10QSB: Optional form for quarterly and transition reports of small business issuers
Published on November 19, 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 September 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 November 10, 2001.
131,733,896 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
1
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets as of September 30, 2001 and December 31,
2000..........................................................3
Statements of Operations for the nine months and three
months ended September 30 and September 30, 2001 and 2000.....4
Statements of Stockholders' Equity (Deficit) for the
nine months ended September 30, 2001..........................5
Statements of Cash Flows for the nine months and
three months ended September 30 and
September 30, 2001 and 2000 ..................................6
Notes to Financial Statements.................................8
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..............................13
Signatures......................................................................13
2
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
September 30, 2001 December 31,
(Unaudited) 2000
ASSETS
CURRENT ASSETS
Cash $ 310 $ 186
Total Assets $ 310 $ 186
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 10,199 $ 10,460
Accrued consulting fees 64,500 -
Advances payable to related party 152,716 114,569
Total Current Liabilities 227,415 125,029
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Common stock; authorized 500,000,000
common shares; par value .001,
126,773,579 and 97,950,128 shares issued
and outstanding at 9/30/01 and 12/31/00 2,068,483 1,321,983
Deficit accumulated during the
development stage (2,295,588) (1,446,826)
Total Stockholders' Deficit (227,105) (124,843)
Total Liabilities and Stockholders' Deficit $ 310 $ 186
============= ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
3
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
From Inception
Nine-Months Three-Months On October 28,
Ended Ended 1998 through
September 30, September 30, September 30,
2001 2000 2001 2000 2001
REVENUE
Revenues $ - $ 252,403 $ - $ - $ 642,802
Cost of goods sold - 100,690 - - 303,939
Gross Profit 151,713 - 338,863
EXPENSES
General and
Administrative 848,762 591,922 289,344 154,180 2,371,894
Sales and marketing - 70,557 - - 133,672
Provisions for bad debt - 14,785 - 11,881 26,666
Total Expenses 848,762 677,264 289,344 142,299 2,532,232
Other Income (expense)
Other Income - 646 - - 2,309
Loss on abandoned assets - (33,365) - (33,365) -
Impairment of Intangibles - (175,600) - (175,600) -
Net Loss before Provision for
income taxes (848,762) (733,870) (289,344) (351,264) (2,191,060)
Provision for income taxes - - - - -
NET LOSS $ (848,762) $ (733,870) $ (289,344) $ (351,264) $(2,191,060)
============= ============= ============== ============= ============
Weighted average loss
Per share
Basic and Diluted $ (0.008) $ (0.01) $ (0.002) $ (0.005)
============= ============= ============== =============
Weighted average shares
Outstanding
Basic and Diluted 106,717,457 72,809,094 118,393,144 73,860,840
============= ============= ============== =============
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
4
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE THREE-MONTHS ENDED SEPTEMBER 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 ($0.0226 per share) 15,973,451 361,000 -
Issuance of common stock
For services ($.022 per share) 12,850,000 385,500 -
Net Loss for the nine-months
Ended September 30, 2001 - - (848,762)
Balance, September 30, 2001 126,773,579 $ 2,068,483 $ (2,295,588)
=========== =========== =============
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
5
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
From Inception
Nine-Months Three-Months On October 28,
Ended Ended 1998 through
September 30, September 30, September 30,
2001 2000 2001 2000 2001
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (848,762) $ (733,870) $ (289,344) $ (351,264) $ (2,191,060)
ADJUSTMENTS TO RECONCILE
NET LOSS TO NET CASH USED
IN OPERATING ACITIVITIES:
Bad debt expense - 14,785 - (11,881) 40,285
Depreciation and amortization - 26,400 - - 44,550
Loss on abandoned assets - 33,365 - 33,365 180,451
Impairment of assets - 175,600 - 175,600
CHANGES IN OPERATING ASSETS
AND LIABILITIES:
(Increase) Decrease in receivables - 55,441 - 14,942 (40,285)
Increase (Decrease) in payables
and accrued expenses 64,239 178,811 (99,103) 82,157 66,559
Stock issued for services 746,500 117,528 385,500 11,161 1,500,883
Net cash provided (used) by
Operating activities (38,023) (131,940) (2,947) (45,920) (398,617)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of fixed assets - - - - (4,136)
CASH FLOWS FROM
FINANCING ACTIVITIES
Advances from stockholder 38,147 73,000 3,177 48,000 158,856
Issuance of common stock - 25,000 - - 200,100
Issuance of debt - - - - 50,000
Payments of capital
Lease obligations - (5,865) - - (5,865)
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
6
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS - (CONTINUED)
(Unaudited)
From Inception
Nine-Months Three-Months On October 28,
Ended Ended 1998 through
September 30, September 30, September 30,
2001 2000 2001 2000 2001
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES: 784,647 92,135 388,677 48,000 403,091
Net (Decrease) Increase in cash 124 (39,805) 230 2,080 338
Cash at beginning of period $ 186 $ 43,613 $ 80 $ 1,728 $ -
Cash at end of period $ 310 $ 3,808 $ 310 $ 3,808 $ 338
Supplemental cash flow
Information:
Cash paid for:
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
Non-cash transactions:
Equipment purchased
Under capital lease $ - $ 34,379 $ - $ -
Stock issued for services $ 746,500 $ 117,528 $ 388,500 $ 11,161
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS
7
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 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 nine months ended September 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 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 $3,177 from Tampa Bay Financial, Inc.,
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 $(227,105), an accumulated deficit of $(2,295,558) as of September
30, 2001, and a net loss for the quarter then ended of $(289,344). 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, although it has
secured a funding commitment for $1.5 million from Tampa Bay Financial, Inc.These
factors among others may indicate that the Company will be unable to continue as
a going concern for a reasonable period of time.
8
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
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 nine months ended September 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 genomics-based products. Until acquisitions and research have
been completed, and potential customers are convinced of the viability of the
Company's fetus-testing products, 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
Three Months Ended September 30, 2001 and 2000
For the quarter ended September 30, 2001 we did not generate any revenues. We
generated $ -0- in revenues for the quarter ended September 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 $(289,344) for the quarter-ended
September 30, 2001 as compared with a net loss of $(351,264) for the
quarter-ended September 30, 2000. Our operating expenses of $(289,344) consist
primarily of accrued consulting fees which were paid through the issuance of
common shares. Whereas in the quarter ended September 30, 2000 operating
expenses of $142,299 consisted of wind up of broadcast operations, sales and
marketing and general and administrative expenses. Such expenses increased by
$147,045 as a result of an increase in accrued consulting fees.
The results of operations for the period ended September 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 in neonatal genomics.
Nine Months Ended September 30, 2001 and 2000
We incurred a net loss of approximately $848,762 for the nine months ended
September 30, 2001 as compared with a net loss of $733,870 for the nine months
ended September 30, 2000.
Our sales and cost of sales for the nine months and three months ended September
30, 2001, were $-0- and $-0- compared to $-0- and $-0- in the corresponding
period of the prior year which reflects the fact that we have yet to commence
our operations.
Our operating expenses consist primarily of general and administrative expenses
and depreciation and amortization. General and administrative expenses increased
to $848,762 for the nine months ended September 30, 2001 from $677,264 for the
nine months ended September 30, 2000 and principally includes payroll and
9
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
related taxes; professional fees for consulting, business development, legal and
accounting; office supplies expense; travel expense and organizational costs.
Inflation and Deflation
We do not believe that either inflation or deflation will have a significant
effect on operations for the foreseeable future.
Market Risk Exposure
We do not consider the market risk exposure relating to foreign currency
exchange to be or to have been material.
Financial Position, 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
September 30, 2001 used cash of $(2,947). Operating activities were primarily
funded through advances from Tampa Bay Financial, Inc. of $3,177. At September
30, 2001 we had cash and cash equivalents of $310. Our accrued expenses were
substantially paid 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 is in its early stages, however, and it is difficult to predict
what revenue stream, if any, it 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 any acquired company will need
cash to fund its operations. The Company will attempt to raise this capital
through a $1.5 million commitment to the Company. Management is confident that
private equity or debt financing will continue to be available to fund it until
revenues from operations are sufficient
We will require the proceeds of our financial commitment from Tampa Bay
Financial, Inc. to expand our genomics research operations and to provide our
future working capital. Based upon our current plans and assumptions relating to
our business plan, we anticipate that we may need to seek additional financing
to fund our proposed acquisition strategy. Due to the need for working capita1,
we will continue to seek additional debt and/or equity financing from existing
shareholders and other investment capital resources.
11
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
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 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.
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
On November 14, 2001, the Company acquired Neogenomics, Inc., a Florida bio-tech
startup company organized for the principal purpose of developing genomics tools
for women's diseases, such as ovarian cancer and the early diagnosis of neonatal
illness. The transaction provided that the Company acquired all of the issued
and outstanding common stock of Neogenomics, Inc. and the Company issued
238,500,000 shares of its common stock. Of such shares, 119,250,000 shares will
be placed in escrow which can be released (in whole or in part) to Dr. Michael
Dent, the founder of Neogenomics upon the achievement of certain milestones:
12
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
1. The Company will release 23,850,000 shares when Neogenomics, Inc. completes
the following: Neogenomics, Inc. enters into an employment agreement with a
qualified laboratory director, enter into a lease agreement for offices and
laboratory, and enter into an employment agreement with Dr. Dent.
2. The Company will release 23,850,000 shares when Neogenomics, Inc. completes
the following: Neogenomics, Inc. orders substantially all of the laboratory
equipment necessary to commence operations (either through purchase or lease)
and enters into an employment agreement with at least one qualified individual
to undertake scientific research as contemplated by the Neogenomics, Inc.
business plan.
3. The Company will release 23,850,000 shares when Neogenomics, Inc. completes
the following: Neogenomics, Inc. establishes a qualified scientific advisory
board of at least two members, and the board holds its first meeting.
4. The Company will release 23,850,000 shares when Neogenomics, Inc. completes
the following: Neogenomics, Inc. hires the personnel necessary to operate its
laboratory and the laboratory becomes operational.
5. The Company will release 23,850,000 shares when Neogenomics, Inc. completes
the following: Neogenomics, Inc. hires personnel necessary to commence research
activities (as contemplated by Neogenomics, Inc. business plan) and Neogenomics,
Inc. begins research activities.
Immediately prior to the closing of the acquisition the total number of shares
issued and outstanding will consist of 166,500,000 shares of common stock.
Additionally, as of the closing, the Company will not have any outstanding
options, warrants and other convertible securities (other than the options
issued to Dr, Dent).
Upon the achievement of each milestone, Tampa Bay Financial, Inc. (TBF), a
related party, has agreed to provide additional funding through the purchase of
45,000,000 restricted shares of the Company's common stock for $1,500,000 in
tranches of $300,000 each.
At the closing, the Company and Neogenomics, Inc. shall have a board of
directors of at least 5 persons, with the majority to be selected by Dr. Dent.
TBF has the right of first refusal with respect to any sale of shares by the
Company. In this connection, in the event that the company intends to issue any
securities, the Company will first offer TBF the right to acquire the shares at
a price which is equal to 50% of the current trading price of the shares.
Dr. Dent shall serve as president and chief executive officer of the Company and
Neogenomics, Inc. and an individual selected by TBF shall serve as the chief
financial officer of the Company and Neogenomics, Inc. The appointed board of
directors of the Company will select the other officers of the Company.
Dr. Dent also received options to acquire up to 135,000,000 additional shares of
the Company's common stock at an exercise price of $0.0001 per share. The
exercise rights vest on different accomplishments by the Company.
The Company will enter into a consulting agreement with TBF in which TBF will
provide services related to the Company's maintaining their public status and
paying the salary of the chief financial officer. In return the
13
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
Company will pay TBF $10,000 per month. The Company has agreed to settle all
liabilities and terminated its Letter of Intent with Aerogroup International
Corporation
Item 6. Exhibits and Reports on Form 8-K
2.1 Agreement and Plan of Exchange by and among American Communications Enterprises, Inc.,
Tampa Bay Financial, Inc., Neogenomics, Inc. and Michael T. Dent, M.D.
10.14 Consulting Agreement between the Company and Tampa Bay Financial, Inc.
10.15 Employee Stock Option Agreement between the Company and Michael T. Dent, M.D.
10.16 Employee Agreement between the Company and Michael T. Dent, M.D.
10.17 Shareholders Agreement.
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.
11/16/2001 /s/ Matthew A. Veal
Date Matthew A. Veal, Director, Chief Financial
and Accounting Officer