-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WOli1Ephm5QsRKWpej4R3d4Bci0yk4+xQ1odGpz+CEkAVW4MPkNEjTGFNUTEqRMw qrTJT2l8VoZtJ975htRRZA== 0001093239-00-000017.txt : 20000523 0001093239-00-000017.hdr.sgml : 20000523 ACCESSION NUMBER: 0001093239-00-000017 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000522 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRTRAX INC CENTRAL INDEX KEY: 0001081372 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 223506376 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-25791 FILM NUMBER: 640676 BUSINESS ADDRESS: STREET 1: 1616 PENNSYLVANIA AVE 122 CITY: VINELAND STATE: NJ ZIP: 08361 BUSINESS PHONE: 8563278112 MAIL ADDRESS: STREET 1: 1616 PENNSYLVANIA AVE 122 CITY: VINELAND STATE: NJ ZIP: 08361 FORMER COMPANY: FORMER CONFORMED NAME: MAS ACQUISITION IX CORP DATE OF NAME CHANGE: 19990308 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION PRIVATE Washington, D. C. 20549 FORM 10-QSB (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the period ended March 31, 2000. [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE Act of 1934 for the transition period from ___ to ___. Commission file number: 0-25791 AIRTRAX, INC. (Name of Small Business Issuer in its charter) New Jersey 22-3506376 (State of (I.R.S. Employer Incorporation) I.D. Number) 870B Central Avenue, Hammonton, New Jersey 08037 (Address of principal executive offices) (Zip Code) Issuer's telephone number 609-567-7800. 1616 Pennsylvania Avenue, #122, Vineland, New Jersey 08361; 856-327-8112 (Former address and former telephone number, if changed from last report) Securities registered under Section 12 (b) of the Act: Title of each class Name of exchange on which to be registered each class is to be registered None None Securities registered under Section 12(g) of the Act: Common Stock (Title of Class) Check whether issuer (1) filed all reports to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or 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. (1). Yes: X No: (2). Yes: X No: The number of shares issued and outstanding of issuer's common stock, no par value, as of March 31, 2000 was 4,660,234. Transitional Small Business Issuer Format (Check One): Yes: No: X PART I - FINANCIAL STATEMENTS Item 1. Financial Statements. INDEX Page Balance Sheets 3 Statements of Income 4 Statements of Changes in Stockholder's Equity 5 Statements of Cash Flows 6 Notes to Financial Statements 7 Item 2. Management's Discussion and Analysis. 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings. 11 Item 2. Changes in Securities. 11 Item 3. Defaults upon Senior Securities. 11 Item 4. Submission of Matters to Vote of Securityholders. 11 Item 5. Other Information. 11 Item 6. Exhibits and Reports on Form 8-K. 11 Signatures 11 AIRTRAX, INC. BALANCE SHEETS March 31, December 31, 2000 1999 ASSETS Current Assets Cash $ 64,525 $ 48,652 Accounts receivable 4,972 71,453 Inventory 651,563 511,525 Prepaid expenses 6,938 6,938 ____________ ____________ Total current assets 767,998 638,568 Fixed Assets Office furniture and equipment 34,003 34,003 Automotive equipment 16,915 16,915 Shop equipment 20,909 20,660 Casts and tooling 72,962 72,962 ____________ ____________ 144,789 144,540 Less, accumulated depreciation 63,181 55,777 ____________ ____________ Net fixed assets 81,608 88,763 Other Assets Patents - net 49,272 50,380 Utility deposits 65 65 ____________ ___________ Total other assets 49,337 50,445 ____________ ___________ TOTAL ASSETS $ 898,943 $ 777,776 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 643,827 $ 527,255 Accrued liabilities 30,778 15,161 Stockholder note payable 51,990 50,000 _____________ ____________ Total current liabilities 726,595 592,416 Stockholders' Equity Common stock - authorized, 5,000,000 shares without par value; issued and outstanding-4,630,604 and 4,549,013, respectively 46,602 45,490 Preferred stock - authorized, 500,000 shares without par value; 275,000 issued and outstanding 12,950 12,950 Additional paid-in-capital 1,942,213 1,784,038 Retained deficit (1,829,417) (1,657,118) _____________ ____________ Total stockholders' equity 172,348 185,360 TOTAL LIABILITIES AND STOCKHOLDER' EQUITY $ 898,943 $ 777,776 ============== ============= The accompanying notes and accountant's audit report are an integral part of these financial statements. AIRTRAX, INC. STATEMENTS OF INCOME For the Three Month Periods Ended March 31, 2000 and 1999 2000 1999 ________ _________ SALES $ 27,589 $ - COST OF GOODS SOLD 5,899 - _________ __________ Gross Profit 21,690 - OPERATING AND ADMINISTRATIVE EXPENSES: Cost of prototype development 79,373 18,952 Auto expense 44 - Health insurance 2,461 2,455 Utilities 522 526 Telephone 2,957 2,316 Shipping, postage and office supplies 7,578 171 Rent - 3,725 Professional fees 25,020 7,454 Travel and entertainment 1,758 3,843 Advertising and promotion 11,814 13,091 Interest expense 65 2,160 Operating supplies 1,589 - Depreciation and amortization 8,512 7,685 Insurance 821 2,617 Equipment repairs - - Equipment rental 1,143 1,143 Payroll and related taxes 50,333 35,715 __________ _________ Total General and Administrative Expenses 193,990 101,853 ___________ _________ NET LOSS BEFORE OTHER INCOME (172,300) (101,853) Other income 1 - __________ __________ NET LOSS $(172,299) $(101,853) ========== =========== NET LOSS PER SHARE $ (.04) $ (.03) ========== =========== The accompanying notes and accountant's audit report are an integral part of these financial statements. AIRTRAX, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the Three Month Period Ended March 31, 2000 COMMON PREFERRED STOCK STOCK ADDITIONAL ___________________ _______________ PAID-IN RETAINED Shares Amount Shares Amount CAPITAL DEFICIT TOTAL _________ ________ _______ ________ __________ ____________ _________ Balance, December 31, 1999 4,549,013 $ 45,490 275,000 $12,950 $1,784,038 (1,657,118) 185,360 Private placement sales of stock 33,630 336 109,665 110,001 Shares issued Under option exercises 75,494 755 42,323 43,078 Shares issued for services 2,097 21 6,187 6,208 Net loss for the period (172,299) (172,299) __________ ________ _______ _______ __________ ___________ __________ Balance, March 31, 2000 4,660,234 $ 46,602 275,000 $12,950 $1,942,213 $(1,829,417) $172,348 The accompanying notes and accountant's audit report are an integral part of these financial statements. AIRTRAX, INC. STATEMENTS OF CASH FLOWS For the Three Month Periods Ended March 31, 2000 and 1999 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $(172,299) $(101,853) Adjustments to reconcile net income to net cash consumed by operating activities: Depreciation and amortization 8,512 7,685 Value of common stock issued for services 6,208 - Changes in current assets and liabilities: Increase in accounts payable and accrued liabilities 132,189 (14,254) Decrease (increase) in prepaid expense - 2,500 Decrease (increase) in accounts receivable 26,481 2,600 Increase in inventory (140,038) (15,994) _________ ________ Net Cash Consumed By Operating Activities (138,947) (119,316) CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of equipment (249) (11,313) ___________ ________ Net Cash Consumed By Investing Activities (249) (11,313) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds of common stock sales 153,079 160,202 Proceeds of borrowing 1,990 - Preferred stock dividends - (17,188) ___________ ___________ Net Cash Provided By Financing Activities 155,069 143,014 ___________ _________ Net Increase (Decrease) In Cash (15,873) 12,385 Balance at beginning of period 48,652 5,081 __________ _________ Balance at end of period $ 64,525 $ 17,466 =========== ========= The accompanying notes and accountant's audit report are an integral part of these financial statements. AIRTRAX, INC. NOTES TO FINANCIAL STATEMENTS March 31, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Of Company The Company was formed April 17, 1997. On May 19, 1997, it merged with a predecessor which had initiated and advanced the development of omni- direction technology. On November 5, 1999, the Company merged with MAS Acquisition IX Corp. ("MAS"), a reporting company under federal securities law. Pursuant to this merger agreement, the Company assumed the reporting status of MAS. In both merger transactions, the Company was the surviving entity. Business The Company has designed a forklift vehicle using omni-directional technology. The right to exploit this technology grew out of a Cooperative Research and Development Agreement with the Navy. Significant resources have been devoted during the past two years to the construction of a prototype of this omni-directional forklift vehicle. It is expected to be in full commercial production during the third quarter of 2000. At that time, it will be offered to industrial users. The Company has also developed a traditional helicopter ground handling machine which has been marketed by the Company on a limited basis. Cash For purposes of the statements of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. Inventory Inventory consists principally of component parts and supplies which are being used to assemble forklift vehicles. Inventories are stated at the lower of cost (determined on a first in-first-out basis) or market. Fixed Assets Fixed assets are recorded at cost. Depreciation is computed by use of the Modified Accelerated Cost Recovery System (MACRS), as permitted by Internal Revenue Service Regulations, using lives of seven years for furniture and shop equipment and five years for computers and automobiles. Intangible Assets Patents The Company incurred costs to acquire and protect certain patent rights. These costs were capitalized and are being amortized over a period of fifteen (15) years on a straight-line basis. Prototype Equipment The cost of developing and constructing the prototype omni-directional helicopter handling vehicle and the omni-directional forklift vehicle is expensed as incurred. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimated. 2. RELATED PARTY TRANSACTIONS During 1999, 305,737 shares of common stock of the Company were issued in lieu of dividends on the preferred stock, as permitted by the terms of the preferred stock issue. The preferred stock is wholly owned by the majority shareholder (see Note 4 for description of the preferred stock). This majority shareholder is a corporation wholly owned by the president of the Company. The majority shareholder corporation advanced $50,000 to the Company during December 1999. The related note is due April 1, 2000 and bears interest at 12%. Since June 1999, the Company has made its headquarters in premises owned by the Company president, which to date has been rent free. 3. PRIVATE PLACEMENT OFFERINGS The Company conducted private placement offerings during 1999 and the first quarter of 2000. These offerings were exempt under the Securities Act of 1933,as amended, and the rules and regulations promulgated thereunder. Under the offerings, a total of 614,552 shares of common stock were sold during 1999 and 33,630 shares of common stock were sold during the first quarter of 2000, resulting in net proceeds of $872,268 and $110,001, respectively. In addition, during the first quarter of 2000, 75,494 shares of common stock were issued under option arrangements with officers and directors yielding proceeds of $43,078, and 2,097 shares of common stock were issued in lieu of cash for services valued at $6,208 to a law firm controlled by a director. AIRTRAX, INC. NOTES TO FINANCIAL STATEMENTS March 31, 2000 4. PREFERRED STOCK The Company is authorized to issue 500,000 shares of preferred stock, without par value. At March 31, 2000, 275,000 of these shares had been issued. Each of these shares entitles the holder to a 5% cumulative dividend based on a $5 per share stated value. If sufficient cash is not available, or at the option of the shareholder, these dividends may be paid in common stock. If payment is in stock, it is to be valued at a price calculated at thirty percent of the last price offered or traded during the applicable quarter. This issue of preferred stock also provides a voting right of 10 votes for each share. Dividends totaling $105,119 had accrued through December 31, 1998 on this issue of preferred stock; another $68,750 accrued during 1999 and $17,188 accrued during the first quarter of the year 2000. Cash dividends of $13,005 were paid during 1998 and $40,498 was paid during 1999. An additional $91,721 was paid during 1999 through the issuance of common stock, leaving a balance of $45,834 unpaid at March 31, 2000. The characteristics of the remaining 225,000 preferred shares authorized have not been specified. 5. Earnings Per Share Three Months Ended March 31, 2000 Income Average Shares Per Share (Loss) Outstanding Amount Net loss $(172,299) Adjustment for preferred stock dividends (17,188) Income (loss) available to common shareholders $(189,487) 4,589,809 $(.04) Three Months Ended March 31, 1999 Net loss $(101,853) Adjustment for preferred stock dividends (17,188) Income (loss) available to common shareholders $(119,041) 3,727,460 $(.03) AIRTRAX, INC. NOTES TO FINANCIAL STATEMENTS March 31, 2000 6. INCOME TAXES The Company has experienced losses each year since its inception. As a result, it has incurred no Federal income tax. The Internal Revenue Code allows net operating losses (NOL's) to be carried forward and applied against future profits for a period of twenty years. A New Jersey corporation business tax liability of $200 accrued during each of the years 1999 and 1998, that being the minimum annual tax imposed on all New Jersey corporations. New Jersey tax law allows the carry forward of NOL's for seven years. The Company had NOL carry forwards of $1,009,000 as of December 31, 1999. The potential tax benefit of these NOL's has not been recorded on the books of the Company. 7. RENTALS UNDER OPERATING LEASES Office equipment is leased under an operating lease that expires in June 2003. The following is a schedule of future minimum rental payments required under the operating lease: Year Ending December 31, Amount 2000 (Remainder) $ 5,714 2001 6,857 2002 6,857 2003 2,857 ________ $22,285 Rent expense amounted to $1,143 in the three months ended March 31,2000 and $4,868 in 1999 period. 8. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION Cash paid for interest and income taxes is presented below: Three Months Ended March 31, 2000 1999 Interest $ 65 $ 2,160 Income taxes 200 200 There were no noncash investing activities during either the 2000 period or 1999 period. The following noncash financing activities occurred: a. Shares of common stock totaling 2,097 shares were issued for services during the three months ended March 31, 2000. AIRTRAX, INC. NOTES TO FINANCIAL STATEMENTS March 31, 2000 9. CONTINGENCIES Pursuant to agreements relating to the merger transaction with MAS, the Company was required to issue 114,867 shares of common stock to former shareholders of MAS ("MAS Common Stock") and make a cash payment to an affiliate of the majority shareholder of MAS. The Company has asserted claims against the affiliate and majority shareholder. The claims involve the amount of the MAS Common Stock and the cash due to the majority shareholder and affiliate under the merger agreement. The Company has not issued the MAS Common Stock. The parties presently are attempting to negotiate a settlement of the matter. The Company has an employment agreement with its president which provides, in part, for options permitting the president to acquire up to 50,000 shares of common stock per year. The first 10,000 shares each year are available at a price of $1; the next 25,000 shares are available at a price per share equal to 30% of the lowest price paid for the stock during the 30 days preceding the date of exercise; the last 15,000 shares are available at a price equal to one half the 30% price described above. These options accumulate if they are not exercised. None of these options had been exercised prior to December 31, 1999. Options for 60,000 shares were exercised during the first quarter at the 30% price and 10,00 at the $1 price. Options for 22,500 shares were outstanding at March 31, 2000 at the one half of 30% price. Item 2. Management's Discussion and Analysis. The following discusses the financial results and position of the consolidated accounts of the Company for the periods indicated. Results of Operations Three Months Ended March 31, 2000 compared with Three Months Ended March 31, 1999. The Company is a development stage company. From inception through March 31, 2000, the activities of the Company consisted of the development of the omni- directional wheel and related components for forklift and other material handling applications. Due to the nature of our business activities to date, we believe that a period-to-period comparison will not be meaningful until we initiate the commercial sale of our product which is anticipated to occur in the second or third quarter of 2000 for our omni-directional forklift. Revenues for the three months ended March 31, 2000 were $27,589 compared with no revenues for the same period in 1999. Revenues for the 1999 period consisted of $8,845 in sales of a non omni-directional product and $18,744 in contract revenues from the United States Navy. Cost of sales for the 2000 period was $5,899 representing parts and manufacturing costs for the non-omni directional product. General and administrative expenses which includes administrative salaries and overhead for the three month period in 2000 totaled $193,990 compared with $101,853 for the same period in 1999. The increase of $92,404 for the 2000 period is due to increase prototype development costs of the omni- directional wheel, increased professional fees associated with Company's reporting status under the federal securities laws, and an increased salary payments to the president of the Company and initiation of salary payments to the executive vice president of the Company. Net loss for the three month period in 2000 was $172,299 compared with a net loss of $101,853 for the prior period. Liquidity and Capital Resources Since its inception, the Company has financed its operations through the private placement of its common stock. During 1999, the Company raised approximately $872,268 net of offering costs from the private placement of its common stock. During the first quarter of 2000, the Company raised $110,001 net of offering costs from the private placement of its common stock. As of March 31, 2000, current assets and total assets increased to $767,998 and $898,943, respectively, from $638,568 and $777,776, respectively, for December 31, 1999; and current liabilities increased to $726,595 from $592,416 for year end 1999. As of March 31, 2000, the Company had limited working capital. The Company anticipates that its use of cash will be substantial for the foreseeable future. In particular, management of the Company expects substantial expenditures for inventory and product production in anticipation of the rollout of its omni-directional forklift expected to occur in the third quarter of fiscal 2000. The Company intends to fund its operations through the issuance of equity and/or debt securities. Presently, the Company is seeking capital from one or more funding sources, however, at this time no arrangement has been finalized. No assurances can be given that the Company will be successful in obtaining sufficient capital to fund the initiation of its production activities. If the Company is unable to obtain sufficient funds in the near future, such event will have a material adverse impact on the Company and its business prospects. Forward Looking Statements. Certain of the statements contained in this Quarterly Report on Form 10-QSB includes "forward looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). See the Company's Annual Report on Form 10-KSB for the period ending December 31, 1999 (including any amended filings thereto) for additional statements concerning operations and future capital requirements. Certain risks exist with respect to the Company and its business, which risks include the need for additional capital and lack of commercial product. Readers are urged to refer to the section entitled "Cautionary Statements in the Company's Form 10-KSB for the period ended December 31, 1999 and elsewhere therein for a broader discussion of such risks and uncertainties. Part II OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities. None Item 3. Defaults upon Senior Securities. None Item 4. Submission of Matters to a Vote of Securityholders. None Item 5. Other Information. None Item 6. Exhibits. (a). Furnish the Exhibits required by Item 601 of Regulation S-B. Exhibit 27.1 - Financial Data Schedule (b) Reports on Form 8-K. None. 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. AIRTRAX, INC. Date: May 17, 2000 /s/Peter Amico Peter Amico President and Principal Financial Officer SCHEDULE 27.1 FINANCIAL DATA SCHEDULE ART.5 FDS FOR 1st QUARTER 10-Q Multiplier 1,000 PERIOD TYPE 3 MONTHS FISCAL YEAR END DEC-31-1999 PERIOD END MAR-31-2000 CASH 65 SECURITIES 0 RECEIVABLES 45 ALLOWANCES 0 INVENTORY 652 CURRENT-ASSETS 767 PP&E 145 DEPRECIATION 63 TOTAL ASSETS 899 CURRENT-LIABILITIES 727 BONDS 0 COMMON 47 PREFERRED-MANDATORY 13 PREFERRED 13 OTHER-SE 1,882 TOTAL-LIABILITIES-AND-EQUITY 899 SALES 28 TOTAL-REVENUES 28 CGS 6 TOTAL-COST 200 OTHER-EXPENSES 0 LOSS-PROVISION 0 INTEREST-EXPENSE 0 INCOME-PRETAX (172) INCOME-TAX 0 INCOME-CONTINUING (172) DISCONTINUED 0 EXTRAORDINARY 0 CHANGES 0 NET-INCOME (172) EPS-PRIMARY (.04) EPS-DILUTED (.04) DRAFT OF 5/9/00 NOT FOR DISTRIBUTION -----END PRIVACY-ENHANCED MESSAGE-----