Form 10QSB for AMERIRESOURCE TECHNOLOGIES INC

20-Nov-2006

Quarterly Report

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 primarily through its subsidiaries, including RoboServer Systems Corp. ("RBSY"), Self-Serve Technologies, Inc. ("SSTI"), Net2Auction, Inc. ("NAUC"), Net2Auction Corporation ("N2AC"), AuctionWagon Inc. ("AWI"), Auction Boulevard ("AB") BizAuctions Corp. ("BAC"), and Kootenai Corp. ("KNTI"). As of August 1, 2006, the Company owned approximately 38.7% of NAUC common stock and upon conversion of the SuperVoting Preferred collectively gives AMRE 69.6% control, which owns 100% of N2AC and AWI. NAUC is publicly traded on the Pink Sheets under the stock symbol "NAUC." As of August 1, 2006, the Company owned approximately 47.15% of RBSY's common stock and upon conversion of the SuperVoting Preferred would give the Company approximately 76.2% control, which owns 100% of SSTI. RBSY is publicly traded on the Pink Sheets under the symbol "RBSY." As of August 1, 2006, the Company's subsidiary, NAUC owns approximately 70% of KTNI's common stock and gives the company majority control. KTNI's name has been changed to BizAuctions, Inc. as of August 17, 2006, and is publicly traded on the Pink Sheets under the symbol "BZCN." BAC is a wholly-owned subsidiary of BZCN. The Company continues to search for viable business operations to acquire or merge with in order to increase the Company's revenues, asset base, and to achieve profitability.

NET2AUCTION, INC.

Net2Auction is an operator of online auction drop-off locations and develops relationships with independently owned and/or franchised pack and ship centers. We believe Net2Auction is ideal for people who want hassle-free selling of their used goods online using eBay internet auction site. In addition to the millions of people who trade on eBay, we believe there is a large population of people who would like to participate on eBay, but lack the skills, time or inclination to sell online directly. Net2Auction serves this population by extending the reach of eBay.

Net2Auction handles all aspects of selling goods on eBay for its customers, including photographing the goods to be sold, posting a picture of the goods on eBay, drafting the product description for eBay, handling inquiries from potential purchasers, selling the goods, processing payments for the goods, and taking care of shipping the goods to the final purchaser. A customer of Net2Auction gets a majority of the proceeds from the sale of the goods while Net2Auction does all the work.

As of September 30, 2006, NAUC operates eighteen (18) drop-off locations, in addition to the twenty-five (25) affiliate locations that were acquired in our acquisition of Auction Wagon Inc., on September 30, 2005. During the third quarter of 2006, Net2Auction developed numerous business commercial accounts with several top retailers-wholesalers within the USA. Net2 liquidates the excess inventory and/or returned merchandise of such accounts on eBay. 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. Net2Auction continues to receive a customer satisfaction rating on eBay exceeding 99%. Net2Auction is listed as an "eBay Trading Assistant," which allows the Company to reach millions of potential buyers for our customers' unwanted goods or products. To learn more, please visit our website at www.net2auction.com.

AUCTION WAGON

AWI was incorporated in September of 2003 and became the first eBay consignment store in the Los Angeles market. AWI is the first company to qualify as both an eBay certified developer and an eBay Trading Post. AWI is a frontrunner in both the retail and software segments of the industry, being featured in Entrepreneur, the New York Times, and the Wall Street Journal. AWI currently markets its consignment software to drop-off stores, and maintains a national affiliate network of drop-off locations.

AWI's software, Store Manager Pro G2, performs virtually all of the functions needed by an eBay consignment store, from printing contracts, barcodes, and inventory labels to managing its inventory, payment, shipping, 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, AWI has added approximately 96 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, NAUC acquired assets from AB. AB is an operator of online auction drop-off locations. Among the assets acquired by NAUC were all rights to the AB name, all of AB intellectual property, and all eBay accounts opened by AB. Additionally, AB assigned to NAUC the lease to AB's principle place of business, located in Encino, California.

AB is a Trading Assistant, as determined by e-Bay, with operations and drop-off store located at 17412 Ventura Boulevard, Encino, CA (northern Los Angeles area). Auction Boulevard has accumulated in excess of 2,000 positive feedbacks on eBay and has a 99% positive feedback. To learn more, please visit our website at www.auctionboulevard.com.

BIZAUCTION, 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. To learn more, please visit our website at www.bizauctions.com.

ROBOSERVER

RBSY is a leading provider of self-service technologies to restaurant industries. RBSY's self-serve systems are designed to work like ATM machines, allowing customers to quickly and easily place orders, pay, and go. Industry estimates and market observations show that self-serve technologies can cut customer waiting time by as much as 33%.

RBSY kiosks can be installed in any restaurant in the United States. RBSY also provides customers with custom software to allow the customer to operate the kiosk with optimum efficiency. To provide our customers with a custom software solution, RBSY has partnered with a leading kiosk software development company, St. Clair Interactive Systems. St. Clair provides our customers with leading edge technology and online monitoring systems. RBSY has also partnered with Renaissance Systems, a leading technology company. Our partnership with Renaissance allows RBSY to undertake any and all customer projects regardless of the size and scope.

RBSY kiosks are manufactured by KIS Kiosks. RBSY's partnership with KIS allows us to offer the competitive pricing and top quality hardware products available. The market for RBSY's point-of-sale and self-serve technologies is increasing rapidly. Business owners are seeking out self-serve kiosks to allow such owners to provide more efficient service to their customers as well as reduce labor costs.

RBSY has installed two (2) pilot RoboServer self-serve units in two (2) different fast-food franchisees, with the first installation at Angelo's Burgers in Encinitas, CA and the second installation at Dairy Queen in Oceanside, CA. The Angelo's Burgers installation was completed in the fall of 2005, and the Dairy Queen in the spring of 2006. RBSY continues to receive numerous inquiries from some of the leading fast-food chains for the RBSY self-serve kiosks. SSTI is a wholly-owned subsidiary of RBSY and is the entity that has performed all of the research, development, and modifications since the POS software and self-serve technologies were acquired on or about May 15, 2004. To learn more, please visit our website at www.roboservercorp.com.

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the audited financial statements and notes thereto included in our annual report on Form 10-KSB for the fiscal year ended December 31, 2005, and should further be read in conjunction with the financial statements included in this report. Comparisons made between reporting periods herein are for the three and nine- month periods ended September 30, 2006, as compared to the same period in 2005.

Revenues for the third quarter ended September 30, 2006, increased to $261,154 from $42,405 in revenues for 2005. The Company's net loss for the quarter ended September 30, 2006, decreased to $426,273 from $468,327 in 2005. The Company's expenses for the third quarter ended September 30, 2006, as compared to 2005, are set forth below:

The increase in expenses for the third quarter of 2006 relative to the same period for 2005 is primarily related to the increase in general & administrative expenses to $1,113,960 for the quarter ended September 30, 2006, as compared to $672,535 for the same period in 2005, legal and professional expenses increasing to $119,507 for the quarter ended September 30, 2006, as compared to $109,510 for the same period in 2005, research and development expenses decreased to $ 0 for the quarter ended September 30, 2006, as compared to $66,350 for the same period in 2005, and cost of goods sold increasing to $266,107 for the quarter ended September 30, 2006, as compared to $93,874 for the same period in 2005.

LIQUIDITY AND CAPITAL RESOURCES

The Company's net cash used in operating activities for the nine months ended September 30, 2006, increased to $771,791 as compared to net cash used in operating activities of $481,581 for the same period in 2005. This increase is mainly attributable to the increase of operations and the acquisition of additional subsidiaries in the development stages of operations. The increase in net loss of $1,579,655 for the nine months ended September 30, 2006, compared to a net loss of $1,455,624 for the same period in 2005, was primarily due to an increase in G & A expenses.

Net cash used in investing activities increased to $ 403,259 for the nine-months ended September 30, 2006, as compared to $302,127 for the same period in 2005. This increase is due to the purchase of BizAuctions, Inc., and the purchase of inventory assets relating to various contracts the Company has with the retailer-wholesalers.

Net cash provided by financing activities was $1,216,128 for nine-months ended September 30, 2006, compared to $1,062,033 for the same period in 2005. This increase is due to increased borrowing and the issuance of common stock effected to facilitate our 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, 2006, we were not involved in any unconsolidated SPE transactions.

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