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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2000.
Commission file number 0-29657
American Electric Automobile Company, Inc.
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(Name of Small Business Issuer in its Charter)
Delaware 33-0727323
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4190 Bonita Rd., Suite 105, Bonita, CA 91902
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(Address of Principal Executive Offices) (ZIP Code)
(619) 479-2809
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(Issuer's Telephone Number, Including Area Code)
Not applicable
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(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
--- ---
There were 2,526,584 new shares of Common stock outstanding as of
May 12, 2000.
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PART I
Item 1. Financial Statements.
AMERICAN ELECTRIC AUTOMOBILE
COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC.
AND SUBSIDIARY
CONTENTS
--------
PAGE 1 INDEPENDENT ACCOUNTANTS' REPORT
PAGE 2 CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000
PAGE 3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 2000 AND 1999
PAGE 4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
MONTHS ENDED MARCH 31, 2000 AND 1999
PAGE 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors of:
American Electric Automobile Company, Inc.
and Subsidiary
We have reviewed the accompanying consolidated balance sheet of American
Electric Automobile Company, Inc. and Subsidiary as of March 31, 2000 and the
related consolidated statements of operations and cash flows for the three
months then ended. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements in order
for them to be in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 4 to
the consolidated financial statements, the Company's level of continuing
losses and the amount cash used in operating activities raise substantial
doubt about its ability to continue as a going concern. Management's plans
concerning this matter are also described in Note 4. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
WEINBERG & COMPANY, P.A.
//WEINBERG & COMPANY, P.A.//
Boca Raton, Florida
May 5, 2000
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AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2000
(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 73,402
Due from related party 1,267
Inventories 17,217
Prepaid rent 15,000
---------
TOTAL CURRENT ASSETS 106,886
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PROPERTY & EQUIPMENT - NET 50,623
---------
OTHER ASSETS
Investments 34,750
Securities deposit 3,000
---------
TOTAL OTHER ASSETS 34,750
=========
TOTAL ASSETS $ 195,259
- ------------ ---------
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 2,124
Income tax payable -
Accrued expenses -
Accounts payable - related parties 23,006
Notes payable - related party 17,809
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TOTAL CURRENT LIABILITIES 42,939
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STOCKHOLDERS' (EQUITY) DEFICIENCY
Preferred stock, $.0001 par value, 20,000,000
shares authorized, none issued and outstanding -
Common stock, $.0001 par value, 50,000,000 shares
authorized, 6,559,600 shares issued and outstanding 656
Additional paid-in capital 670,815
Accumulated deficit (420,360)
---------
251,111
Less subscription receivable (98,791)
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TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 152,320
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 195,259
=========
See accompanying notes to consolidated financial statements
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AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
AS OF MARCH 31, 2000
(UNAUDITED)
-----------
March 31, 1999 March 31, 2000
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NET REVENUES $ - $ -
-------------- --------------
COST OF REVENUES 178 -
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GROSS MARGIN (178) -
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OPERATING EXPENSES
Legal and professional fees 95 13,285
General and administrative 3,694 12,762
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TOTAL OPERATING EXPENSES 3,789 26,047
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LOSS FROM OPERATIONS (3,967) (26,047)
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OTHER EXPENSES
Interest expense 267 132
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TOTAL OTHER EXPENSES 267 132
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NET LOSS $ (4,234) $ (26,179)
=============== ==============
Net loss per common share - basic and
Diluted $ (0.001) $ (0.005)
=============== ===============
Basic and diluted weighted average
Number of common shares outstanding 2,964,000 5,252,422
=============== ===============
See accompanying notes to consolidated financial statements
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AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
AS OF MARCH 31, 2000
(UNAUDITED)
-----------
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 2000
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Cash flows from operating activities
Net loss $ (4,234) $ (26,179)
Adjustments to reconcile net loss to
net cash used in operating activities:
(Increase) decrease in:
Accounts and loans receivable - 5,945
Inventory 418 (1,222)
Prepaid rent - (15,000)
Deposit - (3,000)
Increase (decrease) in:
Accounts payable and accrued expenses (13,706) (9,923)
Accounts payable - related parties 19,471 -
Income taxes payable (2,400) (4,340)
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Net cash used in operating activities (451) (53,719)
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Cash flows from investing activities
Purchase of property and equipment - (15,028)
Investment - (16,000)
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Net cash used in investing activities - (31,028)
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Cash flows from financing activities
Proceeds from stock issuance - 166,208
Notes payable - related party - (10,000)
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Net cash provided by financing activities - 156,208
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NET INCREASE (DECREASE) IN CASH (451) 71,461
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 753 1,941
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CASH AND CASH EQUIVALENTS -
- ----------------------------
END OF PERIOD
------------- $ 302 $ 73,402
=============== ==============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
- ---------------------------------------------------------------------------
During February 2000, the company issued 2,120,000 shares of its common stock
for a stock subscription receivable of $98,791.
See accompanying notes to consolidated financial statements
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AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
NOTE 1 BASIS OF PRESENTATION
---------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles and the rules and
regulations of the Securities and Exchange Commission for interim financial
information. Accordingly, they do not include all the information necessary
for a comprehensive presentation of financial position and results of
operations.
It is management's opinion, however that all material adjustments (consisting
of normal recurring adjustments) have been made which are necessary for a fair
financial statements presentation. The results for the interim period are not
necessarily indicative of the results to be expected for the year.
For further information, refer to the financial statements and footnotes for
the year ended December 31, 1999 included in the Company's Form 10-SB/A2 filed
on April 21, 2000.
NOTE 2 INVESTMENTS
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During the three months ended March 31, 2000, the Company contributed an
additional $16,000 to its joint venture American Electric Automobile Company
(ASIA), Inc. The Company's 45% interest in the joint venture did not change
since the 55% partner of the joint venture also contributed $16,000. No
equity method adjustment was recorded for the three months ended March 31,
2000 since the joint venture had no activity for the period.
NOTE 3 COMMON STOCK
------------
On December 13, 1999, the Board agreed to offer up to 3,000,000 shares of
common stock, pursuant to section 4(2) of the Securities Act of 1933, as
amended, at $0.125 per share. From January 2000 through March 31, 2000, the
Company issued 2,120,000 shares with cash receipts of $166,209 and
subscriptions receivable of $98,791.
NOTE 4 GOING CONCERN
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The Company's financial statements for the three months ended March 31, 2000
have been prepared on a going concern basis which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal
course of business. The Company has incurred accumulated losses of $420,360
and has substantial cash requirements for operating activities which raises
substantial doubt about its ability to continue as a going concern.
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The ability of the Company to continue as a going concern is dependent upon
the Company's ability to attain a satisfactory level of profitability and
obtain suitable, adequate financing. Management's plans include obtaining
additional funding through its stock offering (See Note 3) and collecting on
its subscriptions receivable. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Certain Forward-Looking Information
Information provided in this Quarterly Report on Form 10QSB may contain
forward-looking statements within the meaning of Section 21E or Securities
Exchange Act of 1934 that are not historical facts and information. These
statements represent the Company's expectations or beliefs, including, but not
limited to, statements concerning future and operating results, statements
concerning industry performance, the Company's operations, economic performance,
financial conditions, margins and growth in sales of the Company's products,
capital expenditures, financing g needs, as well assumptions related to the
forgoing. For this purpose, any statements contained in this Quarterly Report
that are not statements of historical fact may be deemed to be forward-looking
statements. These forward-looking statements are based on current expectations
and involve various risks and uncertainties that could cause actual results and
outcomes for future periods to differ materially from any forward-looking
statement or views expressed herein. The Company's financial performance and
the forward-looking statements contained herein are further qualified by other
risks including those set forth from time to time in the documents filed by the
Company with the Securities and Exchange Commission, including the Company's
most recent Form 10SB.
Condition and Results of Operations.
Three months ended March 31, 2000 and 1999
Net sales were $0 for the quarter ended March 31, 1999 and March 1, 2000.
Management is waiting completion of the Company's first production prototype
to prepare a marketing and sales plan.
Operating the operating expenses increased by $22,258 which is approximately
587% over the quarter ended March 31, 1999. The principle reason was the
setting up of a prototype facility and prototype development.
Net Loss for the quarter ended March 31, 2000 increased 518% or $21,945 over
the quarter ended March 31, 1999. Principle reason was the opening of a
prototype facility and beginning development of a prototype.
On December 13, 1999 the Company approved an offering of 3,000,000
(1,000,000 new shares) shares of the Company's common stock at $0.125 per
share. The offering was to be in accordance with Regulation D rule 504. The
offering was to accredited investors only in the states of MN, PA, and TX.
The offering was accomplished during January ($42,500), February ($125,000),
March ($78,750) and April ($127,500) of 2000. The offering was sold out and
closed April 21, 2000. The company subscribed a total of $372,500. As of
April 21, 2000 the Company had received $187,250 in cash and $186,250 in
notes. Future notes are due $50,000 in May, $65,000 in June and $23,750 in
July, 2000. Notes carry interest at twelve percent per annum.
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Expenses of the offering totaled $17,468:
Legal $ 5,614
Accounting 10,928
Transfer 300
Fed Express 126
State Filings 500
Money subscribed $373,750
Expenses (17,468)
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Net proceeds $356,282
Money Received $186,875
Expenses (17,468)
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Money available
prior to 4/30/00 $169,407
On March 1, 2000 the Company leased a facility in San Diego, CA of
approximately 2,500 square feet. This facility is being used for prototype
development. The facility is leased from a non-affiliate of the Company at
prevailing rates for like property. The Company has also hired three new
employees, bringing the total number of full time employees to three.
If the electric automobile being developed is successful, the Company plans to
advertise this car for sale. If sales are successful, the Company will
consider leasing additional space for production to meet sales demand.
If the stock subscribed is fully paid on time, the Company will have
sufficient capital for the next 12 months to develop its prototypes and do
custom conversions for customers. There can be no guarantee that the
subscriptions will be paid on time or at all.
If the Company decides to enter full scale production (10-25 cars per month)
the Company will need additional capital, there is no assurance that this
needed capital can be raised, or raised on terms acceptable to the Company.
RISK FACTORS
1. Limited History of Operations. The Company was organized in May of 1996
and has had limited operations to date. Therefore its operations are subject
to all of the risks inherent in new business enterprises. The likelihood of
the success of the Company must be considered in light of the problems,
expenses, difficulties, complications and delays frequently encountered in
connection with the start up of new businesses and the competitive environment
in which the Company will operate. The Company has had no significant
revenues to date.
2. Time lapse to Operational Stage of the Company Operations therefore will
depend upon the continued availability of investment capital to fully fund
subsequent Projects. If operating revenues are insufficient to continue the
Company's operations, additional funds would have to be raised through equity
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or debt financing. The Company has no commitments for any additional debt or
equity financing and there can be no assurance that any such commitments will
be obtained on favorable terms, if at all.
3. Competition. Competition in the Electric Automobile Industry may be
expected to intensify. General Motors started leasing it's first Electric
Auto in December 1996. Several of the other major automobile manufacturers
also have announced that they have entered or intend to enter the market.
4. Dependence on Management. Because the Company is a new business and has
no significant operating history, it will be heavily dependent upon the
services and experiences of its officers. The loss of the service of any
officer could adversely affect the conduct of the Company's business.
5. Industry and Economic Factors. The Automobile industry in which the
Company expects to operate is subject to constant changes based upon changes
in public taste as well as the condition of the general economy. Factors
beyond the control of the Company or those on whom it intends to rely could
cause the Company to fail.
6. Control of the Company. The Officers, Directors and Principal Shareholder
Group own more than 50% of the Common Shares of the Company. Therefore, the
Control Group will either control or significantly influence a voting control
of the Company. Pursuant to the laws of Delaware, a majority of all
shareholders entitled to vote an any regularly called shareholders meeting,
may act, as a majority, without notice or meeting, giving notice to other
shareholders only after such action may have been taken. While there are some
limits upon this right of the majority, Investors should understand that
Management commands a voting majority in control of the Company.
7. Dividends. The Company has paid no dividends on its Common Shares since
its inception. The Company does not anticipate paying any dividends on its
Common Stock until and unless such profit is realized and may not pay out any
dividends thereafter.
8. Unaudited Financial Statements. The interim financial statements for the
period January 1, 2000 though March 31, 2000 are unaudited.
9. Government Regulation. The automobile industry in general is heavily
regulated both as to crash survival and motor emissions. The Company expects
to have no problems with the latter and because of the use of bodies which
have already been approved for gasoline engine use, less severe problems with
the former.
10. Potential Conflicts of Interest. The officers and directors are
associated with other firms, including others with material contractual
relationships with this Issuer, and are involved in a range of business
activities. Due to these affiliations and the fact that some officers are
expected to devote only a portion of their time to the business of the
Company, there are potential inherent conflicts of interest in their acting as
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directors and as officers. Each of the officers and directors is or may
become an officer, director, controlling shareholder, partner or participant
in other entities engaged in a variety of businesses. These existing and
potential conflicts of interest are irreconcilable and could involve the
participating officers and directors in litigation brought by the Company's
shareholders or by the shareholders of other entities with which the officers
and directors are currently, or may become, affiliated. To help alleviate
this position somewhat, Management has adopted a policy of full disclosure
with respect to business transactions with any entity in which any or all of
the officers or directors are affiliated, either directly or indirectly. An
officer or director may continue any business activity in which such officer
or director engaged prior to joining the Company.
11. Going Concern As of March 31, 2000 the company had a stockholders' Equity
of $152,320. The auditors raised a "going concern" question in the audited
financial statements for the year ended December 31, 1999.
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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.
(a) A special shareholders meeting was held on March 20,
2000. Of the 5,129,600 (old shares) outstanding,
2,633,000 were present and voting.
(b) No directors were elected.
(c) (i) Election of Weinberg & Co., LLP to be the Company's
auditors. 2,633,000 shares or 100% present voted in favor,
there were none opposed.
(ii) That the Company consolidate its stock on a 3 for 1 basis
and that the par value remain the same. 2,633,000 or 100%
present voted in favor, there were none apposed.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) (2) Filed by reference; Form 10-SB filed February 23, 2000.
(3) Filed by reference; Form 10-SB filed February 23, 2000.
(11) Statement re: Computation of per share earnings.
(27) Financial Data Schedule
(b) There were no reports filed on Form 8-K
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.
AMERICAN ELECTRIC AUTOMOBILE COMPANY, INC.
Date: 5/15/2000 By // Edward F. Myers //
13
b) 11 Computation of per share earnings
American Electric Automobile Company, Inc.
Weighted Average Shares Outstanding
March 31, 2000
<TABLE>
<CAPTION>
Original Days
Date Issuance Cumulative Outstanding Total
<S> <C> <C> <C> <C>
01/01/00 4,471,600 4,471,600 37 165,449,200
02/07/00 690,000 5,161,600 1 5,161,600
02/08/00 (32,000) 5,129,600 3 15,388,800
02/11/00 150,000 5,311,600 4 21,246,400
02/15/00 280,000 5,441,600 1 5,441,600
02/16/00 100,000 5,541,600 6 33,249,600
02/22/00 300,000 5,841,600 27 157,723,200
03/20/00 300,000 6,141,600 6 36,849,600
03/26/00 300,000 6,441,600 27 157,723,200
03/31/00 0 0 0
6,559,600 90 472,718,000
90
--
Weighted Average Shares 5,252,422
---------
Net Loss (22,179.00)
---------
Net Loss Per Share (0.0042)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
b) 27 Financial Data Schedule
THIS SCHEDULE CONTAINS SUMARY FINANCIAL INFORMATION EXTRACTED FRON THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AS OF AND FOR THE TWELVE MONTHS ENDING
MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIREETY BY FREFERENCE TO
FINANCIAL STATMENTS INCLUDED IN THIS FILING
<S> <C>
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-2000
<PERIOD-TYPE> 3-MOS
<CASH> 73,402
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 17,217
<CURRENT-ASSETS> 106,886
<PP&E> 72,580
<DEPRECIATION> 21,957
<TOTAL-ASSETS> 195,259
<CURRENT-LIABILITIES> 42,939
<BONDS> 0
0
0
<COMMON> 656
<OTHER-SE> 670,815
<TOTAL-LIABILITY-AND-EQUITY> 195,259
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 26,047
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132
<INCOME-PRETAX> (26,179)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,179)
<EPS-BASIC> (.005)
<EPS-DILUTED> 5,252,422
</TABLE>
