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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-25097
SWIFTY CARWASH AND QUIK-LUBE, INC.
(Exact Name of Small Business Issuer in Its Charter)
Florida 65-078-3722
(State or other jurisdiction of (I.R.S. Employer Identi-
incorporation or organization) fication No.)
17521 Crawley Road, Odessa, Florida 33556
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 926-1603
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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
The number of shares of the registrant's common stock, par value $.0001
per share, outstanding as of May 3, 1999 was 8,604,120.
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<PAGE>
Index to Form 10QSB
Part I - Financial Information Page
Item 1. Financial Statements (unaudited)
Condensed Balance Sheet March 31, 1999...............................1
Condensed Statements of Operations - Three Months Ended
March 31, 1999 and for the period August 13, 1997
(Date of Inception) through March 31, 1999...........................2
Condensed Statements of Cash Flows - Three Months Ended
March 31, 1999 and for the period August 13, 1997
(Date of Inception) through March 31, 1999...........................3
Notes to Condensed Financial Statements..............................4
Item 2. Management's Discussion and Analysis or Plan of Operation............8
Part II - Other Information
Item 1. Legal Proceedings...................................................10
Item 2. Changes in Securities and Use of Proceeds...........................10
Item 4. Submission of Matters to a Vote of Security Holders..................10
Item 6. Exhibits and Reports on Form 8-K....................................10
Signatures...................................................................14
Exhibit Index................................................................15
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
SWIFTY CARWASH & QUIK-LUBE, INC.
BALANCE SHEET
(Unaudited)
March 31, 1999
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ASSETS
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Current assets
Cash and cash equivalents $ 38,108
Inventory 5,357
Loans to stockholders 13,000
Prepaid expenses 152,633
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Total current assets 209,098
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Property and equipment
Land 312,500
Building 651,325
Equipment 348,076
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1,311,901
Less: Accumulated depreciation (14,871)
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Total property and equipment 1,297,030
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Other assets
Loans to stockholder 24,005
Deposits 32,600
Deposit held by stockholder 210,000
Prepaid expenses, long-term portion 111,764
Other assets 14,531
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Total other assets 392,900
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Total Assets $ 1,899,028
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
Accounts payable $ 101,718
Payable to stockholders 5,700
Current maturities of notes payable and long-term debt 74,500
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Total current liabilities 181,918
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Long-term liabilities
Notes payable and long-term debt, less current maturities 707,926
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Stockholders' equity
Common stock; $.0001 par value; 50,000,000 shares
authorized; 8,404,120 shares issued and outstanding 840
Paid in capital 1,471,721
Accumulated deficit (463,377)
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Total stockholders' equity 1,009,184
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Total Liabilities and Stockholders' Equity $ 1,899,028
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See accompanying notes to financial statements.
1
<PAGE>
SWIFTY CARWASH & QUIK-LUBE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
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1999 1998
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Revenues
Operating revenues $ 38,138 $ -
Interest income 2,223 3,707
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Total revenues 40,361 3,707
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Expenses
Operational costs 45,515 -
Depreciation and amortization 54,115 -
Other general and administrative 38,845 45,934
Interest expense 14,207 -
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Total expenses 152,682 45,934
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Net loss $ (112,321) $ (42,227)
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Net loss per common share $ (.01) $ (.01)
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Weighted average common shares outstanding 8,404,120 8,240,333
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See accompanying notes to financial statements.
2
<PAGE>
SWIFTY CARWASH & QUIK-LUBE, INC.
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
Three Months Ended
March 31,
----------------------------
1999 1998
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Cash flows from operating activities
Net loss $ (112,321) $ (42,227)
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Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortizati on 54,115 -
Increase in interest receivable (1,952) -
Increase in inventory (5,357) -
Increase in accounts payable 28,556 24,201
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Total adjustments 75,362 24,201
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Net cash used in operating activities (36,959) (18,026)
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Cash flows from investing activities
Acquisition of building and equipment (5,689) (23,482)
Decrease (increase) in deposits and other assets (200) 1,123
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Net cash used in investing activities (5,889) (22,359)
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Cash flows from financing activities
Payments on notes payable (34,030) -
Net proceeds from issuance of stock - 122,305
Advances from stockholders 41,000 -
Net advances (to) from a stockholder 3,300 (8,400)
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Net cash provided by financing activities 10,270 113,905
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Net increase (decrease) in cash and cash equivalents (32,578) 73,520
Cash and cash equivalents, beginning of period 70,686 357,419
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Cash and cash equivalents, end of period $ 38,108 $ 430,939
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See accompanying notes to financial statements.
3
<PAGE>
SWIFTY CARWASH & QUIK-LUBE, INC.
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(Continued)
Supplemental disclosures of noncash investing and financing activities:
In March 1999, the Company issued 10,000 shares of common stock due under a
consulting contract executed in 1998.
Supplemental disclosure of cash flow information:
The Company paid approximately $14,000 in interest for the three months ended
March 31, 1999.
See accompanying notes to financial statements.
4
<PAGE>
SWIFTY CARWASH & QUIK-LUBE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(Anaudited)
The information presented herein as of March 31, 1999, and for the three months
ended March 31, 1999 and 1998, is unaudited.
(1) Basis of Presentation:
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal required
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1999, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. For further information, refer to the financial statements
and footnotes included in the Company's annual report of Form 10-KSB for the
year ended December 31, 1998.
(2) Development Stage Enterprise:
Prior to January 1, 1999, the Company was considered a development stage
enterprise.
(3) Notes Payable:
The Company borrowed $41,000 from three shareholders during the three months
ended March 31, 1999. These notes are payable in annual installments of $15,623,
including interest at 7%, beginning June 1, 1999. The debt is convertible into
shares of the Company's common stock at price of $1.00 per share.
(4) Income Taxes:
The Company has provided a 100% valuation allowance for the income tax
benefit resulting from the losses incurred since inception. Therefore, no income
tax provision or benefit is provided in the accompanying statement of
operations.
(5) Stock Offering:
On February 18, 1998, the Company offered 160,000 shares of common stock and
320,000 common stock warrants through a private placement memorandum to raise
$1.0 million. Each warrant entitles the holder to purchase one share of the
Company's common stock at $7.25 per share at any time after 30 days from their
issue date through December 31, 2000. Prior to their expiration, each warrant
may be redeemable by the Company at a price of $.01.
As of December 31, 1998, 159,120 shares of stock and 318,240 common stock
warrants have been issued under the above offering.
5
<PAGE>
SWIFTY CARWASH & QUIK-LUBE, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(6) Commitments and Related Party Transactions:
During the period ended December 31, 1998, subsequent to the Company's
reorganization, the Company issued 2,235,000 shares of stock to directors and
officers at $.01 per share.
During 1998, the Company advanced approximately $118,000 to the majority
stockholder. Of this amount, $96,166 was formalized into an unsecured promissory
note which bears interest at eight percent. The note is to be repaid to the
Company in quarterly installments of principal and interest of $5,000 beginning
on November 15, 1998 until the balance is repaid in full. During the year, the
stockholder repaid approximately $83,600. The balance of this note at March 31,
1999, together with interest, amounted to approximately $37,000.
During 1998, the president performed services for the Company at no cost.
The Board of Directors valued these services at $35,000 for 1998 and recorded
this amount as additional paid-in capital. Other general and administrative
expenses for the three months ended March 31, 1998, includes $8,750 in expense
for these services.
On August 8, 1998, the Company entered into a consulting and contracting
agreement with a stockholder whereby the stockholder will explore, investigate,
and locate appropriate parcels of land and supplies of equipment on behalf of
the Company. In addition, the stockholder will provide certain construction
services to the Company. In exchange for these services, the Company will pay
the stockholder between three and five percent of the total costs of projects
which have been negotiated or performed by the stockholder. No services were
earned under this agreement for the three months ended March 31, 1999. Included
in deposits at March 31, 1999 is $210,000 paid to the stockholder to be used on
behalf of the Company in connection with this agreement.
In November 1998, the Company entered into a consulting contract with a
stockholder. The contract calls for annual compensation of $72,500 for a period
of three years. The Company has accrued and expensed $18,125 for the three
months ended March 31, 1999, under this contract.
The above related party agreements are not necessarily indicative of the
agreements that would have been entered into by independent parties.
During the year ended December 31, 1998, the Company entered into an agreement
for use of a private suite at the Raymond James Stadium for the 1998 through
2003 football seasons. Included in deposits at March 31, 1999 is a $30,000
deposit in accordance with the terms of this agreement. The Company is committed
under this agreement for an annual fee of $30,000 through 2003. The Company
expensed $7,500 and $6,000 for the three months ended March 31, 1999 and 1998,
respectively, under this agreement.
The Company entered into a three-year advertising promotion and publicity
agreement for $270,400. This amount has been capitalized and is being amortized
over the three-year term. The Company expensed $22,500 for the three months
ended March 31, 1999, under this agreement.
6
<PAGE>
SWIFTY CARWASH & QUIK-LUBE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(Unaudited)
(7) Warrants:
At March 31, 1999, the Company had outstanding exercisable warrants to purchase
318,240 shares of the Company's common stock of $7.25 per share. The warrants
expire on December 31, 2000. At March 31, 1999, 318,240 shares of common stock
were reserved for that purpose.
Prior to expiration, the warrants may be redeemed by the Company at a price of
$.01.
(8) Net Loss Per Common Share:
Net loss per common share is computed in accordance with the requirements of
Statement of Financial Accounting Standards No. 128 (SFAS 128). SFAS 128
requires net loss per share information to be computed using a simple weighted
average of common shares outstanding during the periods presented. In computing
diluted loss per share, warrants exercisable into 318,240 common shares were
excluded because the effect is antidilutive.
7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
The following discussion and analysis should be read in conjunction with
the Condensed Financial Statements and the related Notes thereto included
elsewhere in this report. This report contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
These and additional risk factors are identified in our annual report to the
Securities and Exchange Commission filed on forms 10-KSB and in other SEC
filings.
Liquidity
The Company's working capital was approximately $27,000 as of March 31, 1999.
This decrease of $68,000 from December 31, 1998, is due to additional expenses
incurred for the opening the initial Prototype Center in January 1999. The
Company incurred a net loss of $112,321 for the three months ended March 31,
1999, on revenues from operations of $38,138 compared to a loss of $42,227 for
the three months ended March 31, 1998, when the Company was in the development
stage.
As of March 31, 1999, the Company has approximately $782,000 in long-term debt,
including an additional $41,000 from three shareholders incurred in 1999. The
majority of this debt was used to finance the construction of the building and
purchase of equipment for the Prototype Center. The Company anticipates that it
will continue to expend resources for land, construction of facilities and
equipment for additional Centers. Its business plan calls for the development of
approximately two sites in the coming year. The cost of the land will depend
upon its location. Equipment and construction costs are anticipated to be
$900,000 per Center.
From its inception through December 31, 1998, the Company sold 198.9 Units
comprised of common stock and warrants, raising $994,500 in the Company's
private offering pursuant to Regulation D. The Company registered its common
shares under the Securities and Exchange Act. The registration became effective
on January 27, 1999. On March 11, 1999, the Company was approved for trading on
the OTC Bulletin Board. Over the long-term the Company will depend on revenue
from operations. Profit from operations is anticipated to be sufficient to pay
the costs of operating the Prototype Center but is not anticipated to be
sufficient to fund the purchase and construction of additional Centers. The
Company plans to obtain additional funding from commercial lenders to finance
new Centers and may raise additional capital to finance the Company's growth.
Capital Resources
The Prototype Center was constructed and equipped at a cost of approximately
$1,300,000, approximately $747,000 of which was financed with long term debt.
The annual principal payments on long term debt in 1999 are $79,500. As of
March 31, 1999, substantially all of the Company's assets are leveraged against
the loans for the construction of its Prototype Center.
The Company plans to increase its size and incur additional expenditures in the
coming year by constructing new Centers. Additional sites, when committed, will
require additional capital for acquisition of land, building, equipment and
initial opening expenses. In anticipation of these future activities, the
Company has deposited $210,000 for use by Don Hughes General Contractor, Inc.
in the construction of the next Center or capital improvements on the Prototype
Center. To date, no new Center sites have been committed.
Future resources of the Company have been committed to a six year license
agreement with the Tampa Bay Buccaneers for a Luxury Suite beginning in 1998.
The agreement required an initial deposit of $30,000 with annual payments due of
$30,000, due in equal installments of $15,000 on September 1, and December 1
each year.
Results of Operations
Prior to January 1, 1999, the Company was considered in the development stage.
The Company opened its Prototype Center in January, 1999. For the three months
ended March 31, 1999, the Company incurred a net loss of $112,321 on revenues
from operations of $38,138 compared to a loss of $42,227 for the three months
ended March 31, 1998, when the Company was in the development stage. The
increase in expenses was due primarily to opening and promoting the Prototype
Center.
Although it is too soon to determine the profitability of the Company, the
Company's revenues from operations have increased each month in the first
quarter of 1999 as follows: January $692, February $16,429, and March $21,018.
In addition, during the first quarter of operations, the Company has tracked
customers and has found a trend of repeat customers.
Administrative and start-up expenses of $45,934 during the three months ended
March 31, 1998 were due substantially to the Company's retaining consultants,
legal and accounting assistance and personnel costs during the early stages of
the Company's formation and the design and construction of the Prototype Center.
The Company expects its personnel, depreciation and amortization, interest,
advertising and other operating expenses to increase in 1999 due to the opening
of the Prototype Center in January 1999. The Company also expects to incur
additional legal and accounting expenses as a result becoming a reporting
Company and additional consulting expenses as a result of the Company's
expansion plans. When the Company develops additional Centers, additional
opening, operating and promotional costs will be incurred.
The Company has begun cooperative marketing in conjunction with the Palm Harbor
Gold's Gym and Domino's Pizza in order to increase consumer awareness and
attract new customers. The cost of this marketing, which is anticipated to be
$3,900, will be allocated between the Company, Domino's Pizza and Gold's Gym.
In addition, through its advertising consultant, David Gindley, the Company has
begun direct mail marketing to area consumers. Both advertising methods are
anticipated to generate more revenue for the Company.
Year 2000
The Company substantially relies on the PDQ Open Line Tunnel with Modifications
in it carwash system. Defective date programming in information technology, and
computer hardware and software might cause problems in the year 2000. Date
errors may impact computer applications and also production resources, and the
procedures of outside suppliers and independent contractors. Importantly, it is
not always known where such date information is used. The Company has received
written assurances that its software is year 2000 compliant. Not only will the
Company continue to request written guarantees of year 2000 compliance with all
software, hardware and information technology systems it purchases, but also,
the Company plans to conduct regular back-ups of any accounting or inventory
data throughout the year and immediately prior to the year change to preserve
all information contained on its computer systems. Additionally, the carwash
system used by the Company may be manually overridden so that it can be operated
by hand in the event that its hardware or software is effected by the
year 2000.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit Description ....................................... Page
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession ......................... None
(4) Instruments Defining the Rights of Security Holders None
(10) Material Contracts ................................ None
(11) Statement re: Computation of Per Share Earnings ... Note 8 to
Financial
Statements
(15) Letter re: Unaudited Interim Financial Information None
(18) Letter re: Change in Accounting Principles ........ None
(19) Report Furnished to Security Holders .............. None
(22) Published Report re: Matters Submitted to Vote of
Security Holders .................................. None
(23) Consents of Experts and Counsel ................... None
(24) Power of Attorney ................................. None
(27) Financial Data Schedule
(99) Additional Exhibits ............................... None
(b) Reports on Form 8-K ............................... None
<PAGE>
Signatures
SIGNATURES
Pursuant to the requirements 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.
(Registrant) SWIFTY CARWASH & QUIK-LUBE, INC.
/s/ Rachel Steele
By:(Signature and Title)__________________________________________________
RACHEL STEELE, President, Secretary
5/4/99
Date: _________________________________
/s/ R. Lipsch
By:(Signature and Title)__________________________________________________
RAYMOND LIPSCH, Treasurer
Chief Financial Officer
5/4/99
Date: _________________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Financial
Statements for the three (3) months ended March 31, 1999, and is qualified in
its entirety by reference to such form 10-QSB for quarterly period ended
March 31, 1999.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 38,108
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 5,357
<CURRENT-ASSETS> 209,098
<PP&E> 1,311,901
<DEPRECIATION> (14,871)
<TOTAL-ASSETS> 1,899,028
<CURRENT-LIABILITIES> 181,918
<BONDS> 0
<COMMON> 840
0
0
<OTHER-SE> 1,008,344
<TOTAL-LIABILITY-AND-EQUITY> 1,899,028
<SALES> 38,138
<TOTAL-REVENUES> 40,361
<CGS> 45,515
<TOTAL-COSTS> 138,475
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,207
<INCOME-PRETAX> (112,321)
<INCOME-TAX> 0
<INCOME-CONTINUING> (112,321)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (112,321)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
