U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-28255
PICK-UPS PLUS, INC.
(Exact name of small business issuer as specified in its charter)
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Delaware 31-12440524
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(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
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5181 Natorp Blvd, Suite 530, Mason, Ohio 45040
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(Address of Principal Executive Offices)
(513) 398-4344
Issuer's Telephone Number
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No .
There were 7,458,100 shares of the registrant's common stock outstanding as
of September 30, 2000.
Transitional Small Business Disclosure Format Yes ___ No _X_ -
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PICK-UPS PLUS, INC.
- INDEX -
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Page(s)
PART I:
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Item 1 - Financial Information
Condensed Balance Sheets - September 30, 2000 (unaudited)
and December 31, 1999 3
Condensed Statements of Operations - Three and Nine months Ended
September 30, 2000 and 1999 (unaudited) 4
Condensed Statements of Cash Flows - Nine months Ended
September 30, 2000 and 1999 (unaudited) 5
Notes to Interim Condensed Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
PART II Other Information 10
SIGNATURES 11
EXHIBITS:
Exhibit 27 - Financial Data Schedule
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PART I. Financial Information
ITEM 1. Financial Statements
PICK-UPS PLUS, INC.
CONDENSED BALANCE SHEETS
- ASSETS -
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September 30, 2000 December 31,
(unaudited) 1999
CURRENT ASSETS:
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Cash $ 7,715 $ 11,188
Accounts receivable - net of allowance for doubtful accounts of $10,398 and
$3,344 for 2000 and 1999, respectively 17,227 7,052
Inventories 96,808 33,156
Prepaid expenses and other current assets 3,474 2,800
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TOTAL CURRENT ASSETS 125,224 54,196
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FIXED ASSETS - NET 120,453 25,365
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OTHER ASSETS:
Costs in excess of assets acquired - net 284,843 -
Franchise development costs - net 6,300 12,600
Other assets 51,905 1,905
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343,048 14,505
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$ 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
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TOTAL CURRENT LIABILITIES 825,362 198,607
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NON-CURRENT LIABILITIES:
Loans payable 108,056 22,812
Capitalized leases 33,114 4,623
Loans payable - officer 56,393 24,781
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197,563 52,216
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Preferred stock, $1 par value; 5,000,000 shares authorized; none issued - -
Common stock, $.001 par value; 50,000,000 shares authorized, 7,458,100 and 6,758,100
shares issued and attending for 2000 and 1999, respectively 7,458 6,758
Additional paid-in capital 433,282 197,728
Accumulated deficit (874,940) (361,243)
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(434,200) (156,757)
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$ 588,725 $ 94,066
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PICK-UPS PLUS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
REVENUES:
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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
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498,946 213,337 1,074,270 750,696
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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) --
Interest expense ........................... 11,070 -- 23,627 --
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703,755 314,039 1,587,967 923,894
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LOSS BEFORE PROVISION (CREDIT) FOR INCOME TAXES . (204,809) (100,702) (513,697) (173,198)
Provision (credit) for income taxes ........ -- -- -- --
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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
=========== =========== =========== ============
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PICK-UPS PLUS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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Nine Months
Ended September 30,
2000 1999
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
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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
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Net cash (utilized) by operating activities ................................ (289,115) (137,583)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................................................ (9,481) --
Security deposits ............................................................... (50,000) --
Payment re: assets acquired ..................................................... (140,427) --
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Net cash (utilized) by investing activities ................................ (199,908) --
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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
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Net cash provided by financing activities .................................. 485,550 101,610
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NET (DECREASE) IN CASH EQUIVALENTS .................................................. (3,473) (35,973)
Cash and cash equivalents, beginning of year .................................... 11,188 37,113
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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 ...................................................................... -- --
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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.
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.
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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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Introduction:
Pick-Ups Plus, Inc., formed in 1993, is a franchisor,
wholesaler, retailer and installer of accessories for trucks
and sports utility vehicles. We currently have 8 franchised
stores which are located in 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.
The financial information presented herein is derived from
the: (i) Condensed Balance Sheets as of September 30, 2000 and
December 31, 1999; (ii) Condensed Statements of Operations for
the three and nine month periods ended September 30, 2000 and
1999 and (iii) Condensed Statements of Cash Flows for the nine
month periods ended September 30, 2000 and 1999.
RESULTS OF OPERATIONS:
Revenues for the three and nine month periods ended September
30, 2000 consist primarily of net sales generated by the
retail stores. Revenues are also derived from initial
franchise fees and continuing royalty fees. Total revenues for
the three and nine month periods ended September 30, 2000
increased by 134% and 43%, respectively when compared to the
same periods of the previous year.
Costs of sales, as a percentage of retail sales was 59% and
82% for the three month periods ended September 30, 2000 and
1999, respectively. Costs of sales, as a percentage of retail
sales was 65% and 73% for the nine month periods ended
September 30, 2000 and 1999, respectively.
Selling, general and administrative expenses increased by
$240,000 and $531,000 when comparing the three and nine month
periods ended September 30, 2000 to the comparable periods in
1999, 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, Inc. 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 were acquired in May 2000 and
August 2000, respectively.
The Company was also able to recover royalties receivable,
which were written off in prior years, aggregating $70,578.
This recovery was the result of the acquisition of the
operations of the Kentucky store which was consummated on May
1, 2000. See Note 4 to Notes to Interim Condensed Financial
Statements.
Interest expense of $11,000 and $23,600 for the three and nine
month periods ended September 30, 2000 is a result of the
borrowings under the bank credit lines as well as the result
of equipment purchased and financed through loans as opposed
to zero interest costs in the prior year.
As a result of the above, the Company reflected net losses of
$204,809 ($.03 per share) and $513,697 ($.07 per share) for
the three and nine month periods ended September 30, 2000,
respectively compared to net losses of $100,702 ($.01 per
share) and $173,198 ($.03 per share) for the three and nine
month periods ended September 30, 1999, respectively.
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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.
The Company used $289,000 in cash to support operating needs
in 2000 as compared to $138,000 in 1999 and used $200,000 in
2000 for 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, 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 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, 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.
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.
The Company is 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 the Company's products, the competitive
environment within the automotive aftermarket industry, the
ability of the Company to continue to expand its operations,
the level of costs incurred in connection with the Company's
expansion efforts, economic conditions and the financial
strength of the Company's customers and suppliers. Investors
are directed to consider other risks and uncertainties
discussed in documents filed by the Company with the
Securities and Exchange Commission.
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PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
None
Item 2. - Changes in Securities and Use of Proceeds
None
Item 3. - Defaults Upon Senior Securities
N/A
Item 4. - Submission of Matters to a Vote of Security Holders
None
Item 5. - Other Information
None
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused the Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 2000 Pick-Ups Plus, Inc.
By: /s/ John Fitzgerald
President and Principal
Accounting Officer
