SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 2006.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from __________ to __________.
COMMISSION FILE NUMBER: 0-20033
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AMERIRESOURCE TECHNOLOGIES, INC.
--------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 84-1084784
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3440 E. Russell Road, Suite 217, Las Vegas, Nevada 89120
--------------------------------------------------------
(Address of principal executive offices)
(702) 214-4249
--------------
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 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.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
On April 30, 2006, there were 149,156,421 outstanding shares of the
issuer's common stock, par value $0.0001.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION 3
ITEM 1. Financial Statements 3
ITEM 2. Management's Discussion & Analysis of Financial Condition 4
& Results of Operations
ITEM 3. Controls and Procedures 6
PART II - OTHER INFORMATION 7
ITEM 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 8
INDEX TO EXHIBITS 9
CERTIFICATIONS 10
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to AmeriResource Technologies,
Inc., a Delaware corporation, and its subsidiaries and predecessors, unless
otherwise indicated. Consolidated, unaudited, condensed interim financial
statements including a balance sheet for the Company as of the quarter ended
March 31, 2006, statement of operations and statement of cash flows for the
interim period up to the date of such balance sheet and the comparable periods
of the preceding year are attached hereto beginning on Page F-1 and are
incorporated herein by this reference.
The consolidated financial statements for the Company included herein are
unaudited but reflect, in management's opinion, all adjustments, consisting
only of normal recurring adjustments that are necessary for a fair presentation
of the Company's financial position and the results of its operations for the
interim periods presented. Because of the nature of the Company's business, the
results of operations for the three months ended March 31, 2006 are not
necessarily indicative of the results that may be expected for the full fiscal
year. The financial statements included herein should be read in conjunction
with the financial statements and notes thereto included in the Form 10-KSB for
the year ended December 31, 2005.
3
AMERIRESOURCE TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
Unaudited
A S S E T S
March 31, December 31,
2006 2005
---- ----
Current Assets:
Cash and cash equivalents 159,603 109,357
Inventory 13,032 3,122
Accounts receivable 270
Prepaid expenses 2,250
Notes receivable 6,065 6,286
Total Current Assets 181,220 118,765
Fixed Assets:
Fixed assets at cost 175,318 169,141
Accumulated depreciation (29,933) (21,313)
Net Fixed Assets 145,385 147,828
Other Assets:
Intangible assets - net of accumulated
amortization 366,943 354,439
Deposits 8,880 8,880
Total Other Assets 375,823 363,319
Total Assets 702,428 629,912
The accompanying notes are integral part of Consolidated Financial
Statements.
F-1
L I A B I L I T I E S and S T O C K H O L D E R S' E Q U I T Y
AMERIRESOURCE TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
Unaudited
March 31 December 31,
2006 2005
---- ----
Current Liabilities
Accrued Expenses 69,745 50,896
Accounts Payable 87,866 68,330
Note payable - related party 59,197 53,317
Notes payable -current portion 565,000 759,513
Total Current Liabilities 781,808 932,056
Non-Current Liabilities:
Commitments and contingencies 105,000 105,000
Total Other Liabilities 105,000 105,000
Total Liabilities 886,808 1,037,056
Stockholders' Deficit
Preferred stock, $.001 par value; authorized,
10,000,000 shares; Class A, issued and outstanding,
131,275 shares
131 131
Preferred stock, $.001 par value; authorized,
10,000,000 shares; Class B, issued and outstanding,
177,012 shares
177 177
Preferred stock, $.001 par value; authorized,
1,000,000 shares; Class C, issued and outstanding,
1,000,000 shares
1,000 1,000
Preferred stock, $.001 par value; authorized,
750,000 shares; Class D, none issued and outstanding
250 250
Common Stock, $.0001 par value; authorized,
3,000,000,000 shares; issued and outstanding,
153,474,626 shares and 103,692,656, shares 15,347 10,369
Comprehensive loss on marketable securities (3,108) (3,108)
Additional paid in capital 18,693,595 18,226,505
Retained earnings (20,402,154) (19,327,806)
Minority interest 1,510,382 685,338
Total stockholder' deficit (184,380) (407,144)
Total Liabilities and Stockholder's deficit 702,428 $ 629,912
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F-2
AMERIRESOURCE TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Statement of Operations
For the quarter ended
March 31,
2006 2005
Net Service Income 108,218 $ 0.00
Consulting Income 25,000
Revenues 108,218 25,000
Cost of Goods Sold 70,170 0
Gross Profit 38,048 25,000
Operating expenses
General and administrative expenses 146,116 31,866
Salaries 25,000 25,000
Legal & Professional 122,555 46,869
Depreciation and amortization 13,459 2,499
Consulting 547,095 172,750
Operating loss (816,177) (253,984)
Other Income (Expense):
Gain on extinguishments of debt 232,067 0
Interest income 10 0
Interest expense (4,718) 0
Total other income (expense) 227,359 0
Minority interest 153,374
Net Income (loss) before income tax (435,444) (253,984)
Income Tax Provision (Note 7) 0
Net Income (loss) (435,444) (253,984)
Earnings per share (0.003) (0.001)
Weighted average common shares outstanding 128,583,641 360,127,294
F-3
AMERIRESOURCE TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Unaudited
For the three months ended
March 31
2006 2005
Reconciliation of net loss provided by (used in)
operating activities:
Net income (loss) $ (435,444) $ (253,984)
Non-cash items:
Depreciation 13,459 13
Non-cash services through issuance of stock 514,218 241,369
Relief of debt income (232,067)
Minority interest (153,374)
Changes in assets affecting operations (increase)
/decrease
Accounts Receivable (270) 0
Inventory (9,910) 0
Prepaid expenses (2,250)
Notes Receivables 221 6,371
Changes in liabilities affecting operations increase
/(decrease)
Accounts Payable 19,536 0
Accrued Payroll and related expenses 25,000 25,000
Accrued expenses 18,849 0
Other current liabilities 0
Net cash provided by (used in) operating activities (249,668) 18,769
Cash flows from investing activities:
Purchase of Fixed Assets, and intangibles (23,520) 0
Net cash provided by (used in) investing activities (23,520) 0
Cash flows from financing activities:
Net increase in Notes payable 43,434
Proceeds from issuance of stock 280,000
Net cash provided by (used in) financing activities 323,434 0
Increase (decrease) in cash 50,246 $ 18,769
Cash-beginning period 109,357 $ 34,090
Cash-end of period $ 159,603 $ 52,859
F-4
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
NOTE 1 - DESCRIPTION OF DEVELOPMENT STAGE ACTIVITIES
AmeriResource Technologies, Inc., formerly known as KLH Engineering Group, Inc
(the Management Company), a Colorado corporation, was incorporated March 3, 1989
for the purpose of providing diversified civil engineering services throughout
the United States, to be accomplished through acquisitions of small to mid-size
engineering firms. On July 16, 1996, the Company changed its name to
AmeriResource Technologies, Inc.
NOTE 2 - BASIS OF PRESENTATION
The unaudited financial statements included herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310 (b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 2006 and
March 31, 2005 are not necessarily indicative of the results that may be
expected for the fiscal year ended December 31, 2006. For further information,
the statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2005.
Principles of consolidation
The consolidated financial statements include the combined accounts of
AmeriResource Technologies, Inc., West Texas Real Estate & Resources', Inc.,
RoboServer Systems, Inc., Self-Serve Technologies, Inc. Net2Auction, Inc.,
Net2Auction Corporation, and Auction Wagon Inc., and VoIPCOM USA, Inc. All
material intercompany transactions and accounts have been eliminated in
consolidation.
Loss per common share
Loss per common share is based on the weighted average number of common shares
outstanding during the period. Options, warrants and convertible debt
outstanding are not included in the computation because the effect would be
antidilutive.
F-5
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
NOTE 3 - STOCKHOLDERS' EQUITY
Common stock
In December of 2004, the Company approved a 40 for 1 reverse stock split. The
shares are shown after the reverse stock split. During the first quarter of
2006, the Company issued a total of 49,781,970 shares of common stock as
follows:
1,244,620 shares of restricted common stock were issued in partial settlement of
a note payable valued at $12,446, related to AFG settlement.
43,688,640 shares of common stock were issued for consulting services valued at
$408,938. 41,553,640 shares were attributed to AMRE and 2,135,000 shares were
attributed to Auction Wagon.
4,848,710 shares of common stock were issued for legal and professional services
valued at $50,684.
Preferred stock
The Company has currently designated 10,000,000 shares of their authorized
preferred stock to Series A Convertible Preferred Stock and an additional
10,000,000 shares to Series B Convertible Preferred Stock.
Both Series A and B preferred stock bear a cumulative $.125 per share per annum
dividend, payable quarterly. The shareholders have a liquidation preference of
$1.25 per share, and in addition, all unpaid accumulated dividends are to be
paid before any distributions are made to common share- holders. These shares
are subject to redemption by the Company, at any time after the second
anniversary of the issue dates (ranging from August 1990 through December 1995)
of such shares and at a price of $1.25 plus all unpaid accumulated dividends.
Each preferred share is convertible, at any time prior to a notified redemption
date, to one common share. The preferred shares have equal voting rights with
common shares and no shares were converted in 2004. Dividends are not payable
until declared by the Company.
F-6
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
NOTE 3 - STOCKHOLDERS' EQUITY (continued)
On February 22, 2002, the Company filed a "Certificate of Designation" with the
Secretary of State with the State of Delaware to designate 1,000,000 shares of
its Preferred Stock as "Series C Preferred Stock". Each share of the Series C
Stock shall be convertible into common stock of the Company based on the stated
value of the $2.00 divided by 50% of the average closing price of the Common
Stock on five business days preceding the date of conversion. Each share of the
outstanding Series C Preferred shall be redeemable by the Corporation at any
time at the redemption price. The redemption price shall equal $2.00 per share
with interest of 8% per annum. The holders of the Series C is entitled to
receive $2.00 per share before the holders of common stock or any junior
securities receive any amount as a result of liquidation.
On February 22, 2002, the Company filed a "Certificate of Designation" with the
Secretary of State of the State of Delaware to designate 750,000 shares of its
Preferred Stock as "Series D Preferred Stock". Each share of the Series D Stock
shall be convertible into one share of common stock of the Company. Each share
of the outstanding Series D Preferred is redeemable by the Corporation at any
time at the redemption price. The redemption price shall equal $.001 per share
with interest of 8% per annum. The holders of the Series D is entitled to
receive $.001 per share before the holders of common stock or any junior
securities receive any amount as a result of liquidation.
On December 19, 2005, the Company filed a "Certificate of Designation" with the
Secretary of State of the State of Delaware to designate 1,000,000 shares of the
Preferred Stock as "Series E Preferred Stock". Each share of the outstanding
Series E Preferred shall be convertible into common stock of the Company based
on the stated value of the $0.50 divided by 50% of the average closing price of
the Common Stock on five business days preceding the date of conversion. Each
share of the outstanding Series C Preferred shall be redeemable by the
Corporation at any time at the redemption price. The redemption price shall
equal $0.50 per share with interest of 8% per annum. The holders of the Series E
is entitled to receive $0.50 per share before the holders of common stock or any
junior securities receive any amount as a result of liquidation.
Delmar Janovec, President & CEO, exchanged the interest owed to him on the
dividends in the approximate amount of $1,600,000 for the new class of Series C
Preferred Stock that was approved by the Board of Directors on January 31, 2002.
F-7
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
NOTE 5- NOTE PAYABLE
The Company had the following notes payable as of 3/31/06.
Note dated April 12, 2005, interest is prime plus 3% originally due
on November 12, 2005, extended through November 4, 2006, convertible
into 20,000,000 million shares of VoIPCOM USA, Inc. common stock.
$80,000
Note dated February 2005, interest is prime plus 3% due on demand.
Convertible into RoboServer common stock based upon 50% of the bid on
a five day trading average.
$35,000
Note dated in 2002 is non-interest bearing and due on demand.
Note dated August 31, 1998, and amended effective in the $50,000
fourth quarter of 2004, payable to American Factors, in the
original amount of $430,000, secured by 300,000 shares of the
Company's common stock. The note bears interest at 15%. $350,000
Note dated January 2006, interest is 1% per month with a 3% $50,000
origination charge
Total notes payable 565,000
Less current portion (565,000)
Long-term portion $ -
F-8
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
NOTE 5- NOTE PAYABLE (continued)
Maturities of notes payable at March 31, 2006, are as follows:
2006 $ 565,000
2007 $ -0-
Thereafter --
---------
$ 565,000
NOTE 6 - GOING CONCERN UNCERTAINTY
The accompanying financial statements have been prepared in conformity with
principles of accounting applicable to a going concern, which contemplates the
realization of assets and the liquidation of liabilities in the normal course of
business. The Company has incurred continuing losses and has not yet generated
sufficient working capital to support its operations. The Company's ability to
continue as a going concern is dependent, among other things, on its ability to
reduce certain costs, obtain new contracts and additional financing and
eventually, attaining a profitable level of operations.
It is management's opinion that the going concern basis of reporting its
financial condition and results of operations is appropriate at this time. The
Company plans to increase cash flows and take steps towards achieving profitable
operations through the sale or closure of unprofitable operations, and through
the merger with or acquisition of profitable operations.
F-9
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company, from time to time, may be subject to legal proceedings and claims
that arise in the ordinary course of its business. The Company is currently
covered adequately for workmen's compensation, business property & casualty
insurance, and general liability meeting the standard limits which are customary
in the industry.
On March 28, 2006, the Company and Delmar Janovec, individually, and AFG entered
into a Settlement Agreement for full settlement of the existing debt including
interest and penalties totaling approximately $646,312. The settlement called
for a cash payment of $350,000, pursuant to the following terms:
(a) AFG received a cash payment of $50,000 from the Company and/or
Janovec wired within 48 hours of both parties signing this
agreement; and
(b) AFG is to receive a cash payment of $200,000 from the Company
and/ or Janovec thirty (30)days from March 27, 2006; and
(c) AFG is to receive a cash payment of $100,000 from the Company
and/or Janovec sixty (60) days from March 27, 2006; and
(d) AFG is to receive 1,244,620 shares of the Company's common stock.
The Company intends to pay the above amounts without the assistance of Janovec.
In exchange for the above payments, AFG agreed to release and forever discharge
AMRE and Janovec any liability connected to the debt, and will cause the
judgments and/or liens against AMRE and Janovec. If AMRE fails to make the
payments above, then the agreement will become void, and any payments will go to
reduce the original note.
F-10
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
On March 28, 2006, the Company received notice that a complaint had been filed
in Superior Court of California, San Diego County, Case No. 862855, against the
Company, et al., for breach of contract, fraud, promise made without intent to
perform, conspiracy, and breach of implied covenant of good faith and fair
dealing, misrepresentation, negligent misrepresentation of fact relating to
compensation earned by Stark under a consulting agreement entered into between
Stark and the Company. Stark is seeking injunctive relief and compensatory,
punitive, and general damages against the Company. The Company denies all
allegations in the complaint and will vigorously defend its position on the
matter.
Jacques R. Behar, Plaintiff vs. AuctionWagon Inc., a California corporation.
The plaintiff filed a complaint in Superior Court of California, County of Los
Angeles, Beverly Hills Courthouse, West District, Case Number, 05C00539. The
complaint was filed for the collection of fees associated for accounting
services in the approximate amount of $9,115.28, plus any and all court fees,
that were alleged to have been provided by the plaintiff on or about March 21,
2005. The Company and its counsel have been in discussions with the plaintiff
regarding a settlement as well as preparing its case to defend the Company
should the complaint proceed through the Courts.
F-11
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING INFORMATION
This quarterly report contains forward-looking statements. 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 the Company's future financial performance. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"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.
Although the Company believes the expectations reflected in the
forward-looking statements are reasonable, it cannot guarantee future results,
levels of activity, performance, or achievements. Although all such
forward-looking statements are accurate and consequently do not assume
responsibility for the ultimate accuracy and completeness of such
forward-looking statements. The Company is under no duty to update any of the
forward-looking statements after the date of this report to confirm such
statements to actual results.
GENERAL
AmeriResource Technologies, Inc. (the "Company") conducts operations
primarily through its subsidiaries, including RoboServer Systems Corp. ("RBSY"),
Self-Serve Technologies, Inc. ("SSTI"), Net2Auction, Inc. ("NAUC"), and
Net2Auction Corporation ("N2AC"), and AuctionWagon Inc. ("AWI"). As of
May 19, 2006, the Company owned approximately 38.7% of NAUC common stock and
upon conversion of the SuperVoting Preferred collectively gives AMRE 69.6%
control, which owns 100% of N2AC and AWI. NAUC is publicly traded on the Pink
Sheets under the stock symbol "NAUC." As of May 19, 2006, the Company owned
approximately 47.15% of RBSY's common stock and upon conversion of the
SuperVoting Preferred would give the Company approximately 76.2% control, which
owns 100% of SSTI. RBSY is publicly traded on the Pink Sheets under the symbol
"RBSY." The Company continues to search for viable business operations to
acquire or merge with in order to increase the Company's revenues, asset base
and to achieve profitability.
NET2AUCTION
NAUC is an operator of online auction drop-off locations and develops
relationships with independently owned and/or franchised pack and ship centers.
We believe NAUC is ideal for people who want hassle-free selling of their used
goods online using eBay internet auction site. In addition to the millions of
people who trade on eBay, we believe there is a large population of people who
would like to participate on eBay, but lack the skills, time or inclination to
sell online directly. NAUC serves this population by extending the reach of
eBay.
4
NAUC handles of all aspects of selling goods on eBay for its customers,
including photographing the goods to be sold, posting a picture of the goods on
eBay, drafting the product description for eBay, handling inquiries from
potential purchasers, selling the goods, processing payments for the goods, and
taking care of shipping the goods to the final purchaser. A customer of NAUC
gets a majority of the proceeds from the sale of the goods and NAUC does all the
work.
Currently, NAUC operates forty-seven (47) drop-off locations, in addition
to the twenty-three (23) affiliate locations that were acquired in our
acquisition of AuctionWagon, Inc. ("AWI") on September 30, 2005. NAUC has
developed numerous commercial accounts whereby NAUC liquidates the excess
inventory of such accounts on eBay. NAUC has obtained such commercial accounts
in a wide variety of business industries or segments, including golf products,
electronics-computer items, and shoes for both men and woman. NAUC continues to
receive a customer satisfaction rating on eBay exceeding 99%. NAUC is listed as
a "eBay Trading Assistant," which allows NAUC to reach millions of potential
buyers for our customers' unwanted goods or products. To learn more about the
NAUC, please visit the website at www.net2auction.com.
Auction Wagon
NAUC acquired Auction Wagon, Inc ("AWI") on September 30, 2005. AWI was
incorporated in September of 2003 and became the first eBay consignment store in
the Los Angeles market. AWI is the first company to qualify as both an eBay
certified developer and an eBay Trading Post. AWI is a frontrunner in both the
retail and software segments of the industry, being featured in Entrepreneur,
the New York Times, and the Wall Street Journal. AWI currently markets its
consignment software to drop-off stores, and maintains a national affiliate
network of drop-off locations.
AWI's software, Store Manager Pro G2, performs virtually all of the
functions needed by an eBay consignment store, from printing contracts,
barcodes, and inventory labels to managing its inventory, payment, shipping, and
check writing as well as integrating photo editing. The Store Manager Pro offers
multiple levels of software supporting different business requirements and
charges both a monthly fee and an initial fee. The fees range from $99 to $330
per month per customer. For additional information about AWI, see
www.auctionwagon.com.
Auction Boulevard
On September 14, 2005, NAUC acquired assets from Netelectronics.com
d/b/a Auction Boulevard ("AB"). AB is an operator of online auction drop-off
locations. Among the assets acquired by NAUC were all rights to the AB name, all
of AB intellectual property, and all eBay accounts opened by AB. Additionally,
AB assigned to NAUC the lease to AB's principle place of business, located in
Encino, California.
5
AB is a Trading Assistant, as determined by e-Bay, with operations and
drop-off store located at 17412 Ventura Boulevard, Encino, CA (northern
Los Angeles area). Auction Boulevard has accumulated in excess of 2,000 positive
feedbacks on eBay and has a 99% positive feedback.
ROBOSERVER
RBSY is a leading provider of self-service technologies to restaurant
industries. RBSY's self-serve systems are designed to work like ATM machines,
allowing customers to quickly and easily place orders, pay, and go. Industry
estimates and market observations show that self-serve technologies can cut
customer waiting time by as much as 33%.
RBSY kiosks can be installed in any restaurant in the United States.
RBSY also provides customers with custom software to allow the customer to
operate the kiosk with optimum efficiency. To provide our customers with this
custom software solutions, RBSY has partnered with a leading kiosk software
development company, St. Clair Interactive Systems. St. Clair provides our
customers with leading edge technology and online monitoring systems. RBSY has
also partnered with Renasiance Systems, a leading technology company. Our
partnership with Renasiance allows RBSY to undertake any and all customer
projects regardless of the size and scope.
RBSY kiosks are manufactured by KIS Kiosks. RBSY's partnership with KIS
allows us to offer the competitive pricing and top quality hardware products
available. The market for RBSY's point-of-sale and self-serve technologies is
increasing rapidly. Business owners are seeking out self-serve kiosks to allow
such owners to provide more efficient service to their customers as well as
reduce labor costs.
RBSY has installed two pilot RoboServer self-serve units in two (2)
different fast-food franchisees, with the first installation at Angelo's Burgers
in Encinitas, CA and the second installation at Dairy Queen in Oceanside, CA.
The Angelo's Burgers installation was completed in the fall of 2005, and the
Dairy Queen in the spring of 2006. RBSY continues to receive numerous inquiries
from some of the leading fast-food chains for the RBSY self-serve kiosks. SSTI
is a wholly-owned subsidiary of RBSY is the entity that has performed all of the
research and development and modifications since the POS software and self-serve
technologies were acquired on or about May 15, 2004. To learn more, please visit
the RBSY website at www.roboservercorp.com.
6
RESULTS OF OPERATIONS
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, 2005, and should further be read
in conjunction with the financial statements included in this report.
Comparisons made between reporting periods herein are for the three-month period
ended March 31, 2006 as compared to the same period in 2005.
Net Service Income for the first quarter ended March 31, 2006 increased
to $108,218 from $0 for the same period in 2005. The operating loss increased to
$816,177 for the quarter ended March 31, 2006, as compared to an operating loss
of $253,984 for the same period in 2005.
The Company's net loss for the quarter ended March 31, 2006 increased
significantly to a net loss of $435,444, as compared to a net loss of $253,984
for the same period in 2005. This increase is due to an increase in
administration expenses, research and development expenses, and in legal
expenses. The Company's expenses for the first quarter ended March 31, 2006 as
compared to the same period in 2005 are set forth below:
---------------------------------------------- --------------- ------------
Expenses 2006 2005
---------------------------------------------- --------------- ------------
---------------------------------------------- --------------- ------------
General and Administrative $146,116 $114,981
---------------------------------------------- --------------- ------------
---------------------------------------------- --------------- ------------
Consulting $547,095 $163,201
---------------------------------------------- --------------- ------------
---------------------------------------------- --------------- ------------
Employee Salaries and Bonuses $25,000 $25,000
---------------------------------------------- --------------- ------------
---------------------------------------------- --------------- ------------
Interest Expense $4,718 $15,768
---------------------------------------------- --------------- ------------
---------------------------------------------- --------------- ------------
Legal and Professional $122,555 $68,238
---------------------------------------------- --------------- ------------
---------------------------------------------- --------------- ------------
R&D 0 $36,958
---------------------------------------------- --------------- ------------
Total Expenses 845,484 $424,146
----------------------------------------- --------------- ------------
The increase in these expenses for the first quarter of 2006 as related
to the same period for 2005 is due mostly to the increased operations of the
Company's subsidiaries. Net service income increased significantly for the
quarter ended March 31, 2006. The operating loss increase primarily due to the
increased business activities of its subsidiaries, Net2Auction, Inc., Auction
Wagon, Inc. and RoboServer Systems Corp.
Liquidity and Capital Resources
The Company's net cash used in operating activities for the quarter
ended March 31, 2006 increased to $249,668 as compared to cash provided by
operations of $18,769 for the same period in 2005. This increase is mainly
attributable to an increase in non-cash services through the issuance of stock
to $514,218 for the first quarter of 2006 as compared to $241,369 for the first
quarter of 2005, and a decrease in notes receivable from $6,371 for the three
months ended March 31, 2005 by $221 for the three months ended March 31, 2006.
The Company's cash flow used in investing activities was $23,520 during
the first quarter of 2006, as compared to $0 for the same period in 2005. This
increase is due to purchase of fixed assets and intangibles of $23,520.
The Company's cash flow provided by financing activities was $323,434
during the first quarter of 2006, as compared to $0 for the same period in 2005.
This increase is due to a net increase in notes payable of $43,434 and proceeds
from the issuance of stock of $280,000.
7
The Company has relied upon its chief executive officer for its capital
requirements and liquidity. The Company's recurring losses, lack of cash flow
and lack of cash on hand raise 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
acquisitions of ongoing concerns, which generate profits, ultimately allowing
the Company to achieve consistent 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.
OFF-BALANCE SHEET ARRANGEMENTS
We do not participate in transactions that generate relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structure finance or special purpose entities ("SPEs"), which
would have been established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes as part of our
ongoing business. As of March 31, 2006, we were not involved in any
unconsolidated SPE transactions.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
the person performing functions similar to that of a Principal Financial Officer
of the Company, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-15. Based upon the evaluation, the Company's Chief Executive Officer and the
person performing functions similar to that of a Principal Financial Officer of
the Company concluded that the Company's disclosure controls are effective in
timely alerting them to material information relating to the Company (including
its consolidated subsidiaries) required to be included in the Company's periodic
SEC filings. There have been no significant changes in the Company's internal
controls or in other factors which could significantly affect internal controls
subsequent to the date the Company conducted its evaluation.
8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be attached by Item 601 of Regulation S-B are
listed in the Index to Exhibits beginning on page 10 of this Form
10-QSB, which is incorporated herein by reference.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AMERIRESOURCE TECHNOLOGIES, INC.
/s/Delmar Janovec
--------------------------------------
Delmar Janovec, Chief Executive Officer
Dated: May 22, 2006
9
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
3.1 Articles of Incorporation of the Company. (Incorporated by reference
from the Company's Form S-4, file number 33-44104, effective on
February 11, 1992.).
3.2 Bylaws of the Company. (Incorporated by reference from the Company's
Form S-4, file number 33-44104, effective on February 11, 1992.)
10.1 Settlement Agreement, dated March 27, 2006, by and between American
Factors Group, LLC, AmeriResource Technologies, Inc., and Delmar
Janovec.
10.2 Acquisition and Asset Purchase Agreement between Net2Auction and
AuctionBoulevard, Inc. dated September 27, 2005. (filed as Exhibit
10.1 to the Company's Current Report on Form 8-K filed on October 5,
2005, and incorporated herein by reference).
10.3 Acquisition and Stock Exchange Agreement between Net2Auction and
AuctionWagon Inc., dated September 30, 2005. (filed as Exhibit 10 to
the Company's Current Report on Form 8-K filed on October 12, 2005,
and incorporated herein by reference).
10.4 Acquisition and Stock Exchange Agreement between the Company and
Roboserver Systems Corp. dated August 26, 2004 (filed as Exhibit
10(i) to the Company's Current Report on Form 10-KSB filed on
April 15, 2005, and incorporated herein by reference).
10.5 Acquisition and Stock Exchange Agreement between the Company and
Net2Auction, Inc. dated December 2, 2004. (filed as Exhibit 10(ii)
to the Company's Current Report on Form 10-KSB filed on April 15,
2005, and incorporated herein by reference).
10.6 Fourth Addendum Settlement and Release Agreement between the Company
and American Factors Group, LLC dated February 28, 2005.
(filed as Exhibit 10(iii) to the Company's Current Report on
Form 10-KSB filed on April 15, 2005, and incorporated herein by
reference).
10.7 Share Purchase Agreement, dated as of April 15, 2005, by and between
AmeriResource Technologies, Inc. and BBG, Inc. (filed as Exhibit
10.1 to the Company's Current Report on Form 8-K filed on
August 19, 2005, and incorporated herein by reference).
10.8 Promissory Note, dated as of April 12, 2005. (filed as Exhibit 10.1
to the Company's Current Report on Form 8-K filed on
August 19, 2005, and incorporated herein by reference).
14 Code of Ethics adopted by the Company. (filed as Exhibit 14 to the
Company's Form 10-K filed on April 18 2006, and incorporated herein
by reference).
21 Subsidiaries of Registrant (filed as Exhibit 21 to the Company's
Form 10-K filed on April 18, 2006, and incorporated herein by
reference).
31.1 Certification of Chief Executive Officer under Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer of AmeriResource
Technologies, Inc. Pursuant to 18 U.S.C. ss.1350
10
EXHIBIT 31(i)
CERTIFICATION
I, Delmar Janovec, as Chief Executive Officer and the person performing
functions similar to that of a Principal Financial Officer of AmeriResource
Technologies, Inc. (the "Company"), certify that:
1. I have reviewed this report on Form 10-QSB for the quarter ended
March 31, 2006 of the Company;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the small business issuer as of, and for, the periods
presented in this annual report;
4. The small business issuer's other certifying officer(s) and I am
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and
have:
(a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the small business
issuer, including its consolidated subsidiaries, is made known to myself
by others within those entities, particularly during the period in which
this annual report is being prepared;
(b) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed
under my supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
(c) evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation; and
(d) disclosed in this report any change in the small business
issuer's internal controls over financial reporting that occurred during
the small business issuer's most recent fiscal year that has materially
affected, or is reasonably likely to materially effect, the small
business issuer's internal controls over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the
audit committee of the small business issuer's board of directors;
(a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which
are reasonable likely to adversely affect the small business issuer's
ability to record, process, summarize and report financial information;
and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business
issuer's internal control over financial reporting
Date: May 22, 2006
/s/Delmar Janovec
------------------------
Delmar Janovec
Chief Executive Officer and
Principal Financial Officer
11
EXHIBIT 32 (i)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTIONS 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACTS OF 2002
Certification Pursuant to 18 U.S.C., Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
In connection with the Quarterly Report of AmeriResource Technologies, Inc.
(the "Company") on Form 10-QSB for the quarter ended March 31, 2006 (the
"Report"), as filed with the Securities and Exchange Commission, on the date
hereof (the "Report), the undersigned, Delmar Janovec, Chief Executive Officer
and the person performing functions similar to that of a Principal Financial
Officer of the Company, hereby certifies, pursuant to 18 U.S.C. 1350, as adopted
pursuant to 18 U.S.C., Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Dated: May 22, 2006
/s/ Delmar Janovec
-----------------
Delmar Janovec
Chief Executive Officer and Principal
Financial Officer
12