-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TVyGYp9EsqOp7WS6kHSmkmhbfICjGh62NZXFtaFNvCLoo57BP/rgr3nbHUdG4URv /IZ5n8xqzr3zNuUrmX6AIw== 0001042910-99-001073.txt : 19990817 0001042910-99-001073.hdr.sgml : 19990817 ACCESSION NUMBER: 0001042910-99-001073 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ACCESS TECHNOLOGIES INC CENTRAL INDEX KEY: 0001043186 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 593410234 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24575 FILM NUMBER: 99693446 BUSINESS ADDRESS: STREET 1: 238 N WESTMONTE DR #210 CITY: ALTAMONTE SPRINGS STATE: FL ZIP: 32714 BUSINESS PHONE: 4078657696 10QSB 1 QUARTERLY REPORT Form 10-QSB for AMERICAN ACCESS TECHNOLOGIES, INC. filed on August 16, 1999 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB [XX] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1999 OR [ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the transition period from ______________ to ________________ * * * * * * * * * * * * * * * * * * * * * * Commission File No. 000-24575 AMERICAN ACCESS TECHNOLOGIES INC. A Florida corporation (Exact name of registrant as specified in charter, and state incorporated) * * * * * * * * * * * * * * * * * * * * * * Employer Identification No. 59-3410234 Lake Mary Florida, 37 Skyline Drive Suite 1101 (Address of principal executive offices of registrant) (407) 333-1446 (Registrant's telephone number, including area code) * * * * * * * * * * * * * * * * * * * * * * Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X]. NO [ ]. The number of shares of AMERICAN ACCESS TECHNOLOGIES INC. Common Stock (Par Value $0.001) outstanding at June 30, 1999 was 4,021,397 1 AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
Audited Financial ASSETS 30-Jun-99 Statements ------ UNAUDITED Dec. 31, 1998 --------- ------------- Current Assets: Cash and cash equivalents $ 587,392 $ 637,776 Investments 3,450,738 2,825,177 Accounts receivable, net of allowance 1,254,887 806,960 Note receivable, related party 500,000 500,000 Inventories 339,243 297,440 Prepaid expenses and other current assets 124,922 60,466 Cost in excess of contract sales 229,679 - ---------------------------- Total current assets 6,486,861 5,127,819 Property, Plant and Equipment, net of accumulated depreciation 1,296,175 1,313,630 Building Under Construction 543,035 Patent Costs 34,448 34,962 Total assets $ 8,360,519 $ 6,476,411 ============================ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities: Line of credit $ 286,904 $ 296,002 Accounts payable and accrued expenses: Compensation due to officers/directors/stockholders 0 111,235 Other 348,654 355,390 ---------------------------- Total current liabilities 635,558 762,627 ---------------------------- Deferred Income Taxes 69,000 69,000 Stockholders' Equity: Series A 10% Senior Convertible Preferred stock, $.001 par value; authorized 1,000,000 shares; issued and outstanding 12,239 and 50,000 respectively shares at liquidation value 1,223,900 5,000,000 Common stock, $.001 par value; authorized 10,000,000 shares; issued and outstanding 4,021,397 and 3,265,470 respectively shares 4,021 3,265 Additional paid-in capital 7,462,821 1,512,625 Unrealized losses on securities held for investment (37,061) Deficit (997,720) (871,106) ---------------------------- Total stockholders' equity 7,655,961 5,644,784 ---------------------------- Total liabilities and stockholders' equity $ 8,360,519 $ 6,476,411 ============================ See accompanying notes to financial statements
2 AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited
Six Months Six Months Three Months Three Months Ended Ended Ended Ended 30-Jun-99 30-Jun-98 30-Jun-99 30-Jun-98 ------------------------------------------------------------------ Net Sales Formed metal 2,210,820 1,943,184 $ 1,256,511 1,250,270 Zone cabling termination cabinet 714,747 317,051 378,894 187,252 ------------------------------------------------------------------ Total Net Sales 2,925,567 2,260,235 1,635,405 1,437,522 ------------------------------------------------------------------ Costs and Expenses: Cost of sales 1,239,478 1,089,552 737,701 699,474 Selling, general and administrative 1,534,940 1,262,282 858,365 723,731 ------------------------------------------------------------------ Total Cost and Expenses 2,774,418 2,351,834 1,596,066 1,423,205 ------------------------------------------------------------------ Net Operating Income (Loss) 151,149 (91,599) 39,339 14,317 ------------------------------------------------------------------ Other Income (Expense): Interest income 152,457 6,268 72,214 1,464 Interest expense (13,374) (68,435) (7,764) (38,331) Other income 36,835 228,605 19,436 22,034 ------------------------------------------------------------------ Total Other Income (Expense) 175,918 166,438 83,886 (14,833) ------------------------------------------------------------------ Net Income Before Taxes 327,067 74,839 123,225 (516) Income Taxes (Credit) (15,170) (15,170) ------------------------------------------------------------------ Net Income 342,237 74,839 138,395 (516) ================================================================== Net Income Per Common Share (0.05) 0.02 $ 0.02 0.0 ==================================================================
See accompanying notes to financial statements 3 AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
Six Six Months Months Ended Ended June 30, 1999 June 30, 1998 -------------------------------- Cash Flows from Operating Activities: Net Income $ 342,237 $ 74,839 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 150,244 154,225 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable (447,927) (384,260) Inventories (41,803) 100,079 Prepaid expenses and other assets (64,456) 175,091 Costs in excess of contract sales (229,679) Increase (decrease) in: Compensation due to officers/directors/stockholders (111,235) 418,609 Accounts payable and accrued expenses (6,736) (357,787) ------------------------------ Net cash provided by operating activities (409,355) 180,796 ------------------------------ Cash Flows from Investing Activities: Proceeds from investment changes (625,560) - Patent costs - (23,243) Acquisition of property and equipment (net of sales and retirements) (132,275) 8,899 Costs for building under construction (543,035) - ------------------------------ Net cash provided by investing activities (1,300,870) (14,344) ------------------------------ Cash Flows from Financing Activities: Proceeds from issuance of common Stock 1,668,939 160,001 Proceeds from line of credit (9,098) - Payments on loans and capital lease obligations - ------------------------------ Net cash used in financing activities 1,659,841 160,001 ------------------------------ Net Increase (Decrease) in Cash and Cash Equivalents (50,384) 326,453 Cash and Cash Equivalents, Beginning 637,776 638,134 ------------------------------ Cash and Cash Equivalents, Ending $ 587,392 $ 964,587 ============================== Supplemental Disclosure of Cash Flow Information: Cash paid for interest $ 13,374 $ 68,435 ==============================
See accompanying notes to financial statements 4 AMERICAN ACCESS TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 Unaudited 1. Basis of Presentation The accompanying unaudited consolidated condensed financial statements at June 30, 1999 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of financial position as of June 30, 1999 and results of operations for the three and six months ended June 30, 1999 and 1998. All adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year. The statements should be read in conjunction with the consolidated financial statements and footnotes thereto for the year ended December 31, 1998 included in the company's Registrations Statement Form SB-2 filing and 10-KSB. 2. Nature of Business and Summary of Significant Accounting Policies. BUSINESS American Access Technologies, Inc. develops specialized products for the telecommunications industry. The company manufactures and distributes several models of Zone Cabling Termination Cabinets to the telecommunications industry. The product helps manage and route wiring and cabling used in voice, computer and data transmission systems throughout the world. Omega Metals, Inc., a wholly-owned subsidiary of American Access, shears and molds metal and manufactures metal-formed products for customers principally in Florida and Georgia. Omega manufactures the company's product. COMMON STOCK The Registration Statement on April 6 became effective for the Series A 10% Senior Convertible Preferred Stock, of which there were 50,000 shares outstanding at a gross of $5,000,000. Through August 11, 1999, 78.3% of the preferred stock, $3,915,000 has been converted resulting in 288,456 common stock shares being issued. A total of 286,511 shares were sold on the open market. American Access Technologies began trading on the Nasdaq Stock Market, Inc., as a Small Cap listing, on April 13, 1999. The Registration Statement on April 7 became effective for the offering of 720,000 shares of common stock upon the exercise of 720,000 $8 warrants. During the quarter ending June 30, 1999, 483,250 warrants were exercised; 106,500 in May and 376,750 in June, leaving a balance of 86,750 unexercised warrants. NET LOSS PER COMMON SHARE In 1997, the Company adopted Statements of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share" which requires the presentation of both basic and diluted earnings (loss) per share. Basic net loss per common share has been computed based upon the weighted average number of shares of common stock outstanding during the periods. The computation of earnings per share is reflected in the following schedule: 5
Computation of Net Loss Per Common Six Months Ended Three Months Ended Year Ended Share June 30, 1999 June 30, 1999 Dec. 31, 1998 Net Income (Loss ) $ 342,237 $ 138,395 $ (492,814) Cumulative Preferred Stock Dividend (61,195) (61,195) (104,167) Beneficial Conversion Preferred Stock Dividend (468,750) (781,250) ------------ ----------- ------------ $ (187,708) $ 77,200 $(1,378,231) ------------ ------------ ------------ Weighted Average Common Shares Outstanding 3,450,539 3,633,575 2,992,500 Common Shares Issued to Acquire Omega Metals, Inc. 226,470 ------------ Total Weighted Average Number Common Shares and 3,450,539 3,633,575 3,218,970 ------------ ------------ ------------ Equivalent Net Loss per Common $ (.05) $ .02 $ (.43) ------------ ------------ ------------ Share
3. Commitments and Contingencies LEASE COMMITMENTS The Company entered into a sublease for 10,472 square feet of office space on May 28, 1999 with World Color Press, Inc., at 37 Skyline Drive, SunTech Commerce Park, Lake Mary, Florida. The sublease runs through May 30, 2003 and calls for an initial monthly payment of $9,599.33 from May 28, 1999 through May 31, 2000 with a 4% per annum increase. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SIX MONTHS ENDED JUNE 30, 1999 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1998 REVENUES Revenues for the six months ended June 30, 1999 increased by $665,332 or 29.4% to $2,925,567 as compared to $2,260,235 for the six months ended June 30, 1998. The parent company, American Access Technologies, Inc., was still in the development stage for the second quarter ended June 30, 1998, and revenues were only $317,051 . In 1999 for the six months ended June 30, revenues increased by $397,696 to $714,747. The company's subsidiary, Omega Metals Inc., also had an increase in revenues of $267,636. COSTS AND EXPENSES Direct costs represent the cost incurred by the Company to have its products manufactured and assembled. These costs represented 42.4% of revenues for the six months ended June 30, 1999, and 48.2% of revenues for the six months ended June 30, 1998. The decrease is attributed to a change in the customer mix. Revenues generated during the six month period ended June 30, 1999 required less direct labor and material costs per sales dollar than for the previous year's six months ended June 30, 1998. Selling, General and Administrative expenses increased by $272,658 to $1,534,940 for the six months ended June 30, 1999 compared to $1,262,282 for the six months ended June 30, 1998. This increase was the result of costs associated with the continued growth of the company including marketing and promotional costs, management costs, and professional fees associated with the required SEC filings. Startup costs related to the company's Building Industry Consulting Service International (BICSI) licensed training agreements school have also been expensed as incurred. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities utilized cash of $409,355 during the six months ended June 30, 1999 as compared to providing $180,796 during the six months ended June 30, 1998. The Company's operating and capital requirements in connection with its operations have been and will continue to be significant. Based on its current plans, the Company anticipates that revenues earned from product sales will be the primary source of funds for operating activities. The Company believes that these revenues in addition to existing cash and cash equivalents remaining from proceeds of it private offering, and cash received from the exercise of warrants will be sufficient to meet its capital and liquidity needs for the next 12 months. The Company also believes that resources required to fulfill purchase orders will be available through bank borrowings or factoring, if required. The company's primary customers are established corporations with credit ratings that will support such credit arrangements. Management's plans include the following: 1. The Company has arranged for marketing in association with manufacturers and distributors of telecommunications equipment, which will enable the Company to obtain orders for its products with a minimal expenditure of the Company's resources. The Company has launched a manufacturer's rep program to assist in the distribution of its products. 2. The Company has arranged for uninterrupted manufacture of its products by purchasing the manufacturer in October, 1998, in order to minimize the financial requirements necessary for production. 3. The company believes that it can acquire working capital through sale of additional securities (including exercise of outstanding warrants), or borrowings, including bank borrowing, in view of the nature of its customer base. Nevertheless, the Company continues to be subject to a number of risk factors, including the uncertainty of market acceptance for its product line, the need for additional funds, competition, and technological obsolescence. 4. American Access has obtained a general license from BICSI to teach the BICSI cabling installation program and to suitcase the other BICSI Institute courses. These programs as well as company-developed courses will be taught at the Company's Lake Mary location and will serve to increase awareness throughout the industry of the Company's products. 7 PART II. OTHER INFORMATION ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS COMMON STOCK The Registration Statement on April 6 became effective for the Series A 10% Senior Convertible Preferred Stock, of which there were 50,000 shares outstanding at a gross of $5,000,000. Through August 11, 1999, 78.3% of the preferred stock, $3,915,000 has been converted resulting in 288,456 common stock shares being issued. A total of 286,511 shares were sold on the open market. American Access Technologies began trading on the Nasdaq Stock Market, Inc., as a Small Cap listing, on April 13, 1999. The Registration Statement on April 7 became effective for the offering of 720,000 shares of common stock upon the exercise of 720,000 $8 warrants. During the quarter ending June 30, 1999, 483,250 warrants were exercised; 106,500 in May and 376,750 in June, leaving a balance of 86,750 unexercised warrants. ITEM 5: OTHER INFORMATION American Access held a Special Called meeting Saturday, April 10, 1999 at which time three new members were appointed to the Board of Directors, Charles L. Frampton, Elliot G. Steinberg and David S. Snyder, expanding the board from five to seven members. Former Director and President Victor E. Murray retired from American Access at age 74, effective April 15. John E. Presley replaced Victor E. Murray as president, and continues his tenure as director. Charles L Frampton replaced retiring CFO and Secretary/Treasurer Bobby E. Story, 57, effective May 12. Along with Presley, directors whose terms of office continued were: John W. Cooney, Victor D. Phillips and Richard A. Murray. Stock purchase warrants were authorized by the Board of Directors at the April 10 meeting in the following amounts: 20,000 $25 warrants were awarded to each of the company's 1999 outside directors; a total of 750,000 $22 warrants were authorized for management personnel, to be issued at the discretion of the President; and 100,000 $23 warrants to the originals holders of Series A 10% Convertible Preferred Stock. The 100,000 $25 warrants currently outstanding and held by Merrill Webber & Co. were reissued at $23 for services provided with respect to securing approval from Preferred shareholders regarding their warrant issuance. On May 19, Lucent Technologies confirmed in writing an ongoing working relationship with the company. On July 28, Vice President and Director Richard A. Murray resigned from his position as an officer and from the board. He will serve as a consultant to the company for 90 days. The Director position is currently vacant. On August 3, 1999, American Access Technologies, Inc. and Herman Miller, Inc. entered into a contract for an alliance to jointly promote the use of American Access Technologies, Inc products in Herman Miller Ethospace and Systems Bridge products. 8 ITEM 6: EXHIBITS AND REPORTS (b) EXHIBITS The following exhibits are being filed as part of this report: Exhibit No. Description ----------- ----------- 10.0 Material Contracts 27.0 Financial Data Schedule SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 16, 1999 AMERICAN ACCESS TECHNOLOGIES, INC. (Registrant) By: /s/ Charles L. Frampton ---------------------------- Charles L. Frampton Secretary/Treasurer Chief Financial Officer By: /s/ John E. Presley ---------------------------- John E. Presley President 9 EX-10.0 2 CO-MARKETING ALLIANCE AGREEMENT (REVISED 8/2/99) EXHIBIT 10 American Access Technologies Co-Marketing Alliance Agreement (revised 8/2/99) This Co-Marketing Alliance Agreement ("Agreement") is entered into this ____ day of _________ 1999, by and between Herman Miller, Inc. ("HMI"), 855 East Main Ave., P.O. Box 302, Zeeland, Michigan 49464-0302, a Michigan corporation with its principal headquarters located in Zeeland, Michigan, and American Access Technologies (AATK), 37 Skyline Drive, Suite 1101, Lake Mary, Florida 32746, a Florida corporation with its principal headquarters located in Lake Mary, Florida. Statement of Facts HMI manufactures and markets a comprehensive line of office furniture and seating. AATK manufactures and markets a line of telecommunication connectivity products supporting zone distribution of data. In order to provide a greater range of zone distribution telecommunication connectivity solutions to customers of HMI and its subsidiaries, as well as to increase market opportunities for AATK, HMI and AATK agree that it would be mutually beneficial to jointly promote sale of AATK products. AATK and HMI will jointly promote the use of AATK products in Ethospace and Systems Bridge products using AATK's Ethocom and Comdeck products. AATK will sell directly to clients utilizing their products in conjunction with HMI's Ethospace and Systems Bridge products. AATK is responsible to sell, specify, plan, install, invoice, and provide service for their products through its manufacturer representative and value added resellers (Network). HMI will not take title to AATK's products unless otherwise agreed to by HMI and AATK. At its discretion, HMI may employ a technical selling consultant to assist with integration, training, and promotion of AATK products. AATK will provide Ethocom and Comdeck technical training for HMI and its distribution channel, as its cost, to support the sale of its products. HMI authorizes AATK's purchase of Systems Bridge frames for resale to the Competitive Local Exchange Carrier (CLEC) market. AATK will factory-fit the Systems Bridge frames with mounting racks and telecommunications devices as specified by the CLEC, and then sell, install, and service the completed unit to the CLEC at prices agreed to by AATK and the CLEC. 1 Agreement In consideration of the facts set forth above and the mutual promises and undertakings set forth below, the parties agree as follows: 1. License 1.1 AATK assigns its rights in the Ethocom mark to HMI. During the term of this agreement, HMI grants AATK a license to use the mark "Ethocom" in connection with the sale and promotion of HMI's Ethospace and Systems Bridge products manufactured and sold within the United States, Canada, Europe and Latin America. 1.2 AATK may, for the duration of this Agreement, to use the name of Ethocom, as earlier assigned to HMI in this Agreement, for identification and promotion of those zone distribution products. Any exceptions to this must be with prior written approval by HMI. 1.3 HMI remains the sole and exclusive owner of all trademarks, names, designs, or other items licensed under the mark of Ethospace and Systems Bridge. 2. Distribution 2.1 AATK will maintain the network required to support the sale, specification, installation, and service for its Ethocom and Comdeck products in the United States, Canada, Europe, and Latin America (Network). HMI reserves the right to periodically review and approve the organizations selected as the Network. 2.2 AATK will ensure the Network will meet quality and service standards established by AATK, the Telecommunications Industry Association (TIA), Electronic Industry Association (EIA), the National Electrical Code (NEC), and other appropriate US and International standards and code authorities. Any proposed changes or additions to the Network will be communicated to HMI at least 30 days prior to the change. 2.3 AATK, and its Network, will sell Ethocom and Comdeck products directly to Customers, except as otherwise stated in below and in Section 4.2. Ethocom and Comdeck sales to the US Government will be governed by the General Services Administration ("GSA") multiple award schedule contracts held by HMI. The sale of Ethocom and Comdeck products to federal government civilian agencies, the Department of Defense, and select State and Local Government direct accounts will be handled by HMI on an exclusive basis. 2.4 HMI agrees to sell Systems Bridge Products to AATK for resale to the Competitive Local Exchange Carrier (CLEC) market. The Product list and discount for purchases of these products is listed in Exhibit 1. AATK agrees to coordinate with HMI and its distribution channel to provide any required finish tiles and / or furniture components. AATK agrees not to promote or sell Products purchased under this discount to customers who are not CLEC's. 2.5 AATK agrees not to sell or make available the Ethocom and/or Comdeck products, or equivalents, to its Network, competitive dealers, agents, or contractors for installation in competitive frame and tile or systems furniture products unless prior written permission has been given by HMI's Vice President of Marketing. 2 3. Manufacturing 3.1 AATK will manufacture Ethocom and/or Comdeck, or equivalent, products according to printed standards with documented production processes. 3.2 Ethocom and Comdeck products and product enhancements will meet all applicable BIFMA, TIA, EIA, NEC, and international, national and local construction codes and standards. AATK will be exclusively responsible for ensuring the products meet applicable codes and customer safety and performance expectations. 3.3 HMI will inform AATK of product and engineering changes to Ethospace and Systems Bridge products 90 days in advance of production. 3.4 AATK agrees to deliver the Ethocom and/or Comdeck products in a sufficient quantity, dictated by customer-demand, to the installation location in a coordinated manner with the furniture products, in less than a four-week (4) lead time, including staging time at the HMI dealer or Customer location. 4. Pricing 4.1 AATK retains the right to establish the prices for Ethocom and Comdeck products sold directly to clients by AATK, except for Customer pursuant to 4.2. 4.2 The price for those Ethocom and Comdeck products, sold directly to HMI for resale to the US Government and select State and Local Government Agencies, or a subsidiary for resale to third parties, by AATK or the AATK Network during the term of this Agreement will be equal to_______% off AATK's then current list price. (See Exhibit 2 for AATK's current list prices) HMI intends to sell Ethocom and Comdeck products directly to the US Government and select State and Local Government accounts, utilizing the GSA multiple award schedule contract discount schedule for Ethospace and Systems Bridge. AATK will ensure its compliance to all applicable GSA contract terms/conditions (i.e. price reduction clause). The HMI Government Sales Team will provide the necessary contract and technical support to ensure AATK is in full compliance with the applicable GSA terms/conditions. AATK agrees to provide HMI, in a timely manner, with periodic sales and /or pricing reports as needed to ensure compliance to the GSA contract terms and conditions. 4.3 All Ethocom and Comdeck products shipped by AATK will be sold under terms and conditions as established by AATK, with exception of those terms and conditions defined under 4.2. 5. Promotion 5.1 Promotional literature and programs developed by AATK and its Network referencing Ethospace(TM), Systems Bridge(TM), or Herman Miller(R) shall be submitted to HMI Marketing and are subject to approval prior to publication and release. 5.2 HMI will provide promotional, specification, and pricing literature, including electronic media, to support the integration of the AATK products into Ethospace and Systems Bridge as agreed by both parties. 5.3 AATK will publish and make available to HMI, at no charge, reasonable quantities of appropriate AATK promotional, specification, and pricing literature, including electronic media, as agreed to by both parties. HMI will make the referenced literature available to salespeople and Herman Miller dealers through the normal Sales Source program and standard distribution policies. Reasonable additional costs for the distribution of such materials will be paid for by HMI. 3 5.4 At its discretion, HMI will provide the opportunity for presentation of Ethocom and Comdeck product training by AATK at HMI training sessions. 5.5 AATK is allowed to purchase reasonable quantities of HMI products, as mutually agreed by both parties, for use in showroom displays and trade shows promoting the integration of HMI and AATK products. Such products will be available to AATK at HMI's prevailing dealer display discount and must be ordered by AATK through HMI Marketing. Such products are to be used for display only and are not to be resold to any third parties. 5.6 HMI is allowed to purchase reasonable quantities of AATK products, as mutually agreed by both parties, for use in showroom/facility displays and trade shows. Such products will be available to HMI at AATK's prevailing display discount and must be ordered by HMI through AATK. Such products are to be used for display only and are not to be resold to any third parties. 6. Commission to HMI Salesperson 6.1 It is the intent of AATK and HMI that HMI compensation issues will be administered by the HMI sales organization. AATK shall not pay any additional commissions to HMI salespersons for Ethocom and Comdeck product sales. A portion of the Alliance Fee as described in 8.1 pays this commission. 6.2 Within thirty (30) days after the close of each month, AATK will provide HMI and its subsidiaries appropriate documentation to calculate the sales commissions due their respective salespeople. 6.3 Sales commission fees will not be paid by AATK to HMI for Ethocom and Comdeck product sales as described in 4.2. It is the intent of AATK and HMI to include the cost of sales commissions to HMI salespeople in the inter-company transfer price established in 4.2. Commissions for sales of Ethocom and Comdeck product to the US Government and select State and Local Government accounts will be administered by the HMI sales organization. 7. Product Line Expansion 7.1 Neither HMI nor any HMI subsidiary will, during the term of this Agreement, attempt to market other slip-fit telecommunication frames as part of the Ethospace system or Systems Bridge products unless otherwise agreed to in writing by AATK. 7.2 AATK, during the term of this Agreement, will not market office furniture or office seating unless otherwise agreed to in writing by HMI. 7.3 AATK agrees to limit AATK's marketing efforts to Ethospace and Systems Bridge slip-fit telecommunications frame products and associated sale, planning, specification, and installation services. This marketing effort covers new product sales, as well as specification of product for installation into the existing installed base (Retrofit). 8. Alliance Fee 8.1 AATK agrees to pay to HMI an alliance fee as payment for access to the distribution channel, product design, support, marketing assistance, and sales compensation, for all qualifying sales. The alliance fee on qualifying sales (at net sell price, excluding Systems Bridge sales directly to AATK for the CLEC market, and sales to US Government and select State and Local Government contracts as described in 6.3) will be: 4 o 5% of net sell price by AATK Qualifying sales include all sales of Ethocom and Comdeck products except for direct sales to HMI and its subsidiaries as described in 4.2 and 5.7 above. 8.2 AATK agrees to pay the alliance fee to HMI, within thirty (30) days of the close of each month for all products sold, shipped, and invoiced by the close of the month referenced. AATK shall maintain records sufficient to verify net sales, percentages, and fees paid. AATK further agrees that HMI, at its own expense and with reasonable notice, has the right to audit all transactions to verify the alliance fee payments. AATK agrees to pay any shortfall in alliance fee payments uncovered by an audit within thirty (30) days and audit costs if a shortfall were uncovered. 9. Contract Term 9.1 HMI and AATK agree to continue this Marketing Alliance Agreement for a period beginning June 1, 1999, and continuing through June 1, 2001, unless terminated under the provisions set forth in Section 10. 9.2 HMI and AATK agree that this Agreement does not create a fiduciary relationship between them and that AATK shall be an independent contractor. Nothing in this Agreement is intended to constitute either party as agent, legal representative, subsidiary, joint venture, or employee of the other for any purpose whatsoever. 9.3 Each party agrees that nothing in this Agreement authorizes the other party to make any contract, agreement, warranty, or representation on behalf of the other party or to incur any debt or other obligation in the name of the other party. Neither party shall in any event assume liability for, or be deemed liable hereunder as a result of, any such action, or by reason of any act or omission of the other party and its conduct of its business or any claim or judgment arising therefrom against the other party. Each party shall indemnify and hold harmless the other party against any and all claims from third parties arising directly or indirectly from, as a result of, or in connection with the other party's business operation or actions under this Agreement, or any orders or contracts entered into or related hereunder, as well as to the cost, including attorney's fees, of defending against them. 9.4 AATK shall indemnify HMI and hold it harmless against all claims, suits, or actions alleging that the manufacture, use, or sale of such goods infringes any patent, trademark, copyright, or other proprietary right with respect to Products supplied under this Agreement which were designed or specified by AATK, as well as the costs, including attorney's fees, of defending against them. 9.5 During the term of this Agreement, each party shall maintain in effect insurance in coverage and amounts appropriate for its business including worker's compensation, casualty, personal injury, and property damage. Each part shall also maintain product liability insurance in an amount not less than one million dollars ($1,000,000) and shall furnish proof of all insurance coverage to the other party upon request. 5 10. Termination 10.1 This Agreement will automatically renew annually upon expiration of the original term, unless either party notifies the other of their desire to terminate 90 days prior to expiration. 10.2 This Agreement may be canceled given ninety (90) days written notice in the event of a breach which is not cured within thirty (30) days of the written notice given to the party in default specifying the breach. 10.3 This Agreement may be terminated immediately if either HMI or AATK a) becomes insolvent or b) files a petition for voluntary bankruptcy or c) shall be adjudicated bankrupt or d) is subject to receivership or e) materially breaches a provision of the Agreement or f) if the agreement is terminated pursuant to 11. 10.4 HMI or AATK shall give the other written notice of termination upon the occurrence of any such event described in 10.1 and / or10.2 above, delivered by registered or certified mail, postage prepaid, return receipt requested, specifying the reason for the termination. Termination shall be effective upon notice except if given pursuant to paragraph 10.3, in which event the defaulting party shall have 30 days within which to cure the default. If the default is not cured within the 30-day period, this Agreement shall terminate forthwith, without further notice. 10.4 Upon termination for any reason, AATK and its Network will immediately cease use of the Ethospace, Systems Bridge, Herman Miller, and Ethocom marks, and will destroy all advertising literature. 10.5 In the event of a termination, unless otherwise agreed upon by the parties, any outstanding orders shall be completed by AATK and all contractual obligations of each party shall be completed as though this Agreement were in effect. HMI shall be obligated to make payments to AATK for all deliveries made or for orders canceled by HMI as though this Agreement were in full force and effect. 10.6 In the event AATK or any subsequent majority owner(s) or group of owner(s) decide to discontinue production of Ethocom, Comdeck, and/or other products added subsequent to the date of this Agreement, HMI retains the first rights to the manufacturing and intellectual property for the affected products. 11. Change of Ownership If during the period of this Agreement AATK proposed to enter into any agreement or transaction which will result in a change in control of AATK (as hereinafter defined), then in that event, AATK shall give HMI the right to enter into such transaction on the same terms, but for a consideration equal to or higher than the proposed transaction. AATK shall allow HMI adequate time to conduct due diligence, in the event of a proposed change of control. HMI shall be required to notify AATK of its acceptance of any such proposal within five (5) business days of completion of due diligence. Change of Control shall mean: (a) a person or entity or group of affiliated persons shall acquire more than fifty percent (50%) of the outstanding voting power of AATK; or (b) AATK shall sell substantially all of its assets or be merged or consolidated with another corporation or entity under such terms as to result in the shareholders or beneficial owners of such other corporation or entity have more than fifty percent (50%) of the voting power of the resulting or continuing corporation or other entity. 6 12. Product Development 12.1 AATK will provide all design and development resources necessary to support the product line. 12.2 AATK is free to create product enhancements for the Ethocom and Comdeck product lines that satisfy TIA, EIA, NEC, and other current code and standards requirements. Any product enhancements must protect historic and current HMI customers from product obsolescence and must guarantee retrofitability with the new product(s). 12.3 Costs incurred to (1) gain approvals for new product lines or additions to existing lines, (2) obtain or maintain current approvals as the result of any product changes proposed by AATK or changes in code requirements, or (3) periodic performance verification testing required to maintain existing approvals shall be paid by AATK. AATK will provide copies of results of these tests to HMI c/o Compliance Program Manager within 30 days of AATK's receipt of the report(s). Any administrative, testing and/or engineering/consulting costs to attain new or re-approvals as a result of the above conditions shall also be paid by AATK. 13. Exclusivity 13.1 During the term of this Agreement, HMI shall not purchase, distribute, or enter into a marketing alliance arrangement with any other supplier of slip-fit telecommunication frames for Ethospace and/or Systems Bridge unless AATK fails to meet then-current TIA, EIA, and/or other US or International codes, standards, and/or performance requirements. HMI retains the rights to sell, augment, develop, and/or form alliances to advance their telecommunications product offering with new technologies and products beyond the scope of this Agreement. 13.2 AATK, for the duration of this Agreement, and for one (1) year thereafter if this Agreement is terminated or canceled by AATK or if this Agreement is terminated by HMI for cause as described in 10.2 above, will not market or sell any competitive slip-fit zone distribution telecommunication frame products competitive to HMI. This includes telecommunication connectivity frame products for frame and tile-type, Systems Bridge-like, and panel systems furniture products. 13.3 If AATK, at some future date, should expand its product offerings to include other building infrastructure and sub-architectural products, it will provide to HMI a Right at First Refusal to add those products to this Marketing Agreement with similar terms. 14. Product Warranty 14.1 AATK will warrant all Ethocom and Comdeck products sold by them for twenty years (20) as specified in AATK terms and conditions of warranty. 14.2 HMI will warrant all Ethospace and Systems Bridge frames as specified in the terms and condition of current warranty where AATK products are installed, if done so by an authorized AATK Network provider. 15. Confidentiality Unless disclosure is required to provide goods or perform services in connection with the parties' relationship, or is required by law, 7 neither party, its agents, employees, or subcontractors may, at any time during or after this Agreement, without the other party's express written consent, publish or disclose to any person or legal entity, or use, directly or indirectly, any confidential or proprietary information of the other that is obtained during the course of the relationship, for its own benefit or the benefit of any other. 16. Year 2000 Warranty AATK shall ensure that its systems are fully "Year 2000 Compliant"; shall operate and produce data on and after January 1, 2000, accurately and without delay, interruption, or error; and shall accept, calculate, process, maintain, and output accurately and without delay, interruption or error, all times or dates, or both, whether before, on, or after 12:00am on January 1, 2000 including taking into account that such year is a leap year. 17. Survival The following sections and exhibits of this agreement shall survive any termination of this Agreement: 9.4, 14. - Product Warranty, and 15. - Confidentiality 18. Merger Modification Waiver This Agreement contains the entire agreement of the parties with respect to its object matter and supersedes all prior and written agreements. No change or modification of this Agreement shall be valid unless it is in writing and signed by both parties. The waiver by either party of any breach or failure hereunder shall not be considered as a waiver of the same breach or failure on any subsequent occasion or of the breach or failure of any other term, covenant, or condition hereunder. 19. Assignability Neither party shall have the right to assign its interest in this Agreement without the written consent of the other party. 20. Invalid Provision The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions, and the Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted. 21. Applicable Laws This Agreement shall be governed and construed in accordance with the laws of the State of Michigan. 22. Captions The captions of the several sections and subsections of this Agreement are made for convenient reference and shall not modify or amend the expressed terms of this Agreement. 8 23. Execution and Counterpart This Agreement may be executed in any number of counterparts, each of which shall be taken to be an original. 24. Benefit This Agreement shall be binding upon and inure to the benefit of the parties' respective successors and assigns. In witness of which, the parties have executed this Marketing Alliance Agreement. Herman Miller, Inc. American Access Technologies By: s/ C. Kent Gawart By s/ John E. Presley -------------------------------- ------------------ Title: Director of Product Marketing Title President Date: 8/3/99 Date: 8/03/99 9 EXHIBIT 1 Pricing to AATK for Systems Bridge Product ================================================================================ Pursuant to paragraph 2.4, Herman Miller establishes the following discounts from current list prices, as established from time to time, for AATK to purchase Products for resale to the Competitive Local Exchange Carrier (CLEC) market. Product Description Product Number Discount ------------------- -------------- -------- EXHIBIT 2 AATK Price List ================================================================================ Pursuant to paragraph 4.2, AATK establishes the following list prices for its products effective June 1, 1999: ---------------------------------------------------------------- ETHOCOM SIZE NET LIST ---------------------------------------------------------------- ---------------------------------------------------------------- 38x24 150 195 ---------------------------------------------------------------- 38x30 163 211 ---------------------------------------------------------------- 38x36 175 228 ---------------------------------------------------------------- 38x42 188 244 ---------------------------------------------------------------- 38x48 200 260 ---------------------------------------------------------------- 54x24 213 276 ---------------------------------------------------------------- 54x30 225 293 ---------------------------------------------------------------- 54x36 238 309 ---------------------------------------------------------------- 54x42 250 325 ---------------------------------------------------------------- 54x48 263 341 ---------------------------------------------------------------- 70x24 275 358 ---------------------------------------------------------------- 70x30 288 374 ---------------------------------------------------------------- 70x36 300 390 ---------------------------------------------------------------- 70x42 313 406 ---------------------------------------------------------------- 70x48 325 423 ---------------------------------------------------------------- 86x24 338 439 ---------------------------------------------------------------- 86x30 350 455 ---------------------------------------------------------------- 86x36 363 471 ---------------------------------------------------------------- 86x42 375 488 ---------------------------------------------------------------- 86x48 400 520 ---------------------------------------------------------------- COMDECK 41x48 900 1,170 ---------------------------------------------------------------- 55x48 1,080 1,400 ---------------------------------------------------------------- 69x48 1,260 1,640 ---------------------------------------------------------------- Prices are FOB AATK plant and must be stock design. Specials are available but must be designed and quoted separately. Exhibit 10.0 Lucent Technologies Bell Labs Innovations Global Commercial Mkts, Engrg. Lucent Technologies, Inc. 6701 Roswell Road, N.E. Atlanta, GA 30328 MAY 19, 1999 AMERICAN ACCESS TECHNOLOGIES, INC. TM 238 N. Westmonte Suite 210 Altamonte Springs, Fl. 32714 Attn: Richard Murray - Executive Vice President Dear Richard, This is to confirm our telephone conversation May 18, 1999 concerning our working relationship. PATHMAX will continue to comcode AAT material as developing projects dictate. Material that has been comcoded is available for order through the same sales channels as all PATHMAX Products. This means that Lucent's sales representatives, Value Added Resellers, Distributors and any others who sell SYSTIMAX products, will be able to order AAT products via PATHMAX Comcodes - Merchandise Class. PATHMAX will support zone solutions that include the use of AAT products in conjunction, and in addition, to our standard cable delivery methods. AAT's proposal to develop and produce a catalogue illustrating the AAT comcoded products that will be available as PATHMAX solutions is acceptable. You will provide us a rough draft of the catalogue for input. Printing and distribution can be determined as our strategy is more clearly defined. Thank you for all your efforts in making this happen. s/ Gerald Darnell Lucent Technologies North American Emerging Markets PATHMAX EX-27.0 3 FDS --
5 3-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 587,392 3,450,738 1,282,887 28,000 339,243 6,486,861 2,863,327 (1,567,152) 8,360,519 635,558 0 0 5,000,000 4,021 6,428,040 8,360,519 2,925,567 2,925,567 1,239,478 2,774,418 0 0 13,374 327,067 (15,170) 343,006 0 0 0 343,006 0.02 0.02
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