<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, 2000
[ ] 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 89005
---------------------------------------- -------------------
(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 [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 11,678,034 shares of common stock, par value $0.001, as of
September 30, 2000.
<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, 2000; the
related audited balance sheet of the Company as of June 30, 2000; the
related unaudited statements of operations and cash flows for the three month
period ended September 30, 2000 and 1999 and from January 30, 1995 (inception)
through September 30, 2000; and the unaudited statement of shareholders'
equity for the period from January 30, 1995 (inception) through September 30,
2000 are attached hereto and incorporated herein by this reference
Operating results for the three month period ended September 30, 2000 is not
necessarily indicative of the results that can be expected for the Company's
fiscal year ending June 30, 2001.
<PAGE>
<PAGE> 3
AMERICAN TIRE CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
SEPTEMBER 30, JUNE 30,
2000 2000
------------ ------------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 541,553 $ 22,483
Accounts receivable 9,475 16,069
Accounts receivable related party 1,114 2,795
Inventory 349,515 367,080
Prepaid expenses 29,737 10,035
---------- ----------
Total Current Assets 931,394 418,462
---------- ----------
Property and Equipment
Land 59,000 59,000
Building and improvements 305,532 305,532
Equipment 1,129,475 1,097,713
Furniture and fixtures 7,692 7,692
Less: accumulated depreciation (697,121) (635,510)
---------- ----------
804,578 834,427
---------- ----------
Other Assets:
Patents 17,287 16,882
Deposits 7,333 11,878
---------- ----------
Total Other Assets 24,620 28,760
---------- ----------
TOTAL ASSETS $1,760,592 $1,281,649
========== ==========
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,
2000 2000
------------ ------------
(Unaudited)
Current Liabilities:
Accounts payable $ 205,014 $ 239,662
Accrued expenses 83,774 61,911
Note payable - related party 77,000 77,000
Interest payable related party 11,702 10,052
Stock subscription deposit 195,250 65,000
---------- ----------
Total current liabilities 572,740 453,625
---------- ----------
TOTAL LIABILITIES 572,740 453,625
---------- ----------
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, 11,678,034 and 11,163,035
shares issued and outstanding, respectively 11,678 11,163
Additional paid-in capital 13,425,622 12,656,137
Stock subscription receivable (1,212,597) (1,206,230)
Prepaid expenses (228,871) (433,767)
Deficit accumulated during the
development stage (10,807,980) (10,199,279)
---------- ----------
Total stockholders' equity 1,187,852 828,024
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,760,592 $1,281,649
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<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,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES $ 52,323 $ 5,160 $ 195,318
COST OF SALES 52,718 11,512 318,183
------------ ------------ ------------
GROSS MARGIN ( 395) (6,352) (122,865)
------------ ------------ ------------
EXPENSES
Consulting 264,603 4,000 1,332,739
Payroll and payroll taxes 78,951 126,818 3,229,918
Depreciation and amortization 61,981 54,501 875,518
Bad debt expense - - 36,612
Selling, general and administrative 225,668 102,665 2,503,650
------------ ------------ ------------
Total Expenses 631,203 287,984 7,978,437
------------ ------------ ------------
INCOME BEFORE OTHER INCOME (EXPENSES) (631,598) (294,336) (8,101,302)
------------ ------------ ------------
OTHER INCOME (EXPENSES)
Other income - - 2,298
Interest income 24,547 10,204 140,239
Interest expense (1,650) ( 4,042) (632,101)
Impairment loss - - (1,694,111)
Asset impairment loss - - (58,426)
Loss on termination of employment agreement - - (240,000)
Gain on disposition of assets - - 41,638
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSES) 22,897 6,162 (2,440,463)
------------ ------------ ------------
NET LOSS BEFORE DISCONTINUED OPERATIONS $ (608,701) $ (288,174) $(10,541,765)
============ ============ ============
DISCONTINUED OPERATIONS
Loss from discontinued operations - - (495,108)
Gain from disposition of subsidiary - - 228,893
------------ ------------ ------------
Net Discontinued Operations - - (266,215)
------------ ------------ ------------
NET LOSS $ (608,701) $ (288,174) $(10,807,980)
============ ============ ============
BASIC GAIN (LOSS) PER SHARE
Loss from operations $ (0.05) $ (0.04)
Discontinued operations - -
------------ ------------
Basic Gain (Loss) Per Share $ (0.05) $ (0.04)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 11,373,181 7,116,943
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 6
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Other Stock During the
Common Stock Paid-in Comprehensive Subscription Prepaid Development
Shares Amount Capital Income Receivable Expenses 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>
Deficit
Accumulated
Additional Other Stock During the
Common Stock Paid-in Comprehensive Subscription Prepaid Development
Shares Amount Capital Income Receivable Expenses 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>
Deficit
Accumulated
Additional Other Stock During the
Common Stock Paid-in Comprehensive Subscription Prepaid Development
Shares Amount Capital Income Receivable Expenses 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>
Deficit
Accumulated
Additional Other Stock During the
Common Stock Paid-in Comprehensive Subscription Prepaid Development
Shares Amount Capital Income Receivable Expenses 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 2,548,125 2,548 1,271,514 - - - -
Common stock issued for
cash at $1.00 per share 28,000 28 27,972 - - - -
Common stock issued for
cash at $2.00 per share 65,000 65 129,935 - - - -
Common stock issued for
cash at $3.19 per share 2,037 2 6,498 - - - -
Common stock issued for
cash at $1.16 per share 5,592 6 6,494 - - - -
Common stock issued for
services at $0.87 per
share 363,306 363 314,729 - - - -
Common stock issued for
Subscription receivable
at $0.75 per share 1,000,000 1,000 749,000 - (750,000) - -
</TABLE
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 10
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
</TABLE>
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional Other Stock During the
Common Stock Paid-in Comprehensive Subscription Prepaid Development
Shares Amount Capital Income Receivable Expenses Stage
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock issued for
assets at $1.00 per share 12,500 13 12,487 - - - -
Common stock issued as prepaid
expenses at $1.00 per share 22,000 22 21,978 - - (22,000) -
Common stock issued as prepaid
expenses at $2.00 per share 200,000 200 399,800 - - (400,000) -
Common stock issued as prepaid
expenses at $2.50 per share 100,000 100 249,900 - - (250,000) -
Additional interest
recorded on subscription
receivable - - - - (23,105) - -
Receipt of cash on subscriptions
receivable - - - - 12,016 - -
Amortization of prepaid
expenses - - - - - 268,233 -
Net loss for the year
ended June 30, 2000 - - - - - - (1,897,712)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at June 30, 2000 11,163,035 $ 11,163 $12,656,137 $ - $(1,206,230)$ (433,767)$(10,199,279)
=========== =========== =========== =========== =========== =========== ===========
Common stock issued for
cash at $1.00 per share
(unaudited) 5,000 5 4,995 - - - -
Common stock issued for
cash at $1.50 per share
(unaudited) 509,999 510 764,490 - - - -
Additional interest recorded
on subscription receivable - - - - (23,106) - -
Receipt of cash on
subscriptions receivable - - - - 16,738 - -
Amortization of prepaid
expenses (unaudited - - - - - 204,896 -
Net loss for the quarter
ended September 30, 2000 - - - - - - ( 608,701)
(unaudited)
----------- ---------- ---------- ----------- ----------- ----------- ------------
Balance at September 30,
2000 (unaudited) 11,678,034 $ 11,678 $13,425,622 $ - $(1,212,597)$ (228,871)$(10,807,980)
=========== ========== =========== =========== =========== =========== ============
</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
(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,
2000 1999 2000
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (608,701) $ (478,808) $(10,807,980)
Adjustments to Reconcile Net (Loss) to
Net Cash (Used) by Operating Activities:
Depreciation and amortization 61,981 51,804 875,518
Bad debt expense - - 36,612
(Gain) loss on disposition of assets - - (41,638)
Asset impairment loss - - 1,752,537
(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 - - 1,230,351
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 (23,106) - (91,352)
Changes in Assets and Liabilities:
(Increase) decrease in accounts receivable
and accounts receivable - related party 8,275 (74,473) (47,201)
(Increase) decrease in inventory 17,565 (21,946) (349,515)
(Increase) decrease in prepaid expenses (19,702) 88,137 578,496
(Increase) decrease in other assets 4,140 - ( 71,545)
Increase (decrease) in accounts payable and
accrued expenses (12,785) 230,623 152,036
---------- ---------- ------------
Net Cash (Used) by Operating Activities (572,333) (247,299) (5,702,947)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of equipment - - 70,000
Purchase of property and equipment (31,762) (120,711) (1,609,611)
Purchase of subsidiary - - (400,000)
------------ ------------ ------------
Net Cash (Used) in Investing Activities $ (31,762) $(120,711) $ (1,939,611)
------------ ----------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 12
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,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipt of subscription receivable $ 16,738 $ - $ 78,754
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 336,427 - 401,427
Payments made on notes payable and line of credit - (25,000) (429,838)
Payments made to related parties - - (16,000)
Common stock issued for cash 770,000 - 6,451,193
------------ ------------ ------------
Net Cash Provided (Used) by Financing
Activities 1,123,165 103,993 8,184,111
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 519,070 (264,017) 541,553
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 22,483 278,882 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 541,553 $ 14,805 $ 541,553
============ ============ ============
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 $ - $ - $ 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> 13
AMERICAN TIRE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Financial Statements
September 30, 2000
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, 2000 and 1999
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, 2000 audited
financial statements included in its report on Form 10K-SB. The results of
operations for the periods ended September 30, 2000 and 1999 are not
necessarily indicative of the operating results for the full years.
<PAGE>
<PAGE> 14
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.
Results of Operations for Quarter ended September 30, 2000 compared to
September 30, 1999
-----------------------------------------------------------------------------
Revenues: In an effort to introduce its "flat-free" bicycle tires, during
December 1999, the Company began marketing a line of bicycles utilizing the
Company's tires. Sales of the bicycles with the Company's tires have
continued through September 30, 2000, and the Company expects such sales to
continue until its entire inventory of bicycles has been depleted. At
September 30, 2000, the Company's inventory was $349,515, of which $239,622 is
bicycles with the Company's tires. Net sales at September 30, 2000 were
$52,323, an increase of $47,163 over revenues of $5,160 at September 30, 1999.
Other than the increase 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.
Cost of Sales: Costs of sales for the quarter ended September 30, 2000 were
$52,718, or 101% of sales as compared to $11,512, or 223% of sales for the
quarter ended September 30, 1999. The decrease in the cost of sales as a
percent of sales for the quarter ended September 30, 2000 compared to the
quarter ended September 30, 1999 is due to the fact that the Company had sales
in sufficient quantities to offset minimum costs of production. At this time,
the Company has not committed to acquire any additional bicycles, however, in
an effort to increase sales of the Company's product, the Company has entered
into an exclusive worldwide sales and marketing agreement with Focus Sales and
Marketing LLC, a Newport Beach, California based sales and marketing group
headed by Alan Rypinski. The Focus Group will market bicycle tires under the
brand name "AirRiders(TM)" worldwide. The Company cannot predict what the
effect on sales revenue or income will be as a result of this marketing
effort.
Corporate Expense. For the quarter ended September 30, 2000, total operating
expenses were $631,203, consisting of mainly of consulting $264,603, payroll
and payroll taxes of $78,951, depreciation and amortization of $61,981 and
selling, general and administrative expenses of $225,668, resulting in a loss
from operations of $631,598. Total operating expenses for the quarter ended
September 30, 1999 were $287,984, mainly consisting of consulting $4,000,
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. The Company experienced an
aggregated increase of $383,606 in consulting and selling and general and
administrative expenses over the prior year because of the Company's increased
marketing efforts. The Company expects operating expenses to remain
relatively constant for the remainder of the fiscal year at an estimated
$125,000 per month.
<PAGE>
<PAGE> 15
Interest Expense. Interest expense for the quarter ended September 30, 2000
was $1,650 compared to $4,042 for the same period in 1999. 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 loss of $608,701 for the quarter ended September
30, 2000 compared a loss of $288,174 for the same period in 1999. The basic
loss per share for the quarter was $0.05 in 2000 compared to $0.04 for 1999,
based on the weighted average number of shares outstanding of 11,373,181 and
7,116,943, respectively.
Liquidity and Capital Resources
-------------------------------
During the quarter ended September 30, 2000, the Company issued 5,000 shares
of its common stock for cash at $1.00 per share, and 509,999 shares of its
common stock for cash at $1.50 per share, for total proceeds of $770,000.
The Company had current assets of $931,394 and current liabilities of
$572,740, for a working capital of $358,654 at September 30, 2000. The Company
had cash and cash equivalents of $541,553 and accounts receivable of $10,589
for the same period. Net cash used in operations for the quarter ended
September 30, 2000 was $572,333 and $247,299 for the quarter ended September
30, 1999. Cash used in operations for the quarter ended September 30, 2000
was funded primarily by cash received from the sale of common stock.
At September 30, 2000, the Company had net property and equipment of $804,578,
after deduction of $697,121 in accumulated depreciation, the Company's
property and equipment consists mainly of land ($59,000), building and
improvements ($305,532), and equipment ($1,129,475). At September 30, 2000,
the Company has an accumulated deficit during the development stage of
$10,807,980, has limited working capital and limited internal financial
resources. The report of the Company's auditor for the Company's fiscal year
end at June 30, 2000, contains a going concern modification as to the ability
of the Company to continue. During fiscal 2001, the Company expects that it
will be able to effect measures that will (i) reduce cash outflows, (ii)
increase revenues through an increased marketing effort; and (iii) raise
needed working capital through the issuance of additional shares of common
stock for services and cash.
Additionally, the Company has developed an overall strategy and certain
financing options to meet its ongoing needs through June 30, 2001. Due to the
constant need for working capital, the Company will continue to seek
additional equity financing from existing shareholders and other investment
capital resources. The Company has no other commitments for any additional
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,
2001.
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.
<PAGE>
<PAGE> 16
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
In April 2000 the Company filed an action in the United States District Court,
District of Nevada, Case No. CV-S 00-0540-DWH-LRL, against Roger A. Fleming
("Fleming"), a former officer, director and current shareholder. This action
is a breach of employment contract case that includes additional claims
against Fleming for breach of fiduciary duty, breach of covenant of good faith
and fair dealing, intentional interference with business relations and
prospective economic advantage, defamation, intentional misrepresentation and
detrimental reliance and for monies due on a promissory note. The Company's
expects recovery on the promissory note referenced in the Complaint in the
amount of $400,000. Recovery on the remaining claims cannot be predicted. In
additional to monetary damages, the Company is seeking return of the common
stock issued to Fleming pursuant to his employment agreement. Although the
Company intends to vigorously pursue its claim against Fleming, it is
anticipated that the Company's management will attempt to settle this matter
prior to litigation.
In May 2000, the Company was served with a complaint filed in the second
judicial district court in and for Davis County, State of Utah, Civil No.
000700162, titled John R. Hoffman v. American Tire Corporation. In the
complaint, Mr. Hoffman alleges that the Company (i) breached his employment
contract by terminating him without cause, (ii) breached the covenant of good
faith and fair dealing, (iii) was unjustly enriched, and (iv) intends to
dishonor certain option rights to acquire common stock of the Company. Mr.
Hoffman is asking the court to award him judgment in the approximate amount of
$270,000, plus unreimbursed business expenses of $675. In addition, Mr.
Hoffman is asking for declaratory judgment confirming his option rights under
the employment agreement, interest, court cost and attorney fees. The Company
has filed an answer responding that Mr. Hoffman resigned his employment, that
he has breached the employment contract's specific terms relating to
termination and that the claim should be dismissed and the Company awarded its
legal costs. The proceeding is in the discovery stage as of this filing date.
ITEM 2. CHANGES IN SECURITIES
During the quarter ended September 30, 2000, the Company issued 5,000 shares
of its common stock for cash at $1.00 per share, and 509,999 shares of its
common stock for cash $1.50 per share. The securities issued in the foregoing
transactions were issued to accredited investors in reliance on the exemption
from registration and prospectus delivery requirements of the Act set forth in
Section 3(b) and/or Section 4(2) of the Securities Act and the regulations
promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
<PAGE> 17
ITEM 5. OTHER INFORMATION
None.
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 14, 2000 /S/DAVID K. GRIFFITHS
-----------------------------------
Principal Accounting Officer
