
<S> <C> <C>
Cash $177,679 $ 17,555
Accounts Receivable 324,481 336,732
Inventory 579,713 300,366
Other Current Assets 139 21,938
Accounts Payable (357,474) (351,793)
Notes Payable and Capital Lease Obligations (294,642) (370,348)
Notes Payable - Officers (33,274) (33,274)
Other Current Liabilities (70,528) (77,548)
Total Working Capital (Deficit) 326,094 (156,372)
</TABLE>
During the latter six months of 1999 we undertook a private placement
offering of units, with each unit consisting of one share of our 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. These funds were used for working capital purposes
and to repay $111,000 of officer debt. The warrants included in the units will
entitle the holder to purchase one share of common stock at an exercise price of
$.175 per share and will become exercisable on the date on which this prospectus
concerning the transfer of the shares included in the units and the shares
underlying the warrants is declared effective. The warrants expire one year
after becoming exercisable and may be redeemed by us at the price of $.001 per
warrant at any time that the warrants are exercisable after the weighted average
trading price for the common stock is at least $.2275 per share for 20 of 30
consecutive business days. This prospectus covers the resale of the shares of
common stock sold in that offering and the shares that may be issued if the
warrants are exercised.
The note payable to the bank as of December 31, 1998 was an asset-based
revolving credit line which bore interest at prime plus six percent (13.75%).
This line was discontinued by the bank as of January 31, 1999 and we 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 us, thereby reducing
the amount of accounts receivable by the amount of funds received by us from the
sale of those receivables.
The financing cost for this new arrangement is one percent of the
receivable for the first 10 days and 1/15 of one percent each day thereafter
until the account is paid in full. The maximum amount charged is nine percent of
the receivable. As of December 31, 1999, we showed $5,897 as accounts receivable
relating to the unsold 15 percent of the accounts receivable which belong to us
but which are held by the bank as a reserve until the bank has been paid for the
account receivable by the customer.
In addition, effective February 16, 1999, an agreement was entered into
with one of our distributors whereby the distributor advanced us $200,000 at an
interest rate of 12% until March 1, 2000, and at 14% thereafter, and we 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 is being amortized using the straight
line method over the life of the note. The note was paid back through a reduced
price on product as product was shipped and was paid in full on January 31,
2000. The funds advanced were used for working capital purposes.
13
<PAGE>
The $482,466 increase in working capital from December 31, 1998 to
December 31, 1999 was primarily due to an increase in cash due to the proceeds
received in the private placement, an increase in inventory to support the
higher sales volume during the year, and the change in bank financing.
We had total assets of $1,507,969 as of December 31, 1999 as compared
with $1,480,905 as of December 31, 1998, or a 2% increase from the prior year.
Increases in cash primarily due to the private placement funds and inventory due
to the higher sales volume were offset by the decrease in assets associated with
the deferred tax asset valuation reserve as discussed in "Results of
Operations".
Liabilities decreased $364,254 to $762,029 from December 31, 1998 to
December 31, 1999. The previously outstanding note payable to the bank was
repaid using funds from the new account purchase arrangement. As previously
mentioned, a portion of the private placement funds were used to pay $110,000 of
officer debt.
Our net worth was $745,940 as of December 31, 1999 as compared with
$354,622 as of December 31, 1998. The net proceeds from the private placement of
$955,706 were offset by the loss for 1999 of $572,388.
Results of Operations
Year Ended December 31, 1999 Compared To Year Ended December 31 , 1998
For the year ended December 31, 1999, our total revenues were
$4,567,531 as compared to $2,926,728 for the year ended December 31, 1998. The
56% increase in revenues resulted from the sales of the new local TV antennas
systems sold under the GE brand name through Jasco and shipments under the
contract from Thomson Consumer Electronics local TV antenna system under the RCA
brand name.
During 1999, due to the reasons described below, we recorded a
non-cash, non-recurring valuation allowance expense of $335,373 against our net
operating loss carryforward that had been on the balance sheet at full value as
of December 31, 1998. This valuation allowance was recorded in accordance with
Statement of Financial Accounting Standard No. 109 (SFAS 109), Accounting for
Income Taxes, based on the possibility that we may not be able to utilize the
previously recorded deferred tax asset. Although we believe that the deferred
tax asset will be utilized, this is not demonstrated by existing operations
primarily because of our rapid expansion of our business and new products which
has resulted in increased costs for investment, advertising and development for
new commercial products and wireless services. Additionally, in line with
previously stated plans to increase the number and variety of our revenue
streams, and to increase market share in the wireless market, in November 1999
we opened our new e-commerce web site. We anticipate additional expenses
associated with the advertising initiatives to drive traffic to this site to
sell our new and existing products and to inform potential customers of our
total antenna solution capabilities.
After recording the non-cash, non-recurring $335,373 valuation
allowance expense, we incurred a net loss of $572,388 for the year ended
December 31, 1999 as compared with a net loss of $244,726 for the year ended
December 31, 1998. Not including the non-cash, non-recurring $335,373 valuation
allowance expense, we would have incurred a net loss of approximately $149,000
for the year ended December 31, 1999. We have significantly increased our
research and development costs by adding to our engineering staff, filing for
three new patents, and developing three new products relating to those patents.
We anticipate that these new products will have a positive effect on both
revenues and earnings in 2000.
14
<PAGE>
If we begin to utilize our net operating loss carryforward by
generating future earnings, of which there is no assurance, there will be no
corresponding income tax expense for financial statement reporting purposes
until approximately $1.2 million of taxable income has been generated.
Therefore, if this occurs, our statement of operations will be impacted
positively through the generation of future earnings of this amount, with no
corresponding tax expense for financial statement reporting purposes.
Gross profit margins decreased to 24% for the year ended December 31,
1999 from 34% for 1998, which impacted the net results. Contributing to the
lower margins were the lower than projected gross margins on our new local TV
antennas sold under the GE brand name by Jasco Products, Inc. The lower gross
margins were also due to our 1999 plan to increase our exposure to the wireless
market by offering more competitive antenna solutions to mature markets, such as
local TV reception that, due to the competitive nature of the local TV retail
business, incorporate lower gross margins than our commercial products.
Due to our rapid growth in 1999, interest expense increased for 1999
from 1998 by $36,565 due to larger borrowings under a new agreement with higher
interest rates and a loan agreement with a vendor to ramp up our new local TV
antenna production.
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 our computer programs or equipment
using internal programs may recognize a date using "00" as the year 1900 rather
than the year 2000. This could have resulted 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. However, neither we nor our suppliers or customers have had any Year
2000 problems to date.
MANAGEMENT
Our directors and executive officers, 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.
<TABLE>
<CAPTION>
Name Age Position with the Company Director Since
---- --- ------------------------- --------------
<S> <C> <C> <C>
Randall P. Marx 47 Chief Executive Officer; Treasurer; and 1990
Director
Kevin O. Shoemaker 45 Engineer; and Director 1989
Richard L. Anderson 51 Vice President - Administration; Secretary; 1994
and Director
Julie H. Grimm 33 Chief Financial Officer --
Donald A. Huebner 55 Principal Consulting Engineer; and Director 1998
Sigmund A. Balaban 58 Director 1994
</TABLE>
15
<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 us 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 a director since 1989. From April 1989
through December 1999, he served as our Chief Scientist. He also served as
Chairman of the Board from 1989 until March 1999, 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 until December 1995, he served as a part-time
consultant to assist with our general operations. Since January 1996, Mr.
Anderson has served as Vice President of Administration, and since March 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 our Chief Financial Officer 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.
Sigmund A. Balaban has served as a director of the Company since
December 1994. Mr. Balaban has been employed by Fujitsu General America, Inc. of
Fairfield, New Jersey, formerly Teknika Electronics, since 1986 serving as Vice
President, Credit from 1986 to 1992 and as Senior Vice President and General
Manager from 1992 to the present. 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
1998 and Principal Consulting Engineer since February 2000. Dr. Huebner has been
a Department Staff Engineer of Lockheed Martin Astronautics in Denver, Colorado
since 1986. In this capacity, Dr. 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 Masters 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.
16
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth in summary form the compensation
received during each of our three successive completed fiscal years ended
December 31, 1999 by Randall P. Marx, our Chief Executive Officer. None of our
other executive officers received total salary and bonus exceeding $100,000
during any of the three successive fiscal years ending December 31, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------------- ---------- --------
Restricted
Other Annual Stock LTIP All Other
Fiscal Salary Bonus Compensation Awards Options Payouts Compensation
Name and Principal Position Year ($) (1) ($) (2) ($) (3) ($) (#) ($) (4) ($) (5)
- ------------------------------ -------- --------- --------- -------------- ------------ --------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Randall P. Marx 1999 115,000 -0- -0- -0- -0- -0- -0-
Chief Executive Officer,
Treasurer and a Director 1998 90,000 -0- -0- -0- -0- -0- -0-
1997 75,000 10,100 -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.
(3) During the period covered by the Summary Compensation Table, we did not
pay any other annual compensation not properly categorized as salary or
bonus, including perquisites and other personal benefits, securities or
property.
(4) We do 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 our 1997 Stock Option And Compensation Plan.
(5) All other compensation received that we could not properly report in
any other column of the Summary Compensation Table including our annual
contributions or other allocations to vested and unvested defined
contribution plans, and the dollar value of any insurance premiums paid
by us, or on our behalf, 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 us, or on our behalf.
17
<PAGE>
Employee Retirement Plans, Long-Term Incentive Plans, and Pension Plans
Other than our stock option and 401(k) plan, we have no employee
retirement plan, pension plan, or long-term incentive plan to serve as incentive
for performance to occur over a period longer than one fiscal year.
1997 Stock Option And Compensation Plan
In November 1997, the Board of Directors approved our 1997 Stock Option
And Compensation Plan (the "Plan"). Pursuant to the Plan, we may grant options
to purchase an aggregate of 5,000,000 shares of our common stock to key
employees, directors, and other persons who have or are contributing to our
success. 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 our directors who are not our employees. The
option committee may be the entire Board or a committee of the Board.
At the time of their election, directors who are not also employees of
the Company ("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 per
share of our 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, which were not exercisable at the date of
grant, at an exercise price of $.08 per share, pursuant to the Plan on November
19, 1997. All of these options have since become exercisable and expire on
November 19, 2002. Mr. Balaban received options to purchase an additional
250,000 shares, which were not exercisable at the date of grant, at an exercise
price of $.095 per share on June 24, 1998. These options have since become
exercisable and expire on June 24, 2003. Mr. Balaban was then granted options to
purchase 250,000 shares, at an exercise price of $.15 on September 8, 1999. Of
this grant, 100,000 options were exercisable as of February 1, 2000.
Mr. Huebner received options to purchase 250,000 shares, which were
not exercisable at the date of grant, at an exercise price of $.085 per share on
May 15, 1998. All of these options have since become exercisable and expire on
May 15, 2003. Mr. Huebner received options to purchase an additional 250,000
shares at an exercise price of $.06 on May 10, 1999. Of this amount, 150,000 had
become exercisable as of February 1, 2000.
In addition to these automatic grant of options to the Outside
Directors, stock options have been granted pursuant to the Plan on other
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. On
April 14, 1998, options to purchase 50,000 shares at an exercise price of $.12
per share were issued to another of our employees. These options also were to
become exercisable upon certain corporate goals being met. As of December 31,
1998, the corporate goals were not met and these options expired. 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,
our Chief Financial Officer. These options were cancelled as discussed in the
following paragraph.
18
<PAGE>
On May 10, 1999, the Board of Directors authorized new options for each
of two employees for 80,000 shares at an exercise price of $.06 per share. These
options have a one-year term. One of these employees was also granted options
for an additional 100,000 shares at an exercise price of $.06 for a term of two
years. The other employee was granted options for an additional 100,000 shares
at an exercise price of $.06 per share contingent on meeting a certain sales
goal. These options would also have a term of two years. On this same date, the
Board of Directors cancelled the previous options outstanding for Julie H. Grimm
and granted her new options for 240,000 shares at an exercise price of $.06.
These options have a two-year term. Additional options were also granted to
another employee on this same date; however, the options expired when the
employee left the Company in July 1999.
Compensation Of Outside Directors
Standard Arrangements
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 our
restricted common stock at a rate per share equal to the fair market value of
the common stock on the date of the meeting by informing our 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 Outside Director automatically receives options to purchase shares of
common stock pursuant to the Plan.
Prior to the adoption of the Plan in November 1997, we 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
became exercisable on July 14, 1998. Of the options granted to Mr. Anderson,
150,000 became 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 in January 1996. These options expired
unexercised 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
became 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. As of February 1, 2000, a total of
110,416 shares of common stock had been granted to the Outside Directors in lieu
of meeting fees.
19
<PAGE>
Other Arrangements
During the year ended December 31, 1999, no compensation was paid to
our non-employee directors other than pursuant to the standard compensation
arrangements described in the previous section.
Employment Contracts And Termination Of Employment
And Change-In-Control Arrangements
Effective as of March 19, 1998, we entered into an employment agreement
with Kevin O. Shoemaker, one of our engineers, who is the beneficial owner of
6.3 percent of our common stock. 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 we have net profits of at least $300,000 for that fiscal year and if Mr.
Shoemaker contributes a reasonable amount of finished products to our 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 we have net
profits in the applicable fiscal year of at least $300,000 up to a bonus of
$30,000 if we have 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 our prior written consent.
We entered into a written employment agreement with Randall P. Marx,
our Chief Executive Officer and Treasurer on October 1, 1998 with an effective
date of September 1, 1998. Mr. Marx is the beneficial owner of 9.7 percent of
our stock or 9,859,774 shares. The agreement is for a period of two years with
an annual salary rate of $115,000. Mr. Marx is eligible for a bonus of five
percent of the income from our operations per fiscal year for each fiscal year
during the term. As a part of this agreement, Mr. Marx has agreed not to compete
with us for a period of two years following his termination as our employee.
We entered into an employment agreement with Richard L. Anderson, our
Vice President-Administration and Secretary, on October 1, 1998. The term of the
agreement is 23 months and provides for an annual salary rate of not less than
$57,500. The agreement provided for options to purchase shares that would have
become exercisable after 1998 if we met certain net operating income ("NOI")
requirements. We did not meet the income requirements for 1998 and these options
did not become exercisable. The agreement also provided for options to purchase
an additional 150,000 shares of common stock which will become exercisable if
1999 NOI is between $400,000 and $699,999, options to purchase an additional
300,000 shares will become exercisable if 1999 NOI is between $700,000 and
$999,999, and options to purchase an additional 500,000 shares will become
exercisable if 1999 NOI is at least $1,000,000. We did not meet the income
requirements for 1999 and these options did not become exercisable. The exercise
price for the options that could become exercisable based on 1999 results was
$.135 per share. On May 10, 1999, the Board authorized a change in the agreement
for the 1999 option amounts to 120,000, 240,000 and 400,000 options based on the
respective NOI amounts. These options would be priced at $.06 and would have a
term of two years.
We have 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 us or from a change-in-control 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.
20
<PAGE>
BENEFICIAL OWNERS OF SECURITIES
As of February 1, 2000, there were 97,398,467 shares of common stock
outstanding. The following table sets forth certain information as of that date,
with respect to the beneficial ownership of common stock by each director and
nominee for director, by all executive officers and directors as a group, and by
each other person known by us to be the beneficial owner of more than five
percent of the common stock:
<TABLE>
<CAPTION>
Number of Shares
Name and Address of Beneficial Owner Beneficially Owned (1) Percent of Class
- ------------------------------------ ---------------------- ----------------
<S> <C> <C>
Richard L. Anderson 2,551,476 (2) 2.5
Antennas America, Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Sigmund A. Balaban 1,569,964 (3) 1.5
10 Grecian Street
Parsippany, NJ 07054
Julie H. Grimm 240,000 (4) *
Antennas America, Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Donald A. Huebner 544,500 (5) *
6305 W. Apache Drive
Larkspur, CO 80118
Randall P. Marx 9,859,774 (6) 9.7
Antennas America, Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Kevin O. Shoemaker 6,434,474 (7) 6.3
Antennas America, Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033
Bruce Morosohk 5,491,117 (8) 5.4
7212 South Acoma Street
Littleton, CO 80120
All officers and directors
as a group (six persons) 21,200,188 20.8
(2)(3)(4)(5)(6)(7)
</TABLE>
- ------------------------
* Less than one percent.
(1) "Beneficial ownership" is defined in the regulations promulgated by the
U.S. Securities and Exchange Commission as having or sharing, directly or
indirectly (1) voting power, which includes the power to vote or to direct
the voting, or (2) investment power, which includes the power to dispose or
to direct the disposition, of shares of the common stock of an issuer. The
definition of beneficial ownership includes shares underlying options or
warrants to purchase common stock, or other securities convertible into
common stock, that currently are exercisable or convertible or that will
become exercisable or convertible within 60 days. Unless otherwise
indicated, the beneficial owner has sole voting and investment power.
21
<PAGE>
(2) Includes 135,238 shares and 135,238 warrants to purchase shares of common
stock at $.175 owned jointly with Geary Kommer Anderson; includes 475,000
warrants to purchase shares at $.175 per share; includes 636,500 shares
owned by the Lloyd Anderson Marital Trust B Dated June 21, 1990, for which
Richard L. Anderson serves as trustee.
(3) Includes options under the Plan to purchase 250,000 shares at $.0475 per
share until December 26, 2001; options under the Plan to purchase 250,000
shares at $.08 per share until November 19, 2002; options under the Plan to
purchase 250,000 shares at $.095 per share until June 24, 2003; options
under the Plan to purchase 250,000 shares at $.15 per share until September
8, 2004, 100,000 of which are currently exercisable; and 250,000 warrants
to purchase shares of common stock at $.175 per share.
(4) Consists of options under the Plan to purchase 240,000 shares of common
stock for $.06 per share which expire on May 10, 2001.
(5) Consists of Outside Director Options under the Plan to purchase 250,000
shares at $.085 per share until May 15, 2003; option under the Plan to
purchase 250,000 shares at $.06 per share until May 10, 2004, 150,000 of
which are currently exercisable; and warrants to purchase 9,524 shares of
common stock at $.175 per share.
(6) Includes 1,085,000 shares owned by the Harold and Theora Marx Living Trust,
of which Mr. Marx's parents are trustees, although Mr. Marx disclaims
beneficial ownership of these shares; also includes 1,904,762 warrants to
purchase shares of common stock at $.175 per share.
(7) 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.
(8) 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.
DESCRIPTION OF SECURITIES
Common Stock
Our authorized capital consists of 250,000,000 shares of $.0005 par
value common stock. We had 97,398,467 shares of common stock issued and
outstanding as of February 1, 2000, which were held by 350 shareholders.
22
<PAGE>
Each share is entitled to share equally with each other shares in
dividends from sources legally available therefore, when, as, and if declared by
the Board of Directors and, upon our liquidation or dissolution, whether
voluntary or involuntary, to share equally in our assets that are available for
distribution to the holders of shares of our common stock. Each holder of shares
of our common stock 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 our shares have no preemptive rights,
redemption rights or rights of conversion with respect to our shares. All
outstanding shares issued will be fully paid and nonassessable by us. The Board
of Directors is authorized to issue additional shares within the limits
authorized by our Articles Of Incorporation and without shareholder action.
All shares have equal voting rights and voting rights are not
cumulative. The holders of more than 50 percent of our shares could, therefore,
if they chose to do so, elect all our directors.
Upon our liquidation, dissolution or winding up, our assets, after
satisfaction of all liabilities, will be distributed pro rata to the holders of
the shares.
We have not paid any cash dividends since our inception.
We have reserved a sufficient number of shares for issuance upon the
exercise of options under our Plan.
Warrants
In the private placement completed in January 2000, an investor
received common stock purchase warrants to purchase, at an exercise price of
$.175 per share, one additional share of common stock with each share of common
stock purchased.
The warrants are exercisable immediately. They expire on March __ 2001,
which is one year after the registration statement covering the transfer of the
placement shares of common stock included in the units and the shares of common
stock underlying the warrants included in the units becomes effective with the
SEC. At any time that the registration statement is effective, we may, upon
30-days' notice to holders of warrants, repurchase the warrants for $.001 per
warrant at any time that the weighted average trading price of our common stock
has been at least $.2275 for 20 of the 30 consecutive business days preceding
the date of the notice of repurchase. A holder of warrants may exercise part or
all of the holder's warrants at any time during the 30-day period after our
notice of repurchase of the warrants. This prospectus is part of the
registration statement required to be filed by us as a result of our agreement
with investors in the private placement.
In addition, effective February 16, 1999, an agreement was entered into
with one of our distributors whereby the distributor advanced us $200,000 at an
interest rate of 12 percent until March 1, 2000, and at 14 percent thereafter
until paid in full, and we granted the distributor options to purchase 500,000
shares of stock at a price of $.03 per share. The transfer of the shares
underlying these options is covered by this prospectus. We repaid the
distributor in full on January 31, 2000.
Transfer Agent And Registrar
Our transfer agent and registrar is American Securities Transfer &
Trust, Inc., 12039 West Alameda Parkway, Suite Z-2, Lakewood, Colorado 80228,
telephone number (303) 986-5400.
23
<PAGE>
INACTIVE TRADING OF THE COMMON STOCK
Although our shares are publicly held, there currently is not an active
trading market. See "Risk Factors - There is an inactive trading of our shares
and possible volatile prices."
To the extent that there is trading in our shares, of which there is no
assurance, the shares trade in the over-the-counter market and are quoted on the
OTC Bulletin Board. The shares are not quoted on the Nasdaq system or any
exchange. The closing quotes for the shares on February 1, 2000 were $.46 bid
and $.50 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 our shares.
SELLING SECURITY HOLDERS AND PLAN OF DISTRIBUTION
This prospectus concerns the transfer by the selling security holders
of an aggregate of 44,500,000 shares of common stock. These shares consist of
(1) 22,000,000 shares of common stock and (2) 22,500,000 shares of common stock
issuable upon the exercise of warrants and options.
The selling security holders may transfer the common stock at those
prices that they are able to obtain in the market or as otherwise negotiated. In
addition, the selling shareholders may transfer the shares in exchange for
consideration other than cash, or for no consideration, as determined by the
selling shareholders in their sole discretion. This prospectus may be used by
the selling shareholders to transfer shares of the common stock to affiliates of
the selling shareholders. Additionally, agents, brokers or dealers or other
lenders may acquire shares or interests in shares as a pledgee and may, from
time to time, effect distributions of the shares or interests in that capacity.
We will receive no proceeds from the sale of common stock by the selling
security holders. We will receive approximately $3,865,000 if all the warrants
and options are exercised.
It is anticipated that the selling security holders will offer the
shares in direct sales to private persons and in open market transactions. The
selling security holders may offer the shares to or through registered
broker-dealers who will be paid standard commissions or discounts by the selling
security holders. The selling security holders informed us that they do not have
any arrangements or agreements with any underwriters or broker/dealers to sell
the shares, and intend to contact various broker/dealers to identify prospective
purchasers. Additionally, agents, brokers or dealers may acquire shares or
interests in shares as a pledgee and may, from time to time, effect
distributions of the shares or interests in such capacity.
The following table sets forth the name of the selling security
holders, the number of shares of common stock (including the number of shares of
common stock underlying the warrants and options) owned by the selling security
holders before this offering, the number of shares of common stock to be sold by
the selling security holders, and the number and percentage of shares of common
stock owned after this offering. None of the selling security holders has held
any position or office, or had any marital relationship with our officers or
directors in the past three years except as noted below.
24
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Percentage Of
Number Of Shares Number Of Number of Shares Shares Owned
Name Of Common Stock Shares To Be Sold (2) Owned After After Offering
Owned Before Offering
Offering(1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard L. Anderson 2,551,476 1,220,476 (3)(4)(5) 1,331,000 1.3
- -------------------------------------------------------------------------------------------------------------------------
Andrew B. Worden Retirement Plan 442,666 442,666 0 *
- -------------------------------------------------------------------------------------------------------------------------
Sigmund A. Balaban 1,569,964 500,000 (3) 1,069,964 1.1
- -------------------------------------------------------------------------------------------------------------------------
Francis B. Barron 200,000 200,000 0 *
- -------------------------------------------------------------------------------------------------------------------------
Robert M. Bearman 355,000 200,000 155,000 *
- -------------------------------------------------------------------------------------------------------------------------
Jeffrey T. Bogert 1,450,000 1,000,000 450,000 *
- -------------------------------------------------------------------------------------------------------------------------
Evansville Limited 7,600,000 7,600,000 0 *
- -------------------------------------------------------------------------------------------------------------------------
The Exploration Company, PLC 1,600,000 1,200,000 400,000 *
- -------------------------------------------------------------------------------------------------------------------------
Olga Filippova 190,476 190,476 0 *
- -------------------------------------------------------------------------------------------------------------------------
Hudson River Investments, Inc. 8,002,350 8,002,350 0 *
- -------------------------------------------------------------------------------------------------------------------------
Donald A. Huebner 544,500 19,048 (3) 525,452 *
- -------------------------------------------------------------------------------------------------------------------------
Dan Jaffe 571,430 571,430 0 *
- -------------------------------------------------------------------------------------------------------------------------
Jasco Products, Inc. 500,000 500,000 0 *
- -------------------------------------------------------------------------------------------------------------------------
Shelley D. Johnson 190,476 190,476 0 *
- -------------------------------------------------------------------------------------------------------------------------
Harold A. Marx Family Trust
Dated July 16, 1992, 1,085,000 800,000 285,000 *
Harold A. Marx, Trustee
- -------------------------------------------------------------------------------------------------------------------------
Randall P. Marx 8,774,774 3,009,524 (3)(4) 5,765,250 5.7
- -------------------------------------------------------------------------------------------------------------------------
Milan Uremovich DDS PC Profit Sharing 952,380 952,380 0 *
Trust
- -------------------------------------------------------------------------------------------------------------------------
Barry F. Nathanson 8,777,366 8,777,366 0 *
- -------------------------------------------------------------------------------------------------------------------------
Constance D. Perdue 3,833,332 (6) 1,333,332 2,500,000 2.5
- -------------------------------------------------------------------------------------------------------------------------
Prisma Limited 1,676,190 1,676,190 0 *
- -------------------------------------------------------------------------------------------------------------------------
Profit Sharing Plan & Trust of Samuel 1,142,858 1,142,858 0 *
Benjamin, M.D., Inc
- -------------------------------------------------------------------------------------------------------------------------
Alan Talesnick 3,045,000 1,400,000 1,645,000 1.7
- -------------------------------------------------------------------------------------------------------------------------
Robert E. Wade 4,397,000 2,800,000 1,597,000 1.6
- -------------------------------------------------------------------------------------------------------------------------
Wood Capital Associates 200,000 200,000 0 *
- -------------------------------------------------------------------------------------------------------------------------
Andrew B. Worden 571,428 571,428 0 *
- -------------------------------------------------------------------------------------------------------------------------
Total 60,223,666 44,500,000 15,723,666 13.1
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Less than one percent.
(1) The number of shares of common stock owned before the offering includes
shares of common stock underlying warrants, even if not currently
exercisable.
(2) The number of shares of common stock to be sold assumes that the selling
shareholders sell all the shares of common stock being registered.
(3) Holds the position of director of the Company.
(4) Holds the position of executive officer of the Company.
(5) Includes 135,238 shares of common stock and 135,238 shares of common stock
underlying warrants jointly owned with Geary Kommer Anderson.
(6) Includes 2,500,000 shares of common stock owned by or jointly with Robert
Perdue
<PAGE>
SECURITIES AND EXCHANGE COMMISSION POSITION
ON CERTAIN INDEMNIFICATION
Pursuant to Utah law, our 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 our officer or director. 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 our best interests. Our Bylaws grant this indemnification to
officers and directors.
25
<PAGE>
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, we have been advised that,
in the opinion of the SEC, this indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
Patton Boggs LLP, Denver, Colorado has acted as our counsel in
connection with this offering, including the validity of the issuance of the
shares offered under this prospectus. Attorneys employed by Patton Boggs LLP own
approximately 2,700,000 shares of the Company's common stock and warrants to
purchase 900,000 shares of common stock.
EXPERTS
The financial statements of Antennas America, Inc. at December 31, 1999
and 1998, and for the years then ended, appearing in this prospectus and
registration statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in its report concerning those financials appearing
elsewhere in this prospectus, and are included in reliance upon such report
given on the authority of that firm as experts in accounting and auditing.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS AND
CAUTIONARY STATEMENTS
This prospectus includes "forward-looking statements". All statements
other than statements of historical fact included in this prospectus regarding
our financial position, business strategy, plans and objectives of our
management for future operations and capital expenditures, are forward-looking
statements. Although we believe that the expectations reflected in the
forward-looking statements and the assumptions upon which the forward-looking
statements are based are reasonable, we 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 our expectations ("Cautionary
Statements") are disclosed in the "Risk Factors" section and elsewhere in this
prospectus. All written and oral forward-looking statements attributable to us
or persons acting on our behalf subsequent to the date of this prospectus are
expressly qualified in their entirety by the Cautionary Statements.
ADDITIONAL INFORMATION
We have filed a Registration Statement with respect to the securities
offered by this prospectus with the Securities and Exchange Commission. This
prospectus, filed as part of such Registration Statement, does not contain all
of the information set forth in or annexed as exhibits to the Registration
Statement, certain portions of which have been omitted in accordance with the
rules and regulations of the Securities and Exchange Commission. For further
information with respect to our company and this offering, reference is made to
the Registration Statement, including exhibits filed therewith, which may be
read and copied at the public reference facilities maintained by the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, Room 1024 and at the following
Regional Offices of the SEC: 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and 7 World Trade Center, New York, New York 10048. Copies
of these materials also can be obtained at prescribed rates by writing to the
SEC, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information concerning the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. In addition, materials filed
electronically by us with the SEC are available at the SEC's Internet web site
at http://www.sec.gov.
26
<PAGE>
FINANCIAL INFORMATION
ANTENNAS AMERICA, INC.
Index To Financial Statements
Report of Independent Auditors F-2
Balance Sheets at December 31, 1999 and 1998 F-3
Statements of Operations for the Years Ended December 31, 1999 and 1998 F-4
Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1999 and 1998 F-5
Statements of Cash Flows for the Years Ended December 31, 1999 and 1998 F-6
Notes to Financial Statements F-7
F-1
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
Antennas America, Inc.
We have audited the accompanying balance sheets of Antennas America, Inc. as of
December 31, 1999 and 1998, and the related statements of operations, changes in
stockholders' equity, and cash flows for the years 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 auditing standards generally accepted
in the United States. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Antennas America, Inc. at
December 31, 1999 and 1998, and the results of its operations and cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States.
/s/ Ernst & Young LLP
Denver, Colorado
February 18, 2000
F-2
<PAGE>
Antennas America, Inc.
Balance Sheets
<TABLE>
<CAPTION>
December 31,
1999 1998
----------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 177,679 $ 17,555
Accounts receivable, less allowance for doubtful accounts
of $15,060 and $6,465, respectively 324,481 336,732
Inventory 579,713 300,366
Prepaid expenses 139 21,938
----------------------------------------
Total current assets 1,082,012 676,591
Property and equipment, net 369,381 404,814
Other assets:
Deferred tax asset, net - 335,373
Intangible assets, net of accumulated amortization of $57,923
and $49,419, respectively 40,491 40,539
Deposits 16,085 23,588
----------------------------------------
Total assets $1,507,969 $1,480,905
========================================
Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 357,474 $ 351,793
Notes payable--others 114,143 97,799
Note payable--bank - 209,892
Notes payable--officers 33,274 33,274
Current portion of capital lease obligations 54,846 62,657
Accrued expenses 70,528 77,548
----------------------------------------
Total current liabilities 630,265 832,963
Capital lease obligations, less current portion 6,111 60,027
Notes payable--others, less current portion 125,653 116,345
Notes payable--officers, less current portion - 110,948
Other long-term obligations - 6,000
----------------------------------------
Total liabilities 762,029 1,126,283
Commitments
Stockholders' equity:
Common stock, $.0005 par value, 250,000,000 shares
authorized, 95,089,563 and 75,371,847 shares issued
and outstanding, respectively 47,545 37,686
Additional paid-in capital 1,891,686 937,839
Accumulated deficit (1,193,291) (620,903)
----------------------------------------
Total stockholders' equity 745,940 354,622
----------------------------------------
Total liabilities and stockholders' equity $1,507,969 $1,480,905
========================================
</TABLE>
See accompanying notes.
F-3
<PAGE>
Antennas America, Inc.
Statements of Operations
<TABLE>
<CAPTION>
Years ended December 31,
1999 1998
----------------------------------------
<S> <C> <C>
Sales, net $4,567,531 $2,926,728
Cost of sales 3,483,357 1,922,522
----------------------------------------
Gross profit 1,084,174 1,004,206
Selling, general and administrative expenses 1,201,018 1,301,421
----------------------------------------
Loss from operations (116,844) (297,215)
Other income (expense):
Interest expense (120,339) (83,774)
Other income 168 3,498
----------------------------------------
Total other expense (120,171) (80,276)
----------------------------------------
Loss before income taxes (237,015) (377,491)
Provision for (benefit from) income taxes 335,373 (132,765)
----------------------------------------
Net loss $ (572,388) $ (244,726)
========================================
Basic and diluted loss per share $(0.01) $(0.00)
Weighted average shares outstanding 80,089,781 74,676,836
</TABLE>
See accompanying notes.
F-4
<PAGE>
Antennas America, Inc.
Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid-in Accumulated Stock
Shares Amount Capital Deficit Subscriptions Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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) -
Cancellation of common stock (51,371) (26) 26 - - -
Consulting expense related to issuance of
stock options - - 40,000 - - 40,000
Exercise of vendor stock options 1,500,000 750 73,691 - - 74,441
Common stock issued for directors' fees 83,796 42 4,908 - - 4,950
Net loss - - - (244,726) - (244,726)
-----------------------------------------------------------------------------------------
Balance, December 31, 1998 75,371,847 37,686 937,839 (620,903) - 354,622
Issuance of stock options - - 6,000 - - 6,000
Common stock issued for directors' fees 26,620 13 1,987 - - 2,000
Issuance of common stock and warrants in
private placement transactions, net of
expenses of $78,077 19,691,096 9,846 945,860 - - 955,706
Net loss - - - (572,388) - (572,388)
-----------------------------------------------------------------------------------------
Balance, December 31, 1999 95,089,563 $47,545 $1,891,686 $(1,193,291) $ - $745,940
=========================================================================================
</TABLE>
See accompanying notes.
F-5
<PAGE>
Antennas America, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
1999 1998
-------------------------------------
<S> <C> <C>
Operating activities
Net loss $(572,388) $(244,726)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 114,481 115,372
Loss on disposal of property and equipment - 25,478
Noncash expense for issuance of stock and options 2,000 44,950
Accrued interest on notes payable added to principal 18,942 15,974
Accrued salary added to note payable 4,776 7,308
Amortization of note discount 5,500 -
Deferred tax expense (benefit) 335,373 (132,764)
Gain from debt cancellation - (24,862)
Changes in operating assets and liabilities:
Accounts receivable 12,251 (9,047)
Inventory (279,347) 208,188
Prepaid expenses 21,799 53,803
Other assets (1,353) (12,976)
Accounts payable and accrued expenses 458 21,747
-------------------------------------
Net cash provided by (used in) operating activities (337,508) 68,445
Investing activities
Patent acquisition costs (8,457) (14,665)
Purchase of property and equipment (70,543) (73,070)
-------------------------------------
Net cash used in investing activities (79,000) (87,735)
Financing activities
Reductions in notes payable--bank (209,892) (40,837)
Repayment of notes and capital lease obligations (253,938) (84,400)
Proceeds from private placement, net 884,254 -
Proceeds from distributor note payable 201,059 -
Repayment of notes payable--officers (44,851) (1,000)
Proceeds from equipment refinancing - 32,104
Proceeds from exercise of options, net - 69,336
-------------------------------------
Net cash provided by (used in) financing activities 576,632 (24,797)
-------------------------------------
Net increase (decrease) in cash 160,124 (44,087)
Cash, beginning of year 17,555 61,642
-------------------------------------
Cash, end of year $ 177,679 $ 17,555
=====================================
Supplemental cash flow information:
Cash paid for interest $96,207 $ 63,271
Noncash investing and financing activities:
Officer note exchanged for common stock 71,452 -
Capital lease obligations incurred 1,108 53,137
Tax benefit related to stock options - 5,100
</TABLE>
See accompanying notes.
F-6
<PAGE>
Antennas America, Inc.
Notes to Financial Statements
December 31, 1999
1. Organization and Summary of Significant Accounting Policies
Organization
Antennas America, Inc. (the Company) was incorporated in Colorado on September
6, 1988 and was reorganized as a Utah corporation on April 12, 1989. The Company
manufactures and sells antennas used for various purposes.
Consolidation
The wholly owned subsidiary of the Company, Antennas America Distributing
Company, was dissolved effective December 29, 1998. The results of operations of
this subsidiary have been included in the consolidated results of Antennas
America, Inc. through that date. All significant intercompany transactions have
been eliminated.
Inventory
Inventory is valued at the lower of cost or market using standard costs which
approximate average cost. Inventories are reviewed periodically and items
considered to be slow-moving or obsolete are reduced to estimated net realizable
value through an appropriate reserve. Inventory consists of the following at
December 31:
1999 1998
------------------- -------------------
Raw materials $301,874 $161,295
Work in progress 165,392 134,034
Finished goods 153,347 36,037
------------------- -------------------
620,613 331,366
Inventory reserve (40,900) (31,000)
------------------- -------------------
Net inventory $579,713 $300,366
=================== ===================
Property and Equipment
Property and equipment are stated at cost. The Company uses the straight-line
method over estimated useful lives of three to seven years to compute
depreciation for financial reporting purposes and accelerated methods for income
tax purposes.
Property and equipment consist of the following at December 31:
1999 1998
------------------ -----------------
Machinery and equipment $491,966 $439,332
Computer equipment and software 108,330 93,897
Furniture and fixtures 65,515 62,779
Leasehold improvements 29,944 29,204
------------------ -----------------
695,755 625,212
Accumulated depreciation (326,374) (220,398)
------------------ -----------------
$369,381 $404,814
================== =================
F-7
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
1. Organization and Summary of Significant Accounting Policies (continued)
Depreciation expense, which includes amortization of fixed assets acquired
through capital leases, amounted to $105,976 and $106,048 during the years ended
December 31, 1999 and 1998, respectively.
Substantially all of the Company's fixed assets are pledged as collateral for
debt described in Notes 2 and 3.
Patent Costs
Patent costs are stated at cost and amortized over ten years using the
straight-line method. Amortization expense amounted to $8,505 and $9,324 for the
years ended December 31, 1999 and 1998, respectively.
Research and Development
Research and development costs are charged to expense as incurred. Such expenses
were $137,000 and $81,000, respectively, for the years ended December 31, 1999
and 1998.
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.
Additionally, returns related to retail sales have been immaterial and within
management's expectations.
Cash
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash.
Fair Value of Financial Instruments
The Company's short-term financial instruments consist of cash, accounts
receivable, and accounts payable and accrued expenses. The carrying amounts of
these financial instruments approximate 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.
The Company has several major customers (see Note 7), the loss of any one of
which could have a material negative impact upon 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.
F-8
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
1. Organization and Summary of Significant Accounting Policies (continued)
Advertising Costs
Advertising costs are charged to operations when the advertising is first shown.
Advertising costs charged to operations were $4,931 and $11,841 in 1999 and
1998, respectively.
2. Notes Payable
Notes payable to others at December 31, 1999 and 1998 consists of
uncollateralized obligations to individuals and vendors and an equipment loan
secured by the piece of equipment as follows:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
Amount due vendor, interest at 8% per annum, due January 31, 2001 $125,653 $116,345
Amount due vendor, interest at 10% per annum, due on demand 95,540 86,484
Amounts due distributor, interest at 12% per annum, due March 1,
2000 18,603 -
Amount due individual without interest, due on demand - 8,155
Amount due for equipment purchase, interest at 9.5% per annum,
paid in full in February 1999 - 3,160
----------------- -----------------
239,796 214,144
Less current portion (114,143) (97,799)
----------------- -----------------
$125,653 $116,345
================= =================
</TABLE>
On February 16, 1999, an agreement was entered into with one of the Company's
distributors, Jasco Products, 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 is being
amortized using the straight line method over the term of the note. The note
will be paid back through a reduced price on product as product is shipped and
interest will be paid in cash monthly. The funds advanced were used for working
capital purposes. As shown above, the balance due under this agreement at
December 31, 1999 is $18,603, which was paid in full on January 31, 2000.
The vendor notes outstanding included in the amount above were entered into in
prior years for services unpaid. The notes are accruing interest monthly.
F-9
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
2. Notes Payable (continued)
As of December 31, 1998, notes payable to bank consisted of an asset-based
revolving credit line having a maximum borrowing amount of $500,000, of which
$209,892 was outstanding at December 31, 1998. The line bore interest at prime
plus 4.5% (13%) through October 1998 and prime plus 6% thereafter, and was
collateralized by accounts receivable, inventory and otherwise unencumbered
machinery and equipment. The line had $290,108 of unused credit at December 31,
1998. This line was discontinued by the bank as of February 1, 1999 and the
Company then entered into an Account Purchase Agreement with another division of
the bank on February 1, 1999. All borrowings under the first line were paid
using proceeds from the new agreement and therefore the balance of the note
payable to the bank is zero at December 31, 1999.
The Account Purchase Agreement allows the Company to be advanced 85% of certain
approved receivables at a cost of 1% of the receivable for the first 10 days and
1/15 of 1% thereafter until the account is paid in full. The maximum rate
charged is 9%. The funds are advanced on a nonrecourse basis. As of December 31,
1999, we showed $5,897 as accounts receivable relating to the unsold 15 percent
of the accounts receivable which belong to us but which are held by the bank as
a reserve until the bank is paid for the account receivable by the customer.
3. Capital Lease Obligations
The Company has entered into financing type lease transactions with leasing
companies to lease certain manufacturing equipment, office equipment and
software. Most leases have bargain purchase options at the end of the lease
term. Scheduled maturities of the obligations as of December 31, 1999 are as
follows:
2000 $ 60,177
2001 6,425
-----------------
Minimum future lease payments 66,602
Less interest component (5,645)
-----------------
Present value of future net minimum lease
payments 60,957
Less current portion (54,846)
-----------------
Due after one year $ 6,111
=================
Property and equipment includes the following amounts for capital leases at
December 31, 1999:
Machinery and equipment $121,643
Software 27,656
Office equipment 20,993
-----------------
170,292
Less accumulated amortization (52,928)
-----------------
$117,364
=================
F-10
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
4. Notes Payable--Officers
As of December 31, 1998, notes payable to officers included unpaid advances and
salary accruals due to two of the Company's officers, including Randall P. Marx,
the chief executive officer, who accounted for approximately 70% of the balance
owed. The advances accrue no interest. A portion of the balance at December 31,
1998 was a loan to the Company to purchase its computer network made by another
officer. This loan accrues interest at 8.5%.
During October 1999, the note payable to Randall P. Marx was exchanged for
common stock and warrants in the private placement discussed in Note 5. After
withholding of appropriate payroll taxes, $71,452 was available for the
exchange. From funds received in the same private placement, the officer note
for the computer network loan was paid in full. The remaining balance as of
December 31, 1999 is for unpaid salary owed to a former company officer which is
being paid in weekly installments through June 2000.
5. Stockholders' Equity
In January 1996, the Company authorized a stock bonus to one of its officers for
350,000 shares of restricted common stock with a market value of $3,500. During
the year ended December 31, 1997, the Company accepted stock subscriptions from
an officer for 300,000 shares of its restricted common stock. The market value
of the stock subscribed at the subscription date amounted to $0.05 per share.
These shares were issued during 1998.
During 1998, the Company canceled 51,371 shares of its common stock. The
cancellation relates to the 1998 settlement of a dispute with one of the
Company's original shareholders regarding the actual number of shares issued to
this shareholder. There was no gain or loss recognized related to the
cancellation.
The Company entered into a contract with an investor relations firm effective
December 31, 1997 that granted the firm the option to buy 6,000,000 shares of
stock. The total included 2,000,000 shares at $0.06; 2,000,000 shares at $0.10
and 2,000,000 shares at $0.30. The shares underlying these options were
registered effective June 10, 1998 and 1,500,000 of the $0.06 options were
exercised by the firm on June 19, 1998. The Company recognized $40,000 of
consulting expense in 1998 related to the fair market value of these option
grants. These options were valued by using the Black-Scholes method described
below. The unexercised 4,500,000 options expired during 1998 when the contract
terminated with the investor relations firm.
During the latter six months of 1999, 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
will entitle the holder to purchase one share of common stock at an exercise
price of $.175 per share and will become exercisable on the date on which a
registration statement concerning the transfer of the shares included in the
units and the shares underlying the warrants is declared effective. The warrants
expire one year after becoming exercisable and may be called for redemption by
the Company at the price of $.001 per warrant at any time that the warrants are
exercisable after the weighted average trading price for the Company's common
stock is at least $.2275 per share for 20 of 30 consecutive business days. A
registration statement on Form SB-2 relating to the resale of the common stock
sold in this private
F-11
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
5. Stockholders' Equity (continued)
placement and the common stock underlying the warrants was filed with the
Securities and Exchange Commission on February 9, 2000.
As of December 31, 1999, the financial statements include $955,706 of equity
related to the private placement. The total cash received at this date was
$962,331 and expenses were $78,077. As discussed in Note 4, in addition to the
net cash proceed received from the private placement, an officer exchanged a
note payable for $71,452 worth of units in the private placement. As of January
13, 2000, the private placement was completed with total net proceeds of
$1,005,471 received by the Company, which was received as cash of $1,083,548 and
the cancellation of the officer's note of $71,452, reduced by offering expenses
of $78,077.
In November 1997, the Board of Directors approved the Company's 1997 Stock
Option and Compensation Plan (the Plan). Pursuant to the Plan, the Company may
grant options to purchase an aggregate of 5,000,000 shares of the Company's
common stock to key employees, directors, and other persons who have or are
contributing to the success of the Company. The options granted pursuant to the
Plan may be incentive options qualifying for beneficial tax treatment for the
recipient or they may be nonqualified options. The options granted are valued at
the stock price on the date of grant and have varying exercise periods. Certain
options were granted under agreements where certain corporate goals were to be
met before the options could be exercised. Failure of the Company to meet these
goals would result in the options expiring. Under this plan, the following
amounts of options are outstanding:
<TABLE>
<CAPTION>
Number of Weighted Average
Shares Exercise Price ($)
---------------------- --------------------------
<S> <C> <C>
1998 Activity:
Outstanding at beginning of year 1,200,000 0.068
Granted 1,850,000 0.118
Exercised - -
Forfeited or expired 850,000 0.122
---------------------- --------------------------
Outstanding at end of year 2,200,000 0.089
====================== ==========================
Exercisable at end of year 1,350,000 0.069
====================== ==========================
1999 Activity:
Outstanding at beginning of year 2,200,000 0.089
Granted 1,500,000 0.075
Exercised - -
Forfeited or expired 1,200,000 0.103
---------------------- --------------------------
Outstanding at end of year 2,500,000 0.074
====================== ==========================
Exercisable at end of year 2,150,000 0.070
====================== ==========================
</TABLE>
At December 31, 1999, there are 650,000 options exercisable from $0.0475 to
$0.05, 650,000 at $0.06, 750,000 from $0.08 to $0.095 and 100,000 at $0.15.
These options expire beginning in 2000 to 2004. The weighted average grant date
fair values of the options granted during 1999 and 1998 were $.063 and $.083,
respectively. The weighted average remaining contractual life of options
outstanding at the end of 1999 and 1998 were 2.29 years and 2.48 years,
respectively.
F-12
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
5. Stockholders' Equity (continued)
The Company has elected to follow Accounting Principles Board Opinion No., 25,
Accounting for Stock Issued to Employees (APB 25), and related interpretations
in accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FASB Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS
123), requires use of option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, if the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.
Pro forma recognition regarding net loss and loss per share is required by SFAS
123, which also requires that the information be determined as if the Company
has accounted for its employee stock options under the fair value method of SFAS
123. The fair value for options was estimated at the date of grant using a
Black-Scholes option valuation model with the following assumptions used for all
options granted in 1998 and 1999: risk-free interest rate of 5.5%, a dividend
yield of 0%, volatility factors of the expected market price of the Company's
common stock of between 1.395 to 1.781, and an expected life of one to five
years.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
sensitive assumptions, including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
Years Ended December 31,
1999 1998
------------------ ----------------
Net loss:
As reported $(572,388) $(244,726)
Pro forma $(624,288) $(285,756)
Loss per share:
As reported $(0.01) $(0.00)
Pro forma $(0.01) $(0.00)
Because the SFAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma results may not be
representative of that to be expected in future years.
6. 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.
F-13
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
6. Income Taxes (continued)
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.
Income tax expense (benefit) for the years ended December 31, 1999 and 1998 is
as follows:
1999 1998
----------------- ------------------
Current $ - $ -
Deferred 335,373 (132,765)
----------------- ------------------
Total $ 335,373 $(132,765)
================= ==================
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.
The components of the deferred taxes asset as of December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998
----------------- ------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 455,876 $382,353
Inventory reserve 15,256 11,563
Accrued expenses 1,865 8,206
Bad debt reserves 5,617 2,411
----------------- ------------------
478,614 404,533
Deferred tax liabilities:
Property and equipment (40,405) (35,174)
Other - (33,986)
----------------- ------------------
(40,405) (69,160)
----------------- ------------------
Deferred tax assets 438,209 335,373
Valuation allowance (438,209) -
Net deferred tax assets $ - $335,373
================= ==================
</TABLE>
F-14
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
6. Income Taxes (continued)
A reconciliation of federal income taxes computed by multiplying pretax net
income by the statutory rate of 34% to the provision for income taxes is as
follows at December 31:
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
<S> <C> <C>
Tax benefit computed at statutory rate $ (80,586) $(128,347)
State income tax (7,590) (13,268)
Valuation allowance 438,209 -
Effect of permanent differences 2,390 (8,358)
Other (17,050) 17,208
-------------------- --------------------
Provision for income taxes (benefit) $ 335,373 $(132,765)
==================== ====================
</TABLE>
In accordance with Statement of Financial Accounting Standard No. 109 (SFAS
109), Accounting for Income Taxes, the Company recorded a valuation allowance in
the third quarter of 1999 for its deferred tax asset which is primarily
attributable to the net operating loss carryover. At December 31, 1998, the
realization of this deferred tax asset was evaluated based on future earnings
projections at that time and no valuation reserve was deemed necessary. However,
based on current results and the near term financial forecasts of the Company,
an evaluation of the reserve during 1999 determined that it is more likely than
not that the net operating loss asset may not be realized and therefore a
valuation allowance for the full amount was recorded. The Company has a net
operating loss carryforward of approximately $1,222,000 that will expire in
years beginning in 2004 as follows:
2004 $ 95,275
2005 331,357
2006 183,378
2018 369,659
2019 242,519
-------------------
$1,222,188
===================
7. 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, 1999 to three companies totaling $3,879,190
(85%) and for the year ended December 31, 1998 to three companies totaling
$2,418,732 (83%). Additionally, the Company had open uncollateralized accounts
receivable from these customers aggregating $182,283 and $275,792 at December
31, 1999 and 1998, respectively.
F-15
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
8. Operating Leases
The Company leases its facilities under operating leases through May 31, 2000
and November 30, 2002. Minimum future rentals payable under the leases are as
follows:
2000 $ 86,506
2001 17,477
2002 16,042
------------------
$120,025
==================
Rent expense amounted to $187,788 and $176,801 for the years ended December 31,
1999 and 1998, respectively.
9. Defined Contribution Plan
On November 23, 1999, the Board of Directors approved the establishment of the
Antennas America, Inc. 401(k) Plan for employee contributions effective January
1, 2000. Marquette Trust Company was appointed as plan trustee and will use
American Skandia Advisor Funds, Inc. Mr. Sigmund Balaban, a member of the
Company's Board of Directors, is the registered representative of American
Skandia Advisor Funds and will receive some compensation from the transactions.
The Plan will allow for discretionary matching in Company common stock of
employee contributions by the Company if the Company has a profit for the
preceding year.
F-16
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO 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 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.
TABLE OF CONTENTS
PROSPECTUS SUMMARY............................1
RISK FACTORS..................................3
PRICE RANGE OF COMMON STOCK...................5
DIVIDEND POLICY...............................6
THE COMPANY...................................6
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION...............12
MANAGEMENT...................................14
EXECUTIVE COMPENSATION.......................16
BENEFICIAL OWNERS OF SECURITIES.............20
DESCRIPTION OF SECURITIES....................22
INACTIVE TRADING OF THE COMMON
STOCK...................................23
SELLING SECURITY HOLDERS
AND PLAN OF DISTRIBUTION................23
SECURITIES AND EXCHANGE
COMMISSION POSITION ON
CERTAIN INDEMNIFICATION.................25
LEGAL MATTERS................................25
EXPERTS......................................25
AVAILABLE INFORMATION........................25
FINANCIAL INFORMATION.......................F-1
ANTENNAS AMERICA, INC.
44,500,000 Shares Of Common Stock
.........
SELLING SHAREHOLDER
PROSPECTUS
.........
March ___, 2000
<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 our Articles of Incorporation and Bylaws, we are required to
indemnify its directors, officers, and other representatives 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 Company in connection with the
registration of the securities being offered. The selling security holders will
not pay any of the following expenses.
Registration and filing fee....................................$ 4,156
Printing (*)...................................................$ 2,000
Accounting fees and expenses (*)...............................$ 20,000
Legal fees and expenses (*)....................................$ 10,000
Registrar and transfer agent fee...............................$ 500
Miscellaneous..................................................$ 844
-----------------
(*) Estimated
$ 37,500
Item 26. Recent Sales Of Unregistered Securities
Since January 1, 1997, we have issued unregistered securities as
described below.
In April 1997, we 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.
We issued to Millennium Holdings Group, Inc. ("Millennium") options to
purchase 6,000,000 shares of common stock on December 31, 1997 pursuant to the
terms of a consulting agreement with Millennium. Those options and 1,500,000
shares underlying the options that were exercised were issued in reliance on an
exemption from registration under Section 4(2) of the Securities Act. The
remaining 4,500,000 options expired.
We issued to Jasco Products, Inc. 500,000 options to purchase common
stock on February 15, 1999 at $.03 per share. These options were issued in
connection with a loan granted by Jasco to us in reliance on an exemption from
registration under Section 4(2) of the Securities Act.
<PAGE>
During the period from September 8, 1999 through January 13, 2000, we
sold 22,000,000 units of common stock and warrants for a price of $.0525 per
unit. Each unit included one share of common stock and one common stock purchase
warrant to purchase one additional share at an exercise price of $.175 per
share. The offering was available only to accredited investors pursuant to Rules
505 and 506 and/or Sections 3(b) and 4(2) of the Securities Act.
Item 27. Exhibits.
Number Description
3.1 Articles Of Incorporation of Westcliff Corporation, now known as
Antennas America, Inc. (the "Company"). (1)
3.2 Articles Of Amendment to Articles Of Incorporation dated January 26,
1988. (2)
3.3 Articles And Agreement Of Merger between the Company and Antennas
America, Inc. a Colorado corporation, dated March 22, 1989. (2)
3.4 Bylaws of the Company as amended and restated on March 25, 1998. (3)
4.1 Specimen Common Stock Certificate (1)
5.1 Opinion of Patton Boggs LLP concerning the legality of the securities
being registered. (7)
10.1 Industrial Lease dated April 10, 1998 between the Company and Five K
Investments. (4)
10.2 Renewal and Extension of Lease dated April 10, 1998 between the Company
and Five K Investments. (4)
10.3 Renewal and Extension of Lease dated April 10, 1998 between the Company
and Five K Investments. (4)
10.4 Renewal and Extension of Lease dated April 10, 1998 between the Company
and Five K Investments. (4)
10.5 Employment Agreement dated as of March 19, 1998 between the Company and
Kevin O. Shoemaker. (3)
10.6 Employment Agreement dated as of October 1, 1998 between the Company
and Richard L. Anderson.
(5)
10.7 Employment Agreement dated as of October 1, 1998 between the Company
and Randall P. Marx. (5)
10.8 1997 Stock Option and Compensation Plan. (6)
10.9 Assignment of patent rights regarding Microstrip Antennas and Multiple
Radiator Array Antennas from Kevin O. Shoemaker to the Company dated
May 23, 1990. (4)
<PAGE>
10.10 Assignment of patent rights regarding Planar Serpentine Antennas from
Kevin O. Shoemaker to the Company dated May 23, 1990. (4)
10.11 Agreement Of Assignment dated June 27, 1990 between Kevin O. Shoemaker
and the Company. (4)
10.12 Form of Product Development Agreement executed by each of Randall P.
Marx and Kevin O. Shoemaker, respectively. (4)
10.13 Distribution Agreement dated October 7, 1998 between the Company and
Jasco Products Co., Inc. (7)
10.14 Promissory Note dated February 15, 1999 from the Company to Jasco
Products Co., Inc. (7)
10.15 Stock Option Agreement dated February 15, 1999 between the Company and
Jasco Products Co., Inc. (7)
23.1 Consent of Patton Boggs LLP (included in Opinion in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney (included in Part II of Registration Statement). (7)
(1) Incorporated by reference from the Company's Form S-18 Registration
Statement dated December 1, 1987 (File No. 33-18854-D).
(2) 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) Incorporated by reference from the Company's Form 10-KSB for the year
ended December 31, 1997.
(4) Incorporated by reference from the Company's Form SB-2 Registration
Statement dated May 22, 1998 (File No. 333-53453).
(5) Incorporated by reference from the Company's Form 10-KSB for the year
ended December 31, 1998.
(6) 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.
(7) Previously filed.
<PAGE>
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
(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.
2. 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.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act we certify
that we have reasonable grounds to believe that we meet 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 March 8, 2000.
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, 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 March 8, 2000
- ---------------------------
Richard L. Anderson
Director _____________
- ---------------------------
Sigmund A. Balaban
/s/ Randall P. Marx Director March 8, 2000
- ---------------------------
Randall P. Marx
/s/ Kevin O. Shoemaker
- ---------------------------
Kevin O. Shoemaker Director March 8, 2000
Director _____________
- ---------------------------
Donald A. Huebner
<PAGE>
EXHIBIT INDEX
Number Description
3.1 Articles Of Incorporation of Westcliff Corporation, now known as
Antennas America, Inc. (the "Company"). (1)
3.2 Articles Of Amendment to Articles Of Incorporation dated January 26,
1988. (2)
3.3 Articles And Agreement Of Merger between the Company and Antennas
America, Inc. a Colorado corporation, dated March 22, 1989. (2)
3.4 Bylaws of the Company as amended and restated on March 25, 1998. (3)
4.1 Specimen Common Stock Certificate (1)
5.1 Opinion of Patton Boggs LLP concerning the legality of the securities
being registered. (7)
10.1 Industrial Lease dated April 10, 1998 between the Company and Five K
Investments. (4)
10.2 Renewal and Extension of Lease dated April 10, 1998 between the Company
and Five K Investments. (4)
10.3 Renewal and Extension of Lease dated April 10, 1998 between the Company
and Five K Investments. (4)
10.4 Renewal and Extension of Lease dated April 10, 1998 between the Company
and Five K Investments. (4)
10.5 Employment Agreement dated as of March 19, 1998 between the Company and
Kevin O. Shoemaker. (3)
10.6 Employment Agreement dated as of October 1, 1998 between the Company
and Richard L. Anderson. (5)
10.7 Employment Agreement dated as of October 1, 1998 between the Company
and Randall P. Marx. (5)
10.8 1997 Stock Option and Compensation Plan. (6)
10.9 Assignment of patent rights regarding Microstrip Antennas and Multiple
Radiator Array Antennas from Kevin O. Shoemaker to the Company dated
May 23, 1990. (4)
10.10 Assignment of patent rights regarding Planar Serpentine Antennas from
Kevin O. Shoemaker to the Company dated May 23, 1990. (4)
<PAGE>
10.11 Agreement Of Assignment dated June 27, 1990 between Kevin O. Shoemaker
and the Company. (4)
10.12 Form of Product Development Agreement executed by each of Randall P.
Marx and Kevin O. Shoemaker, respectively. (4)
10.13 Distribution Agreement dated October 7, 1998 between the Company and
Jasco Products Co., Inc.
(7)
10.14 Promissory Note dated February 15, 1999 from the Company to Jasco
Products Co., Inc. (7)
10.15 Stock Option Agreement dated February 15, 1999 between the Company and
Jasco Products Co., Inc.
(7)
23.1 Consent of Patton Boggs LLP (included in Option in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney (included in Part II of Registration Statement). (7)
(1) Incorporated by reference from the Company's Form S-18 Registration
Statement dated December 1, 1987 (File No. 33-18854-D).
(2) 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) Incorporated by reference from the Company's Form 10-KSB for the year
ended December 31, 1997.
(4) Incorporated by reference from the Company's Form SB-2 Registration
Statement dated May 22, 1998 (File No. 333-53453).
(5) Incorporated by reference from the Company's Form 10-KSB for the year
ended December 31, 1998.
(6) 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.
(7) Previously filed.
EXHIBIT 23.2
CONSENT
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 18, 2000, in the Registration Statement on Form
SB-2 and related Prospectus of Antennas America, Inc. for the registration of
44,500,000 shares of its common stock.
/s/ Ernst & Young LLP
Denver, Colorado
March 9, 2000
