SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 1997.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to .
----- -----
Commission file number: 0-20033
AMERIRESOURCE TECHNOLOGIES, INC.
--------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 84-1084784
-------- -----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8815 E. Long Street Lenexa, Kansas 66215
----------------------------------------
(Address if principle executive office) (Zip Code)
(913) 859-9292
--------------
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes No X
----- -----
The number of outstanding shares of the issuer's common stock, $0.0001
par value (the only class of voting stock), as of September 30, 1997 was
164,213,803.
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS...................................................3
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS....................................4
PART II
ITEM 1. LEGAL PROCEEDINGS......................................................5
SIGNATURES.....................................................................5
INDEX TO EXHIBITS..............................................................6
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to AmeriResource
Technologies, Inc., a Delaware corporation, and its subsidiaries and
predecessors unless otherwise indicated. Consolidated, unaudited, condensed
interim financial statements including a balance sheet for the Company as of the
quarter ended September 30, 1997, statement of operations, statement of
shareholders equity and statement of cash flows for the interim period up to the
date of such balance sheet and the comparable period of the preceding year are
attached hereto as Pages F-1 through F-6 and are incorporated herein by this
reference.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS PAGE
- ----------------------------- ----
Unaudited Consolidated Condensed Balance Sheet, September 30, 1997...........F-2
Unaudited Consolidated Condensed Statement of Operations,
for the three months ended March 31, 1997 and 1996.........................F-4
Unaudited Consolidated Condensed Statement of Cash Flows,
for the three months ended March 31, 1997 and 1996.........................F-5
Notes to Unaudited Consolidated Condensed Financial Statements,
September 30, 1997.........................................................F-6
F-1
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheet
September 30, 1997
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 195
Receivables: -------------------
Trade
Related Party Notes receivable - 731,000
related party 14,471
Notes receivable - other 332,904
Other receivables 75,000
Allowance for doubtful accounts 193,000
(583,859)
-------------------
Net receivables
762,516
-------------------
Prepaid insurance and other assets
50,195
-------------------
Total current assets
812,906
Property, Plant and Equipment-Net
81,945
Other Assets:
Marketable securities
4,750
-------------------
Total Assets
$ 899,601
===================
See notes to unaudited consolidated financial statements.
F-2
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheet
September 30, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts Payable:
Trade $ 664,090
Related Party 36,231
Current portion of long-term debt:
Related Party 515,028
Other 730,412
Accrued Payroll and related expenses 526,391
Accrued Interest:
Related Party 97,473
Other 51,437
Income Tax Payable 35,960
-----------------
Total Current Liabilities 2,657,022
Long-term Debt-Net of current portion 1,214,296
Commitments and contingencies 105,000
-----------------
Total Liabilities $ 3,976,318
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, authorized
10,000,000 shares; Series A, issued and
outstanding 3,089,621 shares authorized 3,090
Common stock, $.001 par value, authorized 500,000,000
shares; issued and outstanding 164,213,803 shares 16,420
Additional paid-in capital 6,347,954
Common stock held in treasury; 3,600 shares at cost (5,625)
Accumulated deficit 9,438,556
-----------------
Total Stockholder' Equity $ (3,076,717)
-----------------
Total Liabilities and Stockholders' Equity $ 899,601
=================
See notes to unaudited consolidated financial statements.
F-3
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
For the Nine Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30 September 30 September 30 September 30
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Service Income $ (480) $ 589,430 $ 43,663 $ 2,074,341
Operating expenses (672,520) (380,688) (736,086) (1,370,451)
General and administrative expenses (548,849) (499,351) (796,374) (1,929,890)
Gain or (Loss) from sold and closed
subsidiaries -- (94,927) -- 15,055
------------- ------------- ------------- -------------
Operating Loss (1,221,849) (385,536) (1,488,797) (1,210,945)
Other Income (expense)
Interest Income -- 4,199 -- 4,138
Other Income -- 91,651 -- 61,104
Interest Expense (11,677) (8,884) (34,810) (100,699)
------------- ------------- ------------- -------------
Net Loss (1,233,526) (298,570) (1,523,607) (1,246,402)
============= ============= ============= =============
Net loss per common share $ (0.00) $ (0.01) $ (0.00) $ (0.01)
============= ============= ============= =============
Weighted average common shares
outstanding 162,963,803 149,986,217 162,963,803 149,986,217
============= ============= ============= =============
</TABLE>
See notes to unaudited consolidated financial statements.
F-4
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Condensed Statement of Cash Flows
For the Nine Months Ended September 30, 1997 and 1996
For the Nine Months Ended
September 30 September 30
1997 1996
(Unaudited) (Unaudited)
----------- -----------
Cash Flows from Operating Activities:
Net loss $ (1,523,607) $ (1,246,402)
-------------- --------------
Non-Cash Items:
Depreciation and amortization $ 114,639 $ 81,372
Provision for bad debts 16,490 0
-------------- ---------------
Changes in Assets Affecting Operations-Increase (Decrease):
Accounts receivable $ 1,850,970 $ 121,008
Other receivables (2,871) 0
Work-in-process 83,401 196,143
Prepaid insurance and other expenses 105,040 31,408
Capital acquisition costs 0 12,391
Other assets 0 42,872
-------------- ---------------
Changes in Liabilities Affecting
Operations-Increase (Decrease):
Accounts payable $ 41,095 $ 55,981
Accrued payroll and related expense (75,844) 364,027
Accrued interest 19,934 120,696
Commitments and contingencies (80,652) (74,219)
Other current liabilities (91,508) (574,278)
-------------- ----------------
Net cash provided by (used in)
operating activities $ 457,087 $ (869,001)
-------------- ----------------
Cash Flows from Financing Activities:
Proceeds from issuance of debt $ 114,281 $ 247,836
Repayment of debt (579,509) 0
Proceeds from issuance of common
stock 0 271,229
Capital contributions 0 392,400
-------------- ---------------
Net cash provided by financing activities $ (465,228) $ 911,465
-------------- ---------------
Net increase (decrease) in cash $ (8,141) $ 42,464
Cash and cash equivalents-beginning of
period 8,336 0
-------------- ---------------
Cash and cash equivalents-end of period $ 195 $ 42,464
============== ===============
See notes to unaudited consolidated financial statements.
F-5
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Condensed Financial Statements
September 30, 1997
1. Summary of Significant Accounting Policies
The accompanying financial statements have been prepared in accordance
with the instructions of Form 10-QSB and do not include all of the information
and footnotes required by Generally Accepted Accounting Principles for complete
accounting statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included.
2. Corporations Included in the Consolidated Financial Statements
Name Location
----------------------------------- ----------------
KLH Engineers & Contractors, Inc. Closed
KLH Engineering of Colorado Springs, Inc. Closed
KLH Engineering of Lakewood, Inc. Closed
KLH Engineering of Grand Junction, Inc. Closed
KLH Engineering of San Mateo, Inc. Closed
KLH Engineering of Greeley, Inc. Closed
Tomahawk Construction Company, Inc. Lenexa, Kansas
3. Basis of Presentation and Principles of Consolidation
The consolidated financial statements include the combined accounts of
AmeriResource Technologies, Inc., Tomahawk Construction and the accounts of all
the closed subsidiaries. All material intercompany transactions have been
eliminated in consolidation.
4. Additional footnotes included by reference
Except as indicated in Notes above, there have been no other material
changes in the information disclosed in the notes to the financial statements
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996. Therefore, those footnotes are included herein by reference.
F-6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
General
- -------
The Company's primary line of business is currently being conducted
through Tomahawk Construction Company, a wholly owned subsidiary ("Tomahawk").
Tomahawk has traditionally focused its operations on a wide range of
construction projects as a qualified American Indian Minority Business
Enterprise. Tomahawk's construction projects have included utility work,
earthwork, structural concrete, bridge work, asphalt and concrete paving,
commercial buildings, pump stations and treatment plants.
Unfortunately, Tomahawk's ability to generate revenues has been
seriously stifled as a result of filing Chapter 11 Bankruptcy on September 15,
1994. Although Tomahawk emerged from Bankruptcy on August 25, 1995, it has been
unable to obtain any substantial construction contracts. Nonetheless, Tomahawk
continues to bid for new construction projects. (For more information on
Tomahawk's Bankruptcy proceedings, see the Company's Form 10-KSB for December
31, 1996.)
Liquidity and Capital Resources
- -------------------------------
The Company and its subsidiaries continue to have very restricted
liquidity. The Company has experienced severe financial difficulty as a result
of Bankruptcy proceedings involving its subsidiary Tomahawk. Although Tomahawk
emerged from Bankruptcy in August of 1995, Tomahawk's ability to obtain
construction projects has been severely limited as a result of those
proceedings.
In the interim, the Company will continue to utilize the resources of
its president Delmar Janovec until its plans begin generating revenues. Mr.
Janovec has advanced $442,949 to date to support the Company's limited
operations and has continued to work without pay since October 1, 1996. However,
there is no guarantee that Mr. Janovec will continue such support. The Company
will also utilize its common stock to compensate consultants, employees and
creditors when possible.
During the quarter ended September 30, 1997, the Company's working
capital deficit was approximately $1,844,116 a decrease of $5,351,499 from the
same quarter in 1996. This was caused by the construction subsidiary not having
contracts in place during the third quarter of 1997.
Net stockholders' equity in the Company declined from $1,041,865 at the
end of September 30, 1996 to a deficit of $3,076,717, as of September 30, 1997.
The Company's deficit is a result of the Company's inability to generate
construction revenues and the accumulation of debts in its inoperable
engineering subsidiaries prior to current managements involvement with the
Company.
Results of Operations
- ---------------------
The Company's operations for the third quarter consisted of bidding for
construction projects and formulating a plan of operation. The Company was
unsuccessful in its attempts to procure revenue construction projects during the
quarter.
Net service income for the quarter ended September 30, 1997, was a
deficit of $480 as compared to $589,430 for the third quarter in 1996.
Unfortunately, this is due to Tomahawks inability to procure any revenue
construction projects.
<PAGE>
Operating expenses increased from $380,688 for the quarter ended
September 30, 1996 to $672,520 for the quarter ended on September 30, 1997. The
increase is due to legal and consulting fees that were incurred in the
preparation/process of the law-suit filed against MK-Ferguson/DOE which resulted
in an award of $1,851,444 to Tomahawk.
General, and administrative expenses were $548,849 for the quarter
ended on September 30, 1997 as compared to $$499,351 for the third quarter in
1996. This increase is also due to fees associated with the law-suit filed
against MK-Ferguson/DOE.
The Company's net loss went from $298,570 for the quarter ended
September 30, 1996 to $1,233,526 for the quarter ended on September 30, 1997.
This decrease is due to the write down and final settlement of the
MK-Ferguson/DOE claim and expenses that were incurred in estimating and
attempting to negotiate a contract with Fluor-Daniels on a project for Procter &
Gamble Co. that ultimately resulted in not being awarded a project. ARET's
subsidiary, Tomahawk, and a Joint Venture with Dunn Industrial Group, Inc. spent
almost one year on estimating the several design changes that occurred on this
project that exceeded $600 Million Dollars in construction costs.
The management highly recommends reading this Form 10-QSB in
conjunction with the Company's Form 10-KSB for the year ended December 31, 1996,
in order to gain a more complete picture of the Company's financial condition.
PART II
ITEM 1. LEGAL PROCEEDINGS
There has been no change in the Company's legal proceedings during the
third quarter of 1997.
For additional information regarding the Company's legal proceeding,
see the Company's "Legal Proceedings" section in its Form 10-KSB for December
31, 1996.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Annual
Report on Form 10-QSB to be executed on its behalf by the undersigned, thereunto
duly authorized.
AMERIRESOURCE TECHNOLOGIES, INC.
/s/ Delmar Janovec November 13, 1998
--------------------
Delmar Janovec
Chairman of the Board of Directors
and Chief Executive Officer
5
<PAGE>
INDEX TO EXHIBITS
Exhibits marked with an asterisk have been filed previously with the
Commission and are incorporated herein by reference.
EXHIBIT PAGE DESCRIPTION
NO. NO.
3.1 * Articles of Incorporation and Bylaws.
Incorporated by reference to the
Company's Form S-4 registration
statements, effective February 11, 1992.
File No. 33-44104.
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S MARCH 31,
1997, QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 195
<SECURITIES> 4,750
<RECEIVABLES> 762,516
<ALLOWANCES> 583,859
<INVENTORY> 0
<CURRENT-ASSETS> 899,601
<PP&E> 81,945
<DEPRECIATION> 114,634
<TOTAL-ASSETS> 899,601
<CURRENT-LIABILITIES> 2,657,022
<BONDS> 0
0
3,090
<COMMON> 16,420
<OTHER-SE> (3,067,717)
<TOTAL-LIABILITY-AND-EQUITY> 899,601
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,233,526
<INTEREST-EXPENSE> 11,677
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,233,526)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
