10QSB: Optional form for quarterly and transition reports of small business issuers
Published on May 15, 2001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934.
For the quarterly period ended March 31, 2001.
( ) Transition report pursuant to Section 13 or 15(d) of the Exchange Act for the transition period from
____________ to ____________ .
Commission File Number: 333-72097
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(Exact name of registrant as specified in charter)
Nevada 74-2897368
(State of Incorporation) (I.R.S. Employer I.D. No)
355 Interstate Blvd., Sarasota, FL 34240
(Address of Principal Executive Offices)
(941) 923-1949
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section 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 ( )
Indicate the number of shares outstanding of each of the issuer's classes of stock
as of May 10, 2001.
113,923,579 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
1
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheet as of March 31, 2001 and December 31, 2000.......3
Statement of Operations for the three months ended March 31,
2001 and 2000..................................................4
Statement of Stockholders' Equity (Deficit) for the three
months ended March 31, 2001....................................5
Statement of Cash Flows for the three months ended March 31,
2001 and 2000..................................................6
Notes to Financial Statements..................................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..............................................12
Item 2. Changes in Securities..........................................12
Item 3. Defaults Upon Senior Securities................................12
Item 4. Submission of Matters to a Vote of Securities Holders..........12
Item 5. Other Information..............................................12
Item 6. Exhibits and Reports on Form 8-K...............................12
Signatures
2
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
March 31, 2001 December 31,
(Unaudited) 2000
ASSETS
CURRENT ASSETS
Cash $ 500 $ 186
Total Assets $ 500 $ 186
==================== ==================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 9,734 $ 10,460
Accrued consulting fees 329,500 -
Advances payable to related party 130,929 114,569
Total Current Liabilities 470,163 125,029
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock; authorized 500,000,000
common shares; par value .001,
97,950,128 shares issued and
outstanding 1,321,983 1,321,983
Deficit accumulated during the
development stage (1,791,646) (1,446,826)
Total Stockholders' Deficit (469,663) (124,843)
Total Liabilities and Stockholders' Deficit $ 500 $ 186
==================== ==================
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
3
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(Unaudited)
From Inception On
Three-Months Three-Months October 29, 1998
Ended Ended Through March
March 31, 2001 March 31,2000 31, 2001
REVENUE
Revenues $ - $ 126,165 $ 642,802
Cost of goods sold - 53,067 303,939
Gross Profit - 73,098 338,863
EXPENSES
General and administrative 344,820 203,738 1,972,480
Sales and marketing - 35,633 160,338
Total Expenses 344,820 239,371 2,132,818
Other Income (Expense) - 646 2,309
Net loss before provision for income
taxes (344,820) (165,627) (1,791,646)
Provision for income taxes - - -
NET LOSS $(344,820) $(165,627) $(1,791,646)
====================== ===================== ======================
Weighted Average Loss Per Share
Basic and Diluted $ (0.00) $ (0.00)
====================== =====================
Weighted Average Shares Outstanding
Basic and Diluted 97,950,128 72,096,000
====================== =====================
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
4
AMERICAN COMMUNICATION ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE THREE-MONTHS ENDED MARCH 31, 2001
(Unaudited)
Deficit
Accumulated
Common Stock During the
Shares Amount Development Stage
Balance, December 31, 2000 97,950,128 $1,321,983 $(1,446,826)
Net Loss for the three-months ended March 31, 2001 -0- -0- (344,820)
Balance, March 31, 2001 97,950,128 $1,321,983 $(1,791,646)
================== ================= ===================
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
5
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(Unaudited)
For the For the From Inception On
Three-Months Three-Months October 29, 1998
Ended March Ended March Through
31, 2001 31, 2000 March 31, 2001
Cash Flows From Operating Activities
Net Loss $ (344,820) $ (165,627) $ (1,791,646)
Bad Debt Expense - 3,522 40,285
Depreciation and Amortization - 13,950 44,550
Loss on abandoned assets - - 180,451
(Increase) Decrease in Receivables - 25,300 (40,285)
Increase (Decrease) in Payables and Accrued
Expenses 328,774 8,411 333,094
Stock Issued for Services - 28,367 856,883
Net Cash Used by Operating Activities (16,046) (86,077) (376,668)
Cash Flows From Investing Activities
Purchase of fixed assets - - (4,136)
Net Cash Used by Investing Activities - - (4,136)
Cash Flows From Financing Activities
Advances from stockholder 16,360 25,000 137,069
Issuance of common stock - 25,000 200,100
Issuance of debt - - 50,000
Payments of Capital Lease obligation - (2,865) (5,865)
Net Cash Provided by Financing Activities 16,360 47,135 381,304
Net (Decrease) Increase In Cash 314 (38,942) 500
Cash at Beginning of Period 186 43,613 -
Cash at End of Period $ 500 $ 4,671 $ 500
================= ================ ===============
Supplemental cash flow information:
Cash Paid For:
Interest $ - $ - $ -
================= ================ ===============
Income Taxes $ - $ - $ -
================= ================ ===============
Non-Cash Transactions:
Stock issued for debt $ - $ - $ 50,000
Stock issued for services $ - $ 28,367 $ 856,883
Stock issued for licenses $ - $ - $ 215,000
Equipment purchased under capital lease $ - $ 38,515 $ 38,515
Disposal of assets and capital lease payable $ - $ 28,367 $ 32,650
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
6
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: BUSINESS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLOCIES
American Communications Enterprises, Inc. (the "Company") was incorporated
under the laws of the state of Nevada on October 29, 1998. The Company
is considered to be in the development stage, as defined in Financial
Accounting Standards Board Statement No. 7. The Company is currently
in the process of creating strategic relationships and acquiring
complementary operating companies within the global communications
industry that have proven management and state-of-the-art technologies.
Through October 12, 2000 the Company sought to purchase and operate
radio stations throughout the United States. The planned principal
operations of the Company have not commenced, therefore accounting
policies and procedures have not yet been established.
Basis of Presentation
The accompanying unaudited financial statements of the Company have
been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information
and the instructions to Form 10-QSB and Rule 10-1 of Regulation S-X
of the Securities and Exchange Commission (the "SEC"). Accordingly,
these financial statements do not include all of the footnotes required
by generally accepted accounting principles. In the opinion of management,
all adjustments (consisting of normal and recurring adjustments)
considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2001 are
not necessarily indicative of the results that may be expected for
the year ended December 31, 2001. The accompanying financial statements
and the notes should be read in conjunction with the Company's audited
financial statements as of December 31, 2000 contained in its Form 10-KSB.
NOTE 2: RELATED PARTY TRANSACTIONS
During the quarter, the Company borrowed from Tampa Bay Financial,
Inc. $16,360, which is non-interest bearing, unsecured, and due on demand.
NOTE 3: GOING CONCERN
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.
The Company has a working capital deficiency of $469,663, an accumulated
deficit of $1,791,646 as of March 31, 2001, and a net loss for the
7
quarter then ended of $344,820. Accordingly its ability to continue
as a going concern is dependent on obtaining capital and financing
for its planned principal operations. The Company plans to secure
financing for its acquisition strategy through the sale of its common
stock and issuance of debt. However, there is no assurance that they
will be successful in their efforts to raise capital or secure other
financing. These factors among others may indicate that the Company
will be unable to continue as a going concern for a reasonable period
of time.
NOTE 4: RECENT EVENTS
The Company entered into a letter of intent dated February 7, 2001,
to acquire 100% ownership of an operating company, through a reverse
merger. As of the audit report date this transaction has not been
consummated.
8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
OVERVIEW
The following discussion and analysis should be read in conjunction with the balance
sheet as of December 31, 2000 and the financial statements as of and for the three
months ended March 31, 2001 and 2000 included with this Form 10-QSB.
We are considered to be in the development stage as defined in Financial Accounting
Standards Board Statement No. 7. Although the Company has been in existence for a
number of years, management's efforts to develop the Company's business have not
yet resulted in generation of significant revenues. To date, management's efforts
have focused on acquisitions within the communications industry. The Company has
recently changed the focus of its business, from radio communications to telephone
communications using the internet as its backbone. Until acquisitions have been
completed and potential customers are convinced of the viability of the Company's
voice over internet protocol business, it is unlikely that the Company will generate
significant revenue. The following discussion of the Company's historical financial
results should be read against that background.
Readers are referred to the cautionary statement, which addresses forward-looking
statements made by the Company.
RESULTS OF OPERATIONS
For the quarter ended March 31, 2001 we did not generate any revenues. We generated
$126,165 in revenues for the quarter ended March 31, 2000, through the Time Brokerage
Agreement with the Stations, that primarily consisted of commercial or program time
sold.
We incurred a net loss of approximately $344,820 for the quarter-ended March 31, 2001
as compared with a net loss of $165,627 for the quarter-ended March 31, 2000. Our
operating expenses of $344,820 consist primarily of accrued consulting fees which
were paid in April 2000 through the issuance of common shares. Whereas in the quarter
ended March 31, 2000 operating expenses of $292,438 consisted of broadcast operations,
sales and marketing and general and administrative expenses. Such expenses increased
by $52,382 as a result of an increase in accrued consulting fees.
The results of operations for the period ended March 31, 2001 are not necessarily
indicative of the results for any future interim period or for the year ending December
31, 2000. We expect to expand upon obtaining capital and financing for our planned
principal operations.
9
Liquidity and Capital Resources
Our operating requirements have exceeded our cash flow from operations as we attempt
to build our business. Operating activities during the quarter ended March 31, 2001
used cash of $16,046. Operating activities were primarily funded through advances
from Tampa Bay Financial, Inc. of $16,360. At March 31, 2001 we had cash and cash
equivalents of $500. Our accrued expenses were substantially converted to equity
in April 2000 through the issuance of common shares.
Based upon the Company's current plans, the Company anticipates that it will need
to seek additional funding. The Company is pursuing acquisitions. Pursuit of acquisitions
are in their early stages, however, and it is difficult to predict what revenue
stream, if any, they will generate.
The Company does not expect its revenue stream to be sufficient to cover costs of
operations in the immediate future. The Company expects that it will continue to
be required to raise capital to fund operations for the next year as targeted acquisitions
may need cash to fund their operations. The Company will attempt to raise this capital
by borrowing, but no lender has issued a binding commitment to the Company. Therefore,
the Company expects to engage in one or more private placements of common stock to
fund its operating needs. The Company has engaged in discussions with several parties
who have expressed interest in assisting the Company in such a private offering,
based on potential acquisitions. Management is confident that private equity or debt
financing will be available to fund it until revenues from operations are sufficient
to fund operations.
CAUTIONARY STATEMENT
This Form 10-QSB, press releases and certain information provided periodically in
writing or orally by the Company's officers or its agents contain statements which
constitute forward-looking statements within the meaning of Section 27A of the Securities
Act, as amended and Section 21E of the Securities Exchange Act of 1934. The words
expect, anticipate, believe, goal, plan, intend, estimate and similar expressions
and variations thereof if used are intended to specifically identify forward-looking
statements. Those statements appear in a number of places in this Form 10-QSB and
in other places, particularly, Management's Discussion and Analysis of Financial
Condition and Results of Operations, and include statements regarding the intent,
belief or current expectations of the Company, its directors or its officers with
respect to, among other things: (i) the Company's liquidity and capital resources;
(ii) the Company's financing opportunities and plans and (iii) the Company's future
performance and operating results. Investors and prospective investors are cautioned
that any such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements as a result of various factors.
The factors that might cause such differences include, among others, the following:
(i) any material inability of the Company to successfully identify, consummate and
integrate acquisitions at reasonable and anticipated costs to the Company; (ii)
any material inability of the Company to successfully internally develop its products;
(iii) any adverse effect or limitations caused by Governmental regulations; (iv) any
10
adverse effect on the Company's continued positive cash flow and abilities to obtain
acceptable financing in connection with its growth plans; (v) any increased competition
in business; (vi) any inability of the Company to successfully conduct its business
in new markets; and (vii) other risks including those identified in the Company's
filings with the Securities and Exchange Commission. The Company undertakes no obligation
to publicly update or revise the forward looking statements made in this Form 10-QSB
to reflect events or circumstances after the date of this Form 10-QSB or to reflect the
occurrence of unanticipated events.
11
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Securities Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and 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.
05/15/2001 /s/ Matthew A. Veal
Date Mathew A. Veal, Director, Chief financial
and Accounting officer