10QSB: Optional form for quarterly and transition reports of small business issuers
Published on August 20, 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 June 30, 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 August 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 Sheets as of June 30, 2001 and December 31, 2000.......... 4
Statement of Operations for the six months and three months
ended June 30, 2001 and 2000 and the period from October 29,
1998 (commencement of the development stage) to June 30, 2001..... 5
Statement of Stockholders' Equity (Deficit) for the six months
ended June 30, 2001............................................... 6
Statements of Cash Flows for the six months and three months
ended June 30, 2001 and 2000 and the period from October 29,
1998 (commencement of the development stage) to June 30, 2001..... 7
Notes to Financial Statements..................................... 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ........................................ 10
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 ....................................................................... 12
2
FORWARD-LOOKING STATEMENTS
Certain statements contained in this filing are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements relating to financial results and plans for future business
development activities, and are thus prospective. These statements appear in a
number of places in this Form 10-QSB and include all statements that are not
statements of historical fact regarding intent, belief or our current
expectations, with respect to, among other things: (i) our financing plans; (ii)
trends affecting our financial condition or results of operations; (iii) our
growth strategy and operating strategy; and (iv) the declaration and payment of
dividends. The words "may," "would," "could," "will," "expect," "estimate,"
"anticipate," "believe," "intent," "plans," and similar expressions and
variations thereof are intended to identify forward-looking statements.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, many of
which are beyond our ability to control. Actual results may differ materially
from those projected in the forward-looking statements as a result of various
factors. Among the key risks, assumptions and factors that may affect operating
results, performance and financial condition are changes in technology,
fluctuations in our quarterly results, ability to continue and manage our
growth, liquidity and other capital resource issues, competition and the other
factors discussed in detail in our filings with the Securities and Exchange
Commission.
3
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A Development Stage Company)
Balance Sheet
ASSETS
CURRENT ASSETS June 30, 2001 December 31, 2000
(unaudited)
Cash $ 80 $ 186
Total Current Assets $ 80 $ 186
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expense $ 173,802 $ 10,460
Advances payable to related party 149,539 114,569
Total Current Liabilities 323,341 125,029
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, authorized 500,000,000 common
shares; par value .001, 113,923,579 and
97,950,128 shares issued and outstanding, 1,682,983 1,321,983
Accumulated deficit during the development stage (2,006,244) (1,446,826)
Total Stockholders' Equity (Deficit) (323,261) (124,843)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 80 $ 186
============= ==============
See accompanying notes.
4
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
Inception of the
Development
Stage on
For the For the October 29,
Six Months Ended Three Months Ended 1998 Through
June 30, June 30, June 30,
2001 2000 2001 2000 2001
REVENUES
Revenues $ - $ 252,403 $ - $ 126,238 $ 642,802
Cost of goods sold - 100,690 - 47,623 303,939
Gross Profit - 151,713 - 78,615 338,863
EXPENSES
General and administrative 559,418 464,408 214,598 260,670 2,187,078
Sales and marketing - 70,557 - 34,924 160,338
Total Expenses (559,418) 534,965 214,598 295,594 2,347,416
Other Income (Expense) - 646 - - 2,309
Net loss before provision
for income taxes (559,418) (382,606) (214,598) (216,979) (2,006,244)
Provision for income taxes - - - - -
NET LOSS $ (559,418) $ (382,606) $(214,598) $(216,979) $(2,006,244)
=========== =========== ========== ========== ============
Weighted average loss per share
Basic and Diluted (0.005) (0.005) (0.002) (0.0025)
=========== =========== ========== ==========
Weighted average shares outstanding
Basic and Diluted 103,654,932 72,720,000 109,486,509 73,148,000
=========== =========== ========== ==========
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AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE SIX-MONTHS ENDED JUNE 30, 2001
(Unaudited)
Deficit
Accumulated
During the
Common Stock Development
Shares Amount Stage
Balance, December 31, 2000 97,950,128 $ 1,321,983 $ (1,446,826)
Issuance of common stock
for services ($.0226 per share) 15,973,451 361,000 -
Net loss for the six-months
ended June 30, 2001 - - (559,418)
Balance, June 30, 2001 113,923,579 $ 1,682,983 $ (2,006,244)
6
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception of the
Development
Stage on
For the For the October 29,
Six Months Ended Three Months Ended 1998 Through
June 30, June 30, June 30,
2001 2000 2001 2000 2001
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (559,418) $ (382,606) $ (214,598) $ (216,979) $ (2,006,244)
ADJUSTMENTS TO RECONCILE NET
LOSS TO NET CASH USED IN
OPERATING ACTIVITIES:
Bad debt expense - 26,666 - 23,144 40,285
Depreciation and amortization - 26,400 - 12,450 44,550
Loss on abandoned assets - - - - 180,451
CHANGES IN OPERATING ASSETS
AND LIABILITIES:
(Increase) Decrease in receivables - 40,499 - 15,199 (40,285)
Increase (Decrease) in payables
and accrued expenses 163,342 96,654 (165,432) 88,243 167,662
Stock issued for services 361,000 106,367 361,000 78,000 1,217,883
Net cash provided (used) by
operating activities (35,076) (86,020) (19,030) 57 (395,698)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of fixed assets - - - - (4,136)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Advances from stockholder 34,970 25,000 18,610 - 155,679
Issuance of common stock - 25,000 - - 200,100
Issuance of debt - - - - 50,000
Payments of capital
lease obligations - (5,865) - (3,000) (5,865)
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES: 34,970 44,135 18,610 (3,000) 399,914
Net (Decrease) Increase in cash (106) (41,885) (420) (2,943) 80
Cash at beginning of period 186 43,613 500 4,671 -
Cash at end of period $ 80 $ 1,728 $ 80 $ 1,728 $ 80
============== ============ ============= ============= =============
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AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited) (continued)
From
Inception of the
Development
Stage on
For the For the October 29,
Six Months Ended Three Months Ended 1998 Through
June 30, June 30, June 30,
2001 2000 2001 2000 2001
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest $ - $ - $ - $ - $ -
=============== ================ ============== =============== ================
Income taxes $ - $ - $ - $ - $ -
=============== ================ ============== =============== ================
SUPPLEMENTAL DISCLOSURE
OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Equipment purchased under
capital lease $ - $ 34,379 $ - $ - $ 38,515
Stock issued for services $ 361,000 $ 106,367 $ 361,000 $ 78,000 $ 1,217,883
Stock issued for debt $ - $ - $ - $ - $ 50,000
Stock issued for license $ - $ - $ - $ - $ 215,000
Disposal of asset and
Capital lease payable $ - $ - $ - $ - $ 32,650
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AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: BUSINESS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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 six months ended June
30, 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 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. $18,610,
which is non-interest bearing, unsecured, and due on demand.
NOTE 3: GOING CONCERN
The accompanying financial statements have been prepared on a 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 $323,261, an accumulated deficit of $(2,006,244) as of June 30, 2001, and a
net loss for the quarter then ended of $244,147. 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 the Company 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.
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NOTE 4: RECENT EVENTS
The Company entered into a letter of intent in May, 2001, to acquire 100%
ownership of Aero Group, Inc., through a reverse merger. As of the date of this
filing this transaction has not been consummated; however, Tampa Bay Financial,
Inc., a related party shareholder, has advanced $375,000 during July and August,
2001, to Aero Group, Inc. in connection with its obligations under the letter of
intent.
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 six months ended June 30, 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 six months and quarter ended June 30, 2001, we did not generate any
revenues. We generated $252,403 and $126,238 in revenues for the six months and
quarter ended June 30, 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 $559,418 and $214,598 for the six months
and quarter ended June 30, 2001 as compared with a net loss of $382,606 and
$216,979 for the six months and quarter ended June 30, 2000. For the quarter
ended June 30, 2001, our operating expenses of $214,598 consist primarily of
accrued fees which were paid in April, 2001 through the issuance of common
shares, whereas in the quarter ended June 30, 2000 operating expenses of
$295,594 consisted of broadcast operations, sales and marketing and general and
administrative expenses. Such expenses decreased by $80,996 as a result of the
cessation of our Time Brokerage Agreement.
The results of operations for the period ended June 30, 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.
10
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
June 30, 2001, used cash of $19,030. Operating activities were primarily funded
through advances from Tampa Bay Financial, Inc. of $18,610. At June 30, 2001, we
had cash and cash equivalents of $80. Our accrued expenses were substantially
converted to equity in April, 2001 through the issuance of common shares.
Based upon our current plans, we anticipate that we will need to seek additional
funding. The Company is pursuing acquisitions. Pursuit of acquisitions are in
their early stages, however, it is difficult to predict what revenue stream, if
any, they will generate.
We do not expect our revenue stream to be sufficient to cover costs of
operations in the immediate future. We expect that we 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. We will attempt to raise
this capital by borrowing, but no lender has issued a binding commitment to the
Company. Therefore, we expect to engage in one or more private placements of
common stock to fund our operating needs. We have engaged in discussions with
several parties who have expressed interest in assisting us 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 difference include, among others, the
following: (i) any material inability of the Company to successfully internally
develop its products;(iii) any adverse effect or limitations caused by
Governmental regulations; (iv) any 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
a) Exhibits:
10.1 Letter of Intent dated May 17, 2001, between the Registrant and Aero Group, Inc.
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.
5/15/2001 /s/ Matthew A. Veal
Date Matthew A. Veal
Director, Chief Financial Officer,
and Accounting Officer
12