FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended April 30, 2000
Commission File Number 000-25967
ARS NETWORKS, INCORPORATED
(Exact name of registrant as specified in its charter)
NEW HAMPSHIRE 14-1805077
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
100 WALNUT STREET, CHAMPLAIN, NEW YORK 12919
(Address of principal executive offices) (Zip Code)
(518) 298-2042
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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.
X Yes No
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of April 30, 2000
Common Stock 10,822,889
<PAGE>
FORM 10-QSB
ARS NETWORKS, INCORPORATED
APRIL 30, 2000
INDEX
Part I - Financial Information
Item 1. Financial Statements
Balance Sheet as of April 30, 2000
Statements of Loss
For the Three Months Ended
April 30, 1999 and 2000 and From
the Inception of Incorporation May 4,
1998 to April 30, 2000
Statements of Stockholder's Deficit
For the Three Months Ended April 30, 1999
and 2000
Statements of Cash Flows For the Three Months
Ended April 30, 1999 and 2000 and From the Inception
of Incorporation May 4, 1998 to April 30, 2000
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
Of Results of Operations and Financial
Condition
Part II - Other Information
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote
Of Security Holders
Item 6. Exhibits and Reports on Form 8k
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ARS NETWORKS, INCORPORATED
(A Development Stage Company)
BALANCE SHEET (UNAUDITED)
($US)
ASSETS
April 30, 2000
CURRENT
Cash in bank $ 142,653
OTHER ASSETS
Non-compete agreements 1
Patent fees 1,995
-----------
$ 144,649
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accrued compensation and fees $ 134,024
Accounts payable 64,646
Due to officer and directors 4,760
Obligation under consulting agreement 30,000
-----------
233,430
-----------
COMMITMENTS AND CONTINGENCIES (NOTE 3)
STOCKHOLDERS' DEFICIT (NOTE 4)
Preferred stock, $.0001 par value -
25,000,000 shares authorized; none
outstanding -
Common stock - $.0001 par value - 50,000,000
shares authorized; 10,010,489 and 10,822,889
outstanding 1,082
Additional paid in capital 1,530,197
Deficit - accumulated during the
development stage (1,620,060)
-----------
(88,781)
-----------
$ 144,649
===========
See accompanying notes
<PAGE>
<TABLE>
ARS NETWORKS, INCORPORATED
(A Development Stage Company)
STATEMENTS OF LOSS (UNAUDITED)
($US)
<CAPTION>
From the Inception
of Incorporation
Three Months Ended Three Months Ended May 4, 1998 to
April 30, 1999 April 30, 2000 April 30, 2000
<S> <C> <C> <C>
SALES $ - $ - $ -
------------ ------------ -----------
EXPENSES
Officers' compensation 51,500 53,453 448,953
Professional fees (Note 4) 2,021 271,626 1,062,859
Promotional expenses - 39,512 39,512
Development expenses and other 4,392 21,007 39,390
Rent and telecommunications 1,637 4,052 29,346
------------ ------------ -----------
TOTAL EXPENSES 59,550 389,650 1,620,060
------------ ------------ -----------
NET LOSS $ (59,550) $ (389,650) $(1,620,060)
============ ============ ============
LOSS PER SHARE (BASIC AND DILUTED):
Net loss $ (.01) $ (.04)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 9,775,198 10,755,697
============ ============
See accompanying notes
</TABLE>
<PAGE>
<TABLE>
ARS NETWORKS, INCORPORATED
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED) (NOTE 4)
($US)
<CAPTION>
Additional Total
Common Stock Paid-In Stockholders'
Date Shares Value Capital Deficit Deficit
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended April 30, 1999
Balance - January 31, 1999 9,726,489 $ 973 $698,431 $(751,778) $ (52,374)
Common stock sold for
$1.00 in cash, valued at
$1.00 per share 3/22/99 2,000 - 2,000 - 2,000
Common stock sold for
$1.00 in cash, valued at
$1.00 per share 3/30/99 5,000 1 4,999 - 5,000
Exercise of options for
250,000 shares at $.0001 4/15/99 250,000 25 - - 25
Common stock sold for
$1.00 in cash, valued at
$1.00 per share 4/21/99 2,000 - 2,000 - 2,000
Common stock sold for
$1.00 in cash, valued at
$1.00 per share 4/28/99 25,000 2 24,998 - 25,000
Officers' compensation
contributed to capital - - 51,500 - 51,500
Net loss - - - (59,550) (59,550)
---------- ------ -------- ---------- ---------
Balance - April 30, 1999 10,010,489 $1,001 $783,928 $(811,328) $ (26,399)
========== ====== ======== ========== =========
See accompanying notes
</TABLE>
<PAGE>
<TABLE>
ARS NETWORKS, INCORPORATED
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED) (NOTE 4)
($US)
<CAPTION>
Additional Total
Common Stock Paid-In Stockholders'
Date Shares Value Capital Deficit Deficit
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended April 30, 2000
Balance - January 31, 2000 10,608,989 $1,061 $1,209,368 $(1,230,410) $ (19,981)
Common stock sold for
$1.50 in cash, valued at
$1.50 per share 2/7/00 13,900 1 20,849 - 20,850
Common stock issued for
consulting agreement, valued
at $1.50 per share 2/25/00 150,000 15 224,985 - 225,000
Common stock sold for $1.50
in cash, valued at $1.50
per share 3/15/00 50,000 5 74,995 - 75,000
Net loss - - - (389,650) (389,650)
---------- ------ ----------- ------------ ---------
Balance - April 30, 2000 10,822,889 $1,082 $1,530,197 $(1,620,060) $ (88,781)
========== ====== =========== ============ =========
See accompanying notes
</TABLE>
<PAGE>
<TABLE>
ARS NETWORKS, INCORPORATED
(A Development Stage Company)
STATEMENT OF CASH FLOWS (UNAUDITED) (NOTE 4)
($US)
<CAPTION>
From the Inception
of Incorporation
Three Months Ended Three Months Ended May 4, 1998 to
April 30, 1999 April 30, 2000 April 30, 2000
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (59,550) $(389,650) $(1,620,060)
---------- ---------- ------------
Adjustments to reconcile net loss to
net cash (used in) operating activities:
Officers' compensation contributed to
capital 51,500 - 395,500
Professional fees - 225,000 800,154
Changes in assets and liabilities:
(Increase) in other assets - (1,350) (1,996)
Increase (decrease) in accounts
payable and accrued liabilities (2,025) 99,464 198,670
---------- ---------- ------------
TOTAL ADJUSTMENTS 49,475 323,114 1,392,328
---------- ---------- ------------
NET CASH (USED IN) OPERATING ACTIVITIES (10,075) (66,536) (227,732)
---------- ---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of stock 34,025 95,850 385,625
Advances from officer - - 20,000
Payments of obligation under consulting
agreement - (10,000) (20,000)
Repayment of advance from officer - (15,240) (15,240)
---------- ---------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 34,025 70,610 370,385
---------- ---------- ------------
NET INCREASE IN CASH 23,950 4,074 142,653
CASH AT BEGINNING OF PERIOD 10,650 138,579 -
---------- ---------- ------------
CASH AT THE END OF PERIOD $ 34,600 $ 142,653 $ 142,653
========== ========== ============
See accompanying notes
</TABLE>
<PAGE>
ARS NETWORKS, INCORPORATED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
INFORMATION AS OF APRIL 30, 1999 AND 2000 AND FOR
THE PERIODS ENDED APRIL 30, 1999 AND 2000 IS UNAUDITED
($US)
1. ORGANIZATION
The Company, incorporated on May 4, 1998 in New Hampshire, was
formed to manufacture and sell railway level crossings to the
railroad industry. The Company is devoting all its efforts to
establishing a new business. Planned principal operations have
not yet started. During the three months ended April 30, 2000,
the Company changed its name from Ameri-can Railway Systems,
Incorporated to ARS Networks, Incorporated.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION
Basis of Presentation
The accompanying financial statements have been prepared in
accordance with U.S. generally accepted accounting principles and
are presented in U.S. dollars.
Development Stage Activities
The Company has not earned revenues from its activities through
April 30, 2000. As such, the Company is still in a development
stage and falls under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by
Development Stage Enterprises."
Going Concern and Management's Plans
The Company has a limited operating history with no revenues.
Because of this, the Company faces significant obstacles in
regards to financing and customer acceptance of the Company's
products. The Company's continuation as a going concern is
dependent upon its ability to raise capital from outside sources.
Management believes sufficient funds are or will be available to
sustain operations for at least the twelve months following the
latest balance sheet date. The Company has been successful in
raising approximately $385,000 through April 30, 2000 and
anticipates raising additional funds as required from the sale of
its Common Stock pursuant to Rule 504 Regulation D offering.
These funds have been and will continue to be utilized to fund
the start-up and development of the Company.
The Company plans to use the proceeds raised from the sale of its
stock to fund potential acquisitions and expand operations. The
Company intends to purchase small companies that have products
and services that add value and are strategic to the success of
the Company's growth. It is intended that these acquisitions of
small companies will complement the Company's product and
generate ongoing revenue to strengthen the Company's ability to
stabilize its stock for its stockholders.
These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern. The financial
statements do not include any adjustments to reflect the possible
future effect on recoverability and classification of assets or
the classification of liabilities that might result from the
outcome of this uncertainty.
<PAGE>
ARS NETWORKS, INCORPORATED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
INFORMATION AS OF APRIL 30, 1999 AND 2000 AND FOR
THE PERIODS ENDED APRIL 30, 1999 AND 2000 IS UNAUDITED
($US)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION (continued)
Unaudited Interim Financial Information
The accompanying financial statements are unaudited; however, in
the opinion of management, all adjustments necessary for a fair
statement of financial position and results for the stated
periods have been included. These adjustments are of a normal
recurring nature. Selected information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted. Results for interim periods are not necessarily
indicative of the results to be expected for an entire fiscal
year. It is suggested that these condensed financial statements
be read in conjunction with the audited financial statements and
accompanying notes for the period from the inception of
incorporation May 4, 1998 to January 31, 2000.
3. COMMITMENTS
Subsequent to April 30, 2000, the Company signed a letter of
intent to purchase all of the outstanding shares of T & T Diesel
Power, Ltd. for approximately
$622,000 (Canadian).
4. SUPPLEMENTAL CASH FLOW INFORMATION
Noncash investing and financing activities consists of the following:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
April 30, 1999 April 30, 2000
<S> <C> <C>
150,000 shares of common stock issued to
consultants (Note 3) and recorded as
professional fee. The value of $1.50 per
share is based upon similar stock sales $ - $225,000
========= =========
Officer's compensation recorded as a
contribution to additional paid-in capital $ 51,500 $ -
========= =========
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has a limited operating history with no revenues.
Because of this, the Company faces significant obstacles in
regards to financing and customer acceptance of the Company's
products. The Company's continuation as a going concern is
dependent upon its ability to raise capital from outside sources.
The Company has been successful in raising approximately $385,000
through April 30, 2000 and anticipates raising an additional
funds from the sale of its Common Stock pursuant to Rule 504
Regulation D offering. These funds have been and will continue to
be utilized to fund the start-up and development of the Company.
ARS is a fully-reporting company with the Securities and Exchange
Commission and is approved by the NASD to trade its common stock
on the OTCBB under symbol (ARSN). The Company plans to raise
approximately $600,000 to complete its REG D 504 offering to
support marketing efforts and the associated working capital
requirements. The Company also plans to file Form SB2 and
register at least 5,000,000 additional shares for sale during the
currant fiscal year. The Company hopes to raise up to
$25,000,000. These funds will be used to expand operations,
continue technical development and procure small technically
viable companies that will contribute to revenue, cash flows and
the future growth of the Company. However there can be no
guarantee that the Company will be successful in raising
additional funds or filing Form SB2 or that a market will
continue for the Company's common stock.
Management, however, believes sufficient funds are or will be
available to sustain operations for at least the twelve months
following the latest balance sheet.
The prime focus of ARS's Crosslogix TM private wireless network is
management of railway traffic and public safety. While the ARS
system and its component parts were developed to improve safety
at rail crossings, the ARS system supports many applications in
real time data collection, processing, monitoring and information
analysis. The system has evolved into Crosslogix TM an integrated
service information System the foundation of the ARS wireless
private network.
The ARS objective is to build and design "State of the Art,"
communications systems that meet customer demands, that are cost
competitive, and that are capable of standing up to the tough
conditions of continuous use in the railway industry.
The Advance Warning System for railway level crossings is the
first commercial application to be offered by ARS, on it's
integrated service information system. ARS's Crosslogix TM
technology provides a portal for the integration of an extensive
family of wayside warning and wayside to train communications
applications. The ability to integrate other applications to
ARS's system adds considerable value for the railway and yet are
relatively inexpensive to implement. The following applications
can be easily integrated with ARS's system.
<PAGE>
Hot box detector: This is a non-contact temperature measurement
system, which we will integrate as an application on to our
information network. These sensors on the track will allow the
bearing journal temperatures to be accurately monitored as the
train rolls by at high speed. This is a major safety issue for
the railway since the detection of a hot bearing can prevent a
derailment.
Flat wheel detector: The use of a vibration impact sensor can be
used to detect wheel with flat spots. The detection of flat spots
will allow the offending cars to be decommissioned and repaired
before additional damage to the rail occurs.
Wide area networking: ARS Crosslogix TM technology can be linked
together to provide a higher speed communications capability to
monitor locomotive and work equipment in dark territories. Dark
territories are sections of railway track where is currently no
communication systems in place.
Hazardous Materials Monitoring: Constant monitoring of tank cars
or other vessels transporting hazardous materials, e.g. measures
of temperature, pressure, evaporation, volatility, decomposition,
and so forth.
Inter-modal Reefer Monitoring Systems: This is a wireless
monitoring application for refrigerated railway cars (Reefers)
which communicate with each ARS service information system via
wireless radio. This allows the Reefers to report such things as
cooling temperature, fuel levels and the condition of the engine
generators that run the refrigerator cars, etc., allowing the
railway to determine where the cars are located, define the
problem with the refrigerated unit and take the appropriate
action to correct problems before the goods being transported are
damaged.
Railway crossing systems are one of the most important safety
systems used by railroads. Canadian Pacific Railroad has agreed
to test the ARS Advance Crossing System application on its main
line in Mississauga Ontario Canada. The audit and certification
process is expected to take 90 to 180 days. CN Rail shares
signaling information and test results with CPR under an
agreement signed by both railways March 26, 1998 (CPRCNJSAP98-A1).
In management's opinion both Canadian railways and their
U.S. subsidiaries' railroads will agree to put the system through
their own internal audit procedures, which will take 3 to 6
months. ARS will offer to sell/lease/rent crossing systems to
each of its customers on a money back guarantee basis to gain
approval to install test systems at all targeted railways as soon
as possible. Certification of the ARS Advance Warning System by
selected Class I railways should open the door for system
installations at Class II and Class III railways. Many Class II
and III railways traditionally forego testing if Class I railways
have certified a technology. However, certification does not
guarantee market acceptance of ARS's technology.
ARS plans to distribute the Crosslogix TM Advance Warning System
through an exclusive distributorship with Geismar/Modern Track
Machinery Inc. (Geismar/MTM). Ameri-can Equipment Sales and
Leasing, Inc., transferred its contract with Geismar/MTM to sell
the level crossing systems to ARS. The contract is valid until
October 1, 2000. ARS plans to commence negotiations in September
2000 to develop the terms for a new contract between ARS
NetworksT and the Geismar Company. Geismar/MTM has a worldwide
sales network in over 100 countries. They are a premier
manufacturer and distributor of light machinery and railway
systems for the railroad industry. They command 60% of the US
market and over 70% of the Canadian market. The alliance with
Geismar/ MTM will enhance the company's ability to penetrate the
market. This relationship facilitates exposure to the key
decision-makers at most U.S. railways and the 60 rapid transit
authorities across North America, and opens to ARS an entrance
into the world market. The ARS management team will support the
efforts of Geismar's sales representatives. The ARS Vice
President of Sales and Service will be mandated to build a field
support group to service the railways directly, which will
provide further brand recognition to ARS in the market place. It
is anticipated that the railways will demand a strong technical
service group to support systems sold by Geismar/Modern Track.
The Company feels growth in this area will be ongoing and
dependent on future sales.
<PAGE>
Market Development and Future Key Customers
The Company entered into an agreement for the development of
corporate and product branding, and logo design. The finished
product can be viewed on the Company's new web site.
www.ARSNetworks.com
The Company hired a public relations and communications
consulting Firm to direct the Company's investor relations
campaign. The term of the public relations and consulting
agreement is for one year commencing February 9, 2000.
ARS will use a multi-step approach to develop business
opportunities in national and international markets:
1) Identify and rank the decision makers within each customer
organization.
2) Develop relationships among the decision-makers of ARS
clients, who will act as positive references of ARS.
3) Demonstrate the signal equipment at target accounts to insure
a comprehensive, unified understanding of ARS' advantages, and
identify problems for which ARS could contribute to cost effective
solutions.
Publicity and Advertising:
The company will aggressively pursue the leading industry
publications for editorial coverage, publicity and trade
advertising. The objective will be to create awareness of the
company's products.
Railway Age
Progressive Railroading
Modern Railway
Brochures and Technical Briefs:
ARS has developed a web site (http:www.arsnetworks.com) that
provides on line information about the Company and allows the
Company to communicate with investors, railway executives,
government transportation authorities and rail safety lobby
groups. The company plans to have its distributor representatives
direct customers to the Company's web site. In addition, the web
site will be used in direct marketing campaigns.
ARS will publish Technical Briefs that provides technical and
operational details. The briefs will be distributed over the web
and in hard copy to the railway's signal engineers to evaluate
the system.
Direct Mail:
The company will use direct mail to build awareness of the
Advanced Warning System. The company will target investors,
senior officials at each railway as well as appropriate officials
at municipal, state, provincial and Canadian US federal
transportation authorities. By targeting these government
officials, the company hopes to be able to "pull" product through
the distribution channel.
Manufacturing Plan
Manufacturing and assembly will be by contractors for the
foreseeable future, with care taken to ensure that ISO 9000
standards are maintained. ISO is a series of international
standards for Quality Management Systems. The ISO 9000 family of
standards recognizes four generic product categories, hardware,
software, processed materials, and services. More than 95,000
companies received certification of compliance in 86 countries.
<PAGE>
Year 2000
Historically, certain computer programs were written using two
digits rather that four to define the applicable year.
Accordingly, the Company's software may recognize a date using
"00" as 1900 rather than the year 2000, which could result in
computer systems failures or miscalculations, commonly referred
to as the Year 2000 ("Y2K") issue. The Y2K issue can arise at any
point in the Company's supply, product development tools, and
financial applications. Incomplete or untimely resolution of the
Y2K issue by the company, key suppliers, customers and other
parties could have a material adverse effect on the company's
results of operations, financial condition and cash flows. The
Company has developed a plan to modify its information technology
to recognize the Year 2000 and has, to the extent necessary,
completed analyzing and converting, where necessary, its critical
data processing systems. Since many of the Company's systems and
software are relatively new, management is confident that Year
2000 issues related to its own internal systems are Year 2000
compliant. The Company has initiated informal communications
with its significant equipment suppliers and service providers to
determine the extent to which the Company's systems may be
vulnerable to embedded technology such as micro-controllers. The
Company did not suffer any adverse problems during the Year 2000
change over. However, the Company will continue to monitor it's
systems and the systems technology provided by it's suppliers
over the next 12 months to insure that any potential for Y2K
problems are adverted. There can be no guarantee that the systems
of suppliers or other companies on which the Company relies will
not have material adverse effect on the Company's systems. The
Company believes it is taking the steps necessary regarding Year
2000 compliance with respect to matters within its control.
However, no assurance can be given that the Company's systems
that interface with it's suppliers and service providers will not
have a material adverse effect on the Company's business,
prospects, financial condition and results of operations.
Procurement
All hardware will be specified and procured by ARS engineering
staff. This critical function will be controlled to guarantee
that only optimal hardware from the most reliable vendors is
used. A database of hardware component failures, which occur
during manufacturing and test, will be maintained in order to
keep vital statistics on component failure rate for each part and
for each vendor. This Quality Assurance program will meet ISO9000
standards.
Component Assembly
To avoid the high cost of establishing an assembly plant, this
operation will be contracted out to a qualified assembly house.
Future assembly may require in-house facilities to control
production and reduce product cost.
Functional Testing
ARS's Crosslogix TM system will be tested by the Company's design
engineers who have Developed the product in co-operation with
third party contractors that Provide such test and certification
services. The tests will be conducted in An environmentally
controlled test chamber at temperature ranges from -40 to +85
Degree C. In addition, vibration tables will be used to test the
boards and sensors at variable vibration levels to detect
assembly and component mechanical problems. Thermal Cycling is a
well-documented process proven to expose failures in electronic
components.
Circuit boards will be monitored during extended temperature
cycling by a computer system, which will record the calibration,
drift, induced noise and functionality over several thermal
cycles. Each board is serialized and this data is saved
permanently.
<PAGE>
Final Quality Assurance
Contract manufacturers will assemble the ARS Crosslogix TM system.
Company personnel will approve all product tests, in order to
control the final acceptance and quality assurance operations
before shipping.
The manufacturing area will be operated under the principles of
"Improved Product Reliability through Continuous Process
Improvement" in accordance with ISO9000 standards.
Product Research and Development
During the current fiscal year the company plans to complete the
initial pre-production testing of it's Crosslogix TM service
information system and complete the first rail carrier system
audit and gain certification for the base Advance Crossing
application configuration using a single track system. Multiple
track systems will be deployed later on in the fiscal year with
the ability to permanently record (log) and time stamp rail data
information and transfer this to other computers for analysis.
Later releases in upcoming fiscal year will alert vehicular
traffic of train direction and speed, and provide support for
Wide Area Network capability, (Internet communications)
protocol.
Future Crosslogix TM service information system product releases
planed over the next two years at installed level crossing
applications will be expanded to include other devices and
functions that can build on the installed user-base. For
example, the following applications add considerable value for
the railway, yet are relatively inexpensive to add-on to the
system.
Hot box detector: This is a non-contact temperature measurement
system, which we will integrate as an application on to our
information network. These sensors on the track will allow the
bearing journal temperatures to be accurately monitored as the
train rolls by at high speed. This is a major safety issue for
the railway since the detection of a hot bearing can prevent a
derailment.
Flat wheel detector: The use of a (vibration) impact sensor can
be used to detect wheel with flat spots. The detection of flat
spots will allow the offending cars to be decommissioned and
repaired before additional damage to the rail occurs.
Wide area networking: ARS Crosslogix technology can be linked
together to provide a higher speed communications capability to
monitor locomotive and work equipment in dark territories. Dark
territories are sections of railway track where is currently no
communication systems in place.
Hazardous Materials Monitoring: Constant monitoring of tank cars
or other vessels transporting hazardous materials, e.g. measures
of temperature, pressure, evaporation, volatility, decomposition,
and so forth.
Inter-modal Reefer Monitoring Systems: This is a wireless
monitoring application for refrigerated railway cars (Reefers)
which communicate with each ARS Crosslogix service information
system via wireless radio. This allows the reefers (refrigerated
cars) to report such things as cooling temperature, fuel levels
and the condition of the engine generators that run the
refrigerator cars, etc., allowing the railway to determine where
the cars are located, define the problem with the refrigerated
unit and take the appropriate action to correct problems before
the goods being transported are damaged.
Purchase or sale of Plant and Significant Equipment:
This is not anticipated to occur as all manufacture and most
assembly of Crosslogix product line is to be contracted out.
However, subsequent to April 30, 2000, the Company signed a
letter of intent to purchase all of the outstanding shares of T &
T Diesel Power, Ltd. for approximately $622,000 (Canadian) adding
approximately $1,500,000 to $2,000,000 in revenue to the Company.
Management is confident that readily available electrical power
to service standby and dark territories applications will
greatly enhance the Company's ability to supply turn key systems
to the railway industry. Dark territories encompass thousands of
miles of railway track where there is no available power to run
signaling or safety systems.
Significant Changes in Numbers of Employees: Full time employees
are expected to grow to 8 over the current fiscal year.
<PAGE>
ARS has applied for patent protection filed on January 23, 1998
for an Automated Railway Crossing in the USA and will pursue
protection overseas through international patent treaties and
local patent applications in appropriate markets. ARS intends to
file for patent protection in May 2000 on other elements of its
planned product line, related to track condition monitoring,
intermodal refrigerated car monitoring, flat train car wheels and
wheel bearing deterioration.
Effect of Recent Accounting Pronouncements
Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
establishes accounting and reporting requirements for derivative
instruments. The Company has not in the past nor does it
anticipate that it will engage in transactions involving
derivative instruments, and therefore, does not expect this
pronouncement to have any effect on the financial statements.
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal
years beginning after June 15, 2000.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 4. Submission of Matters to Vote of Security Holders
No matters were submitted to a vote of security-holders through
The solicitation of proxies or otherwise during the first quarter
of the current Fiscal Year.
Item 6. Exhibits and Reports on Form 8K
8K Filed April 04, 2000 changing the company name from Ameri-can
Railway Systems to ARS Networks, Incorporated.
Exhibit 27 - Financial Data Schedule
<PAGE>
SIGNATURES
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Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ARS Networks, Incorporated
________________________________________________
Date June 12, 2000 /s/ Sydney A. Harland
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Sydney A. Harland
Chairman and CEO
