<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 MARCH 31, 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 9,798,906 shares of common stock, par value $0.001, as of March 31,
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 March 31, 2000; 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 and nine month
periods ended March 31, 2000 and 1999 and from January 30, 1995 (inception)
through March 31, 2000; and the unaudited statement of shareholders' equity
for the period from January 30, 1995 (inception) through March 31, 2000 are
attached hereto and incorporated herein by this reference
Operating results for the three and nine month periods ended March 31, 2000 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
MARCH 31, JUNE 30,
2000 1999
------------ ------------
(Unaudited)
Current Assets:
Cash and cash equivalents $ 186,985 $ 3,291
Accounts receivable 93,703 1,562
Inventory 369,100 40,313
Prepaid expenses 56,708 13,806
---------- ----------
Total Current Assets 706,496 58,972
---------- ----------
Property and Equipment
Land 59,000 59,000
Building and improvements 263,920 262,235
Equipment 1,103,514 1,070,881
Furniture and fixtures 7,692 7,692
Less: accumulated depreciation (610,491) (465,510)
---------- ----------
823,635 934,298
---------- ----------
Other Assets:
Patents 63,807 62,417
Deposits 7,334 15,854
---------- ----------
Total Other Assets 71,141 78,271
---------- ----------
TOTAL ASSETS $1,601,272 $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
MARCH 31, JUNE 30,
2000 1999
------------ ------------
(Unaudited)
Current Liabilities:
Accounts payable $ 325,888 $ 235,830
Accounts payable - related parties - 80,507
Accrued expenses 29,663 2,625
Note payable - related party - 6,000
Stock subscription deposit 218,818 39,500
---------- ----------
Total current liabilities 574,369 364,462
---------- ----------
TOTAL LIABILITIES 574,369 364,462
---------- ----------
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, 9,798,906 and 6,816,475
shares issued and outstanding, respectively 9,799 6,816
Additional paid-in capital 11,610,001 9,465,830
Stock subscription receivable (459,616) (434,000)
Related party prepaid compensation contracts - (30,000)
Deficit accumulated during the
development stage (9,499,949) (8,301,567)
---------- ----------
Total stockholders' equity 1,026,903 707,079
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,601,272 $1,071,541
========== ==========
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)
For the For the
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
------------ ------------
NET SALES $ 41,495 $ 1,800
COST OF SALES 52,692 2,292
------------ ------------
GROSS MARGIN (11,197) (492)
------------ ------------
EXPENSES
Consulting 101,668 46,667
Payroll and payroll taxes 271,157 152,261
Depreciation and amortization 54,501 53,585
Bad debt expense - -
Selling, general and administrative 182,056 85,400
------------ ------------
Total Expenses 609,382 338,064
------------ ------------
INCOME BEFORE OTHER INCOME (EXPENSES) (620,579) (338,556)
------------ ------------
OTHER INCOME (EXPENSES)
Other income - -
Interest income 9,543 839
Interest expense (2,281) (5,112)
Impairment loss - -
Inventory impairment loss - -
Loss on termination of employment agreement - -
Loss on disposition of assets - -
------------ ------------
TOTAL OTHER INCOME (EXPENSES) 7,364 (4,273)
------------ ------------
NET LOSS BEFORE DISCONTINUED OPERATIONS $ (613,215) $ (342,829)
============ ============
DISCONTINUED OPERATIONS
Loss from discontinued operations - (6,848)
Gain from disposition of subsidiary - -
------------ ------------
Net Discontinued Operations - (6,848)
------------ ------------
NET LOSS $ (613,215) $ (349,677)
------------ ------------
OTHER COMPREHENSIVE INCOME
Foreign currency adjustments - 757
------------ ------------
NET COMPREHENSIVE LOSS $ (613,215) $ (348,920)
============ ============
BASIC GAIN (LOSS) PER SHARE
Loss from operations $ (0.07) $ (0.07)
Discontinued operations - -
------------ ------------
Basic Gain (Loss) Per Share $ (0.07) $ (0.07)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 9,252,050 5,349,250
============ ============
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Nine Months Nine Months January 30,
Ended Ended 1995 Through
March 31, March 31, March 31,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES $ 61,477 $ 26,388 $ 144,433
COST OF SALES 102,406 30,190 248,880
------------ ------------ ------------
GROSS MARGIN (40,929) (3,802) (104,447)
------------ ------------ ------------
EXPENSES
Consulting 133,918 96,667 876,730
Payroll and payroll taxes 468,187 519,051 3,040,952
Depreciation and amortization 163,502 159,125 751,129
Bad debt expense - - 21,112
Selling, general and administrative 413,190 267,964 1,961,753
------------ ------------ ------------
Total Expenses 1,178,797 1,042,807 6,651,676
------------ ------------ ------------
INCOME BEFORE OTHER INCOME (EXPENSES) (1,219,726) (1,046,609) (6,756,123)
------------ ------------ ------------
OTHER INCOME (EXPENSES)
Other income - - 2,298
Interest income 30,190 3,012 100,240
Interest expense (8,948) (181,302) (628,836)
Impairment loss - - (1,694,111)
Inventory impairment loss - - (13,642)
Loss on termination of employment agreement - - (240,000)
Loss on disposition of assets 102 - (3,560)
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSES) 21,344 (178,290) (2,477,611)
------------ ------------ ------------
NET LOSS BEFORE DISCONTINUED OPERATIONS $ (1,198,382) $ (1,224,899) $ (9,233,734)
============ ============ ============
DISCONTINUED OPERATIONS
Loss from discontinued operations - (108,215) (495,108)
Gain from disposition of subsidiary - - 228,893
------------ ------------ ------------
Net Discontinued Operations - (108,315) (266,215)
------------ ------------ ------------
NET LOSS $ (1,198,382) $ (1,333,114) $ (9,499,949)
------------ ------------ ------------
OTHER COMPREHENSIVE INCOME
Foreign currency adjustments - 5,390 -
------------ ------------ ------------
NET COMPREHENSIVE LOSS $ (1,198,382) $ (1,327,724) $ (9,499,949)
============ ============ ============
BASIC GAIN (LOSS) PER SHARE
Loss from operations $ (0.13) $ (0.23)
Discontinued operations - (0.02)
------------ ------------
Basic Gain (Loss) Per Share $ (0.13) $ (0.25)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 9,252,050 5,349,250
============ ============
</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
<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> 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, 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> 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, 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 (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> 10
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 - - - - - (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)
=========== =========== =========== =========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 11
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, 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) 2,303,309 2,303 1,149,352 - - - -
Common stock issued for
cash at $1.00 per share
(unaudited) 24,000 24 23,976 - - - -
Common stock issued for
cash at $2.00 per share
(unaudited) 2,000 2 3,998 - - - -
Common stock issued for
services at $0.75 per
(unaudited) 100,000 100 74,900 - - - -
Common stock issued for
Note receivable at $0.75
per share (unaudited) 50,000 50 37,450 - - - -
Common stock issued for
services at $1.00 per
share (unaudited) 192,500 193 192,307 - - - -
Common stock issued for
services at $1.17 per
share (unaudited) 10,622 11 12,489 - - - -
Common stock issued for
services at $2.00 per
share (unaudited) 200,000 200 399,800 - - - -
Common stock issued for
services at $2.50 per
share (unaudited) 100,000 100 249,900 - - - -
Additional interest
recorded on subscription
receivable (unaudited) - - - - (25,616) - -
Amortization of prepaid
compensation contract
(unaudited) - - - - - 30,000 -
Net loss for the 9 months
ended March 31, 2000
(unaudited) - - - - - - (1,198,382)
----------- ----------- ----------- ----------- ----------- ----------- ---------
Balance at March 31,
2000 (unaudited) 9,798,906 $ 9,799 $11,610,001 $ - $ (459,616)$ - $(9,499,949)
=========== =========== =========== =========== =========== ========== ==========
</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
(Unaudited)
For the For the
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (613,215) $ (348,920)
Adjustments to Reconcile Net (Loss) to
Net Cash (Used) by Operating Activities:
Depreciation and amortization 54,501 53,736
Amortization of prepaid marketing
sales expense 16,668 -
Bad debt expense - -
Loss on disposition of assets - -
Impairment loss - -
Inventory impairment loss - -
Gain on disposition of subsidiary - -
Loss on termination of employment contract - -
Loss from discontinued operations - 6,091
Common stock issued for services 267,500 30,000
Services provided in lieu of cash payment
on subscriptions receivable - -
Common stock issued in lieu of interest - -
Interest on subscription receivable 8,476 -
Changes in Assets and Liabilities:
(Increase) decrease in accounts receivable
and accounts receivable - related party (85,659) (23,501)
(Increase) decrease in inventory (1,132) (6,481)
(Increase) decrease in prepaid expenses (6,889) (136)
(Increase) decrease in other assets (7,181) (3,770)
Increase (decrease) in accounts payable and
accrued expenses (28,035) (86,722)
---------- ---------
Net Cash (Used) by Operating Activities (394,966) (379,703)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (44,199) (1,148)
Purchase of subsidiary - -
------------ -----------
Net Cash (Used) in Investing Activities $ (44,199) $ (1,148)
------------- -----------
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 13
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
For the For the
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock subscription receivable $ - $ -
Repurchase of common stock - -
Payment of stock offering costs - -
Proceeds from notes payable - -
Cash received on stock subscription deposit 3,177 -
Payments made on notes payable and line of credit - (74,000)
Payments made to related parties - -
Common stock issued for cash 583,100 508,673
------------ ------------
Net Cash Provided (Used) by Financing
Activities 586,277 434,673
------------ ------------
NET INCREASE (DECREASE) IN CASH 147,112 53,822
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 39,873 3,798
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 186,985 $ 57,620
============ ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
CASH PAID FOR:
Interest $ - $ -
Income taxes $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services rendered $ 12,500 $ 30,000
Common stock issued in lieu of debt and interest $ - $ -
Common stock issued for acquisition of subsidiary$ - $ -
Common stock issued as prepaid salary $ - $ -
Common Stock issued as prepaid marketing
and sales expense $ 650,000 $ -
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 14
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Cash Flows, Continued
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Nine Months Nine Months January 30,
Ended Ended 1995 Through
March 31, March 31, March 31,
2000 1999 2000
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (1,198,382) $ (1,327,724) $ (9,499,949)
Adjustments to Reconcile Net (Loss) to
Net Cash (Used) by Operating Activities:
Depreciation and amortization 163,502 159,125 751,129
Amortization of prepaid marketing/sales expense 16,668 - 16,668
Bad debt expense - - 21,112
Loss on disposition of assets (102) - 3,560
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 - 102,825 544,165
Common stock issued for services 280,000 - 1,195,259
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 25,616 - 59,616
Changes in Assets and Liabilities:
(Increase) decrease in accounts receivable
and accounts receivable - related party (92,141) (28,525) (93,703)
(Increase) decrease in inventory (328,787) (13,155) (369,100)
(Increase) decrease in prepaid expenses (42,902) 723,054 (56,708)
(Increase) decrease in other assets (7,130) (3,769) (71,141)
Increase (decrease) in accounts payable and
accrued expenses 36,589 165,679 355,551
----------- ------------ ------------
Net Cash (Used) by Operating Activities (1,147,069) (218,739) (4,850,162)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (62,738) (92,697) (1,504,488)
Purchase of subsidiary - - (400,000)
------------- ------------ ------------
Net Cash (Used) in Investing Activities $ (62,738) $ (92,697) $ (1,904,488)
------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 15
AMERICAN TIRE CORPORATION
(A Development Stage Company)
Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Nine Months Nine Months January 30,
Ended Ended 1995 Through
March 31, March 31, March 31,
2000 1999 2000
------------ ------------ ------------
<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 189,490 - 192,756
Payments made on notes payable and line of credit (6,000) (623,172) (435,838)
Payments made to related parties - - (10,000)
Common stock issued for cash 1,210,011 584,542 5,446,142
------------ ------------ ------------
Net Cash Provided (Used) by Financing
Activities 1,393,501 90,363 6,941,635
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 183,694 (221,073) 186,985
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,291 278,693 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 186,985 $ 57,620 $ 186,985
============ ============ ============
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 $ 12,500 $ - $ 923,592
Common stock issued in lieu of debt and interest $ - $ 1,203,251 $ 2,841,019
Common stock issued for acquisition of subsidiary $ - $ - $ 1,550,000
Common stock issued as prepaid salary $ - $ - $ 610,000
Common stock issued for prepaid marketing and
sales expense $ 650,000 $ - $ 650,000
</TABLE>
<PAGE>
<PAGE> 16
AMERICAN TIRE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Financial Statements
March 31, 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 March 31, 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, 1999 audited
financial statements included in its report on Form 10-KSB. The results of
operations for the period ended March 31, 2000 is not necessarily indicative
of the operating results for the full year ending June 30, 2000.
<PAGE>
<PAGE> 17
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 has worked to resolve any 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. The Company utilizes a
minimum number of computer programs in its operations. The Company has
completed its assessment and found all computer programs to be compliant. The
cost of compliance did not have a material adverse impact on the Company's
financial position during the period ending March 31, 2000.
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.
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 and nine month periods ended March 31,
1999, does not include the consolidated results of operations of the Company
and its former subsidiary for that period.
During December 1999, the Company began marketing a line of bicycles utilizing
the Company's "flat-free" bicycle tires. There were limited sales of the
bicycles made during the three month period ending March 31, 2000. The
Company committed approximately $300,000 to inventory bicycles and tires for
its marketing effort. The Company does not expect to commit additional
capital resources to the bicycle line until sales justify an additional
commitment.
During the period, the Company committed the capital resources to move the
Company's production equipment from Ravenna, Ohio, to a new leased facility
outside of Las Vegas, Nevada. Other than the expected revenue source derived
from the sale of the bicycles and tires, the Company knows of no other
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 sufficient working capital.
<PAGE>
<PAGE> 18
Three and Nine Month Periods ended March 31, 2000 compared to Three and Nine
Month Periods ended March 31, 1999
- ----------------------------------------------------------------------
Total revenues for the three months ended March 31, 2000 was $41,495 compared
to $1,800 for the same period in 1999. Total revenues for the nine months
ended March 31, 2000 was $61,477 compared to $26,388 for the same period in
1999. The increase in sales for the three month period in 2000 as compared to
the prior year three month period is based on the Company's shift from
marketing tires to OEMs to direct sales and the shift to the introduction of
bicycles during the period just ended. Costs of sales for the three months
ended March 31, 2000 were $52,692, or 127% of sales as compared to $2,292, or
127% of sales for the same period ended March 31, 1999. Costs of sales for
the nine month period ended March 31, 2000 were $102,406, or 167% of sales as
opposed to $30,190, or 114% of sales for the corresponding period in 1999. The
increase in the cost of sales as a percent of sales for fiscal year 2000
compared to fiscal year 1999 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 of the Company's bicycles/tire wheel assemblies
is established, the Company cannot predict what the effect on sales revenue or
income will be. The Company will continue to monitor market acceptance or
rejection of the bicycles/tire-wheel assemblies through the balance of its
fiscal year before determining whether manufacturing and sales of
bicycles/tire-wheel assemblies should continue.
Corporate Expense. For the three months ended March 31, 2000, total operating
expenses were $609,382, consisting of mainly of payroll and payroll taxes of
$271,157, depreciation and amortization of $54,501, and selling, general and
administrative expenses of $283,724, resulting in a loss from operations of
$620,579. Total operating expenses for the three months ended March 31, 1999
were $338,064, mainly consisting of payroll and payroll taxes of $152,261,
depreciation and amortization of $53,736, and selling, general and
administrative expenses of $132,067, resulting in a loss from operations of
$338,556. For the nine months ended March 31, 2000, total operating expenses
were $1,178,797, consisting of mainly of payroll and payroll taxes of
$468,187, depreciation and amortization of $163,502, and selling, general and
administrative expenses of $547,108, resulting in a loss from operations of
$1,219,726. Total operating expenses for the nine months ended March 31, 1999
were $1,042,807, mainly consisting of payroll and payroll taxes of $519,051,
depreciation and amortization of $159,125 and selling, general and
administrative expenses of $364,631, resulting in a loss from operations of
$1,046,609.
Over the past several months the Company has implemented cost reduction
measures to decrease the amount of loss the Company was experiencing through
operations until such time as sales volume for its products increased to the
point of offsetting such costs. However, for the three and nine month periods
ended March 31, 2000, the Company has experienced an increase in overall
operating expenses of approximately 13% from the prior year comparative
period. For the remainder of fiscal year 2000, the Company expects operating
expenses to remain relatively constant at approximately $135,000 per month.
Interest Expense. Interest expense for the three months ended March 31, 2000
was $2,281 compared to $5,112 for the same period in 1999. Interest expense
for the nine months ended March 31, 2000 was $8,948 compared to $181,302 for
the same period in 1999. The reduction in interest expense for the three and
nine month periods ended March 31, 2000 is directly attributable to the
conversion to equity of convertible promissory notes issued during previous
periods.
<PAGE>
<PAGE> 19
The Company experienced a net comprehensive loss of $613,215 for the three
month period ended March 31, 2000 compared to a loss of $348,920 for the same
period in 1999. The basic loss per share for the quarter was $0.07 in 2000
compared to a basic loss per share of $0.07 for the quarter in 1999, based on
the weighted average number of shares outstanding of 9,252,050 and 5,349,250,
respectively.
The Company experienced a net comprehensive loss of $1,198,382 for the
nine month period ended March 31, 2000 compared to a net comprehensive loss of
$1,327,724 for the same period in 1999. The basic loss per share for the nine
months was $0.13 in 2000 compared to a basic loss per share of $0.25 for the
nine months in 1999, based on the weighted average number of shares
outstanding of 9,252,050 and 5,349,250, respectively.
Liquidity and Capital Resources
- ---------------------------------
The Company had current assets of $706,496 and current liabilities of
$574,369, for working capital of $132,127 at March 31, 2000. The Company had
cash and cash equivalents of $186,985 and accounts receivable and notes
receivable of $93,703 for the same period. Net cash used by operating
activities for the three month periods ended March 31, 2000 and 1999 was
$394,966 and $379,703, respectively. Net cash used by operating activities
for the nine month periods ended March 31, 2000 and 1999 was $1,147,069 and
$218,739, respectively. Net Cash used by operating activities for the three
and nine month periods ended March 31, 2000 was funded primarily through the
issuance of stock for cash and services.
During the nine month period ended March 31, 2000, the Company issued an
aggregate of 2,379,309 shares of its restricted common stock for cash proceeds
of $1,217,155, at an average price per share of $0.51. In addition, during
the same nine month period, the Company issued an aggregate of 603,122 shares
of its restricted common stock as employment compensation and services
totaling $780,000, at an average of $1.29 per share.
At March 31, 2000, the Company had net property and equipment of $823,635,
after deduction of $610,491 in accumulated depreciation, The Company's
property and equipment consists mainly of land, $59,000; building and
improvements, $263,920; and manufacturing and other equipment, $1,111,206. At
March 31, 2000, the Company has an accumulated deficit during the development
stage of $9,499,949, 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, 1999, contains a going concern modification as to
the ability of the Company to continue.
The Company is aware of its ongoing cash requirements and has implemented
a cash flow plan designed to meet the Company's ongoing cash requirements. 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.
The Company has no other specific 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.
<PAGE>
<PAGE> 20
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 three and nine month periods ended March 31, 2000, 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 AND USE OF PROCEEDS
See PART I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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.
<PAGE>
<PAGE> 21
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: May 16, 2000 /S/DAVID K. GRIFFITHS
-----------------------------------
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 186,985
<SECURITIES> 0
<RECEIVABLES> 93,703
<ALLOWANCES> 0
<INVENTORY> 369,100
<CURRENT-ASSETS> 706,496
<PP&E> 1,434,126
<DEPRECIATION> 610,491
<TOTAL-ASSETS> 1,601,272
<CURRENT-LIABILITIES> 574,369
<BONDS> 0
0
0
<COMMON> 11,619,800
<OTHER-SE> (10,592,897)
<TOTAL-LIABILITY-AND-EQUITY> 1,601,272
<SALES> 41,495
<TOTAL-REVENUES> 51,038
<CGS> 52,692
<TOTAL-COSTS> 609,382
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,281
<INCOME-PRETAX> (613,215)
<INCOME-TAX> 0
<INCOME-CONTINUING> (613,215)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (613,215)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
