U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
( X ) QUARTERLY REPORT UNDER SECTION 13 0R 15(D)OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT
For the transition period from.....................to.......................
Commission file number 0-30544
MARCH INDY INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 88-0339817
(State of other jurisdiction (IRS Employer
of incorporation or organization) identification No.)
6767 W. Tropicana Avenue, Suite 207, Las Vegas , Nevada 89103
(Address of principal executive offices)
(702) 248-1027
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
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_____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
OUTSTANDING AS OF
CLASS October 16, 2000
- -----
Common
Par value $0.001 per share 4,029,916
MARCH INDY INTERNATIONAL, INC.
FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 2000
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION
Page
Item 1. Consolidated Financial Statements:
Balance Sheet as of June 30, 2000 F-1
Statements of Operations for the three months and six months
ended June 30, 2000 and from November 24, 1998 (inception) to
June 30, 2000 F-2
Statements of Cash Flows for the six months ended June 30, 2000
and from November 24, 1998 (inception) to June 30, 2000 F-3
Notes to Financial Statements F-4 - F-5
Item 2. Management's Discussion and Analysis or Plan
of Operations 6-7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 2. Changes in Securities and Use of Proceeds 7
Item 3. Defaults Upon Senior Securities 7
Item 4. Submission of Matters to a Vote of
Securities Holders 7
Item 5. Other Information 7
MARCH INDY INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
June 30, 2000
(Unaudited)
ASSETS
CASH $ 200
INTANGIBLE ASSETS (net of accumulated amortization of $42,500) 1,657,500
--------------
$ 1,657,700
==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 224,850
--------------
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value; authorized 50,000,000 shares;
4,029,916 shares issued and outstanding 4,030
Additional paid-in capital 4,532,498
Deficit accumulated in the development stage (3,103,678)
--------------
TOTAL SHAREHOLDERS' EQUITY 1,432,850
--------------
$ 1,657,700
==============
See notes to consolidated financial statements
F-1
MARCH INDY INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six Months November 24, 1998
Ended Ended (Inception)
June 30, 2000 June 30, 2000 to June 30, 2000
-------------------- ------------------------- ------------------------------
REVENUES $ - $ - $ -
COSTS AND EXPENSES:
Equipment leasing expense - 150,000 150,000
General and administrative 145,100 254,850 411,850
Non cash interest 897,500 897,500 897,500
Writedown of equipment and intangible assets 1,421,828 1,421,828 1,421,828
Loss on forfeited deposits 180,000 180,000 180,000
Amortization of intangible assets 42,500 42,500 42,500
-------------------- ------------------------- ------------------------------
NET LOSS $ (2,686,928) $ (2,946,678) $ (3,103,678)
==================== ========================== ============================
BASIC AND DILUTED LOSS
PER SHARE $ (0.69) $ (0.79) $ (0.85)
==================== ========================== ============================
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,891,169 3,752,281 3,657,251
==================== ========================== ============================
The Company was inactive during the six months ended June 30, 1999. Accordingly,
no comparative operating results are presented herein.
See notes to consolidated financial statements
F-2
MARCH INDY INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Nov. 24, 1998
Ended (Inception)
June 30, 2000 to June 30, 2000
---------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,946,678) $ (3,103,678)
Amortization 42,500 42,500
Non cash interest 897,500 897,500
Writedown of equipment and intangible assets 1,421,828 1,421,828
Changes in assets and liabilities:
Accounts payable and accrued expenses 169,850 224,850
---------------- --------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (415,000) (517,000)
---------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of loans payable 415,000 415,200
Cancellation of shareholders' debt - 102,000
---------------- --------------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 415,000 517,200
---------------- --------------
NET INCREASE IN CASH - 200
CASH - Beginning of period 200 -
---------------- --------------
CASH - End of period $ 200 $ 200
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
No cash payments were made for income taxes or
interest during each of the above periods.
Non-cash investing and financing activities:
Contribution by shareholders of operating
assets for common stock
Equipment $ - $ 330,400
Intangible assets - 2,791,428
---------------- --------------
$ - $ 3,121,828
=============== ===============
Issuance of 1,250,000 share of common stock
in payment of loans $ 415,000 $ 415,000
=============== ===============
The Company was inactive during the six months ended June 30, 1999. Accordingly,
no comparative operating results are presented herein.
See notes to consolidated financial statements
F-3
MARCH INDY INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB. Accordingly,
they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows for all
periods presented have been made. The results of operations for the six
months ended June 30, 2000 are not necessarily indicative of the
results of operations that may be expected for the year ending December
31, 2000. These financial statements should be read in conjunction with
the Company's December 31, 1999 Form 10-KSB, financial statements and
accompanying notes thereto.
2. GOING CONCERN
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company incurred an
operating loss of $3,104,000 from November 24, 1998 (Inception) to June
30, 2000. Additionally, the Company had a working capital deficiency of
$225,000 at June 30, 2000. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
Management's plans with respect to these matters include restructuring
its existing obligations and raising additional capital through future
issuances of stock and or debentures. The accompanying financial
statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
3. LOANS PAYABLE
During the six months ended June 30, 2000, certain persons made
advances of $415,000 on behalf of the Company in payment of deposits,
an equipment lease and amounts due to vendors. Such advances were
interest-free and due on demand. On May 12, 2000, 1,250,000 restricted
common shares with a market value of $1,312,500 were issued in payment
of the outstanding debt. The excess of market value over the debt in
the amount of $897,500 was reflected as non-cash interest expense in
the June 30, 2000 financial statements.
F-4
4. ASSET IMPAIRMENT CHARGE
During the quarter ended June 30, 2000, the Company recorded an
impairment charge of $1,421,828 resulting in part from the obsolescence
of certain equipment and intangible assets due to recent developments
in design and technology as well as the advent of new technical
regulations for competition. Accordingly, carrying amounts for
equipment of $330,400 and the related designs and slot rights of
$697,857 were charged in the period.
The Company has been unable to commence operations and to further
exploit the "March" brand. Accordingly, management has deemed it
appropriate to recognize a partial diminution of value in the "March"
brand approximating $400,000 in the current financial statements.
5. COMMON STOCK
The Company rescinded the issuance of 158,600 shares, resulting from an
over allotment of shares to certain shareholders in connection with the
reverse acquisition of March Indy International, Inc. The financial
statements give retroactive effect to this transaction.
On June 17, 2000 the Company declared a one for three reverse stock
split, effective June 26, 2000. The financial statements give
retroactive effect to this transaction.
6. COMMITMENTS AND CONTINGENCIES
a. The Company was obligated under an equipment lease which
terminates in December 2000. The lease required advance
payments of $530,000 as of May 20, 2000, of which the Company
paid $150,000 as of June 30, 2000. The Company is presently
alleging failure of the lessor to perform in accordance with
the agreement and has withheld payment of the balance of
$380,000 due on the contract. Management is engaged in
negotiations to resolve the dispute and accordingly, has not
made any provision for loss in the financial statements. The
initial payment was charged to operations as of June 30, 2000.
b. In March 2000, the Company agreed to purchase an office
building in Hallandale, Florida for approximately $350,000 and
made a non-refundable down payment of $170,000 towards the
purchase price. The Company was given a six-month extension to
complete the transaction but was unable to do so. Accordingly,
the $170,000 non-refundable down payment was charged to
operations during the three months ended June 30, 2000.
The Company is currently obligated under a three-year lease of
the aforementioned premises, commencing April 1, 2000, for
monthly rentals of $2,850. The financial statements include
rent expense of $8,550 through June 30, 2000.
F-5
c. In May 2000, the Company amended previously reported
compensation agreements with Messrs. Herd, Megas and
Johansson. The amended agreements call for modified payments
of combined aggregate annual compensation ranging from
$188,000 to $867,000, commencing June 1, 2000.
F-6
ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Statements included in this "Management Discussion and Analysis or Plan of
Operations" which are not historical facts are forward looking statements. These
forward-looking statements involve risks and uncertainties that could render
them materially different, including, but not limited to, the risk that new
products and sponsorships may not be available on a timely basis, and the risk
that the Company will not raise additional funds necessary to fund working
capital needs and the risk that the Company would not be able to fund its
working capital needs from cash flow.
Overview:
March Indy International, Inc. (the "Company") was incorporated as N.E.C.
Properties Inc. in Nevada in 1995. In November 1999, the Company changed its
name to March Indy International, Inc. after completing, on November 10, 1999,
the acquisition of all of the common stock of March Indy International, Inc., a
Delaware Corporation ("March Delaware"). The merger was accounted for as a
reverse acquisition. The Company exists primarily as a stock holding company,
and accordingly, the operations described in this document, unless otherwise
specified, are those of the subsidiary, March Delaware. The Company intends to
engage in the business of designing and building racing chassis to be sold to
racing teams competing in Formula, KART and Indy racing competitions. The
Company was in the development stage as of June 30, 2000. The Company decided to
delay the commencement of racing operations until 2001 and decided not to enter
the recent Indianapolis 500 race in May 2000.
Development Stage Revenues:
The Company's operations have been devoted primarily to developing a business
plan, acquiring its March subsidiary, developing its racing team, developing a
business plan for the production of chassis and administrative functions. The
Company has had no revenue to date. The Company intends to grow through internal
development and strategic alliances. The ability of the Company to achieve its
business objectives is contingent upon its success in raising additional capital
until adequate revenues are realized from operations.
Development Stage Expenses:
The Company's development stage expenses were $2,946,678 for the six months
ended June 30, 2000 and $3,103,678 for the period from November 24, 1998
(inception) to June 30, 2000. The expenses incurred were primarily due to
various consulting, managerial and professional services in pursuit of the
Company's objectives and the write-down of the intangible assets.
6
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
Not Applicable
ITEM 2. Changes in Securities and Use of Proceeds
Not Applicable
ITEM 3. Defaults Upon Senior Securities
Not Applicable
ITEM 4. Submission of Matters to a Vote of Securities Holders
Not Applicable
ITEM 5. Other Information
On June 17, 2000, the Board of Directors of the Company approved a 1-for-3
reverse stock split with an effective date of June 26, 2000, which reduced the
number of outstanding common shares of the Company from 12,089,957 to 4,029,916.
In connection with the reverse split, the Company changed its stock symbol from
"INDY" to "MIDI".
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
NUMBER DESCRIPTION
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on form 8-K were filed during the quarter ended June 30, 2000
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MARCH INDY INTERNATIONAL INC.
DATE: OCTOBER 31, 2000 /S/ TOM MEGAS
------------------------------
Tom Megas
Chief Executive Officer
8