As filed with the Securities and Exchange Commission on December 12, 2000.
Registration No. 333-51660
--------------------------------------------------------------------------------
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PICK-UPS PLUS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 6794 31-1438392
------------------------------- ---------------- ----------------
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification
Classification Number)
Number)
5181 Natorp Boulevard
Mason, OH 45040
(513) 398-4344
----------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices and principal place of business)
JOHN FITZGERALD, President
Pick-Ups Plus, Inc.
5181 Natorp Boulevard
Mason, OH 45040
(513) 398-4344
-----------------------------------------------------------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Seth A. Farbman, P.C.
138-54 Jewel Avenue
Flushing, New York 11367
Telephone:(718) 261-4327 Fax: (718) 261-8807
Approximate Date of Commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<PAGE>
CALCULATION OF REGISTRATION FEE
--------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH OFFERING AGGREGATE AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
=============================================================================
Common Stock, 1,845,000 shares $0.3781 $697,595 $184
par value $.001
per share
Common Stock, par 1,999,332 shares $0.3781 $755,947 $200
value $.001 per
share, underlying
warrants(2)
-------------------------------------------------------
Total 3,844,332 shares $0.3781 $1,453,542 $384(3)
=============================================================================
(1) Estimated solely for purposes of calculating the amount of the
registration fee pursuant to Rule 457(c) of the Securities Act of 1933 (the
"Securities Act"). The registration fee is calculated on the basis of the
average of the closing bid and ask prices for our common stock as quoted on
the Over-the-Counter Bulletin Board on December 6, 2000, $0.3781.
(2) These shares of common stock are not outstanding and are issuable upon the
exercise of warrants to purchase an aggregate of 1,999,332 shares of our common
stock at an exercise price of $.15 (fifteen cents) per share.
(3) Paid herein by electronic transfer.
The registrant hereby amends the Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Acts of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
PROSPECTUS Subject to Completion; Dated December _____, 2000
The information in this prospectus is subject to completion or amendment.
We may not sell these securities until the registration statement filed with
the Securities and Exchange Commission becomes effective. This prospectus
shall not constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any state in which an offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of that state.
PICK-UPS PLUS, INC.
1,845,000 SHARES OF COMMON STOCK TO BE SOLD BY CERTAIN SELLING SECURITYHOLDERS
1,999,332 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF WARRANTS
This prospectus related to the offer and sale 3,844,332 shares of our
common stock, par value $.001 per share, which includes 1,845,000 shares of
common stock for sale by eight of our shareholders identified in this
prospectus and includes shares of our common stock issuable upon the exercise
of 1,999,332 warrants held by six individuals, exercisable at $.15 (fifteen
cents) per share. These shareholders are referred to throughout this prospectus
as "selling securityholders". Our common stock trades on the Over-the-Counter
("OTC") Bulletin Board under the symbol "PUPS". On December 6, 2000, the last
sale price of our common stock on the OTC Bulletin Board was $.375 per share.
The shares registered herein will become tradeable on the effective date
of this prospectus. The selling securityholders will receive the proceeds from
the sale of their shares and we will not receive any of the proceeds from the
sales other than an aggregate of $299,899 that we may receive upon the exercise
of outstanding warrants. The selling securityholders, directly or through
agents, dealers or representatives to be designated from time to time, may
sell their shares on terms to be determined at the time of sale. See "Plan
of Distribution."
INVESTING IN THE COMMON STOCK OFFERED HEREIN INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CONSIDER CAREFULLY THE "RISK FACTORS" CONTAINED IN THIS PROSPECTUS
BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this prospectus is December , 2000
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<PAGE>
We have not authorized anyone to provide you with information different
from that contained in this prospectus. This prospectus is not an offer to
sell nor is it seeking an offer to buy these securities in any jurisdiction
where such offer or sale is not permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or of any sale of the common stock.
In this prospectus, references to the "Company", "we", "us" and "our" refer
to Pick-Ups Plus, Inc., a Delaware corporation.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Disclosure Regarding Forward Looking Statements. . . . . . . . . . 5
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . .10
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Security Ownership Of Certain beneficial Owners and Management . .18
Certain Relationships and Related Transactions . . . . . . . . . .19
Selling Securityholders. . . . . . . . . . . . . . . . . . . . . .20
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . .22
Description of Securities. . . . . . . . . . . . . . . . . . . . .24
Where You Can Find More Information. . . . . . . . . . . . . . . .26
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Index to Financial Statements. . . . . . . . . . . . . . . . . . F-1
</TABLE>
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<PAGE>
PROSPECTUS SUMMARY
------------------
The following is a summary of certain information found elsewhere in
this prospectus. Reference is made to, and this summary is qualified by, the
more detailed information set forth in this prospectus, which should be read
in its entirety.
Our Company
We are a franchisor, wholesaler, retailer and installer of accessories
for trucks and sports utility vehicles. We currently have eight franchised
stores which are located in Kentucky, Indiana, Iowa, Oregon, Pennsylvania,
Idaho and California and three company-owned stores in Ohio, Indiana and
Kentucky which serve as prototype stores for our franchise system.
We were incorporated in Delaware on February 22, 1993 under the name
Mr. Pickup Co. and on October 31, 1994 we amended our certificate of
incorporation to change our name to Pick-Ups Plus, Inc.
Our principal executive offices are located at 5181 Natorp Boulevard,
Mason, Ohio 45040. Our telephone number is: (513) 398-4344 and our fax
number is (513) 398-4271. We maintain an Internet web site located at
http://www.pickups-plus.com. Information contained on our web site is not
part of this prospectus.
THE OFFERING
Number of shares of common stock outstanding 10,745,100 shares (1)
Common stock offered by selling securityholders 3,844,332 shares (2)
Use of Proceeds We will not receive any
proceeds from the sale of
the shares of common stock
registered in this prospectus
other than the $299,899 we
might receive upon the
exercise of 1,999,332
outstanding warrants.
Plan of Distribution The offering of our shares
of common stock is being
made by shareholders of our
company who wish to
sell their shares. Sales of
our common stock may be
made by the selling
securityholders in the open
market or in privately
negotiated transactions and
at prices, fixed prices or
negotiated prices.
Risk Factors There are substantial risk
factors involved in
investing in our company.
For a discussion of certain
factors you should consider
before buying shares of our
common stock, see the
section entitled "Risk
Factors".
OTC Bulletin Board Symbol "PUPS"
______________
(1) Such figure does not include 1,999,332 shares of our common stock issuable
upon the exercise of outstanding warrants at an exercise price of $.15(fifteen
cents)per share.
(2) Such figure includes and assumes the conversion of 1,999,332 shares of our
common stock issuable upon the exercise of outstanding warrants at an exercise
price of $.15(fifteen cents)per share.
4
<PAGE>
Selected Financial Data
The following information is taken from our audited financial statement as of
December 31, 1999 and 1998 and our unaudited consolidated financial statements
for the nine months ended September 30, 2000 and 1999.The financial information
set forth below should be read in conjunction with the more detailed financial
statements (including notes thereto) appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
December 31, September 30
1999 1998 2000 1999
Income Statement Data:
<S> <C> <C> <C> <C>
Revenues $ 954,190 $ 318,239 $1,074,270 $ 750,696
Costs and Expenses 1,229,967 331,745 1,587,967 923,894
Net Income (Loss) (275,777) (13,506) (513,697) (173,198)
Income (Loss) Per Share $ (.04) - $ (.07) $ (.03)
Average Shares Outstanding 6,751,050 6,184,291 6,845,415 6,752,309
Balance Sheet Data
Working Capital (Deficit) $ (144,411) $104,594 $ (700,138)
Total assets 94,066 134,717 588,725
Long Term Debt 52,216 24,781 197,563
Shareholder's Equity (Deficit) (156,757) 105,634 (434,200)
</TABLE>
RISK FACTORS
An investment in our common stock is speculative in nature and involves a
high degree of risk. You should carefully consider the following risks and
the other information contained in this prospectus before investing in the
common stock offered hereby. The price of our common stock could decline due
to any of these risks, and you could lose all or part of your investment. You
also should refer to the other information included in this prospectus,
including the financial statements and related notes thereto. In addition,
the risks described below are not the only ones facing us. We have described
only the risks we consider material. However, there may be additional risks
that we view as not material or of which we are not presently aware.
If any of the events described below were to occur, our business,
prospects, financial condition or results of operations or cash flow could be
materially adversely affected. When we say that something could or will have a
material adverse effect on it, we mean that it could or will have one or more
of these effects.
Special note regarding forward-looking statements
This prospectus may contain certain forward-looking statements and
information relating to us that are based on beliefs and its principals as
well as assumptions made by and information currently available to them.
These statements include, among other things, the discussions of our business
strategy and expectations concerning our market position, future operations,
expansion opportunities, and profitability. When used in these documents,
the words "anticipate," "feel," "believe," "estimate," "expect," "plan," and
"intend" and similar expressions, as they relate to us or our principals, are
intended to identify forward-looking statements. Such statements reflect the
current view of respecting future events and are subject to certain risks,
uncertainties, and assumptions, including the meaningful and important risks
and uncertainties noted, particularly those related to our operations, results
of operations, and growth strategy, liquidity, competitive factors and pricing
pressures, changes in legal and regulatory requirements, general economic
conditions, and other factors described in this prospectus.
5
<PAGE>
BUSINESS
WE HAVE A SHORT OPERATING HISTORY BY WHICH YOU CAN EVALUATE OUR BUSINESS AND
PROSPECTS AND HAD A LOSS IN 1999 AND IN THE NINE MONTHS ENDED SEPTEMBER 30,
2000.
We were incorporated in 1993 and have a limited operating history
from which to evaluate our business and prospects. We had a loss of $13,506
for the year ended December 31, 1998, a loss of $275,777 for the year ended
December 31, 1999, and a loss of $513,697 in the nine months ended September
30, 2000. Our operations are subject to the risks and competition inherent in
the establishment of a business enterprise. There can be no assurance that
future operations will be profitable. Revenues and profits, if any, will
depend upon various factors, including whether we will be able to continue
expansion of our franchised stores. We may not achieve our business
objectives and the failure to achieve such goals would have an adverse impact
on us.
WE MAY NEED TO RAISE ADDITIONAL FUNDS IN THE FUTURE FOR OUR OPERATIONS AND IF
WE ARE UNABLE TO SECURE SUCH FINANCING, WE MAY NOT BE ABLE TO SUPPORT OUR
OPERATIONS.
Future events, including the problems, delays, expenses and difficulties
frequently encountered by companies, may lead to cost increases that could
make our funds insufficient to support our operations. We may seek additional
capital, including an offering of our equity securities, an offering of debt
securities or obtaining financing through a bank or other entity. We have not
established a limit as to the amount of debt we may incur nor have we
adopted a ratio of our equity to a debt allowance. If we need to obtain
additional financing, there is no assurance that financing will be available
from any source, that it will be available on terms acceptable to us, or that
any future offering of securities will be successful. If additional funds are
raised through the issuance of equity securities, there may be a significant
dilution in the value of our outstanding common stock. We could suffer adverse
consequences if we are unable to obtain additional capital when needed.
WE MUST COMPLY WITH FEDERAL AND STATE FRANCHISE REGULATIONS AND IF WE SHOULD
FAIL TO MATERIALLY COMPLY WITH SUCH REGULATIONS, IT MAY HAVE AN ADVERSE EFFECT
ON OUR BUSINESS OPERATIONS.
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 ("FTC")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 our offering disclosure
documents to reflect the occurrence of material events. The occurrence of any
such events may from time to time require us 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 our
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 our expansion plans, that we
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 our results of
operation.
THE LOSS OF OUR KEY EMPLOYEES MAY ADVERSELY AFFECT OUR GROWTH OBJECTIVES.
Our success in achieving our growth objectives depends upon the efforts
of our top management team including the efforts of John Fitzgerald, our
President, as well as other of our management members. The loss of the
services of any of these individuals may have a material adverse effect on
our business, financial condition and results of operations. We can give no
assurance that we will be able to maintain and achieve our growth objectives
should we lose any or all of these individuals' services.
6
<PAGE>
OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND/OR RETAIN QUALIFIED PERSONNEL.
A change in labor market conditions that either further reduces the
availability of employees or increases significantly the cost of labor could
have a material adverse effect on our business, our financial condition and
results of our operations. Our business is dependent upon our ability to
attract and retain sales personnel, business administrators and corporate
management. We can give no assurance that we will be able to employ a
sufficient number of such personnel in order to accomplish our growth
objectives.
MANY OF OUR COMPETITORS ARE LARGER AND HAVE GREATER FINANCIAL AND OTHER
RESOURCES THAN WE DO AND THOSE ADVANTAGES COULD MAKE IT DIFFICULT FOR US TO
COMPETE WITH THEM.
The wholesale/retail industry for the accessories of trucks and sports
utility vehicles is extremely competitive and includes several companies which
have achieved substantially greater market shares than we have, and have longer
operating histories, have larger customer bases, have substantially greater
financial, development and marketing resources than we do. If overall demand
for our products should decrease it could have a material adversely affect on
our operating results.
WE MAY, IN THE FUTURE, ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK WHICH WOULD
REDUCE INVESTORS PERCENT OF OWNERSHIP AND MAY DILUTE OUR SHARE VALUE.
Our Certificate of Incorporation authorizes the issuance of 50,000,000
shares of common stock, par value $.001 per share, and 5,000,000 shares of
preferred stock, par value $1.00 per share. The future issuance of all or
part of our remaining authorized common stock may result in substantial
dilution in the percentage of our common stock held by our then existing
shareholders. We may value any common or preferred stock issued in the
future on an arbitrary basis. The issuance of common stock for future services
or acquisitions or other corporate actions may have the effect of diluting the
value of the shares held by our investors, and might have an adverse effect
on any trading market for our common stock.
THE SHARES AVAILABLE FOR SALE IMMEDIATELY BY THE SELLING SECURITYHOLDERS COULD
SIGNIFICANTLY REDUCE THE MARKET PRICE OF OUR COMMON STOCK.
The market price of our common stock could drop if substantial amounts
of shares are sold in the public market or if the market perceives that such
sales could occur. A drop in the market price could adversely affect holders
of our common stock and could also harm our ability to raise additional capital
by selling equity securities. We have 10,745,100 shares of our common stock
outstanding and there are warrants outstanding to purchase an aggregate of
2,819,332 shares of our common stock, exercisable at prices ranging from $.15
per share to $.21 per share. The exercise of these warrants at a price less
than the market price could dilute the value of outstanding shares and depress
the market price. The perception that these warrants may be exercised for or
converted into common stock that could be sold into the public market could
adversely affect the market price of our common stock. In addition, after a
one-year holding period, shares held by our non-affiliates will become
eligible for trading, pursuant to Rule 144 of the General Rules and
Regulations of the Securities and Exchange Commission, without any additional
payment to us or any increase in our capitalization.
SHARES ELIGIBLE FOR FUTURE RESALE
As of December 7, 2000, we had an aggregate of 10,745,100 shares of
our common stock issued and outstanding. Of the 10,745,100 shares outstanding
and not registered for sale in this prospectus, 8,615,100 shares are
"restricted securities," which may be sold only in compliance with Rule 144
under the Securities Act of 1933, as amended. Rule 144 provides, in essence,
that a person holding restricted securities for a period of one year after
payment therefor may sell, in brokers' transactions or to market makers, an
amount not exceeding 1% of the outstanding class of securities being sold,
or the average weekly reported volume of trading of the class of securities
being sold over a four-week period, whichever is greater, during any three-
month period. (Persons who are not our affiliates and who had held their
restricted securities for at least two years are not subject to the volume or
transaction limitations.) The sale of a significant number of these shares
in the public market may adversely affect prevailing market prices of the our
securities.
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<PAGE>
SELLING SECURITYHOLDERS MAY SELL SECURITIES AT ANY PRICE OR TIME WHICH MAY
HAVE AN ADVERSE EFFECT ON THE PRICE OF OUR COMMON STOCK.
After effectiveness of this prospectus, the non-affiliated selling
securityholders may offer and sell their shares at a price and time determined
by them without subject to Rule 144. The timing of sales and the price at
which the shares are sold by the selling securityholders could have an adverse
effect upon the public market for our common stock. See "Plan of Distribution".
MANAGEMENT AND AFFILIATES OWN ENOUGH SHARES TO CONTROL SHAREHOLDER VOTE
Our executive officers, directors, affiliates and entities controlled by
them, own approximately 55% of the outstanding shares of common stock. As a
result, these executive officers and directors will control matters that
require stockholder approval such as election of directors, approval of a
corporate merger, increasing or decreasing the number of authorized shares,
adopting corporate benefit plans, effecting a stock split, amending our
certificate of incorporation or other material corporate actions.
SINCE WE HAVE NOT PAID ANY DIVIDENDS ON OUR COMMON STOCK AND DO NOT INTEND TO
DO SO IN THE FORESEEABLE FUTURE, A PURCHASER IN THIS OFFERING WILL ONLY
REALIZE AN ECONOMIC GAIN ON HIS OR HER INVESTMENT FROM AN APPRECIATION, IF
ANY, IN THE MARKET PRICE OF OUR COMMON STOCK.
We have never paid, and have no intentions in the foreseeable future to
pay, any cash dividends on our common stock. Therefore an investor in this
offering, in all likelihood, will only realize a profit on his investment if
the market price of our common stock increases in value.
THE APPLICATION OF THE "PENNY STOCK REGULATION" COULD ADVERSELY AFFECT THE
MARKET PRICE OF OUR COMMON STOCK
Our securities may be deemed a penny stock. Penny stocks generally are
equity securities with a price of less than $5.00 per share other than
securities registered on certain national securities exchanges or quoted on the
NASDAQ Stock Market, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. Our securities may be subject to "penny stock rules" that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination
for the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The broker-
dealer also must disclose the commissions payable to both the broker-dealer
and the registered representative and current quotations for the securities.
Finally, monthly statements must be sent disclosing recent price information
on the limited market in penny stocks. Consequently, the "penny stock rules"
may restrict the ability of broker-dealers to sell our securities and may have
the effect of reducing the level of trading activity of our common stock in the
secondary market. The foregoing required penny stock restrictions will not
apply to our securities if such securities maintain a market price of $5.00 or
greater. We can give no assurance that the price of our securities will reach
or maintain such a level.
IN THE FUTURE, THE AUTHORIZATION OF OUR PREFERRED STOCK MAY HAVE AN ADVERSE
EFFECT ON THE RIGHTS OF HOLDERS OF OUR COMMON STOCK.
We may, without further action or vote by our shareholders, designate
and issue additional shares of our preferred stock. The terms of any series of
preferred stock, which may include priority claims to assets and dividends
and special voting rights, could adversely affect the rights of holders of the
common stock and thereby reduce the value of the common stock. The designation
and issuance of preferred stock favorable to current management or shareholders
could make the possible takeover of us or the removal of our management more
difficult and discharge hostile bids for control of us which bids might have
provided shareholders with premiums for their shares.
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<PAGE>
OUR OFFICERS AND DIRECTORS HAVE LIMITED LIABILITY AND HAVE INDEMNITY RIGHTS
Our Certificate of Incorporation and By-Laws provide that we may indemnify
our officers and directors against losses sustained or liabilities incurred
which arise from any transaction in that officer's or director's respective
managerial capacity unless that officer or director violates a duty of loyalty,
did not act in good faith, engaged in intentional misconduct or knowingly
violated the law, approved an improper dividend, or derived an improper benefit
from the transaction.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. For example, statements included in this prospectus
regarding our financial position, business strategy and other plans and
objectives for future operations, and assumptions and predictions about
future demand for our services and products, supply, costs, marketing and
pricing factors are all forward-looking statements. When we use words like
"intend," "anticipate," "believe," "estimate," "plan" or "expect," we are
making forward- looking statements. We believe that the assumptions and
expectations reflected in such forward-looking statements are reasonable,
based on information available to us on the date of this prospectus, but we
cannot assure you that these assumptions and expectations will prove to have
been correct or that we will take any action that we may presently be planning.
We have disclosed certain important factors that could cause our actual results
to differ materially from our current expectations under "Risk Factors" and
elsewhere in this prospectus. You should understand that forward-looking
statements made in connection with this offering are necessarily qualified by
these factors. We are not undertaking to publicly update or revise any forward-
looking statement if we obtain new information or upon the occurrence of future
events or otherwise.
USE OF PROCEEDS
The shares of common stock covered by this prospectus are to be sold by
our shareholders and we will not receive any proceeds from such sales other
than the $299,899 we might receive upon the exercise of outstanding warrants.
PRICE RANGE OF OUR COMMON STOCK
Market Information
Our common stock is quoted on the OTC Bulletin Board under the symbol
"PUPS". The following table sets forth the range of high and low bid
quotations of our common stock, as reported on the OTC Bulletin Board, for
the periods indicated. The prices represent inter-dealer quotations, which do
not include retail markups, markdowns or commissions, and may not represent
actual transactions.
Common Stock
<TABLE>
<CAPTION>
High Low
2000
-----
<S> <C> <C>
First Quarter...............................$4.00 $3.50
Second Quarter .............................$3.875 $0.9062
Third Quarter ..............................$1.9375 $0.3125
Fourth Quarter
until December 5 ..................... $0.6875 $0.2188
</TABLE>
9
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SECURITY HOLDERS
At December 7, 2000 there were 10,745,100 shares our common stock
outstanding which were held by approximately 50 stockholders of record.
DIVIDEND POLICY
We have not paid any dividends on our common stock, and it is not
anticipated that any dividends will be paid in the foreseeable future. Our
Board of Directors intends to follow a policy of using retained earnings, if
any, to finance our growth. The declaration and payment of dividends in the
future will be determined by our Board of Directors in light of conditions
then existing, including the our earnings, if any, financial condition,
capital requirements and other factors.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to provide an analysis of our
financial condition and should be read in conjunction with our financial
statements and the notes thereto. The matters discussed in this section that
are not historical or current facts deal with potential future circumstances
and developments. Such forward-looking statements include, but are not limited
to, the development plans for our growth, trends in the results of our
development, anticipated development plans, operating expenses and our
anticipated capital requirements and capital resources. Our actual results
could differ materially from the results discussed in the forward-looking
statements.
Introduction:
We were formed in 1993 as a franchisor, wholesaler, retailer and installer
of accessories for trucks and sports utility vehicles. We currently have 8
franchised stores which are located in Kentucky, Indiana, Iowa, Oregon,
Pennsylvania, Idaho and California and three company-owned stores in Ohio
(acquired on September 30, 1998, as the prototype store), Kentucky (acquired
in May 2000) and Indiana (acquired in August 2000). These acquisitions were
recorded under the purchase method of accounting.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 2000 vs. September 30, 1999:
------------------------------------------------------------
Revenues for the nine month periods ended September 30, 2000 and 1999 consist
primarily of net sales generated by our retail stores and are also derived
from initial franchise fees and continuing royalty fees. When comparing 1999 to
2000, revenues increased from $751,000 to $1,074,000, an increase of 43%.
Cost of sales as a percentage of retail sales was 65% and 73% for the nine
month periods ended September 30, 2000 and 1999, respectively. Management
believes that the improvement in 2000 was due to product mix and more closely
monitored costs.
Selling, general and administrative expenses increased from $449,000 to
$979,000 when comparing September 30, 1999 to the same period in 2000,
primarily due to the following: (i) the continuation in 2000 of an aggressive
advertising program to help accelerate the name recognition of Pick-Ups Plus
as well as the franchise opportunity which resulted in increased expenses as
discussed above; (ii) increase in professional fees due primarily to expenses
relating to the preparation for an initial public offering of our common
stock and (iii) additional overhead expenses associated with the new stores
in Kentucky and Indiana which we acquired in May 2000 and in August 2000,
respectively.
The Company was also able to recover royalties receivable, which were written
off in prior years, aggregating $70,578 during the nine months ended September
30, 2000. This recovery was the result of the acquisition of the operations of
the Kentucky store which was consummated on May 1, 2000.
10
<PAGE>
During the nine months ended September 30, 2000, we incurred interest expense
of $23,600 as a result of borrowings under our bank credit lines as well as
certain equipment financing. This compares to no such costs in the prior year
nine month period.
As a result of the above, the Company reflected a net loss of approximately
$514,000 ($.07 per share) for the nine months ended September 30, 2000 as
compared to a loss of approximately $173,000 for the nine months ended
September 30, 1999, ($.03 per share).
RESULTS OF OPERATIONS
Year ended December 31, 1999 vs. December 31, 1998:
---------------------------------------------------
Revenues for the years ended December 31, 1999 and 1998 resulted primarily
from the net sales generated by the retail stores, from initial franchise
fees and from continuing royalty payments. Total revenues increased to
$954,000 in 1999 from $318,000 in 1998, an increase of 200%. Management
attributes this increase to the opening of new stores.
Cost of sales as a percentage of retail sales for 1999 was approximately 73%
while for 1998 it approximated 63%. This increase in cost was primarily due
to product mix. Management intends to closely monitor purchases in future
periods.
Selling, general and administrative expenses increased from $203,000 in 1998
to $600,000 in 1999 as we hired more personnel and experienced increased
professional fees due to becoming a public company.
During the year ended December 31, 1999, we incurred $20,000 of interest costs
as compared to no costs for 1998. This interest was due to borrowings under a
bank line of credit and various equipment financings.
For the year ended December 31, 1999,we reflected a net loss of $276,000 or
$.04 per share. For the year ended December 31, 19998, we reflected a loss
of $13,506 or -0- per share. The reasons for the increased loss in 2000 can
be derived from the discussion above.
LIQUIDITY AND CAPITAL RESOURCES:
As of September 30, 2000, current liabilities exceeded current assets by
approximately $700,000. As of December 31, 1999, current liabilities
exceeded current assets by approximately $144,000.
We used $289,000 in cash to support our operating needs in 2000 as compared to
$138,000 in 1999 and we used $200,000 in 2000 for our investing activities.
This use of cash was offset by the proceeds from the sale of common stock
purchase warrants in 2000 and borrowings under our credit lines with two banks.
On May 1, 2000, we completed the acquisition of the assets of a franchisee.
The purchase price of $286,942, was offset by royalties owed to us which are
being recovered from this franchisee, aggregating $73,042, (including $70,578
from prior years). The remaining balance of $213,900 is payable in cash of
$175,000 and 19,450 shares of our common stock valued at $2.00 per share. We
paid $60,000 at the time of closing and an additional $50,000 through September
30, 2000. The remaining cash portion of the purchase price is due in monthly
installments through December 2000.
On August 18, 2000, we completed the acquisition of certain net assets of a
second franchisee. Assets acquired included store fixtures and inventory and
we assumed certain accounts payable and a bank loan.
We currently have insufficient funds available for operations and would be
required to seek additional financing to supplement cash generated from the
operations of our three company owned retail stores. Our management team is
undergoing discussions with outside parties to rectify this situation. We may
determine, depending on the opportunities available to us, to seek additional
equity or debt financing to fund the cost of our operations. There can
be no assurance that additional financing will be available to us on
commercially reasonable terms, or at all. In the event that we are unable to
raise additional funds, we could be required to either substantially reduce or
terminate our operations.
11
<PAGE>
We are not aware of any material trend, event or capital commitment which
would potentially adversely affect liquidity.
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 our products, the
competitive environment within the automotive aftermarket industry, our
ability to continue to expand our operations, the level of costs incurred in
connection with our expansion efforts, economic conditions and the financial
strength of our customers and suppliers.
THE COMPANY
BUSINESS
In 1993, Fitzgerald Urethane, Inc. opened a retail store for trucks
and sports utility vehicle accessories in Cincinnati, Ohio, which did business
as Pick-Ups Plus. On February 22, 1993, John Fitzgerald founded Mr. Pickup Co.
to act as a franchisor of similar stores and, on October 3, 1994, amended the
certificate of incorporation of Mr. Pickup Co. to change its name to Pick-Up
Plus, Inc.
We sold our first franchise, located in Florence, Kentucky, in 1996. The
following year, we sold two additional franchises, one in South Bend, Indiana
and the other in Des Moines, Iowa. In 1998, we added new franchises in
Portland, Oregon and in Pittsburgh, Pennsylvania. In 1999 and 2000 we added
franchises in California, Idaho, Ohio, Indiana, Kentucky and Iowa. We
currently have eight franchised locations operated by independent franchisees.
We currently maintain three company-owned stores in Ohio, Indiana and Kentucky
which serve as prototype stores for our franchise system.
We are a Delaware corporation with our executive offices located at 5181
Natorp Boulevard, Mason, Ohio 45040. Our telephone number is (513) 398-4344
and our fax number is (513) 398-4271. We maintain an Internet web site located
at http://www.pickups-plus.com.
OUR FRANCHISE SYSTEM
THE TYPICAL FRANCHISE UNIT. While each store within our franchise
system is unique in many aspects, there are several similarities from one
franchise unit to the next. This section presents a profile of the "typical"
store within the Pick-Ups Plus franchise 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. Each
store offers a wide selection of automotive products designed to cover a broad
range of specific vehicle applications. 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 - The typical Pick-Ups Plus store, consisting of 4,000
square feet of space, 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 floor mats, 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.
12
<PAGE>
STAFFING. The franchisee is on-site during the vast majority of, if
not all, hours of operation, is responsible for all operations, and has direct
responsibility for marketing, financing, hiring personnel and product
purchasing. The franchisee is also 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 assist in managing 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. We believe that each store serves as a
marketing tool for our products and for the franchise opportunity. We design
and build our franchised stores with a high visual impact and our products
are merchandised for maximum appeal and in accordance with in-store traffic.
Uniformed and trained sales associates remain readily available to help
customers with product selection.
Store-level advertising efforts are supplemented by advertisements
developed and placed by the franchiser. Store-initiated advertising may
include, but not be limited to utilizing print media such as multi-page
catalogs, television and radio commercials, newspaper advertisements and
various in-store promotions.
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.
FRANCHISE 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 sales, are paid on a weekly basis.
OTHER RESPONSIBILITIES. To insure the success of our franchisees and
the system in general, we require that our franchisees meet certain additional
requirements such as the allocation of a minimum marketing budget (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).
COMPANY SUPPORT
MARKET-TESTED PRODUCTS AND OPERATIONS APPROACH - Since 1993, we
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 - Our 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, our President
and Chief Executive Officer, and other support professionals. Helpful
management information is also distributed through regular educational
seminars, conferences, bulletins, and newsletters. We host an informative
Internet web site located at http://www.pickups-plus.com that all franchisees
have access to. On our web site, the franchisee can exchange sales tips,
installation tips, access information about other franchise stores, managers
and supplier information. Additionally, the web site gives the franchisees
the ability to communicate directly with us and other franchisees through an
on-line mailbox system.
13
<PAGE>
CONTINUED MARKETING SUPPORT - Franchisees benefit from our overall
marketing efforts. Our corporate marketing campaign creates awareness and
positive perceptions that are then amplified by the franchisees' own local
marketing efforts. Our franchisees benefit from their affiliation with a
larger, recognizable organization.
BUYING POWER - Through its favorable vendor relationships, we enable
our franchisees to purchase items in small quantities at significant discounts
normally reserved for volume purchases. No franchisee is required to
purchase any products from us.
SITE SELECTION - We offer our franchisees assistance with site
selection, market analysis, specific site evaluation, and lease negotiations.
Substantially all of our Pick-Ups Plus stores are based on standard store
formats resulting in generally consistent appearance, merchandising and
product mix.
STORE OPENING - We assist our franchisees in designing layouts and
merchandising their stores. We help the franchisees identify preferred
vendors for fixtures, insurance, and other pre-opening requirements. We also
provide on-site store opening assistance for the first week of the franchisee's
operations.
FRANCHISE AGREEMENT - The initial term of the franchise agreement is
for five (5) years and may be renewed by the franchisee for an additional five
(5) years. We may terminate a franchise agreement in the event the
franchisee breaches the terms of the franchise agreement.
STORE LOCATIONS
We have three company-owned store located at 11370 Reading Road,
Cincinnati, Ohio 45241; 107 E. McGalliard Road, Muncie, Indiana 47303; and
8045A Connector Drive, Florence, Kentucky 41042.
The following table sets forth the locations of the Pick-Ups Plus
stores as of the date hereof:
<TABLE>
<CAPTION>
State Location Number of franchised stores Company-owned stores
-------------- --------------------------- --------------------
<S> <C> <C>
Indiana 1 1
Oregon 1
Pennsylvania 1
Kentucky 1 1
Iowa 1
Ohio 1 1
California 1
Idaho 1
----------------------------------------------------------------------------
Total 8 3
</TABLE>
FRANCHISE MARKETING
Our marketing strategy for franchise sales is based on the sale of
individual franchise stores to business-minded individuals. We do not have
any area development agreements to open multi- store franchises. We believe
that the market opportunity for our Pick-Ups Plus stores is nationwide. We
seek franchisees by attending franchise and business opportunity shows,
advertising in national publications and through our web site.
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., a privately
held company located in Winston-Salem, North Carolina.
14
<PAGE>
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.
Some of our competitors are also general, full range, traditional department
stores which carry automotive accessories. Certain of our competitors are
larger in terms of sales volume, store size, resources and have been operating
longer than we have. We believe that we maintain a competitive position in
terms of depth and breadth of product line, price, quality or personnel and
customer service.
TRADE NAMES AND SERVICE MARKS
We currently hold a federal trademark registration from the United
States Patent and Trademark Office (No: 974468789) for "PICK-UPS PLUS" .
Such trademark rights were issued to John Fitzgerald in 1995 and, in May 1996,
John Fitzgerald assigned such trademark rights to us for a twenty year term at
a nominal cost. In addition, we hold copyrights in connection with all of our
training manuals and materials which we consider proprietary products. We are
not aware of any current use of similar marks. We also maintain a registered
domain name for our web-site located at http://www.pickups-plus.com.
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 ("FTC") 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 of material events. The occurrence of any such events
may from time to time require us 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 we 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 our results of operation.
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 federal and
state franchising laws and the regulations promulgated thereunder and have
obtained all licenses and permits necessary to conduct our business. Failure
to comply with such laws and regulations in the future could subject us to
civil remedies, including fines or injunctions, as well as possible criminal
sanctions, which would have a material adverse effect on us.
15
<PAGE>
Our retail operations and those of our 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. Failure by us or our franchisees to comply with applicable
regulations could interrupt the operations of the affected franchise or
otherwise adversely affect the franchise or our business operations.
Employees
As of December 1, 2000, we had approximately fourteen full time
employees and nine part-time employees. We have never experienced a work
stoppage and we believe that our employee relations are good. Our success
depends to a large extent upon the continued services of our key managerial
employees and salesmen. The loss of such personnel could have a material
adverse effect on our business and our results of operations.
Properties
We lease our principal executive office, located at 5181 Natorp
Boulevard, Mason, Ohio 45040, at an annual rent of $30,800. Our lease for our
executive office expires in June 2005. Our Ohio based company-owned store is
located at 11370 Reading Road, Cincinnati, Ohio 45241, is leased at an annual
lease rent of $26,400 and expires on March 31, 2002. Our Indiana based
company-owned store is located at 107 E. McGalliard Road, Muncie, Indiana
47303, is leased at an annual base rent of $34,464 and expires in June 2006.
Our Kentucky based company-owned store is located at 8045A Connector Drive,
Florence, Kentucky 41042, is leased at an annual base rate of $66,720 and
expires on September 30, 2001. We believe that our leased properties are
adequate for our current and immediately foreseeable operating needs. We do
not have any policies regarding investments in real estate, securities or
other forms of property.
Legal Proceedings
There is no current outstanding litigation in which we are involved in
other than routine litigation incidental to ongoing business.
Transfer agent
Our transfer agent is Florida Atlantic Stock Transfer, 7130 Nobb Hill
Road, Tamarac, Florida 33321.
MANAGEMENT
The following table sets forth certain information regarding the members
of our board of directors and its executive officers:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
John Fitzgerald 55 President and Director
Sean Fitzgerald 30 Treasurer and Executive Vice President
Joseph Lamble 58 Director
Brian Glover 37 Vice President of Operations
</TABLE>
Our directors hold office until the next annual meeting of our
shareholders or until their successors are duly elected and qualified.
Our executive officers serve at the pleasure of the Board of Directors. Set
forth below is a summary description of the principal occupation and business
experience of each of our directors and executive officers for at least the
last five years.
16
<PAGE>
JOHN FITZGERALD has served as our President and a member of our
Board of Directors since February 1993. In 1987, Mr. Fitzgerald founded,
Fitzgerald Urethane, Inc., a truck accessories store. Prior to working with
us, Mr. Fitzgerald owned and operated Reaction Plastics, Inc., a plastics
manufacturing company, which he sold in 1994 to finance our franchising
efforts. Prior to 1993, Mr. Fitzgerald held various positions including:
International Urethane Director for H.C. Price (1976 to 1978); Eastern Sales
Manager for Foam Systems, Inc. (1978 to 1984); and regional salesman for
Owens-Corning Fiberglass (1972 to 1976). Mr. Fitzgerald has 30 years
experience in sales and marketing and 15 years experience in management.
Mr. Fitzgerald received a Bachelors degree in marketing from the University
of Fort Lauderdale. John Fitzgerald is the father of Sean Fitzgerald, our
Treasurer and executive vice president.
SEAN FITZGERALD has served as our vice president since 1993.
Mr. Fitzgerald is primarily responsible for overseeing the daily operations
of the Ohio based company-owned store, training franchisees on store
operations and maintaining ongoing contact with franchisees to assist in
their daily operation. Mr. Sean Fitzgerald also oversees all of our
advertising and marketing programs. In 1996 Sean Fitzgerald received a
Bachelors degree in marketing from the University of Cincinnati. Sean
Fitzgerald is the son of John Fitzgerald, our President.
JOSEPH LAMBLE has served as a member of our Board of Directors
since 1998. Since 1992 Mr. Lamble has served as the President of
Entrepreneurial Services, Inc. doing business as Frannet Mid-America, a
national group of franchise consultants located in Indiana. Mr. Lamble
coauthored a franchise textbook, "Franchising 101" and is listed in the
Who's Who in United States Executives. Mr. Lamble serves on the SCORE
chapter of the Small Business Association. In 1982, Mr. Lamble received
his Masters degree in Business Administration from California Coast
University.
BRIAN GLOVER has served as our vice president of operations since
April 2000. From October 1996 through April 2000, Mr. Glover was a franchisee
of a Pick-Ups Plus store located in Florence, Kentucky. From 1992 through
1996, Mr. Glover served as a sales manager for CMI Brokerage located in
Norwood, Ohio. Mr. Glover received a Bachelors degree in telecommunications
from Indiana University in 1986.
Involvement in Certain Legal Proceedings
We are not aware of any material legal proceedings that have occurred
within the past five years concerning any director, director nominee,
promoter or control person which involved a criminal conviction, a pending
criminal proceeding, a pending or concluded administrative or civil
proceeding limiting one's participation in the securities or banking
industries, or a finding of securities or commodities law violations.
17
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total
compensation that we have paid or accrued on behalf of our chief executive
officer during the fiscal periods ending December 31, 1997, 1998 and 1999.
None of our officers received a salary and bonus in excess of $100,000 for
services rendered during such fiscal years.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------------
<TABLE>
<CAPTION>
Annual Compensation Awards Payouts
--------------------- ------ -------
Name and Restricted
Principal Stock
Position(s) Year Salary($) Bonus($) Other($) Awards(# shares)
Compensation
<S> <C> <C>
John Fitzgerald, 1999 50,000
President 1998 18,000
1997 0
</TABLE>
We do not have any long term compensation plans or stock option plans.
Director Compensation
We paid a one time issuance of 25,000 shares of our common stock to
each of Joseph Lamble and Dave McConnell (a former director) for serving as
directors.
Employment Agreements
We do not have any written employment agreements with our employees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of the date
of this prospectus regarding the beneficial ownership of our common stock held
by each of our executive officers and directors, individually and as a
group and by each person who beneficially owns in excess of five percent of
the common stock.
<TABLE>
<CAPTION>
Number of Shares of Percent of
Common Stock Common Stock
Beneficially Beneficially
Name of Owned or Right Owned or Right
Beneficial Owner to Direct Vote(1) to Direct Vote (2)
---------------- ----------------- ------------------
<S> <C> <C>
John Fitzgerald 5,580,000 52%
Sean Fitzgerald 315,000 2.9%
Joseph Lamble 25,000 (*)
Brian Glover 30,000 (*)
Insight & Opinions, Inc.(3) 810,000 7.5%
Executive Officers and 5,950,000 55.5%
Directors as a group
(4 persons)
</TABLE>
-----------------------
(*) Represents less than one percent (1%) of the outstanding shares of our
common stock.
18
<PAGE>
(1) The number of shares of common stock beneficially owned by each person or
entity is determined under the rules promulgated by the SEC. Under such rules,
beneficial ownership includes any shares as to which the person or entity
has sole or shared voting power or investment power and shares which such
person or entity has the right to acquire within sixty days after December 7,
2000. The inclusion herein of any shares deemed beneficially owned does not
constitute an admission by such person of beneficial ownership of such shares.
The information is based upon information furnished by the persons listed.
(2) Such figures are based on 10,745,100 shares of our common stock issued and
outstanding as of the date of this prospectus which does not include 1,999,332
shares of our common stock issuable upon the exercise of outstanding warrants
exercisable at $.15 per share.
(3) The named beneficial holder is a marketing research and business analyst
firm that received 810,000 shares of common stock as a named designee of
Morgan Brewer Securities & Co., an NASD member firm with whom we have entered
into a financial advisory agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1998, we acquired our franchise system's prototype
store from Fitzgerald Urethane, Inc., a corporation owned by John Fitzgerald,
our President, director and majority shareholder, in exchange for 144,000
shares of our common stock. We also assumed liabilities of $5,603 as of the
date of the acquisition.
As of December 31, 1999 and 1998, we were indebted to John Fitzgerald,
our President, in the amount of $24,781. This loan is payable on demand and
Mr. Fitzgerald has agreed not request payment for this loan prior to June
2001. While Mr. Fitzgerald has waived payment of interest, interest is being
imputed at 8 1/2%per annum, and amounted to $2,106 for 1999.
From October through December 2000, we issued an aggregate of 178,332
shares of our common stock to Seth A. Farbman, P.C. as compensation for
general legal services rendered to us and for preparing this registration
statement.
SELLING SECURITY HOLDERS
We are registering for offer and sale by the holders thereof 3,844,332
shares of common stock held by certain securityholders which includes 1,845,000
shares of common stock for sale by eight of our shareholders identified in this
prospectus and includes 1,999,332 shares of our common stock issuable upon the
exercise of warrants held by six persons.
The selling securityholders may offer their shares for sale on a
continuous basis pursuant to Rule 415 under the 1933 Act. See "Risk Factors"
All of the selling securityholders' shares registered hereby will become
tradeable on the effective date of the registration statement of which this
prospectus is a part.
19
<PAGE>
Based on information provided to us by the selling securityholders, the
following table sets forth certain ownership and registration information
regarding the shares held by each person who is a selling securityholder and
by all selling securityholders as a group.
<TABLE>
<CAPTION>
Number of Number of Shares Percent of Stock Owned
Shares of of Common Stock ----------------------
Name and Address Common Stock Registered Prior to After
of Beneficial Owner Owned For Sale(1) Offering(1) Offering(2)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aspermont, Inc. 475,000(3) 475,000(3) 4.4% (*)
c/o Peter Workin
7500 San Felipe
Road #777
Houston, TX 77063
Brewer Capital Group
LLC. (4) 45,000 45,000 (*) (*)
3003 South Loop West
Suite 330
Houston, TX 77054
Stephen M. Brewer (5) 36,000 36,000 (*) (*)
3003 South Loop West
Suite 330
Houston, TX 77054
A. Hager Bryant, III (5) 9,000 9,000 (*) (*)
3003 South Loop West
Suite 330
Houston, TX 77054
Consulting & Strategy(6) 99,332(3) 99,332(3) (*) (*)
International LLC
5433 Westheimer
Suite 500
Houston, TX 77056
Seth A. Farbman, P.C.(7) 178,332 178,332 1.6% (*)
138-54 Jewel Avenue
Flushing, NY 11367
Hanover Street 316,667(3) 316,667(3) 2.9% (*)
Partners LP
14601 Bellaire
Boulevard # 338
Houston, TX 77083
Insights and
Opinions, Inc.(8) 810,000 810,000 7.5% (*)
10122 Holly Springs
Houston, TX 77042
Timothy Horan, Jr. 333,334 333,334 3.1% (*)
11309 Smithdale
Houston, TX 77024
Merger Communications, 100,000 100,000 (*) (*)
Inc. (9)
5599 San Felipe Rd
Suite 975
Houston, TX 77056
Quest Partners LP 316,667(3) 316,667(3) 2.9% (*)
3030 Greenridge #66
Houston, TX 77057
ID: 76-0659012
Roanroke Associates Ltd 475,000(3) 475,000(3) 4.4% (*)
c/o Peter Workin
7500 San Felipe
Road #777
Houston, TX 77063
Salomon Properties LP 316,666(3) 316,666(3) 2.9% (*)
6802 San Remo
Houston, TX 77083
Martin Weiner 333,334 333,334 3.1% (*)
5433 Westheimer
Suite 590
Houston, TX 77056
</TABLE>
* Represents less than 1% of our outstanding shares of common stock
20
<PAGE>
(1) Such figure is based upon 10,745,100 shares of common stock outstanding
as of the date of this prospectus which figure does not include 1,999,332
shares of our common stock issuable upon the exercise of warrants exercisable
at $0.15 per share.
(2) Such figure assumes the sale of all of the shares offered by the selling
securityholders.
(3) Represent shares of our common stock issuable upon the exercise of
warrants currently exercisable at $.15 per share.
(4) The named shareholder is the holding company of Morgan Brewer Securities
& Co., an NASD member firm that has entered into an agreement with us to
provide financial advisory services on a non-exclusive basis.
(5) The named shareholder is a principal of Morgan Brewer Securities & Co.
(6) The named shareholder's principals are Franklin C. Fisher, Jr. and Steve
L. Tebo.
(7) The named shareholder is the law firm that helped us prepare this
registration statement. Seth A. Farbman is its controlling shareholder.
(8) The named shareholder is a marketing research firm to whom 810,000 shares
were designated as payment from Morgan Brewer Securities & Co.
(9) The named shareholder performed corporate consulting services for us.
We will not receive any proceeds from the sale of any shares by the
selling securityholders other than $299,899 we might receive upon the exercise
of outstanding warrants to purchase shares of our common stock. We are bearing
all expenses in connection with the registration of the selling
securityholder's shares offered by this prospectus.
The shares owned by the selling securityholders are being registered
pursuant to Rule 415 of the General Rules and Regulations of the Securities
and Exchange Commission which Rules pertain to delayed and continuous
offerings and sales of securities. In regard to the selling securityholder's
shares offered under Rule 415, we have made certain undertakings in Part II
of the registration statement of which this prospectus is a part pursuant to
which, in general, we have committed to keep this prospectus current during
any period in which offers or sales are made pursuant to Rule 415.
21
<PAGE>
PLAN OF DISTRIBUTION
Sale of the Selling Securityholder Shares
In this section of the prospectus, the term "selling securityholder"
means and includes: (1) the persons identified in the tables above as the
selling securityholders and (2) any of their donees, pledgees, distributees,
transferees or other successors in interest who may (a) receive any of the
common stock offered hereby after the date of this prospectus and (b) offer
or sell those shares hereunder.
The common stock offered by this prospectus may be sold from time
to time directly by the selling securityholders. Alternatively, the selling
securityholders may from time to time offer those shares through underwriters,
brokers, dealers, agents or other intermediaries. The selling securityholders
as of the date of this prospectus have advised us that at that time there were
no underwriting or distribution arrangements entered into with respect to the
common stock offered hereby. The distribution of the common stock by the
selling securityholders may be effected in one or more transactions that may
take place on the OTC Electronic Bulletin Board (including one or more block
transaction) through customary brokerage channels, either through brokers
acting as agents for the selling securityholders, or through market makers,
dealers or underwriters acting as principals who may resell these shares on
the OTC Electronic Bulletin Board; in privately-negotiated sales; by a
combination of such methods; or by other means. These transactions may be
effected at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at other negotiated prices. Usual and
customary or specifically negotiated brokerage fees or commissions may be
paid by the selling securityholders in connection with sales of the common
stock.
The selling securityholder may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise.
In such transactions, broker-dealers may engage in short sales of the shares
in the course of hedging the positions they assume with the selling
securityholder. The selling securityholder also may sell shares short and
redeliver the shares to close out such short positions. The selling
securityholder may enter into option or other transactions with broker-dealers
which require the delivery to the broker-dealer of the shares. The broker-
dealer may then resell or otherwise transfer such shares pursuant to this
prospectus.
The selling securityholders also may loan or pledge the shares to a
broker-dealer. The broker-dealer may sell the shares so loaned, or upon a
default the broker-dealer may sell the pledged shares pursuant to this
prospectus. Any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 promulgated under the Securities Act may be sold under
Rule 144 rather than pursuant to this prospectus. The selling securityholders
have advised us that they have not entered into any agreements, understandings
or arrangements with any underwriters or broker-dealers regarding the sale of
their securities. There is no underwriter or coordinating broker acting in
connection with the proposed sale of shares by the selling securityholders.
Although the common stock covered by this prospectus are not
currently being underwritten, the selling securityholders or their
underwriters, brokers, dealers or other agents or other intermediaries
that may participate with the selling securityholders in any offering or
distribution of common stock may be deemed "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), and any
profits realized or commissions received by them may be deemed underwriting
compensation thereunder.
At the time a particular offer of common stock is made by or on
behalf of a selling securityholder, to the extent required under applicable
rules of the SEC, we will prepare a prospectus supplement setting forth the
number of shares being offered and the terms of the offering, including the
name or names of any underwriters, dealers, brokers, agents or other
intermediaries, if any, the purchase price paid by any underwriter for
securities purchased from the selling securityholders and any discounts,
commissions or concessions allowed or reallowed or paid to others, and the
proposed selling price to the public.
22
<PAGE>
Under applicable rules and regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), any person engaged in
a distribution of the common stock offered hereby may not simultaneously
engage in market making activities with respect to the common stock for a
period of up to five days preceding such distribution. The selling
securityholders will be subject to the applicable provisions of the Exchange
Act and the rules and regulations promulgated thereunder, including without
limitation Regulation M, which provisions may limit the timing of purchases
and sales by the selling securityholders.
In order to comply with certain state securities laws, if applicable,
the common stock offered hereby will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In certain states, the
common stock may not be sold unless they are registered or qualified for sale
in such state, or unless an exemption from registration or qualification is
available and is obtained.
All costs, expenses and fees in connection with the registration of
the common stock offered hereby will be borne by us. However, any brokerage
or underwriting commissions and similar selling expenses, if any, attributable
to the sale of the common stock will be borne by the selling securityholders.
DESCRIPTION OF SECURITIES
Common Stock
We are currently authorized to issue 50,000,000 shares of common
stock with $.001 par value. The holders of our common stock are entitled to
one vote per each share held and have the sole right and power to vote on all
matters on which a vote of stockholders is taken. Voting rights are non-
cumulative. The holders of shares of our common stock are entitled to receive
dividends when, as and if declared by the Board of Directors, out of funds
legally available therefore and to share pro-rata in any distribution to
stockholders. We anticipate that any earnings will be retained for use in our
business for the foreseeable future. Upon liquidation, dissolution, or
winding up of the company, the holders of the common stock are entitled to
receive the net assets held by the company after distributions to the
creditors. The holders of our common stock do not have any preemptive right
to subscribe for or purchase any shares of any class of stock. The outstanding
shares of our common stock and the shares offered hereby will not be subject to
further call or redemption and will be fully paid and non-assessable.
We currently have 10,745,100 shares of our common stock outstanding.
Such figure does not include 1,999,332 shares of our common stock issuable
upon the exercise of outstanding warrants currently exercisable at $0.15 per
share and registered herein.
Preferred Stock
Our Board of Directors has the authority to cause us to issue without
any further vote or action by the stockholders, up to 5,000,000 shares of
preferred stock, in one or more series, and to designate the number of shares
constituting any series, and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, voting rights, rights and
terms of redemption, redemption price or prices and liquidation preferences of
such series. The issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control of the company without further
action by the stockholders. The issuance of preferred stock with voting and
conversion rights may adversely affect the voting power of the holders of
common stock, including the loss of voting control. No preferred stock is
outstanding as of the date hereof.
Warrants
We have warrants outstanding to purchase an aggregate of 2,819,332 shares
of our common stock. 820,000 of such outstanding warrants are currently
exercisable at $.21 per share and expire on November 2, 2001. The remaining
1,999,332 outstanding warrants were granted to six individuals to purchase an
aggregate of 1,999,332 shares of our common stock, are currently exercisable
at $.15 (fifteen cents) per share, and expire on December 1, 2003. Such
warrants may not be transferred or assigned without compliance with applicable
federal and state securities laws by the transferor and the transferee. The
exercise price of the warrants and the number of shares issuable upon exercise
of the warrants will be subject to adjustment to protect against dilution in
the event of stock dividends, stock splits, combinations, subdivisions and
reclassifications.
24
<PAGE>
Additional Information Describing Securities
Reference is made to our Certificate of Incorporation and by-laws which
are available for inspection at our offices or which can be viewed through the
EDGAR data base at http://www.sec.gov as exhibits to the registration
statement on Form SB-2. Reference is also made to applicable statutes of the
state of Delaware for a description concerning statutory rights and
liabilities of shareholders.
Reports to Shareholders
We will furnish to holders of our common stock annual reports containing
audited financial statements examined and reported upon, and with an opinion
expressed by, an independent certified public accountant. We may issue other
unaudited interim reports to our shareholders as we deem appropriate.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The Company's Certificate of Incorporation provides that the Company shall
indemnify its directors provided that such indemnification shall not eliminate
or limit the liability of a director (a) for any breach of the director's duty
or loyalty to the corporation or its stockholders, (b) for acts of omission not
in good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the Delaware General Corporation Law ("DGCL"), or
(d) for any transaction from which the director derived an improper personal
benefit.
Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation,
if such directors, officers, employees or agents acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceedings, had
no reason to believe their conduct was unlawful. In a derivative action, i.e.,
one by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agent in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and
only to the extent that the court in which the action or suit was brought
shall determine upon application that the defendant directors, officers,
employees or agents are fairly and reasonably entitled to indemnify for such
expenses despite such adjudication of liability.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended ("Securities Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Commission such indemnification is against public policy as expressed
in the Securities Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act, and will be governed by the final adjudication
of such issue.
25
<PAGE>
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 under the Securities Act
with respect to the securities being offered. This prospectus, filed as a part
of the registration statement, does not contain certain information contained
in or annexed as exhibits to the registration statements. Reference is made to
exhibits to the registration statement for the complete text. For further
information with respect to us and the securities hereby offered, reference is
made to the registration statement and to the exhibits filed as part of it,
which may be inspected and copied at the public reference facilities of the
Commission in Washington D.C., and at the Commission's regional offices at 500
West Madison Street, Chicago, IL 60604; 7 World Trade Center, New York, NY
10048; and 5757 Wilshire Boulevard, Los Angeles, CA 90034. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 5th Street, NW, Washington, D.C. 20549, at prescribed rates and are
available on the World Wide Web at: http://www.sec.gov.
We are subject to the informational reporting requirements of the
Securities Exchange Act of 1934 and intend to file reports and other
information with the Commission. We will provide without charge to each person
who receives a copy of this prospectus, upon written or oral request, a copy of
any of the information incorporated herein by reference, not including exhibits.
Such requests should be made in writing to John Fitzgerald, President, Pick-Ups
Plus, Inc., 5181 Natorp Boulevard, Mason, Ohio 45040, or by telephone to (513)
398-4344.
LEGAL MATTERS
The legality of the common stock included in this prospectus has been
passed upon for us by Seth A. Farbman, P.C., Flushing, New York, but purchasers
of such common stock should not rely on Seth A. Farbman, P.C. with respect to
any other matters.
Seth A. Farbman, P.C., owns 178,332 shares of our common stock and is a
selling securityholder. Seth A. Farbman is its controlling shareholder.
EXPERTS
The financial statements as of December 31, 1999 appearing in this
prospectus and registration statement have been audited by Lazar Levine &
Felix, LLP, independent certified accountants, and the financial statements
as of December 31, 1998 have been audited by Robert L. White, CPA, as set
forth in their reports thereon appearing elsewhere herein and in the
registration statement, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
26
<PAGE>
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 - 8-14
Condensed Balance Sheets - September 30, 2000 (unaudited)
and December 31, 1999 F - 15
Condensed Statements of Operations - Three and Nine months Ended
September 30, 2000 and 1999 (unaudited) F - 16
Condensed Statements of Cash Flows - Nine months Ended
September 30, 2000 and 1999 (unaudited) F - 17
Notes to Interim Condensed Financial Statements F - 18-19
</TABLE>
F-1
<PAGE>
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
<PAGE>
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>
PICK-UPS PLUS, INC.
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
- ASSETS -
<TABLE>
<CAPTION>
BALANCE SHEET
1999 1998
---- ----
CURRENT ASSETS:
<S> <C> <C>
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 authorized,
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>
F-4
<PAGE>
PICK-UPS PLUS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
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>
F-5
<PAGE>
PICK-UPS PLUS, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
STATEMENT OF SHAREHOLDERS' DEFICIT
Common Stock Additional Total
------------ Paid-in Accumulated Shareholders'
Shares Amount Capital Deficit Deficit
------ ------ ---------- ---------- -----------
<S> <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>
F-6
<PAGE>
PICK-UPS PLUS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
1999 1998
---- ----
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
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
F-7
<PAGE>
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>
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>
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>
NOTE 4 - FIXED ASSETS:
Fixed assets is comprised of the following:
1999 1998
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
======== ========
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, 81/2%, as of December 31, 1999.
(b) Loans Payable:
Loans payable as of December 31, 1999 consists of the following:
1999
----
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
=========
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>
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 81/2% (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>
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:
Shares
------
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
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>
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
<PAGE>
SEPETMBER 30, 2000
PICK-UPS PLUS, INC.
CONDENSED BALANCE SHEETS
- ASSETS -
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEETS
September 30, 2000 December 31,
(unaudited) 1999
CURRENT ASSETS:
<S> <C> <C>
Cash $ 7,715 $ 11,188
Accounts receivable - net of
allowance for doubtful accounts of $10,398
and $3,344 for 2000 and 1999, respectively 17,227 7,052
Inventories 96,808 33,156
Prepaid expenses and other current assets 3,474 2,800
------------ ---------
TOTAL CURRENT ASSETS 125,224 54,196
------------ ---------
FIXED ASSETS - NET 120,453 25,365
------------ ---------
OTHER ASSETS:
Costs in excess of assets acquired - net 284,843 -
Franchise development costs - net 6,300 12,600
Other assets 51,905 1,905
----------- ---------
343,048 14,505
----------- --------
$ 588,725 $ 94,066
============ =========
- LIABILITIES AND SHAREHOLDERS' DEFICIT -
CURRENT LIABILITIES:
Bank credit lines payable $ 393,100 $ 93,100
Accounts payable 315,295 58,940
Accrued expenses 13,925 13,375
Loans payable - current 84,424 28,221
Capitalized lease payable - current 18,618 4,971
---------- ----------
TOTAL CURRENT LIABILITIES 825,362 198,607
--------- ---------
NON-CURRENT LIABILITIES:
Loans payable 108,056 22,812
Capitalized leases 33,114 4,623
Loans payable - officer 56,393 24,781
--------- ---------
197,563 52,216
----------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Preferred stock, $1 par value;
5,000,000 shares authorized; none issued - -
Common stock, $.001 par value; 50,000,000 shares
authorized,7,458,100 and 6,758,100 shares issued and
attending for 2000 and 1999, respectively 7,458 6,758
Additional paid-in capital 433,282 197,728
Accumulated deficit (874,940) (361,243)
------------- --------
(434,200) (156,757)
------------- -------
$ 588,725 $ 94,066
============ =========
</TABLE>
F-15
<PAGE>
PICK-UPS PLUS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
Three Months Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
REVENUES:
<S> <C> <C> <C> <C>
Retail sales ..............$ 480,450 $ 178,131 $1,014,568 $650,709
Royalties ....................18,496 35,206 54,702 74,987
Initial franchise fees ........-- -- 5,000 25,000
---------- ---------- ---------- --------
498,946 213,337 1,074,270 750,696
---------- ----------- ---------- --------
COSTS AND EXPENSES (INCOME):
Cost of sales .............. 283,876 145,685 655,630 475,214
Selling, general and
administrative expenses. . . 408,809 168,354 979,288 448,680
Other income -- -- (70,578) --
Inteest expense ............. 11,070 -- 23,627 --
---------- ---------- ---------- -------
703,755 314,039 1,587,967 923,894
---------- ---------- ---------- -------
LOSS BEFORE PROVISION (CREDIT)
FOR INCOME TAXES . (204,809) (100,702) (513,697) (173,198)
Provision (credit) for
income taxes ........ -- -- -- --
---------- ----------- ---------- -------
NET LOSS .....................$ (204,809) $(100,702) $(513,697) $(173,198)
=========== =========== ======== ==========
BASIC LOSS PER COMMON SHARE ..$ (.03) $ (.01) $ (.07) $ (.03)
=========== =========== ======== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING ...... 7,020,322 6,758,100 6,845,415 6,752,309
=========== =========== ======== ==========
</TABLE>
F-16
<PAGE>
PICK-UPS PLUS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months
Ended September 30,
2000 1999
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss.............................................. $(513,697) $(173,198)
Adjustments to reconcile net loss to net cash (utilized)
by operating activities:
Depreciation and amortization.................... 32,924 6,884
Bad debt provision .............................. 7,054 --
Compensatory shares ............................. 7,000 --
Imputed interest on shareholder loan ............ 2,254 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable....... (17,229) 1,001
(Increase) decrease in inventory .............. (63,652) 3,474
(Increase) in prepaid expenses and other ........ (674) --
Increase in accounts payable .................... 256,355 19,871
Increase in accrued expenses .................... 550 4,385
--------- ---------
Net cash (utilized) by operating activities .. (289,115) (137,583)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .............................. (9,481) --
Security deposits ................................. (50,000) --
Payment re: assets acquired ....................... (140,427) --
--------- ---------
Net cash (utilized) by investing activities .. (199,908) --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt ..................... 300,000 90,330
Principal payments of long-term debt .............. (63,854) --
Payments of capitalized leases .................... (9,208) --
Proceeds from shareholder loans ................... 31,612 --
Proceeds from sale of equity units ................ 227,000 11,280
--------- ---------
Net cash provided by financing activities .... 485,550 101,610
--------- ---------
NET (DECREASE) IN CASH EQUIVALENTS ................... (3,473) (35,973)
Cash and cash equivalents, beginning of year ..... 11,188 37,113
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD .............. $ 7,715 $ 1,140
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period:
Interest ...................................... $ 21,373 $ --
Taxes ......................................... -- --
</TABLE>
F-17
<PAGE>
PICK-UPS PLUS, INC.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
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 three
Company owned-stores. Subject to the availability of financing,
the Company intends to pursue an aggressive expansion strategy
by opening additional company-owned stores and franchise
locations.
The accounting policies followed by the Company are set forth
in Note 2 to the Company's annual report filed on Form 10-KSB
for the year ended December 31, 1999. Specific reference is
made to this report for a description of the Company's
securities and the notes to the financial statements included
therein.
In the opinion of management, the accompanying unaudited
interim condensed financial statements of Pick-Ups Plus, Inc.,
contain all adjustments necessary to present fairly the
Company's financial position as of September 30, 2000 and the
results of its operations for the three and nine month periods
ended September 30, 2000 and 1999 and its cash flows for the
nine month periods ended September 30, 2000 and 1999.
The results of operations for the three and nine month periods
ended September 30, 2000 and 1999 are not necessarily
indicative of the results to be expected for the full year.
The Company currently has insufficient funds available for
operations and would be required to seek additional financing
to supplement cash generated from the operations of the three
Company owned retail stores. Management is undergoing
discussions with outside parties to rectify this situation. The
Company may determine, depending on the opportunities available
to it, to seek additional equity or debt financing to fund the
cost of its operations. There can be no assurance that
additional financing will be available to the Company on
commercially reasonable terms, or at all. In the event that the
Company is unable to raise additional funds, the Company could
be required to either substantially reduce or terminate its
operations.
F-18
<PAGE>
NOTE 2 - CAPITAL STOCK AND EQUIVALENTS:
During the period ended September 30, 2000, the Company
received $227,000 in net proceeds and issued 650,000 shares of
common stock as of result of the exercise of common stock
purchase warrants. The Company also issued 50,000 shares to a
consultant in lieu of payment for services rendered aggregating
$7,000.
NOTE 3 - LINES OF CREDIT:
In May 2000, the Company entered into an agreement with a new
bank to provide an additional line of credit in the amount of
$300,000. Borrowings under this line 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. As of September 30, 2000, borrowings under this
new line aggregated $300,000. The Company also has $93,100
outstanding with another bank under a previous line of credit
agreement.
PICK-UPS PLUS, INC.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
NOTE 4 - ACQUISITION:
On May 1, 2000, the Company completed the acquisition of the
assets of a franchisee. The purchase price of $286,942, was
offset by royalties owed to the Company which are being
recovered from this franchisee, aggregating $73,042 (including
$70,578 from prior years). The remaining balance of $213,900 is
payable in cash of $175,000 and 19,450 shares of Company common
stock valued at $2.00 per share. The Company paid $60,000 at
the time of closing and through September 30, 2000, has paid an
additional $50,000. The remaining cash portion of the purchase
price is due in monthly installments through December 2000.
Costs in excess of the assets acquired of $214,500 is being
amortized on a straight line basis over ten (10) years.
On August 18, 2000, the Company completed the acquisition of
certain net assets of a second franchisee. Assets acquired
included store fixtures and inventory and the Company assumed
certain accounts payable and a bank loan. Costs in excess of
the assets acquired of $80,284, have been assigned to goodwill
and is being amortized on a straight line basis over ten (10)
years.
F-19
<PAGE>
PICK-UPS PLUS, INC.
-------------------
3,844,332 shares of common stock to be sold by certain selling securityholders
----------------
PROSPECTUS
----------------
December , 2000
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE
INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE ON THE DATE OF THIS DOCUMENT.
ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN OR THAT ARE
CURRENTLY DEEMED IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS. THE RISKS
AND UNCERTAINTIES DESCRIBED IN THIS DOCUMENT AND OTHER RISKS AND UNCERTAINTIES
WHICH WE MAY FACE IN THE FUTURE WILL HAVE A GREATER IMPACT ON THOSE WHO PURCHASE
OUR COMMON STOCK. THESE PURCHASERS WILL PURCHASE OUR COMMON STOCK AT THE MARKET
PRICE OR AT A PRIVATELY NEGOTIATED PRICE AND WILL RUN THE RISK OF LOSING THEIR
ENTIRE INVESTMENT.
27
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Company is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against
them by a third party or in the right of the corporation, by reason of the fact
that they were or are such directors, officers, employees or agents, against
expenses incurred in any action, suit or proceeding. The Company's Certificate
of Incorporation and By-laws provide for indemnification of its directors and
officers to the fullest extent permitted by the General Corporation Law of the
State of Delaware.
The General Corporation Law of the State of Delaware provides that a
Certificate of Incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director
(1) for any breach of the director's duty of loyalty to the corporation
or its stockholders,
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,
(3) under Section 174 (relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock) of the General
Corporation Law of the State of Delaware, or
(4) for any transaction from which the director derived an improper
personal benefit.
Our Certificate of Incorporation contains such a provision.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers or control
persons pursuant to the foregoing provisions, it is the opinion of the
Securities and Exchange Commission that such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth our expenses in connection with this
registration statement. All of such expenses are estimates, other than
the filing fees payable to the Securities and Exchange Commission.
<TABLE>
<CAPTION>
<S> <C>
Filing Fee--Securities and Exchange Commission............$ 384
Fees and Expenses of Accountants and legal counsel........$ 30,000
Blue Sky Fees and Expenses................................$ 2,000
Printing and Engraving Expenses...........................$ 3,000
Miscellaneous expenses....................................$ 2,000
---------
Total............................... $ 37,384
28
<PAGE>
Item 26. Recent Sales of Unregistered Securities.
Within the past three years, the Company has issued the following shares
of its common stock, par value $.001 (the "Shares"), for cash or services
rendered to the Company and has granted the following warrants to purchase
its common stock for services rendered to the Company, absent registration
under the Securities Act of 1933, as amended (the "Securities Act") pursuant
to the exemption provided in Section 4(2) of the Securities Act for
transactions by an issuer not involving a public offering, except where
otherwise indicated below.
Some of the holders of the shares issued below may have subsequently
transferred or disposed of their shares and the list does not purport to be
a current listing of the Company's shareholders.
From November 1998 to December 1998 the Company sold to two accredited
investors and to 28 sophisticated investors, units ("Units") which consisted
of fifty (50) shares of common stock and ninety-five (95) redeemable stock
purchase warrants ("Warrants"). Each Unit was sold for $5.00 and each Warrant
entitled the holder to purchase 1 share of the Company's common stock for $1.00
per share. The shares and warrants were issued pursuant to the provisions of
Rule 504 of Regulation D under the Securities Act.
In September 1998 the Company issued 300,000 shares of its common
stock to one accredited investor, for consulting services, and also issued
144,000 shares of common stock to Fitzgerald Urethane, Inc. in consideration
for the purchase of the prototype store for the Company's franchise system.
Such issuances were pursuant to the exemption provided in Section 4(2) of the
Securities Act for transactions by an issuer not involving a public offering.
From January 1, 1999 through June 1, 1999, the Company sold 14,100
shares of its common stock to 5 private accredited investors for an aggregate
purchase price of $11,280. Such issuances were pursuant to the exemption
provided in Section 4(2) of the Securities Act for transactions by an issuer
not involving a public offering.
In March, 2000, the Company issued 140,000 shares of common stock to one
individual upon the exercise of warrants to purchase shares of the Company's
common stock, exercisable at $1.00 per share, for which the Company received
$140,000.
In April, 2000, the Company issued 10,000 shares of common stock to one
individual upon the exercise of warrants to purchase shares of the Company's
common stock, exercisable at $1.00 per share, for which the Company received
$10,000.
In May 2000, the Company acquired a Pick Ups Plus store and, as part of
the purchase price, in October, 2000, the Company issued 19,450 shares of its
common stock valued at $2.00 per share. Such issuance was pursuant to the
exemption provided in Section 4(2) of the Securities Act for transactions by
an issuer not involving a public offering.
In August 2000, the Company issued 50,000 shares of its common stock,
valued at $.14 per share, to one individual consultant as payment for services
rendered to the Company valued at $7,000. Such issuance was pursuant to
the exemption provided in Section 4(2) of the Securities Act for transactions
by an issuer not involving a public offering.
In September,2000, the Company issued 500,000 shares of common stock to
one individual as compensation for services rendered pursuant to his consulting
agreement. Such shares were valued at an aggregate of $25,000. Such issuance
was pursuant to the exemption provided in Section 4(2) of the Securities Act
for transactions by an issuer not involving a public offering.
In October, 2000, the Company issued 10,000 shares to one individual,
valued at $.30 per share, which was paid as part of the purchase price of a
Pick Ups Plus store. Such issuance was pursuant to the exemption provided in
Section 4(2) of the Securities Act for transactions by an issuer not involving
a public offering.
29
<PAGE>
In October 2000, the Company issued 30,000 shares of it common
stock to one individual upon the exercise of warrants to purchase shares of
the Company's common stock for which the Company received an aggregate of
$4,300. The Company also issued an aggregate of 382,550 shares of its common
stock to ten employees and consultants for services rendered to the Company.
All of such shares issued were valued at a fifty percent discount from
the then quoted price of the Company's common stock as traded on the OTC
Bulletin Board. Such issuances were pursuant to the exemption provided in
Section 4(2)of the Securities Act for transactions by an issuer not involving
a public offering.
In October 2000, the Company granted warrants to two individuals to
purchase an aggregate of 1,000,000 shares of its common stock. Such warrants
were granted with an exercise price of $.15 per share. The warrants were
exercised and paid for in full (an aggregate of $150,000 in proceeds to the
Company) prior to the date of this filing.
From October through December 2000, the Company issued 153,332 shares of
its common stock, valued at $.15 per share, and 25,000 shares of its common
stock valued, at $.20 per share, to one individual as payment for legal
services rendered to the Company. Such issuances were pursuant to the
exemption provided in Section 4(2) of the Securities Act for transactions by
an issuer not involving a public offering.
In December 2000, the Company issued an aggregate of 666,668 shares of
its common stock to two accredited investors who purchased such shares at a
price of $.15 per share, for an aggregate purchase price of $100,000 to the
Company. Such issuances were pursuant to the exemption provided in Section 4(2)
of the Securities Act for transactions by an issuer not involving a public
offering.
In December 2000, the Company also granted warrants to six persons to
purchase an aggregate of 1,999,332 shares of our common stock. Such warrants
are currently exercisable at $.15 (fifteen cents) per share and expire on
December 1, 2003. Such issuances were pursuant to the exemption provided in
Section 4(2) of the Securities Act for transactions by an issuer not involving
a public offering.
30
<PAGE>
Item 27. Exhibits.
---------
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation of the Company filed with the
registration statement on Form 10-SB filed with the Commission
on May 11, 1999 and incorporated herein by reference
3.2 Amendments to Certificate of Incorporation of the Company filed
with the registration statement on Form 10-SB filed with the
Commission on May 11, 1999 and incorporated herein by reference
3.3 By-Laws of the of the Company filed with the registration statement
on Form 10-SB/A filed with the Commission on July 7, 1999 and
incorporated herein by reference.
4.1 Form of Warrant Agreement
5.1 Opinion of Seth A. Farbman, P.C.
6.1 Form of Franchise Agreement filed with the registration statement
on Form 10-SB/A filed with the Commission on July 7, 1999 and
incorporated herein by reference.
6.2 Lease Agreement, premises at Cincinnati, Ohio, filed as Exhibit 6(c)
with the registration statement on Form10-SB/A filed with the
Commission on July 7, 1999 and incorporated herein by reference.
23.1 Consent of counsel is contained in Exhibit 5.1
23.2 Consent of Lazar Levine & Felix LLP
23.3 Consent of Bob White, CPA
27 Financial Data Schedule.
_______________
31
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Item 28.Undertakings.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
(b) a post-effective amendment to this
registration statement:
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(3) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that for the purpose of
determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
32
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in
the City of Mason and State of Ohio on December 21, 2000.
PICK-UPS PLUS, INC.
By: /s/ John Fitzgerald
-----------------------
President, Principal Executive Officer
and Principal Accounting Officer
In accordance with the requirements of the Securities Act of 1933,
as amended, his registration statement has been signed by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Joseph Lamble Director December 21, 2000
-----------------
Joseph Lamble
33
<PAGE>
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation of the Company filed with the
registration statement on Form 10-SB filed with the Commission
on May 11, 1999 and incorporated herein by reference
3.2 Amendments to Certificate of Incorporation of the Company filed
with the registration statement on Form 10-SB filed with the
Commission on May 11, 1999 and incorporated herein by reference
3.3 By-Laws of the of the Company filed with the registration statement
on Form 10-SB/A filed with the Commission on July 7, 1999 and
incorporated herein by reference.
4.1 Form of Warrant Agreement
5.1 Opinion of Seth A. Farbman, P.C.
6.1 Form of Franchise Agreement filed with the registration statement
on Form 10-SB/A filed with the Commission on July 7, 1999 and
incorporated herein by reference.
6.2 Lease Agreement, premises at Cincinnati, Ohio, filed as Exhibit 6(c)
with the registration statement on Form10-SB/A filed with the
Commission on July 7, 1999 and incorporated herein by reference.
23.1 Consent of counsel is contained in Exhibit 5.1
23.2 Consent of Lazar Levine & Felix LLP
23.3 Consent of Bob White, CPA
27 Financial Data Schedule.
34
<PAGE>
EXHIBIT 4.1
Form of Warrant Agreement
-------------------------
NEITHER THE SECURITIES REPRESENTED BY THIS WARRANT NOR THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE; THEREFORE, THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF, IF ANY, MAY NOT BE SOLD OR
TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY TO THE CORPORATION
OF AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE CORPORATION
THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR TRANSFER.
VOID AFTER 5:00 P.M. EASTERN TIME, DECEMBER 1, 2003
EXERCISABLE COMMENCING DECEMBER 1, 2000
WARRANT CERTIFICATE
For the Purchase of
_______________ Shares of Common Stock
of
PICK-UPS PLUS, INC. (THE "COMPANY")
5181 NATORP BOULEVARD
MASON, OHIO 45040
1. Warrant.
THIS CERTIFIES THAT, in consideration of $10.00 and other good and valuable
consideration, duly paid by or on behalf of ___________ (the "Holder"), as
registered owner of this warrant certificate ("Warrant"), the Holder is
entitled, at any time or from time to time at or after December 1, 2000
("Exercise Date"), and at or before 5:00 p.m., Eastern Time on December 1,
2003 ("Expiration Date"), but not thereafter, to subscribe for, purchase and
receive, in whole or in part, up to______________ (___________) shares of
Common Stock of the Company, $.001 par value per share ("Common Stock"). If
the Expiration Date is a day on which banking institutions are authorized by
law to close, then this Warrant may be exercised on the next succeeding day
which is not such a day in accordance with the terms herein. During the period
ending on the Expiration Date, the Company agrees not to take any action that
would terminate the Warrant. This Warrant is exercisable at $.15 (fifteen
cents) per share; provided, however, that upon the occurrence of any of the
events specified in Section 6 hereof, the rights granted by this Warrant,
including the number of shares of Common Stock to be received upon such
exercise, shall be adjusted as therein specified. The term "Exercise Price"
shall mean the initial exercise price or the adjusted exercise price,
depending on the context, of a share of Common Stock. The term "Securities"
shall mean the shares of Common Stock issuable upon exercise of this Warrant.
2. Exercise.
2.1 Exercise Form. In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the
Company on or before 5:00 p.m. Eastern Time on any business day on or prior
to the Expiration Date, together with the surrender of this Warrant and payment
of the Exercise Price for the Securities being purchased. If the subscription
rights represented hereby shall not be exercised at or before 5:00 p.m.,
Eastern Time, on the Expiration Date, this Warrant shall become and be void
without further force or effect, and all rights represented hereby shall cease
and expire.
2.2 Legend. Each certificate for Securities purchased under this Warrant
shall bear a legend as follows, unless such Securities have been registered
under the Securities Act of 1933, as amended ("Act"):
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"The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended ("Act") or applicable state law. The
securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the Act or applicable
state securities laws, or pursuant to an opinion of counsel satisfactory to
the Company stating that an exemption from such registration is available for
such sale and transfer."
2.3 Exercise Right.
2.3.1 Exercise in Full. The Holder of this Warrant may exercise it in
full by surrendering this Warrant, with the form of subscription at the end
hereof duly executed by such Holder, to the Company at its principal office.
The surrendered Warrant shall be accompanied by payment: in cash, by wire
transfer or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of Common
Stock subject to this Warrant by the Exercise Price.
2.3.2 Partial Exercise. This Warrant may be exercised in part
by surrender of this Warrant in the manner and at the place provided in this
Section 2.3 for the amount obtained by multiplying (a) the number of shares
of Common Stock the Holder of this Warrant chooses to purchase as shall be
designated by the Holder in the subscription at the end hereof by (b) the
Exercise Price. On any such partial exercise, subject to the provisions of
Section 2 hereof, the Company at its expense will forthwith issue and deliver
to or upon the order of the Holder hereof a new Warrant or Warrants of like
tenor, in the name of the Holder hereof or as such Holder may request,
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock remaining subject to this Warrant after the exercise
contemplated herein.
2.3.3 Company Acknowledgment. The Company will, at the time of the
exercise, exchange or transfer this Warrant, upon the request of the Holder
hereof acknowledge in writing its continuing obligation to afford to such
Holder or transferee any rights to which such Holder or transferee shall
continue to be entitled after such exercise, exchange or transfer in accordance
with the provisions of this Warrant, provided that if the Holder of this
Warrant shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder or transferee
any such rights.
2.3.4 Delivery of Stock Certificates, Etc., on Exercise. As soon
as practicable after the exercise of this Warrant in full or in part, and in
any event within 10 days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the Holder hereof, or as such Holder (upon payment
by such Holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and non-assessable Shares to which
such Holder shall be entitled on such exercise, and any fractional Share to
which such Holder would otherwise be entitled shall be eliminated pursuant to
Section 6.3.
2.3.5 Nothing contained herein shall be construed to confer upon the
Holder any of the rights of a shareholder of the Company until after such
Warrant is exercised.
3. Transfer.
3.1 Restrictions Imposed by the Securities Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until
(i) the Company has received the opinion of counsel for the Holder that such
securities may be transferred pursuant to an exemption from registration under
the Act, and applicable state law, the availability of which is established to
the reasonable satisfaction of the Company, or (ii) a registration statement
relating to such Securities has been filed by the Company and declared
effective by the Securities and Exchange Commission ("SEC") and compliance
with applicable state law.
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4. New Warrants to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3
hereof, this Warrant may be exercised or assigned in whole or in. In the
event of the exercise or assignment hereof in part only part surrender of
this Warrant for cancellation, together with the duly executed exercise or
assignment form and funds sufficient to pay any Exercise Price and/or transfer
tax, the Company shall cause to be delivered to the Holder without charge a
new Warrant of like tenor to this Warrant in the name of the Holder evidencing
the right of the Holder to purchase the aggregate number of shares of Common
Stock and Warrants purchasable hereunder as to which this Warrant has not been
exercised or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant and of
reasonably satisfactory indemnification as required by the Company's transfer
agent, the Company shall execute and deliver a new Warrant of like tenor and
date. Any such new Warrant executed and delivered as a result of such loss,
theft, mutilation or destruction shall constitute a substitute contractual
obligation on the part of the Company.
5. Registration Rights.
The Holders of this Warrant are hereby granted piggy-back registration
rights. The shares of common stock underlying this Warrant shall be registered
by the Company with the Securities and Exchange Commission on a Form SB-2 as
soon as practicable from the date hereof. The Holders shall be entitled to
exercise such registration rights prior to the Exercise Date defined above.
6. Adjustments
6.1 Adjustments
If the Company shall pay a dividend in shares of its Common Shares, subdivide
(split) its outstanding shares of Common Stock, combine (reverse split) its
outstanding shares of Common Stock, issue by reclassification of its shares of
Common Stock any shares or other securities of the Company, or distribute to
holders of its Common Stock any securities of the Company or of another entity,
the number of shares of Common Stock or other securities the Holder hereof is
entitled to purchase pursuant to this Warrant immediately prior thereto shall
be adjusted so that the Holder shall be entitled to receive upon exercise the
number of shares of Common Stock or other securities which he or she would have
owned or would have been entitled to receive after the happening of any of the
events described above had this Warrant been exercised immediately prior to the
happening of such event, and the exercise price per share shall be
correspondingly adjusted.
An adjustment made pursuant to this Section 6 shall become effective
immediately after the record date in the case of the stock dividend or other
distribution and shall become effective immediately after the effective date
in the case of a subdivision, combination or reclassification.
The Holder of this Warrant shall be entitled to participate in any subscription
or other rights offering made to holders of the Company's Common Stock to the
extent he or she would have been entitled had this Warrant been exercised in
the full number of shares as to which this Warrant remains unexercised
immediately prior to the record date for such rights offering. If the Company
is consolidated or merged with or into another corporation or if all or
substantially all of its assets are conveyed to another corporation this
Warrant shall thereafter be exercisable for the purchase of the kind and
number of shares of stock or other securities or property, if any, receivable
upon such consolidation, merger or conveyance by a holder of the number of
shares of Common Stock of the Company which could have been purchased on the
exercise of this Warrant immediately prior to such consolidation, merger or
conveyance; and, in any such case, appropriate adjustment (as reasonably
determined by the Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and interests thereafter
of the Holder of this Warrant to the end that the provisions set forth herein
(including provisions with respect to changes in and other adjustments of the
number of shares of Common Stock the Holder of this Warrant is entitled to
purchase) shall thereafter by applicable, as nearly as possible, in relation
to any shares of Common Stock or other securities or other property thereafter
deliverable upon the exercise of this Warrant.
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6.2 Changes in Form of Warrant. This form of Warrant need not be changed
because of any change pursuant to this Section, and Warrants issued after such
change may state the same Exercise Price and the same number of shares of
Common Stock and Warrants as are stated in the Warrants initially issued
pursuant to this Agreement. The acceptance by any Holder of the issuance of
new Warrants reflecting a required or permissive change shall not be deemed to
waive any rights to a prior adjustment or the computation thereof.
6.3 Fractional Interests. The Company shall not be required to issue
certificates representing fractions of shares of Common Stock upon the exercise
of this Warrant.
7. Reservation and Listing. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder.
As long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon exercise of the
Warrants to be listed (subject to official notice of issuance) on all securities
exchanges (or, if applicable on Nasdaq) on which the Common Stock is then listed
and/or quoted.
8. Certain Notice Requirements.
8.1 Holder's Right to Receive Notice. Nothing herein shall be construed as
conferring upon the Holder the right to vote or consent or to receive notice as
a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any
time prior to the expiration of the Warrants and their exercise, any of the
events described in Section 8.2 shall occur, then, in one or more of said
events, the Company shall give written notice of such event at least fifteen
days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such
dividend, distribution, conversion or exchange of securities or subscription
rights, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of the
closing of the transfer books, as the case may be.
8.2 Events Requiring Notice.
A. The Company shall be required to give the notice described in this
Section 8 upon one or more of the following events: (i) if the Company shall
take a record of the holders of its shares of Common Stock for the purpose of
entitling them to receive a dividend or distribution, or (ii) the Company shall
offer to all the holders of its Common Stock any additional shares of capital
stock of the Company or securities convertible into or exchangeable for shares
of capital stock of the Company, or any option, right or warrant to subscribe
therefor, or (iii) a merger or reorganization in which the Company is not the
surviving party, or (iv) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business shall be
proposed.
8.3 Notice of Change in Exercise Price. Upon request of the Holder, the
Company shall, promptly after an event requiring a change in the Exercise
Price pursuant to Section 6 hereof, send notice to the Holder of such event and
change ("Price Notice"). The Price Notice shall describe the event causing the
change and the method of calculating same and shall be certified as being true
and accurate by the Company's President and Chief Financial Officer.
8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on
the books of the Company, or (ii) if to the Company, to its principal executive
office.
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9. Miscellaneous.
9.1 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.
9.2 Entire Agreement. This Warrant (together with the other agreements and
documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings
of the parties, oral and written, with respect to the subject matter hereof.
9.3 Binding Effect. This Warrant shall inure solely to the benefit of and
shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Warrant or any provisions herein contained.
9.4 Governing Law; Submission to Jurisdiction. This Warrant shall be governed
by and construed and enforced in accordance with the law of the State of Ohio,
without giving effect to conflict of laws. The Company hereby agrees that any
action, proceeding or claim against it arising out of, or relating in any way
to this Warrant shall be brought and enforced in the courts of the State of
Ohio. Any process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
8 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim. The Company
agrees that the prevailing party(ies) in any such action shall be entitled to
recover from the other party(ies) all of its reasonable expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
9.5 Waiver, Etc. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of
any breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer as of the 1st day of December, 2000.
PICK-UPS PLUS, INC.
By:______________________________________
John Fitzgerald, President
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<PAGE>
Form to be used to exercise Warrant:
EXERCISE NOTICE
Pick-Ups Plus, Inc.
Attention: John Fitzgerald
5181 Natorp Boulevard
Mason, OH 45040
Date: _____________________, 20__
The undersigned hereby elects irrevocably to exercise the within Warrant and to
purchase shares of Common Stock of Pick Ups Plus, Inc.
and hereby makes payment of $____________ (at the rate of $.15 (fifteen cents)
per share of Common Stock) in payment of the Exercise Price pursuant thereto.
Please issue the Common Stock as to which this Warrant is exercised in
accordance with the instructions given below.
______________________________________
Signature
Payment is hereby made in:
______ cash
______ check or money order
______ wire transfer
Form to be used to assign Warrant:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the within
Warrant):
FOR VALUE RECEIVED, ________________________________ does hereby sell, assign
and transfer unto _________________________________ the right to purchase
_____________________ shares of Common Stock of Pick Ups Plus, Inc. ("Company")
evidenced by the within Warrant and does hereby authorize the Company to
transfer such right on the books of the Company.
Dated:____________________, _____
_____________________________________________
Signature
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</TABLE>
