UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File No. 000-30105
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PAWNBROKERS EXCHANGE, INC.
(Exact name of Small Business Issuer as specified in its charter)
Utah 84-1421481
------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
158 South State Street
Salt Lake City, Utah 84111
-------------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (801) 238-0111
---------------------------------
Indicate by check mark whether the Issuer (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 Issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of September 30, 2000
------------------------- ----------------------------------------
NO PAR VALUE COMMON STOCK 2,149,000 SHARES
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
BASIS OF REPRESENTATION
General
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and, therefore, do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows and stockholders' equity (deficit)
in conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the nine
months ended September 30, 2000, are not necessarily indicative of the results
that can be expected for the year ending December 31, 2000.
2
<PAGE>
PAWNBROKERS EXCHANGE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------ ------------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ (3,694) $ 4,151
Pawns receivable 17,019 28,014
Inventory 64,010 60,349
------------------ ------------------
TOTAL CURRENT ASSETS 77,335 92,514
Property & equipment 27,038 33,039
------------------ ------------------
$ 104,373 $ 125,553
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 12,385 $ 7,640
Accrued expenses 5,354 7,838
Loan Payable 10,000 10,000
Accrued expenses - related parties 47,760 33,750
Franchise tax payable 0 100
Loans payable - related parties 87,000 52,000
------------------ ------------------
TOTAL CURRENT LIABILITIES 162,499 111,328
------------------ ------------------
TOTAL LIABILITIES 162,499 111,328
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock no par value, 50,000,000 shares authorized;
2,149,000 shares issued 191,372 191,372
Deficit accumulated during development stage (249,498) (177,147)
------------------ ------------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (58,126) 14,225
------------------ ------------------
$ 104,373 $ 125,553
================== ==================
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
PAWNBROKERS EXCHANGE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period
from
7/9/97
Three Months Ended Nine Months Ended (Date of
September 30, September 30, inception) to
2000 1999 2000 1999 9/30/00
------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Sales $ 34,403 $ 33,643 $ 114,774 $ 117,713 $ 391,727
Cost of Sales 12,696 12,156 43,165 44,583 147,857
------------- ------------- ------------- ------------- ---------------
GROSS PROFIT 21,707 21,487 71,609 73,130 243,870
Expenses:
General and Administrative expenses:
Advertising 2,629 3,353 9,292 11,818 38,638
Bank charges 144 131 555 426 2,344
Depreciation 2,037 1,981 6,111 5,943 21,995
Insurance 0 0 1,118 1,091 3,789
Interest 917 0 1,417 0 1,417
Interest - related parties 6,172 3,120 14,010 9,360 48,760
Miscellaneous overhead (548) 915 3,411 3,766 12,075
Office supplies 549 2,603 2,738 4,995 17,739
Outside services 1,000 1,549 17,090 7,107 33,041
Payroll and payroll taxes 17,921 16,139 52,966 47,216 160,389
Property taxes 0 0 4,119 3,883 11,353
Rent - related party 9,000 12,000 27,000 27,000 117,000
Repairs 236 137 796 745 10,171
Utilities 864 1,043 3,337 3,540 14,357
------------- ------------- ------------- ------------- ---------------
40,921 42,971 143,960 126,890 493,068
------------- ------------- ------------- ------------- ---------------
(LOSS) BEFORE INCOME TAXES (19,214) (21,484) (72,351) (53,760) (249,198)
PROVISION FOR INCOME TAXES 0 0 0 0 300
------------- ------------- ------------- ------------- ---------------
NET (LOSS) $ (19,214) $ (21,484) $ (72,351) $ (53,760) $ (249,498)
============= ============= ============= ============= ===============
BASIC AND DILUTED
(LOSS) PER COMMON SHARE
Net (loss) per weighted average common
share outstanding $ (.01) $ (.01) $ (.03) $ (.03)
============= ============= ============= =============
Weighted average number of common
shares outstanding 2,149,000 2,149,000 2,149,000 2,128,608
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
PAWNBROKERS EXCHANGE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period
from
7/9/97
Nine Months Ended (Date of
September 30, inception) to
2000 1999 9/30/00
------------- ------------- ---------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (loss) $ (72,351) $ (53,760) $ (249,498)
Adjustments to reconcile net (loss) to net
cash required by operating activities:
Depreciation 6,111 5,943 21,995
Changes in:
Pawns receivable 10,995 (3,908) (17,019)
Inventory (3,661) (13,157) (64,010)
Franchise tax payable (100) (100) 0
Accounts payable and accrued expenses 16,271 12,432 65,499
------------- ------------- ---------------
NET CASH REQUIRED BY
OPERATING ACTIVITIES (42,735) (52,550) (243,033)
INVESTING ACTIVITIES
Purchase of equipment (110) (1,700) (49,033)
------------- ------------- ---------------
NET CASH USED IN
INVESTING ACTIVITIES (110) (1,700) (49,033)
FINANCING ACTIVITIES
Stock sold 0 53,978 191,372
Loan 0 10,000 10,000
Loans - related parties 35,000 0 162,000
Loan repayments - related parties 0 0 (75,000)
------------- ------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 35,000 63,978 288,372
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NET INCREASE (DECREASE) IN CASH (7,845) 9,728 (3,694)
CASH AT BEGINNING OF YEAR 4,151 8,798 0
------------- ------------- ---------------
CASH AT END OF PERIOD $ (3,694) $ 18,526 $ (3,694)
============= ============= ===============
SUPPLEMENTAL INFORMATION Cash paid for:
Interest $ 0 $ 0 $ 1,000
Income taxes 100 100 300
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
PAWNBROKERS EXCHANGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted auditing principles for complete
financial statements. The unaudited financial statements should, therefore, be
read in conjunction with the financial statements and notes thereto in the
Report on Form 10-SB12G for the year ended December 31, 1999. In the opinion of
management, all adjustments (consisting of normal and recurring adjustments)
considered necessary for a fair presentation, have been included. The results of
operations for the three and nine-month periods ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the entire fiscal
year.
Nature of Operations
The Company was incorporated in the State of Utah on July 9, 1997. The Company
is engaged in the business of pawnbrokering.
Development Stage Company
The financial statements present the Company as a development stage company
because of its short operating history.
Pawns Receivable
These amounts are collateralized by property of the debtor which has a higher
value than the receivable. The Company's experience has been that about 40% of
the receivable will not be collected and the Company will convert the collateral
to inventory that can be sold for more than the receivable.
Property and Equipment
Property and equipment is recorded at cost and is being depreciated over its
useful life of five to seven years under the straight-line method.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly liquid
investments with an original maturity of three months or less when purchased to
be cash equivalents.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues, and expenses
during the reporting period. Estimates also affect the disclosure of contingent
assets and liabilities at the date of the financial statements. Actual results
could differ from these estimates.
Inventory
Inventory consists of items for sale in the normal course of business, and is
valued at the lower of cost (first-in, first-out basis) or market.
6
<PAGE>
PAWNBROKERS EXCHANGE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)
September 30, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company utilizes the liability method of accounting for income taxes as set
forth in Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS 109). Under the liability method, deferred taxes are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect in the years in
which the differences are expected to reverse. An allowance against deferred tax
assets is recorded when it is more likely than not that such tax benefits will
not be realized.
Revenue Recognition
Revenue on retail sales is recognized at the time of sale. Service fee revenue
on pawns is recognized when collected due to the high default rate on pawns.
NOTE B - GOING CONCERN ITEMS
The financial statements are presented on the basis that the Company is a going
concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business over a reasonable length of time.
At September 30, 2000, the Company has a working capital deficit of $(85,164),
an accumulated deficit of $(249,498), and a loss from operations for 2000 of
$(72,351). The Company only began operations in December, 1997 and has a
substantial need for working capital.
Management feels that loans from related parties will provide sufficient working
capital to allow the Company to continue as a going concern.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company is engaged in the business of pawnbrokering.
Sales for the three months ended September 30, 2000 were $34,403
compared to $33,643 for the prior year. Cost of sales were $12,696 for the three
months ended September 30, 2000 compared with $12,156 for the prior year.
Expenses were $40,921 for the three months ended September 30, 2000,
compared with $42,971 for the prior year.
Sales for the nine months ended September 30, 2000 were $114,774
compared to $117,713 for the prior year. Cost of sales were $43,165 for the nine
months ended September 30, 2000 compared with $44,583 for the prior year.
Expenses were $143,960 for the nine months ended September 30, 2000,
compared with $126,890 for the prior year. The main increase in 2000 was for
outside services.
Sales in 2000 include about $24,600 of service charge income collected
on pawns and about $90,200 from retail sales ($22,200 and $95,600 in 1999).
During 2000, the Company borrowed $35,000 from related parties to help
provide working capital. The Company hopes to be able to increase sales to
provide working capital in the future. The Company also feels that related
parties will provide loans during the next twelve months to allow the Company to
continue operating.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAWNBROKERS EXCHANGE, INC.
Dated: November 6, 2000 /s/ Michael Vardakis
-----------------------------------------
Michael Vardakis, President and Director
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