<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, 1999
[ ] 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.)
705-B YUCCA STREET, BOULDER CITY, NEVADA 44266
- ----------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(702) 293-1930
----------------------------------------------------
(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 [ ] 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 7,710,923 shares of common stock, par value $0.001, as of September
30, 1999.
<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, 1999; the
related audited balance sheet of the Company as of June 30, 1999; the
related unaudited statements of operations and cash flows for the three month
period ended September 30, 1999 and 1998 and from January 30, 1995 (inception)
through September 30, 1999; and the unaudited statement of shareholders'
equity for the period from January 30, 1995 (inception) through September 30,
1999 are attached hereto and incorporated herein by this reference
Operating results for the three month period ended September 30, 1999 is not
necessarily indicative of the results that can be expected for the Company's
fiscal year ending June 30, 2000.
<PAGE>
<PAGE> 3
AMERICAN TIRE CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
SEPTEMBER 30, JUNE 30,
1999 1999
------------ ------------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 230,964 $ 3,291
Accounts receivable 421 1,562
Inventory 115,405 40,313
Prepaid expenses 19,077 13,806
---------- ----------
Total Current Assets 365,867 58,972
---------- ----------
Property and Equipment
Land 59,000 59,000
Building and improvements 262,235 262,235
Equipment 1,070,881 1,070,881
Furniture and fixtures 7,692 7,692
Less: accumulated depreciation (520,011) (465,510)
---------- ----------
879,797 934,298
---------- ----------
Other Assets:
Patents 63,112 62,417
Deposits 28,354 15,854
---------- ----------
Total Other Assets 91,466 78,271
---------- ----------
TOTAL ASSETS $1,337,130 $1,071,541
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 4
AMERICAN TIRE CORPORATION
(A Development Stage Company)
BALANCE SHEETS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, JUNE 30,
1999 1999
------------ ------------
(Unaudited)
Current Liabilities:
Accounts payable $ 309,415 $ 235,830
Accounts payable - related parties - 80,507
Accrued expenses 10,153 2,625
Note payable - related party 6,000
Stock subscription deposit 128,561 39,500
---------- ----------
Total current liabilities 448,129 364,462
---------- ----------
TOTAL LIABILITIES 448,129 364,462
---------- ----------
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, 7,710,923 and 6,816,475
shares issued and outstanding, respectively 7,709 6,816
Additional paid-in capital 9,913,603 9,465,830
Stock subscription receivable (442,570) (434,000)
Related party prepaid compensation contracts - (30,000)
Deficit accumulated during the
development stage (8,589,741) (8,301,567)
---------- ----------
Total stockholders' equity 889,001 707,079
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,337,130 $1,071,541
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
AMERICAN TIRE CORPORATION
(A Development Stage Company)
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,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES $ 5,160 $ 12,450 $ 88,116
COST OF SALES 11,512 13,950 157,987
------------ ------------ ------------
GROSS MARGIN (6,352) (1,500) (69,871)
------------ ------------ ------------
EXPENSES
Consulting 4,000 25,000 746,812
Payroll and payroll taxes 126,818 193,072 2,699,582
Depreciation and amortization 54,501 51,804 642,127
Bad debt expense - - 21,112
Selling, general and administrative 102,665 113,470 1,651,229
------------ ------------ ------------
Total Expenses 287,984 383,346 5,760,862
------------ ------------ ------------
INCOME BEFORE OTHER INCOME (EXPENSES) (294,336) (384,846) (5,830,733)
------------ ------------ ------------
OTHER INCOME (EXPENSES)
Other income - - 2,298
Interest income 10,204 1,300 80,255
Interest expense (4,042) (95,262) (623,931)
Impairment loss - - (1,694,111)
Inventory impairment loss - - (13,642)
Loss on termination of employment agreement - - (240,000)
Loss on disposition of assets - - (3,662)
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSES) (6,162) (93,962) (2,492,793)
------------ ------------ ------------
NET LOSS BEFORE DISCONTINUED OPERATIONS $ (288,174) $ (478,808) $ (8,323,526)
============ ============ ============
DISCONTINUED OPERATIONS
Loss from discontinued operations - (47,677) (495,108)
Gain from disposition of subsidiary - - 228,893
------------ ------------ ------------
Net Discontinued Operations - (47,677) (266,215)
------------ ------------ ------------
NET LOSS $ (288,174) $ (526,485) $ (8,589,741)
------------ ------------ ------------
OTHER COMPREHENSIVE INCOME
Foreign currency adjustments - 4,633 -
------------ ------------ ------------
NET COMPREHENSIVE LOSS $ (288,174) $ (521,852) $ (8,589,741)
============ ============ ============
BASIC GAIN (LOSS) PER SHARE
Loss from operations $ (0.04) $ (0.10)
Discontinued operations - (0.01)
------------ ------------
Basic Gain (Loss) Per Share $ (0.04) $ (0.11)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 7,116,943 4,919,079
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Related Deficit
Party Accumulated
Additional Other Stock Prepaid During the
Common Stock Paid-in Comprehensive Subscription Compensation Development
Shares Amount Capital Income Receivable Contracts Stage
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <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 financial statements.
<PAGE>
<PAGE> 7
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Related Deficit
Party Accumulated
Additional Other Stock Prepaid During the
Common Stock Paid-in Comprehensive Subscription Compensation Development
Shares Amount Capital Income Receivable Contracts Stage
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <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 Urathon 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 financial statements.
<PAGE>
<PAGE> 8
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Related Deficit
Party Accumulated
Additional Other Stock Prepaid During the
Common Stock Paid-in Comprehensive Subscription Compensation Development
Shares Amount Capital Income Receivable Contracts Stage
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <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)
Exercise of options for
common stock at $2.50
per share 5,500 5 13,745 - - - -
Common stock repurchased
at $0.18 per share(Note 3)(1,270,000) (1,270) (228,730) - - - -
Common stock issued in lieu
of interest on promissory
notes at approximately
$3.24 per share 152,250 152 492,629 - - - -
Common stock issued in lieu
of notes payable at $1.00
per share 400,000 400 399,600 - - - -
Common stock issued as
prepaid salary under related
party compensation contracts
at $2.00 per share 305,000 305 609,695 - - (610,000) -
Common stock issued for
subscription receivable
at $2.00 per share 200,000 200 399,800 - (400,000) - -
Common stock issued for
services at $2.00 per
share 264,752 265 529,239 - - - -
Receipt of stock
subscriptions - - - - 50,000 - -
Currency translation
adjustment - - - 188 - - -
Amortization of prepaid
compensation contracts - - - - - 33,333 -
Net loss for the year
ending June 30, 1998 - - - - - - (4,267,829)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, June 30, 1998 4,619,250 $ 4,619 $ 7,798,789 $ 3,172 $ (400,000)$ (576,667)$(6,522,221)
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 9
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
Related Deficit
Party Accumulated
Additional Other Stock Prepaid During the
Common Stock Paid-in Comprehensive Subscription Compensation Development
Shares Amount Capital Income Receivable Contracts Stage
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1998 4,619,250 $ 4,619 $ 7,798,789 $ 3,172 $ (400,000) $ (576,667)$(6,522,221)
Common stock issued for
cash at $0.50 per share 875,000 875 436,625 - - - -
Common stock issued in lieu
of interest on promissory
note at approximately $0.93
per share 7,225 7 6,731 - - - -
Common stock issued in lieu
of notes payable at $1.00
per share 1,135,000 1,135 1,133,865 - - - -
Common stock issued in lieu
of notes payable at $0.50
per share 90,000 90 44,910 - - - -
Common stock issued for
services at $0.50 per
share 90,000 90 44,910 - - - -
Additional interest recorded
on subscription receivable - - - - (34,000) - -
Currency translation
adjustment - - - (3,172) - - -
Amortization of prepaid
compensation contracts - - - - - 306,667 -
Termination of employment
contract (Note 3) - - - - - (240,000) -
Net loss for the year
ending June 30, 1999 - - - - - - (1,779,346)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, June 30, 1999 6,816,475 $ 6,816 $ 9,465,830 $ - $ (434,000)$ (30,000)$(8,301,567)
Common stock issued for
cash at $0.50 per share
(unaudited) 891,000 889 443,611 - - - -
Common stock issued for
services at $1.20 per
share (unaudited) 3,448 3 4,163 - - - -
Additional interest
recorded on subscription
receivable (unaudited) - - - - (8,570) - -
Amortization of prepaid
compensation contract
(unaudited) - - - - - 30,000 -
Net loss for the 3 months
ended September 30, 1999
(unaudited) - - - - - - (288,174)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at September 30,
1999 (unaudited) 7,710,923 $ 7,709 $ 9,913,603 $ - $ (442,570)$ - $(8,589,741)
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 10
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(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,
1999 1998 1999
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (288,174) $ (478,808) $(8,589,741)
Adjustments to Reconcile Net (Loss) to
Net Cash (Used) by Operating Activities:
Depreciation and amortization 54,501 51,804 642,127
Bad debt expense - - 21,112
Loss on disposition of assets - - 3,662
Impairment loss - - 1,694,111
Inventory impairment loss - - 13,642
Gain on disposition of subsidiary - - (228,893)
Loss on termination of employment contract - - 240,000
Loss from discontinued operations - 47,677 495,108
Common stock issued for services 4,167 - 919,426
Services provided in lieu of cash payment
on subscriptions receivable - - 75,000
Common stock issued in lieu of interest - 3,751 499,519
Interest on subscription receivable 8,570 - 42,570
Changes in Assets and Liabilities:
(Increase) decrease in accounts receivable
and accounts receivable - related party 1,141 (74,473) (21,533)
(Increase) decrease in inventory (75,092) (21,946) (115,405)
(Increase) decrease in prepaid expenses (5,271) 88,137 320,923
(Increase) decrease in other assets (336) - (104,325)
Increase (decrease) in accounts payable and
accrued expenses 606 230,623 27,764
---------- ---------- ------------
Net Cash (Used) by Operating Activities (299,888) (247,299) (4,039,215)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (120,711) (1,441,750)
Purchase of subsidiary - - (400,000)
------------ ------------ ------------
Net Cash (Used) in Investing Activities $ - $ (120,711) $ (1,841,750)
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 11
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Cash Flows (Continued)
(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,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock subscription receivable $ - $ - $ 50,000
Repurchase of common stock - - (439,862)
Payment of stock offering costs - - (160,401)
Proceeds from notes payable - 128,993 2,298,838
Cash received on stock subscription deposit 89,061 - 128,561
Payments made on notes payable and line of credit (6,000) (25,000) (435,838)
Payments made to related parties - - (10,000)
Common stock issued for cash 444,500 - 4,680,631
------------ ------------ ------------
Net Cash Provided (Used) by Financing
Activities 527,673 103,993 6,111,929
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 227,613 (264,017) 230,094
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,291 278,882 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 230,964 $ 14,805 $ 230,094
============ ============ ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
CASH PAID FOR:
Interest $ - $ 411 $ 56,449
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services rendered $ 4,167 $ - $ 915,259
Common stock issued in lieu of debt and interest $ - $ 630,751 $ 2,241,519
Common stock issued for acquisition of subsidiary $ - $ - $ 1,550,000
Common stock issued as prepaid salary $ - $ - $ 610,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 12
AMERICAN TIRE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Financial Statements
September 30, 1999
NOTE 1- CONDENSED FINANCIAL STATEMENTS
The accompanying 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, 1999 and 1998
and for all periods have been made.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's June 30, 1999 audited
financial statements included in its report on Form 10K-SB. The results of
operations for the periods ended September 30, 1999 and 1998 are not
necessarily indicative of the operating results for the full years.
<PAGE>
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-looking Statements
- ---------------------------------------------------------
This report may contain "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
- --------------------
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 completed its
assessment, and believes it to be compliant. The Company believes the cost of
compliance did not have a material adverse impact on the Company's financial
position. However, if third parties upon which the Company relies are unable
to address this issue in a timely manner, it could result in a material
financial risk to the Company.
Results of Operations
- ---------------------
The Company manufactures the flat-free tires utilizing 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.
During the fiscal year ending June 30, 2000, the Company will begin the
marketing of a line of bicycles utilizing the Company's "flat-free" bicycle
tires. No sales of the bicycles was made during the three month period ending
September 30, 1999, however; the Company committed the capital resources to
produce tires for 10,000 bicycles. Introduction of the bicycles should begin
in December 1999. Other than the new revenue source derived from the sale of
the bicycles, 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.
In June 1999, due to lack of sufficient working capital to adequately
exploit the United Kingdom and European markets and in an effort to reduce
expenses, the Company's management decided to discontinue its distribution
operations in Europe. As a result of disposing of the Company's subsidiary,
the Company's results of operations for the three month period ended September
30, 1998, does not include the consolidated results of operations of the
Company and its subsidiary for that period.
<PAGE> 14
Quarter ended September 30, 1999 compared to September 30, 1998
- ---------------------------------------------------------------
Total revenues for the quarter ended September 30, 1999 was $5,160
compared to $12,450 for the same period in 1998. The reduction in sales for
the current period as compared to the prior period is based on the Company's
shift in marketing from OEM to direct sales and the shift to the introduction
of bicycles during the current period. Costs of sales for the quarter ended
September 30, 1999 were $11,512, or 223% of sales as compared to $13,950, or
112% of sales for the year ended September 30, 1998. The increase in the cost
of sales as a percent of sales for fiscal year 1999 compared to fiscal year
1998 is due to the fact that the Company has not had sales in sufficient
quantities to offset minimum costs of production. The Company believes that
market acceptance or rejection of its bicycle/tire-wheel assemblies may be
reasonably expected to have a material impact on the net sales revenues or
income from continuing operations. Until such time as the market acceptance
or rejection is established, the Company cannot predict what the effect on
sales revenue or income will be.
Corporate Expense. For the quarter ended September 30, 1999, total
operating expenses were $287,984, consisting of mainly of payroll and payroll
taxes of $126,818, depreciation and amortization of $54,501, and selling,
general and administrative expenses of $102,665, resulting in a loss from
operations of $(294,336). Total operating expenses for the quarter ended
September 30, 1998 were $383,346, mainly consisting of payroll and payroll
taxes of $193,072, depreciation and amortization of $51,804, and selling,
general and administrative expenses of $113,470, resulting in a loss from
operations of $(384,846). The Company expects operating expenses to remain
relatively constant for the remainder of the fiscal year at approximately
$100,000 per month.
Interest Expense. Interest expense for the quarter ended September 30,
1999 was $4,042 compared to $95,262 for the same period in 1998. The
reduction in interest expense for the quarter is directly attributable to the
conversion to equity of convertible promissory notes issued during previous
periods.
The Company experienced a net comprehensive loss of $(288,174) for the
quarter ended September 30, 1999 compared a loss of $(521,852) for the same
period in 1998. The basic loss per share for the quarter was $(0.04) in 1999
compared to $(0.11) for 1998, based on the weighted average number of shares
outstanding of 7,116,943 and 4,919,079, respectively.
Liquidity and Capital Resources
- -------------------------------
During the quarter ended September 30, 1999, the Company issued 891,000
shares of its common stock for cash at $0.50 per share, and 3,448 shares of
its common stock, valued at $1.20 per share, for services.
The Company had current assets of $365,867 and current liabilities of
$448,129, for a working capital deficit of $(82,262) at September 30, 1999.
The Company had cash and cash equivalents of $230,964 and accounts receivable
of $421 for the same period. Net cash used in operations for the quarter
ended September 30, 1999 was $299,888 and $247,299 for the quarter ended
September 30, 1998. Cash used in operations for the quarter ended September
30, 1999 was funded primarily by cash received from the sale of common stock.
<PAGE> 15
At September 30, 1999, the Company had net property and equipment of
$879,797, after deduction of $520,011 in accumulated depreciation, The
Company's property and equipment consists mainly of land ($59,000), building
and improvements ($262,235), and equipment ($1,070,881). At at September 30,
1999, the Company has an accumulated deficit during the development stage of
$(8,589,741), 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 1999, the Company continued 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, 2000. Due to the need for working capital, the Company will continue to
seek additional debt and/or equity financing from existing shareholders and
other investment capital resources. At September 30, 1999, the Company had
received $123,561 under a Share Purchase Agreement with an affiliate, and
expects to receive an additional $376,439 by December 31, 1999. The Company
has no other 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, 2000.
Impact of Inflation
- -------------------
The Company does not anticipate that inflation will have a material
impact on its current or proposed operations.
Principal Customers
- -------------------
During the quarter the Company had no individual customer that accounted
for more than 10% of the Company's revenues.
Seasonality
- -----------
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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
<PAGE> 16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of the shareholders of the Company, was held on
September 27, 1999 at the Sunset Station Hotel and Casino, 1301 West Sunset
Road, Henderson, Nevada.
The special meeting was called to consider and vote on proposals to:
1. Elect Richard A. Steinke, Henry D. Moyle, William K. Watkins, Louis M.
Haynie and James L. Sanderson as directors to serve until the expiration of
their respective terms and until their respective successors are elected and
qualified;
2. Consider and act upon the ratification of the appointment of Jones, Jensen
& Company as the Company's independent public accountants; and
3. Transact such other business as may properly come before the special
meeting or any adjournment thereof.
Proposal No. 1 was adopted with 4,632,140 shares voting FOR; 1,000 shares
voting AGAINST and 2,000 shares voting to WITHHOLD AUTHORITY.
Proposal No. 2 was adopted with 4,577,940 shares voting FOR; -0- shares
voting AGAINST and 57,200 shares voting to WITHHOLD AUTHORITY.
Proposal No. 3 was adopted with 4,558,732 shares voting FOR; -0- shares
voting AGAINST and 76,408 shares voting to WITHHOLD AUTHORITY.
The number of shares required to approve each proposal is 50% of the
quorum or 2,317,570 shares. All proposals were adopted.
At the special meeting a motion from the floor was made and seconded. In
was moved that the Company hold a shareholders' meeting no later than 13
months from the date of the special meeting (i.e., October 27, 2000).
The proposal was adopted with 4,558,732 shares voting FOR, -0- shares
voting AGAINST and 76,408 shares voting to WITHHOLD AUTHORITY.
ITEM 5. OTHER INFORMATION
None.
<PAGE>
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
EXHIBIT
NO. DESCRIPTION Location
- ------- ----------- --------
27 Financial Data Schedule This Filing
(b) REPORTS ON FORM 8-K.
None.
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: November 15, 1999 /S/DAVID K. GRIFFITHS
-----------------------------------
Principal Accounting Officer
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 230,964
<SECURITIES> 0
<RECEIVABLES> 421
<ALLOWANCES> 0
<INVENTORY> 115,405
<CURRENT-ASSETS> 365,867
<PP&E> 1,399,808
<DEPRECIATION> (520,011)
<TOTAL-ASSETS> 1,337,130
<CURRENT-LIABILITIES> 448,129
<BONDS> 0
0
0
<COMMON> 9,478,742
<OTHER-SE> (8,589,741)
<TOTAL-LIABILITY-AND-EQUITY> 1,337,130
<SALES> 5,160
<TOTAL-REVENUES> 15,364
<CGS> 11,512
<TOTAL-COSTS> 287,984
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,042)
<INCOME-PRETAX> (288,174)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (288,174)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
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