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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Fiscal Year Ended: December 31, 1999
Commission File No. 000-28255
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PICK-UPS PLUS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 31-12440524
- ------------------------ -------------------
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
3532 Irwin Simpson Rd., Mason, Ohio 45040
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Check 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 past 12
months (or 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 [ ] No [X]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for twelve months ended December 31, 1999: $954,190
The aggregate market value of the voting stock held by non-affiliates of the
Registrant based upon the average bid and asked prices of such stock, at
March 28, 2000 was $4,174,125.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,858,100 shares of common
stock, as of March 28, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Transitional Small Business Disclosure Format: No
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ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND
In 1993, Fitzgerald Urethanes, Inc. opened a retail store for trucks
and sports utility vehicle accessories in suburban Cincinnati, Ohio, which did
business as Pick-Ups Plus. John Fitzgerald founded Mr. Pickup Co. in February,
1993 to act as a franchisor of similar stores and changed its name to Pick-Up
Plus, Inc. in 1994. We sold our first franchise, located in Florence, Kentucky,
in 1996. The following year, two more franchises were sold, one in South Bend,
Indiana and the other in Des Moines, Iowa. In 1998, we added three new
franchises, one in Portland, Oregon, and two in Pittsburgh, Pennsylvania. We
currently have seven (7) franchised locations operated by six (6) independent
franchisees.
On September 30, 1998, we acquired the Pick-Ups Plus prototype store
from Mr. Fitzgerald in order to consolidate its operations with that of the
franchise system. We are a Delaware corporation with our executive offices
located at 3532 Irwin Simpson Road, Mason, Ohio 45040. Our telephone number is:
513-398-4344.
OUR FRANCHISE SYSTEM
THE TYPICAL FRANCHISE UNIT. While each store within our franchise
system is unique in many aspects, there are in fact more similarities than
differences from one franchise unit to the next. This section presents an
profile of the "typical" store within the Pick-Ups Plus system.
FACILITIES. The Picks-Ups Plus store is designed and merchandised to be
a "toy store for pick-up truck and sports utility vehicle enthusiasts." Products
are displayed for maximum appeal, profitability, and traffic flow. The typical
store features approximately 4,000 square feet of space, with 1,500 feet devoted
to the retail showroom, 2,000 feet to the installations facility, and 500 feet
for storage, common area, and office use.
PRODUCTS AND SERVICES
ACCESSORIES - With 4,000 square feet of space, the typical Pick-Ups
Plus store offers a variety of merchandise to accessorize trucks and sports
utility vehicles. Popular product categories include: Grille Accessories,
Running Boards, Chrome Light Bars, Fiberglass Fender Flares, Ladder Racks, Bug
Guards, Heavy-duty Floormats, Oversized Visors, Headlight Covers, Toolboxes, Bed
Liners, Caps and Step Bars.
INSTALLATION - Each store's installation service is an important profit
center. Products typically installed by the stores include: Running Boards, Bug
Shields and Tonnue Tops.
STAFFING. The franchisee is on-site during the vast majority of, if not
all, hours of operation. He has the ultimate responsibility over all operations
and direct responsibility for marketing, financing, human
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resources and purchasing. He also is active with in-store selling,
merchandising, and customer service. The typical owner-operator takes his
compensation in the form of the store's distributed profits.
In addition to the franchisee, a typical store employs three full-time
associates who manage in-store sales and customer service. The sales associates
are trained in customer-oriented selling techniques and must remain
highly-informed regarding all of the stores products and services.
MARKETING AND ADVERTISING. The Company's most important marketing
activities take place within the stores themselves. Products are merchandised
for maximum appeal and in accordance with in-store traffic. Uniformed and highly
trained sales associates remain constantly available to help customers with
product selection, turning browsers into buyers.
Store-level advertising efforts are supplemented by advertisements
developed and placed by the franchiser. Store-initiated advertising utilizes
print media, radio, and local TV.
Pick-Ups Plus stores generate maximum productivity from their client
bases by maintaining detailed information about all past and current customers.
Mailings are sent regularly to these customers promoting new products and
services or other special promotions. Promotional post cards are sent to
acquired lists of new truck and sport utility vehicle owners in the market
areas.
FRANCHISEE FEES. The fee for the rights to establish a Pick-Ups Plus
franchise is $25,000, payable upon the signing of the franchise agreement and
before the commencement of training or franchise operations. Royalties, equal to
6% of the franchisee's previous week's sales, are paid on a weekly basis.
OTHER RESPONSIBILITIES. To insure the success of its franchisees and
the system in general, the Company requires that its franchisees meet certain
additional requirements. These include the allocation of minimum marketing
budgets (at least $1,500 per month or 4% of gross sales, whichever is larger)
and the acquisition of proper insurance coverage (including a minimum of $1
million coverage each for general aggregate, product, and personal injury
coverage).
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COMPANY SUPPORT
MARKET-TESTED PRODUCTS AND OPERATIONS APPROACH - Since 1993, the
Company and its predecessor company have refined all aspects of store
operations, including merchandising, product/service mix, and promotional
materials. A 187 page operations manual covering all aspects of operations
serves as the franchisee's first source of reference for operational questions.
TRAINING - The Company's franchisees receive 18 days of intensive
training and orientation. Training covers all aspects of operations including:
Store Operations, Ordering Inventory, Inventory Control, Installation of
Products Sold, Store Maintenance and Merchandising (In-Store Training), Office
Procedures, Forms, Ordering Items (In-Store Training), Sales Training, and
Dealing with Customers and Employees.
CONTINUED MANAGEMENT SUPPORT - Support efforts include regular
operational visits and phone consultations from Mr. Fitzgerald and other support
professionals. Helpful management information is also distributed through
regular educational seminars, conferences, bulletins, and newsletters. The
Company hosts a very sophisticated Web Site that all franchisees have access to.
On the Web Site (www.pickupsplus.com), the franchisee can exchange sales tips,
installation tips, information about other franchise stores and managers, and
supplier information. Additionally, the Web Site gives the franchisees the
ability to communicate directly with the franchiser and other franchisees
through an on-line mailbox system.
CONTINUED MARKETING SUPPORT - Franchisees benefit from marketing
developed and placed by the Company. This corporate marketing creates awareness
and positive perceptions that are then amplified by the franchisees' own local
marketing efforts. The Company's franchisees benefit from the affiliation with a
larger, recognizable organization.
BUYING POWER - Through its favorable vendor relationships, the Company
enables its franchisees to purchase items in small quantities at significant
discounts normally reserved for volume purchases. No franchisee is required to
purchase any products from the Company.
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SITE SELECTION - The Company offers assistance in site selection
includes market analysis, specific site evaluation, and lease negotiation.
STORE OPENING - The Company assists its franchisees in designing,
laying out, and merchandising their stores. It identifies preferred vendors for
fixtures, insurance, and other pre-opening requirements. Finally, the Company
provides on-site store opening assistance for the first week of operations.
FRANCHISE AGREEMENT - The initial term of the franchise agreement is
five (5) years and may be renewed by the franchisee for an additional five (5)
years. The Company may terminate a franchise agreement in the event the
franchisee breaches the terms of the franchise agreement.
STORE LOCATIONS
We have one company-owned store located in Ohio.
The following table sets forth the locations of the franchised stores
as of the date hereof: Number of
State Franchised Stores
----- -----------------
Indiana 2
Oregon 1
Pennsylvania 2
Kentucky 1
Iowa 1
Idaho 1
Ohio 1
FRANCHISE MARKETING
Our marketing strategy for franchise sales is based on the sale of
individual franchise stores to business-minded individuals. The Company does not
have any area development agreements to open multi- store franchises. We believe
that the market for Pick-ups Plus stores is nationwide. We seek franchisees by
attendance at franchise and business opportunity shows, advertising in national
publications and our World Wide Web site.
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COMPETITION
Franchising - We compete directly with many other local and national
franchisors which are also seeking to sell their franchises or business
opportunities to prospective franchisees. We are aware of only one other
franchiser of truck accessory stores, Trucking America, Inc. of Winston-Salem,
N.C.
Merchandise - Our franchisees compete against local auto parts stores,
specialized truck accessory stores and national auto parts chains such as
AutoZone, Pep Boys and Discount Auto Parts. Major retailers, such as Wal-Mart,
K-Mart and Sears also offer a limited selection of truck accessories. Truck
enthusiast magazines and catalogs carry extensive advertisements of products
available by mail order. The World Wide Web is a rapidly growing source of
merchandise, including truck accessories.
Our franchisees generally compete on the basis of an extensive product
selection and the availability of installation services.
TRADE NAMES AND SERVICE MARKS
We currently hold a Federal trademark registration for PICK-UPS PLUS
which was issued in 1995. In addition, we hold copyrights in connection with all
of our training manuals and materials which it considers proprietary. We are not
aware of any current use of similar marks.
REGULATION
The offer and sale of franchises is subject to extensive federal and
state laws and substantial regulation under such laws by government agencies,
including the Federal Trade Commission and various state authorities. Pursuant
to FTC regulations, we are required to furnish to prospective franchisees a
current franchise offering disclosure document containing information prescribed
by the FTC. We use Uniform Franchise Offering Circulars to satisfy this
disclosure obligation. In addition, in certain states, we are required to
register or file with such states and to provide prescribed disclosures. We are
required to update its offering disclosure documents to reflect the occurrence
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of material events. The occurrence of any such events may from time to time
require the Company to cease offering and selling franchises until the
disclosure document relating to such franchising business is updated. There can
be no assurance that we will be able to update its disclosure documents (or in
the case of any newly acquired franchising business, prepare an adequate
disclosure document) or become registered in certain states in a time frame
consistent with its expansion plans, that it will not be required to cease
offering and selling franchises or that we will be able to comply with existing
or future franchise regulation in any particular state, any of which could have
an adverse effect on the Company.
We are also subject to a number of state laws that regulate certain
substantive aspects of the franchiser-franchisee relationship, such as
termination, cancellation or non-renewal of a franchise (including requirements
that "good cause" exist as a basis for such termination and that a franchisee be
given advance notice of and a right to cure a default prior to termination) and
may require the franchiser to deal with its franchisees in good faith, prohibit
interference with the right of free association among franchisees, and regulate
discrimination among franchisees in charges, royalties or fees. If we are unable
to comply with the franchise laws, rules and regulations of a particular state
relating to offers and sales of franchises, we will be unable to engage in
offering or selling franchises in or from such state. Amendments to existing
statutes and regulations, adoption of new statutes and regulations and the
Company's expansion into new states and foreign jurisdictions could require us
to continually alter methods of operations at costs which could be substantial.
We believe that we are in substantial compliance with all of the
foregoing federal and state franchising laws and the regulations promulgated
thereunder and has obtained all licenses and permits necessary for the conduct
of its business. Failure to comply with such laws and regulations in the future
could subject the Company to civil remedies, including fines or injunctions, as
well as possible criminal sanctions, which would have a material adverse effect
on us.
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Our retail operations and those of its franchisees are also subject
to various federal, state and local laws affecting their retail businesses,
including state and local licensing, labor, wage and hour, zoning, land use,
construction and environmental regulations and various safety and other
standards. The failure of the Company or its franchisees to comply with
applicable regulations could interrupt the operations of the affected franchise
or otherwise adversely affect the franchise or the Company.
EMPLOYEES
As of the date hereof, we employ 7 persons (of which 5 are full-time
employees). None of the Company's employees are covered by a collective
bargaining agreement. We believe that our employee relations are satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
We lease our principal executive office, located in Mason, Ohio, at an
annual rent of $9,600 and with an expiration date of May 2000. The Company-owned
store in Sharonville, Ohio is leased at an annual rent of $26,400 and with an
expiration date of April 1, 2002.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Our Common Stock began trading on the over-the-counter market under the OTC
Bulletin Board Symbol PUPS. During this time the low bid and high bid has ranged
from $3.75 to $4.75. As of the date hereof, the Company has approximately
44 shareholders of record.
PART III
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL:
Pick-Ups Plus, Inc., formed in 1993, is a franchisor, wholesaler, retailer and
installer of accessories for trucks and sports utility vehicles. The Company
currently has 9 franchised stores which are located in Kentucky, Indiana, Iowa,
Oregon, Pennsylvania, Idaho and California and one Company-owned store in Ohio,
which was acquired on September 30, 1998, as the prototype store. Accordingly,
revenues and expenses of that store have been included in operations from that
date since the acquisition was recorded under the purchase method of accounting.
RESULTS OF OPERATIONS:
Revenues for both 1999 and 1998 consist primarily of net sales generated by the
retail store. Revenues are also derived from initial franchise fees and
continuing royalty fees. Revenues increased by $635,951 (200%), from $318,239 in
1998 to $954,190 in 1999. This increase in revenues reflects a complete year of
sales generated by the prototype store in 1999 as compared to three months of
sales reflected in 1998, since this store was acquired in September 1998.
The increase in costs of sales of $481,716, from $128,657 to $610,373 is also
primarily due to the costs of the Company-owned store as discussed above.
Selling, general and administrative expenses increased by $396,579 when
comparing 1999 to 1998, primarily due to the following: (i) increased expenses
associated with adding the retail store operation which commenced in October
1998 representing approximately $160,000 of the overall increase; (ii) an
aggressive advertising program to help accelerate the name recognition of
Pick-Ups Plus, Inc. as well as the franchise opportunity which resulted in an
increase of approximately $60,000; (iii) the addition of three (3) employees
needed for the franchise development and accounting departments and an increase
in compensation paid to the President of the Company resulted in increased
payroll costs of $79,000; (iv) travel costs incurred due to efforts in the
cultivation of new franchise locations resulted in an increase in such expense
of approximately $26,000 and (v) professional fees increased by approximately
$42,000, due primarily to expenses relating to the preparation for an initial
public offering of our common stock.
Interest expense of $19,927 recorded in 1999 is a result of the borrowings under
the note payable to a bank as well as the result of equipment purchased and
financed through loans as opposed to zero interest costs in the prior year.
As a result of the above, the Company reflected a net loss of $275,777 or $.04
per shares in 1999, as compared to a net loss of $13,506 ($.00 per share) for
1998.
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LIQUIDITY AND CAPITAL RESOURCES:
As of December 31, 1999, current liabilities exceeded current assets by
approximately $144,000 as compared to working capital of approximately $105,000
at December 31, 1998. In March 1999, the Company secured a $100,000 line of
credit from Huntington Bank which carries interest at the bank's prime lending
rate (8 1/2% at December 31, 1999) per year and, as extended, is repayable on
March 29, 2000. The Company expects to be able to extend this line further if
needed.
The Company used $145,000 in cash to support operating needs in 1999 as compared
to $2,000 in 1998. The Company also used $31,000 to invest in new equipment
needed by the prototype store. These uses of cash were offset by the proceeds of
loans received from banks through our line of credit and for equipment which was
financed. The Company also received cash from the sale of common stock. The
total cash provided from such financing activities was $150,000 for 1999 as
compared to cash provided in 1998 of $40,000 which was primarily as a result of
the completion of our unit offering. See Note 7 of Notes to the Financial
Statements for a more detailed description of this offering.
In March 2000, The Company received net proceeds of $112,000 as a result of the
exercise of common stock purchase warrants which were issued in this offering.
The Company expects that the exercise of additional common stock purchase
warrants still outstanding will generate additional net proceeds of
approximately $650,000 before the end of the second calendar quarter of 2000.
Also in March 2000, the Company received a commitment from a bank to provide a
new line of credit in the amount of $300,000. Borrowings under this line, which
don't become due and payable until June 2001, bear interest at an annual rate
equal to 1% in excess of the bank's prime lending rate.
The Company is not aware of any material trend, event or capital commitment
which would potentially adversely affect liquidity. In the event such a trend
develops, the Company believes that it will have sufficient funds available to
satisfy working capital needs through lines of credit and the funds expected
from warrant exercises.
RISKS ASSOCIATED WITH YEAR 2000 PROBLEM:
Computer systems and software used by many companies may need to be upgraded to
accept four digit entries to distinguish 21st century dates from 20th century
dates. Like most other companies using computers in their operations, we need to
ensure that our operations will not be adversely impacted by software or system
failures related to the Year 2000 problem. We have reviewed our internal
computer and related information and operational systems to ensure Year 2000
compliance and the consequences of incomplete or untimely resolution of the Year
2000 problem will not have a material adverse effect on our business, financial
condition and results of operations in any given year. However, even if our
internal systems are not materially affected by the Year 2000 problem, our
business, financial condition and results of operations could be materially
adversely affected if the businesses with which we interact are disrupted by
Year 2000 problems. We have discussed this matter with those businesses upon
which we are most dependent and have been assured that no material disruptions
are anticipated.
OTHER:
Except for historical information contained herein, the matters set forth above
are forward-looking statements that involve certain risks and uncertainties that
could cause actual results to differ from those in the forward-looking
statements. Potential risks and uncertainties include such factors as the level
of business and consumer spending, the amount of sales of the Company's
products, the competitive environment within the automotive aftermarket
industry, the ability of the Company to continue to expand its operations, the
level of costs incurred in connection with the Company's expansion efforts,
economic conditions and the financial strength of the Company's customers and
suppliers. Investors are directed to consider other risks and uncertainties
discussed in documents filed by the Company with the Securities and Exchange
Commission.
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ITEM 7. FINANCIAL STATEMENTS.
The financial statements are filed herewith following the signatures.
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company replaced Robert L. White, CPA as its independent auditor
for the fiscal year ended December 31, 2000 with Lazar, Levine & Felix,
LLP. This change was approved by our Board of Directors. We have
engaged Robert L. White, CPA to assist us in preparing our financial
statements for the fiscal year ended December 31, 2000 and,
accordingly, were required to engage an independent firm to audit such
statements. This change of auditors was not due to any disagreement
with Robert L. White. Mr. White's report on our financial statements
did not contain an adverse opinion or disclaimer of opinion and was not
modified as to uncertainty, audit scope, or accounting principals.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
OUR DIRECTORS AND EXECUTIVE OFFICERS ARE:
Name Age Position
---- --- --------
John Fitzgerald 56 President and Director
Sean Fitzgerald 29 Vice President - Store Operations
Erin Schueler 30 Secretary and Franchise Coordinator
Joseph Lamble 58 Director
SEAN FITZGERALD is the son of John Fitzgerald. Erin Schueler is his
daughter.
JOHN FITZGERALD is the founder of the Company, which was incorporated
in 1993, and the founder of its predecessor company, Fitzgerald Urethanes, Inc.,
which was incorporated in May, 1987. A graduate of the University of Ft.
Lauderdale with a Bachelor's in Marketing, he has 30 years experience in sales
and marketing and 15 years experience in management. His experience includes the
following positions: International Urethane Director for H.C. Price from 1976 to
1978; Eastern Sales Manager for Foam Systems from 1978 to 1984; and, Regional
Salesman for Owens-Corning Fiberglass from 1972 to 1976. He owned and operated
Reaction Plastics, a small manufacturing company, which he sold in 1994 to
finance the franchising efforts of the Company. Mr. Fitzgerald is primarily
responsible for coordinating the expansion of the Company. He has direct
responsibility for the management of franchise operations and the supervision of
the company owned store. As such, he is responsible for the development of
marketing strategies and new product lines. He has been President and a director
since 1993.
SEAN FITZGERALD is a graduate of the University of Cincinnati with a
Bachelors degree in Marketing. He has been with the Company and its predecessor
company since its inception in 1993. Mr. Fitzgerald is primarily responsible for
overseeing the daily operations of the company store, training franchisees on
store operations and maintaining ongoing contact with franchisees to assist in
their daily operation. Mr. Fitzgerald also oversees all advertising and
marketing programs for the stores.
ERIN SCHUELER is a graduate of Ohio University with a Bachelors in
Communications. She has been involved with the Company and its predecessor
company since its inception in 1993. As Director of Business Operations, Ms.
Schueler's primary responsibilities include overseeing the daily operations of
the corporate office, accounts payable and receivables, personnel and assisting
with franchise sales, training and maintaining ongoing contact with franchisees
to assist in their business operations.
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and are required to
furnish copies to the Company. To the best of the Company's knowledge, all
reports required to be filed were timely filed in fiscal year ended December 31,
1999.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table set s forth the total compensation paid to our
chief executive officer for the last three completed fiscal years. No executive
officer of the company received compensation of $100,000 or more during any such
year.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR TOTAL INCOME OTHER ANNUAL OTHER ANNUAL
BONUS COMPENSATION
- --------------------------- ---- ------------ ------------ ------------
<S> <C> <C> <C> <C>
JOHN FITZGERALD, PRESIDENT 1997 $ -0- -0- -0-
1998 $ 18,000 -0- -0-
1999 $ 50,000 -- --
</TABLE>
We do not have any long term compensation plans or stock option plans.
DIRECTOR COMPENSATION
No other fees are paid for director services. We paid 25,000 shares
of its common stock to each of Joseph Lamble and Dave McConnell for serving as
directors.
EMPLOYMENT AGREEMENTS
We do not have any written employment agreements.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 24, 2000, the beneficial
ownership of our 6,858,100 outstanding shares of common stock by (1) the only
persons who own of record or are known to own, beneficially, more than 5% of
our common stock; (2) each director and executive officer of the Company; and
(3) all directors and officers as a group.
Number of
Name Shares Percent(1)
---- --------- ----------
John Fitzgerald 5,580,000 81.4%
Sean Fitzgerald 90,000 *
Erin Schueler 50,000 *
Joseph Lamble 25,000 *
All officers and directors
as a group (4 persons) 5,745,000 83.8%
(1) Based upon 6,858,100 shares outstanding as of March 28, 2000.
1999.
* Less than 2%.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1998, we acquired our franchise system's prototype store
from a corporation owned by John Fitzgerald, our President, a director and
majority shareholder.
The acquisition was for 144,000 shares of our common stock. Mr.
Fitzgerald owned the store since 1993. In addition, we assumed liabilities of
$5,603 as of the closing.
The Company has established a policy that any transactions between the
Company and any officer, director or 10% or greater shareholder will be on
terms at least as favorable as could be obtained from independent third parties.
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ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
---------
Exhibit No. Description
- ----------- -----------
3(a) Certificate of Incorporation of the Registrant*
3(b) Amendments to Certificate of Incorporation*
3(c) By-Laws of the Registrant*
3(d) Form of Stock Purchase Warrant expiring February 11, 2000*
6(a) Form of Franchise Agreement*
6(b) Agreement of Lease, premises at Mason, Ohio*
6(c) Lease Agreement, premises at Cincinnati, Ohio*
27 Financial Data Schedule
* Incorporated by reference to this Exhibit No. of Registrant's
Registration Statement on Form SB-2, File No. 333-78205.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PICK UPS PLUS, INC.
By: /s/ JOHN FITZGERALD
--------------------------
John Fitzgerald
President
Dated: March 29, 2000
In accordance with the Act this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
PICK UPS PLUS, INC.
By: /s/ JOHN FITZGERALD
--------------------------
John Fitzgerald
Director
Dated: March 29, 2000
By: /s/ JOSEPH LAMBLE
--------------------------
Joseph Lamble
Director
Dated: March 29, 2000
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Independent Auditors' Report - Current Auditor F-2
Independent Auditor's Report - Predecessor Auditor F-3
Balance Sheets as of December 31, 1999 and 1998 F-4
Statements of Operations for the Years Ended December 31, 1999 and 1998 F-5
Statement of Shareholders' Deficit for the Years Ended from December 31, 1999 and 1998 F-6
Statements of Cash Flows for the Years Ended December 31, 1999 and 1998 F-7
Notes to Financial Statements F-8
</TABLE>
F-1
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Pick-Ups Plus, Inc.
Mason, Ohio
We have audited the accompanying balance sheet of Pick-Ups Plus, Inc. as of
December 31, 1999, and the related statements of operations, shareholders'
deficit, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pick-Ups Plus, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
---------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
March 24, 2000, except
as to Note 10 which is
dated March 28, 2000
F-2
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Pick-Ups Plus, Inc.
Mason, Ohio
We have audited the accompanying balance sheet of Pick-Ups Plus, Inc. (a
Delaware Corporation) as of December 31, 1998, and the related statements of
operations, shareholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pick-Ups Plus, Inc. as of
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Robert L. White, CPA
February 20, 1999
F-3
<PAGE> 18
PICK-UPS PLUS, INC.
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
- ASSETS -
CURRENT ASSETS:
Cash $ 11,188 $ 37,113
Accounts receivable - net of allowance for doubtful accounts of $3,344 and $3,906
for 1999 and 1998, respectively 7,052 35,153
Inventories 33,156 36,630
Prepaid expenses and other current assets 2,800 --
------------ ---------
TOTAL CURRENT ASSETS 54,196 108,896
------------ ---------
FIXED ASSETS (NOTES 4 AND 5C) 25,365 4,821
------------ ---------
OTHER ASSETS:
Franchise development costs - net 12,600 21,000
Other assets 1,905 --
------------ ---------
14,505 21,000
------------ ---------
$ 94,066 $ 134,717
============ =========
- LIABILITIES AND SHAREHOLDERS' DEFICIT -
CURRENT LIABILITIES:
Note payable - bank (Note 5a) $ 93,100 $ --
Accounts payable 58,940 4,302
Accrued expenses 13,375 --
Loans payable - current (Note 5b) 28,221 --
Capitalized lease payable - current (Note 5c) 4,971 --
------------ ---------
198,607 4,302
------------ ---------
NON-CURRENT LIABILITIES:
Loans payable (Note 5b) 22,812 --
Capitalized leases (Note 5c) 4,623 --
Loans payable - officer (Note 6) 24,781 24,781
------------ ---------
52,216 24,781
------------ ---------
COMMITMENTS AND CONTINGENCIES (NOTES 9 AND 10)
SHAREHOLDERS' DEFICIT (NOTE 7):
Preferred stock, $1 par value; 5,000,000 shares authorized; none issued -- --
Common stock, $.001 par value; 50,000,000 shares authoriz 6,758,000 and
6,744,000 shares issued for 1999 and 1998, respectively 6,758 6,744
Additional paid-in capital 197,728 184,356
Accumulated deficit (361,243) (85,466)
------------ ---------
(156,757) 105,634
------------ ---------
$ 94,066 $ 134,717
============ =========
</TABLE>
See accompanying notes
F-4
<PAGE> 19
PICK-UPS PLUS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
REVENUES:
<S> <C> <C>
Retail sales $ 839,420 $ 205,217
Initial franchise fees 100,000 70,000
Royalties 14,770 43,022
----------- -----------
954,190 318,239
----------- -----------
COSTS AND EXPENSES:
Costs of sales 610,373 128,657
Selling, general and administrative expenses 599,667 203,088
Interest expense 19,927 --
----------- -----------
1,229,967 331,745
----------- -----------
LOSS BEFORE PROVISION (CREDIT) FOR INCOME TAXES (275,777) (13,506)
Provision (credit) for income taxes (Note 8) -- --
----------- -----------
NET LOSS $ (275,777) $ (13,506)
=========== ===========
BASIC LOSS PER COMMON SHARE $ (.04) $ --
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,751,050 6,184,291
=========== ===========
</TABLE>
See accompanying notes
F-5
<PAGE> 20
PICK-UPS PLUS, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
--------------------- PAID-IN ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT DEFICIT
------ ------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 6,100,000 $ 6,100 $ 60,000 $ (71,960) $ (5,860)
Transfer of founder shares to officers
and directors -- -- 19,000 -- 19,000
Transfer of founder shares for consulting
services -- -- 30,000 -- 30,000
Issuance of shares for assets 144,000 144 25,856 -- 26,000
Sale of common stock 500,000 500 49,500 -- 50,000
Net loss for the year ended
December 31, 1998 -- -- -- (13,506) (13,506)
--------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1998 6,744,000 6,744 184,356 (85,466) 105,634
SALE OF COMMON STOCK 14,100 14 11,266 -- 11,280
IMPUTED INTEREST ON SHAREHOLDER LOAN -- -- 2,106 -- 2,106
NET LOSS FOR THE YEAR ENDED
DECEMBER 31, 1999 -- -- -- (275,777) (275,777)
--------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1999 6,758,100 $ 6,758 $ 197,728 $(361,243) $(156,757)
========= ========= ========= ========= =========
</TABLE>
See accompanying notes
F-6
<PAGE> 21
PICK-UPS PLUS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(275,777) $ (13,506)
Adjustments to reconcile net loss to net cash (utilized) by operating
activities:
Depreciation and amortization 34,191 8,579
Bad debt provision (562) --
Compensatory shares -- 49,000
Imputed interest on shareholder loan 2,106 --
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 28,663 (35,153)
Decrease in inventory 3,474 --
(Increase) in prepaid expenses and other (4,705) --
Increase (decrease) in accounts payable 54,638 (11,328)
Increase in accrued expenses 13,375 --
--------- ---------
NET CASH (UTILIZED) BY OPERATING ACTIVITIES (144,597) (2,408)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (30,965) --
--------- ---------
NET CASH (UTILIZED) BY INVESTING ACTIVITIES (30,965) --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt 118,100 --
Proceeds from long-term debt 28,840 --
Principal payments of long-term debt (2,807) (10,500)
Payments of capitalized leases (5,776) --
Proceeds from sale of common stock 11,280 50,000
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 149,637 39,500
--------- ---------
NET (DECREASE) INCREASE IN CASH EQUIVALENTS (25,925) 37,092
Cash and cash equivalents, beginning of year 37,113 21
--------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 11,188 $ 37,113
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
(i) Cash paid during the year:
Interest $ 14,446 --
Taxes -- --
(ii) During 1999, the Company entered in capitalized leases for equipment in the
amount of $15,370
</TABLE>
See accompanying notes.
F-7
<PAGE> 22
PICK-UPS PLUS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - DESCRIPTION OF COMPANY:
Pick-Ups Plus, Inc., the Company, was incorporated in Delaware
in 1993. The Company operates and franchises retail automotive
parts and accessories stores catering to the light truck
market, which is considered to be the fastest growing segment
of the motor vehicle market in the United States. There are
currently eight franchised locations in operation and one
Company owned-store. Subject to the availability of financing,
the Company intends to pursue an aggressive expansion strategy
by opening additional company-owned stores and franchise
locations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company's accounting policies are in accordance with
generally accepted accounting principles. Outlined below are
those policies which are considered particularly significant.
(A) USE OF ESTIMATES:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain
estimates and assumptions, where applicable, that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and
expenses during the reporting period. While actual results
could differ from those estimates, management does not expect
such variances, if any, to have a material effect on the
financial statements.
(B) STATEMENTS OF CASH FLOWS:
For purposes of the statements of cash flows, the Company
considers all highly liquid investments purchased with a
remaining maturity of three months or less to be cash
equivalents.
(C) FAIR VALUE:
The carrying amounts of cash, trade receivables, accounts
payable and debt obligations approximate fair value.
(D) INVENTORIES:
Inventories, which consist solely of goods held for resale, are
stated at the lower of cost (first-in, first-out method) or
market. Market is considered as net realizable value.
F-8
<PAGE> 23
PICK-UPS PLUS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(E) FIXED ASSETS:
Fixed assets are recorded at cost. Depreciation and
amortization are provided on a straight-line basis
as follows:
Machinery and equipment 5 years
Furniture and fixtures 7 years
Transportation equipment 3 years
Assets under capitalized leases 3 years
Maintenance and repairs are expensed as incurred, renewals and
betterments are capitalized.
(F) FRANCHISE DEVELOPMENT COSTS:
Franchise development costs represent specific identifiable
costs incurred with outside parties in developing the initial
franchise system, master agreements and circulars. These costs
are being amortized on a straight-line basis over five years,
the expected life of a franchise agreement. Accumulated
amortization as of December 31, 1999 and 1998 aggregated
$29,400 and $21,000, respectively. Amortization expense
amounted to $8,400 for 1999 and 1998.
(G) REVENUE RECOGNITION:
The Company recognizes revenues from retail sales of automotive
parts and accessories at the point of sale.
When a franchise is sold, the Company agrees to provide certain
services to the franchisee. Generally these services include
assistance in site selection, training personnel, design and
set-up of retail floor space and an installation center.
Revenue (initial franchise fee) from the sale of an individual
franchise is recognized when substantially all services to be
provided by the Company have been performed. Monthly royalty
fees received from the franchisees are recorded as earned.
(H) ADVERTISING AND PROMOTION COSTS:
Advertising and promotion costs are expensed as incurred. For
the years ended December 31, 1999 and 1998, such costs
aggregated $79,319 and $20,209, respectively.
(I) INCOME TAXES:
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases, and to
net operating loss and tax credit carry forwards, measured by
enacted tax rates for years in which taxes are expected to be
paid or recovered.
Deferred taxes are provided for temporary differences between
financial and tax accounting, principally for differences in
the basis of fixed assets and other nondeductible expenses, as
well as for net operating loss carry forwards. See also Note 8.
F-9
<PAGE> 24
PICK-UPS PLUS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(J) EARNINGS (LOSS) PER SHARE:
Basic earnings (loss) per share has been computed on the basis
of the weighted average number of common shares outstanding
during each period presented according to the standards of SFAS
No. 128 "EARNINGS PER SHARE". Diluted earnings (loss) per share
have not been presented as the effect of the Company's 950,000
common stock purchase warrants outstanding as of December 31,
1999, on such calculation would have been antidilutive. Such
securities could potentially dilute basic earnings per share in
the future.
(K) COMPREHENSIVE INCOME:
SFAS 130 "REPORTING COMPREHENSIVE INCOME" is effective for
years beginning after December 15, 1997. This statement
prescribes standards for reporting other comprehensive income
and its components. Since the Company currently does not have
any items of other comprehensive income, a statement of
comprehensive income is not yet required.
NOTE 3 - BUSINESS COMBINATION:
Effective September 30, 1998, Pick-Ups Plus, Inc. entered into
an asset purchase agreement with a related party to acquire a
retail store in Cincinnati, Ohio, for 144,000 shares of the
Company's common stock and the assumption of certain
obligations totaling $15,630. The Company recorded the
acquisition using the purchase method of accounting as follows:
Assets acquired $41,630
Liabilities assumed 15,630
--------
Acquisition price of assets $26,000
========
Accordingly, the operations of this retail store are reflected
in the financial statements from the date of acquisition.
The following unaudited pro forma data summarizes the results
of operations of the Company for the year ended December 31,
1998, as if the acquisition had been completed on January 1,
1998. The pro forma data gives effect to the actual operating
results prior to acquisition. The pro forma results do not
purport to be indicative of the results that would have
actually been achieved if the acquisition had occurred on
January 1, 1998, or that may be achieved in the future.
1998
----------
Sales $ 942,414
Net income 42,617
Basic net income per share $ --
F-10
<PAGE> 25
PICK-UPS PLUS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 4 - FIXED ASSETS:
Fixed assets is comprised of the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Furniture and fixtures $ 3,000 $ 3,000
Machinery and equipment 4,125 2,000
Transportation equipment 28,840 --
Capitalized leases 15,370 --
--------- -------
51,335 5,000
Less: accumulated depreciation and amortization 25,970 179
--------- --------
$ 25,365 $ 4,821
========= ========
</TABLE>
Depreciation and amortization expense aggregated $25,791 and
$179 for 1999 and 1998, respectively.
NOTE 5 - LOANS PAYABLE:
(A) NOTE PAYABLE - BANK:
In March 1999, the Company effected a promissory note in the
amount of $100,000, payable to a bank. This note, originally
due on July 29, 1999 was extended and now matures on March 29,
2000. Borrowings under this note, $93,100 as of December 31,
1999, are secured by the personal guarantees of the Company's
President and another shareholder. The annual interest rate is
equal to the bank's prime lending rate, 8 1/2%, as of December
31, 1999.
(B) LOANS PAYABLE:
Loans payable as of December 31, 1999 consists of the
following:
<TABLE>
<CAPTION>
1999
----
<S> <C>
Demand loan payable to shareholder, interest at an annual rate of
prime + .5% $ 25,000
Equipment loans payable 26,033
---------
51,333
Less: current maturities 28,221
---------
$ 22,812
=========
</TABLE>
The annual scheduled payments for these loans for the next
three years, and in the aggregate, are $28,221, $3,395
and $19,417, respectively.
F-11
<PAGE> 26
PICK-UPS PLUS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 5 - LOANS PAYABLE (CONTINUED):
(C) CAPITALIZED LEASE OBLIGATIONS:
The Company is the lessee of telephone and computer equipment
under leases expiring through 2002. The assets and liabilities
under capital leases are recorded at the lower of the present
value of the minimum lease payments or the fair market value of
the asset. The assets are depreciated over their estimated
useful lives. Depreciation of assets under capital leases,
included in depreciation expense for the year ended December
31, 1999, aggregated $5,451.
Minimum future lease payments under capital leases as of
December 31, 1999 and for each of the next three years and in
the aggregate are:
2000 $ 5,982
2001 4,669
2002 242
---------
Total minimum lease payments 10,893
Less: amount representing interest 1,299
---------
$ 9,594
=========
The interest rates on the capitalized leases were based on the
lower of the Company's incremental borrowing rate at the
inception of each lease or the lessor's implicit rate of
return.
NOTE 6 - LOANS PAYABLE OFFICER:
As of December 31, 1999 and 1998, the Company was indebted to
an officer of the Company in the amount of $24,781. This loan
is payable on demand and the officer has agreed to not request
payments prior to June 2001. The officer has also waived
payment of any interest, however, interest is being imputed at
8 1/2% (the Company's borrowing rate) per annum, and amounted
to $2,106 for 1999.
NOTE 7 - CAPITAL STOCK AND EQUIVALENTS:
In September 1998, the Company's directors authorized an
increase in the number of shares of common stock from one share
to fifty million shares at $0.001 par value per share and five
million shares of preferred stock at $1.00 par value per share.
They also authorized a forward stock split of 6,100,000 to 1,
which has been reflected retroactively to the earliest period
presented.
F-12
<PAGE> 27
PICK-UPS PLUS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 7 - CAPITAL STOCK AND EQUIVALENTS (CONTINUED):
As a result, the Company's founder, John Fitzgerald, now owned
six million, one hundred thousand (6,100,000) shares. He then
transferred part of his shares to the following parties:
300,000 shares were issued to The Southern Companies
as part of their consulting contract to provide
certain investment banking services.
190,000 shares were issued to the following Company
directors and officers:
<TABLE>
<CAPTION>
SHARES
------
<S> <C>
Sean Fitzgerald, Director, Vice President
(John Fitzgerald's son) 90,000
Erin Schueler, Director, Corporate Secretary
(John Fitzgerald's daughter) 50,000
David McConnell, Director 25,000
Joseph Lamble, Director 25,000
-------
190,000
=======
</TABLE>
In accordance with Accounting Principles Board Opinion
Number 25, Interpretation Number 1, although these
shares were transferred by the Company's sole
shareholder, they were deemed to benefit the Company
and were therefore accounted for as such. This
resulted in the following compensation being recorded
in 1998:
Officers' salaries $ 9,000
Directors' fees 10,000
Consulting fees 30,000
In December 1998, the Company consummated a private placement
of its common stock, issuing 10,000 units at $5.00 per unit.
Each unit consisted of 50 shares of common stock and 95
redeemable common stock purchase warrants. The common stock
purchase warrants are exercisable for one share of common stock
at $1.00 per share until November 2, 2000. The Company may
redeem the warrants at $.01 per warrant with 30-day prior
written notice if the common stock bid price equals or exceeds
$2.50 per share for ten consecutive trading days ending on the
third day prior to the date on which such notice was given.
During 1999, the Company issued 14,100 shares of its common
stock for net proceeds of $11,280.
F-13
<PAGE> 28
PICK-UPS PLUS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 8 - INCOME TAXES:
No provision for Federal and state income taxes has been
recorded since the Company has incurred losses for 1999 and
1998. Deferred tax assets at December 31, 1999 consist
primarily of the tax effect of the net operating losses which
expire in years beginning in 2019 and, amounts to approximately
$90,000. The Company has provided a 100% valuation allowance on
the deferred tax assets at December 31, 1999 to reduce such
asset to zero, since there is no assurance that the Company
will generate future taxable income to utilize such asset.
Management will review this valuation allowance requirement
periodically and make adjustments as warranted.
NOTE 9 - LEASE OBLIGATIONS:
The Company is obligated presently for future minimum lease
payments, pursuant to renewable leases, for office and retail
space, in the following amounts:
2000 $ 29,235
2001 26,400
2002 6,600
Rental expense for 1999 and 1998 aggregated $32,357 and
$13,452, respectively.
NOTE 10 - MANAGEMENT'S PLAN/SUBSEQUENT EVENTS:
The Company has incurred net losses for the past three years
and, at December 31, 1999, had an accumulated deficit of
$361,243 and negative shareholders' equity of $156,757. In
addition, as of that date, current liabilities exceeded current
assets by $144,411.
In March 2000, subsequent to the year end, the Company received
net proceeds aggregating $112,000 as a result of the exercise
of common stock purchase warrants (see Note 7). The Company
expects that additional warrants will be exercised within the
next six months thus fulfilling its financing needs.
On March 28, 2000, the Company received a letter of commitment
from a bank to provide a new line of credit in the amount of
$300,000. Borrowings under this line will bear interest at an
annual rate equal to the bank's prime lending rate + 1%, and
are collateralized by all of the Company's assets as well as
144,000 shares of the Company's common stock which are held by
its President. The principal payment on this credit line is due
in June 2001.
F-14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 11,188
<SECURITIES> 0
<RECEIVABLES> 10,396
<ALLOWANCES> 3,344
<INVENTORY> 33,156
<CURRENT-ASSETS> 54,196
<PP&E> 51,335
<DEPRECIATION> 25,970
<TOTAL-ASSETS> 94,066
<CURRENT-LIABILITIES> 198,607
<BONDS> 52,216
6,758
0
<COMMON> 0
<OTHER-SE> (163,515)
<TOTAL-LIABILITY-AND-EQUITY> 94,066
<SALES> 954,190
<TOTAL-REVENUES> 954,190
<CGS> 610,373
<TOTAL-COSTS> 1,210,040
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,927
<INCOME-PRETAX> (275,777)
<INCOME-TAX> 0
<INCOME-CONTINUING> (275,777)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (275,777)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
