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, 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 June 30, 2002 was 5,431,237.
Transitional Small Business Issuer Format (Check One):
Yes: No: X
INDEX
Page
Balance Sheets as of June 30, 2002 (unaudited) and
December 31, 2001 (audited)
3
Statements of Operations and Deficit Accumulated During
Development Stage-Three months ended
June 30, 2002 and 2001
4
Statements of Operations and Deficit Accumulated During
Development Stage-Six months ended
June 30, 2002 and 2001
5
Statements of Cash Flows-Six Months Ended
June 30, 2002 and 2001
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
10
Item 3. Defaults upon Senior Securities
10
Item 4. Submission of Matters to Vote of Securityholders
10
Item 5. Other Information
10
Item 6. Exhibits and Reports on Form 8-K
10
Signatures
10
#
AIRTRAX, INC.
(A Development Stage Company)
BALANCE SHEETS
June 30, 2002 December 31, 2001
(Unaudited)
(Audited)
ASSETS
Current Assets
Cash
$ 84,304
$ 32,420
Accounts receivable
16,251
20,835
Inventory
254,751
233,250
Prepaid expenses
6,938
6,938
Deferred tax asset
97,963
69,786
Total current assets
460,207
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
120,630
108,454
Net fixed assets
52,920
63,596
Other Assets
Patents – net
40,440
42,656
Utility deposits
65
65
Total other assets
40,505
42,721
TOTAL ASSETS
$ 553,632
$ 469,546
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable
$ 469,101
$ 515,725
Accrued liabilities
79,646
68,662
Stockholder note payable
97,511
26,111
Total current liabilities
646,258
610,498
Stockholders’ Equity
Common stock – authorized, 10,000,000 shares without
par value; issued and outstanding – and
5,431,237 respectively
3,077,370
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
(2,975,994)
(2,799,845)
Deficit prior to development stage
(206,952)
(206,952)
Total stockholders’ equity
(92,626)
(140,952)
TOTAL LIABILITIES AND
STOCKHOLDER’S EQUITY
$ 553,632
$ 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 June 30, 2002 and 2001
(Unaudited)
May 19, 1997
(Date of Inception)
2002 2001
to June 30, 2002
SALES
$ 129,730
$ 52,463
$ 694,688
COST OF GOODS SOLD
66,580
1,222
275,837
Gross Profit
63,150
51,241
418,851
OPERATING AND ADMINISTRATIVE EXPENSES
188,209
215,810
3,423,099
OPERATING LOSS
(125,059)
(164,569)
(3,004,248)
OTHER INCOME AND (EXPENSE)
Interest expense
(8,370)
(9,051)
(80,963)
Other income
-
800
63,186
NET LOSS BEFORE INCOME TAXES
(133,429)
(172,820)
(3,022,025)
INCOME TAX BENEFIT (STATE):
Current
11,331
15,617
93,078
Prior years
-
-
183,573
Total Benefit
11,331
15,617 276,651
LOSS ACCUMULATED DURING
DEVELOPMENT STAGE
$(122,098) $(157,203)
(2,745,374)
PREFERRED STOCK DIVIDENDS DURING
DEVELOPMENT STAGE
(230,620)
DEFICIT ACCUMULATED DURING DEVELOPMENT
STAGE
$(2,975,994)
NET LOSS PER SHARE – Basic and Diluted
$(.02)
$(.03)
See accompanying notes and accountant’s report.
#
AIRTRAX, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS and DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
For the Six Month Period Ended June 30, 2002 and 2001
(Unaudited)
May 19, 1997
(Date of Inception)
2002 2001
to June 30, 2002
SALES
$ 244,566
$ 88,430
$ 694,688
COST OF GOODS SOLD
104,414
1,222
275,837
Gross Profit
140,152
87,208
418,851
OPERATING AND ADMINISTRATIVE EXPENSES
330,573
438,933
3,423,099
OPERATING LOSS
(190,421)
(351,725)
(3,004,248)
OTHER INCOME AND (EXPENSE)
Interest expense
(13,905)
(16,154)
(80,963)
Other income
-
925
63,186
NET LOSS BEFORE INCOME TAXES
(204,326)
(366,954)
(3,022,025)
INCOME TAX BENEFIT (STATE):
Current
28,177
33,026
93,078
Prior years
-
-
183,573
Total Benefit
28,177
33,026 276,651
LOSS ACCUMULATED DURING
DEVELOPMENT STAGE
$(176,149) $(333,928)
(2,745,374)
PREFERRED STOCK DIVIDENDS DURING
DEVELOPMENT STAGE
(230,620)
DEFICIT ACCUMULATED DURING DEVELOPMENT
STAGE
$(2,975,994)
NET LOSS PER SHARE – Basic and Diluted
$(.02)
$(.03)
See accompanying notes and accountant’s report.
#
AIRTRAX, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Six Month Periods ended June 30, 2002 and 2001
(Unaudited)
May 19, 1997
(Date of Inception)
2002
2001 to June 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss
$(176,149)
$(333,928)
$(2,745,374)
Adjustments to reconcile net income to net cash
consumed by operating activities:
Depreciation and amortization
14,392
16,590
147,797
Value of common stock issued for services
24,973
18,767
201,521
Accrual of deferred tax benefit
(28,177)
(33,026)
(97,963)
Changes in current assets and liabilities:
(Decrease) Increase in accounts payable
and accrued liabilities
(105,760)
(95,162) 622,944
Decrease (Increase) in prepaid expense
-
-
(7,003)
Decrease (increase) in accounts receivable 4,584
21,428
(16,251)
Increase in inventory
(21,501) 46,211
(254,751)
Net Cash Consumed By
Operating Activities
(216,118)
(359,120)
(2,149,080)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of equipment
(1,500)
(18,907)
(173,550)
Additions to patent cost
-
- (67,607)
Net Cash Consumed By
Investing Activities
(1,500)
(18,907)
(241,157)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of common stock sales
199,502
320,801
2,491,780
Proceeds of sales of preferred stock
-
-
12,950
Proceeds of stockholder loans
70,000 1,400
23,314
Preferred stock dividends paid in cash
-
50,000
(53,503)
Net Cash Provided By
Financing Activities
269,502 372,201
2,474,541
Net Increase (Decrease) In Cash
51,884
(5,826)
84,304
Balance at beginning of period
32,420
23,663
-
Balance at end of period
$ 84,304
$ 17,837
$ 84,304
See accompanying notes and accountant’s report.
#
AIRTRAX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)
1.
BASIS OF PRESENTATION
The unaudited interim financial statements of AirTrax, Inc. (“the Company”) as of June 30, 2002 and for the three month and six month periods ended June 30, 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 and six month period ended June 30, 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.
--------------------------
Six Months Ended June 30, 2002 compared with Six Months Ended June 30, 2001.
For the six month period ended June 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 six months ended June 30, 2002six Juwere $244,566 compared with $88,430 in revenues for the same period in 2001. Revenues for the 2002 period consisted of $239,366 in contract revenues from the United States Navy and $5,200 in sales of a non omni-directional product. Revenues for the 2001 period consisted of $86,322 in contract revenues from the United States Navy and $2,108 in sales of a non omni-directional product.
Cost of goods sold for the 2002 and 2001 six month periods were $104,414 and $1,222, respectively. Of the amount for the 2002 period, $69,951 represented parts and $34,893 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 six month periodJune in 2002 totaled $330,573 compared with $438,933 for the same period in 2001. The decrease$340,220 of $108,360 from 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 other businesses within the state in exchange for a cash payment equal to approximately 75% of such losses and credits. Income tax benefit accrued for the six month period in 2002 was $28,177 contrasted with $33,026 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 accumulated during development stage for the six month period in 2002 applicable to common shareholders was $176,149 or $0.02 per common share, compared with a net loss applicable to common shareholders of $333,928 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 six month period in 2002, the Company raised $199,502 net of offering costs from the private placement of 48,000 shares of its common stock. During this period in 2002, the Company received a shareholder loan in the amount of $70,000 which is due upon demand. 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 $186,051.
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 $553,632$1,895,587 on June 30, 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 June 27, 2002, the Company filed a report of Form 8-K to report information under Item 5 and Item 7.
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 14, 2002 /s/Peter Amico
Peter Amico
President and
Principal Financial Officer
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