-----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, SpAYCevtC+bo2tHhejfc17tG1qTFfj3lUApTXZusbMUouUmWF7rOELEfTvsE0VR4 kPcvjN52Kwt1RECNEa7Idw== 0001116502-01-501385.txt : 20020410 0001116502-01-501385.hdr.sgml : 20020410 ACCESSION NUMBER: 0001116502-01-501385 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ACCESS TECHNOLOGIES INC CENTRAL INDEX KEY: 0001043186 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 593410234 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24575 FILM NUMBER: 1789905 BUSINESS ADDRESS: STREET 1: 37 SKYLINE DR STREET 2: SUITE 1101 CITY: LAKE MARY STATE: FL ZIP: 32746 BUSINESS PHONE: 4073331446 10QSB 1 aatk-10qsb.txt QUARTERLY REPORT Form 10-QSB for AMERICAN ACCESS TECHNOLOGIES, INC. 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 September 30, 2001 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 37 Skyline Drive, Suite 1101, Lake Mary, Florida 32746 (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 November 12, 2001 was: 5,846,869. AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Unaudited
ASSETS September 30, 2001 December 31, 2000 ----------------------------------------- Current Assets: Cash and cash equivalents $ 183,207 $ 399,948 Accounts receivable, net of allowance of $75,000 and $62,400, respectively 870,494 1,011,712 Notes receivable,directors and stockholders,including accrued interest 421,222 393,988 Inventories 666,082 781,718 Prepaid expenses and other current assets 8,232 41,271 ------------------------------------ Total current assets 2,149,237 2,628,637 Property, Plant and Equipment 2,951,493 3,193,043 Patent Costs 71,301 73,992 Web Site Development Costs 6,150 24,615 Other Assets 13,075 13,075 ------------------------------------ Total assets $ 5,191,256 $ 5,933,362 ==================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 409,407 $ 325,632 Accrued expenses 73,918 86,696 Capital lease obligation-current portion 45,055 40,414 ------------------------------------ Total current liabilities 528,380 452,742 ------------------------------------ Long-Term Liabilities: Capital lease obligation, net of current portion 169,569 203,965 ------------------------------------ Commitments, Contingencies, Other Matters and Subsequent Events - Stockholders' Equity: Common stock, $.001 par value; authorized 30,000,000 shares; issued 4,530,347 and 4,740,948 shares, respectively 4,530 4,741 Additional paid-in capital 10,924,133 11,174,677 Deficit (6,435,086) (5,379,183) ------------------------------------ 4,493,577 5,800,235 Treasury stock, 0 and 79,500 common shares at cost - (288,660) Stock subscription receivable, net of allowance of $2,712,000 (270) (270) Treasury stock receivable - (234,650) ------------------------------------ Total stockholders' equity 4,493,307 5,276,655 ------------------------------------ Total liabilities and stockholders' equity $ 5,191,256 $ 5,933,362 ====================================
See notes to condensed consolidated financial statements. AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited
Nine Months Nine Months Three Months Three Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2001 2000 2001 2000 ---------------------------------------------------------------------- Net Sales Formed metal $ 2,026,549 $ 2,606,290 $ 579,504 $ 765,020 Zone cabling termination cabinet 924,445 1,315,071 197,366 258,918 ---------------------------------------------------------------------- 2,950,994 3,921,361 776,870 1,023,938 ---------------------------------------------------------------------- Costs and Expenses: Cost of sales 1,558,523 1,967,031 458,276 546,209 Selling, general and administrative 2,197,425 3,002,268 658,255 1,059,414 Stock-based compensation 273,270 -- 63,249 -- ---------------------------------------------------------------------- 4,029,218 4,969,299 1,179,780 1,605,623 ---------------------------------------------------------------------- Loss Before Other Income (Expense) (1,078,224) (1,047,938) (402,910) (581,685) ---------------------------------------------------------------------- Other Income (Expense) Interest income 29,218 52,003 9,492 24,191 Interest expense (25,307) (1,739) (8,074) (41) Other income 18,410 51,564 7,542 12,354 Provision for doubtful loan receivable, related party -- -- 221,278 -- Abandoned joint venture -- (200,000) -- -- ---------------------------------------------------------------------- 22,321 (98,172) 230,238 36,504 ---------------------------------------------------------------------- Net Loss $(1,055,903) $(1,146,110) $ (172,672) $ (545,181) ====================================================================== Basic and Diluted Net Loss Per Common Share $ (0.23) $ (0.25) $ (0.04) $ (0.11) ======================================================================
See notes to condensed consolidated financial statements. AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited
Nine Months Nine Months Ended Ended September 30, 2001 September 30, 2000 ------------------------------------------- Cash Flows From Operating Activities: Net Loss $(1,055,903) $(1,146,110) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 266,587 341,769 Warrants and common stock issued for services 273,270 -- Decrease (Increase) in Operating Assets: Accounts receivable 141,217 227,675 Accrued interest receivable (27,235) 30,962 Inventories 115,636 (158,198) Prepaid expenses and other assets 33,040 (21,958) Increase (Decrease) in Operating Liabilities: Accounts payable and accrued expenses 60,997 (34,651) Compensation due to officers/directors/stockholders -- (66,394) Retirement plan payable -- (75,000) ------------------------------------------- Net Cash Used in Operating Activities (192,391) (901,905) ------------------------------------------- Cash Flows From Investing Activities: Proceeds from sale of investments -- 833,344 Acquisition of property and equipment (net of sales and retirement) (3,879) (516,221) Decrease in note receivable -- 175,000 Loans to officers -- (320,000) Purchase of domain name -- 2,494 Costs for building under construction -- (125,000) ------------------------------------------- Net Cash Provided by (Used in) Investing Activities (3,879) 49,617 ------------------------------------------- Cash Flows From Financing Activities: Acquisition of treasury stock -- (609,146) Proceeds from issuance of common stock 9,284 1,584,156 Payments on loans and capital lease obligations (29,755) (83,812) Increase in note payable -- 115,000 ------------------------------------------- Net Cash Provided by (Used In) Financing Activities (20,471) 1,006,198 ------------------------------------------- Net Increase (Decrease) in Cash and Cash Equivalents $ (216,741) $ 153,910 ------------------------------------------- Cash and Cash Equivalents, Beginning $ 399,948 $ 714,109 ------------------------------------------- Cash and Cash Equivalents, Ending $ 183,207 $ 868,019 =========================================== Supplemental Disclosure of Cash Flow Information: Cash paid for interest $ 25,307 $ 1,739 ===========================================
See notes to condensed consolidated financial statements. AMERICAN ACCESS TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2001 Unaudited 1. Basis of Presentation The accompanying unaudited consolidated condensed financial statements at September 30, 2001 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 September 30, 2001 and results of operations for the nine and three months respectively ended September 30, 2001 and 2000. 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, 2000 included in the Company's Form 10-KSB. 2. Nature of Business and Summary of Significant Accounting Policies. BUSINESS American Access Technologies, Inc. manufactures patented zone cabling enclosures for the telecommunications industry, enabling businesses and government to Move, Add, and Change copper and fiber optic cabling to keep pace with changes in high-speed communications networks. Our ceiling and raised floor cabinets, our systems furniture panels, and our new wireless solution can save up to 70% of the cost to reconfigure office and school data centers and networks by eliminating excessive wiring and rewiring in traditional home run arrangements. Our wholly-owned subsidiary, Omega Metals, Inc., continues to manufacture zone cabling cabinets along with other metal fabricating jobs, ensuring quality and cost control. The ability to powder coat metals is available at our plant. We also have the ability to punch and stamp metal. Our subsidiary AATK.com, LLC, on September 28, 2001 was administratively dissolved by the Florida Department of State. The subsidiary was created on February 2, 2000, as a joint venture with Vulcan Microsystems, Inc., and Grovegate Capital, LLC to create a Business-to-Business e-commerce portal. We owned 76%, Vulcan owned 19% and Grovegate owned 5% of the joint venture. The relationship with Vulcan ended in litigation. Because we believed the concept was viable, we built our own web presence with an in-house technology team, and Zonecabling.com, Inc. was incorporated as a subsidiary on May 4, 2000. We subsequently determined that marketing our products in this manner competed with our traditional marketing methods. Currently, this subsidiary is subject to a Management with Option to Purchase Agreement with a former shareholder and officer/director, signed March 27, 2001. Zonecabling.com's role is being re-evaluated and the terms of the Agreement are being renegotiated. The agreement ends December 31, 2002. We have expanded our proprietary line of products, and have entered into private labeling agreements with several manufacturers, for which we custom design products to their specifications, serving as an Original Equipment Manufacturer, or label our standard and modified products to suit these customers' needs. Most recently, we added a wireless solution to our line, originally developed for the University of Florida, but which has generated great interest in the commercial marketplace. In October 2001, a major solutions provider placed a substantial order for the wireless units, with expectations of future orders. American Access has been approved as a vendor for government services contracts. As an approved vendor, we will be able to sell our products for network applications at the federal level. Through one of our private label partners, we sub-contracted to manufacture a key component in a secured telecommunications unit ordered for rush delivery by the Pentagon to be installed during renovations after the recent tragedy. We also participated as the sub-contractor in the manufacture of a chemical warfare detector used by the U.S. Army. We were invited to join the Telecommunications Industry Association, and have committed to working on its subcommittees that study zone cabling solutions. The TIA sets telecommunications industry standards. We also are creating an Advisory Board of accomplished professionals in the telecommunications and other related industries. Advisory board members will assist us in evaluating joint ventures, pending and future private label agreements, and possible future acquisitions and mergers. Members may also review public relations and marketing materials, make presentations, introduce the Company's zone cabling products to help establish a niche in the marketplace, suggest improvements to business procedures, and advise the Company on products, industry customs and trends. NET LOSS PER COMMON SHARE The Company follows Statement 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. Diluted loss per share has not been presented, as it would be anti-dilutive. The computation of earnings per share is reflected in the following schedule:
Computation of Net Loss Nine Months ended Nine Months ended Three Months ended Three Months ended Per Common Share Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2001 Sept. 30, 2000 -------------- -------------- -------------- -------------- Net Income (Loss) $(1,055,903) $(1,146,110) $ (172,672) $ (545,181) Total Weighted Average Number of Common Shares and Equivalents 4,630,480 4,509,526 4,530,347 4,740,947 ----------- ----------- ----------- ----------- Net Loss per Common Share $ (0.23) $ (0.25) $ (0.04) $ (0.11) ----------- ----------- ----------- -----------
NOTES RECEIVABLE RELATED PARTY In May and June 2000, the Company authorized loans to three directors, who also were officer-employees of American Access or its subsidiaries, and who secured the loans with personal assets unrelated to these transactions. The secured loans were to enable these directors to cover margin calls precipitated by a drop in the price of the Company's common stock. On May 31, 2000 Director and Company President John Presley and Director Erik Wiisanen each executed a promissory note and security agreement for $75,000 and $60,000 respectively, payable to the Company on or before December 31, 2000, with interest at the rate of 10 percent paid in arrears. On June 8, 2000, Director and Chief Financial Officer Bobby Story executed two promissory notes and a security agreement for a total of $200,000, payable to the Company on or before December 31, 2000, with interest at the rate of 10 percent paid in arrears. In October 2000, Mr. Presley and Mr. Wiisanen executed additional promissory notes with identical terms for $10,000 each, payable to the Company on or before April 30, 2001. All three notes were extended to June 30, 2001and subsequently to June 30, 2002. An allowance for doubtful collectibility was recorded on the full principal and interest owed by Mr. Story ($221,278). However, on October 18, 2001, Mr. Story repaid his note for $226,866.80, which includes 26,866.80 interest to date. The reserve for collectibility was reversed in the third quarter. These transactions were approved by disinterested directors in accordance with the Florida Business Corporation Act. STOCK-BASED COMPENSATION Common Stock On August 1, 2001 the Company entered into an agreement for investment banking services with Kirlin Securities. We agreed to pay Kirlin $5,000 of common stock a month, the amount of shares due, to be recalculated quarterly, for one year, payable at the beginning of each three-month period. The Company registered 60,000 shares of common stock on an SB-2 that became effective October 10, 2001, in anticipation of payments to be made for the life of the contract. The Company issued payment of 15,000 shares on October 12, 2001. Options On August 15, 2001, directors renewed the 2000 stock option plans for directors and officers/employees, issuing 840,000 options pending approval for changes by stockholders at the next annual meeting. The purpose of the Plan is to advance the interests of the Company and its shareholders by providing a means to attract, retain and reward employees (including employees who may be directors and officers), independent contractors and consultants of the Company and its subsidiaries with an added incentive to provide their services to the Company and to induce them to exert their maximum efforts towards the Company's success. Warrants On July 23, 2001, the Company issued 150,000 2-year warrants in connection with investment banking services provided to the Company with an exercise price of $1.25. Additionally, the Company pursuant to a settlement agreement in 1998 issued 40,000 3-year warrants to Steve Jones, a former officer/director. The exercise price is $1.13. The granting of warrants or stock to consultants resulted in a charge to stock based compensation in the amount of approximately $63,000 in the third quarter 2001 representing the fair value of the 400,000 warrants issued in 2000, which were and are being amortized in 2000 and 2001 and 404,435 warrants issued in the first nine months of 2001, which are being amortized in 2001 and 2002. Fair Value Disclosures Had compensation cost for the 765,370 stock options issued to officers/directors in the second quarter and additional 840,000 stock options issued in the third quarter, pending shareholder approval, been determined based on the fair value at the grant date consistent with SFAS No. 123, the Company's net loss and loss per share would have been as follows:
Nine Months Ended September 30, 2001 Three Months Ended September 30, 2001 ------------------------------------ ------------------------------------- Net Loss: As reported $(1,055,903) $ (172,672) =========== =========== Pro forma $(1,747,579) $ (750,806) =========== =========== Loss Per Share: Basic: As reported (0.23) $ (0.04) =========== =========== Pro forma (0.38) $ (0.17) =========== =========== The Company used the Black-Scholes option pricing model to determine the fair value of grants made in the three months ended September 30,2001. The following assumptions were applied in determining the pro forma compensation cost: Nine Months Ended September 30, 2001 Three Months Ended September 30, 2001 -------------------------------------- ------------------------------------- Risk Free Interest Rate 5.5% 5.5% Expected Dividend Yield -- -- Expected Option Life 1.0 - 2.5 years 1.0 - 2.5 years Expected Stock Price Volatility 122% - 133% 126% - 133%
3. Contingencies and Commitment LEGAL PROCEEDINGS The federal litigation against the Company, precipitated by the fall of the price of common stock in August, 1999, was dismissed on June 4, 2001, based upon the Plaintiffs' failure to comply with the Court's prior Order to Show Cause. Plaintiffs on July 3, 2001 filed a Motion to Reopen the case, and we subsequently filed a Memorandum of Law in Opposition to Plaintiffs' Motion. On August 2, 2001, the judge denied the Plaintiff's motion to reopen, ruling that the case will remain closed. The suit was filed in United States District Court, Eastern District of New York, originally on September 22, 1999, and amended in February 2000. In March 2001, the judge ruled to move the case to federal district court in Orlando, Florida. Plaintiffs Rachel Bass, Yuri Gurarity, Sol Gingold, Don Nagy, Marilyn Lesser-Gale and John Guida alleged in the Amended Complaint that the defendants, primarily Capital International Security Group and its principals, Grovegate Capital Partners, LLC, and its principals, Bridge Bank and its principals and American Access Technologies, Inc., and its principals participated in a conspiracy to inflate the price of the Company's common stock for the purpose of allowing "insiders" to enrich themselves by selling personal holdings at the inflated price. Plaintiffs believed they were injured in an amount in excess of $30 million and sought treble their general damages and special compensatory damages with interest. The Company has consistently denied not only any wrongdoing, but most of the material factual allegations as well. The Company has paid for legal services as incurred, which includes the advancing of any legal fees for indemnification of defendants who are principals of the Company. Company defendants have signed Conflict Waivers and Undertaking to Repay Expenses for Defense for indemnification under Florida Statutes Section 607.0850(6). American Access Technologies, Inc. on September 14, 2000 was served as a defendant in a lawsuit filed by Vulcan Microsystems, Inc., in the Circuit Court of the Eleventh Judicial Circuit for Miami-Dade County Florida. Vulcan alleges that American Access breached the terms and committed other misdeeds in connection with the companies' letter of intent to establish a joint venture to engage in e-commerce. Vulcan is seeking in excess of $15,000 damages. American Access intends to vigorously defend its position and has filed a counterclaim against Vulcan and its principals Eric Gray and Bill Wetmore to include damages in excess of $15,000. We allege that Vulcan, Gray and Wetmore breached the terms of the letter agreement and committed other misdeeds in connection with the joint venture. American Access at March 15 has filed suit in Seminole County Circuit Court, 18th Judicial Circuit, against McLean Ventures LLC, and personal guarantor Manuel Iglesias, for default in payment of a promissory note of $325,000, with accrued interest in excess of $36,000 at December 31, 2000. We are seeking full repayment of the note. The original promissor, Universal Beverages Holding Corp., Inc., assigned its obligations with written consent of the Company, after the Company filed a lawsuit for default of the original note of $500,000 plus accrued interest. Although McLean paid the accrued interest and a portion of the principal at assignment, its obligations were in default at October 31, 2000. This note is reserved for the full amount owed. We sought and received a default judgment in the case against McLean and the guarantor, and are currently taking all legal avenues toward perfecting that judgment On April 10, 2001, American Access Technologies, Inc. entered into an Agreement and Plan of Merger with DataWorld Solutions, Inc., of Farmingdale, New York, in which our newly incorporated subsidiary, Dolphin Acquisition Corp., a corporation registered in Delaware, was to have been merged into DataWorld, with DataWorld the surviving subsidiary. Subsequent to signing the agreement, DataWorld suffered material adverse effects to its business condition, which we believe so prejudiced the terms of the merger against our shareholders that we terminated the agreement on July 2, 2001. We filed for declaratory judgment in Seminole County Circuit Court, 18th District, seeking a ruling that we were privileged to terminate the agreement under its terms. Subsequently, DataWorld countersued for $500,000, the termination payment specified in the agreement, payable under limited circumstances. We do not believe that DataWorld is entitled to the termination payment. We asked for leave to amend our complaint, and we are seeking general damages in excess of $15,000 from DataWorld for breach of contract. SUBSEQUENT EVENTS From October 10-12, 2001, a total of 1,286,522 stock purchase warrants at $1.25, $1.65 and $2.25 were exercised by employees, outside consultants, and former affiliates, for net proceeds to the Company of $2,624,675. On October 18, 2001 Bobby Story repaid to the Company two promissory notes for $200,000 plus interest of $26,866.80 for a total of $226,866.80. On June 8, 2000, then-Director and Chief Financial Officer Bobby Story executed two promissory notes and a security agreement, payable to the Company on or before December 31, 2000, with interest at the rate of 10 percent paid in arrears. The notes were extended to June 30, 2001 and subsequently to June 30, 2002. An allowance for doubtful collectibility was recorded on the full principal and interest owed by Mr. Story ($221,278) at June 30, 2001, but that allowance was reversed in the third quarter 2001. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 Revenues Revenues for the three months ended September 30, 2001 decreased by $247,068 or 24.1% to $776,870 as compared to $1,023,938 for the three months ended September 30, 2000. Revenues for the nine months ended September 30, 2001 decreased by $970,367 or 24.7 % to $2,950,994 as compared to $3,921,361 for the nine months ended September 30, 2000. This decrease in revenues is the result of fewer new projects pursuant to the economic downturn. Costs and Expenses Direct costs represent costs incurred by the Company to have its products manufactured and assembled. These costs represent 58.9 % of revenues for the three months ended September 30, 2001 and 53.3 % of revenues for the three months ended September 30, 2000. Direct costs represent 52.8 % of revenues for the nine months ended September 30, 2001 and 50.2 % of revenues for the nine months ended September 30, 2000. The increase in direct cost percentage is related to smaller formed metal jobs produced in the past two quarters as compared to a year ago and a price decrease in the zone cabling products. Selling, General and Administrative expenses decreased by $401,159 to $658,255 for the three months ended September 30, 2001 as compared to $1,059,414 for the three months ended September 30, 2000. Selling, General and Administrative expenses decreased by $804,843 to $2,197,425 for nine months ended September 30, 2001 as compared to $3,002,268 for the nine months ended September 30, 2000. This decrease was the result of continued cost-cutting strategies implemented by management over the past nine months. Income (Loss) from Operations Loss from operations for the quarter ended September 30, 2001 was $402,910 as compared to a Loss of $581,685 for the quarter ended September 30, 2000, a decrease of $178,775. Loss from operations for the nine months ended September 30, 2001 was $1,078,224 as compared to a Loss of $1,047,938 for the nine months ended September 30, 2000, an increase of $30,286. The decreased Loss for the three months is the result of the cost saving in Selling, General and Administrative expenses. For the nine months, the slight increase is due primarily to the reduction in revenues. Net Income (Loss) Net loss for the quarter ended September 30, 2001 was $172,672 compared to $545,181 for the quarter ended September 30, 2000. Net loss for the nine months ended September 30, 2001 was $1,055,903 compared to $1,146,110 for the nine months ended September 30, 2000. A note receivable for which a reserve was taken in the quarter ended June 30, 2001, was repaid in full in October and the reserve was reversed in the quarter ended September 30, 2001. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities utilized cash of $192,391 during the nine months ended September 30, 2001 as compared to utilizing cash of $901,905 during the nine months ended September 30, 2000. Management's plans include the following: The Company has reworked its marketing plan to coincide with the growing acceptance of zone cabling in the marketplace. Our marketing plan envisions a distribution chain that includes forging relationships with and ultimately selling our products to: o Systems Providers (Original Equipment Manufacturers or OEMs) that buy and sell product and specify telecommunications systems to end-users. We have signed private label agreements with companies such as Tyco, Hitachi, Flexspace and others. Marketing through systems providers is much like selling tires to an automobile manufacturer, ensuring that the tire is incorporated into the design of the auto at the beginning, rather than setting up shop to sell tires to auto owners who are already driving cars with tires. For us, being specified as part of a whole telecommunications system at the pre-design phase is an important part of our sales effort, so we focus on getting the word out to OEMs about the benefits of zone cabling; o Distributors that stock, sell and finance product and whole systems. We work with Graybar, Anixter, and GE Supply, as well as other distributors that employ a sales force to support and sell product through contractors. Working closely with distributors ensures that their sales efforts are successful because their sales personnel understand why zone cabling products are important to a network; o Contractors who install, test and guarantee the network systems they build for end-users. Contractors also work closely with the architects and Information Technology Systems Designers who need to know the benefits of zone cabling so it can be specified from the beginning of a project; o End-users that can specify the most cost-efficient system available to them will want to hear the American Access zone cabling story from their architects, contractors, distributors or systems providers. Forging all of these relationships gives us the edge in education. The more you know about us, the more likely you are to buy the products we manufacture. As we build relationships on four levels, the products we manufacture can be sold to systems providers and distributors, who in turn sell to contractors or directly to the end-user. Because our products are an integral part of a telecommunications network, we market them for inclusion in those networks, not just as separate entities. Again, this is similar to the tire manufacturer that broadens its sales success by selling tires to the automobile manufacturer for inclusion in the finished product. Our goal is to reach beyond the concept that our product is an alternative to traditional home run cabling and to make zone cabling the standard in the industry. Between October 10 and 12, 2001 the Company acquired substantial working capital through the exercise of outstanding warrants by investment bankers, employees and consultants. Additionally, two promissory notes totaling $200,000, plus interest of $26,866.80 have been paid back to the Company on October 18, 2001. We believe that the capital generated by the exercise of warrants and the repayment of the loan will be sufficient for us to meet our needs over the next fiscal year. Any additional capital needs can be met through private placement, or borrowings, including bank borrowing and private equity lines, in view of the nature of our customer base. Since our 67,500 sq. ft. plant is unencumbered, we also have the potential to mortgage it to raise capital. On May 2, 2000, the Company entered into a stock placement agreement through which it can acquire additional working capital through November 2001. However, at the present time, certain conditions of liquidity specified in that agreement are not met and until they are, this avenue for capital is unavailable. 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, technological obsolescence and the difficulties faced by young companies in general. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS -------------------- (b) EXHIBITS The following exhibits are being filed as part of this report:
Exhibit No. Description ----------- ----------- (c.) Exhibits on Form 8-K Incorporated By Reference, as filed with the Securities and Exchange Commission on July 19, 2001 and August 14, 2001. Additionally, as a subsequent event, an 8-K was filed November 9, 2001 and is also Incorporated by Reference.
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: November 13, 2001 AMERICAN ACCESS TECHNOLOGIES, INC. (Registrant) By: /s/ Joseph F. McGuire ---------------------------------------- Joseph F. McGuire Treasurer Chief Financial Officer By: /s/ John E. Presley ---------------------------------------- John E. Presley President -----END PRIVACY-ENHANCED MESSAGE-----