UNITED STATES
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: June 30, 2001
Or
[ ] 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:
Future Carz, Inc.
(Exact name of registrant as specified in its charter)
Nevada 88-0431029
------ ----------
(State or other jurisdiction of (I.R.S. 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)
(480) 444-0080
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(Registrant's telephone number, including area code)
N/A
---
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13
or 15(d) of the Securities Exchange Act of 1934 subsequent to
the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 8,652,087
/1/
FUTURE CARZ, INC.
Table of Contents
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of June 30, 2001 (Unaudited) 3
Consolidated Statements of Operations For the Three and 4
Six Months Ended June 30, 2001 and 2000 (Unaudited)
Consolidated Statements of Cash Flows For the Three and 5
Six Months Ended June 30, 2001 and 2000 (Unaudited)
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Plan of Operation 7
PART II - OTHER INFORMATION
Item 6. Exhibits 10
SIGNATURES 11
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Future Carz, Inc.
Consolidated Balance Sheet
June 30, 2001
(Unaudited)
Assets
Current assets:
Cash $ 6,759
Accounts receivable 15,190
-----------
Total current assets 21,949
-----------
Fixed assets, net 238,630
-----------
$ 260,579
===========
Liabilities and Stockholders' (Deficit)
Current liabilities:
Accounts payable $ 292,480
Notes payable - stockholders 237,917
-----------
Total current liabilities 530,397
-----------
Stockholders' (Deficit):
Preferred stock, $0.001 par value, -
5,000,000 shares authorized, no shares
issued and outstanding
Common stock, $0.001 par value, 8,652
20,000,000 shares authorized, 8,652,087
shares issued and outstanding
Additional paid-in capital 2,145,127
Accumulated (deficit) (2,423,597)
-----------
(269,818)
-----------
$ 260,579
===========
The accompanying notes are an integral part of these
consolidated financial statements.
/3/
Future Carz, Inc.
Consolidated Statements of Operations
(Unaudited)
For the For the For the For the
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Revenue $ 70,654 $ - $ 134,134 $ -
----------- ----------- ----------- -----------
Expenses:
General and 330,485 558 2,325,726 6,862
administrative
Depreciation and 12,405 1,091 21,096 2,514
amortization ----------- ----------- ----------- -----------
342,890 1,649 2,346,822 9,376
----------- ----------- ----------- -----------
Net Operating (loss) (272,236) (1,649) (2,212,688) (9,376)
Other income (expenses):
Interest income 3,500 - 7,399 -
Interest expense (5,736) - (12,071) -
Loss on writedown of - - - -
assets ----------- ----------- ----------- -----------
Net (loss) $ (274,472) $ (1,649) $(2,217,360) $ (9,376)
=========== =========== =========== ===========
Weighted average number
of common shares
outstanding - basic
and fully diluted 8,652,087 5,328,087 8,069,669 5,328,087
=========== =========== =========== ===========
Net (loss) per share
- basic and fully
diluted $ (0.03) $ (0.00) $ (0.27) $ (0.00)
=========== =========== =========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
/4/
Future Carz, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the For the
six six
months months
ended ended
June 30, June 30,
2001 2000
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Net cash (used in) operating activities $ (208,184) $ (4,862)
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Cash flows from investing activities
Advances on notes receivable - -
Purchase of fixed assets (37,391) -
Web development costs - -
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Net cash (used in) investing activities (37,391) -
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Cash flows from financing activities
Proceeds from notes payable - stockholders 175,077 -
Issuance of common stock - -
Advance from shareholder - -
--------- ----------
Net cash provided by financing activities 175,077 -
--------- ----------
Net increase (decrease) in cash (70,498) (4,862)
Cash - beginning 77,257 5,082
--------- ----------
Cash - ending $ 6,759 $ 220
========= ==========
The accompanying notes are an integral part of these
consolidated financial statements.
/5/
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 and Item 310(b) of Regulation S-B. 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. The results of operations
for the periods presented are not necessarily indicative of
the results to be expected for the full year. For further
information, refer to the audited financial statements of the
Company as of December 31, 2000, including notes thereto,
included in the Company's Form 10-KSB.
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: Subsequent Events
On July 12, 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.
/6/
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
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. Through our wholly owned subsidiary formed in February
2001, AutoCarz, Inc. ("AutoCarz"), we have launched a dealer
network positioned to service the sub-prime credit segment of
the auto leasing market. AutoCarz applies 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.
The AutoCarz system is aimed at providing individuals with
an affordable lease on a quality pre-owned vehicle. While
consumers are using the AutoCarz system, they work towards
building back good credit, as the Company reports regularly to
credit bureaus.
Results of Operations
In early 2001, we completed the acquisition of certain
assets of Auto Central Discount, Inc. of San Diego, CA. 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, detailed corporate information on the
operations of Future Carz and useful links such as a link to
the AutoCarz web site (www.autocarz.net) that allows potential
customers to obtain information on leasing operations, or to
access qualifications for leasing through AutoCarz.
/7/
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
Revenue for the three months ended June 30, 2001 was
$70,654, six months ended June 30, 2001 was $134,134, as
compared to the three and six month periods ended June 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 June
30, 2001 were $342,890. This represents an increase of
$341,241 in total operating expenses from the comparable three
month period ended June 30, 2000, when we reported total
operating expenses of $1,649. Total operating expenses for
the six months ended June 30, 2001 were $2,346,822. This
represents an increase of $2,337,446 in total operating
expenses from the comparable six month period ended June 30,
2000, when we reported total operating expenses of $9,376.
The Company's operating expenses include the necessary sales,
general and administrative expenses associated with the auto-
leasing operations and include $1,565,940 of financing costs
associated with the Auto Central Discount asset purchase.
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 six months ended
June 30, 2001 of $2,217,360 as compared to the loss of $9,376
reported in the comparable period of 2000. Furthermore, as of
June 30, 2000 the company had a working capital deficit of
$508,448. The net cash used in operational activities for the
six months ended June 30, 2001 was $208,184 as compared to net
cash used in operational activities of $4,862 reported in the
comparable period of 2000.
Future Business
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 Auto Carz, Inc. brand 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.
/8/
Liquidity and Capital Resources
Net Loss. Due to the significant administrative expense
related to the asset purchase of Auto Central Discount, we
experienced a net loss of $2,217,360 for the six months ended
June 30, 2001, as compared to a net loss of $9,376 in the six
month period ended June 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
$68,000 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 $10,000 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.
/9/
PART II - OTHER INFORMATION
Item 6. Exhibits
Exhibit Name and/or Identification of Exhibit
Number
3 Articles of Incorporation & By-Laws
(a)Articles of Incorporation of the Company filed
July 13, 1999. Incorporated by reference to the
exhibits to the Company's General Form For
Registration Of Securities Of Small Business
Issuers on Form 10-SB, previously filed with the
Commission.
(b)By-Laws of the Company adopted July 16, 1999.
Incorporated by reference to the exhibits to the
Company's General Form For Registration Of
Securities Of Small Business Issuers on Form
10-SB, previously filed with the Commission.
/10/
SIGNATURES
Pursuant to the requirements of the 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.
- --------------------------------------------------------------
(Registrant)
Date: August 30, 2001
----------------------
By: /s/ Edward Heisler
----------------------
Edward Heisler, President, Secretary, Treasurer and Director
/11/