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) DECEMBER 29, 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.)
15170 NORTH HAYDEN ROAD, SUITE 5, SCOTTSDALE, ARIZONA 85260
(Address of principal executive offices) (Zip Code)
(480) 556-6701
Registrant's telephone number, including area code
8135 EAST BUTHERUS, SUITE 3, SCOTTSDALE, ARIZONA 85260
(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
As of December 29, 2000, the registrant sold its interest in the
following subsidiaries to Automotive Disposition Management Services,
Inc., an Arizona corporation ("ADM"):
o Auto Network Group of New Mexico, Inc., a New Mexico corporation
o Auto Network Group Northwest, Inc., an Oregon corporation
o Auto Group Management, L.C., a Texas limited liability company
o Auto Group of San Antonio Ltd., a Texas limited partnership
In return, the registrant received a 16% interest in ADM. ADM is a
private company owned by Jules Gollins, the manager of Auto Network
Group of New Mexico, Inc., and by Mark Moldenhauer, one of the founders
and a former officer and director of the registrant.
In addition, promissory notes for $1,200,000 owed to the registrant by
the above-listed subsidiaries, have been assigned to Pinnacle Financial
Corporation, a private company owned by Mr. Moldenhauer. Pinnacle
Financial Corporation has in turn reduced the outstanding principal
balance of the registrant's promissory note to Pinnacle by $1,200,000
and extended the principal installment, originally due December 31,
2000, to January 30, 2001.
This transaction effectively disposes of the registrant's land-based
operations in Albuquerque, New Mexico; San Antonio, Texas; and Bend,
Oregon. The registrant also intends to wind down its land-based
operations in Scottsdale, Arizona, thereby discontinuing all land-based
operations and allowing it to focus on providing automotive remarketing
services via the Internet. Management of the registrant believes that
this change will improve the registrant's prospects for profitability.
While the land-based operations generated a substantial amount of
revenue, the gross profit margins were low and insufficient to cover
operating expenses relating to the land-based operations. These
operating expenses consisted primarily of selling commissions, interest
expenses (for financing inventory and accounts receivable), bad debt
expense, and office overhead. In addition, the land-based operations
were capital intensive. Cash received from the discontinuance of these
operations should allow the company to retire all of its debt and
utilize the excess, if any, in its Internet operations.
In contrast, Internet operations generate a lesser amount of revenue
with high gross-profit margins. Initially, Internet operations will not
cover operating expenses, and the Company will operate at a cash flow
deficit. This deficit partially will be financed by funds, if any, made
available from the discontinuance of its land-based operations, and
partially from additional Capital in the form of equity or debt or both
raised in a private placement. In the event such Capital is not raised,
the Company's Internet operations will be severely limited. Such
limitation may adversely affect shareholder value.
The registrant expects to record a loss of approximately $650,000 from
the ADM transaction, of which over $250,000 will result from the
write-off of the balance of unamortized goodwill that was originally
recorded at the time of acquisition of these various land-based
operations. Further, the registrant intends to ascribe a nominal value
to its 16% interest in ADM, since its actual value is indeterminable at
this time.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not Applicable.
2
<PAGE>
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: Not applicable.
(b) Pro forma financial information: To be filed by amendment.
(c) Exhibits:
<TABLE>
<CAPTION>
REGULATION PAGE
S-K NUMBER DOCUMENT NUMBER
<S> <C> <C>
2.1 Stock for Stock Agreement with Automotive Disposition Management
Services, Inc. dated December 29, 2000 5
10.1 Extension and Exchange Agreement with Pinnacle Financial
Corporation dated December 29, 2000 16
</TABLE>
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
3
<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.
January 15, 2001 By: /s/ ROGER L. BUTTERWICK
--------------------------------------
Roger L. Butterwick, President
4
