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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 April 30, 2002
[ ] 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: 44,781,977 at June 21, 2002.
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
Balance Sheet - April 30, 2002 (Unaudited) 1
Statements of Operations - Three months ended
April 30, 2002 and 2001 (Unaudited) 2
Statements of Operations - Nine months ended
April 30, 2002 and 2001 (Unaudited) 3
Statements of Cash Flows - Nine Months ended
April 30, 2002 and 2001 (Unaudited) 4
Notes to Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis or Plan of Operation 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of matters to a Vote of Securities Holders 13
Item 5. Other Information 13
Item 6. Exhibits and reports on Form 8-K 13
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
The information required by Item 310(b) of Regulation SB is as follows:
AMERICAN MILLENNIUM CORPORATION, INC.
BALANCE SHEET (Unaudited)
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April 30, 2002
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ASSETS
CURRENT ASSETS
Cash and cash equivalents ..........................$ 769,477
Accounts receivable, less allowance for doubtful
accounts of $6,036 ............................... 113,696
Inventories ........................................ 32,244
Employee advances .................................. 3,888
Prepaid expenses ................................... 807
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TOTAL CURRENT ASSETS ................................. 920,112
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PROPERTY AND EQUIPMENT, NET .......................... 102,952
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OTHER ASSETS
Securities in closely-held corporation ............. 3,040
Deposits............................................ 6,379
Other .............................................. 760
Deferred income tax asset, less valuation
allowance of $5,484,412 .......................... --
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TOTAL OTHER ASSETS ................................... 10,179
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TOTAL ASSETS .........................................$ 1,033,243
=============================================================================
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accounts payable ....................................$ 566,125
Accrued payroll and related taxes ................... 189,451
Other accrued liabilities ........................... 58,812
Accrued Warranty .................................... 15,000
Current portion of capitalized lease obligations .... 7,440
Notes payable to related parties .................... 205,101
Notes payable to shareholder ........................ 39,971
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TOTAL CURRENT LIABILITIES ............................. 1,081,900
LONG-TERM PORTION OF CAPITALIZED LEASE OBLIGATIONS..... 910
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TOTAL LIABILITIES .................................... 1,082,810
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DEFICIENCY IN ASSETS
Preferred stock, 10,000,000 shares authorized;
none issued --
Common stock, $.001 par value, 60,000,000 shares
authorized; 44,781,977 and outstanding ........... 44,782
Additional paid-in capital ......................... 18,840,110
Stock subscription receivable (115,000)
Accumulated deficit.................................(18,819,459)
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TOTAL DEFICIENCY IN ASSETS ........................... (49,567)
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TOTAL LIABILITIES AND DEFICIENCY IN ASSETS ...........$ 1,033,243
=============================================================================
See accompanying notes.
1
AMERICAN MILLENNIUM CORPORATION, INC.
STATEMENTS OF OPERATIONS (Unaudited)
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For the Three Months Ended April 30, 2002 2001
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REVENUES..............................................$ 81,874 $ 79,349
COST OF REVENUES ..................................... 78,338 21,006
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GROSS PROFIT.......................................... 3,536 58,343
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Compensation to officers and directors ............. 112,200 306,790
Consulting - others ................................ 40,053 48,124
Professional ....................................... 14,909 35,020
Employee salaries .................................. 74,145 122,766
Employee benefits and payroll taxes ................ 23,955 38,820
Travel ............................................. 13,158 31,110
Telephone and utilities ............................ 10,545 10,261
Depreciation and amortization ...................... 7,595 37,645
Equipment and property rental ...................... 20,771 20,510
Warranty expense.................................... 80,400 -
Bad debts........................................... -- 8,489
Computer and internet............................... 22,732 16,282
Other .............................................. 17,595 23,357
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TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ... 438,058 699,174
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LOSS FROM OPERATIONS ................................. (434,522) (640,831)
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OTHER INCOME (EXPENSE)
Interest expense ................................... (14,590) (31,802)
Other miscellaneous income ......................... 17,061 (1,466)
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TOTAL OTHER INCOME (EXPENSE).......................... 2,471 (33,268)
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LOSS BEFORE INCOME TAXES ............................. (432,051) (674,099)
INCOME TAXES ......................................... -- --
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NET LOSS ............................................. (432,051) (674,099)
==============================================================================
BASIC AND DILUTED NET LOSS PER COMMON SHARE .......... $(0.014) $(0.031)
==============================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(BASIC AND DILUTED) ................................. 30,516,989 21,947,619
==============================================================================
See accompanying notes.
2
AMERICAN MILLENNIUM CORPORATION, INC.
STATEMENTS OF OPERATIONS (Unaudited)
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For the Nine Months Ended April 30, 2002 2001
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REVENUES..............................................$ 462,290 $ 221,613
COST OF REVENUES ..................................... 412,026 155,161
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GROSS PROFIT.......................................... 50,264 66,452
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Compensation to officers and directors ............. 371,825 581,540
Consulting - others ................................ 196,078 256,810
Professional ....................................... 37,676 108,093
Employee salaries .................................. 204,146 380,878
Employee benefits and payroll taxes ................ 84,451 128,196
Travel ............................................. 50,082 93,638
Telephone and utilities ............................ 25,857 34,208
Depreciation and amortization ...................... 57,831 90,160
Equipment and property rental ...................... 61,375 62,809
Warranty expense.................................... 80,400 -
Bad debts........................................... 43,348 8,872
Computer and internet............................... 54,961 30,250
Other .............................................. 55,834 76,455
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TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ... 1,323,864 1,851,909
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LOSS FROM OPERATIONS ................................. (1,273,600) (1,785,457)
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OTHER INCOME (EXPENSES)
Interest expense ................................... (73,433) (84,719)
Loan costs.......................................... -- (41,875)
Miscellaneous income ............................... 12,592 23,148
Impairment of asset ................................ (20,417) --
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TOTAL OTHER INCOME (EXPENSES)......................... (81,258) (103,446)
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LOSS BEFORE INCOME TAXES ............................. (1,354,858) (1,888,903)
INCOME TAXES ......................................... -- --
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NET LOSS ............................................. (1,354,858) (1,888,903)
==============================================================================
BASIC AND DILUTED NET LOSS PER COMMON SHARE .......... $(0.044) $(0.086)
==============================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(BASIC AND DILUTED) ................................. 30,516,989 21,947,619
==============================================================================
See accompanying notes.
3
AMERICAN MILLENNIUM CORPORATION, INC.
STATEMENTS OF CASH FLOWS (Unaudited) (Unaudited)
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For the Nine Months Ended April 30, 2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) ........................................$(1,354,858) $(1,888,903)
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Depreciation and amortization ................. 57,831 90,160
Amortization of loan costs..................... -- 41,875
Provision for bad debts ....................... 43,349 --
Loss on disposal of property and equipment .... 1,201
Common stock exchanged for services ........... 24,260 54,691
Stock options issued as compensation........... 20,417 204,000
(Increase) decrease in assets:
Accounts receivable ........................... (60,666) (32,199)
Inventory ..................................... 5,514 (6,778)
Prepaid expenses .............................. 7,417 (23,504)
Other assets .................................. 13,791 (5,866)
Increase (decrease) in liabilities:
Accounts payable .............................. 245,175 82,374
Accrued payroll and related taxes ............. 110,090 (2,523)
Accrued liabilities ........................... 95,948 (71,398)
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NET CASH USED BY OPERATING ACTIVITIES ................. (791,732) (1,556,870)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts
Proceeds from disposal of property and equipment.... -- 400
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RECEIPTS FROM INVESTING ACTIVITIES ............... -- 400
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Disbursements
Acquisition of property and equipment .............. (3,105) (138,895)
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DISBURSEMENTS FROM INVESTING ACTIVITIES ............... (3,105) (138,895)
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NET CASH USED BY INVESTING ACTIVITIES ................. (3,105) (138,495)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts
Proceeds from notes payable to officers ............. -- 289,500
Proceeds from note payable stockholder .............. 30,130 950,000
Proceeds from warrants exercised .................... 25,000
Proceeds from issuance of common stock, net ......... 1,535,000 583,000
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RECEIPTS FROM FINANCING ACTIVITIES ..................... 1,565,130 1,847,500
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Disbursements
Payments on notes payable to officers ............... (190,000)
Payments on notes due related parties ............... (5,000) (18,158)
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DISBURSEMENTS FROM FINANCING ACTIVITIES ................ (5,000) (208,158)
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NET CASH PROVIDED BY FINANCING ACTIVITIES .............. 1,560,130 1,639,342
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ... 765,293 (56,023)
CASH AND CASH EQUIVALENTS - BEGINNING .................. 4,184 105,148
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CASH AND CASH EQUIVALENTS - ENDING .....................$ 769,477 $ 49,125
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SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest ..........................................$ -- $ 84,719
Income taxes ......................................$ -- $ --
In addition to amounts reflected above, common stock was issued for:
Notes payable to related parties ..................$ -- $ --
Accrued consulting due officers ...................$ -- $ 298,498
Advances due to officers ..........................$ -- $ 14,080
Notes payable to officers .........................$ -- $ 245,397
Accrued salary due officers .......................$ -- $ 89,208
Notes payable related parties .....................$ 30,130 $ --
Notes payable to shareholders .....................$ 170,595 $ --
Convertible debt ..................................$ 875,000 $ --
================================================================================
See accompanying notes.
4
AMERICAN MILLENNIUM CORPORATION, INC.
NOTES TO FINANCIAL STATEMENTS
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 April 30, 2002, to purchase 19,385,516 shares were
anti-dilutive and not considered common stock equivalents for purposes of
computing loss per common share. In periods where losses are reported, the
weighted average number of common shares outstanding excludes common stock
equivalents, because their inclusion would be anti-dilutive
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
Amounts in the prior year financial statements have been reclassified for
comparative purposes to conform with the presentation of the current period
financial statements.
NOTE 3. RELATED PARTY TRANSACTIONS
On February 26, 2002, the Board of Directors authorized the issuance of 71,000
shares of restricted common stock to Lindy Amyx, an individual independent
consultant, in settlement of an accounts payable for consulting services in the
amount of $4,260.
On March 16, 2002, the Board of Directors authorized the issuance of 301,300
shares of restricted common stock to Savitar Farms, LLC in full settlement of a
promissory note payable dated August 8, 2001 in the amount of $30,130.
On April 3, 2002, the Board of Directors authorized the issuance of 189,979
shares of restricted common stock to AlphaCom, Inc. a current shareholder, in
partial settlement of a $75,000 promissory note payable due to AlphaCom dated
October 5, 2000. The balance of the note as of April 3, 2002 is $40,595.
5
NOTE 4. COMMON STOCK
On March 1, 2002 the Board of Directors authorized the issuance of 5,800,000
shares of restricted common stock to one private investor pursuant to this
investor exercising all of their outstanding warrants. The Company received net
proceeds of $100,000 from the exercise of these warrants along with a promissory
note in the amount of $150,000. The promissory note was to be paid only if the
investor did not make an additional $750,000 investment in the Company. On April
29, 2002 the same investor did make the additional investment, as described
below, thus the promissory note was not due the Company.
On April 29, 2002 the Board of Directors authorized the issuance of 1,000,000
shares of restricted common stock to one private investor. The Company received
net proceeds of $750,000 from the sale of these shares. The investor
will have the option to purchase additional shares for a period of five years as
follows: 1,000,000 shares of common stock at a price of $1.00 per share;
1,000,000 shares of common stock at a price of $1.50 per share; and 1,000,000
shares of common stock at a price of $2.00 per share.
On March 15, 2002, the holder of the Company's $875,000 convertible debentures
converted all debt to the Company's restricted common stock. 1,377,551 shares
were converted at $0.49 per share pursuant to a November 9, 2000 Convertible
Note Agreement, and 909,090 shares were converted at $0.22 per share pursuant to
a Convertible Note Agreement dated April 18, 2001. The holder also exercised all
available options and warrants associated with these convertible notes as
follows: Two (2) 175,000 share options dated December 28, 2000 were exercised at
a price of $.05 per share; 502,500 warrants were exercised at a price of $.05
per share pursuant to an agreement dated April 7, 2000; 352,941 warrants were
exercised at a price of $.05 per share pursuant to an agreement dated June 7,
2000; 1,377,551 warrants were exercised at a price of $.05 per share pursuant to
an agreement dated November 9, 2000 and 909,090 warrants were exercised at a
price of $.05 per share pursuant to an agreement dated April 18, 2001. The
Company received net proceeds of $30,633 from the options exercised and
warrants, after paying in full a short-term note owed to the note holder of
$125,000, plus accrued interest of $18,971.
6
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 ($1,354,858 for the nine months ending April 30, 2002). In addition, the
Company has used substantial working capital in its operations. As of April
30, 2002, current liabilities exceeded current assets by $161,788. 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 May 16, 2002, the Company completed the acquisition of 2,400,000 shares
of stock from NSI Global, Inc for $750,000 as required under the April 23,
2002 agreement. The Company has options to purchase an additional 14.1
million shares of NSI Global, Inc. for prices ranging from $0.55 to $0.61
that expire on various dates ending December 31, 2003.
On May 30, 2002, Telespazio Brasil announced its intention to work with the
Company on the distribution of GlobalWave technology and products in
South America. Under this expected agreement, Telespazio Brasil will use
its considerable resources in South America to provide Vistar MT2000
terminals and satellite airtime to value added resellers, original equipment
manufacturers and end users. The Company will provide the necessary capital
to acquire the regional operator hardware from Vistar and buy the
satellite airtime.
7
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 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 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 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, 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 available two-way satellite communication, we can
monitor currently 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.
8
RECENT DEVELOPMENTS
In the nine months ended April 30, 2002, we have continued to implement our
current product line and business strategy to enhance our ability to achieve
profitability by focusing on our core business of remote asset monitoring.
In the nine months ended April 30, 2002, we shipped approximately 400 of our
Sentry units to new and existing oil and gas customers. These shipments produced
one time revenues of approximately $352,000 and will produce monthly recurring
revenues of approximately $12,000.
On February 11, 2002 the Company entered into a Teaming Agreement with
Telespazio Brasil to pursue a South American initiative involving
satellite telecommunications.
On April 23, 2002, the Company was awarded the license to provide the GlobalWave
system for satellite tracking and monitoring for South American from NSI Global,
Inc. Under the agreement, NSI will provide a turnkey GlobalWave wireless packet
data system on an exclusive basis to the Company and Telespazio Brasil. The
Company has issued NSI a five year option to purchase up to 10% of the company
to be formed to provide GlobalWave services in South America. The exercise price
of the option is the lower of 10% of the book value of the net assets at the
time of the option exercise, and $1,000,000. The Company also issued NSI a
five-year warrant to purchase up to 1.5 million shares of the Company for $.10
per share.
On April 29, 2002 we received net proceeds of $750,000 from the sale of
1,000,000 shares of our common stock. These proceeds will be used to purchase
2.4 million shares of NSI Global, Inc . common stock pursuant to our agreement
with them concerning the South American regional operator license.
RESULTS OF OPERATIONS
Revenue. Revenue consists of hardware and airtime sales and custom development
of products for our customers. During the nine months ended April 30, 2002,
revenues increased approximately 209% to $462,290 compared to the same period in
2001. 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 $412,026 for the
nine months ended April 30, 2002, compared to $155,161 for the nine months ended
April 30, 2001. 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 $430,192 in the nine months ended April 30, 2002, as
compared to April 30, 2001. This is attributable to the fact that we had three
less employees during the nine months ended April 30, 2002, and that payroll and
benefit administration was brought in house rather than contracting with a third
party payroll administrator. The total number of employees as of April 30, 2002,
is 10.
9
Consulting fees. Consulting fees decreased from $256,810 to $196,078 for the
nine months ended April 30, 2001 and 2002, respectively. The decrease is
primarily due to the fact that 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 33%
decrease in total selling, general and administrative expenses compared to the
nine month period a year ago. During the quarter we experienced an unusually
high level of warranty returns and repairs. Our mangement has met with
production personnel and redesigned certain components to alleviate future
occurrences. Selling, general and administrative expenses for the nine
months ended April 30, 2002 and 2001 were $1,323,864 and $1,851,909,
respectively. The decrease is primarily due to increased cost control efforts
and the reduction in personnel.
Other Income and Expenses. Other income (expenses) consisted of income from cash
equivalents and short term investments, less interest expense related to
financing obligations. Other income (expenses) for the nine months ended April
30, 2002 and 2001 was ($81,258) and ($103,446), respectively. The difference is
due to the amortization of loan costs we incurred for the period ended April 30,
2001, and the impairment of asset of $20,417 related to non-compete agreement
with Mr. Buntin during the quarter ended January 31, 2002.
Net Loss. We had a net loss of $1,354,858 (or $0.0444 per share) on revenues of
$462,290 for the nine months ended April 30, 2002, compared to a net loss of
$1,888,903 (or $0.086 per share) on revenues of $221,613 for the period ended
April 30, 2001. The decrease in net loss was primarily attributable to
increased revenues and a decrease in selling, general and administrative
expenses.
10
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We understand that cash and equivalents on hand at April 30, 2002, are not
adequate to meet even our short-term capital needs. On April 29, 2002 we sold
1,000,000 shares of our common stock and we received net cash proceeds of
$750,000. This cash was subsequently used to purchase 2,400,000 shares of NSI
Global, Inc pursuant to our agreement with NSI regarding the South American
regional operation agreement.
As a result of net losses incurred, we have used substantial working capital in
our operations. As of April 30, 2002, current liabilities exceeded current
assets by $161,788. 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 5,800,000 shares of our common stock,
pursuant to option and warrant agreements for net proceeds of $100,000.
Although we believe that our current 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.
On March 1, 2002, 5,800,000 warrants for the purchase of the Company's
restricted common stock were exercised. The Company received net proceeds of
$100,000 on March 1, 2002, along with a $150,000 contingent promissory note
receivable pursuant to a Letter Agreement dated February 28, 2002. The repayment
of the $150,000 note was contingent on the investor making a $750,000 investment
in the Company. On Apri 29, 2002 the $750,000 investment was received by the
Company, therefore the $150,000 contingent note was not payable to the Company.
On March 15, 2002, all of the Company's convertible debt was converted into the
Company's restricted common stock. 1,377,551 shares were converted at $.49 per
share pursuant to a November 9, 2000 Convertible Note Agreement and 909,090
shares were converted at $.22 per share pursuant to an April 18, 2000
Convertible Note Agreement. Also on the same date, 3,492,082 options and
warrants were exercised at a price of $.05 per share for the Company's
restricted common stock.
On March 18, 2002, the holder of a $30,130 short term note of the Company
converted the note into 301,300 shares ofthe Company's restricted common stock
pursuant to a Short Term Note dated August 8, 2001.
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 500 Sentry units in the field currently being used for production
purposes and under assessment by various customers and resellers. Within the
next two calendar 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 the 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 500 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 United 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.
11
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
On February 26, 2002, the Board of Directors authorized the issuance of 71,000
shares of restricted common stock to Lindy Amyx, an individual independent
consultant, in settlement of an accounts payable for consulting services in the
amount of $4,260.
On March 1, 2002 the Board of Directors authorized the issuance of 5,800,000
shares of restricted common stock to Jerry D. Kennett, MD pursuant to this
investor exercising all of their outstanding warrants. The Company received net
proceeds of $100,000 from the exercise of these warrants along with a promissory
note in the amount of $150,000. The promissory note was to be paid only if the
investor did not make an additional $750,000 investment in the Company. On April
29, 2002 the same investor did make the additional investment, as described
below, thus the promissory note was not due the Company.
On March 15, 2002, Rodney R. Schoemman,the holder of the Company's $875,000
convertible debentures converted all debt to the Company's restricted common
stock. 1,377,551 shares were converted at $0.49 per share pursuant to a November
9, 2000 Convertible Note Agreement, and 909,090 shares were converted at $0.22
per share pursuant to a Convertible Note Agreement dated April 18, 2001. The
holder also exercised all available options and warrants associated with these
convertible notes as follows: Two (2) 175,000 share options dated December 28,
2000 were exercised at a price of $.05 per share; 502,500 warrants were
exercised at a price of $.05 per share pursuant to an agreement dated April 7,
2000; 352,941 warrants were exercised at a price of $.05 per share pursuant to
an agreement dated June 7, 2000; 1,377,551 warrants were exercised at a price of
$.05 per share pursuant to an agreement dated November 9, 2000 and 909,090
warrants were exercised at a price of $.05 per share pursuant to an agreement
dated April 18, 2001. The Company received net proceeds of $30,633 from the
options exercised and warrants, after paying in full a short term note owed to
the note holder of $125,000 plus accrued interest of $18,971.
On March 16, 2002, the Board of Directors authorized the issuance of 301,300
shares of restricted common stock to Savitar Farms, LLC in full settlement of a
promissory note payable dated August 8, 2001 in the amount of $30,130.
On April 3, 2002, the Board of Directors authorized the issuance of 189,979
shares of restricted common stock to AlphaCom, Inc. a current shareholder, in
partial settlement of a $75,000 promissory note payable due to AlphaCom dated
October 5, 2000. The balance of the note as of April 3, 2002 is $40,595.
On April 29, 2002 the Board of Directors authorized the issuance of 1,000,000
shares of restricted common stock to Jerry D. Kennett, MD. The Company received
net proceeds of $750,000 from the sale of these shares. The investor
will have the option to purchase additional shares for a period of five years as
follows: 1,000,000 shares of common stock at a price of $1.00 per share;
1,000,000 shares of common stock at a price of $1.50 per share; and 1,000,000
shares of common stock at a price of $2.00 per share.
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Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) No Reports on Form 8-K were filed during the quarter for which
this report is filed.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
American Millennium Corporation, Inc.
-------------------------------------
(Registrant)
Date: June 21, 2002 /s/ Garrett L. Thomas
----------------------------------
Garrett L. Thomas, President
(Chief Executive Officer)
Date: June 21, 2002 /s/ Stephen F. Watwood
--------------------------------------
Stephen F. Watwood, Vice President of
Business Development
Date: June 21, 2002 /s/ Andrew F. Cauthen
--------------------------------------
Andrew F. Cauthen, Vice Chairman
Date: June 21, 2002 /s/ Bruce R. Bacon
--------------------------------------
Bruce R. Bacon, Chief Technology Officer,
Vice President of Engineering
Date: June 21, 2002 /s/ Shirley Harmon
--------------------------------------
Shirley Harmon, Corporate Secretary
Date: June 21, 2002 /s/ Ronald J. Corsentino
--------------------------------------
Ronald J. Corsentino, Controller,
Treasurer, Chief Financial Officer
14