Item
2.
Management’s Discussion and Analysis Or Plan Of Operation
Forward-Looking
Statements and Associated Risks
.
This
Report contains forward-looking statements. Such forward-looking statements
include statements regarding, among other things, (a)) our growth strategies,
(b) anticipated trends in our industry, (c) our future financing plans, (d)
our anticipated needs for working capital, (e) our lack of operational
experience, and (f) the benefits related to ownership of our common stock.
Forward-looking statements, which involve assumptions and describe our future
plans, strategies, and expectations, are generally identifiable by use of the
words “may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,”
or “project” or the negative of these words or other variations on these words
or comparable terminology. These forward-looking statements are based largely
on
the Company’s expectations and are subject to a number of risks and
uncertainties, including those described in “Business Risk Factors” of the
Company’s Form 10-KSB for the year ended December 31, 2006. Actual results
could differ materially from these forward-looking statements as a result of
changes in trends in the economy and the industry, demand for the Company’s
services,, competition, reductions in the availability of financing and
availability of raw materials, and other factors. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this Report will in fact occur as projected.
Any
forward-looking statement speaks only as of the date on which such statement
is
made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of
each
such factor on the business or the extent to which any factor, or combination
of
factors, may cause actual results to differ materially from those contained
in
any forward-looking statements.
Overview
American
Racing Capital, Inc. (the “
Company
”)
was
incorporated under the laws of the State of Nevada on September 8, 1998 as
Mega
Health Corporation. On June 23, 1999, the name of the corporation was changed
to
Altrimega Health Corporation (“
Altrimega
”).
On
July 25, 2002, the Company entered into a non-binding letter of intent with
Creative Holdings, Inc., a South Carolina corporation “Creative Holdings”.
Pursuant to that Letter of Intent and upon the consummation of a definitive
agreement, Altrimega was to acquire Creative Holdings. A Merger Agreement “the
Merger Agreement” was executed on August 15, 2002, between the Company,
Altrimega Acquisition Company, a Nevada corporation, Creative Holdings and
the
shareholders of Creative Holdings. On September 2, 2002, the Company, Creative
Holdings and the shareholders of Creative Holdings, Inc. amended the Merger
Agreement and restructured the merger into a stock exchange transaction, whereby
Creative Holdings would become a wholly-owned subsidiary of the Company. The
share exchange was completed on October 17, 2002, at which time, Creative
Holdings became a wholly owned subsidiary of the Company.
Pursuant
to the agreement (effective retroactively as of August 15, 2002), by and among
the Company, Creative Holdings and the shareholders of Creative Holdings, the
shareholders exchanged with and delivered to the Company 100% of the issued
and
outstanding capital stock of Creative Holdings in exchange for 20,000,000 shares
of common stock of the Company and 1,000,000 shares of Series A Convertible
Preferred Stock of the Company. Each share of Series A Convertible Preferred
Stock was convertible into 300 shares of common stock of the Company. Between
December 21, 2004 and January 5, 2005, the Company entered into releases with
each holder of the Company’s 1,000,000 shares of Series A Preferred Stock, which
resulted in the cancellation of all of the Company’s outstanding shares of
Series A Preferred Stock.
On
October 17, 2005, the Company entered into a Share Exchange Agreement, by and
among the Company, American Racing Capital, Inc., a Nevada company
(“
ARCI
”)
and
the shareholders of ARCI, pursuant to which, the ARCI shareholders exchanged
with, and delivered to the Company all of the issued and outstanding common
stock of ARCI in exchange for 150,000,000 shares of the Company’s common stock
and 1,000,000 shares of Series A Preferred Stock, which can be converted at
any
time into three hundred (300) fully paid, nonassessable shares of the Company’s
common stock. As a result of the Share Exchange Agreement, on October 19, 2005,
ARCI became a wholly-owned subsidiary of the Company.
On
October 18, 2005, the Company entered into a Share Exchange Agreement, by and
among the Company, ARC Development Corporation, a Nevada corporation
(“
ARCD
”)
and
the shareholders of ARCD. Pursuant to the Share Exchange Agreement, the ARCD
shareholders exchanged with, and delivered to, ARC the issued and outstanding
common stock of ARCD in exchange for 235,000,000 shares of the Company’s common
stock, and 1,000,000 shares of Series A Preferred Stock, which can be converted
at any time into three hundred (300) fully paid, nonassessable shares of the
Company’s common stock. As a result of the Share Exchange Agreement, on October
19, 2005, ARCD became a wholly-owned subsidiary of the Company.
As
a
result of the above described ARCI and ARCD share exchange transactions, in
October 2005, the Company adopted a new strategy which seeks to integrate race
track design and development operations with a professional racing team and
a
national driving school network to leverage the popularity and growth of the
motor sports industry.
On
March
20, 2006, the Board of Directors of the Company, in lieu of a special meeting
and pursuant to unanimous written consent, approved a one for one hundred
(1-for-100) reverse stock split (the “
Reverse
Stock Split
”)
of the
Company’s issued and outstanding, which became effective on March 30, 2006 (the
“
Effective
Date
”).
On
the Effective Date, the Company’s issued and outstanding Common Stock was
reduced based on the 1-for-100 ratio and the new symbol for the Company was
changed to ‘ANRC’.
On
October 27, 2006, the Company entered in a Settlement Agreement and General
Release with D. Davy Jones whereby it returned the shares of its former
subsidiaries FastOne, Inc. and Davy Jones Motorsports, Inc. to Mr. Jones for
1,500,000 shares of its common stock and 1,000,000 shares of its preferred
stock. As additional consideration for termination of his employment contract,
the Company agreed to pay Mr. Jones $240,000 over 24 months. The Company is
currently in litigation with Mr. Jones regarding the payments due under the
Settlement Agreement.
Critical
Accounting Policies And Estimates
Management’s
discussion and analysis of the Company’s financial condition and results of
operations are based upon the Company’s consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires that we make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues and expenses. At each balance sheet date,
management evaluates its estimates. The Company based its estimates on
historical experience and on various other assumptions that are believed to
be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. The estimates and critical
accounting policies that are most important in fully understanding and
evaluating our financial condition and results of operations include those
listed below.
Revenue
Recognition
The
Company recognizes revenue when services have been provided and collection
is
reasonably assured.
Principles
Of Consolidation
On
October 17, 2005, the Company entered into a Share Exchange Agreement, by and
among the Company, ARCI and the shareholders of ARCI, pursuant to which, the
ARCI Shareholders exchanged with, and delivered to the Company all of the issued
and outstanding common stock of ARCI in exchange for 150,000,000 shares of
the
Company’s Common Stock and 1,000,000 shares of Series A Preferred Stock, which
can be converted at any time into three hundred (300) fully paid, nonassessable
shares of the Company’s Common Stock. As a result of the Share Exchange
Agreement, on October 19, 2005, ARCI became a wholly-owned subsidiary of the
Company. The shareholders of Fast One, Inc., DJ Motorsports, Inc. and ARCI
became the controlling shareholders of the Company. Accordingly, the financial
statements of Fast One, Inc., DJ Motorsports, Inc. and ARCI are presented as
the
historical financial statements of the Company.
All
intercompany transactions have been eliminated.
Results
Of Operations
For
The Three Months Ended September 30, 2007 Compared To The Three Months Period
Ended September 30, 2006
Revenues
Revenue
from continuing operations for the three months ended September 30, 2007, was
$277,621 as compared to $5,375 in revenues for the comparable period ended
September 30, 2006. The Company disposed of its ownership of Davy Jones
Motorsports, Inc. and Fast One, Inc. on October 1, 2006 while it acquired a
controlling interest in LJJ in June of 2007. Beginning with July 1, 2007, the
Company consolidates its investment in LJ&J accordingly its revenues are now
recognized in the financial statements.
Operating
expenses.
Operating
expenses for the three months ended September 30, 2007 were $573,287, as
compared to $6,084,648, for the three months ended September 30, 2006 a decrease
of $5,511,361 or 91%. The decrease is primarily attributable to the Company
reducing the number of shares of its common stock issued for services. Operating
expenses for the three months ended June 30, 2006 consisted of $5,997,869 in
consulting and professional fees paid in connection with acquisitions being
considered compared to $86,964 in the comparable period in 2007.
Net
( loss).
The
Company had a net loss of $1,036,525 for the three months ended September 30,
2007, as compared to a net loss of $6,161,217 for the three months ended
September 30, 2006 a decrease of $5,124,692 or 83%. The decreased loss of was
primarily attributable to the value of the shares of common stock and warrants
issued to consultants during 2006.
For
The Nine Months Ended September 30, 2007 Compared To The Nine Months Period
Ended September 30, 2006
Revenues
Revenue
from continuing operations for the nine months ended September 30, 2007, was
$277,621 compared to $21,622 in revenues for the comparable period ended
September 30, 2006. The Company disposed of its ownership of Davy Jones
Motorsports, Inc. and Fast One, Inc. on October 1, 2006 while it acquired a
controlling interest in LJJ in June of 2007. Beginning with July 1, 2007, the
Company consolidates its investment in LJ&J accordingly its revenues are now
recognized in the financial statements.
Operating
expenses.
Operating
expenses from continuing operations for the nine months ended September 30,
2007
were $5,332,063, as compared to $6,144,389, for the nine months ended September
30, 2006 a decrease of $812,326 or 13%. This increase is primarily attributable
to the Company issuing fewer shares of its common stock for services. Operating
expenses for the nine months ended September 30, 2007 consisted of $4,775,050
in
consulting and professional fees paid in connection with acquisitions being
considered and $557,013 in general and administrative expense as compared to
$5,999,632 and $144,757, respectively, in the comparable period ended September
30, 2006.
Net
(loss).
The
Company had a net loss of $6,130,189 for the nine months ended September 30,
2007, as compared to a net loss of $6,204,711 for the nine months ended
September 30, 2006 a decrease of $74,522 or 1%. The Company’s operations include
those of LJJ on a consolidated basis beginning July 1, 2007.
Liquidity
And Capital Resources
Our
financial statements have been prepared on a going concern basis that
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. We have incurred losses since
inception. We incurred a net loss of $6,130,189 for the nine months ended
September 30, 2007, and have an accumulated deficit of $11,492,186 at September
30, 2007. As of September 30, 2007, we had current assets of $128,440 and
current liabilities of $2,344,364 resulting in a working capital deficit of
$2,215,924.
For
the
nine months ended September 30, 2007, the Company used net cash in its
operations of $755,412, $250,000 cash was used in investing activities to
complete the acquisition of LJ&J and $1,200,000 cash was provided by
financing activities through the issuance of convertible debt.
Included
in the Company’s liabilities, is $1,873,655 in convertible debt net of the
discount for the beneficial conversion feature. In the third quarter of 2006,
the Company secured funding through the issuance of notes and warrants. On
July 25, 2006, the Company entered into a Securities Purchase Agreement
with New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
AJW
Offshore, Ltd. and AJW Partners, LLC (collectively, the “
Investors
”).
Under
the terms of the Securities Purchase Agreement, the Investors purchased an
aggregate of (i) $2,000,000 in callable convertible secured notes (the
“
Notes
”)
and
(ii) warrants to purchase 10,000,0000 shares of our common stock (the
“
Warrants
”).
The
Notes carry an interest rate of 6% per annum and a maturity date of July 25,
2009. The notes are convertible into the Company’s common shares at fifty
percent (50%) (the “
Applicable
Percentage
”)
of the
average of the lowest three (3) trading prices for our shares of common stock
during the twenty (20) trading day period prior to conversion. However, the
Applicable Percentage shall be increased to (i) 55% in the event that a
Registration Statement is filed within thirty days of the closing and (ii)
60%
in the event that the Registration Statement becomes effective within one
hundred and twenty days from the Closing. In addition, the Company has granted
the investors a security interest in substantially all of its assets and
intellectual property as well as registration rights. In connection with the
Securities Purchase Agreement, the Company issued to the Investors seven year
warrants to purchase 10,000,000 shares of our common stock at an exercise price
of $0.30.
On
June
10, 2007, the Company entered into a Securities Purchase Agreement. Under the
terms of the Securities Purchase Agreement, the Investors purchased an aggregate
of (i) $500,000 in callable convertible secured notes (the “
Notes
”)
and
(ii) warrants to purchase 1,100,000 shares of the Company’s Common Stock (the
“
Warrants
”)
at an
exercise price of $0.50. The Notes carry an interest rate of 12% per annum
and a
maturity date of December 11, 2007.
Plan
Of Operation
The
Company’s plan of operations which seeks to integrate race track design and
development operations with a professional racing team and a national driving
school network to leverage the popularity and growth of the motor sports
industry.
For
the
next 12 months, the Company anticipates that it will need $2,500,000 to fund
event and administrative operations and provide working capital, in addition
to
funding necessary to acquire and develop race track projects. The Company will
seek debt financing to launch any new race track projects and will seek equity
funding or a combination of debt/equity financing for operations.
RISK
FACTORS
Risks
Related To Our Business
We
are subject to various risks that may materially harm our business, financial
condition and results of operations. You should carefully consider the risks
and
uncertainties described below and the other information in this filing before
deciding to purchase our common stock. If any of these risks or uncertainties
actually occurs, our business, financial condition or operating results could
be
materially harmed. In that case, the trading price of our common stock could
decline.
We
Have Historically Lost Money And Losses May Continue In The Future, And This
May
Adversely Impact Our Business.
Since
our
inception, through June 30, 2007 we have not been profitable and have lost
money
on both a cash and non-cash basis. For the nine months ended September 30,
2007,
we incurred a net loss of $5,093,664. As of September 30, 2007, our accumulated
deficit was $10,455,659. Future losses are likely to occur, as we are dependent
on spending money to evaluate and pursue motor sports development projects.
No
assurances can be given that we will be successful in maintaining operations
or
reaching profitable operations. Accordingly, we may continue to experience
liquidity and cash flow problems.
Our
Limited Operating History Makes It Difficult Or Impossible To Evaluate Our
Performance And Make Predictions About Our Future
Due
to
our limited operating history, it is difficult to make an evaluation of our
future performance can be made. You should be aware of the difficulties normally
encountered by motorsports companies similarly situated to us and the high
rate
of failure of such enterprises. If we do not successfully address the risks
facing us, then our future business prospects will be significantly limited
and,
as a result, the trading price of our common stock would likely decline
significantly. You should consider the likelihood of our future success in
view
of our limited operating history, as well as the complications frequently
encountered by other companies in the early stages of development. If we
encounter problems, additional costs, difficulties, complications or delays
in
connection with our motorsports activities, it will have a material adverse
effect on its business, results of operations and financial condition, and
as a
result, we could be forces to cease our business operations.
We
Will Need To Raise Additional Capital Or Debt Funding To Sustain Operations,
And
Our Inability To Obtain Adequate Financing May Result In Us Curtailing or
Ceasing Our Business Operations
Unless
we
can become profitable, we will require additional capital to commence and
sustain operations and will need access to additional capital or additional
debt
financing to grow. In addition, to the extent that we have a working capital
deficit and we will need to raise capital to repay the deficit and provide
more
working capital to permit growth in revenues. We cannot assure you that
financing whether from external sources or related parties will be available
if
needed or on favorable terms. Our inability to obtain adequate financing will
result in the need to reduce the pace of implementing our business objectives.
Any of these events could be materially harmful to our business, which would
force us to curtail or cease our business operations, thus resulting in a lower
stock price.
We
Have Been The Subject Of A Going Concern Opinion From December 31, 2006 and
2005. From Our Independent Auditors, Which Means That We May Not Be Able To
Continue Operations Unless We Can Become Profitable or Obtain Additional
Funding
Our
independent auditors had added an explanatory paragraph to their audit opinions
issued in connection with our financial statements for the year ended December
31, 2006, which stated that the financial statements raise substantial doubt
as
to our ability to continue as a going concern. Our ability to make operations
profitable or obtain additional funding will determine our ability to continue
as a going concern. Our financial statements do not include any adjustments
that
might result from the outcome of this uncertainty. We will have to raise
additional funds to meet our current obligations and to cover operating expenses
through the year ending December 31, 2007. If we are not successful in raising
additional capital we may not be able to continue as a going concern.
We
Are Subject To A Working Capital Deficit, Which Means That Our Current Assets
On
September 30, 2007 Were Not Sufficient To Satisfy Our Current
Liabilities
As
of
September 30, 2007, we had current assets of $128,440 and current liabilities
of
$2,344,364 resulting in a working capital deficit of $2,215,924. Current assets
are assets that are expected to be converted to cash within one year and,
therefore, may be used to pay current liabilities as they become due. Our
working capital deficit means that our current assets on September 30, 2007
were
not sufficient to satisfy all of our current liabilities on that date. We will
have to raise capital or debt to fund the deficit or cease our business
operations.
Our
Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
Significantly, And This May Adversely Affect Your
Investment
There
has
been a limited public market for our common stock and there can be no assurance
that a more active trading market for our common stock will develop. An absence
of an active trading market could adversely affect our shareholders’ ability to
sell our common stock in short time periods, or possibly at all. Our common
stock has experienced in the past, and is likely to experience in the future,
significant price and volume fluctuations, which could adversely affect the
market price of our common stock without regard to our operating performance.
In
addition, we believe that factors such as changes in the overall economy or
the
condition of the financial markets could cause the price of our common stock
to
fluctuate substantially. These fluctuations may also cause short sellers to
enter the market from time to time in the belief that we will have poor results
in the future. We cannot predict the actions of market participants and,
therefore, can offer no assurances that the market for our stock will be stable
or appreciate over time.
Our
Common Stock Is Deemed To Be “Penny Stock,” Which May Make It More Difficult For
Investors To Sell Their Shares Due To Suitability
Requirements
Our
common stock is deemed to be “penny stock” as that term is defined in
Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as
amended. These requirements may reduce the potential market for our common
stock
by reducing the number of potential investors. This may make it more difficult
for investors in our common stock to sell shares to third parties or to
otherwise dispose of them. This could cause our stock price to decline. Penny
stocks are stock:
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With
a price of less than $5.00 per
share;
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That
are not traded on a “recognized” national exchange;
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Whose
prices are not quoted on the NASDAQ automated quotation system (NASDAQ
listed stock must still have a price of not less than $5.00 per share);
or
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In
issuers with net tangible assets less than $2.0 million (if the issuer
has
been in continuous operation for at least three years) or $10.0
million (if in continuous operation for less than three years), or
with
average revenues of less than $6.0 million for the last three
years.
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Broker/dealers
dealing in penny stocks are required to provide potential investors with a
document disclosing the risks of penny stocks. Moreover, broker/dealers are
required to determine whether an investment in a penny stock is a suitable
investment for a prospective investor.
Additional
Financing May Potentially Dilute The Value Of Our Stockholders’
Shares
We
will
need to raise additional capital to fund our anticipated future expansion and
implement our business plan. Any additional financing may also involve dilution
to our then-existing stockholders, which could result in a decrease in the
price
of our common stock.
We
Depend On Key Personnel And Our Failure To Attract Or Retain Key Personnel
Could
Harm Our Business
Our
success largely depends on the efforts and abilities of our key executive and
consultants, including A. Robert Koveleski, our President and Chief Executive
Officer, and consultant, Steve B. Pinson, consultant dba Pinson LLC. The loss
of
the services of Messrs. Pinson and Koveleski could materially harm our business
because of the cost and time necessary to replace and train a replacement.
Such
a loss would also divert management attention away from operational issues.
New
Business Ventures Or Acquisitions That We May Undertake Would Involve A Number
Of Inherent Risks, Any Of Which Could Cause Us Not To Realize The Benefits
Anticipated To Result.
We
continually seek to expand our operations through acquisitions of businesses
and
assets. These transactions involve various inherent risks, such as:
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uncertainties
in assessing the value, strengths, weaknesses, contingent and other
liabilities and potential profitability of acquisition or other
transaction candidates;
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the
potential loss of key personnel of an acquired
business;
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the
ability to achieve identified operating and financial synergies
anticipated to result from an acquisition or other
transaction;
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problems
that could arise from the integration of the acquired or new
business;
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unanticipated
changes in business, industry or general economic conditions that
affect
the assumptions underlying the acquisition or other transaction rationale;
and
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unexpected
development costs that adversely affect our
profitability.
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Any
one
or more of these factors could cause us not to realize the benefits anticipated
to result from the acquisition of businesses or assets or the commencement
of a
new business venture.
We
Are Subject To New Corporate Governance And Internal Controls Reporting
Requirements, And Our Costs Related To Compliance With, Or Our Failure To Comply
With Existing And Future Requirements Could Adversely Affect Our
Business.
We
face
new corporate governance requirements under the Sarbanes-Oxley Act of 2002,
as
well as new rules and regulations subsequently adopted by the SEC. These laws,
rules and regulations continue to evolve and may become increasingly stringent
in the future. In particular, we will be required to include management and
auditor reports on internal controls as part of our annual report for the year
ended December 31, 2007 pursuant to Section 404 of the Sarbanes-Oxley Act.
We
cannot assure you that we will be able to fully comply with these laws, rules
and regulations that address corporate governance, internal control reporting
and similar matters. Failure to comply with these laws, rules and regulations
could materially adversely affect our reputation, financial condition and the
value of our securities.
Our
Success Will Depend Partly On Our Ability To Operate Without Infringing On
Or
Misappropriating The Proprietary Rights Of Others.
We
may be
sued for infringing on the intellectual property rights or misappropriating
the
proprietary rights of others. Intellectual property litigation is costly, and,
even if we prevail, the cost of such litigation could adversely affect our
business, financial condition and results of operations. In addition, litigation
is time consuming and could divert management attention and resources away
from
our business. If we do not prevail in any litigation, we could be required
to
stop the infringing activity and/or pay substantial damages. Under some
circumstances in the United States, these damages could be triple the actual
damages the patent holder incurs. If we have supplied infringing products to
third parties for marketing or licensed third parties to manufacture, use or
market infringing products, we may be obligated to indemnify these third parties
for any damages they may be required to pay to the patent holder and for any
losses the third parties may sustain themselves as the result of lost sales
or
damages paid to the patent holder.
If
a
third party holding intellectual property rights successfully asserts an
infringement claim with respect to any of our products, we may be prevented
from
manufacturing or marketing our infringing product in the country or countries
covered by the patent we infringe, unless we can obtain a license from the
patent holder. Any required license may not be available to us on acceptable
terms, or at all. Some licenses may be non-exclusive, and therefore, our
competitors may have access to the same technology licensed to us. If we fail
to
obtain a required license or are unable to design around a patent, we may be
unable to market some of our anticipated products, which could have a material
adverse effect on our business, financial condition and results of
operations.
Shareholders
Must Rely On Management For The Operation Of The Company.
All
decisions with respect to the operation of ANRC and development, production
and
marketing of our products and services, will be made exclusively by management.
Our success will, to a large extent, depend on the quality of the management
of
the Company. In particular, we will depend on the services of our board members
and officers. Management believes that these individuals have the necessary
business experience to supervise the management of the company and production
and commercial exploitation of our products, however, there can be no assurance
that they will perform adequately or that our operations will be successful.
Shareholders will have no right or power to take part in the management of
the
company, for the most part, except to the extent of voting for the members
of
the Board of Directors each year. Accordingly, no person should purchase any
of
the stock offered hereby unless such prospective purchaser is willing to entrust
all aspects of the management of the company to management and has evaluated
management’s capabilities to perform such functions.
We
May Issue Additional Preferred Stock In The Future, And The Terms Of The
Preferred Stock May Reduce The Value Of Your Common Stock.
We
are
authorized to issue up to 10,000,000 shares of preferred stock in one or more
series. Our Board of Directors will be able to determine the terms of preferred
stock without further action by our stockholders. We have designated 2,000,000
shares of preferred stock as Series A Convertible Preferred Stock which is
convertible into 300 shares of common stock, 1,000,000 of which were issued
to
management and are outstanding as of September 30, 2007. To the extent we
issue preferred stock, it could affect your rights or reduce the value of your
common stock. In particular, specific rights granted to future holders of
preferred stock could be used to restrict our ability to merge with or sell
our
assets to a third party. These terms may include voting rights, and may include
preferences as to dividends and liquidation, conversion and redemption rights,
and sinking fund provisions.
We
Have Not, And Currently Do Not Anticipate, Paying Dividends On Our Common Stock.
We
have
never paid any dividend on our common stock and do not plan to pay dividends
on
our common stock for the foreseeable future. We currently intend to retain
future earnings, if any, to finance operations, capital expenditures and to
expand our business.
There
Is A Limited Market For Our Common Stock Which Makes It Difficult For Investors
To Engage In Transactions In Our Securities.
Our
common stock is quoted on the Over the Counter Bulletin Board under the symbol
“AMRA.”
There
is
a limited trading market for our common stock. If public trading of our common
stock does not increase, a liquid market will not develop for our common stock.
The potential effects of this include difficulties for the holders of our common
shares to sell our common stock at prices they find attractive. If liquidity
in
the market for our common stock does not increase, investors in our company
may
never realize a profit on their investment.
Our
Stock Is Thinly Traded, Which Can Lead To Price Volatility And Difficulty
Liquidating Your Investment.
The
trading volume of our stock has been low, which can cause the trading price
of
our stock to change substantially in response to relatively small orders. In
addition, during the last two fiscal years and interim quarters, our common
stock has traded pre-split as low as $0.11 and as high as $12.00, and post-split
as low as $0.18 and as high as $0.60. Both volume and price could also be
subject to wide fluctuations in response to various factors, many of which
are
beyond our control, including actual or anticipated variations in quarterly
and
annual operating results and general market perception. An absence of an active
trading market could adversely affect our shareholders’ ability to sell our
common stock in short time periods, or possibly at all. In addition, we believe
that factors such as changes in the overall economy or the condition of the
financial markets could cause the price of our common stock to fluctuate
substantially. These fluctuations may also cause short sellers to enter the
market from time to time in the belief that we will have poor results in the
future. We cannot predict the actions of market participants and, therefore,
can
offer no assurances that the market for our stock will be stable or appreciate
over time.
A
Sale Of A Substantial Number Of Shares Of Our Common Stock May Cause The Price
Of Our Common Stock To Decline.
If
our
shareholders sell substantial amounts of our common stock in the public market,
including shares issued upon the exercise of outstanding options or warrants,
the market price of our common stock could fall. These sales also may make
it
more difficult for us to sell equity or equity-related securities in the future
at a time and price that we deem reasonable or appropriate.