10QSB: AMERIRESOURCE TECHNOLOGIES INC
8/15/2002 2:03:00 AM
(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein. Except for historical information contained herein, certain statements herein are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These statements relate to future events or to our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. There are a number of factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements.
This discussion contains forward-looking statements which involve the acquisition of technology, and the Company's financial position, business strategy and other plans and objectives for future operations. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected effects on its business or operations. Moreover, the Company does not assume responsibility for the accuracy and completeness of such statements. The Company is under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.
General
The Company's operations for the second quarter of 2002 were conducted through its wholly owned subsidiaries Jim Butler Performance ("JBP") and West Texas Real Estate & Resources, Inc. ("WTRER"), and through its minority interest in Prime Enterprises 2001, LLC ("Prime").
JBP concentrated on its core business of manufacturing high end racing engines and the research for the development of potential new product lines as well as expanding the functionality of its existing website, www.jbp-pontiac.com, which is still under minor construction. The website will have a link to a full inventory of parts that can be purchased on line, as well as a calendar of upcoming events and a technical section that will allow JBP's management to answer questions from the car enthusiasts and/or hobbyists. The link for the website should be completed within the next thirty (30) days.
WTRER's business operations in the second quarter consisted primarily of analyzing the viability of drilling additional wells and deepening the existing wells on its oil, gas and mineral lease in Pecos County, Texas.
Prime's sole acquisition is the Golden Steer Restaurant which has been in business since 1958 and is one of the oldest steak restaurants in Las Vegas. Prime continues to look for other acquisitions in the restaurant industry in Las Vegas as well as outside the State of Nevada. On July 1, 2002, the Company's president, Delmar Janovec, acquired the Company's 9% interest in Prime Enterprises 2001, LLC, in exchange for the extinguishment of a debt in the amount of $233,330 that was owed to him by the Company.
The Company continues to search for viable business operations to acquire or merge with in order to increase the Company's revenues and profitability. The Company has received unsolicited offers concerning the sale of its subsidiaries and although it has not received an offer on any of its subsidiaries which the Company deems acceptable, it will continue to entertain offers to sell some or all of its subsidiaries in an attempt to generate profitability.
Results of Operations
The following discussion should be read in conjunction with the audited financial statements and notes thereto included in our annual report on Form 10-KSB for the fiscal year ended December 31, 2001; and should further be read in conjunction with the financial statements included in this report. Comparisons made between reporting periods herein are for the six month period ended June 30, 2002 as compared to that period in 2001, and for the three month period ended June 30, 2002 as compared to the same period in 2001.
Revenue from the operations of the Company's wholly owned subsidiary, JBP, of $140,948 was realized during the second quarter of 2002. The Company did not generate any revenue during the three months ended June 30, 2001. JBP's revenues for the six month period ended June 30, 2002 were $333,145 as compared to $0 for the same period in 2001.
Although consulting expenses decreased from $156,396 for the quarter ended June 30, 2001 to $28,900 for the same period in 2002, general and administrative expenses as well as employees salaries and bonuses primarily related to the operations of JBP increased in the second quarter of 2002. Thus, despite the addition of JBP's operating expenses, the Company's total operating expenses for the quarter ended June 30, 2002 increased only slightly to $236,119 from $210,947 for the quarter ended June 30, 2001.
General and administrative expenses for the six months ended June 30, 2002 increased to $435,310 from $190,949 for the same period in 2001, and consulting expenses increased by $105,800. However, employee salaries and bonuses decreased significantly from $479,379 for the six months ended June 30, 2001 to $72,848 for the same period in 2002. As a result, total operating expenses for the six month period ended June 30, 2002 decreased to $613,958 from $670,328 for the six months ended June 30, 2001.
The Company experienced a net loss of $315,304 for the three months ended June 30, 2002, as compared to net income of $3,207,993 for the same period in 2001. The majority of the net income realized in the second quarter of 2001 was attributable to a gain on extinguishment of debt in the amount of $3,366,460.
A net loss of $523,437 was experienced by the Company for the six month period ended June 30, 2002 as compared to net income of $2,669,190 for the same period in 2001. As a result, the earnings per share decreased from $0.32 per share for the six months ended June 30, 2001 to $0.05 per share for the six months ended June 30, 2002. Again, the majority of the net income realized in the first six months of 2001 was attributable to a gain on extinguishment of debt in the amount of $3,366,460.
Liquidity and Capital Resources
Net cash used in operating activities decreased from $3,180,077 for the six months ended June 30, 2001 to $302,729 for the same period in 2002. There was $65,840 used in, or provided by, financing activities for the first six months of 2002 as compared to $3,245,640 used in net financing activities in the same period in 2001.
The Company has relied upon its chief executive officer for its capital requirements and liquidity. The Company has had recurring losses, which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans with respect to these matters include raising additional working capital through equity or debt financing and ultimately achieving profitable operations. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern |
