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 March 31, 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 March 31, 1997 was
164,213,803.
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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
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2
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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 March 31, 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
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INDEX TO FINANCIAL STATEMENTS PAGE
- ----------------------------- ----
Unaudited Consolidated Condensed Balance Sheet, March 31, 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...............F-6
F-1
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheet
March 31, 1997
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 319
---------------
Receivables:
Trade 2,524,016
Related Party 14,471
Notes receivable-related party 330,079
Notes receivable-other 75,000
Other receivables 193,000
Allowance for doubtful accounts (557,551)
---------------
Net receivables 2,579,015
---------------
Prepaid insurance and other assets 46,772
---------------
Total current assets 2,626,106
Property, Plant and Equipment-Net 196,584
Other Assets:
Marketable securities 4,750
---------------
Total Assets $ 2,827,440
===============
See notes to unaudited consolidated condensed financial statements.
F-2
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheet
March 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable:
Trade $ 636,922
Related Party 36,231
Current portion of long-term debt:
Related Party 490,256
Other 218,875
Accrued Payroll and related expenses 698,366
Accrued Interest:
Related Party 97,473
Other 77,760
Income Tax Payable 35,960
---------------
Total Current Liabilities 2,291,843
Long-term Debt-Net of current portion 2,188,939
Commitments and contingencies 105,000
---------------
Total Liabilities $ 4,585,782
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 (8,120,181)
Total Stockholder' Equity $ (1,758,342)
---------------
Total Liabilities and Stockholders' Equity $ 2,827,440
===============
See notes to unaudited consolidated condensed financial statements.
F-3
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
For three months ended March 31, 1997 and 1996
1997 1996
-----------------------------------
Net Service Income - 966,766
Operating expenses - (611,952)
General and administrative expenses (193,663) (792,813)
Loss from sold and closed subsidiaries - (6,113)
------------------------------------
Operating Loss (193,663) (444,112)
Other Income (expense)
Interest Income - 61
Other Income - 14,585
Interest Expense (11,569) (44,264)
------------------------------------
Net Loss (205,232) (473,730)
====================================
Net loss per common share ($0.00) ($0.01)
====================================
Weighted average common shares outstanding 145,942,742 132,691,399
====================================
See notes to unaudited consolidated condensed financial statements.
F-4
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Condensed Statement of Cash Flows
For the three months ended March 31, 1997 and 1996
For the Three Months Ended
March 31 March 31
1997 1996
(unaudited) (unaudited)
----------- -----------
Cash Flows from Operating Activities:
Net loss $ (205,232) $ (473,731)
Non-Cash Items:
Depreciation and amortization 0 26,538
Provision for bad debts (9,818) 0
Changes in Assets Affecting
Operations-Increase(Decrease):
Accounts receivable 57,954 (8,862)
Other receivables (46) 114,094
Work-in-process 83,401 (99,933)
Prepaid insurance and other expenses 108,463 (39,962)
Capital acquisition costs 0 0
Other assets 0 35,728
Changes in Liabilities Affecting
Operations-Increase (Decrease):
Accounts payable 13,927 (49,079)
Accrued payroll and related expense 96,131 266,591
Accrued interest 46,257 103,639
Commitments and contingencies (80,652) 0
Other current liabilities (91,508) 194,436
------------ ------------
Net cash provided by (used in) operating
activities 18,877 69,459
------------ ------------
Cash Flows from Financing Activities:
Proceeds from issuance of debt 0 0
Repayment of debt (26,894) (128,575)
Net payments on line of credit 0 (13,296)
Proceeds from issuance of common stock 0 147,587
Capital contributions 0 0
------------ ------------
Net cash provided by financing activities (26,894) 5,716
------------ ------------
Net increase (decrease) in cash (8,017) 75,175
Cash and cash equivalents-beginning of period 8,336 (34,017)
------------ ------------
Cash and cash equivalents-end of period $ 319 $ 41,158
============ ============
See notes to unaudited consolidated condensed financial statements.
F-5
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Condensed Financial Statements
March 31, 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 $418,697 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 March 31, 1997, the Company's working capital
was approximately $334,263 a decrease of 90% over the same quarter in 1996. This
was caused by the construction subsidiary not having contracts in place during
the first quarter of 1997.
Net stockholders' equity in the Company declined from $755,876 at the
end of March 31, 1996 to a deficit of $1,758,342, as of March 31, 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 first 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 March 31, 1997, was $ 0 as
compared to $966,766 for the first quarter in 1996. Unfortunately, the Company
had no net service income in 1997 because of its inability to procure any
revenue construction projects.
Operating expenses decreased from $611,952 for the quarter ended March
31, 1996 to $0 for the quarter ended on March 31, 1997. The decrease in
operating expenses is a result of the Company's lack of construction operations.
4
<PAGE>
General and administrative expenses were $193,663 for the quarter ended
on March 31, 1997 as compared to $792,813 for the first quarter in 1996.
The Company's net loss went from $473,730 in the first quarter ended on
March 31, 1996 to $205,232 for the quarter ended on March 31, 1997. This
decrease is due to unsuccessful attempts to procure revenue construction
projects during the quarter.
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
In February 1997 Enterprise Capital Corporation filed suit against the
Company and certain Subsidiaries for breach of contract and fraud in the
extension of credit on a factoring agreement. The Company disputes this claim in
that the contract called for American Factors Group to purchase the receivables
from the Company on a non-recourse basis. The Company filed a response to the
complaint and demanded that the matter be submitted to arbitration. An
arbitrator has been appointed, but a date has not been scheduled. American
factors Group claims it is owed $291,044 plus interest.
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 17, 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 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>
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<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 319
<SECURITIES> 4,750
<RECEIVABLES> 2,579,015
<ALLOWANCES> 557,551
<INVENTORY> 0
<CURRENT-ASSETS> 2,827,440
<PP&E> 196,584
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,827,440
<CURRENT-LIABILITIES> 2,291,843
<BONDS> 0
0
3,090
<COMMON> 16,420
<OTHER-SE> (1,758,342)
<TOTAL-LIABILITY-AND-EQUITY> 2,827,440
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 205,232
<INTEREST-EXPENSE> 0
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<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
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<NET-INCOME> (205,232)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
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