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Replies to post #58243 on Tytan Holdings Inc (TYTN)
09/20/11 8:14 PM
Management’s discussion and plan of operation. as seen on p.13-14 2011 Q1 QUARTERLY REPORT
The first quarter of 2011 was sluggish due to poor weather, a weak economy and the Company’s intense focus on exciting future projects. Our sales for Q1 2011 were $97,586 compared to sales of $234,324 in 2010 representing a decrease of 58% year over year. Our cost of sales for Q1 2011 was $38,707 or 67% less than 2010. Our expenses this quarter were $50,611, or 106% more than for the first quarter of 2010. Our Q1 2011 net income was $3,066, or 96% less than 2010. Factors that adversely affected the Company were:
1. Prior to the Recession of 2008, buyers were able to purchase Tytan products with 0% down and low interest rates. Banks are now requiring potential customers to place 30% down and have credit scores 700 and higher. With buying interest down anyway due to the Recession, it was even harder for buyers to acquire our products, consequently our sales flagged.
2. 2010 was the last year of EPA Emission requirement transitions. This resulted in engine manufacturers refusing to incur these extra costs which meant a shortage of engines and parts.
3. We were involved in a Washington State Consumer Protection Act, defamation and other claims lawsuit which occupied much of our time and resources, taking focus away from our core business. The result, however, was satisfactory.
4. Much time and effort was spent designing and overseeing the new product line manufacturing. Molds were purchased and factory orders were negotiated and placed. This includes the much awaited Mini 304 tractor as well as several new implements.
The Company believes that all three of these challenges have been, or will be, made moot beginning with the Q2 2011 and reports the following:
1) “Our dealers are reporting that financing conditions for them and their customers have been improving in recent months. This should bode well for us since we believe that we have low overhead and high profit margins due to our proprietary relationships with our manufacturers in China.
2) Dealers have learned that they must make higher profits in these tough economic times. We believe that our products fit the bill perfectly by being extremely competitively priced, having very attractive dealer profit margins, and meeting OSHA and EPA requirements. Tytan’s new products all have unique product features that create a niche that should leave us having very little competition. Start up dealers also like the fact that they are not forced to purchase huge quantities that would create financial hardship.
3) Tytan hopes to be able to offer financing for both wholesale dealers and retail customers, which will be a first for a company in the economy priced tractor sector. Tytan is hopeful that this program will be available in the 3rd quarter of 2011.
4) The EPA’s Tier IV Requirements took effect in 2011 and should remain the same for many years to come without further changes. Tytan’s engine manufacturers now will be able to plan and produce complying engines for the future without supply interruption.
5) Tytan also purchased a patented special coating that enhances fuel efficiency and reduces diesel emissions. It appears from various testing so far that emissions can be reduced by 4-8%.”
