U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-08735
HomeZipR Corp.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Colorado 84-0682860
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
3001 Redhill Avenue, Suite 1-204, Costa Mesa, California 92626
- --------------------------------------------------------------------------------
(Address of principal executive offices)
714-513-1219
---------------------------
(Issuer's telephone number)
N/A
- --------------------------------------------------------------------------------
(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 of 1934 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
----- -----
As of February 12, 2001, the Company had 16,150,000 shares of its no par value
common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
HOMEZIPR CORP.
--------------
INDEX TO FORM 10-QSB
--------------------
FOR THE QUARTER ENDED DECEMBER 31, 2000
----------------------------------------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Condensed Consolidated Balance Sheet
at December 31, 2000 (unaudited) 3
Condensed Consolidated Statements of Operations for the
Three and Nine Months Ended December 31, 2000
and December 31, 1999 (unaudited) 5
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended December 31, 2000 and December 31, 1999
(unaudited) 6
Notes to Condensed Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis or Plan of Operation 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
HOMEZIPR CORP.
--------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
DECEMBER 31, 2000
------------------
(Unaudited)
ASSETS
------
CURRENT ASSETS
- --------------
CASH AND CASH EQUIVALENTS $ 13,412
------------------------- ----------------
ACCOUNTS RECEIVABLE 0
------------------- ----------------
STOCK SUBSCRIPTION RECEIVABLE 96,300
----------------------------- ----------------
DEPOSITS 50,565
-------- ----------------
TOTAL CURRENT ASSETS 160,277
-------------------- ----------------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION 804,574
- ----------------------------------------------------- ----------------
TOTAL ASSETS $ 964,851
- ------------ ================
3
HOMEZIPR CORP.
--------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
DECEMBER 31, 2000
------------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
- -----------
CURRENT LIABILITIES
-------------------
ACCOUNTS PAYABLE $ 109,734
---------------- --------------
ACCRUED EXPENSES 238,203
---------------- --------------
DUE TO AFFILIATES 0
----------------- --------------
REFUND DUE - CANCELLED SHARES 45,000
----------------------------- --------------
LOANS FROM STOCKHOLDERS 0
----------------------- --------------
TOTAL CURRENT LIABILITIES 392,937
------------------------- --------------
LONG TERM LIABILITIES 0
---------------------
TOTAL LIABILITIES 392,937
----------------- --------------
STOCKHOLDERS' EQUITY
- --------------------
PREFERRED STOCK, NO PAR VALUE, 5,000,000 SHARES AUTHORIZED,
-----------------------------------------------------------
NO SHARES ISSUED ---
---------------- --------------
COMMON STOCK, NO PAR VALUE, 50,000,000 SHARES AUTHORIZED
--------------------------------------------------------
16,150,000 SHARES ISSUED AND OUTSTANDING 2,508,322
---------------------------------------- --------------
ACCUMULATED DEFICIT (1,936,408)
------------------- --------------
TOTAL STOCKHOLDERS' EQUITY 571,914
-------------------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 964,851
- ------------------------------------------ ==============
4
HOMEZIPR CORP.
--------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
NINE MONTHS ENDED DECEMBER 31, 2000
-----------------------------------
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ ----------------
DECEMBER 31, DECEMBER 31,
------------- -------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
INCOME
LOAN ORIGINATION FEES $ 80,626 $ --- $ 167,467 $ ---
--------------------- ------------ ------------ ------------ ------------
TOTAL INCOME 80,626 --- 167,467 ---
- ------------ ------------ ------------ ------------ ------------
EXPENSES
- --------
COMMISSIONS, COMPENSATION AND 252,556 --- 889,765 ---
----------------------------- ------------ ------------ ------------ ------------
BENEFITS
--------
OCCUPANCY
48,151 --- 64,296 ---
--------- ------------ ------------ ------------ ------------
GENERAL AND ADMINISTRATIVE 409,165 --- 725,215 ---
-------------------------- ------------ ------------ ------------ ------------
TOTAL EXPENSES 709,872 --- 1,679,276 ---
- -------------- ------------ ------------ ------------ ------------
LOSS BEFORE INCOME TAXES (626,246) --- (1,511,809) ---
- ------------------------ ------------ ------------ ------------ ------------
PROVISION (BENEFIT) FOR INCOME
- ------------------------------
TAXES --- --- --- ---
- ----- ------------ ------------ ------------ ------------
NET LOSS $ (626,246) $ --- $(1,511,809) $ ---
- -------- ============ ============ ============ ============
BASIC LOSS PER SHARE $ (.04) $ --- $ (.10) $ ---
- -------------------- ============ ============ ============ ============
DILUTED LOSS PER SHARE $ (.04) $ --- $ (.10) $ ---
- ---------------------- ============ ============ ============ ============
5
HOMEZIPR CORP.
--------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
NINE MONTHS ENDED DECEMBER 31,
------------------------------
2000 1999
------------- -------------
NET CASH USED IN OPERATING ACTIVITIES $ (1,213,369) $ ---
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (731,644) ---
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,877,074 ---
------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (67,939) ---
CASH AND CASH EQUIVALENTS, beginning of period 81,350 ---
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 13,411 $ ---
============= =============
NON-CASH INVESTING AND FINANCING
ACTIVITIES
Asset purchases and liabilities assumed in the reverse
acquisition
Assets acquired $ 0 $ ---
Liabilities assumed 0 ---
Common stock issued 0 ---
------------- -------------
Cash paid for acquisition $ --- $ ---
============= =============
SUPPLEMENTAL INFORMATION, CASH PAID FOR:
Interest $ --- $ ---
============= =============
Income taxes $ --- $ ---
============= =============
6
HOMEZIPR CORP.
--------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
DECEMBER 31, 1999 AND 2000
---------------------------
A. NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements include the accounts of
HomeZipR Corp. (the "Company") and all of the Company's wholly owned
subsidiaries. All significant intercompany transactions have been eliminated.
The unaudited financial statements included herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 301(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
December 31, 2000 are not necessarily indicative of the results that may be
expected for the year ended March 31, 2001.
B. NOTE 2 - ORGANIZATION
On July 31, 2000, MRI Medical Diagnostics, Inc. ("MRI") conducted a
reorganization with HomeZipR.com Corp. ("HomeZipR"), a Delaware Corporation.
Pursuant to the terms of a Securities Purchase and Plan or Reorganization
between MRI and the stockholders of HomeZipR, MRI acquired all of the
outstanding shares of HomeZipR's common stock in exchange for 22,393,671 shares
of MRI's common stock and 5,000,000 shares of its Series A Preferred Stock (the
"Reorganization"). Following the Reorganization, the former stockholders of
HomeZipR owned approximately 42% of the Registrant's outstanding common stock
and approximately 94% of its outstanding preferred stock. Together, this
accounted for approximately 90% of the Registrant's total outstanding voting
power. Effective after the reverse acquisition, the Company approved a 1 for
18.85077263 reverse split (the "Reverse Split") of its common stock. Also
effective after the reverse acquisition the stockholders of the Series A
Preferred Stock converted into common stock. Because the stockholders of
HomeZipR owned approximately 90% of the outstanding shares of the common stock
of the Company after giving effect to the Reorganization, the acquisition of
HomeZipR was considered a reverse merger, and HomeZipR has been deemed the
acquirer for accounting purposes. As such, the equity of HomeZipR has been
carried forward as the equity of the Company. HomeZipR was formed March 14,
2000, therefore, the operating results for the three and nine months periods
ended December 31, 1999 do not reflect any activity. Subsequent to the
reorganization, the Company changed its name to HomeZipR Corp.
HomeZipR was recently formed for the purpose of developing a consumer
direct business that will use e-commerce as a delivery mechanism dedicated to
providing resources to homeowners. The Company is engaged in the business of
securing home equity and residential mortgages in several states across the
nation. Over the course of the next twelve (12) months, the Company intends to
expand upon its current operations, develop the HomeZipR.com web site, and
provide additional home-related services.
7
(i) NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
METHOD OF ACCOUNTING - The consolidated financial statements are
prepared on the accrual basis of accounting in accordance with generally
accepted accounting principles (GAAP). The preparation of financial statements
in conformity with GAAP requires management to make significant estimates and
assumptions that affect the reported amounts of assets, liabilities and
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results may differ materially from those estimates.
C. NOTE 4 - LOSS PER SHARE
The following table sets forth the computation of basic and diluted loss
per share:
Nine Months Ended December 31,
------------------------------
2000 1999
-------------- --------------
Net loss $ (1,511,809) $ ---
============== ==============
Weighted average shares outstanding:
Basic 16,150,000 ---
============== ==============
Diluted 16,150,000 ---
============== ==============
Basic loss per share $ (.10) $ ---
-------------- --------------
Diluted loss per share $ (.10) $ ---
-------------- --------------
(i) NOTE 5 - ACQUISITION OF ASSETS
On July 31, 2000, concurrent with the closing of the Reorganization
described above, the Company acquired certain fixed assets in exchange for
320,463 shares of the Company's Series A Preferred Stock. The stockholders of
the Series A Preferred Stock have subsequently converted their shares into
850,000 shares of common stock.
8
NOTE 6 - COMMITMENTS AND CONTINGENCIES
On October 3, 2000, Household Commercial Financial Services, Inc.
("Household") filed a complaint against the Company, one of its directors,
Kenneth C. Ketner, and Mortgage Capital Resource Corporation ("MCR"), among
others. Household alleged that it had provided a mortgage banking warehouse line
of credit to MCR and that the line of credit has been personally guaranteed by
Mr. Ketner. The Household complaint alleges that MCR committed certain acts of
default under the line of credit and seeks recovery of monies owed from MCR and
Mr. Ketner. The allegations in the Household complaint concerning the Company
are that the sale of certain assets by MCR to the Company constituted a
fraudulent conveyance based on the failure of the Company to provide adequate
consideration to MCR for the purchased assets. The complaint seeks to set aside
the sale of the assets by MCR to the Company and an accounting by the Company
for all profits and proceeds earned or acquired in exchange for the assets
purchased from MCR. The Company intends to vigorously defend the action.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
- -------
HomeZipr Corp., a Colorado corporation formerly known as MRI Medical
Diagnostics, Inc. ("Company"), is a development stage company that intends to
provide home related products and services to consumers and real estate agents
via direct mail using the Internet to communicate with the client once a
relationship has been established. The Company commenced the development of its
business model in March 2000 and commenced revenue producing operations on a
limited basis during the six months ended December 31, 2000. The Company
intends to launch its Internet portal during the quarter ending June 30, 2001,
subject to the receipt of additional capital.
The Company intends to offer certain home related products and services
through its proposed Internet portal, to be located at www.HomeZipR.com. As of
the date of this report, the portal is intended to include:
o MORTGAGE BROKERAGE SERVICES - The Company intends to provide
an Internet portal through which homeowners and potential
homeowners can receive a full line of mortgage financing,
including first and second mortgages. The Company also intends
to offer a full line of home-related products and services,
including banking and insurance services, chat rooms, message
boards and personalized content.
o HOME FURNITURE, FURNISHINGS AND APPLIANCES - The Company
intends to offer to consumers through its HomeZipR Club the
ability to conduct Internet purchases of home furniture,
furnishings and appliances. The HomeZipR Club will be a
limited access Internet shopping mall for the sale of home
products to consumers who have sourced their financial
information through the Company's mortgage financing portal.
o SUPPORT SERVICES TO REAL ESTATE AGENTS - The Company is
building a web site, located at YourInternetCenter.com, which
is intended to serve as a proprietary marketing system for
real estate agents. At this site the Company intends to
provide agents with a turnkey Internet marketing solution and
a bundle of services, including Internet access, a turnkey
branded web site, weekly coaching, marketing support and
strategies, e-mail capability and other value-based services
and content.
Results of Operations and Financial Condition
- ---------------------------------------------
During the quarter ended December 31, 2000, and pending the roll-out
of its Internet portal, the Company commenced providing mortgage brokerage
services on a limited basis. During the three months ended December 31,2000,
the Company generated $80,626 of revenue from loan origination fees against
$709,872 of expenses. The Company realized a net loss of $629,246 for the
quarter ended December 31, 2000.
10
As of December 31, 2000, the Company had negative working capital of
$(232,660). The Company expects to incur losses from operations for, at least,
the next several months and the Company will require significant additional
capital.
Plan of Operations
- ------------------
As of the date of this report, the Company has completed its Internet
portal, assembled its management team and is otherwise ready to commence revenue
producing operations through its proposed Internet portal subject to its receipt
of a minimum of $500,000 of additional capital. The Company believes that it
will require a minimum of $2,000,000 over the next 12 months in order to
implement its business plan. The Company intends to raise the necessary capital
from the sale of its securities. However, there are no commitments,
understandings or arrangements for the purchase of the Company's securities by
any third parties and there can be no assurance that the Company will be able to
raise the necessary capital as and when needed. The Company's failure to raise
the necessary capital on a timely basis will prevent the Company from
implementing its proposed business plan and may cause the Company to terminate
its operations.
The report of the Company's independent accountants for the fiscal year
ended March 31, 2000 states that due to the absence of operating revenues and
the Company's limited capital resources, there is doubt about the Company's
ability to continue as a going concern.
Background
- ----------
The Company was incorporated in Colorado in November 1971 under the
name Sierra Resources, Inc. From inception through 1993, the Company was engaged
in a variety of business pursuits, including the operation of a number of
medical diagnostic imaging centers from 1992 through 1993. In July 1993, the
Company filed for bankruptcy, after which it ceased operations and became
dormant. The Company had no operations until July 31, 2000, at which time it
acquired HomeZipR.com Corp. and a division of Mortgage Capital Resource
Corporation. On September 6, 2000, the Company changed its name to HomeZipR
Corp. and conducted a 1 for 18.85077263 reverse split of its outstanding common
shares. All common share amounts in this report give effect to the 1 for
18.85077263 reverse split.
On July 31, 2000, the Company completed its acquisition of HomeZipR.com
Corp., a Delaware corporation, pursuant to which the Company purchased all of
the outstanding shares of HomeZipR.com Corp. in exchange for 1,200,000 shares of
the Company's common stock and 5,000,000 shares of the Company's Series A
Preferred Stock. Each share of Series A Preferred Stock was convertible at the
option of the holder into 2.65 shares of common stock. In September 2000, the
5,000,000 shares of our Series A Preferred Stock were converted into 13,250,000
common shares.
Concurrent with the closing of its acquisition of HomeZipR.com Corp.,
the Company acquired a division of Mortgage Capital Resource Corporation in
exchange for 320,463 shares of Series A Preferred Stock. In September 2000, the
320,463 shares of Series A Preferred Stock were converted into 850,000 common
shares. The acquired division is engaged in the business of brokering home
mortgage loans in the Atlanta, Georgia area, and the assets acquired consist
largely of the call and mailing center described above.
11
In October 2000, the Company raised $900,000 of capital through the
private placement sale of 257,243 units of its securities, each unit consisting
of one common share and one common stock purchase warrant, at a price of $3.50
per unit. The unit warrants entitle their holders to purchase one common share
at a price of $5.00 per share up through December 31, 2003. The purchasers of
the units were provided with certain registration rights. The Company's Chairman
of the Board, Kenneth C. Ketner, provided certain guarantees to the unit
purchasers in connection with the their purchase of the units.
Forward Looking Statements
- --------------------------
This report contains forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this report, the words "believe,"
"expect," "anticipate," "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties including, but no limited to, the Company's present
financial condition and its ability to obtain additional capital as and when
needed; its ability to roll-out its Internet portal on a timely basis and the
commercial acceptance of the services and products offered through the portal;
litigation claims relating to its acquisition of certain assets from Mortgage
Capital Resource; technological changes; increased competition; and general
economic conditions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated, or projected. The Company
cautions potential investors not to place undue reliance on any such
forward-looking statements all of which speak only as of the date made.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
On October 3, 2000, Household Commercial Financial Services, Inc.
("Household") filed a complaint in the Superior Court of California, County of
Orange (Case No. 00cc10590) against the Company, one of its directors, Kenneth
C. Ketner, and Mortgage Capital Resource Corporation ("MCR"), among others.
Household alleged that it had provided a mortgage banking warehouse line of
credit to MCR and that the line of credit had been personally guaranteed by Mr.
Ketner. The Household complaint alleges that MCR committed certain acts of
default under the line of credit and seeks recovery of monies owed from MCR and
Mr. Ketner. The allegations in the Household complaint concerning the Company
are that the sale of certain assets by MCR to the Company constituted a
fraudulent conveyance based on the failure of the Company to provide adequate
consideration to MCR for the purchased assets. The complaint seeks to set aside
the sale of the assets by MCR to the Company and an accounting by the Company
for all profits and proceeds earned or acquired in exchange for the assets
purchased from MCR. The Company intends to vigorously defend the action.
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
In October 2000, the Company raised $900,000 of capital through the
private placement sale of 257,243 units of its securities, each unit consisting
of one common share and one common stock purchase warrant, at a price of $3.50
per unit. The unit warrants entitle their holders to purchase one common share
at a price of $5.00 per share up through December 31, 2003. The proceeds were
used to finance operations.
Item 3. Defaults Upon Senior Securities.
-------------------------------
Inapplicable.
13
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Inapplicable
Item 5. Other Information.
-----------------
Inapplicable.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
27.1 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
14
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HomeZipR Corp.
(Registrant)
Dated: February 10, 2000 By: /S/ RON WASSERMAN
--------------------------
Ron Wasserman,
Chief Financial Officer
15