UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the three-month period ended October 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-23903
eAUTOCLAIMS.COM, INC.
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(Exact name of registrant as specified in charter)
Nevada 95-4583945
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2708 Alt. 19 N., Suite 604, Palm Harbor, Florida 34683
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(Address of principal executive offices) (Zip Code)
Registrant's telephone Number, including area code: (727) 781-0414
Securities registered pursuant to Section 12(b) of the Exchange Act: None
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.
[ X ] Yes [ ] No
The number of shares outstanding of the Issuer's Common Stock, $.001 Par
Value, as of October 31, 2000 was 11,158,096.
Transitional Small Business Disclosure Format:
[ ] Yes [ X ] No
TRANSFORMATION PROCESSING, INC.
------------------------------
(Former name or former address, if changed since last report)
<PAGE>
EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
INDEX TO FORM 10-QSB
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PART I
FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements 2
Balance Sheets 3
Statement of Operations 4
Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE>
EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The consolidated financial statements of eAutoclaims.com, Inc. and
Subsidiaries (collectively the "Company") included herein were prepared, without
audit, pursuant to rules and regulations of the Securities and Exchange
Commission. Because certain information and notes normally included in financial
statements prepared in accordance with generally accepted accounting principles
were condensed or omitted pursuant to such rules and regulations, these
financial statements should be read in conjunction with the financial statements
and notes thereto included in the audited financial statements of the Company as
included in the Company's Form 10-KSB for the year ended July 31, 2000.
2
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<TABLE>
<CAPTION>
EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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October 31, 2000 July 31, 2000
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(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 243,952 $ 239,979
Accounts receivable, less allowance for doubtful accounts
of $60,000 and $30,000, respectively 791,047 578,729
Due from related parties 131,618 182,684
Prepaid expenses and other current assets 114,816 81,686
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Total current assets 1,281,433 1,083,078
Property and Equipment, net of accumulated depreciation
of $87,040 and $55,731, respectively 361,680 285,212
Goodwill, net of accumulated amortization
of $66,792 and $7,019, respectively 1,606,859 1,654,633
Other Assets 13,840 11,661
Deferred Income Tax Asset, net of valuation
allowance of $1,485,000 and $1,121,000, respectively - -
----------------------------------------------------------------------------------------------------------------------
Total Assets $ 3,263,812 $ 3,034,584
======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,214,228 $ 778,265
Loans payable - stockholders 231,145 218,365
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Total current liabilities 1,445,373 996,630
Loans Payable - stockholders, net of current maturities 26,655 66,635
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Total liabilities 1,472,028 1,063,265
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Commitments and Contingencies
Stockholders' Equity:
Preferred stock to be issued - 500,000
Convertible preferred stock - $.001 par value; authorized 5,000,000 shares,
issued and outstanding 260 and -0- shares, respectively,
aggregate liquidation preference of $1,300,000 1 -
Common stock - $.001 par value; authorized 50,000,000 shares, issued
and outstanding 11,158,096 and 10,790,367 shares, respectively 11,158 10,790
Common stock to be issued 28,240 1,320,000
Additional paid-in capital 7,750,730 3,216,286
Accumulated deficit (5,998,345) (3,075,757)
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Stockholders' equity 1,791,784 1,971,319
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Total Liabilities and Stockholders' Equity $ 3,263,812 $ 3,034,584
======================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
3
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<TABLE>
<CAPTION>
EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
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For the three-month period ended October 31, 2000 (unaudited)
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<S> <C>
Revenue:
Collision repairs management $ 1,311,896
Glass repairs 743,904
Fleet repairs management 234,924
Other repairs and fees 128,765
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Total revenue 2,419,489
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Expenses:
Claims processing 1,969,964
Selling, general and administrative 1,348,496
Depreciation and amortization 91,082
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Total expenses 3,409,542
======================================================================================================================
Net loss $ (990,053)
======================================================================================================================
Loss per common share - basic and diluted $ (0.26)
======================================================================================================================
Weighted-average number of common shares outstanding - basic and diluted 11,133,179
======================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
4
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<TABLE>
<CAPTION>
EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
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For the three-month period ended October 31, 2000 (unaudited)
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<S> <C>
Cash flows from operating activities:
Net loss $(990,053)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 91,082
Common stock issued for services 98,420
Common stock to be issued for services 28,240
Allowance for doubtful accounts 30,000
Changes in operating assets and liabilities:
Increase in accounts receivable (242,318)
Decrease in due from related parties 51,066
Increase in prepaid expenses and other current assets (33,130)
Increase in other assets (2,179)
Increase in accounts payable and accrued expenses 447,598
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Net cash used in operating activities (521,274)
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Cash flows used in investing activity:
Purchases of property and equipment (107,777)
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Cash flows from financing activities:
Issuance of compensatory stock options 280
Net proceeds from issuance of preferred stock 659,944
Principal payments on stockholder loans (27,200)
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Net cash provided by financing activities 633,024
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Net increase in cash and cash equivalents 3,973
Cash and cash equivalents at beginning of period 239,979
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Cash and cash equivalents at end of period $ 243,952
======================================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 2,394
======================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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Note 1 - Basis of presentation
------------------------------
The accompanying consolidated financial statements reflect the operations of
eAutoclaims.com and its wholly owned Subsidiaries for the three-month period
ended October 31, 2000. eAutoclaims.com, Inc. and Transformation Processing,
Inc. completed a reverse merger on May 25, 2000. Prior to the reverse merger,
Transformation Processing, Inc. had ceased operations. The Company began
operations on December 7, 1999.
The accompanying unaudited consolidated financial statements contain all
adjustments (consisting only of those of a normal recurring nature) necessary to
present fairly the financial position of the Company as of October 31, 2000 and
its results of operations and its cash flows for the three-month period ended
October 31, 2000. Results of operations for the three-month period ended October
31, 2000 are not necessarily indicative of the results that may be expected for
the year ending July 31, 2001.
Note 2 - Per share calculations
-------------------------------
Basic loss per share is computed as net loss divided by the weighted-average
number of common shares outstanding for the period. Diluted loss per share
reflects the potential dilution that could occur from common shares issuable
through stock-based compensation including stock options, restricted stock
awards, warrants and other convertible securities. Potential common shares have
not been included in diluted loss per share since the effect would be
anti-dilutive. The calculation of basic and diluted loss per common share is as
follows:
Net loss (990,053)
Less: Preferred stock dividends (16,153)
Deduction related to Series A convertible
preferred stock (1,916,382)
-----------------------
Net loss applicable to common stock $ (2,922,588)
=======================
Basic and diluted:
Weighted average number of common shares outstanding 11,133,179
=======================
Basic and diluted loss per common share $ (0.26)
=======================
Note 3 - Equity Transactions
----------------------------
As of July 31, 2000, the Company had not issued any shares of preferred stock
but had received $500,000 in cash toward shares of preferred stock. During the
three-month period ended October 31, 2000, the Company received an additional
$659,944 in cash that was net of $140,056 of offering costs and issued 260
shares of preferred stock.
6
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EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
In connection with the issuance of convertible preferred stock, the Company
issued warrants to purchase 463,922 shares of common stock. The warrants are
exercisable at prices ranging from $3.00 to $4.50 per share, are exercisable
upon issuance, and expire in five years. The fair value of $1,157,987
attributable to the warrants has been treated as a cost associated with the
issuance of the convertible preferred stock, and has been recorded as an
increase to accumulated deficit and an increase in the net loss available to
common shareholders.
On the date of issuance of the convertible preferred stock, a beneficial
conversion feature of the convertible stock existed represented by the intrinsic
value of that feature. That amount is calculated as the difference between the
conversion price and the fair value of the common stock into which the preferred
stock is convertible, multiplied by the number of shares into which the
preferred stock is convertible. This amount has been recorded as an increase to
accumulated deficit and an increase in the net loss available to common
shareholders. The aggregate amount attributable to the beneficial conversion
feature is $618,339.
During the three-month period ended October 31, 2000, the company issued 2,372
shares of restricted common stock on the acquisition of SalvageConnection.com,
Inc. These shares were valued at the fair market value at the date of issuance
that totaled $12,000.
During the three-month period ended October 31, 2000, the Company entered into
agreements with three consultants to provide services to the Company. These
consultants will receive cash and approximately 116,000 shares of the Company's
common stock for these services. The Company will record a charge to operations
when the services are performed based on the fair market value of the shares of
common stock at the time of issuance. During the three-month period ended
October 31, 2000, approximately $98,000 was charged to operations as a result of
these agreements. At October 31, 2000, 45,357 common shares have been earned.
During the three-month period ended October 31, 2000, the Company agreed to
issue 50,000 shares of common stock in exchange for $100,000 of legal services.
As of October 31, 2000, $28,240 in legal services has been invoiced. At October
31, 2000, 14,120 common shares have been earned.
During the three-month period ended October 31, 2000, the Company issued options
to employees to purchase 187,000 shares of common stock. The exercise prices of
the options are equal to or greater than the fair market value of the Company's
common stock on the date of each grant.
Note 4 - Acquisitions
---------------------
On August 1, 2000, the Company acquired the outstanding shares of
SalvageConnection.com, Inc. for the issuance of 2,372 shares of restricted
common stock. These shares were valued at the fair market value at the date of
issuance that totaled $12,000. SalvageConnection.com is an Internet-based
procurement network for recycled and remanufactured automobile parts.
SalvageConnection.com was incorporated in December 1999 had no significant
assets and liabilities and has not had any substantial operations since
incorporation. The acquisition has been accounted for as a purchase with the
entire consideration recorded as goodwill, to be amortized over 7 years.
Note 5 - Additional information
-------------------------------
The Company's records and the records of its transfer agent differ with respect
to the number of outstanding shares of the Company's common stock. According to
the transfer agent, the number of shares of common stock outstanding is
approximately 31,500 shares greater than the 11,158,096 indicated by the
Company's records. The Company believes that its records are correct and is in
the process of resolving this difference. The number of shares outstanding
reflected in the Company's financial statements do not include these shares or
any adjustment which might be necessary to resolve this difference.
7
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EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 6 - Subsequent Events
--------------------------
In December 2000, the Company issued 60 shares of preferred stock for $270,000
in cash that was net of $30,000 of offering costs. In connection with the
preferred stock, warrants to purchase 128,023 shares of common stock of the
Company were issued. These warrants are exercisable at prices ranging from
$1.4625 to $4.50 per share, are exercisable upon issuance, and expire in five
years.
8
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EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The statements contained in this Report on Form 10-QSB, that are not purely
historical, are forward-looking information and statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These include statements regarding our expectations,
intentions, or strategies regarding future matters. All forward-looking
statements included in this document are based on information available to us on
the date hereof. It is important to note that our actual results could differ
materially from those projected in such forward-looking statements contained in
this Form 10-QSB. The forward-looking statements contained herein are based on
current expectations that involve numerous risks and uncertainties. Assumptions
relating to the foregoing involve judgments regarding, among other things, our
ability to secure financing or investment for capital expenditures, future
economic and competitive market conditions, and future business decisions. All
these matters are difficult or impossible to predict accurately and many of
which may be beyond our control. Although the we believe that the assumptions
underlying our forward-looking statements are reasonable, any of the assumptions
could be inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this form 10-QSB will prove to be
accurate.
GENERAL
eAutoclaims.com, Inc. ("eAutoclaims.com", the "Company" or "we") provides
Internet based collision claims administration services for automobile insurance
companies and corporate automobile fleet management companies. We provide an
infrastructure that links automobile insurance companies and self-insured fleet
owners with thousands of collision repair shops and support facilities located
throughout the United States. Our services provide our customers with a
cost-effective means of monitoring repairs and controlling expenses incurred in
the process of evaluating and paying collision claims. We derive our revenues
from administrative fees paid by our customers and by sharing in discounts
received by our customers from parts and service providers when processing
collision work through our system.
Our business model is similar to that of health maintenance organizations
("HMO's") and preferred provider organizations ("PPO's"). HMO's and PPO's seek
to control the cost of medical services by bringing the various health care
providers, such as doctors and hospitals, together in a single organization,
thereby exerting control over the costs of services paid for by the HMO or PPO.
eAutoclaims.com controls the vehicle repair process from the reporting of the
accident through the satisfactory repair of damage. We bring together and
coordinate the activities of the insurance company, its insured, and the various
parties involved in evaluating a claim, negotiating the cost of parts and
services, and performing necessary repair services. We monitor the performance
of parts and service providers to help assure that the expectations of the
insurance company for quality, timeliness and cost are being met. As HMO's and
PPO's have relationships with many providers, we have established relationships
with approximately 2,000 body shops and over 4,000 glass shops throughout the
United States. Because of these relationships, we are typically able to obtain
lower cost parts and services for insurance companies and increase the volume of
work for repair shops that are part of our preferred provider network.
RESULTS OF OPERATIONS
FOR THE THREE-MONTH PERIOD ENDED OCTOBER 31, 2000
The accompanying consolidated financial statements reflect the operations of
eAutoclaims.com and its wholly owned Subsidiaries for the three-month period
ended October 31, 2000. eAutoclaims.com, Inc. and Transformation Processing,
Inc. completed a reverse merger on May 25, 2000. Prior to the reverse merger,
Transformation Processing, Inc. had ceased operations. Comparisons to the prior
three-month period operating results are not meaningful and have been excluded
from these financial statements and discussions. The Company began operations on
December 7, 1999.
9
<PAGE>
EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
REVENUE
Total Revenue for the three-month period ended October 31, 2000 was
approximately $2.4 million, which consists of approximately $1.3 in collision
repairs management for insurance companies, approximately $750,000 in glass
repairs, and approximately $350,000 in fleet repairs management and other
repairs and fees. These revenues reflect the operations of Premier Express
Claims, Inc. for the full three-month period, which contributed approximately
$770,000 in revenue for the three-month period ended October 31, 2000. Our
revenues for the three-month period ended October 31, 2000 exceed our revenues
for the period from our date of inception (December 7, 1999) to July 31, 2000,
which were approximately $1.7 million. This increase is attributed to the growth
in revenues from our core collision repairs management business as well as the
inclusion of our Premier Express Claims operations for the full three-month
period.
eAutoclaims.com, Inc. recognizes revenues by assuming the risk and completing
the repair of insurance claims for insurance companies and on corporately own
fleet vehicles. In addition to recognizing revenue associated with the repair of
insurance claims, we charge additional fees on a per-claims basis to our
insurance and corporate fleet customers pursuant to the terms of a Services
Agreement.
EXPENSES
Claims processing charges for the three-month period ended October 31, 2000 were
approximately $2 million, or 81% of revenues. Claims processing charges include
the costs of collision repairs paid by eAutoclaims.com to its collision repair
shop network. We expect margins on claims repairs to remain low in the near
future as we use favorable pricing as a means to obtain increased market share.
We are dependent upon our third party collision repair shops for insurance
claims repairs. eAutoclaims.com, Inc. currently includes over 2,000 affiliated
repair and 4,000 auto glass vendors facilities in its network for insurance
claims repairs. We electronically audit individual claims processes to their
completion using remote digital photographs transmitted over the Internet.
However, if the quality of service provided by a collision repair shop falls
below a satisfactory standard leading to poor customer service, this could have
a harmful effect on our business. We control our service requirements by
continually monitoring customer service levels and, if required, establish
similar relationships with other collision repair shops. Total selling, general
and administrative expenses for the three-month period ended October 31, 2000
were approximately $1.35 million, or 56% of revenue. Selling, general and
administrative expenses consisted of salaries and other personnel related
expenses, facilities related expenses, legal and other professional fees,
advertising costs, and travel expenses. Total non-cash charges for the
three-month period ended October 31, 2000 that included selling, general and
administrative expenses and depreciation and amortization were approximately
$252,000. Non-cash charges included approximately $161,000 in charges incurred
pertaining to consulting agreements for investor relations services, legal, and
professional consultants. During the three-month period ended October 31, 2000
we incurred payroll related expenses of approximately $637,000.
Depreciation and amortization was approximately $91,000 for the three-month
period ended October 31, 2000. Depreciation of fixed assets represented
approximately $31,000. Amortization expense of approximately $60,000 reflects
the amortization of goodwill associated with our Premier Express Acquisition.
In the event that we continue to acquire other companies, amortization of
goodwill will continue to have an impact on our results of operations in the
future. Based on our previous acquisitions, future amortization of goodwill will
reduce net income from operations by approximately $60,000 in each quarter
through 2007.
Interest expense, net of interest income was $861 for the three-month period
ended October 31, 2000. Interest expense related primarily to interest on
shareholder loans and capital leases and interest income resulted primarily form
interest earned on our cash reserves.
NET LOSS
We recorded a net loss of $990,053 for the three-month period ended October 31,
2000, because the our revenues were not sufficient to cover our costs incurred.
Management is continuing to develop its infrastructure to support its rapid
growth and we believe that our business operations will benefit in the long-term
by supporting higher levels of claims processing charges leading to increased
10
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EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
revenues. Contributing to the current net loss were non-cash expenses of
approximately $161,000 pertaining to consulting agreements for investor
relations services, legal, and professional consultants. During the three-month
period ended October 31, 2000, our net losses have narrowed on a month-by-month
basis. It is expected that we will break-even between the fourth quarter of this
fiscal year and the second quarter of fiscal year 2002, however there are no
assurances that we will be able to meet this objective or obtain future
profitability.
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 2000, we had a cash and cash equivalents of $243,952 and a
working capital deficiency of approximately $164,000. The primary source of our
working capital during the three-month period ended October 31, 2000, was from
the sale of our preferred stock to Thomson Kernaghan.
eAutoclaims.com's operations generated negative cash flow of $521,274 during the
three-month period ended October 31, 2000, and management expects a significant
use of cash during the upcoming fiscal quarter as it funds its operating
businesses. There is no assurance we will continue to sustain our growth. Our
business has grown significantly since our inception. We believe that our
current cash resources, access to capital and cash flow from operations will be
sufficient to sustain our operations for at least 12 months. This estimate is a
forward-looking statement that involves risks and uncertainties. The actual time
period may differ materially from that indicated as a result of a number of
factors so that we cannot assure that our cash resources will be sufficient for
anticipated or unanticipated working capital and capital expenditure
requirements for this period. In order to sustain our growth, we will require
substantial additional capital. Although we are currently negotiating with two
different funding sources for additional capital, there is no assurance we will
obtain such capital. If we raise additional funds through the issuance of our
securities, these securities may have rights, preferences or privileges senior
to those of our Common Stock, and our stockholders may experience additional
dilution to their equity ownership.
As of July 31, 2000, the Company had not issued any shares of preferred stock
but had received $500,000 in cash toward shares of preferred stock. During the
three-month period ended October 31, 2000, the Company received an additional
$659,944 in cash that was net of $140,056 of offering costs and issued 260
shares of preferred stock for total cash received of $1.3 million. We have an
obligation to register these shares of Common Stock underlying the Preferred
Stock to provide these investors future liquidity of their investment. We have
escrowed 292,500 shares of Common Stock underlying the conversion rights of all
of our 260 shares of Preferred Stock.
In December 2000, the Company issued 60 shares of preferred stock for $270,000
in cash that was net of $30,000 of offering costs. In connection with the
preferred stock, warrants to purchase 128,023 shares of common stock of the
Company were issued. These warrants are exercisable at prices ranging from
$1.4625 to $4.50 per share, are exercisable upon issuance, and expire in five
years.
We will need capital to implement our business objectives. We cannot provide any
assurance that we will be successful in raising such capital, and such
undertakings are difficult to complete. Although management is optimistic that
we will be successful in obtaining future financing, there is no assurance that
such financing will be available to meet our needs.
Our principle commitments at October 31, 2000 consist of monthly operating
rental payments, compensation of employees and accounts and notes payable.
INFLATION
We believe that the impact of inflation and changing prices on our operations
since the commencement of our operations has been negligible.
SEASONALITY
eAutoclaims.com does not deem its revenues to be seasonal.
11
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EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to a number of lawsuits and claims arising out of the
conduct of its business. Management believes that the probable resolution of
such matters will not materially affect the financial position, results of
operations or cash flows of the Company. In October 2000, EAUTO, Inc., a Texas
corporation, asserted that the Company's use of its EAUTOCLAIMS.COM mark and
website violated its federally registered EAUTO service mark. The Company denied
this assertion since the marks are different, the services offered by the
Company are different than those offered by EAUTO, Inc., and there is no
likelihood of confusion among relevant consumers. When EAUTO, Inc. refused to
withdraw its assertions of trademark infringement, the Company filed a lawsuit
styled EAUTOCLAIMS.COM, Inc. v. EAUTO, L.L.C., Case No. 8:00CV-1855-T-26B, in
the United States District Court for the Middle District of Florida, Tampa
Division seeking a judicial declaration that the Company's use of its
EAUTOCLAIMS.COM mark and website are lawful. EAUTO, L.L.C. has yet to respond to
this lawsuit.
On or about October 23, 2000, we received a demand letter from a website
developer for $135,000 alleging breach of contract. Our management believes that
we are entitled to a refund of $15,000. It is too early to predict the ultimate
outcome of this dispute. On December 6, 2000, we were served with a complaint
for breech of contract in the Pinellas County Circuit Court Case No.
00-8376-C1-5 alleging we owe $135,000 to Offshore Websites, Inc.
We believe that there are no other claims or actions pending or threatened
against us, the ultimate disposition of which would have a material adverse
effect on us.
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS.
As of July 31, 2000, the Company had not issued any shares of preferred stock
but had received $500,000 in cash toward shares of preferred stock. During the
three-month period ended October 31, 2000, the Company received an additional
$659,944 in cash that was net of $140,056 of offering costs and issued 260
shares of preferred stock for total cash received of $1.3 million. In connection
with the preferred stock were warrants to purchase shares of common stock of the
Company. The Company issued 73,922 warrants to the agent, which are exercisable
at a price of $4.50 per share, are exercisable upon issuance, and expire in five
years. The Company also issued 390,000 warrants to the purchasers, which are
exercisable at prices of $3.00 and $3.33 per share, are exercisable upon
issuance, and expire in five years.
During the three-month period ended October 31, 2000, the company issued 2,372
shares of restricted common stock on the acquisition of SalvageConnection.com,
Inc. These shares were valued at the fair market value at the date of issuance
that totaled $12,000.
During the three-month period ended October 31, 2000, the Company entered into
agreements with three consultants to provide services to the Company. These
consultants will receive cash and approximately 116,000 shares of the Company's
common stock for these services. The Company will record a charge to operations
when the services are performed based on the fair market value of the shares of
common stock at the time of performance.
During the three-month period ended October 31, 2000, the Company agreed to
issue 50,000 shares of common stock in exchange for $100,000 of legal services.
As of October 31, 2000, $28,240 in legal services has been invoiced.
ITEM 5. OTHER INFORMATION
On November 20, 2000, George Chajes resigned as a member of our Board of
Directors.
On December 1, 2000, Tony Jessop was appointed as a member and Vice-Chairman of
our Board of Directors to fill the vacancy created with the resignation of
George Chajes.
On November 22, 2000 we entered into a distribution arrangement with Comp-Est,
Inc., which is a developer of a Windows-based collision estimating software. We
intend to market this software product to members of our automobile repair
facilities network. If we purchase at least 100 software units within a 10 month
period beginning November 1, 2000 and purchase an average of 15 software units
thereafter, beginning July 1, 2001 Comp-Est has agreed not to sell the software
12
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EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
to our competitors. Assuming compliance with the above minimum purchase
requirements, this agreement has a 10-year term. We agree not to sell this
software package to Comp-Est's current customers and Comp-Est has agreed not to
sell renewals to our customers. We anticipate generating a monthly subscription
fee of $200 per month from each participating repair facility. We believe that
the addition of this software product will increase our revenues and improve the
quality of our services.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
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EAUTOCLAIMS.COM, INC. AND SUBSIDIARIES
SIGNATURES
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.
Date: December 15, 2000 By: /s/ Eric Seidel
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Eric Seidel, Chief Executive Officer
By: /s/ Scott Moore
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Scott Moore, Chief Financial Officer
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