PROSPECTUS Filed pursuant to Rule 424(b)(3)
Registration No. 333-51660
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 6.
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 26, 2000
<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
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Page
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Disclosure Regarding Forward Looking Statements. . . . . . . . . . 10
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . 11
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Security Ownership Of Certain Beneficial Owners and Management . . 21
Certain Relationships and Related Transactions . . . . . . . . . . 21
Selling Securityholders. . . . . . . . . . . . . . . . . . . . . . 22
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 24
Description of Securities. . . . . . . . . . . . . . . . . . . . . 26
Where You Can Find Additional Information. . . . . . . . . . . . . 28
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Index to Financial Statements. . . . . . . . . . . . . . . . . . . F-1
</TABLE>
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3
<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.
4
<PAGE>
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.
5
<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.
6
<PAGE>
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.
7
<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.
8
<PAGE>
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.
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.
9
<PAGE>
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.
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.
10
<PAGE>
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>
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.
11
<PAGE>
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.
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.
12
<PAGE>
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.
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.
13
<PAGE>
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.
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.
14
<PAGE>
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.
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.
15
<PAGE>
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.
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.
16
<PAGE>
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.
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.
17
<PAGE>
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>
18
<PAGE>
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.
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.
19
<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.
20
<PAGE>
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 52.0%
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.
(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.
21
<PAGE>
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.
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 LLP
14601 Bellaire
Boulevard # 338
Houston, TX 77083
Insights and
Opinions, Inc.(8) 810,000 810,000 7.5% (*)
10122 Holly Springs
Houston, TX 77042
22
<PAGE>
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 LLP 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 316,666(3) 316,666(3) 2.9% (*)
LP LLP
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
(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.
23
<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.
24
<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.
25
<PAGE>
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.
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.
26
<PAGE>
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.
27
<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.
28
<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>
<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 26, 2000
No dealer, salesman or other person is authorized to give any
information or make any information or make any representations not
contained in this Prospectus with respect to the offering made hereby.
This Prospectus does not constitute an offer to sell any of the securities
offered hereby in any jurisdiction where, or to any person to whom it is
unlawful to make such an offer. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the information set forth
herein or in the business of our company since the date hereof.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Disclosure Regarding Forward Looking Statements. . . . . . . . . . 10
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . 11
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Security Ownership Of Certain Beneficial Owners and Management . . 21
Certain Relationships and Related Transactions . . . . . . . . . . 21
Selling Securityholders. . . . . . . . . . . . . . . . . . . . . . 22
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 24
Description of Securities. . . . . . . . . . . . . . . . . . . . . 26
Where You Can Find Additional Information. . . . . . . . . . . . . 28
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Index to Financial Statements. . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE>
