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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] 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
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(Exact name of registrant as specified in its charter)
NEVADA 87-0535207
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
705-B YUCCA STREET, BOULDER CITY, NEVADA 44266
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(Address of principal executive offices) (Zip Code)
(702) 293-1930
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(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 [ ] No [X] 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 5,220,500 shares of common stock, par value $0.001, as of September
30, 1998.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-looking Statements
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This report may contain "forward-looking" statements. The Company is
including this cautionary statement for the express purpose of availing itself
of the protections of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to all such forward-looking
statements. Examples of forward-looking statements include, but are not
limited to: (a) projections of revenues, capital expenditures, growth,
prospects, dividends, capital structure and other financial matters; (b)
statements of plans and objectives of the Company or its management or Board
of Directors; (c) statements of future economic performance; (d) statements of
assumptions underlying other statements and statements about the Company and
its business relating to the future; and (e) any statements using the words
"anticipate," "expect," "may," "project," "intend" or similar expressions.
Year 2000 Disclosure
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The Company is working to resolve the potential impact of the year 2000
on the ability of the Company's computerized information systems to accurately
process information that may be date-sensitive. Any of the Company's programs
that recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures. The Company utilizes a minimum
number of computer programs in its operations. The Company has not completed
its assessment, but currently believes that costs of addressing this issue
will not have a material adverse impact on the Company's financial position.
However, if the Company and third parties upon which it relies are unable to
address this issue in a timely manner, it could result in a material financial
risk to the Company. In order to assure that this does not occur, the Company
plans to devote all resources required to resolve any significant year 2000
issues in a timely manner.
Results of Operations
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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.
The Company's revenues are generated primarily by its business operations
in the United States. However in February 1997, the Company acquired all of
the capital stock of its current subsidiary Urathon Limited. For the quarters
ended September 30, 1998 and 1997, the functional currency for the Company's
foreign subsidiary (Urathon Limited) has been determined to be the British
Pound Sterling. Assets and liabilities have been translated at period end
exchange rates and operating statement items are translated at average
exchange rates prevailing during the period. For the quarters ended September
30, 1998 and 1997, the Company had a gain of $4,633 and $0, respectively, as a
result of foreign currency translation adjustments.
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Quarter ended September 30, 1998 compared to September 30, 1997
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Total revenues for the quarter ended September 30, 1998 was $112,742
compared to $106,058 for the same period in 1997. Costs of sales for the
quarter ended September 30, 1998 were $78,823, or 69.9% of sales as compared
to $85,339, or 80.5% of sales for the year ended September 30, 1997. The
decrease in the cost of sales as a percent of sales for fiscal year 1998
compared to fiscal year 1997 is attributable to efficiencies developed in the
Company's manufacturing process during the period. The Company knows of no
predictable events or uncertainties that may be reasonably expected to have a
material impact on the net sales revenues or income from continuing operations
other than the lack of working capital.
Corporate Expense. For the quarter ended September 30, 1998, total
operating expenses were $481,058, consisting of mainly of payroll and payroll
taxes of $226,252 and selling, general and administrative expenses of
$176,712, resulting in a loss from operations of $(447,149). Total operating
expenses for the quarter ended September 30, 1997 were $466,567, mainly
consisting of payroll and payroll taxes of $172,621, depreciation and
amortization of $121,453, and selling, general and administrative expenses of
$143,423, resulting in a loss from operations of $(445,848).
Interest Expense. Interest expense for the quarter ended September 30,
1998 was $98,443 compared to $4,187 for the same period in 1997. The increase
in interest expense for the quarter in 1998 is directly attributed to issuance
of convertible promissory notes during the period and the prepayment of
interest in connection therewith.
The Company experienced a net comprehensive loss of $(521,852) for the
quarter ended September 30, 1998 compared a loss of $(447,396) for the same
period in 1997. The basic loss per share for the quarter was $(0.11) in both
1998 and 1997, based on the weighted average number of shares outstanding of
4,919,079 and 3,932,248, respectively.
Liquidity and Capital Resources
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During the quarter ended September 30, 1998, the Company issued 1,250
shares of its common stock to note holders in lieu of interest on convertible
promissory notes at approximately $3.00 per share for a value of $3,750. In
connection therewith, 600,000 shares of common stock were issued to the
holders of the convertible promissory notes on conversion of $600,000 of such
notes at a conversion price of $1.00 per share.
The Company had current assets of $428,425 and current liabilities of
$1,130,707, for a working capital deficit of $(702,282) at September 30, 1998.
The Company had cash and cash equivalents of $14,805 and accounts receivable
of $167,907 for the same period. Net cash used in operations for the quarter
ended September 30, 1998 was $247,299 and $216,894 for the quarter ended
September 30, 1997. Cash used in operations for the quarter ended September
30, 1998 was funded primarily by cash received from the sale of convertible
promissory notes.
At September 30, 1998, the Company had net property and equipment of
$1,120,477, after deduction of $355,730 in accumulated depreciation, The
Company's property and equipment consists mainly of land ($59,000), building
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and improvements ($296,740), and equipment ($1,080,744). Because at September
30, 1998, the Company has an accumulated deficit during the development stage
of $(7,046,706), has a working capital deficit and limited internal financial
resources. The report of the Company's auditor for the Company's fiscal
year end at June 30, 1998, contains a going concern modification as to the
ability of the Company to continue. During fiscal 1998, the Company began to
effect measures to reduce cash outflows and increase working capital thru the
issuance of additional shares of common stock for services and conversion of
debt.
The Company is aware of its ongoing cash requirements and has implemented
a cash flow plan, including continued reduction in its general and
administrative expenses. Additionally, the Company has developed an overall
strategy and certain financing options to meet its ongoing needs through June
30, 1999. Due to the need for working capital for both the Company and its
subsidiary Urathon Limited, the Company intends to seek additional debt and/or
equity financing from existing shareholders and other investment capital
resources. The Company has no commitments for any additional debt or equity
financing at this time and no assurance can be given that the Company will be
able to obtain any such commitments. 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 ended June 30,
1999.
Impact of Inflation
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The Company does not anticipate that inflation will have a material
impact on its current or proposed operations.
Principal Customers
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During the quarter he Company had no individual customer that accounted
for more than 10% of the Company's revenues.
Seasonality
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Management of the Company knows of no seasonal aspects relating to the
nature of the Company business operations that had a material effect on the
financial condition or results of operation 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: June 1, 1999 /S/DAVID K. GRIFFITHS
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Principal Accounting Officer
