U.S. SECURITIES AND EXCHANGE COMMISSION
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 June 30, 2001.
[ ] 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, 2001 was 5,327,849.
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 Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis. 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 18
Item 2. Changes in Securities. 18
Item 3. Defaults upon Senior Securities. 18
Item 4. Submission of Matters to Vote of Securityholders. 18
Item 5. Other Information. 18
Item 6. Exhibits and Reports on Form 8-K. 18
Signatures 19
2
AIRTRAX, INC.
(A Development Stage Company)
BALANCE SHEETS
June 30, 2001 December 31, 2000
-------------- ------------------
ASSETS
Current Assets
Cash $ 17,837 $ 23,663
Accounts receivable 12,955 34,382
Inventory 718,664 764,875
Prepaid expenses 6,938 6,938
Deferred tax asset 94,311 61,285
-------------- ------------------
Total current assets 850,705 891,143
Fixed Assets
Office furniture and equipment 45,598 35,303
Automotive equipment 16,915 16,915
Shop equipment 20,660 20,660
Casts and tooling 85,298 76,687
-------------- ------------------
168,471 149,565
Less, accumulated depreciation 97,602 82,346
-------------- ------------------
Net fixed assets 70,869 67,219
Other Assets
Patents - net 43,997 45,331
Utility deposits 65 65
-------------- ------------------
Total other assets 44,062 45,396
-------------- ------------------
TOTAL ASSETS $ 965,636 $ 1,003,758
============== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 2001 December 31, 2000
-------------- ------------------
Current Liabilities
Accounts payable $ 677,161 $ 763,210
Accrued liabilities 26,517 35,630
Stockholder note payable 24,714 23,314
Contract deposit 50,000 -
-------------- ------------------
Total current liabilities 778,392 822,154
Stockholders' Equity
Common stock - authorized, 10,000,000 shares without
par value; 5,327,849issued and outstanding 2,748,117 2,408,549
Preferred stock - authorized, 500,000 shares without
par value; 275,000 issued and outstanding 12,950 12,950
Deficit accumulated during the development stage (2,366,871) (2,032,943)
Deficit prior to development stage (206,952) (206,952)
-------------- ------------------
Total stockholders' equity 187,244 181,604
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 965,636 $ 1,003,758
============== ==================
See accompanying notes and accountant's report.
3
AIRTRAX, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS and DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
For the Three Month Periods Ended June 30, 2001 and 2000
May 19, 1997
(Date of Inception)
2001 2000 to June 30, 2001
-------------- ---------- --------------------
SALES $ 52,463 $ 4,800 $ 318,265
COST OF GOODS SOLD 1,222 3,795 64,733
-------------- ---------- --------------------
Gross Profit 51,241 1,005 253,532
OPERATING AND ADMINISTRATIVE EXPENSES 215,810 154,951 2,564,564
-------------- ---------- --------------------
OPERATING LOSS (164,569) (153,946) (2,311,032)
-------------- ---------- --------------------
OTHER INCOME (EXPENSE)
Interest expense (9,051) (3,938) (55,004)
Other income 800 1 13,186
-------------- ---------- --------------------
NET LOSS BEFORE INCOME TAXES (172,820) (157,883) (2,352,850)
-------------- ---------- --------------------
INCOME TAX BENEFIT (STATE):
Current 15,617 - 94,311
Prior years - - 122,288
-------------- ---------- --------------------
Total Benefit 15,617 - 216,599
-------------- ---------- --------------------
LOSS ACCUMULATED DURING
DEVELOPMENT STAGE $ (157,203) $(157,883) (2,136,251)
============== ==========
PREFERRED STOCK DIVIDENDS DURING
DEVELOPMENT STAGE (230,620)
--------------------
DEFICIT ACCUMULATED DURING DEVELOPMENT
STAGE $ (2,366,871)
====================
NET LOSS PER SHARE - Basic and Diluted $(.03) $(.04)
====== ======
See accompanying notes and accountant's report.
4
AIRTRAX, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS and DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
For the Six Month Periods Ended June 30, 2001 and 2000
May 19, 1997
(Date of
Inception)
2001 2000 to June 30, 2001
-------------- ---------- --------------------
SALES $ 88,430 $ 32,389 $ 318,265
COST OF GOODS SOLD 1,222 9,694 64,733
-------------- ---------- --------------------
Gross Profit 87,208 22,695 253,532
OPERATING AND ADMINISTRATIVE EXPENSES 438,933 348,876 2,564,564
-------------- ---------- --------------------
OPERATING LOSS (351,725) (326,181) (2,311,032)
OTHER INCOME AND (EXPENSE)
Interest expense (16,154) (4,003) (55,004)
Other income 925 2 13,186
-------------- ---------- --------------------
NET LOSS BEFORE INCOME TAXES (366,954) (330,182) (2,352,850)
-------------- ---------- --------------------
INCOME TAX BENEFIT (STATE):
Current 33,026 - 94,311
Prior years - - 122,288
-------------- ---------- --------------------
Total Benefit 33,026 - 216,599
-------------- ---------- --------------------
LOSS ACCUMULATED DURING
DEVELOPMENT STAGE $ (333,928) $(330,162) (2,136,251)
============== ==========
PREFERRED STOCK DIVIDENDS DURING
DEVELOPMENT STAGE (230,620)
--------------------
DEFICIT ACCUMULATED DURING DEVELOPMENT
STAGE $ (2,366,871)
====================
NET LOSS PER SHARE - Basic and Diluted $(.07) $(.08)
====== ======
See accompanying notes and accountant's report.
5
AIRTRAX, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Six Month Periods ended June 30, 2001 and 2000
May 19, 1997
(Date of
Inception)
2001 2000 to June 30, 2001
-------------- ---------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (333,928) $(330,182) $ (2,136,251)
Adjustments to reconcile net income to net cash
consumed by operating activities:
Depreciation and amortization 16,590 17,024 121,212
Value of common stock issued for services 18,767 41,956 99,569
Accrual of deferred tax benefit (33,026) (94,311)
Changes in current assets and liabilities:
(Decrease) increase in accounts payable and
accrued liabilities (95,162) 261,279 703,678
Decrease (Increase) in prepaid expense - - (7,003)
Decrease (increase) in accounts receivable 21,428 69,893 (12,955)
Decrease (increase) in inventory 46,211 (276,184) (718,664)
-------------- ---------- --------------------
Net Cash Consumed By
Operating Activities (359,120) (216,214) (2,044,725)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of equipment (18,907) (1,449) (168,471)
Additions to patent cost - (20,886) (67,607)
-------------- ---------- --------------------
Net Cash Consumed By
Investing Activities (18,907) (22,335) (236,078)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of common stock sales 320,801 164,763 2,264,479
Proceeds of borrowing - 48,810 12,950
Proceeds of stockholder loans 1,400 - 24,714
Receipt of contract deposit 50,000 - 50,000
Preferred stock dividends paid in cash - - (53,503)
-------------- ---------- --------------------
Net Cash Provided By
Financing Activities 372,201 213,573 2,298,640
-------------- ---------- --------------------
Net Increase (Decrease) In Cash (5,826) (24,976) 17,837
Balance at beginning of period 23,663 48,652 -
-------------- ---------- --------------------
Balance at end of period $ 17,837 $ 23,676 $ 17,837
============== ========== ====================
See accompanying notes and accountant's report.
6
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2001
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-directional
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. For financial
accounting purposes, the reverse merger with MAS was accounted for as a pooling
of interests.
Business
The Company has designed a forklift vehicle using omni-directional
technology obtained under a contract with the United States Navy Surface Warfare
Center in Panama City, Florida. 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 fourth quarter of 2001. 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.
Development Stage Accounting
The Company is a development stage company, as defined in Financial
Accounting Standards (FAS) Statement No. 7. Generally accepted accounting
principles that apply to established operating enterprises govern the
recognition of revenue by a development stage enterprise and the accounting for
costs and expenses. From inception to June 30, 2001, the Company has been in the
development stage and all its efforts have been devoted to the development of a
forklift vehicle with omni-directional technology that is suitable for market.
Only small amounts of revenue have been realized through June 30, 2001.
Basis of Presentation
The Company has incurred losses from inception to June 30, 2001 of
$2,136,252. Activities have been financed primarily through private placements
of equity securities. The Company may need to raise additional capital through
the issuance of debt or equity securities to fund its operations.
7
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2001
1. continued
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 using
accelerated methods, with useful lives of seven years for furniture and shop
equipment and five years for computers and automobiles.
Income Taxes
Deferred income taxes are recorded to reflect the tax consequences or
benefits to future years of temporary differences between the tax bases of
assets and liabilities, and of net operating loss carryforwards.
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.
8
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2001
1. continued
Fair Value of Financial Instruments
The carrying amounts of the Company's financial instruments, which include
cash equivalents, accounts receivable, accounts payable and accrued liabilities,
approximate their fair values at June 30, 2001.
Advertising Costs
The Company expenses advertising costs when the advertisement occurs.
Advertising costs amounted to $8,274 in the second quarter of 2001. These costs
were $18,201 in the first six months of 2001 and $16,175 in the comparable 2000
period.
Segment Reporting
Management treats the operations of the Company as one segment.
Revenue Recognition
Revenue is realized from product sales. Recognition occurs upon delivery.
Common Stock
Common stock is often issued in return for product, services, and as
dividends on the preferred stock. These issuances are assigned values equal to
the value of the product or service received or the market value of the common
stock, with appropriate discounts, whichever is most clearly evident.
9
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2001
2. RELATED PARTY TRANSACTIONS
During the year 2000, 95,558 shares of common stock of the Company were
issued in lieu of cash dividends on the preferred stock in the amount of
$56,751, 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.
During the year 2000, a total of 129,999 shares were issued to the
President and Vice President of the Company pursuant to their respective
employment agreements, yielding a total of $60,851. Three non-employee directors
each received 5,000 shares of common stock during 2000 upon exercise of their
director options yielding a total of $7,500. During the six months ended June
30, 2001, one director received 5,000 shares of common stock upon exercise of
director options, yielding $2,500. In addition, the majority stockholder
purchased 33,334 shares for $50,001 during the 2000 period. The majority
shareholder corporation made loans to the Company during 1999 and 2000. The
related notes accrued interest at 12%, which totaled $5,519 for the year 2000
and $1,400 for the six months ended June 30, 2001. The unpaid balance of
principal and interest was $24,714 at June 30, 2001, and was due on demand.
During 2000, a board member received 5,539 shares of common stock in
exchange for professional services rendered to the Company valued at $9,000, and
an affiliate of a board member received 2,097 shares of common stock in exchange
for professional services rendered to the Company valued at $6,208. During the
six months ended June 30, 2001, an affiliate of a board member received 2,657
shares of common stock, valued at $3,985, in exchange for professional services.
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 2000 and the first
half of 2001. These offerings were exempt under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder. A total of
330,719 shares of common stock was sold under the offerings during 2000 and
212,199 shares during the first half of 2001, resulting in net proceeds of
$430,858 and $318,301, respectively.
10
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2001
4. PREFERRED STOCK
The Company is authorized to issue 500,000 shares of preferred stock,
without par value. At June 30, 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
lower of the last price traded in either a public or private transaction during
the applicable quarter. This issue of preferred stock also provides a voting
right of 10 votes for each share. The holder of this preferred stock is the
majority shareholder of the Company, which is a corporation wholly owned by the
Company's President and Chairman.
Dividends of $68,750 accrued on this issue of preferred stock during the
year 2000; an additional $34,375 accrued during the first half of 2001. During
2000, the holder received dividends in the form of 95,558 shares of common
stock, which were valued at $56,751. At June 30, 2001, $46,374 of dividends
remains unpaid.
The characteristics of the remaining 225,000 preferred shares authorized
have not been specified.
11
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2001
5. LOSS PER SHARE
Basic and diluted loss per share is based on the net loss divided by the
weighted average number of common shares outstanding during the period.
Six Months Ended June 30, 2001
-------------------------------------
Weighted
Income Average Shares Per Share
(Loss) Outstanding Amount
-------------------------------------
Net loss $(333,928)
Adjustment for preferred stock dividends (34,375)
----------
Loss allocable to common shareholders -
Basic and Diluted $(368,303) 5,243,331 $ (.07)
========== ========= =========
Three Months Ended June 30, 2001
-------------------------------------
Net loss $(157,203)
Adjustment for preferred stock dividends (17,188)
----------
Loss allocable to common shareholders -
Basic and Diluted $(174,391) 5,315,137 $ (.03)
========== ========= =========
Six Months Ended June 30, 2000
-------------------------------------
Net loss $(330,182)
Adjustment for preferred stock dividends (34,375)
----------
Loss allocable to common shareholders -
Basic and Diluted $(364,557) 4,618,160 $ (.08)
========== ========= =========
Three Months Ended June 30, 2000
-------------------------------------
Net loss $(157,883)
Adjustment for preferred stock dividends (17,188)
----------
Loss allocable to common shareholders -
Basic and Diluted $(175,071) 4,673,771 $ (.04)
========== ========= =========
12
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
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. At December 31, 2000, the Company had NOL
carryforwards of $1,885,253 available for Federal taxes and $586,773 for New
Jersey taxes. The potential tax benefit of the state NOL's has been recognized
on the books of the Company; the potential benefit of the Federal NOL's has been
offset by a valuation allowance. If not used, these Federal carryforwards will
expire as follows:
2017 $129,092
2018 486,799
2019 682,589
2020 586,773
During the year 2000, the Company realized $122,561 from the sale, as
permitted by New Jersey law, of its rights to use the New Jersey NOL'S and
research and development credits that had accrued through December 31, 1999.
These potential New Jersey offsets are, thus, no longer available to the
Company.
Under Statement of Financial Accounting Standards No. 109, recognition of
deferred tax assets is permitted unless it is more likely than not that the
assets will not be realized. At June 30, 2001, the Company has recorded deferred
tax assets as follows:
Current Non-current Total
------------------------------------
Deferred Tax Assets $207,847 $623,616 $831,463
Valuation Allowance 113,536 623,616 737,152
------------------------------------
Balance Recognized $ 94,311 $ - $ 94,311
====================================
The entire balance of the valuation allowance relates to Federal taxes.
Since state tax benefits for years prior to 2000 were realized during the year
2000, no reserve is deemed necessary for the benefit of state tax losses of 2000
or 2001.
13
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
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
-----------------------------
2001(Remainder) $ 3,429
2002 6,857
2003 2,857
--------
$13,143
========
During the second quarter of 2001, the Company entered a month-to-month
lease of warehouse space in New Jersey. A total of $10,500 was incurred for rent
expense during the six months ended June 30, 2001. Rent expense amounted to
$2,856 in the 2000 period.
8. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for interest and income taxes is presented below:
Six Months Ended June 30, Three Months Ended June 30,
2001 2000 2001 2000
Interest $ - $1,142 - $1,077
Income taxes - 200 - -
There were no noncash investing activities during the 2001 period or the
2000 period. The following noncash financing activity occurred:
a. Shares of common stock were issued for services during both years.
These totaled 19,669 shares during the six months ended June 30, 2000
and 12,757 shares during the six months ended June 30, 2001.
b. Common stock totaling 57,272 shares was issued to satisfy the Company
obligation under a merger agreement (see Note 9).
14
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
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 in the amount of $25,000. The Company
asserted claims against the majority shareholder. The claims involved the amount
of the MAS Common Stock and the cash due to the majority shareholder and
affiliate under the merger agreement. This matter was settled during the first
quarter of 2001 by the issuance of 57,272 share of common stock.
The Company had an employment agreement with its president, which expired
December 31, 2000. The agreement provided, in part, for options permitting the
president to acquire up to 50,000 shares of common stock per year, with portions
of these options accumulating if not exercised. Options were exercised for
100,000 shares during the year 2000; these yielded proceeds of $48,376. There
were no options outstanding at December 31, 2000. A renewal of the president's
contract is currently being discussed and a new contract is expected to be
executed shortly.
In May 2001, the Company entered into a Memorandum of Understanding ("MOU")
with Management Assistance & Concepts Corporation ("MACC"). Under the provisions
of the MOU, MACC would establish a facility in West Virginia to assemble up to
70% of Company forklift requirements for the United States. MACC would also be
required to purchase existing Company inventory of approximately $700,000, and
to purchase $1,300,000 of common stock. The number of shares to be issued would
be between 371,428 and 433,332, depending on the market value of Company stock
during a six month period following issuance. The parties are presently
negotiating a definitive agreement. In addition, MACC paid the Company $50,000
as a deposit under the MOU. The deposit is non refundable. If an agreement can
not be reached for reasons outside of the control of AirTrax, the deposit will
be converted to common stock at a price of $3.50 per share.
15
Item 2. Management's Discussion and Analysis.
The following discusses the financial results and position of the accounts
of the Company for the periods indicated.
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, 2000 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, lack of commercial product, lack
of determined product prices and impact on profit margins, and limited operating
history, among other factors. Readers are urged to refer to the section entitled
"Cautionary Statements in the Company's Form 10-KSB for the period ended
December 31, 2000 for a broader discussion of such risks and uncertainties.
Results of Operations
---------------------
Six Months Ended June 30, 2001 compared with Six Months Ended June 30,
2000.
For the period ended June 30, 2001 and comparable period in 2000, the
Company was a development stage company and the Company has not engaged in full
scale operations for these periods. The limited revenues for the periods have
been derived from sales of a non omni-directional product, and from contracts
with the United States Navy that relate to the research and potential
application of omni-directional products for military use. The period-to-period
results presented and discussed below are not necessarily meaningful comparisons
due to the Company's development stage status, and are not indicative of future
results.
Revenues for the six months ended June 30, 2001 were $52,463 compared with
$4,800 in revenues for the same period in 2000. Revenues for the 2001 period
consisted principally of contract revenues from the United States Navy.
Cost of sales for the 2001 and 2000 periods were $1,222 and $3,795,
respectively, representing parts and manufacturing costs for the non
omni-directional product.
General and administrative expenses which includes administrative salaries
and overhead for the six month period in 2001 totaled $438,933 compared with
$348,876 for the same period in 2000. The increase of $90,057 for the 2001
period is principally due to marketing and promotional expenses that occurred in
the second quarter of 2001 and increases in prototype development costs of the
omni-directional wheel that occurred during the six month period. Net loss for
the six month period in 2001 applicable to common shareholders was $333,928 or
$0.07 per common share, compared with a net loss applicable to common
shareholders of $330,162 or $0.08 per common share for the prior period.
16
Liquidity and Capital Resources
-------------------------------
Since its inception, the Company has financed its operations through the
private placement of its common stock. During 2000, the Company raised $430,858
net of offering costs from the private placement of 330,719 shares of its common
stock. During the first quarter of 2001, the Company raised $318,301 net of
offering costs from the private placement of 212,199 shares of its common stock.
As of June 30, 2001, the Company's working capital was $72,310.
The Company anticipates that its cash requirements for the foreseeable
future will be significant. In particular, management expects substantial
expenditures for inventory and product production in anticipation of the rollout
of its omni-directional forklift, which is projected to occur during 2001. 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 formal arrangements have been finalized.
In this regard, in May 2001, the Company entered into a Memorandum of
Understanding ("MOU") with Management Assistance & Concepts Corporation
("MACC"). The MOU provides that MACC will establish a facility in West Virginia
to assemble up to 70% of the Company's forklifts for the territory of the United
States. MACC also is required to purchase existing inventory of the Company with
an approximate value of $700,000, and to purchase 371,428 shares of common stock
for a total of $1,300,000 at prices ranging from $1.50 to $4.67 per share. In
addition, MACC paid the Company $50,000 as deposit under the MOU. The deposit is
a non refundable deposit if a mutually acceptable agreement can not be reached
within an agreed period of time, provided that, if an agreement can not be
reached for reasons within AirTrax's control, the amount is converted to common
stock of the Company at $3.50 per share. The MOU is subject to the execution of
a definitive agreement. Presently, the parties are negotiating a definitive
agreement, however, as of the date of this report, such an agreement has not
been executed.
No assurances can be given that the Company will negotiate a definitive
agreement with MACC or will be otherwise 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 delay the
projected rollout of its product and likely will have a material adverse impact
on the Company and its business prospects (See disclosure relating to cautionary
statements in the Company's Annual Report on Form 10-KSB for the period ending
December 31, 2000).
17
Total assets, net of accumulated depreciation, totaled $965,636 on June 30,
2001. Total assets, net of accumulated depreciation, totaled $1,003,758 on
December 31, 2000.
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.
None.
(b). Reports on Form 8-K.
None.
18
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.
AIRTRAX, INC.
Date: August 9, 2001 /s/Peter Amico
------------------------------
Peter Amico
President and
Principal Financial Officer
19