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 March 31, 2002.
[ ] 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.
(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 September 30, 2001 was 5,484,651.
Transitional Small Business Issuer Format (Check One):
Yes: No: X
INDEX
Page
Balance Sheets
3
Statements of Operations and Deficit–Three months ended
March 31, 2001 and 2002
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
8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
10
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.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
March 31, 2002 December 31, 2001
ASSETS
Current Assets
Cash
$ 7,380
$ 32,420
Accounts receivable
20,038
20,835
Inventory
246,347
233,250
Prepaid expenses
6,938
6,938
Deferred tax asset
86,632
69,786
Total current assets
367,335
363,229
Fixed Assets
Office furniture and equipment
44,671
44,671
Automotive equipment
16,915
16,915
Shop equipment
20,660
20,660
Casts and tooling
91,304
89,804
173,550
172,050
Less, accumulated depreciation
114,542
108,454
Net fixed assets
59,008
63,596
Other Assets
Patents – net
41,548
42,656
Utility deposits
65
65
Total other assets
41,613
42,721
TOTAL ASSETS
$ 467,956
$ 469,546
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable
$ 490,601
$ 515,725
Accrued liabilities
79,649
68,662
Stockholder note payable
26,811
26,111
Total current liabilities
597,061
610,498
Stockholders’ Equity
Common stock – authorized, 10,000,000 shares without
par value; issued and outstanding – 5,484,651 and
5,431,237 respectively
2,918,793
2,852,895
Preferred stock – authorized, 500,000 shares without
par value; 275,000 issued and outstanding
12,950
12,950
Deficit accumulated during the development stage
(2,853,896)
(2,799,845)
Deficit prior to development stage
(206,952)
(206,952)
Total stockholders’ equity
(129,105)
(140,952)
TOTAL LIABILITIES AND
STOCKHOLDER’S EQUITY
$ 467,956
$ 469,546
See accompanying notes and accountant’s report.
AIRTRAX, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS and DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
For the Three Month Period Ended March 31, 2002 and 2001
(Unaudited)
May 19, 1997
(Date of Inception)
2002 2001
to March 31, 2002
SALES
$ 114,836
$ 35,967
$ 564,958
COST OF GOODS SOLD
37,834
2,904
209,257
Gross Profit
77,002
33,063
355,701
OPERATING AND ADMINISTRATIVE EXPENSES
142,364
220,219
3,234,890
OPERATING LOSS
(65,362)
(187,156)
(2,879,189)
OTHER INCOME AND (EXPENSE)
Interest expense
(5,535)
(7,103)
(72,593)
Other income
-
125
63,186
NET LOSS BEFORE INCOME TAXES
(70,897)
(194,134)
(2,888,596)
INCOME TAX BENEFIT (STATE):
Current
16,846
17,409
81,747
Prior years
-
-
183,573
Total Benefit
16,846
17,409 265,320
LOSS ACCUMULATED DURING
DEVELOPMENT STAGE
$ (54,051) $(176,725)
(2,623,276)
PREFERRED STOCK DIVIDENDS DURING
DEVELOPMENT STAGE
(230,620)
DEFICIT ACCUMULATED DURING DEVELOPMENT
STAGE
$(2,853,896)
NET LOSS PER SHARE – Basic and Diluted
$(0.01)
$(0.03)
See accompanying notes and accountant’s report.
#
AIRTRAX, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Three Month Period Ended March 31, 2002
(Unaudited)
COMMON
PREFERRED
DEFICIT ACCUMULATED
DEFICIT PRIOR
STOCK
STOCK
DURING
TO
Shares
Amount
Shares
Amount
DEVELOPMENT STAGE
DEVELOPMENT STAGE TOTAL
Balance, December 31, 2001
5,431,237
$2,852,895
275,000
$12,950
$(2,799,845)
$(206,952)
$ (140,952)
Private placement sales of stock
48,000
59,400
59,400
Stock issued for service
5,414
6,498
6,498
Net loss for the period
(54,051)
(54,051)
Balance, March 31, 2002
5,484,651
$2,918,793
275,000
$12,950
$(2,853,896)
$(206,952)
$ (129,105)
See accompanying notes and accountant’s report.
AIRTRAX, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Three Month Periods ended March 31, 2002 and 2001
(Unaudited)
May 19, 1997
(Date of Inception)
2002
2001 to March 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss
$ (54,051)
$(176,725)
$(2,623,276)
Adjustments to reconcile net income to net cash
consumed by operating activities:
Depreciation and amortization
7,196
8,295
140,601
Value of common stock issued for services
6,498
-
183,046
Accrual of deferred tax benefit
(16,846)
(17,409)
(86,632)
Changes in current assets and liabilities:
(Decrease) Increase in accounts payable
and accrued liabilities
(13,438)
53,521 573,746
Decrease (Increase) in prepaid expense
-
-
(7,003)
Decrease (increase) in accounts receivable 798
29,763
(20,037)
Increase in inventory
(13,097) (23,540)
(246,347)
Net Cash Consumed By
Operating Activities
(82,940)
(126,095)
(2,085,902)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of equipment
(1,500)
(13,831)
(173,550)
Additions to patent cost
-
- (67,607)
Net Cash Consumed By
Investing Activities
(1,500)
(13,831)
(241,157)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of common stock sales
59,400
306,800
2,351,678
Proceeds of sales of preferred stock
-
-
12,950
Proceeds of stockholder loans
- -
23,314
Preferred stock dividends paid in cash
-
-
(53,503)
Net Cash Provided By
Financing Activities
59,400 306,800
2,334,439
Net Increase (Decrease) In Cash
(25,040)
166,874
7,380
Balance at beginning of period
32,420
23,663
-
Balance at end of period
$ 7,380
$190,537
$ 7,380
See accompanying notes and accountant’s report.
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
1.
BASIS OF PRESENTATION
The unaudited interim financial statements of AirTrax, Inc. (“the Company”) as of March 31, 2002 and for the three month periods ended March 31, 2002 and 2001, respectively, have been prepared in accordance with generally accepted accounting principles. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. The results of operations for the quarter ended March 31, 2002 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2002.
Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2001.
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.
Forward Looking Statements
Certain of the statements contained in this Quarterly Report on Form 10-QSB include "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, 2001 (“Form 10-KSB”) 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 a broader discussion of such risks and uncertainties.
Results of Operations.
--------------------------
Three Months Ended March 30, 2002 compared with Three Months Ended March 30, 2001.
For the period ended March 30, 2002 and comparable period in 2001, 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, and to a lesser extent the sale of omni-directional equipment to defense contractors. 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 three months ended March 31, 2002six Juwere $114,836 compared with $35,963 in revenues for the same period in 2001. Revenues for the 2002 period consisted entirely of contract revenues from the United States Navy. Revenues for the 2001 period consisted of $33,860 in contract revenues from the United States Navy and $2,107 in sales of a non omni-directional product.
Cost of goods sold for the 2002 and 2001 periods were $37,834 and $2,904, respectively. Of the amount for the 2002 period, $7,604 represented parts and $30,230 represented employee salaries. The amount for the 2001 period represented parts and manufacturing costs for the non omni-directional product.$280,050 which
Operating and administrative expenses which includes administrative salaries and overhead for thesix three month periodJune in 2002 totaled $142,364 compared with $220,219 for the same period in 2001. The decrease$340,220 of $77,855 for the 2001 period is principally due to reduced product marketing and promotional expenses and reduced development costs of the omni-directional technology, partially offset by increased professional fees. Income tax benefit is funds received from the State of New Jersey’s technology tax transfer program which is designed to foster technology development in the State of New Jersey. Pursuant to this program, the Company is able to sell its net operating losses and research and development credits as calculated under state law to the other business within the state in exchange for a cash payment equal to approximately 75% of such losses and credits. Income tax benefit accrued for the three month period in 2002 was $16,846 contrasted with $17,409 for the period in 2001.
consisted of administrative salaries and overhead expenses incurred during its development and initial operating phase which represents an increase of $223,353 from the prior six month period ended June 30, 1996. Net loss for the three month period in 2002 applicable to common shareholders was $54,051 or $0.01 per common share, compared with a net loss applicable to common shareholders of $176,725 or $0.03 per common share for the prior period. ($407,421).
Liquidity and Capital Resources.
--------------------------------------
Since its inception, the Company has financed its operations through the private placement of its common stock. During 2000 and 2001, the Company raised approximately $430,858 and $348,600, respectively, net of offering costs from the private placement of its common stock.June During the three month period in 2002, the Company raised $59,400 net of offering costs from the private placement of 48,000 shares of its common stock. In addition, under the New Jersey tax transfer program discussed above, the Company has received $183,573 since inception.
As of March 31, 2002, the Company’s working capital deficit was $229,726.
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. Funds required to initiate production are estimated to be $1,500,000. 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 delay the rollout of its product and likely will have a material adverse impact on the Company and its business prospects.
Total assets, net of accumulated depreciation, totaled $467,956$1,895,587 on March 31, 2002. Total assets, net of accumulated depreciation, totaled $469,546 on December 31, 2001.
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.
On February 6, 2002, the Company filed a report of Form 8-K to report information under Item 5 and Item 7.
On February 22, 2002, the Company filed a report of Form 8-K to report information under Item 7 and Item 9.
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 15, 2002 /s/Peter Amico
Peter Amico
President and
Principal Financial Officer