UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 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: 0-29435
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
(Address of principal executive offices) (Zip Code)
(480) 444-0080
(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: 9,842,087
FUTURE CARZ, INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheet (Unaudited) 3
Statements of Operations (Unaudited) 4
Statements of Cash Flows (Unaudited) 5
Notes to Financial Statements (Unaudited) 6-8
Item 2. Management's Discussion and Plan of Operation 9
PART II - OTHER INFORMATION
Item 6. Exhibits 12
SIGNATURES 13
2
FUTURE CARZ, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 2001
(UNAUDITED)
ASSETS
Current assets:
Cash $ 2,171
Accounts receivable 3,145
Note receivable 51,596
Prepaid expenses 17,065
Assets held for sale 198,560
-----------
Total current assets 272,537
-----------
Fixed assets, net 51,015
-----------
$ 323,552
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 70,998
Acounts payable - related party 24,717
Deferred management fee 22,823
Accrued interest 500
Accrued interest - related parties 5,660
Notes payable 50,000
Notes payable - related parties 126,000
-----------
Total current liabilities 300,698
-----------
Long term liabilities:
Notes payable - related parties 20,000
-----------
Stockholders' equity:
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, 8,832,087 shares issued and
outstanding 8,832
Additional paid-in capital 2,239,047
Deferred compensation (32,333)
(Deficit) accumulated during the development stage (2,212,692)
-----------
2,854
-----------
$ 323,552
===========
The accompanying notes are an integral part of these financial statements.
3
FUTURE CARZ, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the period
July 13, 1999
For the three For the three (inception)
months ended months ended through
March 31, 2001 March 31, 2000 March 31, 2001
-------------- -------------- --------------
Revenue $ 3,145 $ -- $ 3,145
----------- ----------- -----------
Expenses:
Non-cash stock compensation 16,167 -- 16,167
Write off of assets acquired by issuance of common stock 1,565,940 -- 1,565,940
General and administrative 234,992 6,303 417,647
Depreciation and amortization 1,981 1,424 4,329
----------- ----------- -----------
1,819,080 7,727 2,004,083
----------- ----------- -----------
Net operating (loss) (1,815,935) (7,727) (2,000,938)
Other income (expenses):
Interest income 1,017 -- 2,290
Interest expense (3,396) -- (6,236)
(Loss) on disposal of assets (6,075) -- (6,075)
(Loss) on writedown of assets (182,066) -- (201,733)
----------- ----------- -----------
(190,520) -- (211,754)
----------- ----------- -----------
Net (loss) $(2,006,455) $ (7,727) $(2,212,692)
=========== =========== ===========
Weighted average number of common shares
outstanding - basic and fully diluted 7,612,422 5,328,087 5,524,276
=========== =========== ===========
Net (loss) per share - basic and fully diluted $ (0.26) $ (0.00) $ (0.40)
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
4
FUTURE CARZ, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the period
July 13, 1999
For the three For the three (inception)
months ended months ended through
March 31, 2001 March 31, 2000 March 31, 2001
-------------- -------------- --------------
Net cash (used in) operating activities $(191,392) $ (6,303) $(359,338)
--------- --------- ---------
Cash flows from investing activities
Advances on notes receivable -- -- (138,000)
Purchase of fixed assets (19,694) -- (55,011)
Web development costs -- -- (20,000)
--------- --------- ---------
Net cash (used in) investing activities (19,694) -- (213,011)
--------- --------- ---------
Cash flows from financing activities
Proceeds from notes payable 50,000 -- 50,000
Proceeds from notes payable - related parties 86,000 2,000 146,000
Issuance of common stock -- -- 376,520
Advance from shareholder -- -- 2,000
--------- --------- ---------
Net cash provided by financing activities 136,000 2,000 574,520
--------- --------- ---------
Net increase (decrease) in cash $ (75,086) $ (4,303) $ 2,171
Cash - beginning 77,257 5,082 --
--------- --------- ---------
Cash - ending $ 2,171 $ 779 $ 2,171
========= ========= =========
The accompanying notes are an integral part of these financial statements.
5
Future Carz, Inc.
(a Development Stage Company)
Notes to Financial Statements
March 31, 2001
(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.
NOTE 2: EARNINGS PER SHARE
The Company calculates net income (loss) per share as required by Statement of
Financial Accounting Standard (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: ASSET PURCHASE AGREEMENT
On February 23, 2001, the Company entered into an Asset Purchase Agreement
(Agreement) with Auto Central Discount, Inc. (Auto Central), whereby the Company
acquired automobiles valued at $184,060 from Auto Central in exchange for
2,000,000 shares of its $0.001 par value common stock, 1,000,000 shares of its
$0.001 par value common stock to obtain the services of key employees of Auto
Central, the assumption of three Auto Central operating leases, and a consulting
agreement. Pursuant to the Agreement, the holders of the shares have piggyback
registration rights.
NOTE 4: STOCKHOLDERS' (DEFICIT)
On February 23, 2001 the Company issued 2,000,000 shares of its $0.001 par value
common stock at a price of $0.875 per share, which approximates the fair market
value of the shares, related to the Asset Purchase of Auto Central Discount (See
Note 3).
During the quarter ended March 31, 2001, the Company issued 100,000 shares of
its $0.001 par value common stock to two shareholders at a price of $0.30 per
share, which approximates the fair market value of the shares, in exchange for
services performed.
On February 1, 2001, the Company issued 50,000 shares of its $0.001 par value
common stock at $0.97 per share, which approximates the fair market value of the
shares, to a shareholder in exchange for services to be performed. At March 31,
2001, the Company had deferred stock compensation of $32,333 for the services
that have not been performed.
6
Future Carz, Inc.
(a Development Stage Company)
Notes to Financial Statements
March 31, 2001
(unaudited)
On March 6, 2001, the Company commenced a Regulation D offering pursuant to Rule
506 of the Securities and Exchange Commission Act of 1933, as amended. The
Private Placement Memorandum offers investment units consisting of $10,000 notes
at 15% interest plus 1,000 shares of the Company's $0.001 par value common
stock. On March 16, 2001, the Company issued 30,000 shares of its $0.001 par
value common stock at a price of $0.52 per share and a $30,000 note to two
individuals.
NOTE 5: RELATED PARTY TRANSACTIONS
During the quarter ended March 31, 2001, a stockholder of the Company paid
operating expenses on behalf of the Company aggregating $15,674, which is owed
to the stockholder at March 31, 2001.
During the quarter ended March 31, 2001, an officer of the Company paid
operating expenses on behalf of the Company aggregating $9,043, which is owed to
the officer at Mach 31, 2001.
NOTE 6: NOTES PAYABLE
During the quarter ended March 31, 2001, the Company entered into several notes
with various related parties evidenced with promissory notes valued at $86,000.
The interest rate on these notes varies between 8 and 20%. The notes have
various due dates and terms.
During the quarter ended March 31, 2001, the Company entered into two notes with
an unrelated party for $50,000 with interest at 8% and various due dates and
terms.
NOTE 7: GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern which contemplates the recoverability
of assets and the satisfaction of liabilities in the normal course of business.
Since its inception, the Company has been engaged substantially in financing
activities and developing its product line, incurring substantial costs and
expenses. As a result, the Company incurred net losses during the quarter ended
March 31, 2001 and the year ended December 31, 2000 of $2,006,455 and $168,680.
The Company also has a working capital deficit of $28,161 at March 31, 2001. In
addition, the Company's development activities since inception have been
financially sustained by debt and capital contributions from its affiliates and
others.
The Company's management has made plans to alleviate the debt by issuing shares
of common stock. The Company is pursuing new lines of business and increasing
equity through the issuance of stock.
The ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. The accompanying
financial statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets or satisfy its
liabilities.
7
Future Carz, Inc.
(a Development Stage Company)
Notes to Financial Statements
March 31, 2001
(unaudited)
NOTE 8: SUBSEQUENT EVENTS
Subsequent to March 31, 2001, the Company entered into several notes with
various individuals and Companies evidenced with promissory notes valued at
$62,696. The interest rate on these notes varies between 8 and 20%. The notes
have various due dates and terms. A number of these notes are to related
parties.
On April 3, 2001, the Company issued 10,000 shares of its $0.001 par value
common stock at a price of $0.22 per share, which approximates the fair market
value of the shares, to three noteholders to comply with the terms of the notes.
On April 12, 2001, the Company issued 1,000,000 shares of its $0.001 par value
common stock at a price of $0.18 per share, which approximates the fair market
value of the shares, to various key employees of Auto Central Discount in
relation to the Asset Purchase Agreement. (See Note 3).
8
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 a development stage company 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. Through our division 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 February 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; Mesa, Phoenix and Glendale, Arizona; and Las Vegas, Nevada.
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.
9
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.
Revenue for the three months ended March 31, 2001 was $3,145, as compared to the
three month period ended March 31, 2000 in which no revenue was generated. The
impact of the asset acquisition of Auto Central Discount has been accretive to
revenues at a rate of approximately $20,000 per month and provided assets in the
form of automobiles and automobile lease agreements.
Operating expenses for the three months ended March 31, 2001 were $1,819,080, as
compared to the three month period ended March 31, 2000 in which we incurred
$7,727 in operating expenses. $1,565,940 of the operating expenses reflected in
the March 31, 2001 Statement of Operations are almost entirely related to the
asset purchase of Auto Central Discount. Upon completion of the acquisition of
certain assets of Auto Central Discount, Inc. we had 13 full time employees. As
of May 21, 2001 we now have nine full time employees. After the acquisition,
management identified overlapping functions and in an effort to cut costs
reduced the total number of employees by four.
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.
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 $2,006,455 in
the quarter ended March 31, 2001, as compared to a net loss of $7,727 in the
three month period ended March 31, 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
$20,000 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.
GOING CONCERN. Since its inception, the Company has been engaged substantially
in financing activities and developing its product line, incurring substantial
costs and expenses. As a result, the Company incurred net losses during the
quarter ended March 31, 2001 and the year ended December 31, 2000 of $2,006,455
and $168,680. The Company also has a working capital deficit of $28,161 at March
31, 2001. In addition, the Company's development activities since inception have
been financially sustained by debt and capital contributions from its affiliates
and others.
10
The Company's management has made plans to alleviate the debt by issuing shares
of common stock. The Company is pursuing new lines of business and increasing
equity through the issuance of stock.
The ability of the Company to continue as a going concern is dependent upon its
ability to raise additional capital from the sale of common stock and,
ultimately, the achievement of significant operating revenues. The accompanying
financial statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets or satisfy its
liabilities.
11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
EXHIBIT NUMBER NAME AND/OR IDENTIFICATION OF EXHIBIT
- -------------- -------------------------------------
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.
Reports on Form 8-K
Incorporated by reference Form 8-K filed on March 12, 2001 for acquisition of
assets.
Incorporated by reference Form 8-K filed on March 14, 2001 for change in
accountants.
12
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: June __, 2002
By: /s/ Edward Heisler
------------------------------------------------------------
Edward Heisler, President, Secretary, Treasurer and Director
13