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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-28255
PICK-UPS PLUS, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 31-12440524
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
5181 Natorp Blvd, Suite 530, Mason, Ohio 45040
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(Address of Principal Executive Offices)
(513) 398-4344
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Issuer's Telephone Number
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ].
There were 6,908,100 shares of the registrant's common stock
outstanding as of June 30, 2000.
Transitional Small Business Disclosure Format Yes [ ] No [X]
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PICK-UPS PLUS, INC.
- INDEX -
<TABLE>
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Page(s)
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PART I:
Item 1 - Financial Information
Condensed Balance Sheets - June 30, 2000 (unaudited) and December 31, 1999 3
Condensed Statements of Operations - Three and Six months Ended June 30, 2000
and 1999 (unaudited) 4
Condensed Statements of Cash Flows - Six months Ended June 30,
2000 and 1999 (unaudited) 5
Notes to Interim Condensed Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations 7
PART II: Other Information 11
SIGNATURES 12
EXHIBITS:
Exhibit 27 - Financial Data Schedule
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PICK-UPS PLUS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, December 31,
2000 1999
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(unaudited)
<S> <C> <C>
- ASSETS -
CURRENT ASSETS:
Cash $ 8,612 $ 11,188
Accounts receivable - net of allowance for doubtful accounts of $10,398 and
$3,344 for 2000 and 1999, respectively 13,230 7,052
Inventories 70,021 33,156
Prepaid expenses and other current assets 2,800 2,800
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TOTAL CURRENT ASSETS 94,663 54,196
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FIXED ASSETS - NET 83,805 25,365
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OTHER ASSETS:
Costs in excess of assets acquired - net 210,925 --
Franchise development costs - net 8,400 12,600
Other assets 56,905 1,905
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276,230 14,505
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$ 454,698 $ 94,066
========= =========
- LIABILITIES AND SHAREHOLDERS' DEFICIT -
CURRENT LIABILITIES:
Bank credit lines payable $ 288,100 $ 93,100
Accounts payable 183,909 58,940
Accrued expenses 42,600 13,375
Loans payable - current 127,207 28,221
Capitalized lease payable - current 11,343 4,971
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TOTAL CURRENT LIABILITIES 653,159 198,607
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NON-CURRENT LIABILITIES:
Loans payable 21,137 22,812
Capitalized leases 18,212 4,623
Loans payable - officer 24,781 24,781
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64,130 52,216
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Preferred stock, $1 par value; 5,000,000 shares authorized; none issued -- --
Common stock, $.001 par value; 50,000,000 shares authorized, 6,908,100 and
6,758,100 shares issued for 2000 and 1999, respectively 6,908 6,758
Additional paid-in capital 400,632 197,728
Accumulated deficit (670,131) (361,243)
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(262,591) (156,757)
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$ 454,698 $ 94,066
========= =========
</TABLE>
See accompanying notes.
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PICK-UPS PLUS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES:
Retail sales $ 337,753 $ 266,607 $ 534,118 $ 472,578
Royalties 11,446 24,026 36,206 39,781
Initial franchise fees 5,000 25,000 5,000 25,000
----------- ----------- ----------- -----------
354,199 315,633 575,324 537,359
----------- ----------- ----------- -----------
COSTS AND EXPENSES (INCOME):
Cost of sales 224,484 198,201 371,754 329,529
Selling, general and administrative expenses 385,884 141,870 570,479 280,326
Other income -- -- (70,578) --
Interest expense 7,476 -- 12,557 --
----------- ----------- ----------- -----------
617,844 340,071 884,212 609,855
----------- ----------- ----------- -----------
LOSS BEFORE PROVISION (CREDIT) FOR INCOME TAXES (263,645) (24,438) (308,888) (72,496)
Provision (credit) for income taxes -- -- -- --
----------- ----------- ----------- -----------
NET LOSS $ (263,645) $ (24,438) $ (308,888) $ (72,496)
=========== =========== =========== ===========
BASIC LOSS PER COMMON SHARE $ (.04) $ -- $ (.05) $ (.01)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,907,767 6,608,436 6,844,489 6,609,046
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
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PICK-UPS PLUS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
Six Months
Ended June 30,
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2000 1999
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(308,888) $ (72,496)
Adjustments to reconcile net loss to net cash (utilized) by operating
activities:
Depreciation and amortization 15,552 2,675
Bad debt provision 7,054 --
Imputed interest on shareholder loan 1,054 --
Changes in assets and liabilities:
(Increase) in accounts receivable (13,232) (2,893)
(Increase) in inventory (36,865) (6,804)
Increase in accounts payable 124,969 5,859
Increase (decrease) in accrued expenses 29,225 (940)
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NET CASH (UTILIZED) BY OPERATING ACTIVITIES (181,131) (74,599)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (43,675) (550)
Security deposits (55,000) --
Payment re: assets acquired (90,000) --
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NET CASH (UTILIZED) BY INVESTING ACTIVITIES (188,675) (550)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt 195,000 48,518
Principal payments of long-term debt (27,189) --
Payments of capitalized leases (2,581) --
Proceeds from sale of equity units 202,000 11,100
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NET CASH PROVIDED BY FINANCING ACTIVITIES 367,230 59,618
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NET (DECREASE) IN CASH EQUIVALENTS (2,576) (15,531)
Cash and cash equivalents, beginning of year 11,188 37,113
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,612 $ 21,582
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
(i) Cash paid during the period:
Interest $ 10,120 $ --
Taxes -- --
</TABLE>
See accompanying notes.
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PICK-UPS PLUS, INC.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
JUNE 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 two 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 June 30, 2000 and the results of its operations for the
three and six month periods ended June 30, 2000 and 1999 and its cash
flows for the six month periods ended June 30, 2000 and 1999.
The results of operations for the three and six month periods ended
June 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 two Company owned retail stores.
Management is undergoing discussions with outside parties to rectify
this situation. The Company may determine, depending on the
opportunities available to it, to seek additional equity or debt
financing to fund the cost of its operations. There can be no assurance
that additional financing will be available to the Company on
commercially reasonable terms, or at all. In the event that the Company
is unable to raise additional funds, the Company could be required to
either substantially reduce or terminate its operations.
NOTE 2 - CAPITAL STOCK AND EQUIVALENTS:
During the period ended June 30, 2000, the Company received $202,000 in
net proceeds and issued 150,000 shares of common stock as of result of
the exercise of common stock purchase warrants.
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 June 30, 2000, borrowings under
this new line aggregated $195,000. The Company also has $93,100
outstanding with another bank under a previous line of credit
agreement.
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PICK-UPS PLUS, INC.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
JUNE 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 an additional $30,000 as of June 30,
2000. The remaining cash portion of the purchase price ($85,000) is due
in monthly installments through December 2000.
Costs in excess of the assets acquired of $214,500 is being amortized
on the straight line basis over ten (10) years.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION:
Pick-Ups Plus, Inc., formed in 1993, is a franchisor, wholesaler,
retailer and installer of accessories for trucks and sports utility
vehicles. We currently have 8 franchised stores which are located in
Indiana, Iowa, Oregon, Pennsylvania, Idaho and California and two
Company-owned stores in Ohio (acquired on September 30, 1998, as the
prototype store) and Kentucky (acquired in May 2000 - see Note 4 of
Notes to Interim Condensed Financial Statements). These acquisitions
were recorded under the purchase method of accounting.
The financial information presented herein includes: (i) Condensed
Balance Sheets as of June 30, 2000 and December 31, 1999; (ii)
Condensed Statements of Operations for the three and six month periods
ended June 30, 2000 and 1999 and (iii) Condensed Statements of Cash
Flows for the six month periods ended March 31, 2000 and 1999.
RESULTS OF OPERATIONS:
Revenues for the three and six month periods ended June 30, 2000
consist primarily of net sales generated by the retail stores. Revenues
are also derived from initial franchise fees and continuing royalty
fees. Total revenues for the three and six month periods ended June 30,
2000 increased by 12% and 7%, respectively when compared to the same
periods of the previous year.
Costs of sales, as a percentage of retail sales was 66% and 74% for the
three month periods ended June 30, 2000 and 1999, respectively. Costs
of sales, as a percentage of retail sales was 70% for each of the six
month periods ended June 30, 2000 and 1999.
Selling, general and administrative expenses increased by $244,000 and
$290,000 when comparing the three and six month periods ended June 30,
2000 to the comparable periods in 1999, primarily due to the following:
(i) the continuation in 2000 of an aggressive advertising program to
help accelerate the name recognition of Pick-Ups Plus, Inc. as well as
the franchise opportunity which resulted in increased expenses as
discussed above; (ii) increase in professional fees due primarily to
expenses relating to the preparation for an initial public offering of
our common stock and (iii) additional overhead expenses associated with
the new store in Kentucky which was acquired in May 2000.
The Company was also able to recover royalties receivable, which were
written off in prior years, aggregating $70,578. This recovery was the
result of the acquisition of the operations of the Kentucky store which
was consummated on May 1, 2000. See Note 4 to Notes to Interim
Condensed Financial Statements.
Interest expense of $7,400 and $12,600 for the three and six month
periods ended June 30, 2000 is a result of the borrowings under the
bank credit lines as well as the result of equipment purchased and
financed through loans as opposed to zero interest costs in the prior
year.
As a result of the above, the Company reflected net losses of $263,645
($.04 per share) and $308,888 ($.05 per share) for the three and six
month periods ended June 30, 2000, respectively compared to net losses
of $24,438 ($.00 per share) and $72,496 ($.01 per share) for the three
and six month periods ended June 30, 1999, respectively.
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LIQUIDITY AND CAPITAL RESOURCES:
As of June 30, 2000, current liabilities exceeded current assets by
approximately $558,000. As of December 31, 1999, current liabilities
exceeded current assets by approximately $144,000.
The Company used $181,000 in cash to support operating needs in 2000 as
compared to $75,000 in 1999. This use of cash was offset by the
proceeds from the sale of common stock purchase warrants in 2000 and
borrowings under our credit lines with two banks.
On May 1, 2000, the Company completed the acquisition of the assets of
a franchisee. The purchase price of $286,942, was offset by royalties
owed to the Company which are being recovered from this franchisee,
aggregating $73,042, (including $70,578 from prior years). The
remaining balance of $213,900 is payable in cash of $175,000 and 19,450
shares of Company common stock valued at $2.00 per share. The Company
paid $60,000 at the time of closing and an additional $30,000 as of
June 30, 2000. The remaining cash portion of the purchase price
($85,000) is due in monthly installments through December 2000.
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 two Company owned retail stores.
Management is undergoing discussions with outside parties to rectify
this situation. The Company may determine, depending on the
opportunities available to it, to seek additional equity or debt
financing to fund the cost of its operations. There can be no assurance
that additional financing will be available to the Company on
commercially reasonable terms, or at all. In the event that the Company
is unable to raise additional funds, the Company could be required to
either substantially reduce or terminate its operations.
The Company is not aware of any material trend, event or capital
commitment which would potentially adversely affect liquidity.
RISKS ASSOCIATED WITH YEAR 2000 PROBLEM:
Computer systems and software used by many companies were required to
be upgraded to accept four digit entries to distinguish 21st century
dates from 20th century dates. Like most other companies using
computers in their operations, we ensured that our operations were not
adversely impacted by software or system failures related to the Year
2000 problem. We reviewed our internal computer and related information
and operational systems to ensure Year 2000 compliance and have
experienced no consequences due to untimely resolution of the Year 2000
problem. However, even if our internal systems were not materially
affected by the Year 2000 problem, our business, financial condition
and results of operations could be materially adversely affected if the
businesses with which we interact are disrupted by Year 2000 problems.
We have discussed this matter with those businesses upon which we are
most dependent and have been assured that no material disruptions were
experienced.
OTHER:
Except for historical information contained herein, the matters set
forth above are forward-looking statements that involve certain risks
and uncertainties that could cause actual results to differ from those
in the forward-looking statements. Potential risks and uncertainties
include such factors as the level of business and consumer spending,
the amount of sales of the Company's products, the competitive
environment within the automotive aftermarket industry, the ability of
the Company to
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continue to expand its operations, the level of costs incurred in
connection with the Company's expansion efforts, economic conditions
and the financial strength of the Company's customers and suppliers.
Investors are directed to consider other risks and uncertainties
discussed in documents filed by the Company with the Securities and
Exchange Commission.
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PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
None
Item 2. - Changes in Securities and Use of Proceeds
None
Item 3. - Defaults Upon Senior Securities
N/A
Item 4. - Submission of Matters to a Vote of Security Holders
None
Item 5. - Other Information
None
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused the Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 14, 2000 Pick-Ups Plus, Inc.
By: /s/ John Fitzgerald
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President and Principal
Accounting Officer
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