U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-QSB

 

(X)              Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2006

 

(   )    Transition report under Section 13 or 15(d) of the Exchange Act

 

For the transition period from ________ to ________

 

Commission file number 333-18439

 

 

Mobile Area Networks, Inc.

(Exact Name of Small Business User as Specified in its Charter)

 

                                           Florida                                                 59-3482752

                          (State or Other Jurisdiction of                          (I.R.S. Employer

                          Incorporation or Organization)                         Identification No.)

 

2772 Depot Street, Sanford, Florida                                                          32773

(Address of Principal Executive Offices)                                                (Zip Code)

 

407-333-2350

(Issuer’s telephone Number, including area code)

 


Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 by check mark if the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). __ Yes    No X

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b of the Exchange Act). __Yes   No X

 

The registrant has not authorized non-voting common equity and as of September 30, 2006, 46,761,080 shares of the registrant’s voting common stock were outstanding and held by non-affiliates.  The Company’s stock began trading on January 10, 2001 on the OTCBB under the symbol "MANW". 

 

 

 

 

 

 

MOBILE AREA NETWORKS, INC.

Index

 

Page

Number

PART 1.                                     FINANCIAL INFORMATION

 

                        Item 1.                Financial Statements

 

                                                   

                                                     Balance Sheets

                                                       September 30, 2006 (Unaudited)

                                                          and December 31, 2005                                                                                 3

 

                                                    Statements of Operations

                                                       Three and Nine months ended                                                                      

                                                          September 30, 2006 (Unaudited) and

                                                               September 30, 2005(Unaudited)

                                                                                                                                                                                   4

 

                                                    Statements of Cash Flows

                                                        Nine months ended

                                                            September 30, 2006 (Unaudited) and

                                                              September 30, 2005 (Unaudited)                                                             5

 

                                                    Notes to Financial Statements                                                                          6

 

                        Item 2.                Management’s Discussion and Analysis of

                                                        Financial Condition and Results of Operations                                       7-9

 

PART II.                                    OTHER INFORMATION                                                                                  10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MOBILE AREA NETWORKS, INC.

(A Florida Corporation)

Sanford, Florida

 

Balance Sheets

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,    2005

 

September 30, 2006

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

$         6,621

 

   $               31,730      

 

Accounts Receivable-Net of Allowance for Doubtful Accounts

             19,009

 

35,877

 

Inventory

           47,626

 

47,914

 

 

Total current assets

 

 

 

     73,256

 

115,521

 

 

 

 

 

 

 

 

 

 

Property and equipment, net of Accumulated Depreciation

240,897           

 

124,597

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

 

Security Deposits and Other Assets

 

7,091

 

7,092

 

 

Total assets

 

 

 

 

 $       321,244

 

    $      247,210         

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit

Current liabilities:

 

 

 

 

 

 

 

 

Notes and Capital Leases Payable-Due Within One Year

          $      112,745    

 

     $           102,610

 

Accounts Payable

 

 

 

 

241,687

 

233,925

 

Accrued Expenses

 

 

59,284

 

62,988

                            Total current liabilities

 

 

 

 

413,716

 

399,523

Other Liabilities:

 

 

 

 

 

 

 

 

Notes and Capital Leases Payable-Due After One Year

114,256

 

75,386

 

Accrued Salaries-Related Party

774,973

 

970,813

 

Advances from Stockholders

31,147

 

125,871

Total Liabilities

1,334,092

 

1,571,593

Stockholders’ deficit:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, no par value; authorized 50,000,000 shares;

 

 

 

 

Issued and outstanding 45,877,747 and 46,761,080 shares

3,742,069

 

3,909,069

 

Treasury Stock, 864,000 shares

 

(38,200)

 

(38,200)

 

Accumulated Deficit

 

      (4,716,717)

 

(5,195,252)

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ deficit

 

 

          (1,012,848)

 

(1,324,383)

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 $        321,244

 

      $          247,210      

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MOBILE AREA NETWORKS, INC.

(A Florida Corporation)

Sanford, Florida

Statements of Operations

Three and Nine months ended September 30, 2006 and 2005

(Unaudited)

 

 

 

 

 

 

 

 

Three months

 

Three months

 

Nine months

 

Nine months

 

 

 

 

 

 

Ended

 

Ended

 

Ended

 

Ended

 

 

 

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

 

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales-Net of Returns and Allowances

 

$   72,382

 

$    65,169

 

$   177,464

 

$    209,265

Cost of Goods Sold

 

45,214

 

39,878

 

159,732

 

130,291

Gross Profit

 

27,168

 

25,291

 

17,732

 

78,974

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

38,900

 

40,255

 

116,700

 

121,599

 

Bad Debt Expense

 

 

—

 

—

 

—

 

12,779

 

Interest and Finance Charges

 

 

 18,652

 

20,266

 

34,015

 

46,444

 

Outside Services

 

 

—

 

1,752

 

900

 

3,252

 

Payroll and Payroll Taxes

 

 

81,511

 

81,275

 

243,381

 

262,066

 

Professional Services

 

 

12,900

 

1,000

 

12,900

 

15,622

 

Other Operating Expenses

 

 

30,632

 

25,852

 

88,372

 

102,397

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

182,595

 

170,400

 

496,268

 

        564,159

Loss Before Other Income and Provision for Taxes

 

           (155,427)

 

(145,109)

 

(478,536)

 

(485,185)

Other Income

 

 

 

 

 

 

 

 

        Gain on Foregiveness of Debt

 

—

 

—

 

—

 

49,165

         Insurance Recovery for hurricane damage

 

—

 

—

 

—

 

70,432

Total Other Income

 

—

 

—

 

—

 

119,597

Provision for Taxes

 

—

 

—

 

—

 

—

Net Loss for the Period

 

$   (155,427)

 

    $      (145,109

 

   $      (478,536)

 

     $    (365,588)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares

 

 

 

 

 

 

 

 

Outstanding-Basic and Diluted

 

46,343,285

 

45,296,539

 

46,140,768

 

   44,888,154

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share-Basic and Diluted

 

 

 

$    (0.00)

 

$     (0.00)

 

$    (0.01)

 

$    (0.01)

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

MOBILE AREA NETWORKS, INC.

(A Florida Corporation)

Sanford, Florida

Statements of Cash Flows

Nine months ended September 30, 2006 and 2005

(Unaudited)

 

 

Nine Months

 

Nine Months

 

 

Ended

 

Ended

 

 

September 30, 2006

 

September 30, 2005

Cash flows from operating activities

 

 

 

 

Net loss for the period

 

 $     (478,536)

 

 $     (365,588)

Adjustments to Reconcile Net Loss to Net Cash Flows from

 

 

 

 

Operating Activities:

 

 

 

 

        Depreciation

 

116,700           

 

             121,599

        Bad Debt Expense

 

—

 

12,779

Changes in Assets and Liabilities:

 

 

 

 

             Accounts Receivable

 

(16,868)           

 

17,269

             Inventory

 

(287)

 

(8,436)

             Accounts Payable

 

(7,761)

 

(45,651)

             Accrued Expenses

 

109,543

 

1,847

             Accrued Salaries-Related Party

 

90,000

 

(12,274)

Net Cash Flows from Operating Activities

 

(187,209)

     (278,455)

Cash flows from Investing Activities

 

 

 

 

             Acquisitions of Property and Equipment

 

(400)

 

—

Cash Flows from Financing Activities

 

           

 

           

             Advances from (Repayments to) stockholders

 

94,724                     

 

(67,886)

             Proceeds from Issuance of Common Stock

 

167,000

 

513,955

             Gain on Forgiveness of Debt

 

—

 

—

             Purchase of Treasury Stock

 

—

 

(38,200)

             Repayment of Notes and Capital Leases Payable

 

(49,006)   

 

(118,853)

 

 

 

 

 

Net Cash Flows from Financing Activities

 

212,718       

 

289,016

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

25,109

 

            10,561

 

 

 

 

 

Cash and Cash Equivalents-Beginning of Period

 

6,621

 

            11,325

 

 

 

 

 

Cash and Cash Equivalents-End of Period

 

$                31,730

 

      $            21,886

 

 

 

 

 

     Cash paid for:

 

 

 

 

          Taxes

 

    $                —

 

       $        —

 

 

 

 

 

          Interest

 

    $            34,015

 

 $           46,444

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

MOBILE AREA NETWORKS, INC.

(A Florida Corporation)

Sanford, Florida

Notes to Financial Statements

 

Note A - Basis of Presentation

               The condensed financial statements of Mobile Area Networks, Inc. (the ”Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading.  These condensed financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s annual report on Form 10-KSB.

 

               The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present  fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole.

 

Reclassifications

               Certain amounts in the prior year financial statements have been reclassified to conform with the current year presentation.

 

Note B - Going Concern

               The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has reported net losses of $478,536 and $365,588 for the nine months ended September 30, 2006 and 2005, respectively.  As a result, there is an accumulated deficit of $5,195,252 at September 30, 2006. The primary causes of the losses are attributable to the inability of the Company to produce parts quickly for lack of sufficient cash to stockpile materials.

 

               The Company’s continued existence is dependent upon its ability to raise capital and/or achieving profitable operations.  The Company plans to raise sufficient working capital through equity offerings and continues to restructure debt to lower its monthly payments and interest costs. The Company continues to fund operational deficits through the acquisition of debt and equity financing through private individuals. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

Note C-Forgiveness of Debt

               During the three months ending June 30, 2005, the Company received a reduction of $49,165 in the outstanding loan balance from one of the Company’s equipment lenders.

 

 

 

 

 

 

 

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

 

 

 

Liquidity and Capital Resources

 

Working  Capital amounted to $(284,002) at September 30, 2006 compared to $(340,460) at December 31, 2005.  Cash amounted to $31,730 at September 30, 2006 as compared to $6,621 at December 31, 2005.   As more fully described under the Company’s statements of cash flows in the accompanying financial statements, net cash used in operating activities for the nine months ended September 30, 2006 and 2005 was $(187,209) and $(278,455), respectfully primarily as a result of the Company’s net losses.   For the nine months ended September 30, 2005 and 2004, cash was provided primarily by additional stock issuance and advances from stockholders. During the nine months ended September 30, 2006 and 2005, cash was used to fund operations.

 

As indicated herein, the Company’s short term liquidity needs have been satisfied primarily from the continuing sale of the Company stock and advances from stockholders.

 

Results of Operations

Sales increased during the current period third quarter as compared with the year earlier period.  For the three months ended September 30, 2006 sales were $72,382 and for the three months ended September 30, 2005, sales were $65,169.  For the nine months ended September 30, 2006, sales were $177,464 and for the nine months ended September 30, 2005, sales were $209,265. The decreases for the nine month period relates to the Company’s inability to stockpile materials for quick production of parts orders in combination with the competitive forces and lingering disruptions of the Company and some of its customers from the 2004 hurricane season.

 

Cost of Goods Sold increased during the three and nine month periods.  For the three months ended September 30, 2006, Cost of Goods Sold were $45,214 and for the three months ended September 30, 2005, Cost of Goods Sold were $39,878.  For the nine months ended September 30, 2006, Cost of Goods Sold were $159,732 and for the nine months ended September 30, 2005, Cost of Goods Sold were $130,291.  The increases for the three and nine month periods relate to increases in materials costs due to increases in petroleum prices which significantly affect resin prices.

 

Total Operating Expenses increased to $182,595 for the three months ended September 30, 2006 from $170,400 for the three months ended September 30, 2005.  For the nine months ending September 30, 2006, operating expenses decreased to $496,268 from $564,159 for the nine months ending September 30, 2005.

 

Depreciation expense decreased slightly from $121,599 for the year earlier nine month period to $116,700 for the current year nine month period.

 

 

 

Bad Debt Expense was unchanged at $-0- for both the three months ending September 30, 2006 and 2005.  For the nine months ending September 30, 2006, Bad Debt Expense decreased to $-0- from $12,779 for the nine months ending September 30, 2005.  The reserve for uncollected accounts is considered adequate based on the current aging.

 

Interest and Finance Charges decreased from $20,266 for the three months ended September 30, 2005 to $18,652 for the three months ended September 30, 2006.  Interest and Finance Charges decreased from $46,444 for the nine months ended September 30, 2005 to $34,015 for the nine months ended September 30, 2006.  The decreases for both the three and nine month period relate to lower amounts of outstanding debt during the current year.

 

Outside Services expense decreased to $-0- for the three months ended September 30, 2006 from $1,752 for the three months ending September 30, 2005.  For the nine months ended September 30, 2005, Outside Services expense decreased from $3,252 to $900 for the nine months ended September 30, 2006.  The decreases relate to a reduction in need for contracted labor expenses.

 

 

Payroll and Payroll Taxes expense increased slightly from $81,275 for the three months ended September 30, 2005 to $81,511 for the three months ended September 30, 2006.  For the nine months ended September 30, 2005, Payroll and Payroll Taxes expense decreased from $262,066 to $243,381 for the nine months ended September 30, 2006.  The decreases reflect a reduction in staffing necessitated by the reduced volume of business.

 

Professional Services expense increased from $1,000 for the three months ended September 30, 2005 to $12,900 for the three months ended September 30, 2006.  For the nine months ended September 30, 2005, Professional Services expense decreased from $15,622 to $12,900 for the nine months ended September 30, 2006.  The increase for the three month period relates to legal expenses paid to settle claims against the Company and the accrued 2005 audit expense.  The decrease for the nine month period relates to a reduced level of legal services related to collection matters.  

 

Other Operating Expenses increased  from $25,852 for the three months ended September 30, 2005 to $30,632 for the three months ended September  30, 2006. Other Operating Expenses decreased from $102,397 for the nine months ended September 30, 2005 to $88,371 for the nine months ended September 30, 2006.   The increase for  the three month periods relate principally to additional spending for office expenses, utilities, telephone and local property taxes on tangible equipment.  The decrease for the nine month period relates primarily to reduced spending on office expenses, repairs and  travel.

 

Other Income for the nine months ending September 30, 2005 included $70,432 for  insurance claims related to hurricane damages and $49,165 related to abatement of debt.  The abatement of debt relates to the reduction of the principal amount allowed by one of the Company’s equipment lenders.  There was not any Other Income in 2006.

 

 

 

 

 

The Net Loss for the Period was $(155,427) for the three months ended September 30, 2006, an increase from the $(145,109) Net Loss reported for the three months ended September 30, 2005. The Net Loss for the Period was $(478,536) for the nine months ended September 30, 2006, an increase from the $(365,588) Net Loss reported for the nine months ended September 30, 2005. 

 

The Net Loss Per Share remained unchanged at $0.00 for the three month periods and $(0.01) for the nine month periods.

 

 

 

Forward-Looking Statements

 

The Quarterly Report on Form 10-QSB  contains certain statements of a forward-looking nature relating to future events or the future financial performance of the Company.  Such statements are only predictions and the actual events or results may differ materially from the results discussed in the forward-looking statements.  Factors that could cause or contribute to such differences include those discussed below as well as those discussed in other filings made by the Company with the Securities and Exchange Commission, including the Company’s Annual Report included in its annual filing on Form 10-KSB.

 

 

 

 

Controls and Procedures

 

With the participation of management, the Company’s chief executive officer and chief financial officer evaluated the Company’s disclosure controls and procedures on September 30, 2006.  Based on this evaluation, the chief executive officer and the chief financial officer concluded that the disclosure controls and procedures are effective in connection with the Company’s filing of its quarterly report on Form 10-QSB for the quarterly period ended September 30, 2006.

 

Subsequent to September 30, 2006, through the date of this filing of Form 10-QSB for the quarterly period ended September 30, 2006, there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls, including any significant deficiencies or material weaknesses of internal controls that would  require corrective action.

 

 

 

 
 

 

 

 


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 Security Holders:                   None

 

Item 5.                    Other Information:                                                                                None

 

Item 6.                    Exhibits and Reports on Form 8-K:

 

                                (a)           Exhibits:                                 

 

                                                31      Certification of Chief Executive Officer and Chief Financial Officer

                                                                    pursuant to Rule 13a-14 or 15d-14 of The Securities Exchange Act of               1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of            2002.

                               

                                                32      Certification of Chief Executive Officer and Chief Financial Officer                             pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of               the Sarbanes-Oxley Act of 2002. 

 

(b)                 During the quarter ended September 30, 2006  no report on Form 8-K was filed or required to be filed.

 
 

 

 


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 thereto duly authorized.

 

 

MOBILE AREA NETWORKS INC.

 

 

                                                                   

Date       November  9, 2006

/s/ George Wimbish   

                                                                         Director, Chairman and President

 

 

 

                              

 

 

CERTIFICATION

In connection with the Quarterly Report of Mobile Area Networks, Inc. (the “Company”) on Form 10-QSB for the period ending September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, George Wimbish, Chief Executive Officer and Jerald R. Hoeft, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)               The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)               The information contained in the Report fairly presents, in all material respects the financial condition and results of the Company.

 

Date: November 9, 2006                                    /s/  George Wimbish                              

                                                                        George Wimbish

                                                                        Chief Executive Officer

 

 

 

/s/  Jerald R. Hoeft                                           

Jerald R. Hoeft

Chief Financial Officer

 

 

 

 

 

 

 

 

 

CERTIFICATION PURSUANT TO THE SARBANES-OXLEY ACT

We, George Wimbish, the Chief Executive Officer, and Jerald R. Hoeft, the Chief Financial Officer of Mobile Area Networks, Inc., certify that:

1. We have reviewed this quarterly report on Form 10-QSB of Mobile Area Networks, Inc.;

2. Based on our knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on our knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this quarterly report;

4. We are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

 

a)   designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)   evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c)   presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

 

5. We have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

 

6. We have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

Date:  November 9, 2006                                     /s/  George Wimbish           

                                                                        George Wimbish

                                                                        Chief Executive Officer

 

/s/  Jerald R. Hoeft                                           

Jerald R. Hoeft

Chief Financial Officer