UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
May 24, 2000
Antennas America, Inc.
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(Exact name of registrant as specified in its charter)
Utah
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(State of Other Jurisdiction of Incorporation)
000-18122 87-0454148
- -------------------------- -------------------------------------
(Commission File Number) (IRS Employer Identification Number)
4860 Robb Street, Suite 101
Wheat Ridge, Colorado, 80033-2163
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(Address of principal executive offices including zip code)
(303) 421-4063
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(Registrant's telephone number, including area code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
This form 8-K/A amends the Form 8-K filed with the Securities and Exchange
Commission on June 8, 2000 (the "Original Form 8-K") by including the financial
statements and pro forma financial information referred to below.
Item 7. Financial Statements, Pro Forma Information and Exhibits
(a) Financial Statements of Business Acquired
(1) Report of Independent Auditors.
(2) Winncom Technologies, Inc., balance sheets as of
December 31, 1999 and 1998 and the related statements
of operations, stockholders' equity and cash flows
for each of the two years in the period ended
December 31, 1999.
(3) Notes to Financial Statements of Winncom
Technologies, Inc.
(b) Pro Forma Financial Information (unaudited)
(1) Unaudited Pro Forma Condensed Combined Statement of
Operations for the Year Ended December 31, 1999.
(2) Unaudited Pro Forma Condensed Combined Statement of
Operations for the Quarter Ended March 31, 2000.
(3) Unaudited Pro Forma Condensed Combined Balance Sheet
as of March 31, 2000.
2
Report of Independent Auditors
The Board of Directors and Stockholders of
Winncom Technologies, Inc.
We have audited the accompanying balance sheets of Winncom Technologies, Inc. as
of December 31, 1999 and 1998, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Winncom Technologies, Inc. at
December 31, 1999 and 1998, and the results of its operations and cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
July 31, 2000
3
Winncom Technologies, Inc.
Balance Sheets
December 31,
1999 1998
----------------------------------------
Assets
Current assets:
Cash $ 18,780 $ 83,502
Accounts receivable, less allowance for doubtful accounts
of $109,600 and $15,600 for 1999 and 1998, respectively 1,421,301 351,337
Inventory 506,526 276,591
Due from officer 55,000 -
Prepaid expenses 3,615 992
----------------------------------------
Total current assets 2,005,222 712,422
Fixed assets, net 21,203 18,625
Deposits 4,660 4,660
----------------------------------------
Total assets $ 2,031,085 $ 735,707
========================================
Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 1,059,214 $ 523,130
Revolving line of credit 355,497 150,000
Notes payable - officers 30,126 30,126
Current portion of capital lease obligations 4,247 8,269
Accrued expenses 68,149 7,063
----------------------------------------
Total current liabilities 1,517,223 7,18,588
Capital lease obligations, less current portion 1,074 5,321
Notes payable - officers, less current portion - 5,000
----------------------------------------
Total liabilities 1,518,307 728,909
Stockholders' equity:
Common stock, no par value, 850 shares
authorized, and 230 shares issued
and outstanding 4,600 4,600
Retained earnings 508,178 2,198
----------------------------------------
Total stockholders' equity 512,778 6,798
----------------------------------------
Total liabilities and stockholders' equity $ 2,031,085 $ 735,707
========================================
See accompanying notes.
4
Winncom Technologies, Inc.
Statements of Operations
Years ended December 31,
1999 1998
----------------------------------------
Sales, net $ 7,338,247 $ 2,335,365
Cost of sales 5,540,595 1,588,238
----------------------------------------
Gross profit 1,797,652 747,127
Selling, general and administrative expenses 1,101,417 679,855
----------------------------------------
Income from operations 696,235 67,272
Interest expense 23,140 13,829
----------------------------------------
Net income $ 673,095 $ 53,443
========================================
See accompanying notes.
5
Winncom Technologies, Inc.
Statements of Stockholders' Equity
Common Stock
-------------------------------- Retained
Shares Amount Earnings Total
-----------------------------------------------------------------------
Balance, December 31, 1997 230 $ 4,600 $ (4,041) $ 559
Net income 53,443 53,443
Stockholder distributions (47,204) (47,204)
-----------------------------------------------------------------------
Balance, December 31, 1998 230 4,600 2,198 6,798
Net income 673,095 673,095
Stockholder distributions (167,115) (167,115)
-----------------------------------------------------------------------
Balance, December 31, 1999 230 $ 4,600 $ 508,178 $ 512,778
=======================================================================
See accompanying notes.
6
Winncom Technologies, Inc.
Statements of Cash Flows
Year ended December 31
1999 1998
-------------------------------------
Operating activities
Net income $ 673,095 $ 53,443
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation 9,549 7,856
Provision for bad debts 94,000 11,400
Changes in operating assets and liabilities:
Accounts receivable (1,163,964) (225,101)
Inventory (229,935) (157,879)
Due from officer (55,000) -
Prepaid expenses and other assets (2,623) (2,190)
Accounts payable and accrued expenses 597,170 334,640
-------------------------------------
Net cash (used in ) provided by operating activities (77,708) 22,169
Investing activities
Purchase fixed assets, net of capital leases (12,127) (867)
-------------------------------------
Net cash used in investing activities (12,127) (867)
Financing activities
Proceeds from revolving line of credit 223,867 150,000
Proceeds from issuing notes payable-officers - 35,126
Payments of revolving line of credit (18,370) (89,737)
Payments of capital lease obligation (8,269) (6,755)
Repayment of notes payable--officers (5,000) (24,728)
Distributions to stockholders (167,115) (47,204)
-------------------------------------
Net cash provided by financing activities 25,113 16,702
-------------------------------------
Net (decrease) increase in cash (64,722) 38,004
Cash, beginning of year 83,502 45,498
-------------------------------------
Cash, end of year $ 18,780 $ 83,502
=====================================
Supplemental cash flow information:
Cash paid for interest $ 21,872 $ 12,854
Capital lease obligations incurred - 3,914
See accompanying notes.
7
Winncom Technologies, Inc.
Notes to Financial Statements
December 31, 1999 and 1998
1. Organization and Summary of Significant Accounting Policies
Organization
Winncom Technologies, Inc. (the Company) was incorporated as a Subchapter S
corporation in Ohio on August 16, 1996. The Company operates in a single
business segment designing, assembling, distributing and servicing wireless
network products and systems for data and voice transmission using radio
technology.
The wireless network products and systems are sold to customers located
primarily in the United States. Export sales to customers located outside of the
United States totaled approximately $862,000 and $456,000 (12% and 20% of total
sales, respectively) in 1999 and 1998, respectively. The Company performs
ongoing credit evaluations of its customers and generally does not require
collateral. Losses from credit sales are provided for in the financial
statements and have historically been within management expectations.
Inventory
Inventory is valued at the lower of cost or market using the first-in first-out
method of accounting. Inventories are reviewed periodically and items considered
to be slow-moving or obsolete are reduced to estimated net realizable value
through an appropriate reserve. Inventory consists primarily of finished goods
at December 31, 1999 and 1998.
Fixed Assets
Fixed assets are stated at cost. The Company uses the straight-line method over
estimated useful lives of three to seven years to compute depreciation for
financial reporting purposes and accelerated methods for income tax purposes.
Amortization of assets recorded under capital leases is included in depreciation
expense and accumulated depreciation. Fixed assets consists of the following at
December 31:
1999 1998
------------------ -------------------
Computer equipment and software $ 27,253 $ 20,960
Furniture and fixtures 13,176 9,342
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42,429 $ 30,302
Accumulated depreciation (21,226) (11,677)
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$ 21,203 $ 18,625
================== ===================
8
1. Organization and Summary of Significant Accounting Policies (continued)
Fixed Assets (continued)
Fixed assets include the following amounts for capital leases at December 31:
1999 1998
------------------- ------------------
Computer equipment and software $18,360 $18,360
Furniture and fixtures 5,057 5,057
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23,417 23,417
Less accumulated depreciation (17,689) (9,883)
------------------- ------------------
$ 5,728 $13,534
=================== ==================
Substantially all of the Company's fixed assets are pledged as collateral for
debt described in Notes 2 and 3.
Research and Development
Research and development costs are charged to expense as incurred. These
expenses were $0 and $125,000, for the years ended December 31, 1999 and 1998,
respectively, and are included in selling, general and administrative expenses.
Revenue
Revenue is recorded when goods are shipped.
Fair Value of Financial Instruments
The Company's short-term financial instruments consist of cash, accounts
receivable, and accounts payable and accrued expenses. The carrying amounts of
these financial instruments approximate fair value because of their short-term
maturities. Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of cash and accounts
receivable.
9
1. Organization and Summary of Significant Accounting Policies (continued)
Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
Income Taxes
There is no provision for income taxes in the financial statements of the
Company, as the Company is not subject to Corporate income taxes under the
provisions of Subchapter S of the Internal Revenue Code. Each stockholder is
individually liable for his own tax payments.
Advertising Costs
Advertising costs are charged to operations when incurred. Advertising costs
charged to operations were $24,165 and $27,420 in 1999 and 1998, respectively.
2. Revolving Line of Credit
In 1998, the bank line of credit consisted of an asset-based revolving credit
line having a maximum borrowing amount of $250,000 at an interest rate of prime
plus 1.5% (9.25% at December 31, 1998), of which $150,000 was outstanding at
December 31, 1998. In 1999, the line of credit was renewed with a maximum
borrowing amount of $550,000 at an interest rate of prime plus 1.0% (9.50% at
December 31, 1999), of which $355,497 was outstanding at December 31, 1999. The
line had $194,503 and $100,000 of unused credit at December 31, 1999 and 1998,
respectively. This line was renewed with a new line of credit with a maximum
borrowing limit of $1,500,000 on April 12, 2000, at an interest rate of prime
plus 0.5%. The line is collateralized by accounts receivable, inventory and
otherwise unencumbered fixed assets, and is personally guaranteed by the
stockholders.
10
3. Capital Lease Obligations
The Company has entered into financing type lease transactions with leasing
companies to lease certain manufacturing equipment, office equipment and
software. Certain leases have bargain purchase options at the end of the lease
term. Scheduled maturities of the obligations as of December 31, 1999 are as
follows:
2000 $5,459
2001 1,107
-------------------
Minimum future lease payments 6,566
Less interest component (1,245)
-------------------
Present value of future net minimum lease
Payments 5,321
Less current portion (4,247)
-------------------
Due after one year $1,074
===================
4. Concentration of Credit Risk
The Company had no sales in excess of 10% of its net sales or to any single
party for the year ended December 31, 1999 or 1998. No customers accounts
receivable accounted for 10% or more of total accounts receivable as of December
31, 1999 or 1998.
5. Commitments
The Company has an outstanding commitment to a vendor requiring minimum
purchases of $2,000,000 at market rates in 2000. Management believes that this
commitment will be met. The Company made 62% and 33% of its inventory purchases
from two suppliers in 1999 and 1998, respectively.
11
6. Operating Leases
The Company leases its facilities and equipment under an operating lease through
January 31, 2003. Minimum future rentals payable under the leases are as
follows:
2000 $ 31,536
2001 30,000
2002 31,833
2003 2,667
------------------
$ 96,036
==================
Rent expense amounted to $36,115 and $30,361 for the years ended December 31,
1999 and 1998, respectively.
7. Transactions with Related Parties
During 1997 through 1999, an officer loaned the Company $25,126 on a
non-interest bearing demand note, which appears as Notes Payable - Officers.
This loan was repaid in May 2000.
In March 1998, a relative of an officer loaned the Company $10,000 on a term
loan bearing an interest rate of 12%, payable semi-annually, and a maturity date
of August 10, 2000. $5,000 was repaid in November 1999, and the balance was
repaid in March 2000.
In August 1999, the Company loaned an officer $55,000 evidenced by a
non-interest bearing note with a maturity date of July 31, 2000. The loan was
repaid in March 2000.
8. Subsequent Event
On May 24, 2000, Antennas America, Inc. (the "acquiring company") purchased the
outstanding shares of the Company. As consideration for the shares of the
Company, the stockholders received an aggregate consideration of $12.0 million,
consisting of $3.0 million in cash, a $1.5 million promissory note payable in 90
days from the closing date, a $1.5 million promissory note payable in 180 days
from the closing date and $6.0 million in shares of the restricted common stock
of the acquiring company, calculated based on the weighted average trading price
on the closing date of the transaction.
12
Item 7. Financial Statements, Pro Forma Information and Exhibits
(Continued)
(b) Pro Forma Financial Information
On May 24, 2000, Antennas America, Inc. ("the Company") consummated a
transaction providing for the merger of Winncom Technologies, Inc. ("Winncom")
with and into Winncom Technologies Corp., a wholly owned subsidiary of the
Company. Winncom sells, installs and services wireless network products and
systems for data and voice. In exchange for all of the outstanding common shares
of Winncom, the stockholders of Winncom received aggregate consideration of
$12.0 million, consisting of a total of $3.0 million in cash, a promissory note
with a face amount $1.5 million, payable in 90 days from the closing date, a
promissory note with a face amount $1.5 million payable in 180 days from the
closing date, and $6 million in shares of restricted common stock of the
Company. 6,946,053 shares were issued, based on the weighted average trading
price of $0.8638 per share on the closing date. The actual amount of the 180 day
note payable, and the overall transaction price, will be adjusted by the amount
that the calculated net assets of Winncom at May 24, 2000 are greater or less
than $500,000.
In addition, the Company granted options to purchase 600,000 shares of its
common stock to Winncom employees remaining with the Company after the
acquisition, at an exercise price of $0.86 per share, the trading price of the
stock on the closing date. The total purchase cost of the Winncom Technologies
Inc. merger is as follows:
Cash paid................................. $ 3,000,000
Short-term notes issued................... 3,000,000
Value of securities issued................ 6,000,000
-----------
12,000,000
Direct transaction costs
and expenses.............................. 800,000
-----------
Total purchase cost....................... $12,800,000
===========
Preliminary allocation of Purchase Price:
Annual Useful
Amount Amortization Lives
---------- ------- ------
Tangible net assets $ 478,024 n/a n/a
Intangible assets 12,321,976 821,465 15
---------- -------
Total estimated purchase price
allocation $12,800,000 $821,465
=========== ========
The Company is in the process of obtaining an external valuation of the
intangible assets acquired. Once the valuation is completed, the Company will
amortize these assets over their useful lives. Management estimates that the
useful lives will range from 10 to 20 years. For purposes of this statement, the
Company has used an average useful life of 15 years to calculate amortization.
13
The Unaudited Pro Forma Condensed Combined Statement of Operations for the year
ended December 31, 1999 and for the three months ended March 31, 2000 and the
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2000 should
be read in conjunction with the financial statements of Antennas America, Inc.,
as previously filed and the separate financial statements of Winncom
Technologies, Inc. included herein. This unaudited financial information is
based on the historical financial statements of the Company and Winncom after
giving effect to the acquisition under the purchase method of accounting and the
assumptions and adjustments described in the accompanying Notes to the Unaudited
Pro Forma Condensed Combined Statements of Operations and Unaudited Pro Forma
Condensed Combined Balance Sheet. The pro forma information does not purport to
be indicative of the results which would have been reported if the above
transaction had been in effect for the periods presented or which may result in
the future. The Unaudited Pro Forma Condensed Combined Statements of Operations
are presented as if the operations of the Company and Winncom had been combined
on January 1, 1999.
14
Unaudited Pro Forma Condensed Combined
Statement of Operations
Year Ended December 31, 1999
Antennas Winncom
America, Technologies, Pro forma Pro forma
Inc. Inc. Adjustments Combined
-----------------------------------------------------------------------
Net sales $4,567,531 $7,338,247 $ -- $11,905,778
Cost of sales 3,483,357 5,540,595 -- 9,023,952
-----------------------------------------------------------------------
Gross profit 1,084,174 1,797,652 -- 2,881,826
Operating expenses:
Selling, general and administrative 1,201,018 1,101,417 -- 2,302,435
Amortization of purchased intangibles -- -- (1) 821,465 821,465
-----------------------------------------------------------------------
Total operating expenses 1,201,018 1,101,417 821,465 3,123,900
Income (loss) from operations (116,844) 696,235 (821,465) (242,074)
Interest expense and other income, net 120,171 23,140 -- 143,311
-----------------------------------------------------------------------
Income (loss) before income taxes (237,015) 673,095 (821,465) (385,385)
Income tax expense (benefit) 335,373 -- -- 335,373
-----------------------------------------------------------------------
Net income (loss) $(572,388) $673,095 $(821,465) $(720,758)
=======================================================================
Basic and diluted loss per share $(0.01) $(0.01)
================= ===================
Weighted average shares outstanding 80,089,781 23,464,387 103,554,168
================= ====================================
(2, 3)
See accompanying notes to unaudited pro forma condensed combined statement of
operations.
15
Unaudited Pro Forma Condensed Combined
Statement of Operations
Quarter Ended March 31, 2000
Antennas Winncom
America, Technologies, Pro forma Pro forma
Inc. Inc. Adjustments Combined
-----------------------------------------------------------------------
Net sales $969,555 $2,838,478 $-- $3,808,033
Cost of sales 792,722 2,274,105 -- 3,066,827
-----------------------------------------------------------------------
Gross profit 176,833 564,373 -- 741,206
Operating expenses:
Selling, general and administrative 344,352 392,096 -- 736,448
Amortization of purchased intangibles -- -- (1) 205,366 205,366
-----------------------------------------------------------------------
Total operating expenses 344,352 392,096 205,366 941,814
Income (loss) from operations (167,519) 172,277 (205,366) (200,608)
Interest expense and other income, net (63,763) 16,448 -- (47,315)
-----------------------------------------------------------------------
Income (loss) before income taxes (103,756) 155,829 (205,366) (153,293)
Income tax expense (benefit) -- -- -- --
-----------------------------------------------------------------------
Net income (loss) $(103,756) $155,829 $(205,366) $(153,293)
=======================================================================
Basic and diluted loss per share $ (0.00) $(0.00)
==================== =================================
Weighted average shares outstanding 97,871,239 23,464,387 121,335,626
==================== =================================
(2, 3)
See accompanying notes to unaudited pro forma condensed combined Statement of
Operations.
16
Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
(1) The purchase price has been allocated to specifically identifiable
assets acquired. The intangible assets acquired of approximately $12
million are expected to be amortized over an average estimated useful
life of 15 years. The related amortization is reflected as a pro forma
adjustment to the Unaudited Pro Forma Condensed Combined Statement of
Operations. The purchase price allocation is preliminary subject to
change based on the Company's final analysis.
(2) As part of the consideration of the acquisition of Winncom
Technologies, Inc., Antennas America, Inc. issued 6,946,053 shares of
its common stock.
(3) During 2000, Antennas America, Inc. undertook a private placement
offering of units of its common stock, with attached warrants. As of
May 24, 2000, the Company had raised approximately $3.3 million in
cash through the sale of 19.2 million shares, of which $0.5 million
(2.7 million shares) had been sold through March 31, 2000. As a result,
we have pro forma adjusted only the portion of this private placement
that took place after March 31, 2000.
17
Unaudited Pro Forma Condensed Combined
Balance Sheet
As Of March 31, 2000
Antennas Winncom
America, Technologies, Pro forma Pro forma
Inc. Inc. Adjustments Combined
-------------------------------------------------------------------------
ASSETS
Current assets: (1, 2)
Cash and cash equivalents $473,360 $368,026 $(109,292) $732,094
Accounts receivable, less allowance for doubtful
accounts 414,440 1,228,489 -- 1,642,929
Inventories 320,704 625,836 -- 946,540
Other current assets 21,378 1,309 -- 22,687
-------------------------------------------------------------------------
Total current assets 1,229,882 2,223,660 (109,292) 3,344,250
Other assets:
Property, plant and equipment, net 355,073 19,521 -- 374,594
Intangible assets, including goodwill 40,177 -- (1) 12,123,229 12,163,406
Other assets 16,085 3,901 -- 19,986
-------------------------------------------------------------------------
Total assets $1,641,217 $2,247,082 $12,013,937 $15,902,236
=========================================================================
LIABILITIES AND EQUITY
Current liabilities:
Bank line of credit $ -- $ 554,974 $ -- $ 554,974
Accounts payable 155,936 900,924 -- 1,056,860
Current portion of notes payable - officers 16,637 25,126 -- 41,763
Current portion of notes payable - others 127,271 -- (1) 3,000,000 3,127,271
Current portion of capital lease obligations 41,343 3,529 -- 44,872
Accrued expenses and other current
liabilities 89,511 85,042 (1) 800,000 974,553
-------------------------------------------------------------------------
Total current liabilities 430,698 1,569,595 3,800,000 5,800,293
Capital lease obligations 2,607 716 -- 3,323
-------------------------------------------------------------------------
Total liabilities 433,305 1,570,311 3,800,000 5,803,616
Stockholders' equity:
Common stock 52,053 -- (1, 2) 11,732 63,785
Additional paid-in capital 2,452,906 4,600 (1, 2) 8,874,376 11,331,882
Retained earnings (deficit) (1,297,047) 672,171 (672,171) (1,297,047)
-------------------------------------------------------------------------
Total stockholders' equity 1,207,912 676,771 8,213,937 10,098,620
-------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,641,217 $2,247,082 $12,013,937 $15,902,236
=========================================================================
See accompanying notes to unaudited pro forma condensed combined Balance Sheet.
18
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
(1) On May 24, 2000, Antennas America, Inc. purchased the outstanding
shares of Winncom Technologies, Inc. Antennas America provided $12
million in aggregate consideration, consisting of $3 million in cash, a
$1.5 million promissory note payable in 90 days from the closing date,
a $1.5 million promissory note payable in 180 days from the closing
date and $6 million in shares of Antennas America common stock
(6,946,053 shares). The notes payable are non-interest bearing.
(2) During 2000, Antennas America, Inc. undertook a private placement
offering of units of its common stock, with attached warrants. As of
May 31, 2000, the Company had raised approximately $3.3 million in cash
through the sale of 19.2 million shares, of which $0.5 million (or 2.7
million shares) had been sold through March 31, 2000. As a result, we
have pro forma adjusted only the portion of this private placement that
took place after March 31, 2000.
19
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 hereunto duly authorized. ANTENNAS AMERICA, INC.
/s/ Randall P. Marx
-----------------------------------
Corporate Secretary and Director
Date: August 7, 2000
20