As filed with the Securities And Exchange Commission on February 9, 2000
Registration Number : 333-________
U.S. Securities And Exchange Commission
Washington, D.C. 20549
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
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(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)
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Copies to:
Alan L. Talesnick, Esquire
Francis B. Barron, Esquire
Patton Boggs LLP
1660 Lincoln Street, Suite 1900
Denver, Colorado 80264
(303) 830-1776
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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>
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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
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Common Stock, 22,000,000 $.175 $3,850,000 $1,016
issuable upon
exercise of warrants (2)
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Common Stock, 500,000 $.03 $15,000 $4
issuable upon exercise
of options (3)
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Total shares being 44,500,000 -- $15,745,000 $4,156
registered
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</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 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.
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 STOCKHOLDER
PROSPECTUS
PROSPECTUS DATED February __, 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 stockholders 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 stockholders 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 stockholders in
private transactions.
We will not receive any of the proceeds for the sale of these shares by
the selling stockholders. We will receive approximately $3,865,000 if all of the
warrants are exercised.
The selling stockholders have not entered into any underwriting
arrangements. The sale of the shares by the selling stockholders may occur in
one or more transactions that may take place on the over-the-counter market,
including ordinary broker's 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 stockholders in connection with
the sales of the common stock. The selling stockholders may transfer some or all
of the common stock in exchange for consideration other than cash, or for no
consideration, in the selling stockholders' sole discretion. This prospectus may
be used by the selling stockholders to transfer the common stock to affiliates
of the selling stockholders.
The Company's common stock is quoted on the OTC Bulletin Board under
the symbol "ANTM". On February 1, 2000, the closing price of the common stock
was $.50 per share.
Investing in the common stock involves certain risks. See the "Risk
Factors" section beginning on page 5.
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 February ___, 2000.
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<PAGE>
TABLE OF CONTENTS
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Page
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............................................................15
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
ADDITIONAL 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.
In January 2000, we completed a private placement of
22,000,000 shares of common stock and 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. We received a total of
$1,155,000 for these shares and warrants. 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.
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.
1
<PAGE>
The shares may be sold at market prices or other negotiated
prices. In addition, the selling stockholders 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".
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.
2
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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 year ended December 31, 1998 and nine months ended
September 30, 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.
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.
3
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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.
There is an inactive trading of our shares and possible volatile prices.
There is an extremely limited public market for our shares and 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 developing and sustaining the market for our shares. Further, we
cannot predict that any investor will be in a position 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. The closing quotes for the shares on February 1, 2000 were $.46 bid and
$.50 asked. We do not anticipate that our shares will qualify for listing on the
Nasdaq Stock Market in the near future. Accordingly, a holder of our shares may
be unable to sell shares when he or she wishes to do so, if at all. In addition,
the free transferability of these shares will be dependent on the securities
laws of the various states in which it is proposed these shares be traded.
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.
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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.
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
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Closing Bid Price
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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 February 1, 2000, the closing sale price for our common stock was
$.50 per share.
5
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Number of stockholders of record
On February 1, 2000, the number of our stockholders 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.
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.
6
<PAGE>
We currently have several new antenna systems under development for
many wireless applications. 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.
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.
For the nine months ended September 30, 1999, the patented decal antenna and
other conformal derivatives of the decal antenna accounted for approximately 30
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.
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.
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. Our
two primary projects for this antenna design are (1) the "off-air" antennas for
local television and (2) the 2.4 GHz spread spectrum wireless communications
antennas.
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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, viewer could not receive local TV broadcasts from the
satellite system. U.S. federal law previously prohibited subscribers to
satellite services from receiving local channels or other network programming if
those networks were available using a VHF/UHF antenna. In order to receive 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.
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.
8
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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 page, www.antennas.com, includes
information about our products and background as well as financial and other
shareholder-oriented information. The web page, 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 page 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.
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.
9
<PAGE>
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.
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.
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.
10
<PAGE>
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. In addition, we have filed provisional
patents on three new antenna products designed by Dr. Mohamed Sanad which are
assigned to us per a contract with Dr. Sanad. 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. 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.
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.
11
<PAGE>
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. We
anticipate closure of this case in the first quarter of 2000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity And Capital Resources
On September 8, 1999, the Board of Directors approved financing through
a private placement offering of shares 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 to be
sold for a maximum offering 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 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.
As of January 2000, we had received $1,155,000 of gross proceeds in
funding from the private placement. These funds were used for working capital
purposes and to repay $111,000 of officer debt.
Compared to December 31, 1998, our total assets as of September 30,
1999 increased by $89,143 to $1,570,048. Increases in current assets from the
private placement funds and higher sales volume were offset by the decrease in
long-term assets associated with the deferred tax asset valuation reserve as
discussed in "Results of Operations".
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 September 30, 1999, we showed $14,319 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.
12
<PAGE>
Liabilities increased $75,583 to $1,201,866 from December 31, 1998 to
September 30, 1999. The previously outstanding note payable to the bank was
repaid using funds from the new account purchase arrangement. In addition,
effective February 16, 1999, an agreement was entered into with one of 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 will be paid back through a reduced price on
product as product is shipped and interest will be paid monthly. The funds
advanced were used for working capital purposes. Accounts payable increased
since December 31, 1998 due to the additional investment in inventory to support
the sales increase.
Results of Operations
Three And Nine Month Periods Ended September 30, 1999 Compared To Three
And Nine Month Periods Ended September 30, 1998
For the three month period ended September 30, 1999, our total revenues
were $1,531,866 as compared to $807,560 for the three month period ended
September 30, 1998. The 90% 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. For the nine month period ended September 30,
1999, our total revenues were $3,195,345 as compared to $2,224,112 for the same
period in 1998.
During the third quarter of 1999, due to the reasons described below,
we recorded a non-cash, non-recurring valuation allowance of $389,844 against
our net operating loss carryforward that had been on the balance sheet at full
value. 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 our investment in new technology, 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 $389,344 valuation
allowance expense in the third quarter, our results for the three and nine
months periods ended September 30, 1999 were losses of $397,532 and $482,668,
respectively, as compared with income of $19,347 and a net loss of $86,822,
respectively, for the three and nine month periods ended September 30, 1998. Not
including the non-cash, non-recurring $389,844 valuation allowance expense, we
would have incurred a loss of approximately $8,000 for the three month period
ended September 30, 1999 and a loss of $92,000 for the nine months ended
September 30, 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.
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.
13
<PAGE>
Gross profit margins decreased to 21% and 24% for the three and nine
months ended September 30, 1999 from 41% and 36% for the same periods in 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,
incorporates lower gross margins than our commercial products.
Due to our rapid growth in 1999, interest expense increased for the
three month period ended September 30, 1999 from the same period in 1998 by
$18,339 and by $41,077 for the nine month period ended September 30, 1999
compared to 1998 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 Ended December 31, 1998 Compared To Year Ended December 31 , 1997
For the year ended December 31, 1998, our total revenues were
$2,926,728 as compared with $3,012,266 for the prior year. The 2.8% decrease in
revenues is primarily attributable to the delay of our planned introduction of
the new line of local TV antennas until the first quarter of 1999, and therefore
there was not an increase in sales of local TV antennas for 1998.
Our net results decreased to a $244,726 net loss from net income of
$134,500 for 1997. The loss was attributable to several factors including the
transition to a new antenna system for one of our largest OEM customers, the
maintenance of production overhead despite the seasonal lag in sales of the
local TV antenna systems, increased marketing costs, increases in general and
administrative expenses incurred to support our additional infrastructure, and
contractual investor relations consulting fees of $30,000 and certain one-time
related costs amounting to an additional $57,000.
The increase in selling, general and administrative expenses to
$1,301,421 in 1998 from $850,536 in 1997 is attributable to the previously
mentioned contractual investor relations fees, increases in administrative and
sales salaries, additional legal fees associated with a lawsuit against a
competitor, and higher depreciation related to capital additions in 1998 and the
last half of 1997.
Interest expense increased by $11,544 for 1998 over 1997. The increase
is primarily attributable to the costs associated with the capital leases the
Company entered into during 1997 and 1998 for software, manufacturing and office
equipment.
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.
14
<PAGE>
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 stockholders 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 --
Sigmund A. Balaban 58 Director 1994
Donald A. Huebner 55 Director 1998
</TABLE>
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.
15
<PAGE>
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. 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.
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 $100,000
during any of the three successive fiscal years ending December 31, 1999.
16
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------------
Annual Compensation Awards Payouts
------------------------------------------ ----------- -------
Restricted
Other Annual Stock LTIP All Other
Fiscal Salary Bonus Compensation Awards Options Payouts Compensation
Name and Principal Position Year ($) (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.
Employee Retirement Plans, Long-Term Incentive Plans, and Pension Plans
Other than the Company's stock option and 401(k) plan, the Company has
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.
17
<PAGE>
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.
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.
18
<PAGE>
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.
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.
19
<PAGE>
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. These options will become
exercisable upon the determination of the 1999 NOI and expire two years after
becoming 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.
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
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name and Address of Beneficial Owner Beneficially Owned (1) Percent of Class
- ------------------------------------ ---------------------- ----------------
<S> <C> <C>
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.
(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; does not include options to purchase
500,000 shares that could become exercisable during fiscal year 2000 if
certain performance criteria are met during 1999 as discussed in
"Employment Contracts And Termination Of Employment And Change-In-Control
Arrangements" previously.
(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.
21
<PAGE>
(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 stockholders.
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.
22
<PAGE>
The warrants are exercisable immediately. They expire on _____________,
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.
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 stockholders may transfer the shares in exchange for
consideration other than cash, or for no consideration, as determined by the
selling stockholders in their sole discretion. This prospectus may be used by
the selling stockholders to transfer shares of the common stock to affiliates of
the selling stockholders. 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.
23
<PAGE>
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.
<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 *
- -------------------------------------------------------------------------------------------------------------------------
Andrew B. Worden Retirement Plan 442,666 442,666 0 *
- -------------------------------------------------------------------------------------------------------------------------
Sigmund A. Balaban 1,569,964 500,000 (3) 1,069,964 *
- -------------------------------------------------------------------------------------------------------------------------
Francis B. Barron 200,000 200,000 0 *
- -------------------------------------------------------------------------------------------------------------------------
Robert M. Bearman 460,000 200,000 260,000 *
- -------------------------------------------------------------------------------------------------------------------------
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 3,375,000 1,400,000 1,975,000 1.9
- -------------------------------------------------------------------------------------------------------------------------
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 61,303,666 44,500,000 16,803,666 14.3
- ----------------------------------------- ------------------- ------------- --------- ------------------- ---------------
</TABLE>
*Less than one percent.
24
<PAGE>
(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
stockholders 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
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.
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 3,135,000 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,
1998, and for the year then ended, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, and at
December 31, 1997, and for the year ended December 31, 1997, by James Schiefley
& Associates, P.C., independent certified public accountants, as set forth in
their respective reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given on the authority of such firms as experts in
accounting and auditing.
25
<PAGE>
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
Unaudited Interim Financial Statements for the
Nine Months Ended September 30, 1999
Balance Sheet at September 30, 1999 F-1
Statements of Operations for the Three and Nine Months Ended
September 30, 1999 and 1998 F-2
Statements of Cash Flows for the Nine Months Ended
September 30, 1999 and 1998 F-3
Notes to Financial Statements F-4
Financial Statements for the Years Ended December 31, 1998 and 1997
Reports of Independent Auditors F-5
Balance Sheet at December 31, 1998 F-7
Statements of Operations for the Years Ended
December 31, 1998 and 1997 F-8
Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1998 and 1997 F-9
Statements of Cash Flows for the Years Ended
December 31, 1998 and 1997 F-10
Notes to Financial Statements F-11
<PAGE>
Antennas America, Inc.
Balance Sheet
September 30. 1999
(unaudited)
<TABLE>
<CAPTION>
Assets
Current assets:
<S> <C>
Cash $ 150,300
Accounts receivable, less allowance for doubtful accounts 483,756
Inventory 462,478
Prepaid expenses 10,374
------------------
Total current assets 1,106,908
Property and equipment, at cost, net of accumulated
depreciation 390,037
Other assets:
Intangible assets, net of accumulated amortization 39,043
Deposits and other long term assets 34,060
------------------
Total assets $1,570,048
==================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 575,388
Notes payable-others 333,282
Note payable-bank -
Notes payable-officers 33,274
Current portion of capital lease obligations 63,812
Accrued expenses 77,218
------------------
Total current liabilities 1,082,974
Other long-term obligations -
Capital lease obligations, less current portion 13,137
Notes payable-others, less current portion -
Notes payable-officers, less current portion 105,755
------------------
Total liabilities 1,201,866
Commitments
Stockholders' equity:
Common stock, $.0005 par value, 250,000,000 shares authorized,
85,141,050 shares issued and outstanding 42,571
Additional paid-in capital 1,429,182
Accumulated deficit (1,103,571)
------------------
Total stockholders' equity 368,182
------------------
Total liabilities and stockholders' equity $1,570,048
==================
</TABLE>
See accompanying notes.
F-1
<PAGE>
Antennas America, Inc.
Statements of Operations
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
----------------------------------- -----------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Sales, net $1,531,866 $807,560 $ 3,195,345 $ 2,224,112
Cost of sales 1,210,986 472,434 2,417,638 1,412,630
----------------------------------- -----------------------------------
Gross profit 320,880 335,126 777,707 811,482
General and administrative expenses 291,823 308,717 822,945 907,905
----------------------------------- -----------------------------------
Income (loss) from operations 29,057 26,409 (45,238) (96,423)
Other income (expense):
Interest expense (41,335) (22,996) (102,173) (61,096)
Other income 17 25,902 116 25,971
----------------------------------- -----------------------------------
Total other income (expense) (41,318) 2,906 (102,057) (35,125)
----------------------------------- -----------------------------------
Income (loss) before income taxes (12,261) 29,315 (147,295) (131,548)
Provision for (benefit from) income taxes 385,271 9,968 335,373 (44,726)
----------------------------------- -----------------------------------
Net income (loss) $ (397,532) $ 19,347 $ (482,668) $ (86,822)
=================================== ===================================
Net income (loss) per share $0.00 $0.00 $0.00 $0.00
Weighted average shares outstanding 76,711,610 75,359,712 75,830,586 74,450,787
</TABLE>
See accompanying notes.
F-2
<PAGE>
Antennas America, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Nine months ended September 30,
1999 1998
---------------------------------------
(unaudited)
<S> <C> <C>
Operating activities
Net loss $ (482,668) $ (86,822)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 82,771 82,700
Noncash expense for issuance of stock and options 1,500 34,650
Accrued interest on notes payable added to principal 14,252 12,686
Accrued salary added to note payable 4,776 3,077
Amortization of note discount 4,000 -
Deferred tax expense (benefit) 335,373 (44,724)
Changes in operating assets and liabilities:
Increase in accounts receivable (147,024) (82,719)
(Increase) decrease in inventory (162,112) 130,086
Decrease in prepaid expenses 11,564 26,541
Increase in other assets (10,472) (3,813)
Increase (decrease) in accounts payable and accrued expenses 217,265 (19,384)
---------------------------------------
Net cash provided by (used in) operating activities (130,775) 52,278
Investing activities
Patent acquisition costs (4,539) (14,665)
Acquisition of plant and equipment (61,959) (68,241)
---------------------------------------
Net cash used in investing activities (66,498) (82,906)
Financing activities
Reductions in revolving credit line (209,892) (24,771)
Proceeds from new short term debt 200,000 -
Repayment of notes and leases payable (138,270) (62,506)
Proceeds from private placement, net 488,728 -
Proceeds from equipment refinancing - 32,104
Proceeds from exercise of options, net - 69,336
Repayment of officer loans (10,548) (1,000)
---------------------------------------
Net cash provided by financing activities 330,018 13,163
---------------------------------------
Net increase (decrease) in cash 132,745 (17,465)
Cash, beginning of period 17,555 61,642
---------------------------------------
Cash, end of period $ 150,300 $ 44,177
=======================================
Supplemental cash flow information:
Cash paid for interest $ 86,557 $ 42,782
</TABLE>
See accompanying notes.
F-3
<PAGE>
Antennas America, Inc.
Notes to Financial Statements
September 30, 1999
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1999 and 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1999. For further information,
refer to the financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31, 1998.
Note 2. Equity Transactions
On September 8, 1999, the Company's Board of Directors approved
financing through a private placement offering of shares of units for $.0525 per
unit with each Unit consisting of one share of restricted common stock of the
Corporation and one redeemable Common Stock Purchase Warrant to purchase one
share of common stock. A minimum of 6,000,000 units and maximum of 22,000,000
Units were authorized to be sold for a maximum offering of $1,150,000. 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 Corporation's common stock is at least $.2275 per share for 20 of 30
consecutive business days. As of September 30, 1999, the Company had received
$511,688 of gross proceeds from the private placement which is reflected in the
financial statements. As of January 13, 2000, the maximum amount of gross
proceeds, $1,150,000, had been received from the private placement.
Note 3. 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 in accordance with Statement of Financial Accounting Standard No.
109 (SFAS 109), Accounting for Income Taxes. 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 at the third quarter determined that it is more
likely than not that some portion or all of the net operating loss asset may not
be realized and therefore a valuation allowance for the full amount was
recorded.
Note 4. Reclassifications
Certain amounts in the September 30, 1998 financial statements have
been reclassified to conform with the September 30, 1999 presentation.
F-4
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
Antennas America, Inc.
We have audited the accompanying balance sheet of Antennas America, Inc. as of
December 31, 1998, and the related statements of operations, changes in
stockholders' equity, and cash flows for the year 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Ernst & Young, LLP
Denver, Colorado
March 12, 1999
F-5
<PAGE>
Independent Auditor's Report
Board of Directors and Stockholders
Antennas America, Inc.
We have audited the statements of income, changes in stockholders' equity, and
cash flows of Antennas America, Inc. for the year ended December 31, 1997. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the results of operations, changes in
stockholders' equity and cash flows of Antennas America, Inc. for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ James E. Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
March 6, 1998
F-6
<PAGE>
Antennas America, Inc.
Balance Sheet
December 31, 1998
<TABLE>
<CAPTION>
Assets
Current assets:
<S> <C>
Cash $ 17,555
Accounts receivable, less allowance for doubtful accounts of $6,465 336,732
Inventory 300,366
Prepaid expenses 21,938
----------------
Total current assets 676,591
Property and equipment, at cost, net of accumulated
depreciation 404,814
Other assets:
Deferred tax asset, noncurrent 335,373
Intangible assets, net of accumulated amortization of $49,419 40,539
Deposits and other long term assets 23,588
----------------
Total assets $1,480,905
================
Liabilities and stockholders' equity
Current liabilities:
Note payable-bank $ 209,892
Notes payable-others 97,799
Notes payable-officers 33,274
Current portion of capital lease obligations 62,657
Accounts payable 351,793
Accrued expenses 77,548
----------------
Total current liabilities 832,963
Other long-term obligations 6,000
Capital lease obligations, less current portion 60,027
Notes payable-others, less current portion 116,345
Notes payable-officers, less current portion 110,948
----------------
Total liabilities 1,126,283
Commitments
Stockholders' equity:
Common stock, $.0005 par value, 250,000,000 shares
authorized, 75,371,847 shares issued and outstanding 37,686
Additional paid-in capital 937,839
Accumulated deficit (620,903)
----------------
Total stockholders' equity 354,622
----------------
Total liabilities and stockholders' equity $1,480,905
================
</TABLE>
See accompanying notes.
F-7
<PAGE>
Antennas America, Inc.
Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31,
1998 1997
-------------------------------------
<S> <C> <C>
Sales, net $2,926,728 $3,012,266
Cost of sales 1,922,522 1,890,657
-------------------------------------
Gross profit 1,004,206 1,121,609
Selling, general and administrative expenses 1,301,421 850,536
-------------------------------------
Income (loss) from operations (297,215) 271,073
Other income (expense):
Interest expense (83,774) (72,230)
Other income 3,498 3,810
-------------------------------------
Total other income (expense) (80,276) (68,420)
-------------------------------------
Income (loss) before income taxes (377,491) 202,653
Provision for (benefit from) income taxes (132,765) 68,153
-------------------------------------
Net income (loss) $ (244,726) $ 134,500
=====================================
Net income (loss) per share $0.00 $0.00
Weighted average shares outstanding 74,676,836 73,189,422
</TABLE>
See accompanying notes.
F-8
<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, 1996 73,189,422 $36,595 $801,039 $(510,677) $ 3,500 $330,457
Exercise of stock options - - - - 15,000 15,000
Net income - - - 134,500 - 134,500
---------------------------------------------------------------------------------------------
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 83,796 42 4,908 - - 4,950
directors' fees
Net loss - - - (244,726) - (244,726)
---------------------------------------------------------------------------------------------
Balance, December 31, 1998 75,371,847 $37,686 $937,839 $(620,903) $ - $354,622
=============================================================================================
</TABLE>
See accompanying notes.
F-9
<PAGE>
Antennas America, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31,
1998 1997
----------------------------------
Operating activities
<S> <C> <C>
Net income (loss) $(244,726) $134,500
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 115,372 54,735
Loss on disposal of property and equipment 25,478 -
Noncash expense for issuance of stock and options 44,950 -
Accrued interest on notes payable added to principal 15,974 10,323
Accrued salary added to note payable 7,308 -
Deferred tax expense (benefit) (132,764) 68,153
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (9,047) (161,274)
(Increase) decrease in inventory 208,188 (312,705)
(Increase) decrease in prepaid expenses 53,803 (38,996)
(Increase) decrease in other assets (12,976) 13,500
Increase (decrease) in accounts payable and accrued expenses (3,115) 233,120
----------------------------------
Net cash provided by operating activities 68,445 1,356
Investing activities
Patent acquisition costs (14,665) (12,940)
Acquisition of plant and equipment (73,070) (245,315)
----------------------------------
Net cash used in investing activities (87,735) (258,255)
Financing activities
Proceeds (reductions) from revolving credit line (40,837) 293,330
Repayment of notes and leases payable (84,400) (46,425)
Proceeds from equipment refinancing 32,104 -
Proceeds from exercise of options 69,336 -
Common stock subscriptions - 15,000
Proceeds from officer loan - 9,500
Repayment of officer loans (1,000) (8,500)
----------------------------------
Net cash provided by (used in) financing activities (24,797) 262,905
----------------------------------
Net increase (decrease) in cash (44,087) 6,006
Cash, beginning of year 61,642 55,636
----------------------------------
Cash, end of year $ 17,555 $ 61,642
==================================
Supplemental cash flow information:
Cash paid for interest $ 63,271 $ 61,907
Cash paid for income taxes - -
Noncash investing and financing activities:
Capital lease obligations incurred 53,137 -
Tax benefit related to stock options 5,100 -
</TABLE>
See accompanying notes.
F-10
<PAGE>
Antennas America, Inc.
Notes to Financial Statements
December 31, 1998
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.
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, 1998:
Raw materials $161,295
Work in progress 134,034
Finished goods 36,037
------------
331,366
Inventory reserve (31,000)
------------
Net inventory $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. When assets are retired or otherwise disposed of, the cost and the
related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is recognized in operations for the period. The cost of
repairs and maintenance is charged to operations as incurred, and significant
renewals or betterments are capitalized.
Property and equipment consist of the following at December 31, 1998:
Machinery and equipment $439,332
Computer equipment and software 93,897
Furniture and fixtures 62,779
Leasehold improvements 29,204
-----------
625,212
Accumulated depreciation (220,398)
-----------
$404,814
===========
F-11
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
1. Organization and Summary of Significant Accounting Policies (continued)
Depreciation expense amounted to $106,048 and $49,934 during the years ended
December 31, 1998 and 1997, 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 $9,324 and $8,272 for the
years ended December 31, 1998 and 1997, respectively.
Research and Development
Research and development costs are charged to expense as incurred. Such costs
were not material for the years ended December 31, 1998 and 1997.
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. In 1997, the
Company began retail sales of its product through a distributor. Returns related
to such 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.
Income (Loss) Per Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128 (SFAS 128), Earnings Per Share. SFAS 128
supersedes and simplifies the existing computational guidelines under Accounting
Principles Board (APB) Opinion No. 15, Earnings Per Share. Among other changes,
SFAS 128 eliminates the presentation of primary earnings per share and replaces
it with basic earnings per share for which common stock equivalents are not
considered in the computation. It also revises the computation of diluted
earnings per share. The income (loss) per share is computed by dividing the net
income (loss) for the year by the weighted average number of common shares
outstanding for the year. Income (loss) per share is unchanged on a diluted
basis.
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.
F-12
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
1. Organization and Summary of Significant Accounting Policies (continued)
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. Additionally, the
Company maintains a line of credit with one financial institution. The
maintenance of a satisfactory relationship with this institution is of
significant importance to 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.
Advertising Costs
Advertising costs are charged to operations when the advertising is first shown.
Advertising costs charged to operations were $11,841 and $40,940 in 1998 and
1997, respectively.
Reclassifications
Certain amounts in the December 31, 1997 financial statements were reclassified
to conform with the December 31, 1998 presentation.
2. Notes Payable
Notes payable to bank consists 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 (13.75% at December 31, 1998), and is
collateralized by accounts receivable, inventory and otherwise unencumbered
machinery and equipment. The line has $290,108 of unused credit at December 31,
1998. This line was discontinued by the bank as of January 31, 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. This 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% each day thereafter until the account is
paid in full. The maximum rate charged is 9%. The funds are advanced on a
nonrecourse basis.
F-13
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
2. Notes Payable (continued)
Notes payable to others at December 31, 1998 consists of uncollateralized
obligations to individuals and vendors and an equipment loan secured by a piece
of equipment as follows:
Amount due vendor, interest at 8% per annum,
due January 31, 2000 $116,345
Amount due vendor, interest at 10% per annum,
due on demand 86,484
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
------------
214,144
Less current portion 97,799
------------
$116,345
============
3. Capital Lease Obligations
During 1997 and 1998 the Company 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, 1998
are as follows:
1999 $ 78,463
2000 59,429
2001 6,324
------------
Minimum future lease payments 144,216
Less interest component (21,532)
------------
Present value of future net minimum lease payments 122,684
Less current portion (62,657)
------------
Due after one year $ 60,027
============
Property and equipment include the following amounts for capital leases at
December 31, 1998:
Machinery and equipment $121,643
Software 27,656
Office equipment 19,885
------------
169,184
Less accumulated amortization (26,366)
------------
$142,818
============
F-14
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
4. Notes Payable-Officers
Notes payable to officers includes unpaid advances and salary accruals due to
two of the Company's officers, including Randall P. Marx, the chief executive
officer, who accounts for approximately 70% of the balance owed. The advances
accrue no interest. A portion of the balance is a loan to the Company to
purchase its computer network made by another officer. This loan accrues
interest at 8.5%.
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 at $0.06; 2,000,000 at $0.10 and 2,000,000
at $0.30. Sales of the shares underlying these options were registered effective
June 8, 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.
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 exercise prices of the
options granted are determined by the stock price on the date of grant and have
varying exercise periods. Certain options were granted under agreements where
certain performance standards 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:
F-15
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
5. Stockholders' Equity (continued)
Number of Weighted Average
Shares Exercise Price
----------- -----------------
1997 Activity:
Outstanding at beginning of year 650,000 $0.049
Granted 550,000 0.091
Exercised - -
Forfeited - -
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
At December 31, 1998, the price range of options that are exercisable is $0.0475
to $0.105. These options expire beginning in 2000 to 2003. The weighted average
grant date fair values of the options granted during 1998 and 1997 were $.083
and $.070, respectively.
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 income and earnings 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 these options was estimated at the date of grant
using a Black-Scholes option valuation model with the following assumptions:
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 two 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
option, the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options.
F-16
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
5. Stockholders' Equity (continued)
1998 1997
-------------------- --------------------
Net income (loss):
As reported $(244,726) $134,500
Pro forma $(285,756) $125,590
Earnings per share:
As reported $0.00 $0.00
Pro forma $0.00 $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 net 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.
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. For the years ended December 31, 1998 and 1997, the
Company made estimates of the future utilization of its net operating loss
carryforward. These estimates account for the deferred tax asset recorded.
Income tax expense (benefit) for the years ended December 31, 1998 and 1997 is
as follows:
1998 1997
-------------- --------------
Current $ $ -
-
Deferred (132,765) 68,153
-------------- --------------
Total $(132,765) $68,153
============== ==============
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.
F-17
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
6. Income Taxes (continued)
The components of the net accumulated deferred income tax asset are as follows:
1998 1997
--------------- --------------
Deferred tax assets:
Net operating loss carryforwards $ 382,353 $221,572
Inventory reserve 11,563 -
Accrued expenses 8,206 -
Bad debt reserves 2,411 -
Other - 2,298
--------------- --------------
404,533 223,870
Deferred tax liabilities:
Property and equipment (35,174) (26,361)
Other (33,986) -
--------------- --------------
(69,160) (26,361)
--------------- --------------
Net deferred tax assets $ 335,373 $197,509
=============== ==============
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:
1998 1997
---------------- ------------
Tax expense (benefit) computed at
statutory rate $(128,347) $68,902
State income tax (13,268) 6,687
Effect of permanent differences (8,358) -
Other 17,208 (7,436)
---------------- ------------
Provision for income taxes (benefit) $(132,765) $68,153
================ ============
The Company has determined that profitability for the year ending December 31,
1999 and beyond is reasonably possible and has recorded the benefit of the net
operating loss carryforward as provided for in FAS 109. The Company has a net
operating loss carryforward of approximately $1,025,000 that will expire in
years beginning in 2004 as follows:
2004 $ 39,000
2005 336,000
2006 235,000
2018 415,000
--------------
$1,025,000
==============
F-18
<PAGE>
Antennas America, Inc.
Notes to Financial Statements (continued)
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, 1998 to three companies totaling $2,418,732
(83%) and for the year ended December 31, 1997 to two companies aggregating
$2,279,467 (76%). Additionally, the Company had open uncollateralized accounts
receivable from these customers aggregating $275,792 and $144,377 at December
31, 1998 and 1997, respectively.
8. Operating Leases
The Company leases its facilities under operating leases through May 31, 2000.
Minimum future rentals payable under the leases are as follows:
1999 $185,756
2000 70,153
-------------
$255,909
=============
Rent expense amounted to $176,801 and $190,217 for the years ended December 31,
1998 and 1997, respectively.
F-19
<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...................................15
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
ADDITIONAL INFORMATION.......................26
FINANCIAL INFORMATION.......................F-1
ANTENNAS AMERICA, INC.
44,500,000 Shares Of Common Stock
.........
SELLING SHAREHOLDER
PROSPECTUS
.........
February ___, 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 (*).......................$ 2,500
Legal fees and expenses (*)............................$10,000
Registrar and transfer agent fee.......................$ 500
Miscellaneous..........................................$ 844
-----------------
(*) Estimated
$ 20,000
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.
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.
10.14 Promissory Note dated February 15, 1999 from the Company to
Jasco Products Co., Inc.
10.15 Stock Option Agreement dated February 15, 1999 between the
Company and Jasco Products Co., Inc.
23.1 Consent of Patton Boggs LLP (included in Opinion in Exhibit
5.1).
23.2 Consent of Ernst & Young LLP
23.3 Consent of James E. Scheifley & Associates, P.C.
24.1 Power of Attorney (included in Part II of Registration
Statement).
- -----------------------
(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 Stockholders held on May
15, 1998.
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:
<PAGE>
(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 February 9, 2000.
ANTENNAS AMERICA, INC.
By: /s/ Randall P. Marx
--------------------------------------------
Randall P. Marx, Chief Executive Officer and
Principal Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of Antennas America, Inc., by virtue of their signatures appearing
below to this registration statement hereby constitute and appoint Randall P.
Marx or Richard L. Anderson, and each or either of them, with full power of
substitution, as attorney-in-fact in their names, place and stead to execute any
and all amendments to this registration statement in the capacities set forth
opposite their name and hereby ratify all that said attorney-in-fact and each of
them or his substitutes may do by virtue hereof.
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 February 9, 2000
- ---------------------------
Richard L. Anderson
/s/ Sigmund A. Balaban Director February 9, 2000
- ---------------------------
Sigmund A. Balaban
/s/ Randall P. Marx Director February 9, 2000
- ---------------------------
Randall P. Marx
/s/ Kevin O. Shoemaker Director February 9, 2000
- ---------------------------
Kevin O. Shoemaker
/s/ Donald A. Huebner Director February 9, 2000
- ---------------------------
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.
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)
10.11 Agreement Of Assignment dated June 27, 1990 between Kevin O.
Shoemaker and the Company. (4)
<PAGE>
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.
10.14 Promissory Note dated February 15, 1999 from the Company to
Jasco Products Co., Inc.
10.15 Stock Option Agreement dated February 15, 1999 between the
Company and Jasco Products Co., Inc.
23.1 Consent of Patton Boggs LLP (included in Option in Exhibit
5.1).
23.2 Consent of Ernst & Young LLP
23.3 Consent of James E. Scheifley & Associates, P.C.
24.1 Power of Attorney (included in Part II of Registration
Statement).
- ------------------------
(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 Stockholders held on May
15, 1998.
EXHIBIT 5.1
Patton Boggs LLP
1660 Lincoln Street
Suite 1900
Denver, Colorado 80264
(303) 830-1776
February 2, 2000
Antennas America, Inc.
4860 Robb Street, Suite 101
Wheat Ridge, CO 80033-2163
Ladies and Gentlemen:
We have acted as counsel for Antennas America, Inc., a Utah corporation
(the "Company"), in connection with preparation of the Company's Registration
Statement on Form SB-2 (the "Registration Statement") under the Securities Act
of 1933, as amended, concerning registration of the transfer of 44,500,000
shares of the Company's $.0005 par value common stock (the "Common Stock") by
certain stockholders of the Company (the "Selling Stockholders"). These shares
consist of (1) 22,000,000 shares of Common Stock issued by the Company to
Selling Stockholders in private placement transactions pursuant to exemptions
from federal and state registration requirements and (2) 22,500,000 shares
issuable by the Company to Selling Stockholders in private transactions pursuant
to exemptions from federal and state registration requirements, upon the
exercise of warrants and options to purchase Common Stock.
We have examined the Certificate Of Incorporation and the Bylaws of the
Company and the record of the Company's corporate proceedings concerning the
registration described above. In addition, we have examined such other
certificates, agreements, documents and papers, and we have made such other
inquiries and investigations of law as we have deemed appropriate and necessary
in order to express the opinion set forth in this letter. In our examinations,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, photostatic, or conformed copies and the
authenticity of the originals of all such latter documents. In addition, as to
certain matters we have relied upon certificates and advice from various state
authorities and public officials, and we have assumed the accuracy of the
material and the factual matters contained herein.
Subject to the foregoing and on the basis of the aforementioned
examinations and investigations, it is our opinion that the shares of Common
Stock being transferred by the Selling Stockholders as described in the
Registration Statement have been legally issued and are fully paid and
non-assessable and that the shares to be issued upon the exercise of the
warrants and options, if any, will have been legally issued, and will constitute
fully paid and non-assessable shares of the Company's Common Stock.
We hereby consent (a) to be named in the Registration Statement and in
the prospectus that constitutes a part of the Registration Statement as acting
as counsel in connection with the offering, including with respect to the
issuance of securities offered in the offering; and (b) to the filing of this
opinion as an exhibit to the Registration Statement.
This opinion is to be used solely for the purpose of the registration
of the Common Stock and may not be used for any other purpose.
Very truly yours,
/s/ PATTON BOGGS LLP
--------------------
PATTON BOGGS LLP
EXHIBIT 10.13
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is executed on the dates set below
to be effective as of the 7th day of October, 1998 between Antennas American,
Inc., a Utah corporation, ("AAI") with its principal place of business located
at 4860 Robb Street, Suite 101, Wheat Ridge, Colorado 80033, and Jasco Products,
Co. Inc., an Oklahoma corporation, ("Distributor") with its principal place of
business located at 311 N.W. 122, Oklahoma City, Oklahoma, 73114.
Recitals
A. AAI is engaged in the design, manufacturing and marketing of a variety of
antennas and antenna systems.
B. AAI has designed, developed and is currently manufacturing VHF/UHF Off-Air
TV antennas and related systems.
C. Pursuant to the terms and conditions described in this Agreement, AAI
desires to establish Distributor as the Exclusive Distributor for Consumer
Electronics Retail Customers for the Specified Product, each as defined
below.
Agreement
In consideration of the covenants and mutual promises contained in this
Agreement, AAI and Distributor agree as follows:
Article I: Definitions
1.01 As used in this Agreement, each of the following terms has the meaning set
forth below, each meaning to be equally applicable both to the singular and
plural forms of the terms defined.
(a) The terms "sale" and "resale" and any grammatical variant of these
terms shall include, without limitation, sales, contracts for sales,
conditional sales, installment sales, rentals or leases, and any other
arrangement whereby units of the Specified Product are placed at the
disposal of the ultimate user.
(b) "Specified Product" shall consist of the products designated in Exhibit
A, and Exhibit A(i) attached hereto and incorporated herein.
(c) "Purchase Order" shall consist of a bona fide contract to purchase the
Specified Product from AAI by the Distributor and shall be in
accordance with the terms and conditions as defined in Section 5.02 and
5.03 below. Any provision of any Purchase Order inserted by Distributor
that is not as defined in this Agreement shall be null and void unless
accepted by AAI in writing in a document other than the Purchase Order.
(d) "Exclusive Distributor" includes Distributor's rights, as set forth in
this Agreement, to distribute and market the Specified Product
throughout the United States, Mexico and Central America to Consumer
Electronics Retail Customers on an exclusive basis.
<PAGE>
(e) "Consumer Electronics Retail Customers" are customers whose primary
business is the distribution or retail sale of a variety of consumer
electronics products that includes, but is not limited to, direct to
home satellite equipment. "Consumer Electronics Retail Customers" also
includes Thomson Consumer Electronics, Inc. for the Specified Products.
(f) TVRO customers are non-Exclusive Distributor accounts that include
customers whose primary business is the distribution or retail sale of
satellite equipment to independent satellite retail customers and
installers.
(g) Other non-Exclusive Distributor accounts are Program Distributors, as
defined by DirecTV(R), at its sole discretion, such as DirecTV(R),
USSB, AT&T and Regional Bell Operating Companies. This also includes
Primestar, Echostar, and their affiliates, that are licensed to
distribute or provide the distribution of video, audio, or data
services that such entities owns or are otherwise permitted to
distribute from any DBS Satellite.
Article II: Appointment as Distributor
2.01 AAI hereby appoints Distributor, and Distributor hereby accepts the
appointment, as the Exclusive Distributor for the sale to Consumer Electronics
Retail Customers of the Specified Product. AAI will not directly solicit
Consumer Electronics Retail Customers and all future inquiries and leads
received by AAI from Consumer Electronics Retail Customers regarding sales of
Specified Product will be referred by AAI to Distributor for follow up.
2.02 Distributor may not sell or otherwise make available the Specified Product
to persons or entities that Distributor knows or has a reasonable basis to know
intend to alter, modify, reverse engineer or otherwise attempt to manufacture or
remanufacture the Specified Product. Distributor may not cause or attempt to
cause the alteration, modification, reverse engineering, manufacture or
remanufacture of the Specified Product.
2.03 Except as herein set forth, Distributor shall conduct its business in the
purchase and resale of the Specified Product for its own account and at its own
expense and risk. This Agreement does not in any way create the relationship of
principal and agent, partners, co-venturers, or any similar relationship,
between AAI and Distributor. Distributor covenants and warrants that it will not
act or represent itself directly or by implication as agent for AAI and will not
create or attempt to create any obligation, or make any representation, on
behalf of or in the name of AAI. Except as otherwise set forth in this
Agreement, it is understood that AAI shall exercise no control over the
activities or operations of the Distributor, with each of the Distributor and
AAI recognized hereunder as independent and free of one another except as set
forth in this Agreement. It is further understood that AAI shall place no
restrictions on Distributor's rights to work with or otherwise utilize other
persons or entities in selling the Specified Product provided that (a) no person
or persons or entity other than Distributor shall have any rights pursuant to
this Agreement, and (b) Distributor shall be solely responsible to AAI for all
obligations of Distributor to AAI and Distributor may not assign any such
obligations, and (c) unless AAI otherwise enters into a written agreement with
any such person or entity, (i) AAI shall have no relationship with any such
persons or entities, (ii) such persons shall be at the sole risk and expense,
and will be the sole responsibility of, Distributor, (iii) AAI shall not be
responsible for salaries, commissions, or any other item of cost related to any
such persons or entities, and (iv) no such person or entity will have any claim
against AAI for any matter whatsoever. Distributor agrees to indemnify and hold
harmless AAI against any and all losses, claims, damages, liabilities, costs and
expenses (including but not limited to attorney's fees and other expenses of
investigation and defense of any claims or actions) incurred by AAI due to
resulting from, relating to, or arising out of the appointment of any such
persons or entities or any other representatives, contractors, or
sub-contractors engaged or alleged to have been engaged by Distributor with
respect to the Specified Product.
<PAGE>
2.04 Except as otherwise set forth in this Agreement, it is understood that AAI
shall exercise no control over the activities or operations of the Distributor,
with each of the Distributor and AAI recognized hereunder as independent and
free of one another except as set forth in this Agreement. It is further
understood that Distributor shall place no restrictions on AAI's rights to work
with or otherwise utilize other persons or entities in manufacturing the
Specified Product provided that (a) AAI shall be solely responsible to
Distributor for all obligations of AAI to Distributor and AAI may not assign any
such obligations, and (b) unless Distributor otherwise enters into a written
agreement with any such person or entity, (i) distributor shall have no
relationship with any such persons or entities, (ii) such persons shall be at
the sole risk and expense, and will be the sole responsibility of, AAI, (iii)
Distributor shall not be responsible for salaries, commissions, or any other
item of cost related to any such persons or entities, and (iv) no such person or
entity will have any claim against Distributor for any matter whatsoever. AAI
agrees to indemnify, defend and hold harmless Distributor against any and all
losses, claims, damages, liabilities, costs and expenses (including but not
limited to attorneys' fees and other expenses of investigation and defense of
any claims or actions) incurred by Distributor due to, resulting from, relating
to, or arising out of the appointment of any such persons or entities or any
other representatives, contractors, or sub-contractors engaged or alleged to
have been engaged by AAI with respect to the specified Product.
2.05 AAI is the owner of all rights, title and interest in the Specified Product
and all trademarks, trade names, registered or unregistered patents, the Patent
Application, copyrights, trade secrets, know-how and rights relating to the
manufacture of such Specified Products of which are not specifically owned by
Distributor, including but not limited to trademarks owned or used by
Distributor.
2.06 AAI agrees to indemnify, defend, and hold Distributor harmless from all
liabilities of Distributor resulting from infringement by the Specified Products
of any patent rights of third parties under the laws of the United States which
may result from the sale or distribution of the Specified Product by Distributor
as contemplated and authorized by this Agreement, provided that (i) this
indemnification will arise only if a Distributor gives AAI prompt notice of the
infringement claim; and (ii) the obligation will cover only the Specified
Products as delivered by AAI and will not cover any correction, modification or
addition made by anyone other than AAI. THE FOREGOING IS AAI'S EXCLUSIVE
OBLIGATION WITH RESPECT TO CLAIMS OF INFRINGEMENT OF PATENT RIGHTS OF ANY KIND.
Article III: Sales And Service
3.01 Distributor shall use all reasonable efforts to sell and promote the sales
of the Specified Product, which all reasonable efforts shall include, but not be
limited to prompt performance of all its obligations under this Agreement.
3.02 AAI shall use its reasonable efforts to develop and provide additional
VHF/UHF off-air TV antenna products for the consideration of Distributor. Such
products shall be for the consideration to add to this Agreement. Distributor
will have 90 days to evaluate any new products to add to this Agreement.
<PAGE>
Article IV: Marketing And Related Obligations
4.01 AAI will provide reasonable assistance to Distributor in matters of
approaching and soliciting potential customers for the Specified Product. In the
event Distributor requests AAI's reasonable assistance in promoting the
Specified Product, which requests may include but are not limited to and,
schedule permitting, that AAI attend specific trade shows or make sales
presentations, then AAI agrees to provide its reasonable assistance in such
regard or other reasonable activities at AAI's expense; provided, however, that
in the event Distributor's requests are unreasonable or disproportionate to
Distributor's purchases, and AAI informs Distributor that the requests are
unreasonable or disproportionate to Distributor's purchases, Distributor will
reimburse AAI for its reasonable cost of travel and other expenses related to
this Section 4.01 in connection with any such activities undertaken solely at
the request of Distributor.
4.02 Upon the execution of this Agreement and continuing through the term of
this Agreement, AAI, at AAI's expense, will make available a toll-free customer
service number for the reasonable assistance to end-users of the Specified
Products with respect to the proper installation and operation of the Specified
Products.
4.03 On an ongoing basis, AAI will furnish Distributor with reasonable technical
information concerning the Specified Product, which shall include, without
limitation, a copy of customer manuals, user information, instructions as to
proper care and installation, and updates of the foregoing.
4.04 Any use of AAI's trade name, trademark (or any mark or name closely
resembling the same) now or hereafter owned or licensed by AAI or any of its
affiliates shall be subject to prior written approval of AAI.
Article V: Conditions Of Sale
5.01 The sale by AAI to Distributor of the Specified Product shall be subject to
the provisions of this Agreement and to no other terms and conditions unless
agreed to in writing by the parties.
5.02 The price of the units of the Specified Product (the "Unit Price") sold to
Distributor by AAI is listed in Exhibits A and A(i) attached to and made a part
of this Agreement.
5.03 Distributor agrees to purchase per month (the "Monthly Quota") as outlined
in Exhibit A of this Agreement. In order to determine whether the required
minimum number of units has been purchased by Distributor during a particular
period, the following factors apply: units shall be considered purchased during
the particular period if the Purchase Order with respect to those units is
accepted by AAI during the period.
5.04 Provided Distributor is not in default of this Agreement, including the
terms stated in 5.02 and 5.03 above, all Purchase Orders received during a
calendar month in the aggregate up to but not exceeding 6,000 units shall be
binding on AAI upon receipt. AAI shall use its best efforts to fill and ship all
Purchase Orders within accepted delivery dates specified in such Purchase Order
or at least within 9 weeks if no delivery date is accepted or specified,
acceptance not to be unreasonably withheld. Should AAI not deliver orders within
one week of the specified or accepted ship date, Distributor shall be entitled
to recover reasonable losses or costs incurred by Distributor related to said
late deliveries. Loss limitation as described in Sections 6.03 and 9.02 does not
apply to the reasonable losses or costs mentioned above, unless the late
delivery is due to demonstrable acts of God or any other cause that was beyond
AAI's reasonable control.
<PAGE>
5.05 Delivery to Distributor or Distributor's customers shall be by carrier
reasonably agreed to between Distributor and AAI and shall be F.O.B. AAI's
facility in the Denver, Colorado area. Claims for damage or shortages must be
made in writing by Distributor to AAI within 30 days after arrival of the
shipment. If a claim is not made in this time period and manner, AAI shall not
be required to forward the claim to the carrier and Distributor shall bear the
responsibility of the shipment.
5.06 AAI agrees to deliver Specified Product direct to customers of Distributor
as Distributor may reasonably request. All freight claims and other shipping
matters are subject to the terms of this Agreement.
Article VI: Warranties and Indemnification
6.01 The Specified Product sold under this Agreement by AAI to Distributor shall
be Warranted by AAI to Distributor and the end-user to be free from defects in
workmanship and materials for (i) not more than one year from the date the end
user purchases the Specified Product, and (ii) with respect to units in
Distributor's inventory or its Dealer's inventory for not more than two years
from the date of delivery by AAI to Distributor. Such Warranty shall not be
affected by the termination of this Agreement. With respect to any such
specified Product which are defective, they shall be returned to AAI's
designated location, freight prepaid, and upon receipt by AAI, AAI shall either
(a) replace the defective Specified Product with non-defective Specified
Product, or (b) remit a check to Distributor equal to the amount of
Distributor's price paid to AAI, including outbound freight, for such Specified
Product.
6.02 NO WARRANTIES, EXPRESSED OR IMPLIED, OTHER THAN THOSE ABOUT WHICH
DISTRIBUTOR IS INFORMED PURSUANT TO SECTION 6.01 HEREOF, ARE GIVEN IN RESPECT TO
THE SPECIFIED PRODUCT, AND ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR ANY PURPOSE IS HEREBY EXPRESSLY DISCLAIMED. ANY ACTION FOR ANY ALLEGED
BREACH OF ANY CONTRACT OF SALE OR OF THE ABOVE-STATED WARRANTY IN RESPECT OF THE
PRODUCT MUST BE COMMENCED WITHIN ONE YEAR AFTER THE CAUSE OF ACTION ACCRUES, AND
IF NOT COMMENCED WITHIN THAT PERIOD, THE RIGHT TO BRING SUCH CAUSE OF ACTION
SHALL BE DEEMED TO HAVE BEEN WAIVED.
6.03 IN NO EVENT SHALL AAI BE LIABLE FOR ANY LOSS OF ANTICIPATED PROFITS, OR FOR
THE LOSS OF USE, OR FOR THE COST OF "COVER" OR FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES. BUYER WAIVES ANY RIGHT, EXTENDING BEYOND THE FOREGOING
WARRANTY, TO CLAIM FOR NEGLIGENCE IN DESIGN, MATERIAL, WORKMANSHIP OR
INSTALLATION.
6.04 Distributor will use reasonable efforts to become familiar with the
requirements of safety codes and laws of the states and in which it sells and
delivers the Specified Product under this Agreement. Whenever Distributor learns
of any such code or law, or changes in such code or law, with which the
Specified Product are not in compliance, Distributor will advise and consult
with AAI about such code or law. In the event Distributor learns of any such
code or law, Distributor hereby indemnifies AAI from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, (including attorneys' fees), expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against AAI
arising from the sale by Distributor of any units of the Specified Product which
did not comply at the time of Distributor's sale of such product with the safety
codes and law, as the same may be amended from time to time, of the states and
in which the Specified Product are delivered. Upon notification by Distributor
to AAI of any violation of a code or law, AAI will use its best efforts to
modify future product to meet such codes or laws within 60 days of notification.
<PAGE>
6.05 Upon the execution of this Agreement and continuing through the term of
this Agreement, both AAI and Distributor shall obtain and maintain in effect a
product liability insurance policy covering the Specified Product, which policy
shall provide coverage of at least $1,000,000 and other reasonable provisions as
determined by applicable revenues of Distributor. Both parties shall make a copy
of the insurance policy available upon request by the other party.
Article VII: Termination And Breach
7.01 This Agreement shall be effective as of the date hereof when executed by
Distributor and AAI, and shall be for a 5 year term with 2 successive 1 year
renewal periods unless otherwise terminated as provided in this Agreement.
Termination of this Agreement as provided in this Agreement shall automatically
terminate all Exhibits to this Agreement. Monthly Quotas pursuant to this
Agreement will be reviewed and adjusted if necessary at each annual anniversary
date based on reasonable estimates of both market and manufacturing conditions.
The new Monthly Quotas will be determined only by an amendment to Exhibits A and
A(i) mutually agreed to by AAI and Distributor.
7.02 AAI may terminate this Agreement immediately by delivery to Distributor
written notice of such termination in the event of the happening of any of the
following:
(a) Failure of Distributor to purchase and pay for at least the
Monthly Quota of the Specified Product as set forth in this
Agreement. Such termination shall immediately release
distributor from any past and future Monthly Quota purchases.
(b) A material breach of any other provision of this Agreement by
Distributor, after written notice and failure to cure same
either within thirty (30) days or in the event that more than
thirty (30) days are reasonably required to cure such default,
then after the expiration of such longer agreed to period.
7.03 Distributor may elect to terminate this Agreement immediately by delivery
to AAI or its representative written notice of such termination in the event of
the happening of any of the following:
(a) A material breach of any provision of this Agreement by AAI,
after written notice and failure to cure same within thirty
(30) days unless that in the event that more than thirty (30)
days are reasonably required to cure such default, then after
the expiration of such longer agreed to period.
(b) Failure by AAI to deliver the Specified Product pursuant to
the terms of this Agreement and such failure continues for
more than thirty (30) days after the scheduled delivery date
provided that in the event that more than thirty (30) days are
reasonably required to cure such failure, then after the
expiration of such agreed to longer period.
(c) Change in Distributor customer base and market conditions.
Such termination shall be not be effective until 60 days after
delivery of notice by Distributor of such change in
Distributor's customer base or market conditions.
<PAGE>
7.04 This Agreement shall terminate automatically and without the giving of
notice in the event Distributor shall ask its creditors for a moratorium, or
execute an assignment for the benefit of creditors, or shall file a voluntary
petition in bankruptcy, or shall be adjudicated as a bankruptcy pursuant to an
involuntary petition, or shall suffer for a period exceeding sixty (60) days
appointment of a temporary or permanent receiver, trustee, or custodian on all
or substantial part of its assets.
7.05 This Agreement shall terminate automatically and without the giving of
notice in the event AAI shall ask its creditors for a moratorium, or execute an
assignment for the benefit of creditors, or shall file a voluntary petition in
bankruptcy, or shall be adjudicated as a bankruptcy pursuant to an involuntary
petition, or shall suffer for a period exceeding sixty (60) days appointment of
a temporary or permanent receiver, trustee, or custodian on all or a substantial
part of its assets.
Article VIII: Transactions After Termination
8.01 Any termination of this Agreement shall not release Distributor from paying
any amount which may then be owing to AAI or for paying for any units of the
Specified Product, less defective units, which may have been ordered by and/or
shipped to Distributor, as of the date of termination. AAI may offset and deduct
from any or all amounts owed to Distributor, any or all amounts owed by
Distributor to AAI, rendering to Distributor the excess, if any.
8.02 In the event of termination of this Agreement, AAI will maintain, at AAI's
expense, the toll-free customer service number as described in Section 4, of
this Agreement, for a period of at least 12 months after termination.
8.03 In the event of termination of this Agreement by either party as provided
herein except as expressly provided in this Agreement, AAI is relieved from any
obligation to make any further shipments hereunder. The acceptance of Purchase
Orders by AAI from Distributor or the continuous sale of units of the Specified
Product or parts to Distributor shall not be construed as a renewal of this
Agreement for any further term nor as a waiver of the termination. In the event
of AAI's acceptance of Purchase Orders from Distributor after the termination of
this Agreement, then AAI shall be obligated to deliver such units as though this
Agreement were in full force and effect, unless agreed to otherwise in writing
by the parties, but shall not be construed as a renewal of this Agreement for
any further term nor as a waiver of the termination.
8.04 In the event this Agreement is terminated for any reason, all subsequent
defective returns will be settled by a remittance check from AAI to Distributor
for the original purchase price paid by Distributor within 14 days of receipt of
the defective returns by AAI. Any defective returns deemed by AAI not to be
defective, as specified in Section 6.01, 6.02 and 6.03 shall be returned to
Distributor freight collect.
Article IX: Miscellaneous
9.01 There are no understandings with respect to the subject matter hereof not
contained in this Agreement. This Agreement shall supersede and cancel all
previous contracts, arrangements or understandings that may have existed or may
exist between the parties with respect to the subject matter hereof. All
amendments, changes, revisions and discharges of this Agreement, in whole or
part, and from time to time, shall be binding upon the parties only as the same
shall be in writing and executed by the parties hereto.
<PAGE>
9.02 Neither AAI nor Distributor shall by reason of the termination or
non-renewal of this Agreement be liable to the other for compensation,
reimbursement or damages on account of the loss of prospective profits, or
anticipated sales or on account of expediters, investments, leases, property
improvement or commitment in connection with the business or goodwill of AAI,
Distributor or otherwise.
9.03 Neither this Agreement nor any rights or obligations covered by it are
transferable or assignable, in whole or in part, by Distributor either
voluntarily, or by operation of law, without first obtaining the prior written
consent of AAI which consent shall not be unreasonably withheld.
9.04 All notices, requests, demands, directions and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and shall be mailed or delivered personally or sent by telegraph, telecopier or
facsimile to the applicable party or, as to each party, at such address as shall
be designated by such party in a written notice to the other party complying as
to delivery with the terms of this section. Each such notice, request, demand,
direction or other communication shall, when mailed or telegraphed, be effective
on the fifth working day after it has been deposited in the mails or delivered
to the telegraph company, respectively, addressed as aforesaid, and when mailed
shall be sent by first class certified air mail, return receipt requested,
enclosed in a postage-prepaid wrapper. Each such notice, request, demand,
direction or other communications shall, when delivered personally or sent by
telecopier or facsimile, be effective when delivered.
9.05 No change, addition, or modification to this Agreement shall be effective
unless and until the same is in writing and properly executed by the parties
hereto.
9.06 The laws of the state of domiciliary of the violated party shall apply and
bind the parties in all questions arising hereunder, regardless of the
jurisdiction in which any action or proceeding may be initiated or maintained.
It is understood, however, that if any of the provisions of this Agreement in
any way violated or contravenes the laws of any state or territory, such
provision shall be deemed not to be part of this Agreement, and the remainder of
this Agreement shall remain in full force and effect. In the event any provision
of this Agreement is found to be inapplicable or uncertain, then to the extent
not inconsistent with both the provisions of this Agreement and the intent of
such Agreement, then the Oklahoma Uniform Commercial Code shall apply.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals on the
dates set forth below.
Antennas America, Inc. Jasco Products Co., Inc.
By: /s/ Randall P. Marx, CEO By: /s/ Scott Busby, VP CFO/COO
-------------------------- ---------------------------
Date: October 7, 1998 Date: October 7, 1998
EXHIBIT 10.14
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE,
SOLD, PLEDGED OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR AN EXEMPTION
THEREFROM EXISTS AND IS ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
ANTENNAS AMERICA, INC.
Promissory Note
$200,000 February 15, 1999
1. Promise to Pay
FOR VALUE RECEIVED, Antennas America, Inc., a Utah company (the
"Company"), whose address is 4860 Robb Street, Suite 101, Wheat Ridge, Colorado
80333-2163, hereby promises to pay to the order of Jasco Products Co., Inc.
("Holder"), at the address set forth below, upon the terms and conditions set
forth herein, the principal amount of $200,000, plus interest at the rate set
forth below, with the principal and all accrued and unpaid interest payable as
set forth below.
2. Interest Rates
Interest shall accrue at the rate of 12% per annum during the period
commencing on the date of this Promissory Note and ending on March 1, 2000 and
thereafter at the rate of 14 percent per annum until paid in full. This
Promissory Note may be prepaid, in whole or in part, at any time without
prepayment penalty of any nature.
3. Principal Payment
Repayment of the entire principal amount of this Promissory Note is to
be made as follows: The Holder will provide a purchase order to the Company for
the 4750, 4752, 5754, 4758, and 4759 antenna systems on a monthly basis pursuant
to the terms of the Exclusive Distribution Agreement entered into by the parties
on October 7, 1998. The Company will invoice Holder for 50% of the amount of the
antennas and apply the other 50% of the amount of the antennas to the principal
amount of this Promissory Note.
4. Interest Payment
Interest will accrue at a rate of 12% per annum and 14% per annum at a
rate of .03288% per day of the outstanding principal amount due through March 1,
2000 and .03836% per day thereafter. Interest is calculated per month based on
the principal amount outstanding as reduced on the invoice date by Company to
Holder. A check will be sent by the Company to Holder for the monthly accrued
interest amount on or before the 10th day of the following month.
<PAGE>
5. Investment Restriction
The issuance of this Promissory Note has not been registered under any
federal or state securities laws in reliance upon an exemption from
registration. The Holder may not sell, offer for sale, transfer, pledge or
hypothecate this Promissory Note in the absence of an effective registration
statement covering such transaction under all applicable federal and state
securities laws, unless the sale, offer of sale, transfer pledge or
hypothecation is exempt from registration under all applicable federal and
states securities laws or unless the contemplated transaction otherwise complies
with all such laws. In acquiring this Promissory Note, the Holder represents and
warrants to the Company that the Holder is acquiring the Promissory Note for the
Holder's own account for investment purposes only and not with a view to sale or
distribution.
6. Availability Of Information
Holder acknowledges that the Company has made available to Holder the
opportunity to ask questions of, and receive answers from, the Company and other
persons acting on its behalf concerning the terms and conditions of the
transaction and to obtain any additional information, to the extent that the
Company possesses such information or can acquire it without unreasonable effort
or expense, necessary to verify the accuracy of the information given.
7. Waiver
No failure on the part of the Company or Holder to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver of such
right; nor shall any single or partial exercise by the Company or Holder of any
right preclude the exercise of any other right. The remedies of the Company and
Holder herein provided are cumulative and not exclusive of any remedies provided
herein or by law.
8. Entire Agreement; Amendments
This Promissory Note embodies the entire agreement between the Company
and Holder relating to this Promissory Note and supersedes all prior agreements
and understandings relating thereto, except for the Warrant Agreement and The
Subscription Agreement between the Company and Holder of even date with this
Promissory Note. This Promissory Note may be amended by an agreement in writing
signed by the Company and the Holder.
9. No Third-Party Beneficiaries
The Company and Holder agree that this Promissory Note is solely for
the benefit of the Company and Holder, and their respective successors and
assigns, and no other person shall acquire or have any rights under or by virtue
of this Promissory Note.
<PAGE>
10. Notices
All notices, requests, demands, directions and other communications
("Notices") concerning this Agreement shall be in writing and shall be mailed or
delivered personally or sent by telecopier or facsimile to the applicable party
at the address of such party set forth below in this Section 10. When mailed,
each such Notice shall be sent by first class, certified mail, return receipt
requested, enclosed in a postage prepaid wrapper, and shall be effective on the
fifth business day after it has been deposited in the mail. When delivered
personally, each such Notice shall be effective when delivered to the address
for the respective party set forth in this Section 10. When sent by telecopier
or facsimile, each such Notice shall be effective on the day on which it is sent
provided that it is sent on a business day and further provided that it is sent
prior to 5:00 p.m., local time of the party to whom the Notice is being sent, on
that business day; otherwise, each such Notice shall be effective on the first
business day occurring after the Notice is sent. Each such Notice shall be
addressed to the party to be notified as shown below:
The Company: Antennas America, Inc.
4860 Robb St., Ste. #101
Wheat Ridge, CO 80033-2163
303-421-4063
303-424-5085 (fax)
Holder: Jasco Products Co., Inc.
311 N.W. 122nd St.
Oklahoma City, OK 73114-7318
405-752-0710
405-752-1537 (fax)
11. Severability
If any obligation or portion of this Promissory Note is determined to
be invalid or unenforceable under law, it shall not affect the validity or
enforcement of the remaining obligations or portions hereof.
13. Headings
The Headings for the paragraphs of this Promissory Note are inserted
for convenience only, and shall not constitute a part hereof.
ANTENNAS AMERICA, INC.
By: /s/ Randall P. Marx, CEO
HOLDER: JASCO PRODUCTS CO., INC.
By: /s/ Scott Busby, VP and CFO
EXHIBIT 10.15
ANTENNAS AMERICA, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into,
effective as of February 15, 1999, by and between Antennas America, Inc., a Utah
corporation (the "Company"), and Jasco Products Co., Inc. (the "Optionee").
WITNESSETH:
WHEREAS, pursuant to the terms of the unsecured Promissory Note (the
"Note") dated as of February 15, 1999 whereby the Company agrees to repay the
Optionee a certain sum at a certain rate of interest within one year or at a
later date per the terms of the Note; and
WHERAS, Optionee desired to receive an option on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option. The Company hereby grants to Optionee, the right
and option (the "Option") to purchase all or any part of an aggregate of 500,000
shares of the authorized and unissued $.0005 par value common stock of the
Company (the "Option Shares") pursuant to the terms and conditions set forth in
this Agreement.
2. Option Price. At any time when shares are to be purchased pursuant
to the Option, the purchase price for each Option Share shall be a minimum of
$.01 per share and a maximum of $.03 (the "Option Price"). If within 1 year from
the date of this Agreement the average weighted listed price of the Company's
common stock is not at least $.06 per share, 30 days prior to the expiration of
this Stock Option Agreement, on an adjusted basis for stock splits, the Option
price will be adjusted accordingly to at least 50% of the Company's common stock
price at that time with a minimum Option Price of $.01 per share.
3. Exercise Period. The period for the exercise of the options shall
commence on the date of this Agreement and shall terminate one year from the
date of this Agreement.
4. Exercise Of Option.
(a) The Option may be exercised in whole or in part by delivering to
the Treasurer of the Company (i) a Notice And Agreement Of Exercise Of Option,
substantially in the form attached hereto as Exhibit A, specifying the number of
Option Shares with respect to which the Option is exercised, and (ii) full
payment of the Option Price for such shares. The Options may not be exercised in
part unless the purchase price for the Option Shares purchased is at least
$1,000 or unless the entire remaining portion of the Options are being
exercised.
(b) Promptly upon receipt of the Notice Of Agreement And Exercise Of
Option and the full payment of the Option Price, the Company shall deliver to
the Optionee a properly executed certificate or certificates representing the
Option Shares being purchased.
<PAGE>
5. Withholding Taxes. The Company may take such steps as it deems
necessary or appropriate of the withholding of any taxes which the Company may
be required by any law or regulation or any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with the
Options.
6. Securities Laws Requirements. No Option Shares shall be issued
unless and until, in the opinion of the Company, any applicable registration
requirements of the Securities Act of 1933 as amended (the "1933 Act"), any
applicable listing requirements of any securities exchange on which stock of the
same class has been listed, and any other requirements of law or any regulatory
bodies having jurisdiction over such issuance and delivery, or applicable
exemptions are available and have been fully complied with pursuant to the terms
of the Notice and Agreement Of Exercise Of Option that shall be delivered to the
Company upon each exercise of the Option, the Optionee shall acknowledge,
represent, warrant and agree as follows:
(a) Optionee is acquiring the Option Shares for investment
purposes only and the Option Shares that Optionee is acquiring will be held by
Optionee without sale, transfer or other disposition, other than required by the
1933 Act, and/or unless the transfer of those securities is subsequently
registered under the federal securities laws or unless exemptions from
registration are available;
(b) Optionee's overall commitment to investments that are not
readily marketable is not disproportionate to Optionee's net worth and
Optionee's investment in the Option Shares will not cause such overall
commitments to become excessive;
(c) Optionee's financial condition is such that Optionee is
under no present or contemplated future need to dispose of any portion of the
Option Shares to satisfy any existing or contemplated undertaking, need or
indebtedness;
(d) Optionee has sufficient knowledge and experience in
business and financial matters to evaluate, and Optionee has evaluated, the
merits and risks of any investment in the Option Shares;
(e) The address set forth in this Agreement is Optionee's true
and correct residence, and Optionee has no present intention of becoming a
resident of any other state or jurisdiction;
(f) Optionee confirms receiving and reviewing the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1997 and that the
Company's 1998 Quarterly 10-QSB Reports have been made available or delivered to
Optionee;
(g) Optionee has had the opportunity to ask questions of, and
has received the answers from, the Company concerning the terms of the
investment in the Option Shares;
(h) Optionee understands that no federal or state agency has
made any finding or determination as to the fairness of this investment or any
recommendation of the sale of the Option Shares;
<PAGE>
(i) Optionee acknowledges and is aware of the following:
(a) The Option Shares constitute a speculative investment and
involve a high degree of risk of loss by Optionee of Optionee's total investment
in the Option Shares.
(b) There are substantial restrictions on the transferability
of the Option Shares. The Option Shares cannot be transferred, pledged,
hypothecated, sold or otherwise disposed of unless they are registered under the
1933 Act or an exemption from such registration is available and established to
the satisfaction of the Company; investors in the Company have no rights to
require that the Option Shares be registered; there is no right of presentment
of the Option Shares and there is no obligation by the Company to repurchase any
of the Option Shares; and, accordingly, Optionee may have to hold the Option
Shares indefinitely and it may not be possible for Optionee to liquidate
Optionee's investment in the Company.
(c) Each certificate issued representing the Option Shares
shall be imprinted with a legend that sets forth a description of the
restrictions on transferability of those securities, which legend will read
substantially as follows:
"The securities represented by this Certificate have not been
registered or qualified under federal or state securities laws. These securities
may not be offered for sale, sold, pledged, or otherwise disposed of unless so
registered or qualified or unless an exemption from such registration is
available and established to the satisfaction of the Company."
In the event that the Company elects to register any stock or Options
during the term of this Option Agreement, Optionee will be entitled to
"piggyback" rights and the Options may be included in the registration
statement.
The restrictions described in this Section 6 or thereof may be placed
on the certificates representing the Option Shares purchased pursuant to the
Option, and the Company may refuse to issue certificates or to transfer the
shares on its books unless it is satisfied that no violation of such
restrictions will occur.
The foregoing restrictions or notice thereof shall be placed in the
certificates representing the Option Shares purchased pursuant to the Option and
the Company may refuse to issue the certificates or to transfer the shares on
its books unless it is satisfied that no violation of such restrictions will
occur.
7. Transferability Of Option. The Option shall not be transferable
except as provided in Section 6(i)(b) and (c) and any attempt to do so shall
void the Option.
8. Adjustment By Stock Split, Stock Dividend, Etc. If at any time the
Company increases or decreases the number of its outstanding shares of Common
Stock, or changes in any way the rights and privileges of such shares, by means
of the payment of a stock dividend or the making of any other distribution on
such shares payable in its Common Stock, or through a stock split or subdivision
of shares, or a consolidation or combination of shares, or through a
reclassification or recapitalization involving its Common Stock, the numbers,
rights and privileges of the shares of Common Stock included in the Option shall
be increased, decreased or changed in like manner as if such shares had been
issued and outstanding, fully paid and nonassessable at the time of such
occurrence.
<PAGE>
9. Common Stock To Be Received Upon Exercise. Optionee understands that
the Company is under no obligation to register the Option Shares under the
Securities Act of 1933, as amended (the "Act"), and that in the absence of any
such registration, the Option Shares cannot be sold unless they are sold
pursuant to an exemption from registration under the Act. The Company is under
no obligation to comply, or to assist the Optionee in complying, with any
exemption from such registration requirement, including supplying the Optionee
with any information necessary to permit routine sales of the Option Shares
under Rule 144 of the Securities And Exchange Commission. Optionee also
understands that with respect to Rule 144, routine sales of securities made in
reliance upon such Rule can be made only in limited amounts in accordance with
the terms and conditions of the Rule, and that in cases in which the Rule is
inapplicable, compliance with either Regulation A or another exemption under the
Act will be required. Thus, the Option Shares may have to be held indefinitely
in the absence of registration under the Act or an exemption from registration.
Furthermore, the Optionee fully understands that the Option Shares have
not been registered under the Act and that they will be issued in reliance upon
an exemption which is available only if Optionee acquires such shares for
investment and not with a view to distribution. Optionee is familiar with the
phrase "acquired for investment and not with a view to distribution" as it
relates to the Act and the special meaning given to such term in various
releases of the Securities And Exchange Commission.
10. Privilege Of Ownership. Optionee shall not have any of the rights
of a stockholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such shares shall be delivered to him
upon exercise of the Option.
11. Notices. All notices, requests, demands, directions and other
communications ("Notices") provided for in this Agreement shall be in writing
and shall be mailed or delivered personally or sent by telecopier or facsimile
to the applicable party at the address of such party set forth below in this
Section 11. When mailed, each such Notice shall be sent by first class,
certified mail, return receipt requested, enclosed in a postage prepaid wrapper,
and shall be effective on the third business day after it has been deposited in
the mail. When delivered personally, each such Notice shall be effective when
delivered to the address for the respective party set forth in this Section 11.
When sent by telecopier or facsimile, each such Notice shall be effective on the
first business day on which or after which it is sent. Each such Notice shall be
addressed to the party to be notified as shown below:
Company: Antennas America, Inc.
4860 Robb Street, Suite 101
Wheat Ridge, Colorado 80033
Attention: Treasurer
Facsimile No. (303) 424-5085
Optionee: Jasco Products Co., Inc.
311 N.W. 122nd Street
Oklahoma City, OK 73114
Attention: Chief Financial Officer
Facsimile No. (405) 752-1537
Either party may change his or its respective address for purposes of
this Section 11 by giving the other party Notice of the new address in the
manner set forth above.
12. General Provisions. This instrument (a) contains the entire
agreement between the Parties, (b) may not be amended nor may any rights
hereunder be waived except by an instrument in writing signed by the party
sought to be charged with such amendment or waiver, (c) shall be construed in
accordance with, and governed by, the laws of Colorado, and (d) shall be binding
upon and shall inure to the benefit of the parties and their respective personal
representatives and assigns, except as above set forth below.
<PAGE>
All pronouns contained herein and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural as the
identity of the parties hereto may require.
IN WITNESS WHEREOF, the parties have executed this Agreement the dates
set forth below.
ANTENNAS AMERICA, INC.
By:
Date: February 15, 1999 /s/ Randall P. Marx
------------------------------------
Randall P. Marx
Chief Executive Officer
OPTIONEE
By:
Date: February 15, 1999 /s/ Scott Busby
------------------------------------
Scott Busby, Vice Pres. And CFO for
Jasco Products Co., Inc.
<PAGE>
EXHIBIT A
(To Antennas America, Inc. Stock Option Agreement)
ANTENNAS AMERICA, INC.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
Jasco Products Co., Inc. (the "Optionee") hereby exercises Optionee's
Antennas America, Inc. Stock Option dated effective as of this date ___________,
______ to ________ shares of the $.0005 par value Common Stock (the "Option
Shares") of Antennas America, Inc. (the "Company").
Enclosed is the payment per Paragraph 2 of the Agreement.
Optionee understands that no Option Shares will be issued unless and
until, in the opinion of the Company, any applicable registration requirements
of the Securities Act of 1933, as amended, any applicable listing requirements
of any securities exchange on which stock of the same class is then listed, and
any other requirements of law or any regulatory bodies having jurisdiction over
such issuance and delivery, shall have been fully complied with or exemptions
therefrom have been fully complied with. Optionee hereby acknowledges,
represents, warrants and agrees, to and with the Company as follows:
a. The Option Shares Optionee is purchasing are being acquired
for its own account for investment purposes only and with no
view to their distribution of any kind, and no other person
will own any interest therein.
b. Optionee will not sell or dispose of its Option Shares in
violation of the Securities Act Of 1933, as amended, or any
other applicable federal or state securities laws.
c. Optionee agrees that the Company may, without liability for
its good faith actions, place legend restrictions upon
Optionee's Option Shares and issue "stop transfer"
instructions requiring compliance with applicable securities
laws and the terms of the Option.
The number of Option Shares specified above are to be issued in the
name or names set forth below.
OPTIONEE:
Jasco Products Co., Inc.
By: ________________________________
Signature
------------------------------------
Printed Name and Title
EXHIBIT 23.2
CONSENT
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 12, 1999, 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
February 9, 2000
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form SB-2 of our
report dated March 6, 1998, relating to the financial statements of Antennas
America, Inc. as of December 31, 1997 and to the use of our name in the
"Experts" section of the Registration Statement.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
February 9, 2000
Denver, Colorado
