U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(check one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Six Months Ended December 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE EXCHANGE ACT OF 1934
Commission File Number 000-30486
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.
------------------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA
-------
(State or other jurisdiction
of incorporation or organization)
65-0738251
----------
(IRS Employer Identification No.)
420 LEXINGTON AVENUE, NEW YORK, NY 10170
----------------------------------------
(Address of principal executive offices)
(646)-227-1600
--------------
(Registrant's telephone number)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 3 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 [ ]
As of January 31, 2004, there were 1,244,482,094 shares of
the registrant's no par value common stock issued and outstanding
Transmittal Small Business Disclosure Format (check one):
YES [ ] NO [X]
PART I-FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets as of December 31, 2003
(Unaudited) and June 30, 2003
Condensed Consolidated Statements of Operations for the three and six
months ended December 31, 2003 and 2002 (Unaudited)
Condensed Consolidated Statement of Stockholders' Deficiency for the
six months ended December 31, 2003 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the six months
ended December 31, 2003 and 2002 (Unaudited)
Notes to Unaudited Condensed Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ITEM 3. CONTROLS AND PROCEDURES
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
i
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 JUNE 30, 2003
(UNAUDITED)
-------------------------------------------------
ASSETS
Current Assets
Cash $ 56,471 $ 22,527
--------------------------- --------------------
Total Current Assets 56,471 22,527
--------------------------- --------------------
Other Assets
Prepaid expense/security deposits 10,000 7,700
Deferred financing costs, net of accumulated amortization 14,271 40,521
--------------------------- --------------------
Total Other Assets 24,271 48,221
--------------------------- --------------------
TOTAL ASSETS $ 80,742 $ 70,748
=========================== ====================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
LIABILITIES
Current liabilities
Accounts payable $ 400,697 $ 1,560,165
Accrued compensation - 172,183
Loan payable to shareholder 1,055,736 1,055,736
8% note payable-current portion 57,831 57,831
12% note payable - 35,000
5% convertible debentures due 1/04 325,000 944,000
10% secured convertible debentures due 11/04, net of discount of $83,853 103,647 -
Interest payable 35,303 242,407
--------------------------- --------------------
Total Current Liabilities 1,978,214 4,067,322
--------------------------- --------------------
Long-Term Liabilities
10% secured convertible debentures due 11/04, net of discount of $130,729 - 56,771
8% note payable-non current portion 57,832 115,663
Note payable-ACT Australia 1,791,166 1,791,166
--------------------------- --------------------
Total Long Term Liabilities 1,848,998 1,963,600
--------------------------- --------------------
TOTAL LIABILITIES 3,827,212 6,030,922
--------------------------- --------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Preferred stock, $.01 par value, 25,000,000 shares authorized,
none issued and outstanding - -
Common stock, no par value, 5,000,000,000 and 200,000,000 shares authorized,
1,044,430,196 and 198,852,622 shares issued and outstanding, respectively 27,791,150 25,945,005
Deferred commitment fees, net of accumulated amortization - (187,500)
Accumulated deficit (31,537,620) (31,717,679)
--------------------------- --------------------
Total Stockholders' Deficiency (3,746,470) (5,960,174)
--------------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 80,742 $ 70,748
=========================== ====================
See accompany notes to condensed consolidated financial statements
1
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-----------------------------------------------------------------------
2003 2002 2003 2002
-----------------------------------------------------------------------
REVENUE $ - $ - $ - $ -
-----------------------------------------------------------------------
OPERATING EXPENSES
Consulting fees - 1,667 - 18,439
Depreciation and amortization 106,875 106,312 213,750 211,062
Professional fees 122,527 171,147 191,547 463,556
Other selling, general and administrative expenses 16,294 27,901 54,317 52,088
-----------------------------------------------------------------------
TOTAL OPERATING EXPENSES $ 245,696 $ 307,027 $ 459,614 $ 745,145
-----------------------------------------------------------------------
Loss From Operations (245,696) (307,027) (459,614) (745,145)
-----------------------------------------------------------------------
OTHER INCOME (EXPENSES)
Forgiveness of debt 733,827 740,680 -
Lawsuit settlement - (15,000) - (188,494)
Interest expense (37,730) (327,167) (101,007) (399,667)
-----------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSES) 696,097 (342,167) 639,673 (588,161)
-----------------------------------------------------------------------
NET INCOME (LOSS) $ 450,401 $ (649,194) $ 180,059 $(1,333,306)
=======================================================================
Net income (loss) per share-basic and dilutive $ 0.00 $ (0.005) $ 0.00 $ (0.01)
=======================================================================
Weighted average number of shares outstanding
during the period-basic and dilutive 763,357,062 118,798,274 487,076,833 116,947,051
=======================================================================
See accompany notes to condensed consolidated financial statements
2
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
COMMON STOCK DEFERRED
-------------------------------- ACCUMULATED COMMITMENT
SHARES AMOUNT DEFICIT FEES TOTAL
-------------- -------------------------------------------------------------
BALANCE AT JUNE 30, 2003 198,852,622 $ 25,945,005 $ (31,717,679) $ (187,500) $(5,960,174)
-------------- -------------------------------------------------------------
Stock issued for cash, net 273,613,641 684,125 684,125
Stock issued for conversion of convertible debt
and accrued interest 429,690,125 788,820 788,820
Amortization of deferred commitment fees 187,500 187,500
Stock issued for accounts payable 125,297,618 335,000 335,000
Stock issued in settlement of creditor claims 16,976,190 38,200 38,200
Net income for the period 180,059 180,059
-------------- -------------------------------------------------------------
1,044,430,196 $ 27,791,150 $ (31,537,620) $ - $(3,746,470)
BALANCE AT DECEMBER 31, 2003 ============== =============================================================
See accompany notes to condensed consolidated financial statements
3
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
DECEMBER 31,
------------------------------------------------
2003 2002
------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 180,059 $ (1,333,306)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 213,750 211,062
Stock issued in exchange for services - 5,000
Lawsuit settlements - 173,494
Debt discount expense 46,876 250,000
Forgiveness of debt (740,680) -
Changes in operating assets and liabilities:
(Increase) decrease in assets
Prepaid expense/security deposits (2,300) 5,525
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (303,143) 430,840
Interest payable 48,088 149,667
-----------------------------------------
Net cash used in operating activities (557,350) (107,718)
------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 684,125 -
Repayment of short term and installment debt (92,831) -
Proceeds from issuance of convertible debt, net - 100,000
---------------------------------------
Net cash provided by financing activities 591,294 100,000
---------------------------------------
Net increase (decrease) in cash 33,944 (7,718)
Cash at beginning of period 22,527 11,093
---------------------------------------
CASH AT END OF PERIOD $ 56,471 $ 3,375
========================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid $ 6,043 $ 0
========================================
Income Taxes Paid $ 0 $ 0
=========================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the six months ended December 31, 2003, the Company recorded $373,200 representing 142,273,808 shares of restricted common
stock issued for prior unpaid accrued professional fees and various creditor settlements (See Note 5).
During the six months ended December 31, 2003, debenture holders converted $619,000 and $169,820 of principal and interest,
respectively, into 338,876,567 and 90,813,558 of common stock respectively.
During the six months ended December 31, 2002, the Company issued 4,250,000 shares of restricted common stock valued at $100,407
in full settlement of the September 1999 12% Senior Secured Convertible Debentures.
During the six months ended December 31, 2002, the Company issued 500,000 shares of restricted common stock valued at $5,000 in
partial satisfaction of unpaid prior legal and consulting fees.
During the six months ended December 31, 2002, the Company converted $125,000 of accrued interest into 10% Secured Convertible
Debentures.
See accompany notes to condensed consolidated financial statements
4
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements
include the results of Advanced Communications Technologies, Inc. (the
"Company") and its wholly-owned subsidiaries. The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial statements. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to the quarterly reporting rules of the Securities
and Exchange Commission. The financial statements reflect all adjustments of a
recurring nature that are, in the opinion of management, necessary for the fair
presentation of the financial statements.
Operating results for the six months ended December 31, 2003 are not
necessarily indicative of the results that may be expected for the fiscal year
ending June 30, 2004. The interim financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
for the fiscal year ended June 30, 2003 included in the Company's Form 10-KSB as
filed with the Securities and Exchange Commission.
(A) ORGANIZATION
Advanced Communications Technologies, Inc., a Nevada corporation, was
incorporated on April 30, 1998 and was inactive from its date of formation until
April 1999 when it merged with and into the Company, a Florida corporation, in a
reverse merger. In consideration for 90% of the stock of the Company, Advanced
Communications Technologies, Inc (Nevada) (of which Roger May, our former
Chairman and CEO was the principal shareholder) transferred all of its assets
which included all of the rights and interest in the SpectruCell technology for
the North and South American territories. For accounting purposes, the merger
was treated as an acquisition of all of the assets of the Company and as a
recapitalization of the Company. In July 1999, the Company formed Advanced
Global Communications, Inc. ("AGC") as a wholly owned subsidiary to conduct its
international telephone network distribution business. On July 1, 2001, AGC
ceased operations and has been inactive since this date. On January 31, 2000,
the Company acquired all of the then issued and outstanding shares of
SmartInvestment.com, Inc. ("Smart"), an inactive reporting company, for 200,000
shares of restricted common stock. The Company elected successor issuer status
to become a fully reporting company. On December 9, 2003 and December 17, 2003,
the Company formed Hudson Street Investments, Inc. ("Hudson Street") and
SpectruCell, Inc., respectively, both wholly-owned subsidiaries. Hudson Street
was formed for the purpose of holding the Company's investment in Yorkville
Advisors Management LLC (see footnote 8) and SpectruCell, Inc was formed for the
purpose of holding the Company's rights in the SpectruCell technology acquired
in the above-referenced merger. Both Hudson Street and SpectruCell, Inc were
inactive as of December 31, 2003.
(B) PRINCIPLES OF CONSOLIDATION
The accompanying condensed consolidated financial statements include the
accounts of the Company and its inactive subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.
(C) USE OF ESTIMATES
In preparing consolidated financial statements in conformity with generally
accepted accounting principles in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and revenues and expenses
during the reported period. Actual results could differ from those estimates
(D) EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing income (loss)
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution of securities, using the treasury stock method, that could share in the
earnings of an entity. During the three and six months ended December 31, 2002,
shares of common stock that could have been issued upon conversion of
convertible debt were excluded from the calculation of diluted earnings (loss)
per share as their effect would have been anti-dilutive.
5
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
NOTE 2. CREDITOR SETTLEMENTS AND DEBT FORGIVENESS
During the three months ended December 31, 2003, the Company negotiated,
settled and/or converted approximately $2,200,000 of accounts payable and
accrued liabilities and convertible debentures at a discount to face generating
$733,827 of forgiveness of debt income. For the six months ended December 31,
2003, the Company realized $740,680 of forgiveness of debt income arising from
such negotiations.
NOTE 3. NOTES AND LOAN PAYABLE
(A) 8% NOTE PAYABLE
On November 14, 2002, the Company settled its litigation with the
Needham/DuPont plaintiffs by agreeing to release the plaintiffs' stock from
restriction and issued a three year 8% promissory note for $173,494 to reimburse
the plaintiffs for their legal costs. The note is payable in three equal annual
installments of principal and interest, the first of which was due on December
1, 2003 with additional installments due on December 1, 2004 and December 1,
2005. The current portion of the note payable of $57,831 has been classified as
a current liability on the balance sheet.
On November 24, 2003, the Company paid the first loan installment of
$57,831 plus accrued interest of $4,855.
Interest of $10,496 was accrued on the remaining balance of the note
payable as of December 31, 2003.
(B) 12% NOTE PAYABLE
On June 19, 2003, the Company issued a 12% promissory note for $35,000. The
face amount of this note plus interest was payable in its entirety 60 days from
the date thereof. The note payable for $35,000 has been classified as a current
liability on the balance sheet. The note plus interest was paid on October 1,
2003 in the amount of $36,188.
NOTE 4. CONVERTIBLE DEBENTURES
5% CONVERTIBLE DEBENTURES DUE JANUARY 2004
In January 2002, the Company issued, in the aggregate, $1 million of 5%
Convertible Debentures to Cornell Capital Partners, LP and 15 other accredited
individual investors.
These debentures are convertible into shares of common stock at a price
equal to either (a) an amount equal to 120% of the closing bid price of the
common stock as of the closing date or $.40, whichever is higher, or (b) an
amount equal to 80% of the average of the four lowest closing bid prices of the
common stock for the five trading days immediately preceding the conversion
date. These Convertible Debentures accrue interest at a rate of 5% per year and
are convertible at the holder's option. These Convertible Debentures have a term
of two years. At the Company's option, these debentures may be paid in cash at
maturity or redeemed at a 20% premium prior to January 2004. The Company
incurred $80,000 of financing costs associated with the 5% Convertible
Debentures that is being amortized over the life of the debentures. Amortization
of $20,000 was expensed for each of the six months ended December 31, 2003 and
2002, respectively.
During the six months ended December 31, 2003, debenture holders converted
$619,000 of debentures into 338,876,567 shares of common stock and converted
$169,820 of accrued interest into 90,813,558 shares of common stock. As of
December 31, 2003, the balance due on these debentures after the aforementioned
conversions is $325,000.
As of February 2, 2004, the bondholders elected to convert the balance of
principal and accrued interest in the amount of $328,861 into 155,593,145 shares
of common stock (see footnote 8).
On October 28, 2003 and November 10, 2003, bondholders agreed to forgive
$85,372 of accrued interest, in the aggregate.
6
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
As of December 31, 2003, interest of $2,936 is accrued on these debentures.
10% SECURED CONVERTIBLE DEBENTURES DUE NOVEMBER 2004
On November 22, 2002, the Company entered into a Securities Purchase
Agreement with Cornell Capital Partners, L.P., whereby it agreed to issue and
sell Two Hundred Fifty Thousand Dollars ($250,000) of Secured Convertible
Debentures. These Secured Convertible Debentures have a term of two years and
are convertible into shares of common stock at a price equal to $.001 per share
commencing on December 31, 2002. These Secured Convertible Debentures accrue
interest at a rate 10% per year and are convertible at the holder's option. At
the Company's option, these debentures may be paid in cash or redeemed at a 20%
premium on or before December 15, 2002 and at a 50% premium after December 15,
2002 and prior to November 2004. In connection with the Securities Purchase
Agreement, the Company entered into a Security Agreement in favor of Cornell
Capital Partners, L.P. whereby it granted a security interest in all of its
assets as security for its obligations under the Secured Convertible Debentures,
as well as all other obligations of Advanced Communications to Cornell Capital
Partners, L.P. whether arising before, on or after the date of the Security
Agreement, including, without limitation, those obligations of the Company to
Cornell Capital Partners, L.P. under the Convertible Debentures dated January
2002.
The Convertible Debentures contain a beneficial conversion feature computed
at its intrinsic value that is the difference between the conversion price and
the fair value on the debenture issuance date of the common stock into which the
debt is convertible, multiplied by the number of shares into which the debt is
convertible at the commitment date. The amount attributable to the beneficial
conversion feature of $250,000 is recorded as a discount on the debt and
accreted over a 24 month period as interest expense in accordance with EITF
00-27. For the six months ended December 31, 2003, the Company accreted $46,876
of debt discount as interest expense.
The Company incurred $25,000 of financing costs associated with these
Convertible Debentures that is being amortized over the life of the debentures.
Amortization expense of $6,250 related to these debentures was recorded for the
six months ended December 31, 2003.
As of December 31, 2003, the $187,500 balance due on these debentures, net
of the related debt discount in the amount of $83,853, is $103,647.
As of December 31, 2003, interest of $21,871 is accrued on these
debentures.
NOTE 5. STOCKHOLDERS' DEFICIENCY
On July 9, 2003, the Company's stockholders authorized a change in the
Company's Articles of Incorporation increasing the authorized no par value
common shares from 200,000,000 to 5,000,000,000. A Certificate of Amendment to
the Company's Articles of Incorporation reflecting the above change was filed
with the Florida Secretary of State on July 10, 2003.
(A) EQUITY LINE OF CREDIT FACILITY
During the six months ended December 31, 2003, the Company issued
273,613,641 shares of common stock under the Equity Line of Credit facility for
$725,000. The Company netted $684,125 from these issuances after deducting
escrow agent expenses and other direct costs totaling $40,875 that has been
recorded as a reduction of additional paid-in capital as of December 31, 2003.
(B) STOCK ISSUED FOR CONVERTIBLE DEBENTURES
During the six months ended December 31, 2003, the 5% convertible debenture
holders converted $619,000 of debentures and $169,820 of accrued interest into
338,876,567 and 90,813,558 shares of common stock, respectively.
7
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
(C) STOCK ISSUED FOR SERVICES
On September 24, 2003, the Company's Board of Directors approved the
issuance of 85,714,285 shares of restricted common stock, in the aggregate, to
various officers and directors having a value of $240,000 in the aggregate,
based on the closing price of the stock the day prior to the issuance, in
partial satisfaction of unpaid prior professional services. These shares were
issued on October 3, 2003. During November 2003, the Company's Board of
Directors approved the issuance of 39,583,333 shares of restricted common stock,
in the aggregate, to various officers and directors having a value of $95,000 in
the aggregate, in partial settlement of unpaid prior professional fees. During
November and December 2003, the Company's Board of Directors approved the
issuance of 16,976,190 shares of restricted common stock having a value of
$38,200 in the aggregate, to various creditors in full satisfaction of their
claims.
NOTE 6. COMMITMENTS AND CONTINGENCIES
(A) LEGAL MATTERS
Management has settled all of its outstanding lawsuits and has previously
recorded the financial statement impact of such settlements. During the three
months ended December 31, 2003, the Company has settled all but a few minor
disputes with its creditors. Two creditors have filed and obtained judgments
against the Company for unpaid fees and services in the amount of $21,064 and
one creditor has filed a lawsuit against the Company for the recovery of its
claims. The Company has previously recorded this expense and has determined that
these judgments and lawsuit will not have a material adverse impact on the
Company's financial condition. The Company is currently in settlement
discussions with these creditors.
On February 5, 2004, the Company filed suit in California against Advanced
Communications (Australia), Roger May, Global Communications Technologies
Limited and Global Communications Technologies Pty Ltd to recover damages
incurred as a result of wrongful actions of such defendants against the Company
and to clarify the status of the Company's obligations to such defendants under
various agreements and other arrangements, from which the Company believes it
has been relieved as a result of such wrongful actions.
(B) LEASE
During the three months ended December 31, 2003, the Company entered into a
Termination of Lease Agreement with its California landlord. Under the terms of
the Termination of Lease Agreement, the Company agreed to make a one time
payment of $35,000 to the landlord in exchange for the release of all claims
against the Company for all unpaid past accrued rent in the amount of $133,400
and the remaining 14 month lease obligation in the amount of $109,634.
Management does not believe that the contingency described in (A) above
will have a material adverse impact on the future financial condition of the
Company.
NOTE 7. GOING CONCERN
The Company's consolidated financial statements for the six months ended
December 31, 2003, have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. The Company's net income of
$180,059, negative cash flows from operations of $557,350 for the six months
ended December 31, 2003, working capital deficiency of $1,921,743 and
stockholders' deficiency of $3,746,470, as of December 31, 2003, raise
substantial doubt about its ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on
the Company's ability to implement its business plan and invest in and/or
acquire existing profitable business enterprises. On January 14, 2004, the
Company, through its wholly-owned subsidiary, Hudson Street acquired a minority
interest in Yorkville Advisors Management, LLC, a privately owned investment
management firm. Management anticipates that projected distributions from this
investment along with the periodic issuance of securities under its Equity Line
of Credit facility, if necessary, will generate sufficient resources for the
continuation and expansion of the Company's operations. During the three months
ended December 31, 2003, the Company reduced its contractual obligations by
approximately $2,200,000 through a combination of bondholder conversions, debt
forgiveness, settlements with creditors and the issuance of common stock.
The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
8
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
NOTE 8. SUBSEQUENT EVENTS
During January and February 2004, bondholders elected to convert the
balance of principal of $325,000 and accrued interest of $3,861 or $328,861 of
the 5% convertible debentures into 155,593,145 shares of common stock.
On January 22, 2004, the Company announced that on January 14, 2004, Hudson
Street, its wholly-owned subsidiary acquired a minority interest in Yorkville
Advisors Management, LLC, a privately owned investment management firm and the
portfolio manager of Cornell Capital Partners, L.P.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors that will have affected our financial condition and results
of operations. Certain statements under this section may constitute
"forward-looking statements". The following discussion should be read in
conjunction with the June 30, 2003 audited financial statements and notes
thereto included in the Company's Form 10-KSB.
FINANCIAL CONDITION
We had net losses of $1,869,031 and $4,332,693 during the years ended June
30, 2003 and 2002, respectively. For the six months ended December 31, 2003, we
generated net income of $180,059. As of December 31, 2003, we had cash of
$56,471 and current liabilities of $1,978,214. As of June 30, 2003, our current
liabilities amounted to $4,067,322. During the three months ended December 31,
2003, we reduced our liabilities by approximately $2,200,000 through a
combination of bondholder conversions, debt forgiveness, settlements with
creditors and the issuance of common stock in satisfaction of creditor claims.
On January 14, 2004, we acquired a minority interest in Yorkville Advisors
Management, LLC, a privately held investment management company. We anticipate
that future distributions from this investment and periodic draw downs, if
necessary, of our Equity Line of Credit facility will provide us with sufficient
working capital to meet our current liabilities, continue our operations and to
execute our business/investment expansion plans.
Our independent auditors have added an explanatory paragraph to their audit
opinions issued in connection with the years 2003 and 2002 financial statements,
which states that our ability to continue as a going concern depends upon our
ability to resolve liquidity problems, and generate sufficient revenues to
become profitable. Our ability to implement our business plan and expand our
business and investment interests will determine our ability to continue as a
going concern. Our financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2003 TO THE THREE MONTHS ENDED
DECEMBER 31, 2002
OVERALL RESULTS OF OPERATIONS
For the three months ended December 31, 2003 we generated net income of
$450,401, which was a $1,099,595 increase from the loss of ($649,194) or
($0.005) per share for the comparable period in the prior year.
The substantial increase in net income for the three months ended December
31, 2003 over the comparative period was a result of the Company generating
$733,827 of forgiveness of debt income due to favorable settlements with its
accounts payable creditors and the reduction of interest bearing debt during the
quarter which generated an overall reduction in interest expense in the amount
of $289,437 during the three months ended December 31, 2003 compared with the
prior period.
REVENUE
No revenues were generated during either the three months ended December
31, 2003 or December 31, 2002.
OPERATING EXPENSES
Operating expenses for the three months ended December 31, 2003, were
$245,696 and represent a modest decrease in operating expenses from $307,027 for
the comparative period ended December 31, 2002. Included in operating expenses
for both periods is $106,875 and $106,312, respectively, of non-cash charges for
amortization attributable to deferred financing and commitment fees.
Professional and consulting fees for the three months ended December 31, 2003
decreased by $50,287 from $172,814 to $122,527 due to the decrease in legal fees
as a result of the Company's settlement of all its remaining lawsuits and its
withdrawal from the Australian litigation with Roger May and Advanced
Communications (Australia) during fiscal 2003.
Other selling, general and administrative expenses decreased by $11,607
from the comparative three month period ended December 31, 2002 due to the
termination in November 2003 of the Company's California office lease.
10
OTHER INCOME (EXPENSE)
During the three months ended December 31, 2003, the Company incurred
interest expense of $37,730 that was attributable to $14,292 of accrued interest
on the Company's 10% Secured Convertible Debentures, the outstanding 5%
$1,000,000 Convertible Debentures and the 8% Note Payable and $23,438 of debt
discount expense treated as interest attributable to the beneficial conversion
feature of the Company's 10% Secured Convertible Debentures. Forgiveness of debt
income of $733,827 for the three months ended December 31, 2003 was attributable
to the favorable settlement of a majority of the Company's accounts payable and
accrued expenses in the amount of $648,455 and the forgiveness of interest
expense in the amount of $85,372 by certain of the 5% convertible debenture
holders.
Interest expense incurred for the three months ended December 31, 2002 was
$327,167 and was principally attributable to $250,000 of intrinsic interest on
the beneficial conversion feature of the Company's 10% Secured Convertible
Debentures due November 2004, $72,500 of accrued and default interest on the 5%
$1,000,000 Convertible Debentures due January 2004 and $1,889 of interest on the
8% Note Payable due 2005. During the quarter, the Company also converted
$125,000 of accrued and default interest on its 5% $1,000,000 Convertible
Debentures due January 2004 into the Company's 10% $250,000 Secured Convertible
Debentures that it issued in November 2002. During the three month period ended
December 31, 2002, the Company also recorded, in accordance with paragraphs 8(a)
and 35 of FASB 5, $15,000 of expense relating to the settlement of the Star
MultiCare lawsuit. No such expense was incurred during the comparative three
month period ended December 31, 2003 as the Company settled all of its lawsuits
in prior periods.
COMPARISON OF THE SIX MONTHS ENDED DECEMBER 31, 2003 TO THE SIX MONTHS ENDED
DECEMBER 31, 2002
OVERALL RESULTS OF OPERATIONS
For the six months ended December 31, 2003, the Company earned net income
of $180,059, as compared to an overall net loss of ($1,333,306) or ($.01) per
share, for the comparative six months ended December 31, 2002. The turnaround of
the Company's six month results of operations for the period ended December 31,
2003 or $1,513,365 is a result of the Company negotiating and settling a
majority of its accounts payable and other liabilities at a substantial discount
and generating forgiveness of debt income in the amount of $740,680 along with a
$487,154 reduction in interest expense and lawsuit settlements.
REVENUE
No revenues were generated during either the six months ended December 31,
2003 or December 31, 2002.
OPERATING EXPENSES
Operating expenses for the six months ended December 31, 2003, were
$459,614 and represent a $285,531 or 38% decrease in operating expenses of
$745,145 for the comparative period ended December 31, 2002. Included in
operating expenses for both periods is $213,750 and $211,062 respectively, of
depreciation and amortization attributable to the depreciation of our office
property and equipment and amortization attributable to deferred financing and
commitment fees. Professional and consulting fees for the six months ended
December 31, 2003 decreased by $290,448 over the comparable six month period
ended December 31, 2002 due to the decrease in legal fees associated with the
Company's settlement of all its remaining lawsuits and its litigation with Roger
May and Advanced Communications (Australia) during the six months ended December
31, 2002. All of the legal and professional fees that were incurred during the
six months ended December 31, 2002 were settled at a substantial discount during
the six months ended December 31, 2003.
Other selling, general and administrative expenses increased marginally by
$2,229 from $52,088 to $54,317 for the six months ended December 31, 2003,
principally due to the additional proxy and stock solicitation costs associated
with our shareholder meeting in July 2003.
OTHER INCOME (EXPENSE)
During the six months ended December 31, 2003, the Company incurred
interest expense of $101,007 which was attributable to $54,131 of accrued
interest on the Company's 10% Secured Convertible Debentures, the outstanding 5%
$1,000,000 Convertible Debentures and the 8% Note Payable and $46,876 of debt
discount expense treated as interest attributable to the beneficial conversion
feature of the Company's 10% Secured Convertible Debentures. Forgiveness of debt
income of $740,680 for the six months ended December 31, 2003 was attributable
to the favorable settlement of a majority of the Company's accounts payable and
11
accrued expenses at a substantial discount and the forgiveness of accrued
interest by certain 5% convertible bondholders.
Interest expense incurred for the six months ended December 31, 2002 was
$399,667 and was principally attributable to $250,000 of intrinsic interest on
the beneficial conversion feature of the Company's 10% Secured Convertible
Debentures due November 2004, $145,000 of accrued and default interest on the 5%
$1,000,000 Convertible Debentures due January 2004, $1,889 of interest on the 8%
Note Payable due 2005 and $2,778 of interest on the 10% $250,000 Secured
Convertible Debentures issued November 2002. During the six month period ended
December 31, 2002, the Company settled its remaining two lawsuits and recorded
$188,494 of settlement expense in accordance with paragraphs 8(a) and 35 of FASB
5. No such expense was incurred during the comparative six month period ended
December 31, 2003.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2003, our principal source of liquidity was $56,471 of
cash. On July 16, 2003, we entered into a new Equity Line of Credit Agreement
with Cornell Capital Partners, L.P., a private limited partnership. Pursuant to
the Equity Line of Credit, we may, at our discretion, periodically sell to
Cornell Capital Partners shares of common stock for a total purchase price of up
to $30.0 million. For each share of common stock purchased under the Equity Line
of Credit, Cornell Capital Partners will pay 91% of the lowest closing bid price
of our common stock on the Over-the-Counter Bulletin Board or other principal
market on which our common stock is traded for the 5 days immediately following
the notice date. The periodic sale of shares is known as an advance.
During the six months ended December 31, 2003, the Company has made
advances under the Equity Line of Credit for an aggregate amount of $725,000 in
exchange for issuing 273,613,641 shares of common stock to Cornell Capital
Partners, L.P. The Company netted $684,125 from these advances after deducting
escrow agent expenses and other direct costs totaling $40,875 that has been
recorded as a reduction of additional paid-in capital as of December 31, 2003.
On January 14, 2004, the Company, through its wholly-owned subsidiary, Hudson
Street Investment, LLC ("Hudson Street") acquired a minority interest in
Yorkville Advisors Management, LLC, a privately owned investment management firm
and the portfolio manager of Cornell Capital Partners, L.P. Management
anticipates that projected distributions from this investment along with the
periodic issuance of securities under its Equity Line of Credit facility, if
necessary, will generate sufficient cash resources for the continuation and
expansion of the Company's operations. The Company is of the belief that based
on its anticipated cash flows from Hudson Street's investment and the
availability of its Equity Line of Credit facility, the Company's financial
position has been favorably stabilized and it will have sufficient cash
resources to pursue its business plan of acquisition, investment and expansion.
We anticipate that our cash needs over the next 12 months consist of
general working capital needs of $300,000, plus the repayment of outstanding
indebtedness of $922,478. These obligations include outstanding Convertible
Debentures and interest thereon in the amount of $453,454, as well as accounts
payable and accrued expenses in the amount of $400,697. As of December 31, 2003,
we had a working capital deficiency of $1,921,743.
The Company had total liabilities of $3,827,212 as of December 31, 2003.
Included in this total are contractual obligations of $980,310. These
contractual obligations, along with the dates on which such payments are due,
are described below:
PAYMENTS DUE BY PERIOD
---------------------------------------------------------------------------
1 2-3 4-5 AFTER 5
CONTRACTUAL OBLIGATIONS TOTAL YEAR OR LESS YEARS YEARS YEARS
- --------------------------------------------- ---------------------------------------------------------------------------
Notes Payable and Interest Thereon $ 126,159* $ 63,080 $ 63,079 $ -- $ --
Convertible Debentures and Interest Thereon 453,454 453,454 -- -- --
Accounts Payable and Accrued Expenses 400,697 400,697 -- -- --
-- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Contractual Obligations $ 980,310 $ 917,231 $ 63,079 $ -- $ --
=========== =========== =========== =========== ===========
============================================================================================================================
12
* Excludes $1,791,166 due to Advanced Communications (Australia) under the Stock
Purchase Agreement dated April 5, 2000. The Company believes that this
obligation is not enforceable as a result of Advanced Communications
(Australia)'s improper unilateral revocation of the Stock Purchase Agreement and
other wrongful acts of Advanced Communications (Australia), Roger May and
related parties. Also excludes $1,055,736 due to Roger May and/or Global
Communications Technologies Limited and/or Global Communications Technologies
Pty Ltd for monies provided to the Company. The Company believes it is not
obligated to pay these amounts as a result of wrongful acts of such parties
against the Company. On February 5, 2004, the Company filed suit in California
seeking a judgment against Advanced Communications (Australia), Roger May,
Global Communications Technologies Limited and Global Communications
Technologies Pty Ltd to recover damages related to their wrongful acts against
the Company. The Company's damages claims exceed the $2,846,902 allegedly due
such defendants. The Company also seeks in the action to have its obligations
under the Stock Purchase Agreement and other arrangements clarified as to such
defendants.
During the three months ended December 31, 2003, the Company reduced its
contractual obligations by approximately $2,200,000 through a combination of
bondholder conversions, debt forgiveness, settlements with creditors and the
issuance of common stock.
As of February 2, 2004, the 5% convertible bondholders converted the
remainder of the Company's outstanding obligation of $325,000 including accrued
interest of $3,861 into common stock.
Below is a discussion of our sources and uses of funds for the six months
ended December 31, 2003:
NET CASH USED IN OPERATING ACTIVITIES
Net cash used in operating activities was $557,350 and $107,718 for the six
months ended December 31, 2003 and 2002, respectively. The use of cash by
operating activities for the six months ended December 31, 2003 was principally
from a reduction in accounts payable in the amount of $303,143, and an increase
in debt forgiveness income offset by non-cash charges for amortization and debt
discount expense. The use of cash in operating activities for the six months
ended December 31, 2002 was principally the result of a net loss during the
period reduced by an increase in accounts payable and accrued interest in the
amount of $580,507 and by non-cash charges for depreciation and amortization,
debt discount expense, common stock issued in exchange for services and lawsuit
settlements in the aggregate amount of $639,556.
NET CASH FROM INVESTING ACTIVITIES
No cash was provided by or used in investing activities for the six months
ended December 31, 2003 and 2002.
NET CASH FROM FINANCING ACTIVITIES
Net cash from financing activities for the six months ended December 31,
2003 of $684,125 and was from net proceeds on the sale of common stock to
Cornell Capital Partners, L.P., under the Company's Equity Line of Credit
facility, offset by the repayment of short-term and installment debt in the
amount of $92,831. Net cash of $100,000 from financing activities for the six
months ended December 31, 2002 was from the net proceeds on the $250,000 10%
Secured Convertible Debentures issued in November 2002.
COMPANY QUARTERLY STOCK PRICE
PRICE RANGE OF COMMON STOCK
Our common stock is currently traded on the Over-the-Counter Bulletin Board
("OTCBB") under the symbol "ADVC". As of January 31, 2004, there were
1,244,482,094 common shares outstanding and approximately 500 holders of record.
We believe that the number of beneficial owners is substantially greater than
the number of record holders because a large portion of our common stock is held
in "broker" or "street names".
The following table sets forth, for the fiscal periods indicated, the bid
price range of our common stock:
HIGH BID LOW BID
--------- ---------
2003
Quarter Ended September 30, 2002 $ .080 $ .005
Quarter Ended December 31, 2002 .015 .004
Quarter Ended March 31, 2003 .010 .002
Quarter Ended June 30, 2003 .011 .006
2004
Quarter Ended September 30, 2003 $.007 $.00163
Quarter Ended December 31, 2003 $.00363 $.00169
--------- ---------
13
Such market quotations reflect the high bid and low prices as reflected by
the OTCBB or by prices, without retail mark-up, markdown or commissions and may
not necessarily represent actual transactions.
ITEM 3. CONTROLS AND PROCEDURES
As of December 31, 2003, we carried out an evaluation, under the
supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective in timely alerting them to material
information required to be included in our periodic reports that are filed with
the Securities and Exchange Commission. It should be noted that the design of
any system of controls is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions,
regardless of how remote. In addition, we reviewed our internal controls, and
there have been no significant changes in our internal controls or in other
factors that could significantly affect those controls subsequent to the date of
their last valuation.
14
PART II
OTHER INFORMATION
The statements in this quarterly report, Form 10-QSB, that are not
historical constitute "forward-looking statements". Such forward-looking
statements involve risks and uncertainties that may cause the actual results,
performance or achievements of the Company and its subsidiary to be materially
different from any future results, performances or achievements, express or
implied by such forward-looking statements. These forward-looking statements are
identified by their use of such terms and phrases as "expects", "intends",
"goals", "estimates", "projects", "plans", "anticipates", "should", "future",
"believes", and "scheduled".
ITEM 1. LEGAL PROCEEDINGS
On February 5, 2004, the Company filed a lawsuit in the Orange County
Superior Court in California against Advanced Communications (Australia), Roger
May, Global Communications Technologies Limited and Global Communications
Technologies Pty Ltd to recover damages incurred as a result of wrongful actions
taken by the defendants against the Company and to clarify the status of the
Company's obligations to such defendants under various agreements and other
arrangements, from which the Company believes it has been relieved as a result
of such wrongful actions.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
All issuances of restricted stock have been valued based on the closing
price of the stock as of the date the Company's Board of Directors approved the
grant of shares or under the terms of the Company's Convertible Debentures.
On January 8, 2004, the Board of Directors approved the issuance of
1,000,000 shares of restricted common stock to Mr. Steve Black for professional
services rendered to the Company. The stock was valued at $.00281 per share or
$2,810, the closing bid price of the stock on the date approved by the Board.
On January 5, 2004, January 7, 2004, January 15, 2004, January 22, 2004,
and February 2, 2004, holders of our 5% Convertible Debentures converted
$25,000, $50,000, $75,000, $75,000, and $103,861 or $328,861 in the aggregate,
of principal and interest at conversion prices of $.001676, $.001776, $.002076,
$.00238, and $.002314 per share into 14,916,468, 28,153,153, 36,127,168,
31,512,605, and 44,883,751 or 155,593,145 shares of common stock, in the
aggregate, respectively.
On December 3, 2003 and December 17, 2003, the Board of Directors approved
the issuance of 8,142,857 shares of restricted common stock having a value of
$17,000 or $.0020 per share, to various creditors in full satisfaction of their
claims.
On December 3, 2003, holders of our 5% Convertible Debentures elected to
convert $85,252 of principal and accrued interest at a conversion price of
$.001716 per share into 49,680,653 shares of common stock.
On November 3, 2003 and November 10, 2003, holders of our 5% Convertible
Debentures elected to convert $25,000 and $156,000 or $181,000 of principal and
accrued interest, in the aggregate, at conversion prices of $.00189 and $.0016
per share into 13,227,513 and 97,500,000 or 110,727,513 shares of common stock
in the aggregate, respectively.
On October 31, 2003, the Board of Directors approved the issuance of
39,583,333 shares in the aggregate of restricted common stock to various
officers and directors having a value of $95,000 in the aggregate, in partial
satisfaction of unpaid prior professional services. The shares were valued based
on the closing price of the stock or $.0024 per share, immediately prior to its
issuance. The shares were issued on November 4, 2003. On that same date, the
Board of Directors also approved the issuance of 8,833,333 of restricted common
stock to various creditors in full satisfaction of their claims. The stock was
also valued at $.0024 per share.
On October 7, 2003, October 20, 2003 and October 21, 2003 holders of our 5%
Convertible Debentures elected to convert $188,746, $201,447 and $50,000 or
$440,193 in the aggregate, at conversion prices of $.00207, $.00211 and $.00218
per share, of principal and interest into 91,181,642, 95,472,510 and 22,935,780
or 209,589,932 shares of common stock in the aggregate, respectively.
15
With respect to the sale of unregistered securities referenced above, all
transactions were exempt from registration pursuant to Rule 506 promulgated
under the Securities Act of 1933 (the "1933 Act"). These offerings may have
qualified for other exemptions as well. In each instance, the purchaser had
access to sufficient information regarding Advanced Communications Technologies,
Inc. so as to make an informed investment decision. More specifically, Advanced
Communications Technologies, Inc. had a reasonable basis to believe that each
purchaser was an "accredited investor" as defined in Regulation D of the 1933
Act, which information was based on representations received from such
investors, and otherwise had the requisite sophistication to make an investment
in Advanced Communications Technologies, Inc.'s securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On January 14, 2004, Hudson Street Investments, LLC, a newly formed special
purpose business entity wholly owned by the Company, acquired a minority
interest in Yorkville Advisors Management, LLC, the portfolio manager of Cornell
Capital Partners, LP.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS.
EXHIBIT NO. DESCRIPTION LOCATION
----------------------------------------------------- --------------------------------------------
1.1 Exchange Agreement between MRC Legal Services Incorporated by reference to Exhibit 1.1 to
Corporation and Advanced Communications Technologies, Company's Form 8-K filed on February 4, 2000
Inc. dated as of January 31, 2000
2.1 Articles of Incorporation of Media Forum Incorporated by reference to Exhibit 2.1 to
International, Inc. the Company's Form S-8 filed on February 9,
2000
2.2 Second Amendment to Articles of Incorporation of Incorporated by reference to Exhibit 2.2 to
Telenetworx, Inc. the Company's Form S-8 filed on February 9,
2000
2.3 Third Amendment to Articles of Incorporation of Incorporated by reference to Exhibit 2.3 to
Forum International, Inc. the Company's Form S-8 filed on February 9,
Media 2000
2.4 Bylaws of the Company Incorporated by reference to Exhibit 2.4 to
the Company's Form S-8 filed on February 9,
2000
2.5 Articles of Incorporation as currently in effect for Incorporated by reference to Exhibit 3.1 to
the Company Form S-1 Registration Statement filed on
August 14, 2001
2.6 Bylaws, as currently in effect Incorporated by reference to Exhibit 3.2 to
Form S-1 Registration Statement filed on
August 14, 2001
16
EXHIBIT NO. DESCRIPTION LOCATION
----------------------------------------------------- --------------------------------------------
2.7 Fourth Amendment to Articles of Incorporation Incorporated by reference to Exhibit 2.7 to
the Form SB-2 filed with the SEC on March 5,
2002
2.8 Fifth Amendment to Articles of Incorporation Incorporated by reference to Exhibit 2.8 to
the Form SB-2 filed with the SEC on July 16,
2003
10.1 Lease Agreement dated as of November 27, 2001 between Incorporated by reference to Exhibit 10.1 to
the Company and Continental Development, L.P. II the Form SB-2 filed with the SEC on March 5,
2002
10.2 Stock Purchase Agreement between Advanced Incorporated by reference to Exhibit 10.2 to
Communications Technologies, Inc. and Advanced the Form S-1 Registration Statement filed on
Communications Technologies (Australia) Pty Ltd. August 14, 2001
10.3 Agreement dated June 27, 2000, between Ladenburg Incorporated by reference to Exhibit 10.3 to
Thalmann & Co. and the Company the Company's Form S-1 Registration Statement
filed on August 14, 2001
10.4 Common Stock Purchase Agreement dated December 14, Incorporated by reference to Exhibit 10.4 to
2000, between the Company and Wanquay Ltd. the Company's Form S-1 Registration Statement
filed on August 14, 2001
10.5 Registration Rights Agreement dated December 14, Incorporated by reference to Exhibit 10.5 to
2000, between the Company and Wanquay Ltd. the Company's Form S-1 Registration Statement
filed on August 14, 2001
10.6 Escrow Agreement dated December 14, 2000, among the Incorporated by reference to Exhibit 10.6 to
Company, Wanquay Ltd. and Epstein Becker & Green the Company's Form S-1 Registration Statement
filed on August 14, 2001
10.7 Consulting Agreement with M. Richard Cutler dated Incorporated by reference to Exhibit 10.1 to
January 31, 2000 the Company's Form S-8 filed on February 9,
2000
10.8 Stock Purchase Agreement dated April 5, 2000, between Incorporated by reference to Exhibit 10.5 to
Advanced Communications Technologies, Inc. and the Company's Form 10-QSB filed on May 24,
Advanced Communications Technologies Pty Ltd. 2000
10.9 Securities Purchase Agreement dated January 10, 2002, Incorporated by referenced to Exhibit 10.9 to
by and among Advanced Communications Technologies, the Company's Form 10-QSB filed on February
Inc. and Buyers 12, 2002
10.10 Investor Registration Rights Agreement dated January Incorporated by reference to Exhibit 10.10 to
10, 2002, by and among Advanced Communications the Company's Form 10-QSB filed on February
Technologies, Inc. and Investors 12, 2002
10.11 Transfer Agent Instructions Incorporated by reference to Exhibit 10.11 to
the Company's Form 10-QSB filed on February
12, 2002
10.12 Escrow Agreement dated January 10, 2002, by and among Incorporated by reference to Exhibit 10.12 to
Advanced Communications Technologies, Inc., Buyers the Company's Form 10-QSB filed on February
and First Union National Bank 12, 2002
17
EXHIBIT NO. DESCRIPTION LOCATION
----------------------------------------------------- --------------------------------------------
10.13 Equity Line of Credit Agreement dated July 2003, by Incorporated by reference to Exhibit 10.13 to
and between Cornell Capital Partners, LP and Advanced the Form SB-2 filed with the SEC on July 16,
Communications Technologies, Inc. 2003
10.14 Registration Rights Agreement dated July 2003, by and Incorporated by reference to Exhibit 10.14 to
between Advanced Communications Technologies, Inc. the Form SB-2 filed with the SEC on July 16,
2003
10.15 Placement Agent Agreement dated July 2003, by and Incorporated by reference to Exhibit 10.15 to
between Advanced Communications Technologies, Inc. the Form SB-2 filed with the SEC on July 16,
and Westrock Advisors, Inc. 2003
10.16 Escrow Agreement dated July 2003, by and among Incorporated by reference to Exhibit 10.16 to
Advanced Communications Technologies, Inc., Cornell the Form SB-2 filed with the SEC on July 16,
Capital Partners, LP, Butler Gonzalez LLP and First 2003
Union National Bank
10.17 License and Distribution Agreement dated as of Incorporated by reference to Exhibit 10.17 to
July 5, 2000, between Advanced Communications the Company's Amendment to Form 10-KSB filed
Technologies, Inc. and Advanced Communications on May 23, 2002
Technologies (Australia) Pty. Ltd.
10.18 Letter of Intent dated September 7, 2001 re: Purchase Incorporated by reference to Exhibit 10.18 to
of Advanced Communications (Australia) Amendment No. 1 to the Company's Form 10-QSB
for the quarter ended December 31, 2001
10.19 Securities Purchase Agreement, dated November 2002, Incorporated by reference to Exhibit 10.19 to
by and among Advanced Communications and Buyers the Company's Form 10-KSB for the year ended
June 30, 2002 filed on December 6, 2002
10.20 Investor Registration Rights Agreement, dated Incorporated by reference to Exhibit 10.20 to
November 2002, by and among Advanced Communications the Company's Form 10-KSB for the year ended
and Investors June 30, 2002 filed on December 6, 2002
10.21 Secured Convertible Debenture Incorporated by reference to Exhibit 10.21 to
the Company's Form 10-KSB for the year ended
June 30, 2002 filed on December 6, 2002
10.22 Escrow Agreement, dated November 2002, by and among Incorporated by reference to Exhibit 10.22 to
Advanced Communications, Buyers, and Wachovia Bank, the Company's Form 10-KSB for the year ended
N.A. June 30, 2002 filed on December 6, 2002
10.23 Irrevocable Transfer Agent Instructions, dated Incorporated by reference to Exhibit 10.23 to
November 2002 the Company's Form 10-KSB for the year ended
June 30, 2002 filed on December 6, 2002
10.24 Security Agreement, dated November 2002, by and among Incorporated by reference to Exhibit 10.24 to
Advanced Communications and Buyers the Company's Form 10-KSB for the year ended
June 30, 2002 filed on December 6, 2002
18
EXHIBIT NO. DESCRIPTION LOCATION
----------------------------------------------------- --------------------------------------------
10.25 Middletons Lawyers Letter, dated November 11, 2002, Incorporated by reference to Exhibit 10.25 to
terminating the April 2000 Stock Purchase Agreement the Company's Form 10-KSB for the year ended
between Advanced Communications Technologies, Inc. June 30, 2002 filed on December 6, 2002
and Advanced Communications (Australia)
10.26 Consulting Agreement dated July 1, 2002, between Incorporated by reference to Exhibit 10.26 to
Advanced Communications and Randall H. Prouty the Company's Third Amended Form 10-KSB for
the year ended June 30, 2002 filed on
June 13, 2003
10.27 Proxy Statement, dated March 25, 1999 Incorporated by reference to Exhibit 10.27 to
the Company's Third Amended Form 10-KSB for
the year ended June 30, 2002 filed on
June 13, 2003
10.28 Termination of Lease Agreement, dated November 25, Provided herewith
2003, by and between Continental Development, L.P. II
(Lessor) and Advanced Communications
31.1 Certification by Chief Executive Officer and Chief Provided herewith
Financial Officer pursuant to Sarbanes-Oxley
Section 302
32.1 Certification by Chief Executive Officer and Chief Provided herewith
Financial Officer pursuant to 18 U.S.C.
Section 1350:
(B) REPORTS ON FORM 8-K.
None.
19
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ADVANCED COMMUNICATIONS TECHNOLOGIES, INC.
By: /S/ WAYNE I. DANSON
----------------------------------
Name: Wayne I. Danson
Title: President (Principal Executive
Officer), Chief Financial Officer
(Principal Accounting Officer)
and Director
Date: February 13, 2004
20