UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For quarterly period ended September 30, 2001
____ 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: 000-30554
Future Carz, Inc.
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(exact name of registrant as specified in its charter)
Nevada 88-0431029
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8930 East Raintree, Suite 300, Scottsdale, AZ 85260
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (480) 444-0080
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Indicate by check mark whether the registrant: (1) has filed all reports
required by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 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 ___
The number of shares of the Registrant's Common Stock, as of September 30, 2001:
8,652,087
FUTURE CARZ, INC.
FORM 10-QSB, QUARTER ENDED SEPTEMBER 30, 2001
INDEX
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheet as of September 30, 2001 3
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2001 and 2000 4
Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2001 5
Notes to Consolidated Financial Statements 6
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
Item 2 Management's Discussion and Analysis 7-9
PART II OTHER INFORMATION
Item 1 Legal Proceedings 10
Item 2 Changes in Securities 10
Item 3 Defaults Upon Senior Securities 10
Item 4 Submission of Matters to a Vote of Security Holders 10
Item 5 Other Information 10
Item 6 Exhibits and Reports on Form 8-K 10
Signatures 11
Item 1. Financial Statements
Future Carz, Inc.
Consolidated Balance Sheet
September 30, 2001
(Unaudited)
Assets
Current assets:
Accounts receivable $ 15,270
Prepaid expenses 446,667
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Total current assets 461,937
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Fixed assets, net 318,793
Other assets 1,425
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$ 782,155
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Liabilities and Stockholders' (Deficit)
Current liabilities:
Bank overdraft $ 6,523
Accounts payable 369,663
Notes payable - stockholders 256,959
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Total current liabilities 633,145
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Stockholders' (Deficit):
Preferred stock, $0.001 par value,
5,000,000 shares authorized, no shares
issued and outstanding
Common stock, $0.001 par value, 20,000,000
shares authorized, 13,672,087 shares issued and 13,672
outstanding
Additional paid-in capital 4,549,272
Accumulated (deficit) (4,413,934)
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149,010
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$ 782,155
=======
Future Carz, Inc.
Consolidated Statements of Operations
(Unaudited)
For the three months For the three months For the nine months For the nine months
ended September ended September ended September ended September
30, 2001 30, 2000 30, 2001 30, 2000
-------- -------- -------- --------
Revenue $ 42,313 $ - $ 176,447 $ -
------------------ -------------- ------------- --------------
Expenses:
General and Administrative 1,863,929 10,838 4,285,072 17,700
Depreciation and amortization 34,688 1,424 55,784 4,271
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1,898,617 12,262 4,340,856 21,971
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Net operating (loss) (1,856,304) (12,262) (4,164,409) (21,971)
Other income (expenses):
Interest income - - 3,899 -
Interest expense (10,042) - (18,613) -
Loss on sale of assets (28,574) - (28,574) -
----------- -------- ---------- --------
Net (loss) $ (1,894,920) $ (12,262) $ (4,207,697) $ (21,971)
=================== =============== ============== ===============
Weighted average number of
common shares outstanding -
basic and fully diluted 13,021,867 5,328,087 10,198,607 5,328,087
=================== =============== ============== ===============
Net (loss) per share - basic
and fully diluted $ (0.15) $ (0.00) $ (0.41) $ (0.00)
=================== =============== ============== ===============
Future Carz, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the nine months ended For the nine months
September 30, 2001 ended September 30, 2000
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Cash flows from operating activities:
Net cash provided by (used in) operating activities $ (262,835) $ 44,300
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Cash flows from investing activities:
Purchase of fixed assets (37,391) -
Proceeds on disposal of fixed assets 30,350 -
Organization costs (1,500) -
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Net cash (used in) investing activities (8,541) -
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Cash flows from financing activities:
Proceeds from notes payable - stockholders 194,119 -
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Net cash provided by financing activities 194,119 -
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Net increase (decrease) in cash $ (77,257) $ 44,300
Cash - beginning 77,257 5,082
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Cash - ending $ - $ 49,382
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Future Carz, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1: Basis Of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information. They do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
considered necessary for a fair presentation, have been included in the
accompanying unaudited financial statements. Operating results for the periods
presented are not necessarily indicative of the results that may be expected for
the full year. For further information, refer to the financial statements and
notes therto, included in the Company's Form 10-KSB for the year ended December
31, 2000.
Note 2: Earnings Per Share
The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During the periods presented, common stock
equivalents were not considered, as their effect would be anti-dilutive.
Note 3: Stockholders' (deficit)
On July 15, 2001 the Company entered into an Asset Purchase Agreement
("Agreement") with American Automotive Group, Inc. ("American"), whereby the
Company acquired the assets of American in exchange for 3,000,000 shares of its
$0.001 par value common stock. Pursuant to the Agreement, the holders of the
shares shall have piggyback registration rights. In conjunction with the
Agreement the Company also entered into a Noncompetition Agreement whereby
American shall not compete with the Company for a period of 2 years from the
date of the Agreement.
During the quarter ended September 30, 2001, the Company entered into various
consulting and employment agreements in exchange for 2,020,000 shares of the
Company's common stock. The agreements range in term from six months to one
year, and will be expensed accordingly.
Item 2. Management's Discussion and Plan of Operation
Forward Looking Statements
- --------------------------
This Quarterly Report contains forward-looking statements about our business,
financial condition and prospects that reflect our assumptions and beliefs based
on information currently available. We can give no assurance that the
expectations indicated by such forward-looking statements will be realized. If
any of our assumptions should prove incorrect, or if any of the risks and
uncertainties underlying such expectations should materialize, our actual
results may differ materially from those indicated by the forward-looking
statements.
The key factors that are not within our control and that may have a direct
bearing on operating results include, but are not limited to, the acceptance of
our services, our ability to close auto loans, our ability to raise capital in
the future, the retention of key employees and changes in the regulation of our
industry.
There may be other risks and circumstances that we are unable to predict. When
used in this Quarterly Report, words such as, "believes," "expects," "intends,"
"plans," "anticipates," "estimates" and similar expressions are intended to
identify forward-looking statements, although there may be certain
forward-looking statements not accompanied by such expressions. All
forward-looking statements are intended to be covered by the safe harbor created
by Section 21E of the Securities Exchange Act of 1934.
General
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Future Carz, Inc. ("Future Carz" or the "Company"), a Nevada corporation
incorporated on July 13, 1999, is in the used automobile leasing industry with a
principal business objective to offer financial alternatives to qualified
individuals who do not meet traditional financing terms. The Company was in the
development stage through February 23, 2001. We have launched a dealer network
positioned to service the sub-prime credit segment of the auto leasing market.
We apply a proven formula with rigorous controls to qualify potential borrowers.
The result is a new type of leasing organization capable of building highly
profitable brand-name stores in a largely untapped market within the used
automobile industry.
Our system is aimed at providing individuals with an affordable lease on a
quality pre-owned vehicle. While consumers are using the our system, they work
towards building back good credit, as the Company reports regularly to credit
bureaus.
Results of Operations
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In early 2001, we completed the acquisition of certain assets of Auto Central
Discount, Inc. of San Diego, CA. In July 2001, we completed the acquisition of
certain assets of American Automotive Group, Inc. We currently have operations
in San Diego, California, and Glendale and Scottsdale, Arizona.
Additionally, our web site (www.futurecarz.com) has been remodeled to offer an
array of features aimed at informing and educating interested parties about
Future Carz, our products and services, corporate concept and potential for
success. Key features of the site include an overview of auto leasing, common
terminology, and detailed corporate information on the operations of Future
Carz.
We depend on the growing use and acceptance of the Internet as an effective
medium of commerce by merchants and customers. Decreased levels of e-commerce
transactions and the lack of acceptance of the Internet as a medium of commerce
could have a material adverse effect on our operations.
Comparative
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Revenue for the three months ended September 30, 2001 was $42,313, nine months
ended September 30, 2001 was $176,447, as compared to the three and nine month
periods ended September 30, 2000 when we reported no revenue. We have steadily
increased revenue since inception due to the growing acceptance in the
marketplace for our products and services. The Company upon purchase of certain
assets of Auto Central Discount, Inc. initiated auto-leasing operations.
Total operating expenses for the three months ended September 30, 2001 were
$1,898,617. This represents an increase of $1,886,355 in total operating
expenses from the comparable three month period ended September 30, 2000, when
we reported total operating expenses of $12,262. Total operating expenses for
the nine months ended September 30, 2001 were $4,340,856. This represents an
increase of $4,318,885 in total operating expenses from the comparable nine
month period ended September 30, 2000, when we reported total operating expenses
of $21,971. The Company's operating expenses include the necessary sales,
general and administrative expenses associated with the auto-leasing operations
and also include $1,565,940 and $1,566,300 of financing costs associated with
the Auto Central Discount and American Automotive asset purchases.
As we establish our brand name in the marketplace, we believe that our need for
outside consultants will be greatly diminished once initial development stage
activities are completed and continue to generate increasing revenues. Given
this outcome, it is our intention to hire key personnel to carry on the
functions now performed by numerous outside independent consultants.
Due to our general and administrative expenses incurred year to date, we
recorded a net loss for the nine months ended September 30, 2001 of $4,207,697
as compared to the loss of $21,971 reported in the comparable period of 2000.
Furthermore, as of September 30, 2001 the company had a working capital deficit
of $171,208. The net cash used in operational activities for the nine months
ended September 30, 2001 was $262,835 as compared to net cash provided by
operational activities of $44,300 reported in the comparable period of 2000.
Future Business
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Over the next six to nine months we plan to solidify the overall structure of
the business plan. This will include keeping the key employee's obtained in the
acquisitions as well as marketing our system through various ad campaign's i.e.
news paper, internet, etc. Our goal is to become one of the leading alternative
pre-owned auto- leasing sources in the nation.
For various reasons, there will always be people with credit problems. We
believe that an opportunity exists to capitalize on this built in segment of the
automotive leasing industry. As we attempt to capture the market for leased used
vehicles in a target price range of $5,000 to $8,000, we face the uncertainty of
the availability of these vehicles. Our focus will be on developing and
maintaining a consistent inventory of used vehicles both in terms of cost and
quality.
Liquidity and Capital Resources
- -------------------------------
Net Loss. Due to the significant administrative expense related to the asset
purchases of Auto Central Discount and American Automotive, we experienced a net
loss of $4,207,697 for the nine months ended September 30, 2001, as compared to
a net loss of $21,971 in the nine month period ended September 30, 2000. Our
business is very capital intensive. Our return on investment is greater than in
most other industries; however, we do need to close a larger number of leases
before we become profitable.
We estimate our capital requirements to total approximately $125,000 per month
for the next 12 to 24 months. We are currently in the process of conducting a
Rule 506 $1,000,000 Private Placement Offering to raise additional cash. It is
expected that the proceeds from this offering, in addition to the roughly
$15,000 in revenue being generated on a monthly basis, will be sufficient to
continue existing operations over this period. In addition, the Company
anticipates that short-term operational loans will be available from
shareholders.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURE PAGE
Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FUTURE CARZ, INC.
/s/ Edward C. Heisler
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Edward C. Heisler
President
Dated: December 4, 2001