<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________.
Commission file number: 33-94318-C
AMERICAN TIRE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 87-0535207
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1643 NEVADA HIGHWAY, BOULDER CITY, NEVADA 44266
- ----------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(330) 296-8778
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- ------------------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) 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), Yes [X] No [ ] and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, was 3,297,248 shares of common stock, par value $0.001, as of November
30, 1997.
<PAGE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of September 30, 1997; the
related audited balance sheet of the Company as of June 30, 1997; the
related unaudited statements of operations and cash flows for the three month
period ended September 30, 1997 and 1996 and from January 30, 1995 (inception)
through September 30, 1997; and the unaudited statement of shareholders'
equity for the period from January 30, 1995 (inception) through September 30,
1997 are attached hereto and incorporated herein by this reference
Operating results for the three month period ended September 30, 1997 is
not necessarily indicative of the results that can be expected for the
Company's fiscal year ending June 30, 1998.
<PAGE>
<PAGE> 3
AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
ASSETS
SEPTEMBER 30, JUNE 30,
1997 1997
------------ ------------
(Unaudited) (Unaudited)
Current Assets:
Cash and cash equivalents $ 80,263 $ 501,449
Accounts receivable 119,387 73,922
Accounts receivable - related party 1,200 2,237
Inventory 289,348 303,704
Prepaid expenses 58,129 91,320
---------- ----------
Total Current Assets 548,327 972,632
---------- ----------
Property and Equipment
Land 59,000 59,000
Building and improvements 277,246 278,501
Equipment and vehicles 694,885 660,793
Furniture and fixtures 32,042 32,808
Less: accumulated depreciation (181,324) (150,627)
---------- ----------
881,849 880,475
---------- ----------
Other Assets:
Patents 30,145 24,822
Deposits 854 4,414
Goodwill and technology 1,603,355 1,694,111
---------- ----------
Total Other Assets 1,634,354 1,723,347
---------- ----------
TOTAL ASSETS $3,064,530 $3,576,454
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 4
AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, JUNE 30,
1997 1997
------------ ------------
(Unaudited) (Unaudited)
Current Liabilities:
Accounts payable $ 256,430 $ 69,077
Accounts payable - related parties 51,308 150,000
Accrued expenses 15,913 16,032
Line of credit 63,159 55,380
---------- ----------
Total current liabilities 386,810 290,489
---------- ----------
TOTAL LIABILITIES 386,810 290,489
Stockholder Equity:
Preferred stock, par value $0.001,
5,000,000 shares authorized, 0 shares
issued and outstanding - -
Common stock, par value $0.001, 25,000,000
shares authorized, 3,297,248 and 4,561,748
shares issued and outstanding, respectively 3,297 4,562
Additional paid-in capital 5,367,826 5,582,811
Stock subscription receivable - (50,000)
Currency transactions adjustment 8,385 2,984
Deficit accumulated during the development stage (2,701,788) (2,254,392)
---------- ----------
Total stockholders' equity 2,677,720 3,285,965
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,064,530 $3,576,454
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 5
AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Three Months Three Months January 30,
Ended Ended 1995 Through
September 30, September 30, September 30,
1997 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES $ 106,058 $ - $ 175,576
COST OF SALES 85,339 - 133,221
------------ ------------ ------------
GROSS PROFIT 20,719 - 42,355
------------ ------------ ------------
EXPENSES
Consulting 38,070 - 522,862
Payroll and payroll taxes 172,621 66,503 946,968
Depreciation and amortization 121,453 10,870 350,315
Bad debt expense - - 21,112
Selling, general and administrative 134,423 48,293 907,181
------------ ------------ ------------
Total Expenses 466,567 126,296 2,748,438
------------ ------------ ------------
INCOME BEFORE OTHER INCOME (EXPENSES) (445,848) (126,296) (2,706,083)
------------ ------------ ------------
OTHER INCOME (EXPENSES)
Other income 442 - 56,538
Interest income 2,197 1,717 31,618
Interest expense (4,187) (22,745) (80,199)
Loss on disposition of assets - - (3,662)
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSES) (1,548) (21,028) 4,295
------------ ------------ ------------
NET LOSS $ (447,396) $ (147,324) $ (2,701,788)
============ ============ ============
NET LOSS PER SHARE $ (0.11) $ (0.04)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 3,932,248 3,943,677
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 6
<TABLE>
<CAPTION> AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Deficit
Accumulated
Additional Currency Stock During the
Common Stock Paid-in Translation Subscription Development
Shares Amount Capital Adjustment Receivable Stage
---------- --------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 30, 1995
(Inception) - $ - $ - $ - $ - $ -
Common stock issued for
cash during February
1995 at $0.001 per share 2,510,000 2,510 - - - -
Common stock issued for
services rendered in
February 1995 at $0.10
per share 300,000 300 29,700 - - -
Common stock issued for
services rendered during
April 1995 at $1.00 per
share 100,000 100 99,900 - - -
Common stock issued for
notes receivable valued
at $1.00 per share 170,000 170 169,830 - 170,000 -
Repayment of stock
subscriptions receivable
with cash or services
rendered - - - - (76,100) -
Common stock issued for
cash at $1.00 per share 720,000 720 719,280 - - -
Stock offering costs - - (78,271) - - -
Net loss for the period
ended June 30, 1995 - - - - - (248,630)
---------- --------- ---------- ---------- ------------ ------------
Balance, June 30, 1995 3,800,000 3,800 940,439 - 93,900 (248,630)
Common stock issued for
cash at $6.00 per share 40,642 41 243,811 - - -
Stock offering costs - - (1,600) - - -
Repayment of stock
subscriptions receivable
by providing services - - - - (8,900) -
Net loss for the year
ended June 30, 1996 - - - - - (596,090)
---------- --------- ---------- ----------- ------------ ------------
Balance, June 30, 1996 3,840,642 $ 3,841 $1,182,650 $ - $ 85,000 $ (844,720)
---------- --------- ---------- ----------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 7
<TABLE>
<CAPTION> AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Additional Currency Stock During the
Common Stock Paid-in Translation Subscription Development
Shares Amount Capital Adjustment Receivable Stage
---------- --------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996 3,840,642 $ 3,841 $1,182,650 $ - $ 85,000 $ (844,720)
Cancellation of common
stock (34,977) (35) (209,827) - - -
Common stock issued for
cash at $6.00 per share
pursuant to public
offering 344,083 344 2,064,154 - - -
Stock offering costs - - (307,509) - - -
Common stock issued in lieu
of debt at $6.00 per share
during November 1996 27,000 27 161,973 - - -
Common stock issued for
cash at $6.00 per share
during January 1997 155,000 155 929,845 - - -
Common stock issued to
acquire UTI Chemicals
(Europe) Limited at $7.75
per share 200,000 200 1,549,800 - - -
Common stock issued for
services rendered at
$6.125 per share during
February 1997 15,000 15 91,860 - - -
Common stock issued for
services rendered at
$7.99 per share during
June 1997 15,000 15 119,865 - - -
Repayment of stock
subscriptions receivable
by providing services - - - - (40,000) -
Interest accrual on stock
subscription receivable - - - - 5,000 -
Currency translation
adjustment - - - 2,984 - -
Net loss for the year
ended June 30, 1997 - - - - - (1,409,672)
---------- --------- ---------- ---------- ------------ ------------
Balance, June 30, 1997 $4,561,748 $ 4,562 $5,582,811 $ 2,984 $ 50,000 $ (2,254,392)
---------- --------- ---------- ---------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 8
<TABLE>
<CAPTION> AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Additional Currency Stock During the
Common Stock Paid-in Translation Subscription Development
Shares Amount Capital Adjustment Receivable Stage
---------- --------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1997 $4,561,748 $ 4,562 $5,582,811 $ 2,984 $ 50,000 $ (2,254,392)
Common Stock issued in
July 1997 for services
rendered by exercising
stock option issued at
$2.50 per share 5,500 5 13,745 - - -
Cancellation of
common stock (1,270,000) (1,270) (228,730) - - -
Repayment of stock
subscription
receivable
with cash - - - - (50,000) -
Currency translation
adjustment (unaudited) - - - 5,401 - -
Net loss for the period
ended September 30, 1997
(unaudited) - - - - - (447,396)
______ ______ ______ ______ _______ _______
Balance at
September 30, 1997
(Unaudited) $3,297,248 $ 3,297 $5,367,826 $ 8,385 $ - $(2,701,788)
========== ======= ========== ======= ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 9
<TABLE>
<CAPTION> AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From
For the For the Inception on
Three Months Three Months January 30,
Ended Ended 1995 Through
September 30, September 30, September 30,
1997 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (447,396) $ (147,324) $ (2,701,788)
Adjustments to Reconcile Net (Loss) to
Net Cash (Used) by Operating Activities:
Depreciation and amortization 121,453 10,870 350,315
Currency Translation 5,401 - 8,385
Bad debt expense - - 21,112
Loss on disposition of assets - - 3,662
Common stock issued for services 13,750 - 355,505
Services provided in lieu of cash payment
on subscriptions receivable - - 75,000
Common stock issued in lieu of debt - - 162,000
Changes in Assets and Liabilities:
(Increase) decrease in accounts receivable (44,428) (3,868) (120,587)
(Increase) decrease in inventory 14,356 - (289,348)
(Increase) decrease in prepaid expenses 33,191 2,783 (58,129)
(Increase) decrease in other assets (1,763) (2,259) (30,999)
Increase (decrease) in accounts payable and
accrued expenses 187,234 (86,630) 272,343
Increase (decrease) in accounts payable -
related parties (98,692) - 51,308
---------- ---------- ------------
Net Cash (Used) by Operating Activities (216,894) (226,428) (1,901,221)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (32,071) (2,101) (915,293)
Purchase of investments - - (400,000)
------------ ------------ ------------
Net Cash (Used) in Investing Activities $ (32,071) $ (2,101) $ (1,315,293)
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 10
<TABLE>
<CAPTION> AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From
For the For the Inception on
Three Months Three Months January 30,
Ended Ended 1995 Through
September 30, September 30, September 30,
1997 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock subscription receivable $ 50,000 $ - $ 100,000
Repurchase of common stock (230,000) - (439,862)
Payment of stock offering costs - - (387,380)
Borrowing on line of credit 7,779 - 63,159
Proceeds from notes payable - 110,000 962,838
Payments made on notes payable - (616,838) (962,838)
Common stock issued for cash - 1,484,248 3,960,860
------------ ------------ ------------
Net Cash Provided (Used) by Financing
Activities (172,221) 987,410 3,296,777
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH (421,186) 758,881 80,263
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 501,449 4,467 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 80,263 $ 763,348 $ 80,263
============ ============ ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
CASH PAID FOR:
Interest $ 4,187 $ 22,745 $ 80,199
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services rendered $ 13,750 $ - $ 354,505
Common stock issued in lieu of debt $ - $ - $ 162,000
Common stock issued for acquisition of subsidiary $ - $ - $ 1,550,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 11
AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Notes to the Unaudited Consolidated Financial Statements
September 30, 1997 and June 30, 1997
NOTE l- CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared by the
company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at September 30, 1997
and for all periods presented have been made.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with general accepted accounting
principles have been omitted or condensed. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's June 30, 1997 audited
financial statements. The results of operations for the periods ended September
30, 1997 and 1996 are not necessarily indicative of the operating results for
the full year.
NOTE 2- RELATED PARTY TRANSACTION
On August 19, 1997 the Company entered into Agreements of Settlement and Mutual
Release with two former officers and another employee of the Company. The
Company agreed to pay a total of $317,525 and 1,270,000 shares of the Company's
outstanding common stock were returned for cancellation. An aggregate of
$117,525 was paid to the parties on the date the agreements were executed and
the remaining $200,000 is being paid in twenty consecutive monthly payments. At
September 30, 1997 the remaining balance is $180,000.
NOTE 3- STOCK TRANSACTIONS
Pursuant to the Agreements of Settlement and Mutual Release, the Company
canceled 1,270,000 shares of its outstanding common stock during the quarter
ended September 30, 1997.
NOTE 8- STOCK OPTIONS OUTSTANDING
The Company's Board of Directors has authorized a Non-Qualified Stock Option
Plan that allows for the Company to issue options to purchase up to 35,000
shares of the Company's common stock that may be issued to consultants or others
that provide professional services to the Company. The stock options have been
valued at fair market value according to FAS 123, "Accounting for Stock-Based
Compensation.") Stock option activity for the quarter ended September 30, 1997
consisted of the following:
Number of Weighted Average
Shares Price per Share
--------- ----------------
Outstanding at June 30, 1997 20,000 $ 2.07
Granted during the quarter - -
Exercised during the quarter ( 5,500) (2.50)
--------- ----------------
Outstanding at September 30, 1997 14,500 $ 2.00
<PAGE>
<PAGE> 12
AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Notes to the Unaudited Consolidated Financial Statements
September 30, 1997 and June 30, 1997
NOTE 4- STOCK OPTIONS OUTSTANDING (Continued)
The 14,500 stock options outstanding at September 30, 1997 are summarized as
follows:
Date Number of Exercise Expiration
Issued Options Price Date
------------------ ------------- ----------- ------------------
May 31, 1997 14,500 $2.00 May 31, 1999
NOTE 5- SUBSEQUENT EVENTS
The Company entered into a Development Agreement on September 30, 1997, whereby
an unrelated company shall provide the tire technology relating to shape and
tread pattern and performance evaluation personnel and the Company shall provide
the Urethane technology and personnel. If the result of the testing is positive
and the parties hereto are interested in the joint commercialization of urethane
tires, then the parties shall enter into a separate agreement covering said
commercialization.
On October 24, 1997 the Company borrowed $50,000 from a banking institution for
working capital and equipment purchases. The loan has terms of interest at
prime plus 3/4%. The Company's collateral given the banking institution is a
first lien position in accounts receivable, inventory and equipment, and a first
mortgage on its Ravenna real estate.
The Company has received additional funds for use in its operations upon issuing
promissory notes with a maturity date of six months. Interest is prepaid by
issuing 5,000 shares of the Company's restricted common stock for each $50,000
amount borrowed. The principal amount of the Note is payable on the maturity
date, subject to prepayment as set forth in the note. At the election of the
Company, it may satisfy the entire obligation for the payment of the principal
by issuance and delivery of one or more shares of Common Stock of the Company at
the rate of one share of Common Stock for every $1.00 of outstanding principal
amount of the Note. The following data summarizes amounts received.
Face Number of Value of
Date Amount Shares Issued Prepaid Maturity
Issued Of Notes For Interest Interest Date
- ------ -------- ------------- -------- --------
October 27, 1997 $150,000 15,000 $61,875 April 27, 1998
November 4, 1997 50,000 5,000 21,250 May 4, 1998
November 24, 1997 50,000 5,000 20,625 May 24, 1998
November 25, 1997 100,000 10,000 38,750 May 25, 1998
December 1, 1997 50,000 5,000 19,375 June 1, 1998
-------- ------ -------
Totals $400,000 40,000 $161,875
======== ====== ========
The $ 161,875 cost of this additional financing will be amortized over the terms
above.
<PAGE>
<PAGE> 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is engaged in the development and manufacturing of "flat-free"
bicycle and other specialty tires which compete with the traditional pneumatic
tires (i.e., tires with an inner tube or tubeless tires inflated with air).
The Company manufactures the flat-free tires utilizing single and/or
multiple head, centrifugal molding machines. These machines centrifugally mold
elastomer products, such as the bicycle tires, by pouring a predetermined amount
of polyurethane into a mold, which is then spread out in the mold
through centrifugal force. The molding process occurs when the liquid
polyurethane formula (made up of isocyanide and polyol) is combined with a
catalyst. This combination causes a chemical reaction that results in the cross
linking of the chemicals, which thereafter become solid. The mold then moves to
the next station where the tire is removed and the process is repeated.
For purposes of this report, a comparison of the Company's operations for
the interim period ended September 30, 1997 with the comparable interim period
in the preceding year would not be helpful to the reader's understanding of the
Company's operations in that the Company had nominal operations prior to the
completion of its initial public offering in October 1996.
The Company is in the development stage and has had an operating loss
since inception of $(2,701,788). The Company has initiated commercial sales of
its products with net sales of $106,058 during the three month period ended
September 30, 1997, as opposed to no sales during the three month period ended
September 30, 1996. A majority of the sales during the reporting period were
attributed to the operations of UTI-UK. UTI-UK is a wholly owned subsidiary of
the Company and is a distributor of low density foam bicycle, wheelchair and
other specialty tires in the United Kingdom and Europe. UTI-UK distributes
flat-free tires under the trade name "Urathon TM" in approximately 540 Michelin
Tire Company owned ATS stores in England, Scotland and Wales. UTI also sells
products in France, Denmark, Austria, the Netherlands and Germany through
independent representatives and distributors.
During the three months ended September 30, 1997, the Company had a net
loss from operations of $(447,396) or approximately $(0.11) per share. The
Company is currently operating at a loss of approximately $(100,000) per month
and expects operating expenses to continue at such rate until such time as the
Company begins to receive substantial revenues from the sale of its products. At
September 30, 1997, the Company had current assets of $548,327, and current
liabilities of $386,810, resulting in working capital of $161,517. The Company
has limited working capital and limited internal financial resources and the
report of the Company's auditor for the Company's fiscal year end at June 30,
1997, contained a going concern modification as to the ability of the Company to
continue.
During October 1997, the Company borrowed $50,000 from a banking
institution for working capital and equipment purchases. The loan has terms of
interest at prime plus 3/4%. The Company's collateral gives the banking
institution is a first lien position in accounts receivable, inventory and
equipment, and a first mortgage on the Company's real estate. During October
1997, the Company authorized the issuance of a series of promissory notes for
the purpose of raising up to $1,000,000 for use in its operations (the "Notes").
The Notes have a maturity date of six months from the date of issue and interest
on the Notes is to be prepaid by the Company issuing 5,000 shares of its
restricted common stock for each $50,000 amount borrowed. At December 1, 1997,
the Company had issued $400,000 in such Notes. The principal amount of the Notes
is payable on the maturity date, subject to prepayment as set forth in the Note.
<PAGE> 14
At the election of the Company, it may satisfy the entire obligation for the
payment of the principal by issuance and delivery of one or more shares of
Common Stock at the rate of one share of Common Stock for every $1.00 of
outstanding principal amount of the Note. (See "ITEM 1. Notes to the Unaudited
Consolidated Financial Statements, Note 5.")
The Company's production equipment consists of several "centrifugal
molding machines" and other related specialized manufacturing equipment to
produce low density foam, flat-free tires. The Company has utilized substantial
portions of its working capital to purchase molding machines and related
production equipment and at September 30, 1997, the Company had $881,849 in
property and equipment (net of accumulated depreciation). The Company is
currently utilizing proceeds from the Notes to acquire additional pouring
equipment for producing shell elastomer flat-free tires and to complete a
sufficient quantity of production molds to produce those tires. The Company
expects to be in production of low density foam bicycle tires (26" x 1.95" and
26" x 1.75") by the end of January 1998; and shell elastomer bicycle tires (20"
x 1.95") by the middle of February 1998. In addition, the Company is producing
a low density foam tire for the front deck of riding lawn mowers and has
developed for testing a shell elastomer rear tire which the Company expects to
be producing during the Spring of 1998.
Until the Company begins to receive substantial proceeds from the sale of
its products to meet operational needs, the Company will be relying on the
proceeds from the issuance of the Notes or other debt or equity financing that
may be available to meet operating requirements for the fiscal year ending June
30, 1998.
Because of the Company's limited financial resources, the Company does not
anticipate expending any substantial sums for new research and development
during the fiscal year ending June 30, 1998. However, as financial resources
are available to justify such expenditures, the Company will continue
development of the Company's shell elastomer tire concepts.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
On August 19, 1997, the Company filed a Current Report on Form 8-K, under
Item 5. regarding the resolution of the Company's dispute with Dennis S.
Chrobak, a former officer, director and principal shareholder of the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN TIRE CORPORATION
[Registrant]
Dated: April 8, 1999 /S/DAVID K. GRIFFITHS
-----------------------------------
Principal Accounting Officer
