UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to __________.
Commission file number 0-27240
ECOTYRE TECHNOLOGIES, INC.
--------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 11-3234026
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
895 Waverly Avenue, Holtsville, New York 11742
----------------------------------------------
(Address of principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 of 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
As of February 23, 1998, 3,148,311 shares of $.001 par value Common Stock
of the registrant were outstanding.
Index schedule found on Page No. 2
<PAGE>
ECOTYRE TECHNOLOGIES, INC.
--------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - December 31, 1997 and March 31, 1997 3
Condensed Statements of Operations - Nine Months and Three Months
Ended December 31, 1997 and 1996 4
Condensed Statements of Cash Flows - Nine Months Ended December
31, 1997 and 1996 5
Notes to Condensed Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 12
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ECOTYRE TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
As of As of
December 31, 1997 March 31, 1997
(Unaudited)
----------------- --------------
<S> <C> <C>
ASSETS
Current:
Cash $ 25,191 $ 127,392
Account receivable net of allowance for
doubtful accounts of $25,000 and $17,000 709,403 958,798
Inventories (Note 2) 478,916 431,561
Prepaid expenses 446,281 241,087
Other current assets 166,436 120,999
-------------- --------------
Total current assets 1,826,227 1,879,837
Property, plant and equipment, less accum depr. 2,384,269 2,295,089
Security deposits 232,420 244,815
Other assets 250,000 396,003
-------------- --------------
Total Assets $ 4,692,916 $ 4,815,744
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ - $ 115,000
Notes payable 141,550 -
Accounts payable 870,439 1,003,386
Accrued expenses 196,364 149,687
Preferred stock dividends payable - 120,277
Current maturities of capitalized leases 3,896 7,979
Current maturities of machinery loan 336,144 150,011
-------------- ---------------
Total current liabilities 1,795,028 1,546,340
Long-term debt, less current maturities 150,000 150,000
Capitalized leases, less current maturities - 16,711
Machinery loan, less current maturities 534,993 849,989
Deferred rent credits 319,799 313,169
-------------- ---------------
Total liabilities 2,553,185 2,876,209
-------------- ---------------
Class A Redeemable Convertible Preferred -
2,000,000 shares authorized;
issued and outstanding - 1,202,775
(redemption amount of $1,202,775) - 1,193,090
-------------- --------------
Stockholders' equity (Note 4):
Serial Preferred Stock, $.001 par value,
1,325,000 shares authorized; none issued - -
Class A Preferred Stock, $.001 par value,
2,000,000 authorized; 252,114 issued and
outstanding (liquidation value of $252,114) 252,114 -
Class B Preferred, $.001 par value, 675,000
shares authorized; 450,000 issued and outstanding
(liquidation value $450,000) 450,000 -
Common Stock, $.001 par value 30,000,000 shares
authorized; issued and outstanding -
3,121,134 and 908,143 3,121 908
Paid in capital 11,886,121 7,852,407
Deficit (10,451,625) (7,106,870)
-------------- ----------------
$ 2,139,731 $ 746,445
-------------- ----------------
Total stockholder's equity $ 4,692,916 $ 4,815,744
============== ================
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
ECOTYRE TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
December 31, December 31,
------------ ------------
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net sales $ 2,452,934 $ 1,598,351 $ 315,697 $ 797,013
Cost of sales 3,657,006 3,121,370 1,444,155 1,432,992
------------ ------------ ------------ -----------
Gross profit (1,204,072) (1,523,019) (1,128,458) (635,979)
------------ ------------ ------------ -----------
Operating expenses:
Selling and shipping 479,113 469,934 111,503 157,683
General and administrative 909,086 895,487 333,496 321,500
------------ ------------ ------------ -----------
Total operating expenses 1,388,199 1,365,421 444,999 479,183
------------ ------------ ------------ -----------
Loss from operations (2,592,271) (2,888,440) (1,573,457) (1,115,162)
------------ ------------ ------------ -----------
Other expenses, income
Interest expense, net of
interest income 94,746 17,741 26,669 5,766
Loss on marketable
securities 93,783 - - -
------------ ------------ ------------ -----------
Total other expenses 188,529 17,741 26,669 5,766
------------ ------------ ------------ -----------
Loss before taxes (2,780,800) (2,906,181) (1,600,126) (1,120,928)
Income taxes 10,355 4,243 - 1,046
------------ ------------ ------------
Net loss $ (2,791,155) $ (2,910,424) $ (1,600,126) $(1,121,974)
------------ ------------ ------------ -----------
Preferred stock dividends (Note 3) 553,600 186,686 217,325 61,609
Net loss attributable to common
stockholders $ (3,344,755) $ (3,097,110) $ (1,817,451) $(1,183,583)
============ ============ ============ ===========
Net loss per share (Notes 3 and 4) $ (1.57) $ (5.81) $ (0.58) $ (1.68)
============ ============ ============ ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
ECOTYRE TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
--------------------------
1997 1996
--------------------------
(Unaudited) (Unaudited)
--------------------------
<S> <C> <C>
Cash flows from operating expenses:
Net loss $(2,791,155) $(2,910,424)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 162,442 168,799
Deferred rent 6,630 30,757
Issuance of stock for payment of services 222,324
Loss on sale of marketable securities 93,783 --
Allowance for possible losses on accounts receivable 8,000 6,000
Decrease (increase) in assets:
Accounts receivable 254,395 (551,177)
Inventory (47,355) (146,115)
Other assets (92,233) (44,713)
Increase (decrease) in liabilities:
Accounts payable (132,947) 392,181
Accrued expenses 46,677 --
----------- -----------
Net cash used in operating activities (2,269,439) (3,054,692)
----------- -----------
Cash flows from investing activities:
Proceeds from sale of marketable securities: 356,217 --
Capital expenditures - net (251,622) (571,801)
----------- -----------
Net cash provided by (used in) investing activities 104,595 (571,801)
Cash flows from financing activities:
Proceeds from sale of capital stock 2,100,750 1,558,354
Proceeds from bank loan -- 396,333
Repayment of bank loan (200,000)
Proceeds from working capital loan 141,550
Repayment of working capital loan (30,000) --
Proceeds from long term notes and warrants
Proceeds from bridge financing
Repayment of capitalized lease obligations and
equipment loans (149,657) (78,570)
Net cash provided by financing activities 2,062,643 1,676,117
----------- -----------
Net (decrease) in cash (102,201) (1,950,376)
Cash and cash equivalents, beginning of period 127,392 2,782,952
----------- -----------
Cash and cash equivalents, end of period 25,191 832,576
----------- -----------
Interest paid $ 94,754 $ 66,287
=========== ===========
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
ECOTYRE TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed financial statements included herein have
been prepared in accordance with generally accepted accounting principles for
interim period reporting in conjunction with the instructions to Form 10-QSB.
Accordingly, these statements do not include all of the information required by
generally accepted accounting principles for annual financial statements, and
are subject to year-end adjustments. In the opinion of management, all known
adjustments (consisting of normal accruals and reserves) necessary to present
fairly the interim financial results for the period have been included. It is
suggested that these interim statements be read in conjunction with the
financial statements and related notes included in the Company's 10-KSB for the
year ended March 31, 1997.
The operating results for the nine months ended December 31, 1997 are not
necessarily indicative of the results to be expected for the year ended March
31, 1998.
Note 2. Inventories
Inventories have been valued at the lower of cost or market. The components
of inventory at December 31, 1997 and March 31, 1997 consist of:
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
---------------------------------------
<S> <C> <C>
Raw materials $ 213,445 $ 252,221
Work in process 22,797 9,765
Finished goods 242,674 169,575
------------ --------------
$ 478,916 $ 431,561
============ ==============
</TABLE>
Note 3. Net Loss Per Share
Net loss per share is based on the weighted average number of Common Stock
outstanding during each period. Common Stock equivalents and other potentially
dilutive securities are antidilutive. Net loss has been adjusted for accretion
of preferred dividends. (See Note 4)
<PAGE>
ECOTYRE TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
Note 4. Private Placements
On September 26, 1997, the Company commenced a private placement of its common
stock which provided net proceeds through September 1997 of $63,000 by issuing
42,000 shares of its common stock at a price of $1.50 per share. On October 2,
1997, the Company received an additional $500,000 by issuing 333,333 shares of
its Common Stock in connection with this private placement.
Class A Redeemable Convertible Preferred Stock.
Effective April 17, 1997, the Certificate of Incorporation of the Company was
amended upon approval from its redeemable Convertible Preferred shareholders to
modify their existing stock. The redemption provision has been eliminated and
the conversion rate of Preferred Stock into Common Stock has been reduced. The
Class A Convertible Preferred Stock is now convertible by multiplying the number
of shares to be converted by the sum of $1.00 plus all accrued and unpaid
dividends divided by the lesser of $21.00 per share or 75% of the closing bid
price for a five day trading period immediately prior to the conversion date.
Commencing July 15, 1997, each holder of Class A Convertible Preferred Stock
shall be entitled to convert up to 25% of their shares per month. Through
December 31, 1997, 1,072,886 shares have been converted to Common Stock.
The discount in the conversion rate of the convertible preferred stock to
common is required to be reflected as additional dividends ratably over the
conversion period. Accordingly, the Company recorded accreted preferred stock
dividends related to this discount of $470,933 or ($.14) per share (attributable
to the common stockholders) for the nine months ended December 31, 1997 and
$9,874 (attributable to the common stockholders) for the three months ended
December 31, 1997.
Class B Convertible Preferred Stock.
Effective April 17, 1997, the Certificate of Incorporation of the Company was
amended upon approval from its Board of Directors to authorize 675,000 shares of
Class B Convertible Preferred Stock, with a par value of $.001 per share
(liquidation preference $1.00 per share; cumulative dividend of 10%).
In April 1997, a principal stockholder of the Company purchased 450,000 shares
of Class B Convertible Preferred Stock for $450,000. Such preferred stock is
convertible into common stock by multiplying the number of shares to be
converted by the sum of $1.00 plus all accrued unpaid dividends divided by $2.45
per share. The holder of the Class B Convertible Preferred Stock has agreed not
to convert or sell said stock until May 22, 1998.
Reverse Stock Split
On June 2, 1997, the Company, with the approval of its shareholders,
effectuated a one-for-seven reverse stock split. All share and per share
information in the financial statements reflects the effects of the reverse
stock split.
<PAGE>
Note 5. Income Taxes
Income taxes are based on annualized statutory federal and state income tax
rates. The provision for income taxes exclude a benefit for net operating loss
carryforwards.
Note 6. Supplemental Cash Flow Information
Non-cash investing and financing activities during the three months period
ending December 31, 1997 was as follows:
<TABLE>
<S> <C>
Exchange of Class A Convertible Preferred shares
for Common Stock $ 242,642
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
General
The Company operated as a wholesale distributor of remolded automobile tires
since its inception in April 1993. In accordance with its business plan, the
Company has substantially curtailed distribution operations, concentrating its
efforts on its manufacturing operations. In its distribution operations, the
Company resold its products primarily to retail tire replacement centers and
tire distributors.
The Company commenced limited manufacturing operations in December 1995 at its
65,000 square foot leased facility in Holtsville, New York. See "Properties". To
commence manufacturing, the Company had purchased 20 mold presses, molds, one
extruder, one buffing machine and related ancillary equipment. Additional
equipment was purchased in 1996 to increase the Company's production capacity
and limit down time due to machinery failures and maintenance. The Company
ordered new molds from Italy in November 1996 to be utilized in its current
presses which should allow the Company to increase its production of popular
high performance and light truck tires with anticipated higher profit margins,
decreasing its production of smaller tire sizes which are sold at lower margins.
The molds have arrived at the Company's facility and have been placed in
production. Also, in March 1997, the Company acquired certain of the assets of
Butler Retreading, Inc., a private 18 year old high performance retreading
Company based in Marietta, Georgia. Butler's equipment is expected to increase
the Company's present press capacity and position the Company to increase sales,
with intended higher gross profit margins from the new mix of tires it will
produce. The asset acquisition, which includes Butler's client base, machinery,
equipment and inventory, was financed principally by the proceeds of a
$1,000,000 loan from PhoenixCor. Inc., a wholly owned subsidiary of Sumitoma
Bank. Production commenced at the Company's facility during the quarter.
On October 22, 1997, the Company entered into an Acquisition Agreement with Tire
Group International, Inc. ("TGI"), a wholesale tire distributor. The closing of
this transaction is subject to Board of Directors approval and the securing of
necessary financing.
Results of Operations
Nine Months Ended December 31, 1997 Compared to Nine Months Ended December 31,
1996.
Net Sales. The Company's net sales of $2,452,934 for the nine months ended
December 31, 1997 represent an increase of $854,583 compared to net sales for
the nine months ended December 31, 1996. The increase is attributable to the
Company's operations of its manufacturing facility for the entire nine months
ending December 31, 1997 as compared to limited operations during the nine
months ending December 31, 1996. The increase was partially offset by a
refocusing of the Company's sales effort from the exportation of high volume,
low margin, passenger tires to lower volume, higher margin, high performance and
light truck tires. This change in marketing strategy was necessitated, in part,
from the exportation from Asia of cheap 13" and 14" passenger tires into the
U.S. and Central and South American markets. Pressure on margins has increased
with the continued turmoil principally in the Asian and Brazillian currency
markets.
Cost of Sales. The Company's cost of sales for the nine months ending December
31, 1997 was $3,657,006 as compared to $3,121,370, representing an increase of
$535,636. This increase was due primarily as a result of increased manufacturing
costs to support the increase in sales. During the nine months ended December
31, 1996, the Company was primarily in its initial stages of manufacturing,
operating at an average plant capacity of 30%.
<PAGE>
Gross Loss. The Company's gross loss for the nine months ended December 31,
1997 was ($1,204,072) as compared to a gross loss of ($1,523,019) for the nine
months ended December 31, 1996. The decrease in gross loss is directly related
to the Company operating its facility at a higher percentage of capacity during
the nine months ended December 31, 1997 than during the nine month period ended
December 31, 1996.
Operating Expenses. The Company incurred selling, shipping, general and
administrative expenses of $1,388,199 for the nine months ended December 31,
1997 as compared to $1,365,421 for the nine months ended December 31, 1996. Such
expenses represent 57% and 85% of net sales for the nine months ended December
31, 1997 and December 31, 1996, respectively. The decline of such expenses as a
percentage of sales represents the Company's continuing efforts to contain such
expenses as it expands its operations. The increase of selling and shipping
expenses is a result of the increased sales and the additional selling costs
incurred therein.
Other Expenses. The Company incurred net interest expense of $94,746 for
the nine months ended December 31, 1997 compared to net interest expense of
$17,741 for the nine months ended December 31, 1996. The increase in interest
expense for the nine months ending December 31, 1997 is the result of the
borrowing principally related to the machinery loan.
Net Loss. As a result of the foregoing factors, the Company's net loss
decreased from ($2,910,424) for the nine months ended December 31, 1996 to a net
loss of ($2,791,155) for the nine months ended December 31, 1997. The net loss
attributable to common stockholders increased from ($3,097,110) or ($5.81) per
share (adjusted for reverse split) to ($3,344,755) or ($1.57) per share. As
further explained in Note 4, the principal component of the increase in the
preferred stock dividends relates to preferred dividends accreted of $470,933.
Three Months Ended December 31, 1997 Compared to Three Months Ended December 31,
1996.
Net Sales. The Company's net sales of $315,697 for the three months ended
December 31, 1997 represents a decrease of $486,316 compared to net sales for
the three months ended December 31, 1996. The decrease was attributable to the
Company's change in focus from the exportation of high volume, low margin,
passenger tires to lower volume, higher margin, high performance and light truck
tires. This change in marketing strategy was necessitated, in part, from the
exportation from Asia into the U.S., Central and South American market place of
cheap 13" and 14" passenger tires. Pressure on margins has increased with the
continued turmoil principally in the Asian and Brazilian currency markets.
Cost of Sales. The Company's cost of sales for the three months ended
December 31, 1997 was $1,444,155 as compared to $1,432,992, representing an
increase of $11,163. This increase was due primarily to the exisiting cost
structure in place, which is being addressed through adjustments in the labor
pool and renegotiation of material purchase agreements. The Company believes
that its gross margin will improve with the increased sales anticipated as a
result of the refocusing of it's marketing strategy towards higher margin tires,
along with the changes being implemented in it's cost structure.
Gross Loss. The Company's gross loss for the three months ended December
31, 1997 was ($1,128,458) as compared to a gross loss of ($635,979) for the
three months ended December 31, 1996, an increase of ($492,479). The increase in
gross loss is primarily due to the Company's redefining of it's marketing
strategy.
<PAGE>
Operating/Other Expenses. The Company incurred selling, shipping, general
and administrative expenses of $444,999, and net interest expense of $26,669 in
the three months ended December 31, 1997 as compared to $479,183 of selling,
shipping, general and administrative expenses and $5,766 of net interest expense
in the three months ended December 31, 1996. The decrease in selling, shipping,
general and administrative expenses were attributable primarily to the decrease
in costs related to the decrease in sales during the three months ended December
31, 1997. The increase in interest expenses is primarily due to the Company's
higher outstanding borrowing principally related to the machinery loan.
Net Loss. The Company sustained a net loss of ($1,600,126) in the three
months ended December 31, 1997 as compared to a net loss of ($1,121,974) in the
three months ended December 31, 1996, an increased loss of $478,152. The net
loss attributable to common stockholders increased from ($1,183,583) or ($1.68)
per share (adjusted for reverse split) to ($1,817,451) or ($.58) per share.
Liquidity and Capital Resources
At December 31, 1997, the Company had cash and cash equivalents of $25,191
and working capital of $31,199. As further discussed in Note 4, through December
31, 1997, the Company raised approximately $2,100,750 from the private placement
of common stock and has effectuated an amendment to its Class A Convertible
Preferred stock removing the requirement to pay approximately $1,325,000 on
January 15, 1998. The Company will be required to raise additional working
capital to meet its continuing obligations. If the Company is unsuccessful in
generating additional working capital, the Company's business will be materially
and adversely affected.
As indicated in the Company's annual report on Form 10-KSB, the Company's
financial statements have been prepared assuming that the Company will continue
operating as a going concern. The Company has sustained losses since inception
and requires additional working capital. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
The Company used cash in operating activities in the amount of $2,269,439
for the nine months ended December 31, 1997 and $3,054,692 for the nine months
ended December 31, 1996 which was primarily related to the loss from operations.
The Company purchased machinery and equipment in the amounts of $251,622 and
$571,801 for the nine months ending December 31, 1997 and 1996, respectively.
Financing provided to fund operating activities and fixed asset purchases for
the nine months ended December 31, 1997 was provided by the proceeds from a
private placement of common stock of $2,100,750 and proceeds from the sale of
marketable securities of $356,217. Operating and investing activities for the
nine months ended December 31, 1996 were funded from a bank line of credit of
$396,333.
Accounts Receivable - At December 31, 1997, the net account receivable
balance was $709,403, a decrease of $249,395. The decrease is due to the reduced
sales realized during the three month period ended December 31, 1997. Payment
terms range from cash payment to various net terms in accordance with industry
practice. During the current fiscal year, the Company has not incurred any
significant write-offs.
On March 21, 1997, the Company acquired certain assets of Butler
Retreading, Inc. The aggregate purchase price was approximately $939,000
consisting of $750,000 in cash provided by long term financing and 42,857 shares
of common stock of the Company valued at $189,000, or $4.41 per share, the
quoted market price of the Company's shares as of March 21, 1997. During
September, 1997, the Company received and installed substantially all equipment
purchased from Butler.
<PAGE>
In connection with the acquisition, the Company entered into a new loan
agreement with PhoenixCor, Inc., a wholly owned subsidiary of Sumitoma Bank.
PhoenixCor, Inc. assumed the balance of the previous loan in the amount of
$139,589 and provided financing in the amount of $860,411, for a total new loan
of $1,000,000. The loan is payable in 3 monthly installments of $11,205 from
April 1997 through June 1997, 3 monthly installments of $19,609 from July 1997
through September 1997 and 42 monthly installments of $28,012 thereafter,
including interest at 11.4% per annum. PhoenixCor, Inc. has a security interest
in all of the Company's equipment. As part of a current negotiation to
restructure the payment terms of the loan agreement, the Company made payments
totaling $39,600 for the three month period ending December 31, 1997. It is
expected that any changes to the loan agreement will be completed prior to the
end of the current fiscal year.
The Company has entered into a 10-year, 9-month lease with one five year
renewal option for approximately 65,000 square feet of manufacturing, warehouse
and office space in Holtsville, New York during fiscal 1995, which provides for
minimum annual rental obligations of approximately $282,750, plus utilities and
maintenance, subject to 5% annual increases. As long as the Company is in
substantial compliance with its obligations under this Lease, it has an option
to purchase these premises for $2,500,000. If this option has not been exercised
by October 1, 1997, the purchase price will increase by 5% of that date and on
each anniversary thereof up to and including October 1, 2004. If the Company
elects to purchase these premises, it will be required to tender a deposit equal
to 10% of the purchase price and consummate the purchase within sixty (60) days
thereafter, whereupon the balance of the purchase price will be due. This option
may be exercised at any time up to July 31, 2005. The Company is utilizing this
facility for its manufacturing operations, as well as for warehousing its
inventory and as its corporate offices. The Company's capital requirements may
change depending upon numerous factors and the Company may require additional
financing from time to time, particularly in order to effectuate expansion
activities, if any. As of December 31, 1997, the Company has no significant
commitments for additional capital expenditures, nor has the Company exercised
the purchase option.
Seasonality
While there is a year-round demand for automobile tires, automobile tire
sales in the Northeastern United States are generally strongest during the
second and third calendar quarters of the year. Seasonality may have an impact
on the Company's operations including cash flow, insofar as the Company is
required to control inventory levels to reflect projected quarterly sales.
However, since the Company anticipates that approximately 50% of its sales will
be in the Western United States and other regions where all purpose automobile
tires are used year round, it does not believe that seasonality will have a
material adverse impact on its operations.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
27 - Financial Data Schedule (for electronic submission only)
(b) Reports on Form 8-K
-------------------
None
<PAGE>
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.
Dated : February 23, 1998 ECOTYRE TECHNOLOGIES, INC.
(Registrant)
By: /s/ Lawrence Dobroff
-------------------------
Lawrence Dobroff,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted
from the financial statements for the nine months ended
December 31, 1997 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 25,191
<SECURITIES> 0
<RECEIVABLES> 734,403
<ALLOWANCES> 25,000
<INVENTORY> 478,916
<CURRENT-ASSETS> 1,826,227
<PP&E> 2,384,269
<DEPRECIATION> 162,442
<TOTAL-ASSETS> 4,692,916
<CURRENT-LIABILITIES> 1,795,028
<BONDS> 0
252,114
0
<COMMON> 3,121
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,692,916
<SALES> 2,452,934
<TOTAL-REVENUES> 2,452,934
<CGS> 3,657,006
<TOTAL-COSTS> 3,657,006
<OTHER-EXPENSES> 188,529
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94,746
<INCOME-PRETAX> (2,780,800)
<INCOME-TAX> 10,355
<INCOME-CONTINUING> (2,791,155)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,344,755)
<EPS-PRIMARY> (1.57)
<EPS-DILUTED> (1.57)
</TABLE>
