SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MARCH 1, 2000
AUTOTRADECENTER.COM INC.
(Exact name of registrant as specified in its charter)
ARIZONA 333-78659 86-0879572
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
8135 EAST BUTHERUS, SUITE 3, SCOTTSDALE, ARIZONA 85260
(Address of principal executive offices) (Zip Code)
(480) 951-8040
Registrant's telephone number, including area code
NOT APPLICABLE
(Former name or former address, if changed since last report)
Exhibit index on consecutive page 2
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 1, 2000, the registrant acquired NDSCo.com, Inc., a Utah
corporation engaged in providing technology for the automotive
industry. A total of 1,100,000 restricted shares of the registrant's
common stock were issued to the former shareholders of NDSCo.com, Inc.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not Applicable.
ITEM 5. OTHER EVENTS
Not Applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired: Filed herewith.
(b) Pro forma financial information: Filed herewith.
(c) Exhibits:
<TABLE>
<CAPTION>
<S> <C> <C>
REGULATION CONSECUTIVE
S-K NUMBER DOCUMENT PAGE NUMBER
10.1 Agreement and Plan of Reorganization
dated March 1, 2000 21
</TABLE>
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AUTOTRADECENTER.COM INC.
October 10, 2000 By: /s/ ROGER L. BUTTERWICK
-------------------------------------
Roger L. Butterwick, President
3
<PAGE>
NDSCO.COM, INC.
(A Development Stage Company)
Financial Statements
December 31, 1999
4
<PAGE>
Joseph B. Glass CPA, PC
Certified Public Accountant
3939 South Wasatch Boulevard (Suite #2)
Salt Lake City, Utah 84124
Tel. 801-414-3325 Fax 801-273-7852
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
NDSCo.Com,Inc.
I have audited the balance sheet of NDSCo.Com,Inc. as of December 31, 1999 and
the related statements of operations, stockholders' equity and cash flows for
the period from inception (October 22, 1999) to December 31, 1999. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NDSCo.Com,Inc. as of December 31,
1999 and the results of its operations and its cash flows for the initial period
then ended in conformity with generally accepted accounting principles.
/S/JOSEPH B. GLASS CPA, PC
Joseph B. Glass CPA, PC
Salt Lake City, Utah
February 22, 2000
5
<PAGE>
<TABLE>
<CAPTION>
NDSCo.Com, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 1999
ASSETS
<S> <C>
Current Assets
Cash and cash equivalents $ 1,253
Note Receivable from Shareholder (note 5) 10,116
Deposits 165
----------
Total Current Assets 11,534
Property and Equipment:
Computer Equipment 438,250
Less Accumulated Depreciation and amortization (25,639)
----------
Net Property and Equipment 412,611
Equipment under capital lease obligations less accumulated amortization
of $1,082 (note 4) 84,665
Software development costs 293,884
Deposits 4,500
Deferred income taxes (note 3) -
----------
$ 807,194
==========
</TABLE>
See accompanying notes to the financial statements
6
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current Liabilities:
Current installments of obligations under capital lease (note 4) $ 40,650
Accounts payable 145,544
Accrued liabilities 35,627
Due to stockholder (note 5) 61,370
----------
Total Current Liabilities 283,191
Obligations under capital lease, excluding current installments (note 4) 36,467
----------
Total liabilities 319,658
Commitments and contingent liabilities (notes 2,4 and 6) -
Stockholders' equity:
Common Stock, $.001 par value. Authorized 20,000,000 shares;
issued and outstanding 2,897,712 shares (note 6) 2,898
Additional paid-in capital 804,073
Deficit accumulated during the development stage (319,435)
----------
Total stockholders' equity 487,536
----------
$ 807,194
==========
</TABLE>
7
<PAGE>
NDSCo.Com, Inc.
(A Development Stage Company)
Statement of Operations
For the period from inception (October 22, 1999) to December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Revenues $ -
Operating expenses:
Leased employee expense 181,825
Payroll taxes and employee benefits 30,305
Travel expenses 9,944
Telephone and internet expenses 5,666
Rent (note 4) 38,668
Office expenses 2,547
Legal and professional fees 20,553
Depreciation expense 26,721
----------
Total operating expenses 316,229
----------
Operating loss (316,229)
Net interest expense (note 4) (3,206)
----------
Net loss before income taxes (319,435)
Income tax expense (note 3) -
----------
Net loss $(319,435)
==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
NDSCo.Com, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
For the period from inception (October 22, 1999) to December 31, 1999
<TABLE>
<CAPTION>
Deficit
accumulated
Additional during the Total
Number paid-in development Stockholders'
of Shares Amount capital stage Equity
--------- ------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances at October 22, 1999 - $ - $ - $ - $ -
Shares issued under pre-incorporation
agreement (note 6). 2,000,000 2,000 554,971 - 556,971
Proceeds from shares issued under
pre-incorporation agreement (note 6). 897,712 898 249,102 - 250,000
Net loss for the period from inception
(October 22, 1999) to December 31, 1999 - - - (319,435) (319,435)
--------- ------ -------- ---------- ----------
Balances at December 31, 1999 2,897,712 $2,898 $804,073 $(319,435) $ 487,536
========= ====== ======== ========== ==========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
NDSCo.Com, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the period from inception (October 22, 1999) to December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net Loss $(319,435)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 26,721
Net change in current assets and liabilities:
Deposits (165)
Accounts payable 145,544
Accrued liabilities 35,511
----------
Net cash used in operating activities (111,824)
Cash flows from investing activities:
Purchase of equipment (12,250)
Software development costs (170,384)
Loan to Stockholder (10,000)
----------
Net cash used in investing activities (192,634)
Cash flows from financing activities:
Proceeds from the sale of stock 250,000
Proceeds from stockholder advance 61,370
Repayments of obligations under capital leases (5,659)
----------
Net cash provided by financing activities 305,711
----------
Net increase in cash and cash equivalents 1,253
Cash and cash equivalents at the beginning of the period -
----------
Cash and cash equivalents at the end of the year $ 1,253
==========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
NDSCo.Com, Inc.
(A Development Stage Company)
Statement of Cash Flows (continued)
For the period from inception (October 22, 1999) to December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Cash paid during the period from inception (October 22, 1999)
to December 31, 1999 for:
Interest $ 1,723
Income taxes $ -
Supplemental disclosures of noncash investing and financing activities (note 6):
On October 22, 1999, the Company issued 2,000,000 shares of its $0.0001
par value common stock for various assets and liabilities. The stock was
valued at $0.2785 per share. In conjunction with this transaction net
assets and liabilities were assumed or transferred as follows:
Computer Equipment $ 426,000
Furniture under capital lease obligation 41,967
Display booth under capital lease obligation 43,780
Capitalized software 128,000
Capital lease obligations (82,776)
Stock issued (556,971)
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
NDSCO.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
For the period from inception (October 22, 1999) to
December 31, 1999
(1) DESCRIPTION OF BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
a. DESCRIPTION OF BUSINESS OPERATIONS
NDSCo.Com, Inc. (the Company), based in Salt Lake City, Utah, is a
pioneering provider of e-business products and solutions that use
web-based technologies to achieve business-to-business objectives in
the automobile industry. The Company utilizes a network of auto buying
web sites that empower auto dealerships to research, finance, and
purchase vehicles online. The Company also provides manufacturers the
ability to list vehicles for sale to dealers in all parts of the
country almost instantly from their own lots.
b. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments with an
original maturity to the Company of less than ninety days.
c. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and
amortization are provided for in amounts sufficient to relate the cost
of depreciable assets to operations over their estimated service
lives.
The estimated lives used in determining depreciation and amortization
are:
<TABLE>
<CAPTION>
<S> <C>
Computer equipment 3 years
Furniture and display booths 5-7 years
</TABLE>
Equipment under capital leases are amortized over the lives of the
respective leases or, for those leases which substantially transfer
ownership, over the service lives of the assets. Amortization expense
for capital leases is included with depreciation and amortization
expense.
The straight-line method of depreciation and amortization is followed
for substantially all assets for financial reporting purposes. Certain
assets are depreciated under accelerated methods for tax purposes.
12
<PAGE>
NDSCO.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
For the period from inception (October 22, 1999) to
December 31, 1999
d. INTANGIBLE ASSETS
All research and development costs incurred by the Company in the
development of computer software are charged to expense until
technological feasibility of the software is established. After
technological feasibility has been established, software development
costs are capitalized until the software is available for general
release. Software development costs are recorded at the lower of its
un-amortized historical cost or its estimated net realizable value.
Software development costs are amortized on a product by product basis
using the straight-line method over their estimated useful lives of
three to five years. There was no amortization of software development
costs for the period ending December 31, 1999.
On an ongoing basis, management reviews the valuation and amortization
of software development costs to determine possible impairment by
comparing the carrying value to the discounted estimated future cash
flows of the related business.
e. INCOME TAXES
The Company accounts for income taxes under the asset and liability
method, under which deferred taxes are determined based on the
difference between the financial statement and the tax basis of the
assets and liabilities using enacted tax rates in effect in the years
in which the deferred tax assets or liabilities are expected to be
paid or recovered. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date. A valuation allowance related to deferred
tax assets is recorded when it is more likely than not that such tax
benefits will not be realized.
f. ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities
13
<PAGE>
NDSCO.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
For the period from inception (October 22, 1999) to
December 31, 1999
and disclosure of contingent assets and liabilities at the date of the
financial statement and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(2) LIQUIDITY
The Company is a "Development Stage Company", beginning business in a
competitive market. During the period from inception (October 22, 1999) to
December 31, 1999 the Company incurred at net loss of $312,093 and used
cash from operating activities of $111,824. Management has implemented
plans that it believes will return the Company to profitable operations and
positive cash flows. In the opinion of management, the continued
implementation of these plans will permit the Company to meet its operating
and debt cash requirements, at least through the next fiscal year; however,
the Company is subject to uncertainties over which management has limited
control, any one of which could adversely affect the Company's operating
cash flows, and thus create cash flow problems for the Company.
(3) INCOME TAXES
Net loss from operations before income taxes and related income tax expense
for the period from inceptions (October 22, 1999) to December 31, 1999 was
as follows:
<TABLE>
<CAPTION>
<S> <C>
Net loss from continuing operations
before income taxes $312,093
Current:
Federal $ -
State -
Deferred:
Federal -
State -
--------
Total $ -
========
</TABLE>
14
<PAGE>
NDSCO.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
For the period from inception (October 22, 1999) to
December 31, 1999
Differences between income taxes attributable to continuing operations at
the statutory federal income tax rates and the Company's effective tax rate
of 34% are as follows:
<TABLE>
<CAPTION>
<S> <C>
Tax at federal statutory rate $(106,112)
State income taxes, net of federal
tax benefit (12,484)
Valuation allowance 118,596
----------
Total $ -
==========
Effective income tax rate 00.0%
</TABLE>
Components of deferred income tax assets and liabilities at December 31,
1999 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax asset:
Net loss from operations $ 118,596
Less valuation allowance (118,596)
----------
Net deferred tax asset $ -
==========
</TABLE>
The company has net operating loss carry-forwards of approximately $312,000
for income tax purposes, which expire in 2019. In assessing the
realizability of deferred tax assets, management considers whether it is
more likely than not that the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and
tax planning strategies in making this assessment. In order to fully
realize the deferred tax assets, the Company will need to generate future
taxable income of approximately $312,000 prior to the expiration of the net
operating loss carry-forwards in 2019. Due to the uncertainty of the
ultimate realization of the deferred tax assets, the Company has recorded a
valuation allowance against these assets of $118,596 at December 31, 1999.
15
<PAGE>
NDSCO.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
For the period from inception (October 22, 1999) to
December 31, 1999
(4) LEASING ARRANGEMENTS
The Company leases all of its office facilities under a non-cancelable
operating lease. The lease is with a company controlled by an officer and
director of the Company. The Company also leases certain of its property
and equipment under capital leases.Future minimum lease payments under
capital and non-cancelable operating leases as of December 31, 1999, are as
follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
<S> <C> <C>
Year ending December 31,
2000 $ 57,238 $51,285
2001 19,222 3,773
2002 15,766 -
2003 11,824 -
2004 - -
Thereafter - -
-------- -------
Total minimum lease payments $104,050 55,058
Less amounts representing
estimated executory costs 6,052
Less amounts representing
interest 20,881
--------
Present value of net minimum
capital lease payments 77,117
Less current installments of
obligations under capital lease 40,650
--------
Present value of net minimum
lease payments $ 36,467
========
</TABLE>
Total rent expense under operating leases in 1999 was $38,668, of which
$33,247 was under a lease with a company controlled by an officer and
director of the Company.
16
<PAGE>
NDSCO.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
For the period from inception (October 22, 1999) to
December 31, 1999
(5) RELATED PARTY TRANSACTIONS
An 8.0% unsecured loan in the amount of $10,000 was made to a shareholder
and director in November 1999. The note carries a default interest rate of
10.0% and is due in January 2000.
The Company was advanced $61,370 from a shareholder and director during the
period ending December 31, 1999. The advance carries no interest rate and
is due on demand.
(6) COMMON STOCK
On October 22, 1999 the Company issued 897,712 shares of its $.001 par
value common stock for $250,000 cash ($0.2785 per share).
On October 22, 1999 the Company issued 2,000,000 shares of its $.001 par
value (valued at $556,971, based on a value of $0.2785 per share) to JK
Technologies, Inc. for computer equipment, furniture, computer software,
and lease obligations. Values were assigned to the various assets and
liabilities based on their fair market values. The transaction has been
accounted for using the purchase method of accounting.
As of December 31, 1999, 2,000,000 of the issued and outstanding shares,
were being held in an escrow account. Of those shares, 750,000 are to be
delivered to the shareholder on January 22, 2000, 500,000 are to be
delivered to the shareholder on October 22, 2000, and 750,000 shares are to
be delivered to the shareholder on October 22, 2001. The escrow agreement
allows the Company, at its option, to repurchase any of the shares
remaining in the escrow account, if certain officers and directors are
terminated by the Company for any reason prior to October 22, 2001, at a
purchase price of $.2875 per share
On October 22, 1999 the Company has issued options to a shareholder and director
to purchase 350,000 shares of common stock at a purchase price of $1.00 per
share, an option to purchase 433,139 shares at a purchase price of $1.50, and an
option to purchase 319,149 shares at a purchase price of $2.35 per share. The
shares are exercisable on or before January 15, 2000, on or March 15, 2000, and
on or before June 30, 2000, respectively.
17
<PAGE>
NDSCO.COM, INC.
(A Development Stage Company)
Notes to Financial Statements
For the period from inception (October 22, 1999) to
December 31, 1999
(7) SUBSEQUENT EVENT
On February 16, 2000, the Company signed a letter of intent to exchange all
of its issued and outstanding stock for 1,175,000 shares of the common
stock of an unrelated company. The agreement has a scheduled closing date
of March 1, 2000.
18
<PAGE>
AutoTradeCenter.com, Inc.
Pro forma Income Statement
For the Year Ended March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
AutoTradeCenter.com, NDSCo. Annualize Pro Forma Pro Forma
Inc. 3/31/00 12/31/00 NCSCo. Adjustments Results
<S> <C> <C> <C> <C> <C>
Net sales $ 131,861,292 - - - 131,861,292
Cost of sales 125,770,135 - - - 125,770,135
-------------- ---------- ------------ ---------- --------------
Gross profit 6,091,157 - - - 6,091,157
-------------- ---------- ------------ ---------- --------------
Operating expenses:
Selling 4,084,987 - - - 4,084,987
General and administrative 2,397,342 289,508 1,505,442 - 4,192,292
Depreciation and amortization 358,228 26,721 138,949 186,919 710,817
-------------- ---------- ------------ ---------- --------------
Total operating expenses 6,840,557 316,229 1,644,391 186,919 8,988,096
-------------- ---------- ------------ ---------- --------------
Loss from operations (749,400) (316,229) (1,644,391) (186,919) (2,896,939)
-------------- ---------- ------------ ---------- --------------
Other income (expense):
Miscellaneous 102,133 - - - 102,133
Bad debt expense (1,045,970) - - - (1,045,970)
Interest expense-related party (768,121) - - - (768,121)
Interest expense (182,429) (3,206) (16,671) - (202,306)
-------------- ---------- ------------ ---------- --------------
Total other income (expense) - net (1,894,387) (3,206) (16,671) - (1,914,264)
-------------- ---------- ------------ ---------- --------------
Loss before income taxes (2,643,787) (319,435) (1,661,062) - (4,624,284)
Income tax benefit (expense) 56,034 - - - 56,034
-------------- ---------- ------------ ---------- --------------
Net loss $ (2,587,753) $(319,435) $(1,661,062) (186,919) (4,755,169)
============== ========== ============ ========== ==============
Basic earnings (loss) per share $ (0.12) (0.21)
============== ==============
Diluted earnings (loss) per share $ (0.12) (0.21)
============== ==============
Weighted average shares outstanding for:
Basic earnings per share 21,638,671 22,647,004
============== ==============
Diluted earnings per share 21,638,671 22,647,004
============== ==============
</TABLE>
19
<PAGE>
AutoTradeCenter.com, Inc.
Noters to the Pro Forma Income Statement
For the Year Ended March 31, 2000
Note 1. Description of the Transaction
As of March 1, 2000, AutoTradeCenter.com, Inc. (the Company) acquired NDSCo.com
(NDSCo.), a Utah Corporation by issuing to the shareholders of NDSCo. a total of
1,100,000 restricted shares of stock.
Note 2. Pro Forma Presentation
The Pro Forma presentation shows the estimated results of operations for the
year ended March 31, 2000, had the entities been combined as of April 1, 1999.
As NDSCo. was formed as a corporation on October 22, 1999, the Pro Forma
presentation annualizes the income statement, taking into account income and
expense amounts had the Company been in existence on April 1, 1999. The
presentation does not include the effects of any increase in sales that may have
resulted in the combination. The only Pro Forma adjustment made as a result of
the combination is to add the amortization of goodwill acquired and amortized
over ten years. No income tax benefit has been added as a valuation allowance
has been recorded for the deferred tax asset relating to the loss carry
forwards.
20
