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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d) of
Securities Exchange Act of 1934
For Quarter ended March 31, 2000
Commission File Number 0-23693
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COMPOSITE AUTOMOBILE RESEARCH, LTD.
(Exact name of registrant as specified in its charter)
Alberta, BC 93-1202663
(State of Incorporation) (I.R.S. Employer Identification No.)
635 Front Street
El Cajon, California 92020
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(Address of Principal Executive Offices)
(619) 444-7254 Fax: (619) 444-9026
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(Registrant's telephone and fax number, including area code)
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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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock at the latest practicable date.
As of March 31, 2000, the registrant had 13,082,054 shares of common
stock, no stated par value, issued and outstanding.
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COMPOSITE AUTOMOBILE RESEARCH, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 30,054
Accounts receivable 262,785
Inventory 55,711
Prepaid expenses and other current assets 137,688
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TOTAL CURRENT ASSETS 486,238
FIXED ASSETS
PROPERTY AND EQUIPMENT 1,278,649
LESS DEPRECIATION 784,852
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493,797
OTHER ASSETS
Due from affiliates 5,000
Other
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TOTAL OTHER ASSETS 5,000
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TOTAL ASSETS $ 985,035
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LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
2000
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<S> <C>
CURRENT LIABILITIES
Accounts payable $ 92,617
Accrued liabilities 21,592
Advances from related party 43,093
Deposits for purchases of common stock 27,603
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TOTAL CURRENT LIABILITIES 184,905
LONG TERM LIABILITIES
DEFERRED LICENSE FEES 40,000
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TOTAL LONG TERM LIABILITIES 40,000
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TOTAL LIABILITIES 224,905
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COMMITMENTS
STOCKHOLDERS' EQUITY
COMMON STOCK, no par value,
unlimited shares authorized,
13,082,054 shares issued and
outstanding 8,992,132
ACCUMULATED DEFICIT (8,232,002)
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TOTAL STOCKHOLDERS' EQUITY 760,130
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TOTAL LIAB. AND STOCKHOLDERS' EQUITY $ 985,035
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</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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COMPOSITE AUTOMOBILE RESEARCH, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Revenue:
Sale of products $ 3,851 $ 617,929 $ 26,248
License fees 0 112,000 96,250
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Total revenue 3,851 729,929 122,498
Cost of goods sold -
Production costs 167,342 332,900 22,960
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Gross profit (loss) (163,491) 397,029 99,538
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Operating expenses:
Selling, general and
administrative expenses 419,516 $ 764,695 1,544,231 2,576,927
Depreciation
and amortization 108,501 63,486 325,503 190,458
------------ ------------ ------------ ------------
Total operating expenses 528,017 828,181 1,869,734 2,767,385
------------ ------------ ------------ ------------
Loss from operations (691,508) (828,181) (1,472,705) (2,667,847)
------------ ------------ ------------ ------------
Net loss $ (691,508) $ (828,181) $ (1,472,705) $ (2,667,847)
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Basic net loss per share $ (0.06) $ (0.13) $ (0.26) $ (0.45)
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Weighted average number
of shares outstanding 11,734,333 6,554,614 5,704,588 5,914,205
=====================================================================
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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COMPOSITE AUTOMOBILE RESEARCH, LTD. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
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2000 1999
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<S> <C> <C>
Operating activities:
Net loss $(1,472,705) $(2,667,847)
Adjustments to reconcile net
loss to net cash used
in operating activities:
Depreciation 325,503 190,458
Common stock issued for services 851,199 1,827,374
Changes in operating assets and liabilities:
Accounts receivable (262,785) (57,770)
Inventory 312,986 (63,862)
Prepaid expenses and other assets (103,225) (8,380)
Accounts payable (30,768) (63,828)
Accrued liabilities (83,635) 13,129
Deferred license fees (52,985) 8,750
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Net cash used in operating activities (516,415) (821,976)
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Investing activities - purchases
of property and equipment (2,138)
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Financing activities:
Proceeds from sales of common stock 312,800 373,893
Deposits related to sale of common stock 27,603
Advance from related party 189,592 285,278
Payments of advances from related party (72,264)
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Net cash provided by financing activities 529,995 586,907
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Net increase (decrease) in cash 11,442 (235,069)
Cash at beginning of year 18,612 246,163
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Cash at end of year $ 30,054 $ 11,094
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</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Reporting
In the opinion of management, the accompanying condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring
transactions) necessary to present fairly the financial position of Composite
Automobile Research, Ltd. and its subsidiary (the "Company") as of March 31,
2000 and their results of operations for the three months and nine months ended
March 31, 2000 and 1999 and cash flows of the nine months ended March 31, 2000
and 1999.
Pursuant to the rules and regulations of the Securities and Exchange Commission,
(the "SEC") certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from these financial statements unless
significant changes have taken place since the end of the most recent fiscal
year. Accordingly, these unaudited condensed consolidated financial statements
should be read in conjunction with the audited financial statements of the
Company as of June 30, 1999 and for the years ended June 30, 1999 and 1998
included in the Company's Annual Report on Form 10-KSB for the year ended June
30, 1999 that was previously filed with the SEC.
Results for the quarter ended and nine months ended March 31, 2000 are not
indicative of the results to be obtained for the full year.
2. Organization and Summary of Significant Accounting Policies
Organization and Nature of Operations
In January 1996, Composite Automobile Research, Ltd. was incorporated pursuant
to the Alberta Business Corporations Act. The Company was incorporated to
facilitate an initial public offering in order to provide funding for a new
motor vehicle prototype.
The Company, through its wholly owned subsidiary World Transport Authority, Inc.
("WTA"), is in the business of designing and licensing turn-key automobile
manufacturing facilities to developing nations and supplying licenses with all
components necessary to manufacture vehicles.
The Company sells a Master License for each predetermined geographic region or
each country depending on the estimated vehicle sales in each market. The price
for this Master License varies depending upon the population of the geographic
region or country served. The Master Licensee is responsible for selling
Manufacturing and Distribution Licenses for individual factories throughout
their country or region. The Master Licensee provides all support for each
factory, including training and marketing, utilizing local customs and language.
3. Related party transactions:
The Company has an outstanding stockholder's loan of $43,093 on March 31, 2000,
which is unsecured, non-interest bearing and due on demand.
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4. Inventory:
Inventory as of March 31, 2000 is comprised of the following:
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<S> <C>
Raw materials $ 23,603
Work in process 4,309
Finished goods 27,799
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$ 55,711
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5. Common Stock Transactions:
Stock issued for services:
During the nine months ended March 31, 2000, the Company issued 3,450,967 shares
of common stock to various independent contractors for services rendered and to
be provided. The stock was issued at market value which varied from $.15 per
share to $1.09 per share. Compensation expense associated with this issuance was
equal to $838,149.
Additionally, employees of the Company have been issued 47,000 shares of stock
at a value ranging from $.15 per share to $.35 per share. Compensation expense
associated with this issuance was equal to $13,050.
Stock issued to related party to reduce loan balance:
For the nine months ended March 31, 2000, the Company issued 641,666 shares of
common stock at market prices ranging from $.15 to $.30 to reduce stockholder's
loan by $130,500.
Sale of stock:
For the nine months ended March 31, 2000, the Company issued 848,289 shares of
common stock at market prices ranging from $.15 to $1.20 to new stockholders of
the Company, in exchange for $312,800.
PART 1 FINANCIAL INFORMATION
ITEM 2: Management's Discussion and Analysis of financial condition and results
of operations.
Material changes in financial condition:
As of March 31, 2000 the Company had $30,054 cash on hand and in the bank. The
primary sources of cash and financing for the Company for the nine months then
ended were $340,403 from sales of common stock and deposits for the purchase of
common stock, and $59,092 from shareholder loans. The primary uses of cash
during that period were $516,415 to finance the Company's operations and $2,138
to purchase fixed assets. The Company currently maintains a positive cash
balance through sales of common stock.
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Material changes in the results of operations:
The Company's net sales were $729,929 during the nine months ended March 31,
2000, an increase of 495.9% from its net sales of $122,498 during the nine
months ended March 31, 1999. Revenue from both years consisted of manufacturing
and license sales.
The Company sustained a net loss of $1,472,705 for the nine months ended March
31, 2000 compared to net loss of $2,667,847 for the nine months ended March 31,
1999. A decrease of 44.8% in net loss was primarily due to the decrease in other
expenses, especially professional compensation, and an increase in sales.
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings
On April 1, 1999, the Company agreed to settle a dispute with B.A.T.
International, Inc. ("B.A.T."). Based on this settlement, the Company was to
issue $5,000 worth of the Company's Common Stock to B.A.T. upon completion of
the return of the Company's materials such as body molds and automobile bodies.
Given the nature of the issuance of the stock, it may contain certain trading
restrictions as required by the Securities and Exchange Commission.
Pursuant to the settlement, B.A.T. was required to return all vehicles and/or
vehicle components, body parts and associated pieces in its possession which
incorporate the World Star composite platform, either partially or completely
manufactured, to the Company's office in El Cajon, California by June 1, 1999.
B.A.T. also acknowledged and recognized the rights to the World Star Vehicle
owned by WTA. B.A.T. also agreed to pay a royalty to the Company for all
vehicles B.A.T. produces in the future.
In July 1999, the Company filed suit against B.A.T. in the Superior Court of San
Diego, California for not honoring the terms of the settlement agreement dated
April 1, 1999. The Company acquired a $100,000 judgement against B.A.T.
Effective April 15, 2000, payments on this settlement amount are to begin at
$1,500 per month.
The BAT settlement of $100,000 has not yet been recorded as a receivable due to
the uncertainties regarding collection.
ITEMS 2-4: Not applicable
ITEM 5: Information required in lieu of Form 8-K:
A Master License Agreement was signed on March 28, 2000 between WTA and
Greenvolt, Inc. covering the country of Costa Rica. WTA received seven million
(7,000,000) common shares of Greenvolt Inc., in exchange for the Master License
Agreement.
This contract also grants to Greenvolt, for a period of 18 months, an option to
expand the license for Costa Rica to include the countries of Nicaragua,
Honduras, Guatemala, San Salvador, as well as Belize. The Option terms require
Greenvolt Inc. to pay to WTA Five Hundred Thousand Dollars ($500,000) cash when
the option is exercised to expand into the above-mentioned countries.
ITEM 6: Exhibits and Reports on 8-K:
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a) Exhibit # 27.1, "Financial Data Schedule"
b) No reports on Form 8-K were filed during the fiscal
quarter ended March 31, 2000.
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.
COMPOSITE AUTOMOBILE RESEARCH, LTD.
Date: May 12, 2000 /s/ LYLE WARDROP
----------------------------------------
Lyle Wardrop,
President, Director
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH COMPOSITE AUTOMOBILE RESEARCH, LTD. 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 30,054
<SECURITIES> 0
<RECEIVABLES> 262,785
<ALLOWANCES> 0
<INVENTORY> 55,711
<CURRENT-ASSETS> 486,238
<PP&E> 1,278,649
<DEPRECIATION> (784,852)
<TOTAL-ASSETS> 985,035
<CURRENT-LIABILITIES> 184,905
<BONDS> 0
0
0
<COMMON> 8,992,132
<OTHER-SE> (8,232,002)
<TOTAL-LIABILITY-AND-EQUITY> 985,035
<SALES> 729,929
<TOTAL-REVENUES> 729,929
<CGS> 332,900
<TOTAL-COSTS> 332,900
<OTHER-EXPENSES> 1,869,734
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,472,705)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,472,705)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,472,705)
<EPS-BASIC> (.26)
<EPS-DILUTED> (.26)
</TABLE>
