U.S. SECURITIES AND EXCHANGE COMMISSION PRIVATE
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the period ended March 31, 2000.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE Act of 1934 for the transition period from ___ to ___.
Commission file number: 0-25791
AIRTRAX, INC.
(Name of Small Business Issuer in its charter)
New Jersey 22-3506376
(State of (I.R.S. Employer
Incorporation) I.D. Number)
870B Central Avenue, Hammonton, New Jersey 08037
(Address of principal executive offices) (Zip Code)
Issuer's telephone number 609-567-7800.
1616 Pennsylvania Avenue, #122, Vineland, New Jersey 08361; 856-327-8112
(Former address and former telephone number, if changed from last report)
Securities registered under Section 12 (b) of the Act:
Title of each class Name of exchange on which
to be registered each class is to be registered
None None
Securities registered under Section 12(g) of the Act:
Common Stock
(Title of Class)
Check whether issuer (1) filed all reports to be filed by Section 13 or 15(d)
of the Exchange Act during the past 12 months (or 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.
(1). Yes: X No:
(2). Yes: X No:
The number of shares issued and outstanding of issuer's common stock, no par
value, as of March 31, 2000 was 4,660,234.
Transitional Small Business Issuer Format (Check One):
Yes: No: X
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements.
INDEX
Page
Balance Sheets 3
Statements of Income 4
Statements of Changes in Stockholder's Equity 5
Statements of Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis. 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 11
Item 2. Changes in Securities. 11
Item 3. Defaults upon Senior Securities. 11
Item 4. Submission of Matters to Vote of Securityholders. 11
Item 5. Other Information. 11
Item 6. Exhibits and Reports on Form 8-K. 11
Signatures 11
AIRTRAX, INC.
BALANCE SHEETS
March 31, December 31,
2000 1999
ASSETS
Current Assets
Cash $ 64,525 $ 48,652
Accounts receivable 4,972 71,453
Inventory 651,563 511,525
Prepaid expenses 6,938 6,938
____________ ____________
Total current assets 767,998 638,568
Fixed Assets
Office furniture and equipment 34,003 34,003
Automotive equipment 16,915 16,915
Shop equipment 20,909 20,660
Casts and tooling 72,962 72,962
____________ ____________
144,789 144,540
Less, accumulated depreciation 63,181 55,777
____________ ____________
Net fixed assets 81,608 88,763
Other Assets
Patents - net 49,272 50,380
Utility deposits 65 65
____________ ___________
Total other assets 49,337 50,445
____________ ___________
TOTAL ASSETS $ 898,943 $ 777,776
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 643,827 $ 527,255
Accrued liabilities 30,778 15,161
Stockholder note payable 51,990 50,000
_____________ ____________
Total current liabilities 726,595 592,416
Stockholders' Equity
Common stock - authorized, 5,000,000
shares without par value; issued and
outstanding-4,630,604 and 4,549,013,
respectively 46,602 45,490
Preferred stock - authorized, 500,000
shares without par value; 275,000
issued and outstanding 12,950 12,950
Additional paid-in-capital 1,942,213 1,784,038
Retained deficit (1,829,417) (1,657,118)
_____________ ____________
Total stockholders' equity 172,348 185,360
TOTAL LIABILITIES AND STOCKHOLDER' EQUITY $ 898,943 $ 777,776
============== =============
The accompanying notes and accountant's audit report are
an integral part of these financial statements.
AIRTRAX, INC.
STATEMENTS OF INCOME
For the Three Month Periods Ended March 31, 2000 and 1999
2000 1999
________ _________
SALES $ 27,589 $ -
COST OF GOODS SOLD 5,899 -
_________ __________
Gross Profit 21,690 -
OPERATING AND ADMINISTRATIVE EXPENSES:
Cost of prototype development 79,373 18,952
Auto expense 44 -
Health insurance 2,461 2,455
Utilities 522 526
Telephone 2,957 2,316
Shipping, postage and office supplies 7,578 171
Rent - 3,725
Professional fees 25,020 7,454
Travel and entertainment 1,758 3,843
Advertising and promotion 11,814 13,091
Interest expense 65 2,160
Operating supplies 1,589 -
Depreciation and amortization 8,512 7,685
Insurance 821 2,617
Equipment repairs - -
Equipment rental 1,143 1,143
Payroll and related taxes 50,333 35,715
__________ _________
Total General and
Administrative Expenses 193,990 101,853
___________ _________
NET LOSS BEFORE OTHER INCOME (172,300) (101,853)
Other income 1 -
__________ __________
NET LOSS $(172,299) $(101,853)
========== ===========
NET LOSS PER SHARE $ (.04) $ (.03)
========== ===========
The accompanying notes and accountant's audit report
are an integral part of these financial statements.
AIRTRAX, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Month Period Ended March 31, 2000
COMMON PREFERRED
STOCK STOCK ADDITIONAL
___________________ _______________ PAID-IN RETAINED
Shares Amount Shares Amount CAPITAL DEFICIT TOTAL
_________ ________ _______ ________ __________ ____________ _________
Balance,
December 31,
1999 4,549,013 $ 45,490 275,000 $12,950 $1,784,038 (1,657,118) 185,360
Private placement
sales of
stock 33,630 336 109,665 110,001
Shares issued
Under option
exercises 75,494 755 42,323 43,078
Shares
issued
for services 2,097 21 6,187 6,208
Net loss
for the
period (172,299) (172,299)
__________ ________ _______ _______ __________ ___________ __________
Balance,
March 31,
2000 4,660,234 $ 46,602 275,000 $12,950 $1,942,213 $(1,829,417) $172,348
The accompanying notes and accountant's audit report
are an integral part of these financial statements.
AIRTRAX, INC.
STATEMENTS OF CASH FLOWS
For the Three Month Periods Ended March 31, 2000 and 1999
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(172,299) $(101,853)
Adjustments to reconcile net income to
net cash consumed by operating activities:
Depreciation and amortization 8,512 7,685
Value of common stock issued for services 6,208 -
Changes in current assets and liabilities:
Increase in accounts payable and
accrued liabilities 132,189 (14,254)
Decrease (increase) in prepaid expense - 2,500
Decrease (increase) in accounts receivable 26,481 2,600
Increase in inventory (140,038) (15,994)
_________ ________
Net Cash Consumed By
Operating Activities (138,947) (119,316)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of equipment (249) (11,313)
___________ ________
Net Cash Consumed By
Investing Activities (249) (11,313)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of common stock sales 153,079 160,202
Proceeds of borrowing 1,990 -
Preferred stock dividends - (17,188)
___________ ___________
Net Cash Provided By
Financing Activities 155,069 143,014
___________ _________
Net Increase (Decrease) In Cash (15,873) 12,385
Balance at beginning of period 48,652 5,081
__________ _________
Balance at end of period $ 64,525 $ 17,466
=========== =========
The accompanying notes and accountant's audit report
are an integral part of these financial statements.
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization Of Company
The Company was formed April 17, 1997. On May 19, 1997, it merged with a
predecessor which had initiated and advanced the development of omni-
direction technology. On November 5, 1999, the Company merged with MAS
Acquisition IX Corp. ("MAS"), a reporting company under federal securities
law. Pursuant to this merger agreement, the Company assumed the reporting
status of MAS. In both merger transactions, the Company was the surviving
entity.
Business
The Company has designed a forklift vehicle using omni-directional
technology. The right to exploit this technology grew out of a Cooperative
Research and Development Agreement with the Navy. Significant resources
have been devoted during the past two years to the construction of a
prototype of this omni-directional forklift vehicle. It is expected to be
in full commercial production during the third quarter of 2000. At that
time, it will be offered to industrial users.
The Company has also developed a traditional helicopter ground handling
machine which has been marketed by the Company on a limited basis.
Cash
For purposes of the statements of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Inventory
Inventory consists principally of component parts and supplies which are
being used to assemble forklift vehicles. Inventories are stated at the
lower of cost (determined on a first in-first-out basis) or market.
Fixed Assets
Fixed assets are recorded at cost. Depreciation is computed by use of the
Modified Accelerated Cost Recovery System (MACRS), as permitted by Internal
Revenue Service Regulations, using lives of seven years for furniture and
shop equipment and five years for computers and automobiles.
Intangible Assets
Patents
The Company incurred costs to acquire and protect certain patent rights.
These costs were capitalized and are being amortized over a period of
fifteen (15) years on a straight-line basis.
Prototype Equipment
The cost of developing and constructing the prototype omni-directional
helicopter handling vehicle and the omni-directional forklift vehicle is
expensed as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimated.
2. RELATED PARTY TRANSACTIONS
During 1999, 305,737 shares of common stock of the Company were issued in
lieu of dividends on the preferred stock, as permitted by the terms of the
preferred stock issue. The preferred stock is wholly owned by the majority
shareholder (see Note 4 for description of the preferred stock). This
majority shareholder is a corporation wholly owned by the president of the
Company.
The majority shareholder corporation advanced $50,000 to the Company during
December 1999. The related note is due April 1, 2000 and bears interest at
12%.
Since June 1999, the Company has made its headquarters in premises owned by
the Company president, which to date has been rent free.
3. PRIVATE PLACEMENT OFFERINGS
The Company conducted private placement offerings during 1999 and the
first quarter of 2000. These offerings were exempt under the Securities Act
of 1933,as amended, and the rules and regulations promulgated thereunder.
Under the offerings, a total of 614,552 shares of common stock were sold
during 1999 and 33,630 shares of common stock were sold during the first
quarter of 2000, resulting in net proceeds of $872,268 and $110,001,
respectively.
In addition, during the first quarter of 2000, 75,494 shares of common
stock were issued under option arrangements with officers and directors
yielding proceeds of $43,078, and 2,097 shares of common stock were issued
in lieu of cash for services valued at $6,208 to a law firm controlled by a
director.
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
4. PREFERRED STOCK
The Company is authorized to issue 500,000 shares of preferred stock,
without par value. At March 31, 2000, 275,000 of these shares had been
issued. Each of these shares entitles the holder to a 5% cumulative
dividend based on a $5 per share stated value. If sufficient cash is not
available, or at the option of the shareholder, these dividends may be paid
in common stock. If payment is in stock, it is to be valued at a price
calculated at thirty percent of the last price offered or traded during the
applicable quarter. This issue of preferred stock also provides a voting
right of 10 votes for each share.
Dividends totaling $105,119 had accrued through December 31, 1998 on this
issue of preferred stock; another $68,750 accrued during 1999 and $17,188
accrued during the first quarter of the year 2000. Cash dividends of
$13,005 were paid during 1998 and $40,498 was paid during 1999. An
additional $91,721 was paid during 1999 through the issuance of common
stock, leaving a balance of $45,834 unpaid at March 31, 2000.
The characteristics of the remaining 225,000 preferred shares authorized
have not been specified.
5. Earnings Per Share
Three Months Ended March 31, 2000
Income Average Shares Per Share
(Loss) Outstanding Amount
Net loss $(172,299)
Adjustment for
preferred stock
dividends (17,188)
Income (loss) available
to common shareholders $(189,487) 4,589,809 $(.04)
Three Months Ended March 31, 1999
Net loss $(101,853)
Adjustment for
preferred stock
dividends (17,188)
Income (loss) available
to common shareholders $(119,041) 3,727,460 $(.03)
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
6. INCOME TAXES
The Company has experienced losses each year since its inception. As a
result, it has incurred no Federal income tax. The Internal Revenue Code
allows net operating losses (NOL's) to be carried forward and applied
against future profits for a period of twenty years. A New Jersey
corporation business tax liability of $200 accrued during each of the
years 1999 and 1998, that being the minimum annual tax imposed on all New
Jersey corporations. New Jersey tax law allows the carry forward of NOL's
for seven years. The Company had NOL carry forwards of $1,009,000 as of
December 31, 1999. The potential tax benefit of these NOL's has not been
recorded on the books of the Company.
7. RENTALS UNDER OPERATING LEASES
Office equipment is leased under an operating lease that expires in June
2003. The following is a schedule of future minimum rental payments
required under the operating lease:
Year Ending
December 31, Amount
2000 (Remainder) $ 5,714
2001 6,857
2002 6,857
2003 2,857
________
$22,285
Rent expense amounted to $1,143 in the three months ended March 31,2000
and $4,868 in 1999 period.
8. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for interest and income taxes is presented below:
Three Months Ended March 31,
2000 1999
Interest $ 65 $ 2,160
Income taxes 200 200
There were no noncash investing activities during either the 2000 period
or 1999 period. The following noncash financing activities occurred:
a. Shares of common stock totaling 2,097 shares were issued
for services during the three months ended March 31, 2000.
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
9. CONTINGENCIES
Pursuant to agreements relating to the merger transaction with MAS, the
Company was required to issue 114,867 shares of common stock to former
shareholders of MAS ("MAS Common Stock") and make a cash payment to an
affiliate of the majority shareholder of MAS. The Company has asserted
claims against the affiliate and majority shareholder. The claims
involve the amount of the MAS Common Stock and the cash due to the
majority shareholder and affiliate under the merger agreement. The
Company has not issued the MAS Common Stock. The parties presently are
attempting to negotiate a settlement of the matter.
The Company has an employment agreement with its president which
provides, in part, for options permitting the president to acquire up to
50,000 shares of common stock per year. The first 10,000 shares each
year are available at a price of $1; the next 25,000 shares are available
at a price per share equal to 30% of the lowest price paid for the
stock during the 30 days preceding the date of exercise; the last 15,000
shares are available at a price equal to one half the 30% price described
above. These options accumulate if they are not exercised. None of these
options had been exercised prior to December 31, 1999. Options for
60,000 shares were exercised during the first quarter at the 30% price
and 10,00 at the $1 price. Options for 22,500 shares were outstanding at
March 31, 2000 at the one half of 30% price.
Item 2. Management's Discussion and Analysis.
The following discusses the financial results and position of the
consolidated accounts of the Company for the periods indicated.
Results of Operations
Three Months Ended March 31, 2000 compared with Three Months Ended March
31, 1999.
The Company is a development stage company. From inception through March 31,
2000, the activities of the Company consisted of the development of the omni-
directional wheel and related components for forklift and other material
handling applications. Due to the nature of our business activities to date,
we believe that a period-to-period comparison will not be meaningful until
we initiate the commercial sale of our product which is anticipated to occur
in the second or third quarter of 2000 for our omni-directional forklift.
Revenues for the three months ended March 31, 2000 were $27,589 compared
with no revenues for the same period in 1999. Revenues for the 1999 period
consisted of $8,845 in sales of a non omni-directional product and $18,744
in contract revenues from the United States Navy.
Cost of sales for the 2000 period was $5,899 representing parts and
manufacturing costs for the non-omni directional product.
General and administrative expenses which includes administrative salaries
and overhead for the three month period in 2000 totaled $193,990 compared
with $101,853 for the same period in 1999. The increase of $92,404 for the
2000 period is due to increase prototype development costs of the omni-
directional wheel, increased professional fees associated with Company's
reporting status under the federal securities laws, and an increased
salary payments to the president of the Company and initiation of salary
payments to the executive vice president of the Company. Net loss for the
three month period in 2000 was $172,299 compared with a net loss of
$101,853 for the prior period.
Liquidity and Capital Resources
Since its inception, the Company has financed its operations through the
private placement of its common stock. During 1999, the Company raised
approximately $872,268 net of offering costs from the private placement
of its common stock. During the first quarter of 2000, the Company raised
$110,001 net of offering costs from the private placement of its common
stock. As of March 31, 2000, current assets and total assets increased to
$767,998 and $898,943, respectively, from $638,568 and $777,776,
respectively, for December 31, 1999; and current liabilities increased
to $726,595 from $592,416 for year end 1999.
As of March 31, 2000, the Company had limited working capital. The Company
anticipates that its use of cash will be substantial for the foreseeable
future. In particular, management of the Company expects substantial
expenditures for inventory and product production in anticipation of the
rollout of its omni-directional forklift expected to occur in the third
quarter of fiscal 2000. The Company intends to fund its operations through
the issuance of equity and/or debt securities. Presently, the Company is
seeking capital from one or more funding sources, however, at this time no
arrangement has been finalized. No assurances can be given that the Company
will be successful in obtaining sufficient capital to fund the initiation
of its production activities. If the Company is unable to obtain sufficient
funds in the near future, such event will have a material adverse impact on
the Company and its business prospects.
Forward Looking Statements. Certain of the statements contained in this
Quarterly Report on Form 10-QSB includes "forward looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended ("Exchange Act"). See the Company's Annual Report on Form 10-KSB for
the period ending December 31, 1999 (including any amended filings thereto)
for additional statements concerning operations and future capital
requirements.
Certain risks exist with respect to the Company and its business, which
risks include the need for additional capital and lack of commercial product.
Readers are urged to refer to the section entitled "Cautionary Statements in
the Company's Form 10-KSB for the period ended December 31, 1999 and
elsewhere therein for a broader discussion of such risks and uncertainties.
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 Securityholders.
None
Item 5. Other Information.
None
Item 6. Exhibits.
(a). Furnish the Exhibits required by Item 601 of Regulation S-B.
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K.
None.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIRTRAX, INC.
Date: May 17, 2000 /s/Peter Amico
Peter Amico
President and
Principal Financial Officer
SCHEDULE 27.1
FINANCIAL DATA SCHEDULE
ART.5 FDS FOR 1st QUARTER 10-Q
Multiplier 1,000
PERIOD TYPE 3 MONTHS
FISCAL YEAR END DEC-31-1999
PERIOD END MAR-31-2000
CASH 65
SECURITIES 0
RECEIVABLES 45
ALLOWANCES 0
INVENTORY 652
CURRENT-ASSETS 767
PP&E 145
DEPRECIATION 63
TOTAL ASSETS 899
CURRENT-LIABILITIES 727
BONDS 0
COMMON 47
PREFERRED-MANDATORY 13
PREFERRED 13
OTHER-SE 1,882
TOTAL-LIABILITIES-AND-EQUITY 899
SALES 28
TOTAL-REVENUES 28
CGS 6
TOTAL-COST 200
OTHER-EXPENSES 0
LOSS-PROVISION 0
INTEREST-EXPENSE 0
INCOME-PRETAX (172)
INCOME-TAX 0
INCOME-CONTINUING (172)
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME (172)
EPS-PRIMARY (.04)
EPS-DILUTED (.04)
DRAFT OF 5/9/00
NOT FOR DISTRIBUTION
