AIRG ... sometimes it pays to read the filings before investing.
Results of Operations
The Company's operations for the six months ended November 30, 1998, resulted in a net loss of $926,987, or $.09 basic loss per share, compared to a net loss of $379,834, or $.02 basic earnings per share, for the comparable period in 1997.
The Company, entirely through its wholly-owned subsidiary, Airtech International Corporation, Inc. ("AIC") had sales of $640,601 for the six months ended November 30, 1998 primarily composed of approximately $200,000 of sales of air purification equipment and approximately $400,000 of HVAC contracting and installation and replacement of air filters, compared to Company sales of $(3,328) for the comparable six months of 1997, an increase of $643,929. The Company also sold three new franchises in 1998.
Airtech sales of air purification equipment reflect initial market penetration and acceptance of newly introduced units. The Company has had success selling equipment into businesses with existing or pending bans on smoking, such as hotels and restaurants. The Company continues to expect its Model 950 being developed as a Class II Medical Device for Medicare recipients will be approved and ready for sale into that market during calendar year 1999. Production of the Series 999 automobile unit for pre-sales customer testing is expected in the fall of 1998 with orders beginning before calendar year end. Since its inception and during the research and development phase, the Company shipped air purification units to more than one-hundred customers. The Company's products continue to have a high rate of acceptance among the commercial accounts to which the Company markets and while beta testing its new models.
Cost of Goods Sold was $346,230 compared to $0, for the six months ended November 30, 1998 and 1997, respectively. Representing 54% of sales during 1998, Management believes cost of goods sold as a percent of sales will decrease to approximately 40% in the future as sales of air purification equipment comprises a larger percent of the Company's sales.
Operating expenses increased $844,852, or 224% for the six months ended November 30, 1998 compared to the same quarter in 1997. The increase is attributable to an approximately $80,000 increase in amortization primarily related to amortization of intellectual property; an approximately $160,000 increase in interest expense payable to holders of debentures issued in the Airtech merger and approximately $595,000 increase in general and administrative expenses. The increase in G&A was attributable to the increased size of wages, advertising and consulting expenses incurred by the AIC subsidiary.
The results of operations for the three months ended November 30, 1998 compared to November 30, 1997 are largely comparable to the results of operations for the six months ended November 30, except in relation to the Company's subsidiary, McCleskey Sales and Service ("MSS") and also as corrections of certain amounts from the period ending August 31, 1998. As of November 30, 1998, the Company was considering various business plans on moving forward with MSS or modifying the subsidiary as part of the Company's overall business plan. As a result, and due to historical losses at the subsidiary, the Company terminated the positions of the president and staff of MSS with plans to replace these individuals as part of the reevaluation.
Liquidity and Capital Resources
During the six months ended November 30, 1998, the Company continued to fund operations through revenues, private sales of securities and paying certain debts and business services in Company common stock. As of November 30, 1998, the Company had invested $486,620 in accounts receivable and inventory, an increase of $444,675 over November 30, 1997. Likewise, trade accounts payable increased $303,910 between the two periods.
In June, the Company sold 530,000 shares of its common stock for $106,000. Another 750,000 and 50,000 shares were issued for business services and in settlement of debts, respectively. The Company plans to offer $5,000,000 in convertible debentures in early 1999. On November 4, 1998, the Company signed an investment banking relationship with Lloyd Wade Securities of Dallas, Texas.
This company is speaking or lobbying to stop the ban of smoking in restraurants and sell their hepa purifier filter. I am a warm air contractor and know this company. If they are not able to get a composmise on the banning of smoking they got a serious problem on their hands in the way of sells.
Just be careful.
They are losing money hand over fist. Plus there is a lot of shares out there to be sold into the float ...
:-)
GB
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