U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the period ended December 31,
1999
[ ] 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 Incorporation) (I.R.S. Employer I.D.
Number)
1616 Pennsylvania Avenue, #122, Vineland, New Jersey 08361
_______________________________________________________________
(Address of principal executive offices) (Zip Code)
Issuer's telephone number 856-327-8112.
--------------
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.
Yes: X. No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part II of
this Form 10-KSB or any amendment to this Form 10-KSB. [x]
State issuer's revenues for the most recent fiscal year. $79,302
As of March 31, 2000, the aggregate market value of the voting and
non-voting common equity held by non-affiliates as approximately
$10,576,193. This calculation is based upon the average bid price of
$2.25 and asked price of $5.50 of the common stock on March 31, 2000.
The number of shares issued and outstanding of issuer's common stock,
no par value, as of December 31, 1999 was 4,663,880.
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART I
Item 1. Description of Business.
INTRODUCTION
AirTrax, Inc. ("AirTrax" or "Company") was incorporated in the State
of New Jersey on April 17, 1997. On May 19, 1997, the Company entered
into a merger agreement with a predecessor company that initiated and
advanced the omni-directional technology. The predecessor company was
incorporated on May 10, 1995. The Company became the surviving company
in the merger.
Pursuant to an Agreement and Plan of Merger dated November 5, 1999 by
and between AirTrax and MAS Acquisition IX Corp. ("MAS"), an Indiana
corporation, all of the issued and outstanding shares of capital stock
of MAS were exchanged for 114,867 shares of AirTrax. AirTrax became the
surviving company in the merger. As used in this Form 10-KSB, the terms
"Company" or "AirTrax" refers to AirTrax, Inc. and companies
previously acquired.
AirTrax is a development stage company that has developed an omni-
directional wheel technology intended to be used for various commercial
applications.
The Company's executive offices are located at 1616 Pennsylvania Avenue,
#122, Vineland, New Jersey 08361 and its telephone number is (856)
327-8112.
THE COMPANY
OMNI-DIRECTIONAL TECHNOLOGY
Prior History.
An early stage omni-directional wheel was patented by a Swedish
inventor. The technology was purchased by the United States Navy and
was advanced at the Naval Surface Warfare Center. The Navy held the
patent until its expiration in 1990. In January 1996, the Company
entered into a Cooperative Research and Development Agreement ("CRADA")
with the Navy to transfer the technology to the Company. Since CRADA,
the Company has advanced the development of the technology for
various applications including use on forklifts and other material
handling equipment.
Technology Description.
An omni-directional vehicle employing the Company's technology is
capable of traveling in any direction. On a four-wheel omni-directional
vehicle, each omni-directional wheel has its own independent electric
or hydraulic motor and the motion of the vehicle is controlled by
coordinating all four wheels through a microprocessor that receives
input from an operator-controlled joystick. Unlike most vehicles, there
is no conventional drive train, axle, or steering rack. The basis of
the Company's omni-directional technology consists primarily of a
mobile platform with four omni-directional wheels. Each wheel has its
own electric or hydraulic motor that turns a wheel hub. However, the
wheel hub is not covered by a conventional rubber tire. Rather, each
wheel hub is encircled with multiple tapered rollers that are offset
45 degrees. The tapered rollers, fabricated from steel and covered with
polyurethane, are extremely durable. By independently controlling the
rotation of each wheel, the vehicle has the capability of traveling
in any direction. The joystick controls the direction of the vehicle.
The technology allows the vehicle to move forward, laterally,
diagonally, or completely rotate within its own footprint, thereby
allowing it to move into confined spaces without difficulty. The
navigational options of an omni-directional vehicle are virtually
limitless. The omni-directional wheel can be manufactured in almost any
size, depending upon the application. For instance, the wheel can be
used on miniature vehicles or massive load-carrying vehicles. Presently,
the Company has incorporated omni-directional technology into a
prototype forklift.
CURRENT OPERATIONS.
During the past three years, substantially all of the Company's
resources and operations have directed towards the development of the
omni-directional wheel and related components for forklift and other
material handling applications. Many of its components, including the
unique shaped wheels, motors and frames, have been specially designed
by the Company and specially manufactured. A pilot model of a
commercial omni-directional forklift is currently operational, however,
additional testing and component refinement will be required prior to
commercial production and sale. Testing by Underwriters Laboratory,
and by the Company to meet the stability standards of the American
National Standards Institute (ANSI B56) also will be required. The
Company anticipates that required testing and component refinement
would be completed in the second or third quarter of 2000. The results
of the additional testing may cause the further delay in the commercial
sale of the product. However, management does not expect any material
functionality defects during the final test period.
EXISTING AND PROPOSED PRODUCTS
Omni-Directional Products.
The omni-directional forklift will be available in the ATX, ATX-E and
ATX-ER series with 3000 through 6000 pound capacities. Each series is
briefly described below.
ATX Series. This series will the standard version featuring the
revolutionary omni-directional technology. This forklift will deliver
unequaled maneuverability providing significantly improved operating
efficiencies in the materials handling industry. This model is
expected to retail at a prices higher than standard forklifts.
ATX-E Series. In addition to the omni-directional technology, this
series permits the upper section of the forklift to extend and retract.
This feature effectively reduces the overall dimension of the machine
while carrying a load to approximately 84 inches enabling it to
traverse a eight-foot aisle sideways.
ATX-ER Series. In addition to the omni-directional technology and the
extend/retract feature, the upper section of this series can rotate
allowing loads to be transferred from one side to the other while the
forklift remains stationary.
At this time, the Company's product pricing has not been established.
However, the Company believes that its ATX series will range from
$36,500 to $39,900 per unit.
During 1999, the Company was awarded a Phase I research contract under
the Department of Defense's Small Business Innovation Research Program
("SBIR") to develop an omni directional Multiple Purpose Mobility
Platform (MP2). The Phase I contract studied the application of the
omni-directional technology for military use and was supervised by
the Naval Air Warfare Center Aircraft Division ("NAWC") in Lakehurst,
New Jersey. The contemplated use includes the installation of jet
engines on military aircrafts and the transportation of munitions and
other military goods. The Company completed the Phase I base contract
in 1999 and subsequently has been granted a Phase I option from NAWC
to further define the uses of the MP2. The Company also was advised
that NAWC has recommended it for a Phase II research contract ("Phase
II Contract"), however, as of this date, the contract has not been
awarded. The total amount of the Phase II Contract, if awarded, is
anticipated be between $600,000 and $1 million and, payable during a
24 month performance period. The contract will further study the
feasibility of the MP2 for military purposes, and likely will
include the construction of one or more proto-type devices. The SBIR
program enables the Government to place production orders for awarded
products under a Phase III Contract. Although management believes the
underlying omni directional technology for the proposed MP2 has
significant potential for both commercial and military applications,
no assurances can be given that Company will be awarded the Phase II
Contract nor that any product sales from the United States military
under a Phase III contract will result.
The Company has conducted a preliminary design of an omni-directional
wheel for wheelchair applications. It will require additional funds to
complete a structural and ergonomic design of a proto-type wheelchair,
as well as the construction of the proto-type for evaluation and
testing. Although management recognizes the potential utilitarian
benefit and corresponding market size of an omni-directional
wheelchair, no assurances can be given that the product can be
successfully developed by the Company.
Other Products.
Since 1995, the Company and its predecessor have manufactured and sold
a helicopter ground handling device. Sales to date have been limited,
and management believes that future sales will be insignificant.
The Company has recently completed a feasibility study for a hybrid
power supply module for forklifts and other battery powered mobility
machines. It is designed to replace a standard battery enabling
operation on either fossil fuel or battery power. The module will
consist of a generator coupled to a specially designed battery with
micro-processor controls. Its unique hybrid feature will enable a
forklift to be powered by battery indoors without noise or exhaust
pollution, and by fossil fuel outdoors or in other non pollution
sensitive areas. The battery is designed to re-charge during fossil
fuel use thereby eliminating re-charging downtime customarily
experienced by battery powered forklifts. The Company has filed a
provisional patent for the unique features of the hybrid power module.
MANUFACTURING AND SUPPLIERS.
The Company has entered into an arrangement with H&R Industries, Inc.
located in Warminster, Pennsylvania to commercially produce the
forklift. The Company believes that this arrangement will be suitable
for its production needs during fiscal 2000. The Company intends to
establish arrangements with one or more other facilities to satisfy
its future production requirements. As of this date, the Company is
exploring production facilities domestically and internationally,
however, it has not entered into any formal arrangements at this time.
In addition, it is conceivable the Company may establish its own
manufacturing facility in the future if economically advantageous.
Components for the Company's forklifts consist of over the counter
products and products that have been specially designed and
manufactured by various suppliers in collaboration with the Company.
The Company believes that continual refinements of certain components
will occur during the first six months of initial production in
response to user feedback. The Company will strive to improve product
functionality which may require additional refinements in the future.
The Company considers the specially designed and manufactured products
proprietary and has entered into exclusive contractual agreements with
such suppliers. In addition, while the Company maintains single sources
for the over the counter components, it believes that other sources are
available if necessary.
MARKETING
The Company intends to establish an exclusive dealer network
nationally and internationally for its forklift product line. Each
dealer likely will be an existing equipment distributor, and will be
granted an exclusive territory. In addition, each dealer will be
required to purchase a number of forklifts commensurate with the size
of its territory. To date, the Company has conducted limited dealer
solicitation. The Company will initiate its dealer solicitation
following the successful testing of its forklift. In addition, the
Company plans to increase user awareness through print media,
advertising, and trade shows, as well as direct industry contact.
MARKETS
Forklifts.
The Company's initial market focus will be directed to the forklift
market. The Company believes the commercial version of the omni-
directional forklift will revolutionize the materials handling and
warehousing industries creating sales markets globally. Industry data
indicates that during 1998 approximately 174,000 and 550,000 units
were sold in the United States and worldwide, respectively (Modern
Materials Handling). Based upon an average per unit sale price of
$28,500 (Company estimate), the total market in the United States would
approximate $5 billion in 1998. This amount represents sales of a broad
range of vehicles with price ranges from $18,000 to $23,000 for a
standard 3000-pound vehicle to $80,000 or more for specialty narrow
aisle or side loaders. Of the total market, management expects to
compete with mid-range electrical and fossil fuel riders, and some
specialty narrow aisle or side loaders.
Man Lifts.
Man lifts are used in the construction and warehousing industries, and
are I deally suited for omni directional technology. According to data
provided by the United Department of Commerce, this market consists of
approximately $1.2 billion in annual sales. Man lifts range in size
from single user lifts to large off road machines. Of the total
market, the Company expects to compete with A range of indoor man
lifts.
COMPETITION
Although the Company believes that initially it will not confront
direct competition for its omni-directional technology, it does
anticipate facing competition from competing technologies in the
future. In the immediate future, however, the Company will confront
competition from conventional products in the materials handling and
warehousing industry (ie. other forklift companies). Many of these
companies are subsidiaries of major national and international
equipment companies, and have significantly greater financial,
engineering, marketing and other resources than the Company. In
addition, the patent on omni-directional technology expired in 1990.
Although the Company has sought patent protection for certain aspects
of its technology, no assurances can be given that such patent
protection will effectively thwart competition.
PATENTS AND PROPRIETARY RIGHTS
In December 1997, the Company was awarded a patent for an omni-
directional helicopter ground-handling device. In March 1998, the
Company filed a patent application encompassing certain aspects of
the omni-directional forklift. In addition, the Company anticipates
that it will make other patent applications relating to certain
aspects of its omni-directional technology. Recently, the Company
filed patent applications for its power module and for an additional
feature of its omni directional wheel. The Company also seeks to
protect its proprietary technology through exclusive supply contracts
with manufacturers for specially designed and manufactured components.
BACKLOG
The Company had no backlog for the year ended December 31 1999. There
is no seasonal impact on the Company's sales.
FACILITIES
The Company maintains its administrative offices at 1616 Pennsylvania
Avenue, #122, Vineland, New Jersey 08361 on premises owned by the
president of the Company. As of December 31, 1999, the arrangement
between the parties has been rent-free. In addition, the Company
maintains limited offices at H&R Industries, Inc. ("H&R Industries"),
located at 100 Park Avenue, Warminster, Pennsylvania 18974. H&R
Industries provides contract manufacturing and assembly services to
the Company. As of December 31, 1999, the arrangement between the
parties has been rent-free.
PRODUCT LIABILITY
Due to nature of the Company's business, the Company may face claims
for product liability resulting from the use or operation of the
Company's forklifts or other products.
Presently, the Company does not maintain any product liability
insurance. It intends to obtain such insurance commensurate with the
initial shipment of its omni-directional forklifts.
EMPLOYEES
As of December 31, 1999, the Company has five employees, which includes
its President and Executive Vice President. The Company has no
collective bargaining agreements with its employees and believes its
relations with its employees are good.
Item 2. Description of Property.
The Company maintains its administrative offices at 1616 Pennsylvania
Avenue, #122, Vineland, New Jersey 08361 on premises owned by the
president of the Company. As of December 31, 1999, the arrangement
between the parties has been rent-free. In addition, the Company
maintains limited offices at H&R Industries, Inc. ("H&R Industries"),
located at 100 Park Avenue, Warminster, Pennsylvania 18974. H&R
Industries provides contract manufacturing and assembly services to
the Company. As of December 31, 1999, the arrangement between the
parties has been rent-free.
Item 3. Legal Proceedings.
None
Item 4. Submission of Matters to Vote of Security Holders.
None
PART II
Item 5. Market Price of and Dividends on the Registrant's Common
Equity and Related Stockholder Matters.
The Company's common stock has traded on the NASDAQ OTC Bulletin
Board since March 6, 2000 under the symbol "AITX". Prior to such time,
the Company's common stock traded on the National Quotation Bureau's
"pink sheets".
The table below sets forth the high and low bid prices of the Common
stock of the Company as reported by NASDAQ. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down, or commissions
and may not necessarily represent actual transactions. There is an
absence of an established trading market for the Company's common
stock, as the market is limited, sporadic and highly volatile. The
absence of an active market may have an effect upon the high and low
priced as reported.
2000 Low Bid High Bid
1st Quarter $2.25 $3.50
As of December 31, 1999, there are 840 shareholders of record of the
Company's common stock. Although there are no restrictions on the
Company's ability to declare or pay dividends, the Company has not
declared or paid any dividends since its inception' and does not
anticipate paying dividends in the future.
Item 6. Management's Discussion and Analysis.
The following discusses the financial results of the Company for the
periods indicated.
Results of Operations
Fiscal year end 1999 compared with Fiscal year end 1998.
The Company has been a development stage company for the 1999 and 1998
period.
Revenues for fiscal 1999 were $79,302 representing an increase of
$59,717 from revenues of $19,585 for the 1998 period. Revenues for
the 1999 period consisted of $9,354 in sales of a non omni-directional
product and $69,709 in contract revenues from the United States Navy.
Revenues for 1998 were 19,585 and consisted of sales of a non omni-
directional product.
Cost of sales for 1999 was $10,083 which consisted on parts and
manufacturing costs. Cost of sales for 1998 was $7,637 and consisted
of principally of parts and manufacturing costs.
General and administrative expenses which includes administrative
salaries, depreciation and overhead for the 1999 period totaled
$765,382 which represents an increase of $261,733 from $503,649
incurred in 1998. The increase is due primarily to higher payroll
costs of $141,382 to reflect an increase in salary to the president
of the Company and the initiation of a salary to the vice president of
the Company, higher professional fees of $77,456, and general and
administrative costs increases as the Company moves closer to
commercial production. The stated increases were partially offset,
however, by a reduction of prototype development costs.
Disclosure Regarding Forward Looking Statement and Cautionary Statement.
Forward Looking Statements. Certain of the statements contained in
this Annual Report on Form 10-KSB includes "forward looking statements"
within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended ("Exchange Act"). All statements other than
statements of historical facts included in this Form 10-KSB regarding
the Company's financial position, business strategy, and plans and
objectives of management for future operations and capital
expenditures, and other matters, are forward looking statements. These
forward looking statements are based upon management's expectations
of future events. Although the Company believes the expectations
reflected in such forward looking statements are reasonable, there
can be no assurances that such expectations will prove to be correct.
Additional statements concerning important factors that could cause
actual results to differ materially from the Company's expectations
("Cautionary Statements") are disclosed below in the Cautionary
Statements section and elsewhere in this Form 10-KSB. All written and
oral forward looking statements attributable to the Company or persons
acting on behalf of the Company subsequent to the date of this Form
10-KSB are expressly qualified in their entirety by the Cautionary
Statements.
Cautionary Statements. Certain risks and uncertainties are inherent
in the Company's business. In addition to other information contained
in this Form 10-KSB, the following Cautionary Statements should be
considered when evaluating the forward looking statements contained in
this Form 10-KSB:
NEED FOR ADDITIONAL CAPITAL. The Company will require additional
capital immediately and long term to meet its ongoing operating
requirements. The immediate need includes funds to complete the final
testing of its pilot model forklift. In the future, in order to
initiate full scale production, the Company will require significant
funds for inventory, manufacturing costs and for other working capital
needs. The Company intends on raising the capital through a private
or public financing of debt or equity. Presently, the Company has
no commitment for any such funding. No assurances can be given that
the Company will be successful in obtaining such financing on terms
acceptable to the Company or on any terms. The Company's inability to
obtain such financing could have a material adverse affect on the
Company.
LACK OF COMMERCIAL PRODUCT. The Company has developed the pilot
version of its unique, omni-directional forklift. The commercial
introduction of the product is subject, however, to additional testing
and component refinement. Due to the unique performance attributes of
the forklift, the forklift will undergo a series of unprecedented
tests relating to these attributes. Although management is confident
in the performance capabilities of the forklift, management has not
performed these tests separately. If the forklift cannot perform these
tests successfully, the commercial sale of the product will be delayed.
It also is conceivable that forklift may be redesigned to lessen
certain of the competitive advantages of the forklift. The occurrence
of either event may have a negative impact upon the operations of the
Company.
LACK OF A DETERMINED PRODUCT PRICES AND IMPACT ON PROFIT MARGINS.
The Company is assessing present and projected component pricing in
order to establish a pricing policy for the ATX Series forklifts. The
Company has not completed its assessment as current prices for certain
forklift components reflect special development charges which are
expected to be reduced as order volume for such components increase
and as manufacturing efficiencies improve. The Company intends to
price its forklifts so as to maximize sales yet provide sufficient
operating margins. Given the uniqueness of its product, the Company is
uncertain of pricing sensitivity of product in the market.
Consequently, the pricing policy for its forklifts may be subject to
change, and actual sales or operating margins may be less than
projected.
LIMITED OPERATING HISTORY. The Company is a development stage company,
and, together with its predecessor, has been in operation since 1995.
However, since 1995, the Company's operations have been limited to the
development of its omni-directional products, and limited revenue has
been generated during this period. Consequently, its business may be
subject to the many risks and pitfalls commonly experienced by
development stage companies. There can be no assurances that future
operations will be profitable.
LACK OF INDICATIONS OF PRODUCT ACCEPTABILITY. The success of the
Company will be dependent upon its ability to sell omni-directional
products in quantities sufficient to yield profitable results. To date,
the Company has received limited indications of the commercial
acceptability of certain of its omni-directional products. Accordingly,
no assurances can be given that the Company's omni-directional
products can be marketed and sold in a commercial manner.
LACK OF ESTABLISHED DISTRIBUTION CHANNELS. The Company does not have
an established channel of distribution for its forklift product line.
It intends on establishing a network of exclusive dealers throughout
the United States. Although the Company has received indications of
interest from a number of equipment distributors, to date, such
indications have been limited. No assurances can be given that the
Company will be successful in establishing its intended dealer network.
FEATURES OF PREFERRED STOCK. The Company has 275,000 shares of
preferred stock outstanding that are held by an affiliate of the
President. The stock carries a 10 for 1 voting right and a stated
value of $5.00 per share. The preferred stock carries a liquidation
preference equal to the stated value and an annual, cumulative
dividend preference of five percent, all to the detriment of common
shareholders. In addition, the holder may elect to receive the
dividend in the form of common stock at a discount to the market
price (see Item 12 Certain Relationships and Related Transactions).
MANAGEMENT. The ability of the Company to successfully conduct its
business affairs will be dependent upon the capabilities and business
acumen of current management including Peter Amico, the Company's
President. Accordingly, shareholders must be willing to entrust all
aspects of the business affairs of the Company to its current
management. Further, the loss of any one of the Company's management
team could have a material adverse impact on its continued operation.
CONTROL EXERCISED BY MANAGEMENT. The existing officers and directors
will control approximately 70% of the shareholder votes. This control
by management is in the form of common stock and preferred stock that
has 10 for 1 voting rights. Consequently, management will control
the vote on all matters brought before shareholders, and holders of
common stock may have no power in corporate decisions usually brought
before shareholders.
NATURE OF BUSINESS/INSURANCE. The manufacture, sale and use of omni-
directional forklifts and other mobility or material handling equipment
is generally considered to be an industry of a high risk with a high
incidence of serious personal injury or property loss. In addition,
although the Company intends to provide on-site safety demonstrations,
the unique, sideways movement of the forklift may heighten potential
safety risks. Despite the fact that the Company intends to maintain
sufficient liability insurance for the manufacture and use of its
products, one or more incidents of personal injury or property loss
resulting from the operation of its products could have a material
adverse impact on the business of the Company.
COMPETITION. Although management believes its product will have
significant competitive advantages to conventional forklifts, the
Company will be competing in an industry populated by some of the
foremost equipment and vehicle manufacturers in the world.
Substantially all of these companies have greater financial,
engineering and other resources than the Company. No assurances can
be given that any advances or developments made by such companies
will not supersede the competitive advantages of the Company's omni-
directional forklift. In addition, many of the Company's competitors
have long-standing arrangements with Equipment distributors and carry
one or more of competitive products in addition to forklifts. These
distributors are prospective dealers for the Company. It therefore is
conceivable that some distributors may be loath to enter into any
relationships with the Company for fear of jeopardizing existing
relationships with one or more competitors.
PENNY STOCK REGULATION. The Company's common stock may be deemed a
"penny stock" under federal securities laws. The Securities and
Exchange Commission has adopted regulations that define a "penny
stock" generally to be any equity security that has a market price
of less than $5.00 per share, subject to certain exceptions. These
regulations impose additional sales practice requirements on any
broker/dealer who sell such securities to other than established
investors and accredited investors. For transactions covered by this
rule, the broker/dealer must make certain suitability determinations
and must receive the purchaser's written consent prior to purchase.
Additionally, any transaction may require the delivery prior to sale
of a disclosure schedule prescribed by the Commission. Disclosure also
is required to be made of commissions payable to the broker/dealer and
the registered representative, as well as current quotations for the
securities. Finally, monthly statements are required to be sent
disclosing recent price information for the penny stock held in the
account of the customers and information on the limited market in penny
stocks. These requirements generally are considered restrictive to the
purchase of such stocks, and may limit the market liquidity for such
securities.
Item 7. Financial Statements.
The Financial Statements that constitute Item 7 of this Annual Report
on Form 10-KSB are included in Item 13 below.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers of the Company, their ages, and
the positions they hold are set forth below. The directors of the
Company hold office until the next annual meeting of stockholders
of the Company and until their successors in office are elected and
qualified. All officers serve at the discretion of the Board of
Directors.
OFFICERS AND DIRECTORS
Name Age Title
Peter Amico 56 President and Chairman
D. Barney Harris 39 Executive Vice President and Director
John Watt Jr. 62 Secretary and Director
Frank A. Basile, Esq. 63 Director
James Hudson 55 Director
Daniel H. Luciano, Esq. 48 Director
Peter Amico - Mr. Amico is the founder of the Company and has been
President and Chairman of the Company and its predecessor since its
inception in April 1995. Prior to 1995, Mr. Amico was president
and majority shareholder of Titan Aviation and Helicopter Services,
Inc. ("Titan"). He has an extensive background in sales and in
structural design. His career in sales has spanned over thirty years
and he has held sales positions at Firestone Tire & Rubber and Union
Steel Products, Inc. In 1996 and in connection with operations of
Titan, Mr. Amico filed for bankruptcy protection.
D. Barney Harris - Mr. Harris has been a Director of the Company
since December 1998 and a Vice President since July 1999. From 1997
to July 1999, Mr. Harris was employed by UTD, Inc. Prior to 1997,
Mr. Harris was employed by EG&G as a Senior Engineer and Manager of
the Ocean Systems Department where he was responsible for the
activities of 45 scientists, engineers and technicians. During this
period while performing contract services for the US Navy, he was
principally responsible for the design of the omni-directional wheel
presently used by the Company. Mr. Harris received his B.S.M.E.
from the United States Merchants Marine Academy in 1982.
John Watt Jr. - Mr. Watt has been Secretary and a Director of the
Company since August 1998. From 1990 to the present, he has been
the President of Watt-Bollard Associates, Inc., a manufacturers'
representative sales agency located in Fort Washington, Pennsylvania.
From 1970 to 1990, he served as President of John C. Watt Associates,
Inc.
James Hudson - Mr. Hudson has been a Director of the Company since
May 1998. From 1980 to present, he has been President of Grammer,
Dempsey & Hudson, Inc., a steel distributor located in Newark,
New Jersey.
Frank A. Basile, Esq. - Mr. Basile has been a Director of the Company
since April 1999. Mr. Basile has been a practicing attorney since
1963 and is president of the law firm Basile & Testa located in
Vineland, New Jersey. The firm was one of seven law firms selected by
the State of New Jersey to represent the State in a class action
lawsuit against the tobacco industry.
Daniel H. Luciano, Esq. - Mr. Luciano has been a Director of the
Company since March 2000. Mr. Luciano has been a practicing attorney
since 1977 with an emphasis on corporate and securities law.
Item 10. Executive Compensation.
The compensation for all directors and officers individually for
services rendered to the Company for the fiscal year ended December 31,
1999 is set forth in the following table:
SUMMARY COMPENSATION
Annual Compensation Long Term Compensation Awards
___________________ _____________________________
Name and
Principal Salary Bonus Other Stock Options #
Position Year ($) ($) ($)
- -------- ---- ---- ---- ----- ----------------
Peter Amico(1) 1999 $84,065(2) -- $6,500(3) 25,000
Chairman and
President
- ------------------------------------------------------------------
(1). The Company and Mr. Amico are parties to an employment agreement
governing Mr. Amico's employment with the Company (see below). The
Company became a reporting company during fiscal 1999, and disclosure
is made only for such year.
(2). Includes accrued but unpaid salary from fiscal 1998.
(3). During 1999, Mr. Amico was paid a finder's fee in connection
with the private placement of the Company's stock.
The Company and Peter Amico, as President, have entered into a
written employment agreement for a period from April 1997 to June 2000.
Pursuant to the agreement, Mr. Amico receives a salary of $75,000 per
Year for fiscal 1999 through June 2000. In addition, the agreement
provides Mr. Amico with certain stock options, of which 10,000 shares
are exercisable at $1.00 for year three of the contract, and 25,000
are exercisable at 30% of the lowest price paid in the proceeding 30
day period for each year of the contract.
The Company and D. Barney Harris, as Vice President, have entered into
a written employment agreement for period of five years. Pursuant to
the agreement, Mr. Harris receives an annual salary of $75,000,
subject to annual review by the Company. In addition, Mr. Harris will
be entitled to receive annual stock options not exceeding 25,000
shares of common stock, of which 2,500 shares are exercisable at $1.00,
10,000 are exercisable at 35% of the lowest price paid in the
proceeding 30 day period for each year of the contract, and 12,500
is exercisable at 50% of the option prices described above (in
proportion to the above option amounts) for each year of the contract.
Option Grants in Fiscal Year 1999
% of Total
Options to Exercise or Market price
Options Employee in Base on date of
Name Granted Fiscal Year Price ($/sh) Grant Expiration Date
Peter Amico 25,000 50% (1) (1) None
President
And Chairman
1. The options are exercisable at 30% of the lowest rate paid for
the Company's common stock in the 30 days preceding the exercise.
Aggregate Option Exercises
In Last Fiscal Year and FY-End Option Values
Value of
# of Securities Unexercised
Unexercised In-the-Money
Options at Options at
Shares FY-End(#) FY-End($)at
Acquired On Value Exercisable/ Exercisable/
Name Exercise (#) Realized Unexercisable Unexercisable(1)
Peter Amico -0- -0- 25,000/35,000 $52,500/$82,499
President and
Chairman
(1). Assumes a price of $3.00 per of the Company's common stock for
purposes of this calculation.
The Company's directors are compensated at the rate of $250 per meeting
and are reimbursed for expenses incurred by them in connection with the
Company's business. In addition, each director received a stock option
for 5,000 shares of common stock exercisable at $0.50 per share.
Other than as indicated above, the Company does not have any other form
of compensation payable to its officers or directors, including any
stock option plans, stock appreciation rights, or long term incentive
plan awards for the periods indicated in the table.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table identifies as of March 31, 2000 information
regarding the current directors and executive officers of the Company
and those persons or entities who beneficially own more than 5% of its
common stock and Preferred Stock of the Company:
Percentage of Percentage of
Common Stock Preferred Common Stock Preferred Stock
Beneficially Voting Stock Beneficially Beneficially
Name(1) Owned(2) Rights(2) Owned(3) Owned(3)
- -----------------------------------------------------------------------
[S] [C] [C] [C] [C]
Peter Amico
President and
Chairman 1,680,737(4) 2,750,000 35.39% 100%
D. Barney Harris 92,500(5) -0- 1.97% -0-
Vice President and
Director
Frank Basile 110,128(6) -0- 2.36% -0-
Director
James Hudson 55,800(7) -0- 1.20% -0-
Director
John Watt Jr. 109,000(8) -0- 2.33% -0-
Secretary and
Director
Daniel H. Luciano 16,375(9) -0- 0.35% -0-
Director
All directors 2,064,5540 2,750,000 43.07% 100%
and executive
officers as a
group (5 persons)
- -----------------
(1). The address of each beneficial owner is the address of the Company.
(2). Based on 4,663,880 shares of common stock outstanding as of March 31,
2000. except that shares of common stock underlying options or
warrants exercisable within 60 days of the date hereof are deemed to
be outstanding for purposes of calculating the beneficial ownership
of securities of the holder of such options or warrants.
(2). Based upon 275,000 outstanding shares of preferred stock after giving
effect to the 10 for 1 voting rights.
(3). Represents shares held by Arcon Corp., a corporation wholly owned by
Mr. Amico. The amount includes 85,000 stock options exercisable
pursuant to Mr. Amico's employment agreement.
(5). Includes 25,000 stock options owned by Mr. Harris pursuant to
Mr. Harris' employment agreement.
(6). Includes 5,128 shares held by an affiliate, 10,000 shares held by
Mr. Basile's spouse, and 5,000 shares of common stock issuable upon
exercise of director's options.
(7). Includes 44,500 shares held by an affiliate.
(8). Includes 100,000 shares held jointly with his wife, 4,000 held by an
affiliate, and 5,000 shares of common stock issuable upon exercise of
director's options.
(9). Includes 5,000 shares of common stock issuable upon exercise of
director's options.
Item 12. Certain Relationships and Related Transactions.
Arcon Cop., a corporation wholly owned by the Company's chairman and
president, owns 275,000 shares of preferred stock of the Company.
Each share of Preferred Stock is entitled to 10 voting rights on all
matters on which shareholders are entitled to vote. The preferred
stock has a stated value per share of $5.00 and an annual dividend
per share equal to 5% of the stated value. Dividends are cumulative
and the holder has a right to waive any cash dividend and receive
the dividend in the form of common stock at a price per share equal
to 30% of the lowest offering or trading price of the common stock
during an applicable calendar quarter. The preferred stock is not
convertible into common stock, however, has a preference over common
stockholders upon liquidation equal to the stated value per share.
Dividends totaling $105,119 had accrued through fiscal 1998 and
$68,750 had accrued through fiscal 1999 on the preferred stock. Cash
dividends in the amount of, $13,005 was paid during fiscal 1998 and
$40,498 was paid during fiscal 1999. An additional $120,366 was paid
during fiscal 1999 through the issuance of common stock.
As of December 31, 1999, a loan in the amount of $50,000 from Arcon
Corp. is outstanding. The loan is due April 1, 2000 and bears interest
at 12%.
Mr. Peter Amico received $14,000 and $6,500 in finder's fees during
fiscal 1998 and 1999, respectively, in connection with the private
placement of the Company's stock
Mrs. Patricia Amico, the wife of the Company's President, performed
services to the Company during 1999. The amount of such services
totaled $8,099. Mr. Timothy Smith, the son in law of the Company's
President, performed services to the Company during 1999. The amount
of such services totaled $17,236.
Mr. John Watt, a director of the Company, received commissions during
fiscal 1998 and 1999 from certain suppliers and fabricators that
conduct business with the Company. The amount of such commission
for each year was less that $10,000.
Mr. Frank Basile, a director of the Company, is a partner of a law
firm that performed legal services to the Company during fiscal 1998
and 1999. The billing amount for such services for each year was less
than $10,000.
Mr. Daniel Luciano, a director of the Company, performed legal services
for the Company during fiscal 1998. The billing amount of such services
for the year was less than $10,000.
During 1999, each director of the Company received a stock option to
acquire 5,000 shares of common stock at a price per share of $0.50.
PART IV
Item 13. Exhibits and reports on Form 8-K.
(a)(1). Exhibits
EXHIBIT INDEX
3(i)a. Certificate of Incorporation of AirTrax, Inc. dated April 11, 1997.
(Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on November 19, 1999).
3(i)b. Certificate of Amendment to Certificate of Incorporation of AirTrax,
Inc. dated November 11, 1999. (Incorporated by reference to the Company's
Form 8-K filed with the Securities and Exchange Commission on November 19,
1999).
3(ii)(a). Amended and Restated By-Laws of the Company. (Incorporated by
reference to the Company's Form 8-K filed with the Securities and Exchange
Commission on November 19, 1999).
10(i) Agreement and Plan of Merger by and between MAS Acquisition IX Corp.
and AirTrax, Inc. dated November 5, 1999. (Incorporated by reference to the
Company's Form 8-K filed with the Securities and Exchange Commission on
January 13, 2000).
10(ii). Employment agreement dated April 1, 1997 by and between the Company
and Peter Amico. (Incorporated by reference to the Company's Form 8-K/A
filed with the Securities and Exchange Commission on January 13, 2000).
10(iii). Employment agreement dated July 12, 1999, by and between the
Company and D. Barney Harris. (Incorporated by reference to the Company's
Form 8-K/A filed with the Securities and Exchange Commission on November 19,
1999).
99(i) Consulting Agreement by and between MAS Financial Corp. and AirTrax,
Inc. dated October 26, 1999. (Incorporated by reference to the Company's
Form 8-K filed with the Securities and Exchange Commission on November 19,
1999).
3.(a)(2). Financial Statements
FINANCIAL STATEMENTS INDEX
Independent Auditors' Report of March 29, 2000. 1
- - Balance Sheet as of December 31, 1999. 2
- - Statement of Income for Fiscal Years Ended December 31, 1999 and
December 31, 1998. 3
- - Statements of Changes in Stockholder's Equity
For Years Ended December 31, 1999 and December 31, 1998. 4
- - Statements of Cash Flows for Fiscal Years
Ended December 31, 1999 and December 31, 1998. 5
- - Notes to Financial Statements. 6
AIRTRAX, INC.
FINANCIAL STATEMENTS December 31, 1999
CONTENTS Page
Accountant's Audit Report 1
Balance Sheet 2
Statements of Income 3
Statements of Changes in Stockholder's Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Board of Directors
AirTrax, Inc.
I have audited the accompanying balance sheet of AirTrax, Inc. as of
December 31, 1999, and the related statements of income, changes in
stockholders' equity, and cash flows for the years ended December 31,
1999 and 1998. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion
on these financial statements based on my audit. I conducted the audit
in accordance with generally accepted auditing standards. Those
standards require that I 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. I believe
that my audit provides a reasonable basis for my opinion. In my
opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AirTrax, Inc. as of
December 31, 1999, and the results of its operations and its cash
flows for the years ended December 31, 1999 and 1998 in conformity with
generally accepted accounting principles.
Robert G. Jeffrey
March 29, 2000
AIRTRAX, INC.
BALANCE SHEET
December 31, 1999
ASSETS
--------
Current Assets
Cash $ 48,652
Accounts receivable 71,453
Inventory 511,525
Prepaid expenses 6,938
----------
Total current assets $ 638,568
Fixed Assets
Office furniture and equipment 34,003
Automotive equipment 16,915
Shop equipment 20,660
Casts and tooling 72,962
---------
144,540
Less, accumulated depreciation 55,777
----------
Net fixed assets 88,763
Other Assets
Patents - net 50,380
Utility deposits 65
----------
Total other assets 50,445
----------
TOTAL ASSETS $777,776
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable $527,255
Accrued liabilities 15,161
Stockholder note payable 50,000
---------
Total current liabilities $592,416
Stockholders' Equity
Common stock - authorized, 5,000,000
shares without par value; 4,549,013
issued and outstanding 45,490
Preferred stock - authorized, 500,000
shares without par value; 275,000
issued and outstanding 12,950
Additional paid-in-capital 1,812,683
Retained deficit (1,685,763)
------------
Total stockholders' equity 185,360
TOTAL LIABILITIES AND
STOCKHOLDER' EQUITY $777,776
============
The accompanying notes and accountant's audit report are an
Integral part of these financial statements.
-2-
AIRTRAX, INC.
STATEMENTS OF INCOME
For the Years Ended December 31, 1999 and 1998
1999 1998
---- ----
SALES $ 79,302 $ 19,585
COST OF GOODS SOLD 10,083 7,637
--------- ---------
Gross Profit 69,219 11,948
OPERATING AND ADMINISTRATIVE EXPENSES:
Cost of prototype development 250,831 341,125
Auto expense 74 858
Health insurance 9,765 6,538
Utilities 1,972 1,828
Telephone 8,894 5,012
Shipping, postage and office supplies 25,531 15,840
Rent 7,353 14,898
Professional fees 88,246 10,790
Engineering services 23,223 1,709
Travel and entertainment 9,077 9,648
Business taxes 1,084 5,179
Advertising and promotion 81,021 2,797
Interest expense 7,752 2,854
Operating supplies 1,261 5,302
Depreciation and amortization 30,740 18,269
Insurance 15,207 1,754
Equipment repairs - 1,317
Equipment rental - 150
Commissions 5,743 1,555
Payroll 197,608 56,226
--------- ---------
Total General and
Administrative Expenses 765,382 503,649
--------- ---------
NET LOSS BEFORE OTHER INCOME (696,163) (491,701)
Other income 10,548 1,687
--------- ---------
NET LOSS $(685,615) $(490,014)
========= =========
NET LOSS PER SHARE $ (.18) $ (.17)
========= =========
The accompanying notes and accountant's audit report are an integral part
of these financial statements.
-3-
AIRTRAX, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1999 and 1998
COMMON PREFERRED
STOCK STOCK ADDITIONAL
----------------- --------------- PAID-IN RETAINED
Shares Amount Shares Amount CAPITAL DEFICIT TOTAL
--------- -------- ------- ------- ---------- ---------- -------
Balance,
December 31,
1997 2,006,600 $ 20,066 275,000 $12,950 $ 315,116 $ (336,265) $ 11,867
Sales of stock
under Rule 504,
Regulation D,
offerings 471,962 4,720 488,399 493,119
Stock issued
pursuant to
stock split 1,021,825 10,218 (10,218) -
Stock issued
to redeem
note payable 30,000 300 19,700 20,000
Stock issued for
services 79,708 797 (797) -
Net loss for
the year (490,014) (490,014)
Cash dividends on
preferred stock (13,005) (13,005)
--------- ------- ------- ------ ---------- --------- -------
Balance,
December 31,
1998 3,610,095 36,101 275,000 12,950 812,200 (839,284) 21,067
Sales of stock
under Rule 504
Regulation D
offering 614,552 6,146 866,122 872,268
Shares issued
as dividend
on preferred
stock 305,737 3,057 117,309 (120,366) -
Shares issued
for services 18,629 186 17,052 17,238
Net losses for
the year (685,615) (685,615)
Cash Dividends
on preferred
stock (40,409) (40,498)
---------- ------- ------- ------- -------- ---------- --------
Balance,
December 31
1999 4,549,013 $ 45,490 275,000 $12,950 $1,812,683 $(1,685,763) $185,360
========== ======== ======= ======= ========== ============ ========
The accompanying notes and accountant's audit report are an
integral part of these financial statements
-4-
AIRTRAX, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999 and 1998
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(685,615) $(490,014)
Adjustments to reconcile net income to
net cash consumed by operating activities:
Depreciation and amortization 30,740 18,269
Value of common stock issued for services 17,238 -
Changes in current assets and liabilities:
Increase in accounts payable and
accrued liabilities 421,967 58,543
Decrease (increase) in prepaid expense 2,500 (9,438)
Increase in accounts receivable (68,271) (3,182)
Increase in inventory (488,553) (10,902)
---------- -------
Net Cash Consumed By
Operating Activities (769,994) (436,724)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of equipment (63,373) (44,490)
Acquisition of patents (4,981) -
Increase in utility deposits 149 800
----------- ---------
Net Cash Consumed By
Investing Activities (68,205) (43,690)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of common stock sales 872,268 493,119
Proceeds of borrowing 50,000 -
Preferred stock dividends (40,498) (13,055)
----------- ----------
Net Cash Provided By
Financing Activities 881,770 480,114
----------- ----------
Net Increase (Decrease) In Cash 43,571 (300)
Balance at beginning of year 5,081 5,381
----------- ----------
Balance at end of year $ 48,652 $ 5,081
=========== ==========
The accompanying notes and accountant's audit report are an integral part
of these financial statements.
-5-
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
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
omnidirection 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 United States
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 second 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 shortterm 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.
-6-
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. continued
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. These
offerings were exempt under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder. A total of
614,552 shares of common stock was sold under the offerings resulting
in net proceeds of $872,268.
-7-
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
4. PREFERRED STOCK
The Company is authorized to issue 500,000 shares of preferred stock,
without par value. At December 31, 1999, 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 and another $68,750 accrued
during 1999. Cash dividends of $13,005 were paid during 1998 and
$40,498 was paid during 1999. An additional $120,366 was paid during
1999 through the issuance of common stock. The characteristics of
the remaining 225,000 preferred shares authorized have not been
specified.
5. Earnings Per Share
YEAR 1999
Income Average Shares Per Share
(Loss) Outstanding Amount
Net loss $(685,615)
Adjustment for
preferred stock
dividends (68,750)
Income (loss) available
to common shareholders $(754,365) 4,239,465 $(.18)
YEAR 1998
Net loss $(490,014)
Adjustment for
preferred stock
dividends (68,750)
Income (loss) available
to common shareholders $(558,764) 3,320,662 $(.17)
Warrants to purchase common stock were outstanding at the end of 1998
but were not included in the computation of earnings per share because
such inclusion would have an antidilutive effect. These warrants are
no longer outstanding.
-8-
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENT
December 31, 1999
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 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
June 2003. The following is a schedule of future minimum rental
payments required under the operating lease:
Year Ending December 31, Amount
2000 $ 6,857
2001 6,857
2002 6,857
2003 2,857
---------
$23,428
Rent expense amounted to $5,743 in 1999 and $17,755 in 1998.
8. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for interest and income taxes is presented below:
1999 1998
Interest $7,752 $2,904
Income taxes 200 200
There were no noncash investing activities during either 1999 or 1998.
The following noncash financing activities occurred:
a. A $20,000 note payable was redeemed in 1998 for 30,000 shares of
common stock.
b. Shares of common stock were issued for services during 1997 and
1998, totalling 18,629 and 30,000, respectively.
c. Preferred stock dividends were partially satisfied by the issuance
of 305,737 shares of common stock.
-9-
AIRTRAX, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
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 matter is now under
discussion and a settlement is expected shortly. The Company has an
employment agreement with its president which expires June 30, 2000. The
agreement provides, in part, for options permitting the president to
acquire shares of common stock. These options permit acquisitions
under three separate arrangements. First, 25,000 shares are available
each year at prices per share equal to 30% of the lowest price paid for
the stock during the 30 days preceding the date of exercise; under
the second arrangement, 15,000 shares are available in the year 2000 at
prices equal to one half the 30% price described above; finally, 10,000
shares are available in the year 2000 for a total cost of $1. These
options accumulate if they are not exercised. None of the options has
previously been exercised. Options for 50,000 shares were thus
outstanding at December 31, 1999 at the 30% price.
-10-
(b). Reports on Form 8-K.
On November 19, 1999, the Company filed a Form 8-K with the Securities
and Exchange Commission.
On January 13, 2000, the Company filed a Form 8-K/A with the Securities
and Exchange Commission.
SIGNATURES
In accordance with Section 13 or 15(d) 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.
April 16, 2000
/s/ Peter Amico Date
Peter Amico
Chairman and
Principal Executive Officer
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
/s/ Peter Amico April 16, 2000
Peter Amico Date
Director
/s/ D. Barney Harris April 16, 2000
D. Barney Harris Date
Director
/s/ John Watt April 16, 2000
John Watt Date
Director
/s/ Daniel H. Luciano April 16, 2000
Daniel H. Luciano Date
Director
EXHIBIT 21 (i)
SUBSIDIARIES
None
EXHIBIT 27.1
FINANCIAL DATA SCHEDULE
ART.5 FDS
Multiplier 1,000
PERIOD TYPE 12 MONTHS
FISCAL YEAR END DEC-31-1999
PERIOD START JAN-1-1999
PERIOD END DEC-31-1999
CASH 49
SECURITIES 0
RECEIVABLES 71
ALLOWANCES 0
INVENTORY 512
CURRENT-ASSETS 639
PP&E 145
DEPRECIATION 56
TOTAL ASSETS 778
CURRENT-LIABILITIES 593
BONDS 0
COMMON 45
PREFERRED-MANDATORY 13
PREFERRED 0
OTHER-SE 1,784
TOTAL-LIABILITIES-AND-EQUITY 778
SALES 79
TOTAL-REVENUES 79
CGS 10
TOTAL-COST 765
OTHER-EXPENSES (11)
LOSS-PROVISION 0
INTEREST-EXPENSE 0
INCOME-PRETAX (686)
INCOME-TAX 0
INCOME-CONTINUING (686)
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME (686)
EPS-PRIMARY (.18)
EPS-DILUTED (.18)
