Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. American Nano Silicon Technologies, Inc. (1415917) 10-Q published on Oct 22, 2015 at 5:03 pm
Reporting Period: Jun 29, 2015
Upon opening the new facility, the Company focused its attention on production and marketing of a flame retardant additive, a new refined chemical product for the Company, which has very strict standards. We began trial production of the product on January 2, 2012 and during calendar year 2012 conducted several rounds of testing of the quality of the product by asking potential customers for trial use. Through calendar year 2012 we were recalibrating our production process according to feedback received from potential customers. By December 2012 we had satisfied ourselves regarding the quality of our new manufacturing systems, so during 2013 we initiated efforts to market a relatively low-cost flame retardant to the electric cable industry. We discovered, however, that demand by the cable industry for our product disappeared at our price point, and so we were forced to sell at unprofitable prices. Therefore, we now only manufacture the flame retardant additive when we receive a product order.
During 2014, the Company resumed commercial-scale production of Micro Nano Silicon™. However, due to our limited financial resources and adverse market conditions, our sales have been limited and generally unprofitable. During the nine months ended June 30, 2015, the Company recorded $873,211 of revenue from Micro Nano Silicon™ and $83,704 of revenue from flame retardant additive. The remainder of our revenue was related to our detergent.
Our factory has a production capacity of 10 million tons. However, due to our aborted effort to enter the market for flame retardant and our current lack of financial resources, we are using only a small portion of that capacity. As a result of this failure to utilize the capacity of our facilities, our operations are very inefficient. Our gross loss for the three months ended June 30, 2015 and 2014, therefore, were $297,850 and $344,673, respectively. Our gross loss for the nine months ended June 30, 2015 and 2014 were $1,081,472 and 1,147,852, respectively. We will continue to operate at an unprofitable level until we secure sufficient working capital to enable us to approach full production.
Recently, however, our lack of financial resources has prevented us from carrying forward our research and development program. Therefore, during the nine months ended June 30, 2015, we incurred no expenses related to research and development. During the nine months ended June 30, 2014, we incurred $97,907 in research and development expenses.
Due, primarily, to our gross loss and interest expense, we incurred a net loss of $1,520,762 and $4,878,309 for the three and nine months ended June 30, 2015, compared to net loss of $1,529,920 and $4,440,454 for the three and nine months ended June 30, 2014. Our ability to return to profitable operations will depend on our success in rebuilding our working capital and market acceptance of our products.
Our operations used $1,909,007 in cash during the nine months ended June 30, 2015. Our use of cash fell short of our net loss of $4,878,309, as the net loss included depreciation and amortization expense of $1,168,125 and imputed interest of $179,832. In addition, during the nine months ended June 30, 2015, we reduced our accounts receivable balance by $467,737 and increased our accrued expenses by $950,473, both of which events reduced our use of cash during the period.