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UNITED STATES OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION ------------------------
Washington, D.C. 20549 OMB Number: 3235-0416
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FORM 10-QSB Expires: April 30,2003
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Estimated average burden
hours per response: 32.0
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(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______ to ______.
Commission File No. 0-10841
American Millennium Corporation, Inc.
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(Exact name of small business issuer as specified in its charter)
New Mexico 85-0273340
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(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
1010 Tenth Street, Suite 100, Golden, CO 80401
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(Address of principal executive offices)
(303) 279-2002
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(Issuer's telephone number)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 27,523,328 at December 10, 2001.
Transitional small business disclosure format (check one): Yes [ ] No [ ]
AMERICAN MILLENNIUM CORPORATION, INC.
FORM 10-QSB
INDEX
PAGE
PART I-FINANCIAL INFORMATION
Item 1-Financial Statements (Unaudited)
Balance Sheet - October 31, 2001 (Unaudited) 1
Statements of Operations - Three
months ended October 31, 2001 and 2000 (Unaudited) 2
Statements of Cash Flows - Three Months
ended October 31, 2001 and 2000 (Unaudited) 4
Notes to Financial Statements (Unaudited) 5
Item 2-Management's Discussion and Analysis or Plan of Operation 6
PART II-OTHER INFORMATION
Item 1 -Legal Proceedings 7
Item 2 -Changes in Securities 7
Item 3 -Defaults Upon Senior Securities 7
Item 4 -Submission of matters to a Vote of Securities Holders 7
Item 5 -Other Information 8
Item 6 -Exhibits and reports on Form 8-K 8
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PART I - FINANCIAL INFORMATION
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Item 1-Financial Statements (Unaudited)
The financial statements in response to this item are as follows:
AMERICAN MILLENNIUM CORPORATION, INC.
BALANCE SHEET (Unaudited)
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October 31, 2001
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ASSETS
CURRENT ASSETS
Accounts receivable, less allowance for doubtful
accounts of $13,045 ..............................$ 247,853
Inventories ........................................ 66,887
Employee advances .................................. 3,000
Prepaid expenses ................................... 1,343
Current portion of non-compete agreement............ 26,250
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TOTAL CURRENT ASSETS ................................. 345,333
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PROPERTY AND EQUIPMENT, NET .......................... 116,393
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OTHER ASSETS
Securities in closely-held corporation ............. 3,040
Deposits............................................ 12,753
Other .............................................. 760
Deferred income tax asset, less valuation
allowance of $5,262,535 .......................... --
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TOTAL OTHER ASSETS ................................... 16,553
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TOTAL ASSETS .........................................$ 478,279
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LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Bank overdraft ......................................$ 9,780
Accounts payable .................................... 503,193
Accrued payroll and related taxes ................... 120,557
Other accrued liabilities ........................... 108,775
Current portion of capitalized lease obligations .... 5,504
Notes payable to related parties .................... 215,102
Notes payable to shareholder ........................ 200,000
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TOTAL CURRENT LIABILITIES ............................. 1,162,911
Long-term portion of capitalized lease obligations .. 7,440
Interest payable on long-term liabilities ........... 75,562
Series 1 convertible notes .......................... 875,000
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TOTAL LIABILITIES ..................................... 2,120,913
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DEFICIENCY IN ASSETS
Preferred stock, 10,000,000 shares authorized;
none issued ...................................... --
Common stock, $.001 par value, 60,000,000 shares
authorized; 25,523,328 issued and outstanding .... 25,523
Additional paid-in capital.......................... 16,237,309
Accumulated deficit.................................(17,905,466)
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TOTAL DEFICIENCY IN ASSETS ........................... (1,642,634)
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TOTAL LIABILITIES AND DEFICIENCY IN ASSETS ...........$ 478,279
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See accompanying notes.
AMERICAN MILLENNIUM CORPORATION, INC.
STATEMENTS OF OPERATIONS (Unaudited)
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For the Three Months Ended October 31, 2001 2000
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REVENUES..............................................$ 254,646 $ 74,411
COST OF REVENUES ..................................... 195,008 74,076
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GROSS PROFIT.......................................... 59,638 335
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Compensation to officers and directors ............. 138,250 137,000
Consulting - others ................................ 18,460 147,551
Professional ....................................... 14,518 38,029
Employee salaries .................................. 63,750 145,256
Employee benefits and payroll taxes ................ 29,390 51,969
Travel ............................................. 18,972 35,146
Telephone and utilities ............................ 7,454 12,487
Depreciation and amortization ...................... 37,964 14,870
Equipment and property rental ...................... 21,004 20,281
Bad debt expense ................................... 1,577 383
Computer and internet expenses ..................... 14,727 7,984
Other .............................................. 21,569 26,376
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TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ... 387,635 637,332
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LOSS FROM OPERATIONS ................................. (327,997) (636,997)
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OTHER (EXPENSES) AND INCOME
Interest expense ................................... (27,421) (15,095)
Loan costs ......................................... -- (41,875)
Other miscellaneous expenses ....................... 7 27,218
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TOTAL OTHER EXPENSES ................................ (27,414) (29,752)
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LOSS BEFORE INCOME TAXES ............................. (355,411) (666,749)
INCOME TAXES ......................................... -- --
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NET LOSS .............................................$ (355,411) $ (666,749)
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BASIC AND DILUTED NET LOSS PER COMMON SHARE ..........$ (0.014) $ $(0.031)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(BASIC AND DILUTED) .................................24,770,067 21,570,739
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See accompanying notes.
AMERICAN MILLENNIUM CORPORATION, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
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For the Three Months Ended October 31, 2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) ........................................$ (355,411) $(666,749)
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Depreciation and amortization ................. 37,964 9,720
Amortization of loan costs..................... -- 45,041
Provision for bad debts ....................... 13,044 1,564
Common stock exchanged for services ........... -- 54,691
(Increase) decrease in assets:
Accounts receivable ........................... (194,823) (6,795)
Inventory ..................................... (29,129) (364)
Prepaid expenses .............................. 6,881 13,881
Increase (decrease) in liabilities:
Bank overdraft ................................ 9,780 --
Accounts payable .............................. 182,243 175,489
Accrued payroll and related taxes ............. 41,196 16,385
Accrued liabilities ........................... (19,704) (48,649)
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NET CASH USED BY OPERATING ACTIVITIES ................. (307,959) (405,786)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Disbursements
Acquisition of property and equipment .............. (1,355) (33,376)
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DISBURSEMENTS FROM INVESTING ACTIVITIES ............... (1,355) (33,376)
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NET CASH USED BY INVESTING ACTIVITIES ................. (1,355) (33,376)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts
Proceeds from notes payable to officers ............. -- 139,500
Proceeds from note payable stockholder .............. 30,130 170,000
Proceeds from issuance of common stock, net ......... 275,000 125,000
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RECEIPTS FROM FINANCING ACTIVITIES ..................... 305,130 434,500
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NET CASH PROVIDED BY FINANCING ACTIVITIES .............. 305,130 434,500
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NET DECREASE IN CASH AND CASH EQUIVALENTS .............. (4,184) (4,662)
CASH AND CASH EQUIVALENTS - BEGINNING .................. 4,184 105,148
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CASH AND CASH EQUIVALENTS - ENDING .....................$ -- $ 100,486
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SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest ..........................................$ 456 $ --
Income taxes ......................................$ -- $ --
In addition to amounts reflected above, common stock was issued for:
Notes payable to related parties ..................$ -- $ 6,250
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See accompanying notes.
AMERICAN MILLENNIUM CORPORATION, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. GENERAL BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
General
The accompanying unaudited financial statements of American Millennium
Corporation, Inc. (AMCI) have been prepared in accordance with Rule 10-01 of
Regulation S-X promulgated by the Securities and Exchange Commission and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the Company has made all adjustments necessary for a fair
presentation of the results of the interim periods, and such adjustments consist
of only normal recurring adjustments. The results of operations for such interim
periods are not necessarily indicative of results of operations for a full year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Basic and diluted net loss per common share
Basic net loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding during each period.
Available stock options at October 31, 2001, to purchase 11,917,923 shares, were
anti-dilutive and not considered common stock equivalents for purposes of
computing loss per common share.
Revenue Recognition
AMCI develops and sells satellite communication systems. Revenue from sales of
satellite communication systems is recorded at the time the goods are shipped or
access is granted to the service. The Company provides satellite airtime to its
customers on a month-to-month basis, which is recognized as revenue at the time
the service is provided.
NOTE 2. RECLASSIFICATIONS AND RESTATEMENTS
Amounts in the prior year financial statements have been reclassified for
comparative purposes to conform with the presentation of the current period
financial statements. Additionally, retroactive effect has been given to a
merger for purposes of comparative financial statement presentation.
NOTE 3. RELATED PARTY TRANSACTIONS
On August 8, 2001, a stockholder advanced the Company $30,130 in the form of
a short term unsecured promissory note bearing interest at the rate of 8% per
annum. As of October 31, 2001, this note is still outstanding.
The Company's CEO and President resigned effective September 30, 2001. On
October 1, 2001, the Board of Director's elected a new CEO and President. The
former CEO will remain on the Board of Directors and will serve as Vice
Chairman.
NOTE 4. COMMON STOCK
On August 22, 2001, the Board of Directors authorized the issuance of 900,000
shares of restricted common stock to one private investor. The Company received
net proceeds of $125,000 from the sale of these shares. Each of the shares
issued included a warrant to purchase one additional share of the Company's
restricted common stock for $0.27 per share for a period of five years.
On September 25, 2001, the Board of Directors authorized the issuance of 900,000
shares of restricted common stock to one private investor. The Company received
net proceeds of $150,000 from the sale of these shares. Each of the shares
issued included a warrant to purchase one additional share of the Company's
restricted common stock for $0.10 per share for a period of five years.
NOTE 5. OPERATING AND ECONOMIC CONDITIONS
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, conditions have limited the ability of the
Company to market its products and services at amounts sufficient to recover its
operating and administrative costs. The Company has continued to incur operating
losses ($355,411 for the period ending October 31, 2001). In addition, the
Company has used substantial working capital in its operations. As of October
31, 2001, current liabilities exceeded current assets by $817,578. Because of
these factors, there is substantial doubt as to our ability to continue as a
going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts or
classifications of liabilities that might be necessary in the event the Company
cannot continue in existence.
NOTE 6. SUBSEQUENT EVENTS
On November 5, 2001, the Board of Directors authorized the issuance of 2,000,000
shares of restricted common stock to one private investor. The Company received
net proceeds of $150,000 from the sale of these shares. The investor also has
the option to purchase up to 2,000,000 shares of restricted common stock for
$0.10 per share until December 31, 2001. Each of the shares issued carried a
warrant to purchase one additional share of the Company's common stock for $0.10
per share for a period of five years.
Item 2. Management's Discussion and Analysis or Plan of Operations
SAFE HARBOR STATEMENT
Certain statements in this Form 10-QSB, including information set forth under
this Item 2 - Management's Discussion and Analysis or Plan of Operations
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the Act). American Millennium
Corporation, Inc. desires to avail itself of certain 'safe harbor' provisions of
the Act and is therefore including this special note to enable us to do so.
Forward-looking statements in this Form 10-QSB or hereafter included in other
publicly available documents filed with the Securities and Exchange Commission,
reports to our stockholders and other publicly available statements issued or
released by us involve known and unknown risks, uncertainties and other factors
which could cause our actual results, performance (financial or operating) or
achievements to differ from the future results, performance (financial or
operating) or achievements expressed or implied by such forward-looking
statements. Such future results are based upon our management's best estimates
based upon current conditions and most recent results of operations.
OVERVIEW
AMCI provides easy, convenient and cost-effective Internet based services where
customers can access information about various fixed and mobile assets through a
custom internet based software application. With our SatAlarm backend server
software application, our customers can use their existing PC and Internet
connection to select a particular asset and obtain information from sensors
located at that asset.
Through utilization of newly available two-way satellite communication, we can
monitor isolated facilities and equipment. We have activated over four hundred
of our Sentry systems for satellite monitoring of oil and gas production and
pipeline equipment.
RECENT DEVELOPMENTS
During the quarter ended October 31, 2001:
We have continued to implement our current product line and business strategy to
enhance our ability to achieve profitabity by focusing on our core business of
remote asset monitoring. We shipped approximately 250 of our Sentry units to new
and existing oil and gas customers. These shipments produced one time revenues
of approximately $220,000 and will produce monthly recurring revenues of
approximately $8,000. We experienced a change in senior management. In September
2001, Andy Cauthen resigned from the position of CEO and President. Garrett
Thomas was appointed CEO and President. Mr. Cauthen will remain on the Board of
Directors as Vice Chairman.
RESULTS OF OPERATIONS
Revenue. Revenue consists of hardware and airtime sales and custom development
of products for our customers. During the three months ended October 31, 2001,
revenues increased approximately 342% to $254,646 compared to the same period in
2000. This increase in year over year revenue was due to a higher number of
subscribers to our service.
Cost of Revenues. Costs of revenues principally consists of manufacturing costs
and the purchase of satellite airtime. Cost of revenues was $195,008 for the
three months ended October 31, 2001, compared to $74,076 for the three months
ended October 31, 2000. Our cost of revenue increased primarily due to the
increase in hardware and airtime costs relating to the increased revenue.
Payroll, Payroll Taxes and Related Benefits. Payroll, payroll taxes, and related
benefits decreased by $102,835 in the three months ended October 31, 2001, as
compared to October 31, 2000. This is attributable to the fact that we had four
less employees during the three months ended October 31, 2001. The total number
of employees as of October 31, 2001, is 10.
Consulting fees. Consulting fees decreased 87% from $147,551 to $18,460 for
the three months ended October 31, 2000 and 2001, respectively. The large
decrease is because we have narrowed our development to the Sentry and Satalarm
products, which are now commercially available.
Selling, General and Administrative. Selling, general and administrative
expenses principally consist of compensation and related costs for personnel,
fees for legal and other professional services and depreciation of equipment and
software used for general corporate purposes. There was an approximate 61%
decrease in total selling, general and administrative expenses compared to the
three-month period a year ago. Selling, general and administrative expenses for
the three months ended October 31, 2001 and 2000 were $387,635 and $637,332,
respectively. The decrease is primarily due to increased cost control efforts
and the reduction in headcount.
Other Income and Expenses. Other income (expense) consisted of income from
cash equivalents and short term investments, less interest expense related to
financing obligations. Other income (expense) for the three months ended October
31, 2001 and 2000 was ($27,414) and ($29,752), respectively. The variance is due
to the amortization of loan costs we incurred for the period ended October 31,
2000.
Net Loss. We had a net loss of $355,411 (or $0.014 per share) on revenues of
$254,646 for the period ended October 31, 2001, compared to a net loss of
$666,749 (or $0.031 per share) on revenues of $74,411 for the period ended
October 31, 2000. The decrease in net loss was primarily attributable to
increased revenues and a decrease in selling, general and administrative
expenses.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We understand that cash and equivalents on hand at October 31, 2001, are not
adequate to meet even our short-term capital needs. As a result of net losses
incurred, we have used substantial working capital in our operations. As of
October 31, 2001, current liabilities exceeded current assets by $817,578. There
is substantial doubt as to our ability to continue as a going concern without
additional financing or capital infusion.
During the last three months we have sold 1,800,000 shares of our restricted
common stock for net proceeds of $275,000, and have issued unsecured promissory
notes to shareholders and related parties in the amount of $30,130. Although we
believe that our current investors and several new investors are committed to
our future success, there can be no assurance that additional funds will be
available when needed on commercially reasonable terms.
Conditions have existed to limit our ability to market our products and services
at amounts sufficient to recover an acceptable amount of operating and
administrative costs. However, we anticipate that newly instituted controls and
new products may reverse this condition within the next fiscal year.
We have over 400 Sentry units in the field currently being used for production
pusposes and under assessment by various customers and resellers. Within the
next two calender quarters, we anticipate several orders, which could have a
significant impact on our net sales and income.
We believe that recurring revenues derived from monthly satellite and paging
monitoring charges should continue to build value for our shareholders. Our
principal marketing efforts are directed toward the oil and gas industry, which
has a need for monitoring high value assets. We anticipate that during the
latter part of fiscal year year 2002, revenues should increase from the
enrollment of subscribers based on our various initiatives underway with
manufacturers of gas compressors. We will continue to market our services to
those companies for deployment of our system on a fleet basis in order to
optimize upon subscriber enrollment. We currently have over 400 satellite
subscriber communicators (the industry term for transceivers) deployed in field
operations. These units are currently monitoring a variety of assets although
the bulk of them are on gas compressors in the southwest Unites States.
We have made no material commitments for capital expenditures and expect no
significant changes in the number of employees. We will continue to outsource
production and manufacturing. Research, development, and major marketing efforts
will be performed by our existing employees.
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
On August 22, 2001, the Board of Directors authorized the issuance of 900,000
shares of restricted common stock Patrick Galvin, a private investor. We
received net proceeds of $125,000 from the sale of these shares. Each of the
shares issued carried a warrant to purchase one additional share of the
Company's restricted common stock for $0.27 per share for a period of five
years.
On September 25, 2001, the Board of Directors authorized the issuance of 900,000
shares of restricted common stock to Jerry D. Kennett, MD, a private investor.
The Company received net proceeds of $150,000 from the sale of these shares.
Each of the shares issued carried a warrant to purchase one additional share of
the Company's restricted common stock for $0.10 per share for a period of five
years.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders
No matters were submitted to a vote.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(A) Reports on Form 8-K - None
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.
American Millennium Corporation, Inc.
DATED: December 14, 2001 By: /s/ Garrett L. Thomas
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Garrett L. Thomas, President
(Chief Executive Officer)
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
DATED: December 14, 2001 By: /s/ Stephen F. Watwood
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Stephen F. Watwood, Director, Chairman
of the Board, Vice President of
Business Development
DATED: December 14, 2001 By: /s/ Andrew F. Cauthen
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Andrew F. Cauthen, Director,
Vice Chairman
DATED: December 14, 2001 By: /s/ Bruce R. Bacon
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Bruce R. Bacon, Director, Chief
Technology Officer, Vice President
of Engineering
DATED: December 14, 2001 By: /s/ Shirley Harmon
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Shirley Harmon, Director
(Corporate Secretary)
DATED: December 14, 2001 By: /s/ Ronald J. Corsentino
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Ronald J. Corsentino, Controller, Treasurer
(Principal Accounting Officer)