ari_0907q.htm
UNITED
STATES
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 September 30,
2007.
|
[ ]
|
Transition
report under Section 13 or 15(d) of the Securities Exchange Act of
1934
for the transition period from __________ to
__________.
|
COMMISSION
FILE NUMBER: 000-20033
AMERIRESOURCE
TECHNOLOGIES, INC.
|
(Exact
Name of Small Business Issuer as Specified in its
Charter)
|
DELAWARE
|
|
84-1084784
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(I.R.S.
Employer 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
[ ]
Indicated
by check mark whether the
Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).
YES [ ] NO
[ X]
On
November 7, 2007, there were 1,959,367,048 outstanding shares of the issuer’s
common stock, par value $0.0001.
As
used
herein, the term “Company” refers to AmeriResource Technologies, Inc., a
Delaware corporation, and its subsidiaries and predecessors, unless otherwise
indicated. Consolidated, unedited, condensed interim financial
statements including a balance sheet for the Company as of the quarter ended
September 30, 2007, 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 nine months ended September 30, 2007 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, 2006.
AmeriResource, Technologies,
Inc.
|
|
Condensed
Consolidated Balance Sheet
|
|
(Unaudited)
|
|
|
|
September
30,
2007
|
|
ASSETS
|
|
Current
Assets |
|
|
|
Cash
and cash equivalents
|
|
$ |
162,924 |
|
Inventory
|
|
|
134,783 |
|
Prepaid
expenses
|
|
|
6,072 |
|
Notes
receivable
|
|
|
16,065 |
|
Total
Current Assets
|
|
|
319,844 |
|
|
|
|
|
|
Fixed
Assets |
|
|
|
|
Fixed
assets at cost
|
|
|
271,320 |
|
Accumulated
depreciation
|
|
|
(103,350 |
) |
Net
Fixed Assets
|
|
|
167,970 |
|
|
|
|
|
|
Other
Assets |
|
|
|
|
Intangible
assets - net of accumulated amortization
|
|
|
634,939 |
|
Deposits
|
|
|
25,090 |
|
Total
Other Assets
|
|
|
660,029 |
|
Total
Assets
|
|
|
1,147,843 |
|
The
accompanying notes are an integral part of these financial
statements.
AmeriResouce
Technologies,
Inc.
|
|
Condensed
Consolidated Balance Sheet
|
|
(Unaudited)
|
|
|
|
|
|
|
|
September
30,
2007
|
|
|
|
|
|
LIABILITIES
and STOCKHOLDERS' DEFICIT
|
|
|
|
Current
Liabilities |
|
|
|
Accrued
expenses
|
|
$ |
389,587 |
|
Accounts
payable
|
|
|
358,023 |
|
Note
payable - related party
|
|
|
464,757 |
|
Notes
payable - current portion
|
|
|
1,033,050 |
|
Total
Current Liabilities
|
|
|
2,245,417 |
|
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
|
Commitments
and contingencies
|
|
|
250,571 |
|
Total
Other Liabilities
|
|
|
250,571 |
|
Total
Liabilities
|
|
|
2,495,988 |
|
|
|
|
|
|
Stockholders'
Deficit |
|
|
|
|
Preferred
stock, $.001 par value; authorized, 10,000,000 shares; Class A, issued
and
outstanding, 131,275 shares
|
|
|
131 |
|
Preferred
stock, $.001 par value; authorized, 10,000,000 shares; Class B, issued
and
outstanding, 177,012 shares
|
|
|
177 |
|
Preferred
stock, $.001 par value; authorized, 1,000,000 shares; Class C, issued
and
outstanding, 1,000,000 shares
|
|
|
1,000 |
|
Preferred
stock, $.001 par value; authorized, 750,000 shares, Class D, issued
and
outstanding, 250,000 shares
|
|
|
250 |
|
Preferred
stock, $.001 par value; authorized, 1,000,000 shares; Class E, none
issued
and outstanding
|
|
|
- |
|
Common
Stock, $.0001 par value; authorized, 3,000,000,000 shares, issued
and
outstanding, 1,389,983,994 shares
|
|
|
127,234 |
|
Comprehensive
loss from marketable securities
|
|
|
(3,108 |
) |
Additional
paid-in capital
|
|
|
21,483,811 |
|
Retained
earnings
|
|
|
(22,777,245 |
) |
Subscription
receivable
|
|
|
(12,150 |
) |
Minority
interest
|
|
|
(168,245 |
) |
Total
stockholder' deficit
|
|
|
(1,348,145 |
) |
Total
Liabilities and Stockholders' deficit
|
|
|
1,147,843 |
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
AmeriResource
Technologies, Inc. and Subsidiaries
|
|
Condensed
Consolidated Statement of Operations
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
For
the three months ended
|
|
|
For
the nine months ended
|
|
|
|
September
30
|
|
|
September
30
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
(restated)
|
|
|
|
|
|
(restated)
|
|
Net
service income
|
|
$ |
1,066,210
|
|
|
$ |
260,837
|
|
|
$ |
1,988,710
|
|
|
$ |
574,023
|
|
Consulting
income
|
|
|
388
|
|
|
|
317
|
|
|
|
3,082
|
|
|
|
2,229
|
|
Revenues
|
|
$ |
1,066,598
|
|
|
$ |
261,154
|
|
|
$ |
1,991,792
|
|
|
$ |
576,252
|
|
Cost
of goods sold
|
|
|
888,345
|
|
|
|
266,107
|
|
|
|
1,677,539
|
|
|
|
485,325
|
|
Gross
profit
|
|
|
178,253
|
|
|
|
(4,953 |
) |
|
|
314,253
|
|
|
|
90,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
217,939
|
|
|
|
188,550
|
|
|
|
575,813
|
|
|
|
474,817
|
|
Officer
salaries
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
75,000
|
|
|
|
75,000
|
|
Legal
and professional
|
|
|
44,869
|
|
|
|
119,507
|
|
|
|
140,471
|
|
|
|
346,282
|
|
Consulting
and salary
|
|
|
760,352
|
|
|
|
478,710
|
|
|
|
1,998,050
|
|
|
|
1,581,646
|
|
Depreciation
and amortization
|
|
|
15,492
|
|
|
|
17,305
|
|
|
|
52,796
|
|
|
|
45,571
|
|
Research
and development
|
|
|
4,850
|
|
|
|
|
|
|
|
4,850
|
|
|
|
|
|
Operating
loss
|
|
|
(890,249 |
) |
|
|
(834,025 |
) |
|
|
(2,532,727 |
) |
|
|
(2,432,389 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense – net
|
|
|
(86,685 |
) |
|
|
(36,086 |
) |
|
|
(206,054 |
) |
|
|
(52,501 |
) |
Gain
on extinguishment of debt
|
|
|
232,067
|
|
|
|
|
|
|
|
232,067
|
|
|
|
-
|
|
Loss
on store closure
|
|
|
(56,177 |
) |
|
|
-
|
|
|
|
(56,177 |
) |
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other income (expense)
|
|
|
89,205
|
|
|
|
(36,086 |
) |
|
|
(30,164 |
) |
|
|
(52,501 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority
interest
|
|
|
322,579
|
|
|
|
443,838
|
|
|
|
1,029,965
|
|
|
|
824,361
|
|
Net
income (loss) before income tax
|
|
|
(478,465 |
) |
|
|
(426,273 |
) |
|
|
(1,532,926 |
) |
|
|
(1,660,529 |
) |
Income
tax provision (note 7)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net
income (loss)
|
|
|
(478,465 |
) |
|
|
(426,273 |
) |
|
|
(1,532,926 |
) |
|
|
(1,660,529 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share
|
|
|
(0.0005 |
) |
|
|
(0.0016 |
) |
|
|
(0.002 |
) |
|
|
(0.0086 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares Outstanding
|
|
|
1,024,670,213
|
|
|
|
257,083,003
|
|
|
|
721,199,559
|
|
|
|
192,365,242
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
AMERIRESOURCE
TECHNOLOGIES, INC.
|
Condensed
Consolidated Statement of Cash Flows
|
(Unaudited)
|
|
|
|
|
For
the nine months ended
|
|
|
|
September
30,
|
|
|
|
2007
|
|
|
2006
|
|
Reconciliation
of net loss provided by (used in)
|
|
|
|
|
(Restated)
|
|
Operating
activities:
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(1,532,926 |
) |
|
$ |
(1,660,529 |
) |
Non-cash
items:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
52,796
|
|
|
|
45,571
|
|
Non-cash
services through issuance of stock
|
|
|
1,578,580
|
|
|
|
1,476,028
|
|
Loss
on store closure
|
|
|
56,177
|
|
|
|
|
|
Gain
on extinguishment of debt
|
|
|
(232,067 |
) |
|
|
-
|
|
Minority
interest
|
|
|
(1,029,965 |
) |
|
|
(824,361 |
) |
Changes
in assets affecting operations (increase) / decrease
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
-
|
|
|
|
(200 |
) |
Inventory
|
|
|
(32,440 |
) |
|
|
(58,506 |
) |
Prepaid
expenses
|
|
|
(1,072 |
) |
|
|
(5,000 |
) |
Deposits
|
|
|
-
|
|
|
|
(16,210 |
) |
Notes
receivable
|
|
|
-
|
|
|
|
221
|
|
Changes
in liabilities affecting operations increase / (decrease)
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
149,781
|
|
|
|
45,559
|
|
Accrued
payroll and related
expenses
|
|
|
-
|
|
|
|
25,000
|
|
Accrued
expenses
|
|
|
182,479
|
|
|
|
55,466
|
|
Accrued
expenses/ Note payable - related party
|
|
|
114,600
|
|
|
|
145,170
|
|
Net
cash provided by (used in) operating activities
|
|
|
(694,057 |
) |
|
|
(771,791 |
) |
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase
of fixed assets
|
|
|
(15,226 |
) |
|
|
(85,757 |
) |
Purchase
intangible assets
|
|
|
(21,452 |
) |
|
|
(149,248 |
) |
Purchase
subsidiary
|
|
|
-
|
|
|
|
(168,254 |
) |
Net
cash provided by (used in) investing activities
|
|
|
(36,678 |
) |
|
|
(403,259 |
) |
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Cash
payments on notes payable
|
|
|
(264,978 |
) |
|
|
-
|
|
Net
Cash from notes payable
|
|
|
240,000
|
|
|
|
716,128
|
|
Proceeds
from issuance of stock
|
|
|
825,000
|
|
|
|
500,000
|
|
Net
cash provided by (used in) financing activities
|
|
|
800,022
|
|
|
|
1,216,128
|
|
Increase
(decrease) in cash
|
|
|
69,287
|
|
|
|
41,078
|
|
Cash-beginning
period
|
|
|
93,637
|
|
|
|
109,357
|
|
Cash-end
of period
|
|
|
162,924
|
|
|
|
150,435
|
|
The
accompanying notes are an integral part of these financial
statements.
AMERIRESOURCE
TECHNOLOGIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2007
(Unaudited)
NOTE
1-ORGANIZATION AND BASIS OF PRESENTATION
AmeriResource
Technologies, Inc., formerly known as KLH Engineering Group, Inc (the Management
Company), a Delaware 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 17, 1996, the Company changed its name to
AmeriResource Technologies, Inc.
The
accompanying unaudited and condensed consolidated financial statements included
herein have been prepared in accordance with accounting principles generally
accepted in the United States of America (US GAAP), for interim financial
statements, and pursuant to the instructions for Form 10-QSB, and Item 310
(b)
of Regulation S-B of the Securities and Exchange Commission. Accordingly, the
statements do not include certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles in the United States of America. In
the opinion of management, all adjustments (consisting of normal or recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three months and nine months
ended September 30, 2007, are not necessarily indicative of the results that
may
be expected for the fiscal year ended December 31, 2007. 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, 2006.
NOTE 2 - SIGNIFICANT ACCOUNTING
POLICIES
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. Green Endeavors LTD., formerly
Net2Auction, Inc., Net2Auction Corporation, and AuctionWagon Inc., VoIPCOM
USA,
Inc., BizAuctions, Inc., and BizAuctions Corp. All significant
intercompany transactions and accounts have been eliminated in
consolidation.
Basis
and Diluted 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; therefore, basic and diluted earnings per share are the
same.
Cash
and Cash Equivalents
For
the
purpose of the statement of cash flows, the Company considers currency on hand,
demand deposits with banks or other financial institutions, money market funds,
and other investments with original maturities of three months or less to be
cash equivalents.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and revenues
and
expenses during the reporting period. In these financial statements assets
and
liabilities involve the extensive reliance on management’s estimates. Actual
results could differ from those estimates.
The
Company has adopted the provisions of SFAS 123(R) in accounting for its stock
based compensation. The Company compensates some employees and
consultants in stock and/or stock options for services rendered during the
period. The stock is valued using a 5 day average of the closing
stock price for the 5 days preceding the stock issuance. During the 9
months ended September 30, 2007, the Company recorded $1,578,580 in salary,
consulting, and legal expense for stock issued under this plan for services
rendered.
ACCOUNTING
PRONOUNCEMENTS
Recently
Issued Accounting Standards
In
February 2007, the Financial Accounting Standards Board (the “FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) 159, “The Fair Value Option
for Financial Assets and Financial Liabilities—including an amendment of FASB
Statement 115” that provides companies with an option to report certain
financial assets and liabilities in their entirety at fair value. This statement
is effective for fiscal years beginning after November 15, 2007. The fair
value option may be applied instrument by instrument, and may be applied only
to
entire instruments. A business entity would report unrealized gains and losses
on items for which the fair value option has been elected in earnings at each
subsequent reporting date. We are evaluating SFAS 159 and have not yet
determined the impact the adoption will have on the consolidated financial
statements.
In
September 2006, the FASB issued SFAS 157, “Fair Value Measurements”. This
statement defines fair value, establishes a framework for measuring fair value
for both assets and liabilities through a fair value hierarchy and expands
disclosure requirements. SFAS 157 is effective for financial statements
issued or fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. We are evaluating SFAS 157 and have not
yet
determined the impact the adoption will have on the consolidated financial
statements.
ACCOUNTING
PRONOUNCEMENTS (Continued)
In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements" (SAB 108),
which
addresses how to quantify the effect of financial
statement errors. The provisions of SAB 108 become effective as of the end
of
our 2007 fiscal year. We do not expect the adoption of SAB 108 to have a
significant impact on our financial statements.
In
July
2006, the Financial Accounting Standards Board (FASB) issued Interpretation
No.
48 (FIN 48), “Accounting for Uncertainty in Income Taxes,” an interpretation of
FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48
prescribes a minimum recognition threshold and measurement attribute for the
financial statement recognition of a tax position taken or expected to be taken
in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition for tax related positions. FIN 48 becomes
effective for the Company on January 1, 2007. The Company is
currently in the process of determining the effect, if any; the adoption of
FIN
48 will have on the consolidated financial statements.
NOTE
3 – GOING CONCERN
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 companies.
NOTE
4 – STOCKHOLDERS’ DEFICIT
During
the third quarter ending, September 30, 2007, the Company issued a total of
761,145,549 shares of common stock:
714,145,549
shares of common stock were issued for consulting services valued at
$301,847.
47,000,000
shares of common stock were issued for legal and professional services valued
at
$28,200.
290,000,000
options, with immediate vesting, were issued to employees and consultants
for
services rendered during the quarter. In September 2007, 92,000,000 options
were
exercised in a “cashless” transaction with a floating exercise price set at 45%
of the market price on the exercise date. Since the Company cannot
reasonably estimate the fair value of these options, under SFAS 123R, the
Company has recorded compensation cost based on the intrinsic value of these
options. The intrinsic value of the 290,000,000 option shares was $111,650
at
the issuance date. The Company will reevaluate the compensation cost
at each reporting date, through the date of exercise or other settlement.
At
September 30, 2007 an adjustment of $26,565 was made to reflect the change
in
stock price from the date of issuance, to the reporting date. The
Company recorded the amount received upon the exercise of the 92,000,000
options
of $12,500 as a subscription receivable, since the Company received this
amount
after September 30, 2007.
NOTE
4 – STOCKHOLDERS’ DEFICIT (Continued)
During
the three months ended September 30, 2007, the Company issued 761,145,549 shares
of common stock, pursuant to the Company’s Registration Statement on Form S-8,
valued at $571,009.
Preferred
stock
The
Company has currently designated 10,000,000 shares of its 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
shareholders. These shares are subject to redemption by the Company
at any time 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 have
been converted in 2007. Dividends are not payable until
declared by the Company.
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 a redemption price of $2.00 per share with interest of 8% per annum.
The
holders of the Series C also possess liquidation rights of $2.00 per share
superior in priority to holders of common stock or any junior
securities.
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 shall be redeemable by the Corporation
at
any time at a redemption price of $.001 per share with interest of 8% per annum.
The holders of the Series D also possess liquidation right of $.001 per share
superior in priority to holders of common stock or any junior
securities.
NOTE
4 – STOCKHOLDERS’ DEFICIT (Continued)
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.
NOTE
5-NOTE PAYABLE
The
Company had the following notes payable as of 9/30/07.
Note
dated April 12, 2005, interest is prime plus 3% originally due on
November
12, 2005, extended through November 4, 2007, convertible into 20,000,000
million shares of VoIPCOM USA, Inc. common stock. |
|
$ |
80,000 |
|
|
|
|
|
|
Note
dated August 31, 1998; Amended July 12, 2007. The note is due December
31,
2007. |
|
$ |
172,000 |
|
|
|
|
|
|
Note
dated June 29, 2007, interest is 3% per month, due and payable on
or
before December 30, 2007. |
|
$ |
150,000 |
|
|
|
|
|
|
Note
dated May 29, 2007, is due and payable on or before November 30,
2007. Interest is $1,500. |
|
$ |
35,000 |
|
|
|
|
|
|
Note
dated May 8, 2006 interest is 12% due and payable on May 8, 2008,
convertible into RoboServer common stock at $0.001 per share. |
|
$ |
100,000 |
|
|
|
|
|
|
Note
dated May 12, 2006,. interest is 10% per annum and due on May 12,
2008
with conversion rights into Green Endeavors, LTD, formerly Net2Auction,
Inc. common stock |
|
$ |
171,000 |
|
|
|
|
|
|
Line
of Credit, dated March 25, 2006, due and payable March 25, 2008,
interest
is Prime plus 3%. |
|
$ |
100,050 |
|
|
|
|
|
|
Note
dated June 28, 2006, interest is 10% per annum and due on June 28,
2008
with conversion rights into BizAuctions common stock. |
|
$ |
125,000 |
|
|
|
|
|
|
Note
dated July 9, 2007, interest is $666.00 per day with interest paid
of
$32,500. Note has been extended to November 30, 2007. |
|
$ |
100,000 |
|
|
|
|
|
|
Total
notes payable
|
|
$ |
1,033,050 |
|
|
|
|
|
|
Less
current portion
|
|
|
(1,030,050 |
) |
|
|
|
|
|
Long-term
portion
|
|
$ |
- |
|
NOTE
6 – COMMITMENTS AND CONTINGENCIES
American
Factors Group, LLC., Vs- AmeriResource Technologies, Inc., et al. This case
was
filed in the United States District Court, District of New Jersey, Case Number
3:97cv01094(GEB), March 4, 1999. The Settlement Agreement
provided for the payment by the Company and Delmar Janovec of certain
obligations and judgments entered against the defendants. This amount
has been recorded as a note payable in the financial statements, for
$172,000.
The
Company recorded contingencies in the amount of $250,571 that consisted of
trade
payables for various vendors owed by the Company and its
subsidiaries. These trade payables were accrued more than seven years
ago (beyond the statute of limitations in most states) or prior to the Company
acquiring the subsidiary.
NOTE
7– MINORITY INTERESTS
During
the period ended September 30, 2007, the Company was considered to have
sufficient ownership and control of RoboServer Systems Corp., Green Endeavors,
LTD, formerly Net2Auction, Inc., and BizAuctions, Inc.; therefore the companies
are being reported as subsidiaries on a consolidated basis. Minority interest
losses attributed to RoboServer Systems Corp., Green Endeavors LTD (formerly
Net2Auction, Inc.), and BizAuctions, Inc. are approximately $83,617, $182,561,
and $56,461 respectively.
NOTE
8-RELATED PARTY TRANSACTION
The
Company has notes payable for salary expenses, and unreimbursed business
expenses in the amount
of
$449,759 which is owed to Delmar Janovec, president of the Company, by the
parent and
its
subsidiaries for services performed during 2006, and the first nine months
of
2007, ending September 30, 2007.
An
officer of the subsidiaries loaned the company $15,000 in September
2007. The note bears interest at prime plus 2% and is due on
demand.
NOTE
9-SUBSEQUENT EVENTS
On
October 19, 2007, the Company and Nexia Holdings, Inc. completed the closing
of
the sale of 90% of the issued and outstanding stock of Green Endeavors LTD.,
formerly Net2Auction, Inc. in exchange for the issuance of 150,000 restricted
shares of Nexia’s Series C Preferred Stock with a stated value of $5.00 per
share. Green Endeavors LTD. will retain 13 million shares of BizAuctions, Inc.
with a market value of approximately $995,000 and a convertible debt of
$171,000.
Nexia
Holdings intends to transfer its Landis Lifestyle Salon operations into Green
Endeavors, LTD. with revenues of approximately $2.2 million for the calendar
year 2007, and assets of approximately, $415,000.
The
Company will retain its ownerships of 60,100,000 shares of its restricted
common
stock in Green Endeavors LTD., and all remaining holdings of the Company.
The
Company is a major shareholder in the Company prior to the transfer of
control.
On
October 26, 2007, the Board of Directors, as approved by the written consent
of
the holders of in excess of 50% of the voting rights of the shareholders of
AMRE, received the approval and authorization for an increase in the number
of
authorized shares of the common stock of AMRE to 50 billion whereby filing
a 14
C Information Statement with the SEC for notice of the amendment to the Articles
of Incorporation and the increase of its authorized capital
stock. The Amendment to the Articles of Incorporation to increase the
number of authorized shares of common stock would be filed at a future date
and
time to be determined by the Board of Directors.
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 that the expectations
reflected in the forward-looking statements are reasonable, it cannot guarantee
future results, levels of activity, performance, or achievements.
GENERAL
AmeriResource
Technologies, Inc. (the “Company”) conducts operations as an holding company and
operates primarily through its subsidiaries, West Texas Real Estate and
Resources, Inc., RoboServer Systems Corp. (“RBSY”), Self-Serve Technologies,
Inc. (“SSTI”), Green Endeavors LTD. (“GRNE”), formerly Net2Auction, Inc.
(“NAUC”), Net2Auction Corporation (“N2AC”), AuctionWagon Inc. (“AWI”), Auction
Boulevard (“AB”) BizAuctions, Inc. (“BZCN”), and
BizAuctions
Corp. (“BZAC”), and VoIPCOM USA, Inc. (“VCMU”). As of September 30, 2007, the
Company owned 100% of West Texas Real Estate and Resources, Inc. common stock.
As of September
30, 2007, the Company owned approximately 37% of Green Endeavors LTD. common
stock and upon conversion of the SuperVoting Preferred collectively gives
AmeriResource 84% control, which owns 100% of Green Endeavors Ltd. Green
Endeavors LTD. is publicly traded on the Pink Sheets under the stock symbol
“GRNE.” As of September 30, 2007, the Company owned approximately 42% of
RoboServer’s common stock and upon conversion of the SuperVoting Preferred by
management would give the Company and management approximately 72% control,
which owns 100% of Self-Serve Technologies, Inc. RoboServer is publicly traded
on the Pink Sheets under the symbol “RBSY.” As of September 30, 2007, the
Company’s subsidiary, Green Endeavors LTD., owns approximately 72% of
BizAuctions common stock and upon conversation of the Preferred would give
the
Company approximately 86% majority control. BizAuctions Inc.’s corporate name
was formerly, Kootenai Corp., which was changed in August of 2006. BizAuctions
is publicly traded on the Pink Sheets under the symbol “BZCN.” BizAuctions Corp.
is a wholly-owned subsidiary of BizAuctions, Inc. As of September 30, 2007,
the
Company owned approximately 97% of VoIPCOM USA, Inc.’ s common stock and upon
conversion of the Preferred would give the Company approximately 99% majority
control.
The
Company continues to search for viable business operations to acquire or merge
with in order to increase the Company’s asset base, revenues, and to achieve
profitability on a consistent level.
Green
Endeavors LTD. (formerly Net2Auction, Inc.)
Green
Endeavors currently operates as a holding company with its wholly-owned and
majority owned subsidiaries, AuctionWagon, Inc. and BizAuctions, Inc. As
of September 30, 2007, Green Endeavors LTD no longer operates
drop-off locations through partnerships with pack and ship centers and
co-manages twenty-three (23) affiliate locations that were acquired in the
acquisition of AuctionWagon Inc., on September 30, 2005. During the 3rd quarter
of 2007,
Green Endeavors developed numerous business commercial accounts with several
retailers-wholesalers within the USA. Green Endeavors liquidates the excess
inventory and/or returned merchandise of such accounts on eBay through its
subsidiary, BizAuctions, Inc. The Company has obtained such
commercial accounts in a wide variety of business industries or segments,
including golf products, electronics-computer items, shoes for both men and
woman, and clothing for men, women, and children. Green Endeavors, is
listed as an “eBay Trading Assistant,” with a Power Seller rating and has
accumulated in excess of 6,000 positive feedbacks and continues to receive
a
customer satisfactory rating on eBay exceeding 99%. This allows the Company
to
reach millions of potential buyers for our customers’ unwanted goods or
products.
AuctionWagon
Inc.
AuctionWagon
was incorporated in September of 2003 and became the first eBay consignment
store in the Los Angeles market. AuctionWagon is the first company to qualify
as
both an eBay certified developer and an eBay Trading Post. AuctionWagon 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.
AuctionWagon currently markets its consignment software to drop-off stores,
and
maintains a national affiliate network of drop-off locations.
AuctionWagon’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, check writing, and
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.
Since January 1, 2006, AuctionWagon has added approximately 126 new customer
accounts and during the third quarter of 2007, has added an additional 10 new
customer accounts. AWI’s software continues to be a widely used by commercial
business users doing business on eBay. To learn more, please visit our website
at www.auctionwagon.com.
Auction
Boulevard
On
September 14, 2005, Green Endeavors LTD., formerly Net2Auction, Inc.
acquired the trade name of AuctionBoulevard, Inc. and certain assets from
Netelectronics.com and Jake Ptasznik. AuctionBoulevard is an operator of online
auction drop-off locations. Among the assets acquired by Green Endeavors were
all rights to the trade name of AuctionBoulevard, all intellectual property,
and
all eBay accounts opened by AuctionBoulevard. Additionally, the lease for
AuctionBoulevard’s principle place of business, located at 17412 Ventura
Boulevard, Encino, California was assigned to Green Endeavors, LTD.
In
September of 2007, the Company made the decision to close the drop-off location
in Encino, CA
to
eliminate reoccurring losses and is in the process of sub-leasing the location
to other viable business interests.
BizAuctions,
Inc., formerly Kootenai Corp.
On
June
27, 2006, Net2Auction acquired control of Kootenai Corp. through the purchase
of
Fifty Million (50,000,000) shares of common stock from the majority shareholder
of Kootenai Corp. for, One
Hundred Seventy Thousand ($170,000) US dollars. Kootenai Corp. later acquired
BizAuctions Corp., from Net2Auction, Inc., for the issuance of Fifty Million
(50,000,000) shares of common stock and Twelve Million (12,000,000) shares
of
Preferred stock. Subsequent to the acquisition of BizAuctions Corp., Kootenai
Corp. changed its name to BizAuctions, Inc. BizAuctions, Corp., is a
wholly-owned subsidiary of BizAuctions, Inc. BizAuctions is a publicly traded
company which trades on the Pink Sheets under the symbol of BZCN.
BizAuctions,
Inc. is a prime provider of commercial eBay liquidation services for excess
inventory, overstock items, and merchandise that has been returned. BizAuctions
clients include some of the Nation’s leading retail names at the forefront of
their industries. During the 3rd quarter
ending
September 30, 2007, BizAuctions developed several new accounts or locations
both
inside and outside of the State of California with a top retailer-wholesaler
whereby the Company is able to purchase excess inventory, overstocked
merchandise, and returns from the retailer-wholesaler at a significant discount
from the retail price of the merchandise. The Company is then able to sell
the
merchandise on eBay at a favorable price whereby generating significant gross
profits. To learn more, please visit our website at
www.bizauctions.com.
RoboServer
Systems Corp.
RoboServer
Systems Corp. 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%.
RoboServer
kiosks can be installed in any restaurant in the United States. RoboServer
also
provides customers with custom software to allow the customer to operate the
kiosk with optimum efficiency. To provide our customers with a custom software
solution, RoboServer 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. RoboServer has
also
partnered with Renaissance Systems, a leading technology company. Our
partnership with Renaissance allows RoboServer to undertake any and all customer
projects regardless of the size and scope. By utilizing products from these
two
software companies allows RoboServer to customize our customer’s menus in much
less time? As a result of these efficiencies and options, we
are now able to greatly expand our market with profitable sales from small
single store business while trying to achieve profits without having to do
enormous volumes to cover the software development cost.
RoboServer
kiosks are manufactured by KIS Kiosks. RoboServer’s partnership with KIS allows
us
to
offer the competitive pricing and top quality hardware products
available. The
market for RoboServer’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 services to their customers as well as
reduce labor costs. Other partners include Pro-Tech Inc. which is RoboServer’s
supplier for outdoor kiosks.
During
the first nine months of this calendar year, period ending September 30, 2007,
RoboServer developed its first pilot of the “Assisted Server” two-screen model
that was shown at the Las Vegas Restaurant, Hospitality, and Night Club Expo
in
March, 2007. The pilot “Assisted Server” was well received and has resulted in
numerous leads with various business owners in both the restaurant and night
club segments. Due to the various leads and inquires for the “Assisted Server”
the Company is currently in discussions with Team Research in Taiwan for mass
production of the two-sided “Assisted Server.” Business owners have
expressed a need to migrate customers to self-service without losing contact
with the customer during their ordering process. The “Assisted Server” can be
used as self-service, assisted service or counter service since the unit has
two
screens, one facing the customer and a mirrored screen facing the
cashier/counter helper. Businesses are very excited about the “Assisted Server,”
because it is a natural progression from traditional POS line ordering to
self-service.
RoboServer
has installed two (2) of its pilot 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. Since the installation of the pilot self-serve
free-standing kiosk in Dairy Queen, RoboServer has installed a 2nd model,
a
counter-top self-serve unit in the fall of 2006. RoboServer will be installing
the “Assisted Server” for a pilot test in the Oceanside DQ in the 4th quarter
of 2007
and full rollouts of the new 2-sided units will follow shortly
thereafter. RoboServer continues to receive numerous inquiries from
some of the leading fast-food chains for the RoboServer self-serve kiosks.
Self-Serve Technologies, Inc. is a wholly-owned subsidiary of RoboServer and
is
the entity that has performed all of the research, development, and
modifications since the POS software and self-serve technologies were acquired
in May, 2004. To learn more, please visit our website at
www.roboservercorp.com.
For
further information on the
corporate structure and ownership of its subsidiaries, please review the
following two pages of this statement and the Company’s Form 10 KSB for year
ended December 31, 2006, filed on May 10, 2007, with the Securities and Exchange
Commission. The Form 10 KSB can be viewed on the SEC website at www.sec.gov.
CORPORARTE
CHART FOR SUBSIDIARY OWNERSHIP OF ITS COMMON STOCK
CORPORATE
CHART FOR SUBSIDIRY OWNERSHIP UPON CONVERSION OF PREFERRED OR SUPERVOTING
PREFERRED STOCK
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, 2006, 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 and nine-month periods ended September 30, 2007, as compared to the same
period in 2006.
Revenues
Revenues
for the three and nine month periods ended September 30, 2007, was $1,066,598
and $1,991,792, respectively, as compared to $261,154 and $576,252 for the
same
periods in 2006. The increase in the three and nine month’s revenue of $805,444
and $1,415,540, respectively and is due to increase sales from the operations
of
the Company’s majority-owned subsidiary, BizAuctions.
Operating
Losses
The
Company’s operating losses of $890,249 and $2,532,727 for the three and nine
months ended September 30, 2007, compared to losses of $834,025 and $2,432,389
for the same periods in 2006. The increase in the three and nine
month operating loss of $56,224 and $100,338, respectively, resulted from
increases in General and Administrative expenses for the three and nine months
of $29,389 and $100,996 respectively, issuance of stock for
consulting and professional services rendered, and salary compensation for
the
three and nine month periods of $226,917 and $361,679,
respectively.
Net
Losses
The
Company recorded net losses of $478,465 and $1,532,926 for the three and nine
months ended, September 30, 2007, as compared to $426,273 and $1,660,529
respectively, for the same periods in 2006. The increase in the three months
and
decrease in the nine month losses of $10,157 and $127,603 respectively, resulted
from an increase of general and administrative, cost of goods sold, interest
expense, and issuance of stock for consulting and
professional services rendered.
Expenses
The
Company’s expenses for the third quarter ended September 30, 2007, as compared
to 2006, are set forth below;
Expenses
|
|
Quarter
ended 9/30/2007
|
|
|
Quarter
ended 9/30/2006
|
|
General
and Administrative
|
|
$ |
217,939
|
|
|
$ |
188,550
|
|
Consulting
|
|
|
760,352
|
|
|
|
478,710
|
|
Officers
Salaries and Bonuses
|
|
|
25,000
|
|
|
|
25,000
|
|
Interest
Expense
|
|
|
86,685
|
|
|
|
36,086
|
|
Legal
and Professional |
|
|
44,869 |
|
|
|
119,507 |
|
Research
and development |
|
|
4,850 |
|
|
|
- |
|
Cost
of goods sold |
|
|
888,345
|
|
|
|
266,107 |
|
Total
Expenses
|
|
|
2,028,040
|
|
|
|
1,113,960
|
|
The
General and Administrative expenses for the three and nine month period ended
September 30, 2007, were $217,939 and $575,813 compared to $188,550
and $474,817 for the same periods in 2006. The increase in the three and nine
month expenses of $29,389 and$100,996 respectively, resulted from the increase
in general & administrative expenses as a result of increased
operations. The Company experienced an increase of consulting and
professional services rendered of $226,917, increase of research and development
expenses of $4,850, and increase of cost of goods sold of
$622,238.
LIQUIDITY
AND CAPITAL RESOURCES
The
Company’s net cash used in operating activities for the nine months ended
September 30, 2007, (decreased) to $694,057 as compared to net cash used in
operating activities of $771,791, for the same period in 2006. This
decrease is mainly attributable to the increase of non-cash services through
the
issuance of stock.
The
(decrease) in net loss of $1,532,926 for the nine months ended September 30,
2007, compared to a net loss of $1,660,529 for the same period in 2006, was
primarily due to an decrease in legal and professional expenses and a one-time
gain on extinguishment of debt.
Net
cash
used in investing activities decreased to $ 30,678 for the nine-months ended
September 30, 2007, as compared to $403,259 for the same period in 2006. This
decrease is due to investing activities for acquisitions of operating
entities.
Net
cash
provided by financing activities was $800,022 for nine-months ended September
30, 2007, compared to $1,216,128 for the same period in 2006. This decrease
is
due to decreased borrowing and the issuance of common stock effected to
facilitate investing activities.
The
Company has relied upon its chief executive officer for its capital requirements
and liquidity, in addition to raising capital from investors at the subsidiary
level. The Company’s recurring losses, lack of cash flow, and lack of cash on
hand raise substantial doubts 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 September 30, 2007, we were not involved in any
unconsolidated SPE transactions.
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.
Disclosure
Controls and Procedures
As
required by Rule 13a-15(c) promulgated under the Exchange Act, our
management, with the participation of our Chief Executive Officer, evaluated
the
effectiveness of our internal control over financial reporting as of
September 30, 2007. Management’s assessment was based on criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control—Integrated Framework (“COSO”). Based on
this evaluation our Chief Executive Officer concluded that, because of our
material weaknesses in our internal control over financial reporting described
below, as of September 30, 2007 our disclosure controls and procedures were
not
effective. Notwithstanding management’s assessment that our internal control
over financial reporting was ineffective as of September 30, 2007 and the
material weakness described below, we believe that the condensed consolidated
financial statements included in this Quarterly Report on Form 10-Q correctly
present our financial condition, results of operations and cash flows for the
periods covered thereby in all material respects.
Internal
Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in
Rule 13a-15(f) promulgated under the Exchange Act. Internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of an
issuer’s financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”). Internal control over financial reporting includes policies and
procedures that:
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pertain
to the maintenance of records that, in reasonable detail, accurately
and
fairly reflect the transactions and dispositions of an issuer’s assets;
and
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provide
reasonable assurance that transactions are recorded as necessary
to
permit preparation of financial statements in accordance with
GAAP, and that an issuer’s receipt and expenditures are being made only in
accordance with authorizations of its management and directors; and
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°
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provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of an issuer’s assets that
could have a material effect on the financial
statements;
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Because
of its inherent limitations, internal control over financial reporting may
not
prevent or detect misstatements. Also, the application of any evaluation of
effectiveness to future periods is subject to the risk that controls may become
inadequate because of changes in conditions, or that compliance with the
policies or procedures may deteriorate.
A
material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. Because of the material weaknesses described below,
management concluded that our internal control over financial reporting was
not
effective as of September 30, 2007.
The
specific material weakness identified by management as of September 30, 2007
is
described as follows:
Ineffective
controls related to the financial closing
process.
In
September of 2007, upon discovery that certain transactions were improperly
recorded, we determined it was necessary to restate our condensed consolidated
financial statements for the 10 QSB as of March 31, 2006, 10 QSB as of June
30,
2006, 10 QSB as of September 30, 2006, and the 10 KSB for December 31, 2006,
and
10 QSB as of March 31, 2007. Additionally, the Company's design and
operation of controls with respect to the process of preparing and reviewing
the
interim financial statements are ineffective. Deficiencies identified include
the inadequate segregations of duties, lack of controls over procedures used
to
enter transactions into the general ledger, and lack of appropriate review
of
the reconciliations and supporting work-papers used in the financial close
and
reporting process.
Certain
Changes in Internal Control Over Financial Reporting during the Fiscal Quarter
Ended
September
30, 2007
In
view
of the fact that the financial information presented in this quarterly report
on
Form 10-QSB for the fiscal quarter ended September 30, 2007, was prepared in
the
absence of effective internal control over financial reporting, we are in
process of developing a remediation plan to address the material weakness
identified above. We plan on developing our remediation steps through
a thorough review of the process and activities surrounding the material
weakness and include changes to this process to further develop methods to
prevent or detect similar future occurrences. There were no other
changes to our internal control over financial reporting during the three months
ended September 30, 2007 that management believes have materially affected,
or
are reasonably likely to materially affect, our internal control over financial
reporting.
ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
On
August
30, 2007, the Company authorized the issuance of One Hundred Twelve Million
(112,000,000) shares of restricted common stock, par value of $0.0001 per
share,
to QualityStocks, LLC. The issuance was in satisfaction of the agreement
entered
into between the Company andQualityStocks, LLC to provide public and investor
relations services for the Company. The services provided are for broadcasts,
publications in newsletters, distribution of press releases and placement
of
banner ads. The issuance represented approximately 12% of the current and
issued
outstanding of 933,402,125 shares of common stock of the Company. The
transaction was processed as a private sale exempt from registration under
Section 4 (6) of the Securities Act of 1933.
On
October 10, 2007, the Company and QualityStocks LLC., agreed to mutually
terminate the agreement and returned the One Hundred Twelve Million
(112,000,000) shares of restricted common stock to the Company’s
treasurer.
On
June
22, 2007 AmeriResource Technologies, Inc., a Delaware corporation
("AMRE"), Net2Auction, Inc., a Delaware corporation, ("NAUC"), and
Nexia
Holdings Inc., a Nevada corporation
("NEXA"), entered into a Stock Exchange Agreement (the "Agreement")
whereas Nexia Holdings, Inc. will acquire 90% of
the issued and outstanding preferred
stock shares of Net2Auction, Inc. in exchange for the issuance of
sixty thousand (60,000) shares of Nexia's Series C Preferred stock with a stated
value of $5.00 per share for a total of $300,000.
Nexia
Holdings will be transferring its ownership in its Landis Lifestyle Salon
("Landis") into Net2Auction, Inc., Landis had assets that total
approximately $415,580 and reported revenues of $1,326,013 for the year ending
December 31, 2006. Nexia Holdings reported revenues for the first quarter of
2007 for Landis operations to be $424,863 with a reported net loss of $20,930.
Landis's business plan calls for the acquisition of an additional four (4)
Aveda
Salons, within the next
two
calendar years. Landis Lifestyle Salons uses the Aveda {reg-trade-mark} product
line exclusively in its operations and these products are rated as one of the
best in the health and beauty care industry.
Pursuant
to the terms of the agreement, AmeriResource will retain its Twenty-Five Million
(25,000,000) shares of common stock in Net2Auction, Inc. and remain a
shareholder. All assets and liabilities of Net2Auction, Inc. will be transferred
to AmeriResource prior to the close of the transaction with Nexia Holdings,
Inc.
Subsequent to the execution of the Stock Exchange Agreement with Nexia Holdings
Inc.; Net2Auction, Inc.’s corporate name was changed to Green Endeavors LTD.,
pursuant to the requirements under Delaware state law on July 11,
2007. On
October 19, 2007, the Company and Nexia Holdings, Inc. completed the closing
of
the sale of 90% of the issued and outstanding stock of Green Endeavors LTD.,
formerly, Net2Auction, Inc. in exchange for the issuance of 150,000 restricted
shares of Nexia’s Series C Preferred Stock with a stated value of $5.00 per
share. Green Endeavors LTD. will retain 13 million shares of BizAuctions, Inc.
with a market value of approximately $995,000 and a convertible debt of
$171,000.
On
October 26, 2007, the Board of Directors, as approved by the written consent
of
the holders of in excess of 50% of the voting rights of the shareholders of
AMRE, received the approval and authorization for an increase in the number
of
authorized shares of the common stock of AMRE to
50
billion whereby filing a 14 C Information Statement with the SEC for notice
of
the amendment to the Articles of Incorporation and the increase of its
authorized capital stock. The Amendment to the Articles of
Incorporation to increase the number of authorized shares of common stock would
be filed at a future date and time to be determined by the Board of
Directors.
The
Board
of Directors, and persons owning a majority of the outstanding voting securities
of AMRE, have unanimously adopted, ratified and approved the proposed actions
by
the AMRE Board of Directors. No other votes are required or
necessary. See the caption "Vote Required for Approval"
below. The increase in the authorized number of common shares would
become effective upon filing of an amendment to the Articles of Incorporation
of
AMRE with the Delaware Secretary of State’s office.
GRANT
AUTHORITY TO THE BOARD OF DIRECTORS TO AMEND THE ARTICLES OF INCORPORATION
TO
INCREASE THE AUTHORIZED NUMBER OF COMMON SHARES TO FIFTY
BILLION.
AMRE’s
Articles of Incorporation, as currently in effect, authorizes AMRE to issue
up
to 3,000,000,000 shares of common stock, par value $0.0001 per share. The Board
of Directors has proposed an increase in the number of authorized shares of
the
common stock of AMRE. Upon the approval by the consenting
shareholders holding a majority of the outstanding voting securities and then
the filing of the Amended Articles of Incorporation, AMRE will be authorized
to
issue 50,000,000,000 shares of common stock, the stated par value per share
will
be $0.0001 and the authorized shares of preferred stock, $0.001 par value per
share, will remain at 10,000,000 shares. The Board of Directors believes that
it
is in AMRE's and AMRE's stockholders' best interests to increase the
availability of additional authorized but unissued capital stock to provide
AMRE
with the flexibility to issue equity for other proper corporate purposes which
may be identified in the future. Such future activities may include, without
limitation, raising equity capital, adopting Employee Stock or Incentive Plans
or making acquisitions through the use of stock. The Board of Directors has
no
immediate plans, understandings, agreements or commitments to issue additional
shares of stock for any purpose not previously disclosed in the company’s public
filings.
The
Board
of Directors believes that the increase in authorized capital will make a
sufficient number of shares available, should AMRE decide to use its shares
for
one or more of such previously mentioned purposes or otherwise. AMRE reserves
the right to seek a further increase in authorized shares from time to time
in
the future as considered appropriate by the Board of Directors.
The
increased capital will provide the Board of Directors with the ability to issue
additional shares of stock without further vote of the stockholders of AMRE,
except as provided under Delaware corporate law or under the rules of any
national securities exchange on which shares of stock of AMRE are then listed.
Under AMRE’s Articles, the AMRE stockholders do not have preemptive rights to
subscribe to additional securities which may be issued by AMRE, which
means
that current stockholders do not have a prior right to purchase any new issue
of
capital stock of AMRE in order to maintain their proportionate ownership of
AMRE's stock. In addition, if the Board of Directors elects to issue
additional shares of stock, such issuance could have a dilutive effect on the
earnings per share, voting power and shareholdings of current
stockholders.
In
addition to the corporate purposes discussed above, the authorization of
additional capital, under certain circumstances, may have an anti-takeover
effect, although this is not the intent of the Board of Directors. For example,
it may be possible for the Board of Directors to delay or impede a takeover
or
transfer of control of AMRE by causing such additional authorized shares to
be
issued to holders who might side with the Board in opposing a takeover bid
that
the Board of Directors determines is not in the best interests of AMRE and
our
stockholders. The increased authorized capital therefore may have the effect
of
discouraging unsolicited takeover attempts. By potentially discouraging
initiation of any such unsolicited takeover attempts, the increased capital
may
limit the opportunity for AMRE stockholders to dispose of their shares at the
higher price generally available in takeover attempts or that may be available
under a merger proposal. The increased authorized capital may have the effect
of
permitting AMRE’s current management, including the current Board of Directors,
to retain its position, and place it in a better position to resist changes
that
stockholders may wish to make if they are dissatisfied with the conduct of
AMRE's business. However, the Board of Directors is not aware of any attempt
to
take control of AMRE and the Board of Directors did not propose the increase
in
AMRE's authorized capital with the intent that it be utilized as a type of
anti-takeover device.
The
relative voting and other rights of holders of the common stock will not be
altered by the authorization of additional shares of common stock, nor the
authorization of a class of preferred shares. Each share of common
stock will continue to entitle its owner to one vote. As a result of
the increased authorization, the potential number of shares of common stock
outstanding will be increased.
VOTE
REQUIRED FOR APPROVAL
The
vote
required to approve the proposal is the affirmative vote of the holders of
a
majority of AMRE’s
voting stock. Each holder of Common Stock is entitled to one (1) vote
for each share held.
The
record date for purposes of determining the number of outstanding shares of
voting Stock of AMRE and for determining Stockholders entitled to vote, is
the
close of business on October 26, 2007
(the
“Record Date”). As of the Record Date, AMRE has outstanding
1,834,003,412 shares of
Common
Stock and 1,558,287 shares of preferred stock.
Section
228 of the Delaware General Corporate Law (“Delaware Law”) provides that the
written consent of the holders of the outstanding shares of voting stock, having
not less than the minimum number of votes which would be necessary to authorize
or take action at a meeting at which all shares entitled to vote thereon were
present and voted, may be substituted for such a meeting.
Pursuant
to Section 228 of the Delaware Law, a majority of the outstanding voting shares
of stock entitled to vote thereon is required in order to amend the Articles
of
Incorporation and to thus
increase the number of authorized shares. In order to eliminate the
costs, delay and management time involved in having a special meeting of
Stockholders and obtaining proxies and in order to effect the proposed increase
in authorized shares as early as possible, the Board of Directors
of AMRE voted to utilize, and did in fact obtain, the written consent of the
holders of a majority of the voting power of AMRE as of the Record
Date.
Pursuant
to Section 228(e) of the Delaware Law, the Company is required to provide prompt
notice of the taking of the corporate action without a meeting of the
Stockholders of record who have not consented in writing to such
action. This Information Statement is tended to provide such
notice. No dissenters’ or appraisal rights under the Delaware Law are
afforded to the Company’s Stockholders as a result of the approval of the
proposed increase in authorized shares.
During
the fourth quarter of 2007, the Board of Directors of the Company authorized
and
caused to be filed a new S-8 Registration Statement on Form S-8 whereby,
registering an additional 1,000,000,000 (one billion) shares of common stock
of
the Company. The Plan was filed on October 30, 2007.
The
Company has issued approximately 586,049,720 shares of common and restricted
common stock of the Company for consultant, professional and legal fees since
the 3rd quarter
ending September 30, 2007.
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(a)
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Exhibits
required to be attached by Item 601 of Regulation S-B are listed in
theIndex to Exhibits beginning on page 8 of this Form 10-QSB, which
is
incorporated herein by reference. |
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.
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AMERIRESOURCE
TECHNOLOGIES, INC.
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By:
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/s/ Delmar
A. Janovec |
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Delmar
A. Janovec, Chief Executive Officer and Principal
Financial Officer
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EXHIBIT
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DESCRIPTION |
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3.1
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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.). |
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3.2
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Bylaws
of the Company. (Incorporated by reference from the Company’s Form S-4,
file number 33-44104, effective on February 11, 1992.) |
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10.1
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Unregistered
Sales of Equity Securities, by and between QualityStocks, LLC in
satisfaction of an agreement entered into between the companies. (filed
as
an Exhibit 10 to the Company’s Current Report on Form 8-K filed on
September 4, 2007, and incorporated herein by reference). |
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10.2
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Stock
Exchange Agreement, by and between Net2Auction, Inc., a subsidiary
of the
Company, and Nexia Holdings, Inc., dated June 22, 2007. (filed as an
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 25,
2007, and incorporated herein by reference). |
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10.3
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Settlement
Agreement, dated March 27, 2006, by and between American Factors
Group, LLC, AmeriResource Technologies, Inc., and Delmar
Janovec.(filed as Exhibit 10.1 to the Company's Current Report on
Form 8-K filed on March 31, 2006,
and incorporated herein by reference). |
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10.4
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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). |
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10.5
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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). |
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10.6
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Acquisition
and Stock Exchange Agreement between the Company
and RoboServer Systems Corp. dated August 26, 2004
(filed as Exhibit 10.1 to the Company’s Current Report
on Form 10-KSB filed on April 15, 2005, and incorporated
herein by reference). |
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10.7
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Acquisition
and Stock Exchange Agreement between the Company and Net2Auction, Inc.
dated December 2, 2004. (filed as Exhibit 10.2 to the Company’s Current
Report on Form 10-KSB filed on April 15, 2005, and incorporated herein
by
reference). |
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10.8
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Fourth
Addendum Settlement and Release Agreement between the Company and American
Factors Group, LLC dated February 28, 2005. (filed as Exhibit 10.3
to the
Company’s Current Report on Form 10-KSB filed on April 15, 2005, and
incorporated herein by reference). |
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10.9
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Shares
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). |
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10.10
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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). |
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14
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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). |
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21
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Subsidiaries
of Registrant (filed as Exhibit 21 to the Company's Form 10-K filed
on
April 18, 2006, and incorporated herein by reference). |
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31.1
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Certification
of Chief Executive Officer under Section 302 of the
Sarbanes-Oxley Act of 2002. |
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32.1
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Certification
of Chief Executive Officer of AmeriResource Technologies, Inc.
Pursuant to 18 U.S.C. §
1350 |
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