UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT TO THE 1934
ACT REPORTING REQUIREMENTS
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission File No. 000-27549
NOSTALGIA MOTORCARS, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0362112
(State of organization) (I.R.S. Employer Identification No.)
4502 E. Karen Drive, Phoenix, AZ 85032
(Address of principal executive offices)
Registrant's telephone number, including area code (602) 404-3557
Check whether the issuer (1) filed all reports required to be
file by Section 13 or 15(d) of the Exchange Act during the past
12 months and (2) has been subject to such filing requirements
for the past 90 days. Yes X
There are 5,500,000 shares of common stock outstanding as of
September 30, 2000.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Audited financial statements as of September 30, 2000, and for
the nine-month periods then ended.
TABLE OF CONTENTS
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PAGE
ACCOUNTANT'S LETTER 1
BALANCE SHEET - ASSETS 2
BALANCE SHEET - LIABILITIES AND STOCKHOLDERS' EQUITY 3
STATEMENT OF OPERATIONS 4-5
STATEMENT OF STOCKHOLDERS' EQUITY 6
STATEMENT OF CASH FLOWS 7-8
NOTES TO FINANCIAL STATEMENTS 9-12
</TABLE>
INDEPENDENT AUDITORS' REPORT
Board of Directors November 22, 2000
NOSTALGIA MOTORCARS, INC.
Phoenix, Arizona
I have audited the accompanying Balance Sheet of NOSTALGIA
MOTORCARS, INC. (A Development Stage Company), as of September
30, 2000, and December 31, 1999, and the related statement of
stockholders' equity for September 30, 2000, and December 31,
1999, and statements of operations and cash flows for the three
months ended September 30, 2000, and September 30, 1999, for the
nine months ended September 30, 2000, and September 30, 1999, and
the two years ended December 31, 1999, and December 31, 1998, and
the period December 21, 1992,(inception), to September 30, 2000.
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 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. 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 NOSTALGIA MOTORCARS, INC. (A Development Stage Company), as
of September 30, 2000, and December 31, 1999, and the related
statement of stockholders' equity for September 30, 2000, and
December 31, 1999, and statements of operations and cash flows
for the three months ended September 30, 2000, and September 30,
1999, for the nine months ended September 30, 2000, and September
30, 1999, and the two years ended December 31, 1999, and December
31, 1998, and the period December 21, 1992, (inception), to
September 30, 2000, in conformity with generally accepted
accounting principles.
The accompanying Financial Statements have been prepared
assuming the Company will continue as a going concern. As
discussed in Note #5 to the financial statements, the Company has
had no operations and has no established source of revenue. This
raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is
described in Note #5. These financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
/s/ Barry L. Friedman
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
NOSTALGIA MOTORCARS, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
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9 Mos. Ending Year Ended
Sep. 30, 2000 Dec. 31, 1999
CURRENT ASSETS
Cash $ 310 $ 25,954
----------- -----------
TOTAL CURRENT ASSETS $ 310 $ 25,954
----------- -----------
FIXED ASSETS
Automobile (Net) $ 7,417 $ 8,900
Equipment (Net) 4,903 6,771
----------- -----------
TOTAL FIXED ASSETS $ 12,320 $ 15,671
----------- -----------
OTHER ASSETS
Research & Development $ 16,920 $ 16,920
Deposits 47,426 47,426
----------- -----------
TOTAL OTHER ASSETS $ 64,346 $ 64,346
----------- -----------
TOTAL ASSETS $ 76,976 $ 105,971
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial
statements
- 2 -
NOSTALGIA MOTORCARS, INC.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
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9 Mos. Ending Year Ended
Sep. 30, 2000 Dec. 31, 1999
CURRENT LIABILITIES
Accounts Payable $ 8,327 $ 22,750
Accrued Interest Payable 8,054 0
Convertible Notes Payable (Note #9) 100,000 0
Officers Loans (Note #5) 300,000 300,000
Officers Advances (Note #5) 15,612 $ 14,195
---------- ----------
TOTAL CURRENT LIABILITIES $ 431,993 $ 336,945
---------- ----------
STOCKHOLDERS EQUITY (Note #4)
Common stock, $.001 par value
authorized 50,000,000 shares
issued and outstanding at
December 31, 1999 - 5,000,000 shares $ 5,000
September 30, 2000 - 5,500,000 shares $ 5,500
Additional Paid-in Capital 202,500 0
Accumulated loss during
the development stage -563,017 -235,974
---------- ----------
TOTAL STOCKHOLDERS' EQUITY $ -355,017 $ -230,974
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 76,976 $ 105,971
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial
statements
- 3 -
NOSTALGIA MOTORCARS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
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3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Sep. 30, 2000 Sep. 30, 1999 Sep. 30, 2000 Sep. 30, 1999
REVENUE $ 0 $ 0 $ 0 $ 0
---------- ----------- ------------ ------------
EXPENSES
General and
Administrative $ 1,109 $ 101,360 $ 315,638 $ 153,914
Amortization 0 0 0 0
Depreciation 1,117 635 3,351 635
---------- ----------- ------------ ------------
TOTAL EXPENSES $ 2,226 $ 101,995 $ 318,989 $ 154,549
---------- ----------- ------------ ------------
Net Profit/Loss (-)
from Operations $ -2,226 $ -101,995 $ -318,989 $ -154,549
---------- ----------- ------------ ------------
Interest Expense $ -3,125 $ 0 $ -8,054 $ 0
---------- ----------- ------------ ------------
Net Loss $ -5,351 $ -101,995 $ -327,043 $ -154,549
---------- ----------- ------------ ------------
Net Loss per share -
Basic and diluted
(Note #2) $ -.0010 $ -.0204 $ -.0618 $ -.0309
---------- ----------- ------------ ------------
Weighted average
number of common
shares outstanding 5,500,000 5,000,000 5,288,321 5,000,000
</TABLE>
The accompanying notes are an integral part of these financial statements
- 4 -
NOSTALGIA MOTORCARS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS (Continued)
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Nov.23, 1993
Year Ended Year Ended (INCEPTION) to
Dec. 31, 1999 Dec, 31, 1998 Sep. 30, 2000
REVENUE $ 0 $ 0 $ 0
---------- --------- ----------
EXPENSES
General and
Administrative $ 227,339 $ 1,496 $ -549,727
Amortization 0 0 195
Depreciation 1,690 0 5,041
---------- --------- ----------
TOTAL EXPENSES $ 229,029 $ 1,496 $ 554,963
---------- --------- ----------
Net Profit/Loss (-)
from Operations $ -229,029 $ -1,496 $ -554,963
Interest Expense 0 0 -8,054
---------- --------- ----------
Net Loss $ -229,029 $ -1,496 $ -563,017
---------- --------- ----------
Net Loss per share -
Basic and diluted
(Note #2) $ -.0458 $ -.0003 $ -.1119
Weighted average ---------- --------- ----------
number of common
shares outstanding 5,000,000 5,000,000 5,013,638
---------- --------- ----------
</TABLE>
The accompanying notes are an integral part of these financial
statements
- 5 -
NOSTALGIA MOTORCARS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
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Additional Accumu-
Common Stock Paid-In lated
Shares Amount Capital Deficit
Balance,
December 31, 1998 5,000,000 $ 5,000 $ 0 $ -6,945
Net loss, Year Ended
December 31, 1999 -229,029
----------
Balance,
December 31, 1999 5,000,000 $ 5,000 $ 0 $ -235,974
April 26, 2000
Issued For Services 500,000 +500 +202,500 0
Net Loss
January 1, 2000, to
September 30, 2000 -327,043
----------
Balance,
September 30, 2000 5,500,000 $ 5,500 $ 202,500 $ -563,017
---------- --------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial
statements
- 6 -
NOSTALGIA MOTORCARS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
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3 Mos. Ended 3 Mos. Ended 9 Mos. Ended 9 Mos. Ended
Sep. 30, 2000 Sep. 30, 1999 Sep. 30, 2000 Sep. 30, 1999
Cash Flow from
Operating Activities
Net Loss $ -5,351 $ -101,995 $ -327,043 $ -154,549
Adjustment to reconcile
net loss to net cash
provided by operating
activities
Amortization 0 0 0 0
Depreciation +1,117 +635 +3,351 +635
Issued For Services 0 0 +203,000 0
Increase in Current Assets
Organization Costs 0 0 0 0
Research and Development 0 0 0 0
Deposits 0 -40,000 0 -40,000
Automobile 0 -7,473 0 -7,473
Computer 0 0 0 -9,888
Increase in Current Liabilities
Convertible Notes Payable 0 0 +100,000 0
Accrued Interest Payable +3,125 0 +8,054 0
Accounts Payable 0 -12,250 -14,423 +22,750
Officer's Loan 0 0 0 +300,000
Officers' Advances +1,400 +12,250 +1,417 +12,250
---------- ----------- ---------- -----------
Net cash used in
operating Activities $ +291 $ -148,833 $ -25,644 $ +123,725
Cash Flows from
Investing Activities 0 0 0 0
Cash Flows from
Financing Activities
Issuance of Common
Stock for Cash 0 0 0 0
---------- ----------- ---------- -----------
Net increase (decrease) $ +291 $ -148,833 $ -25,644 $ +123,725
Cash, beginning
of period +19 272,558 25,954 0
---------- ----------- ---------- -----------
Cash,
end of period $ 310 $ 123,725 $ 310 $ 123,725
---------- ----------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
- 7 -
NOSTALGIA MOTORCARS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS (CONTINUED)
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Nov. 23,
1993
Year Ended Year Ended (INCEPTION)
to
Dec. 31, 1999 Dec, 31, 1998 Sep. 30,
2000
Cash Flow from
Operating Activities
Net Loss $ -229,029 $ -1,496 $ -563,017
Adjustment to reconcile
net loss to net cash
provided by operating
activities
Amortization 0 +36 +195
Depreciation +1,690 0 +5,041
Issued For Services 0 0 +203,000
Increase in Current Assets
Organization Costs 0 0 -195
Research and Development -16,920 0 -16,920
Deposits -47,426 0 -47,426
Automobile -7,473 0 -7,473
Computer -9,888 0 -9,888
Increase in Current
Liabilities
Convertible Notes Payable 0 0 +100,000
Accrued Interest Payable 0 0 +8,054
Accounts Payable +22,750 0 +8,327
Officer's Loan +300,000 0 +300,000
Officers' Advances +12,250 +1,460 +15,612
------------ ----------- ----------
Net cash used in
Operating Activities $ +25,954 $ 0 $ -4,690
Cash Flows from
Investing Activities 0 0 0
Cash Flows from
Financing Activities
Issuance of Common
Stock for cash 0 0 +5,000
------------ ----------- ----------
Net increase (decrease) $ +25,954 $ 0 $ 310
Cash, beginning
of period 0 0 0
------------ ----------- ----------
Cash,
end of period $ 25,954 $ 0 $ 310
------------ ----------- ----------
</TABLE>
The accompanying notes are an integral part of these financial
statements
- 8 -
NOSTALGIA MOTORCARS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000, and December 31, 1999
NOTE #1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized November 23, 1993, under the laws
of the State of Nevada as AMEXAN, INC. The Company currently
has no operations and, in accordance with SFAS #7, is
considered a development company. On June 1, 1998, the
Company changed its name to NOSTALGIA MOTORCARS, INC.
NOTE #2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual
method.
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
and disclosure of contingent assets and liabilities at
the date of the Financial Statements and the reported
amounts of revenue and expenses during the reporting
period. Actual results could differ from those
estimates.
Cash and equivalents
The Company maintains a cash balance in a non-interest-
bearing bank that currently does not exceed federally
insured limits. For the purpose of the statements of
cash flows, all highly liquid investments with the
maturity of three months or less are considered to be
cash equivalents. There are no cash equivalents as of
December 31, 1999, or September 30, 2000.
Income Taxes
Income taxes are provided for using the liability
method of accounting in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS #109)
"Accounting for Income Taxes". A deferred tax asset or
liability is recorded for all temporary difference
between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during
the year of deferred tax assets and liabilities.
- 9 -
NOSTALGIA MOTORCARS, INC.
(FORMERLY AMEXAN, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2000, and December 31, 1999
NOTE #2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reporting on Costs of Start-Up Activities
Statement of Position 98-5 ("SOP 98-5"), "Reporting on
the Costs of Start-Up Activities" which provides
guidance on the financial reporting of start-up costs
and organization costs. It requires most costs of start-
up activities and organization costs to be expensed as
incurred. With the adoption of SOP 98-5, there has been
little or no effect on the company's financial
statements.
Loss Per Share
Net loss per share is provided in accordance with
Statement of Financial Accounting Standards No. 128
(SFAS #128) "Earnings Per Share." Basic loss per share
is computed by dividing losses available to common
stockholders by the weighted average number of common
shares outstanding during the period. Diluted loss per
share reflects per share amounts that would have
resulted if dilative common stock equivalents had been
converted to common stock. As of September 30, 2000,
the Company had no dilative common stock equivalents
such as stock options.
Year End
The Company has selected December 31st as its year-end.
Depreciation
The Company is depreciating its fixed assets using the
straight-line method with various useful lives.
Year 2000 Disclosure
The Y2K issue has had no effect on this Company.
Policy In Regards to Issuance of Common Stock in a Non-Cash
Transaction
The company's accounting policy for issuing shares in a
non-cash transaction is to issue the equivalent amount of
stock equal to the fair market value of the assets or
services received.
- 10 -
NOSTALGIA MOTORCARS, INC.
(FORMERLY AMEXAN, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2000, and December 31, 1999
NOTE #3 - INCOME TAXES
There is no provision for income taxes for the period ended
September 30, 2000. The Company's total deferred tax asset
as of December 31, 1999 is as follows:
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Net operation loss carry forward $ 235,974
Valuation allowance $ 235,974
Net deferred tax asset $ 0
</TABLE>
The federal net operation loss carry forward will expire in
various amounts from 2013 to 2019.
This carry forward may be limited upon the consummation of a
business combination under IRC Section 381.
NOTE #4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the corporation consists of
50,000,000 shares with a par value of $0.001 per share.
Preferred Stock
The corporation has no preferred stock.
On November 30, 1993, the Company issued 5,000,000 shares of
its $0.001 par value common stock in consideration of $5,000
in cash.
On April 26, 2000 the Company issued 5,000,000 shares of its
$0.001 par value common stock in consideration of $203,000
for services or $0.406 per share.
NOTE #5 - GOING CONCERN
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a
going concern, which contemplates the realization of assets
and liquidation of liabilities in the normal course of
business. However, the Company does not have significant
cash or other material assets, nor does it have an
established source of revenues sufficient to cover its
operating costs and to allow it to continue as a going
concern. It is the intent of the Company to seek a merger
with an existing, operating company.
- 11 -
NOSTALGIA MOTORCARS, INC.
(FORMERLY AMEXAN, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2000, and December 31, 1999
NOTE #6 - RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in
other business activities and may, in the future, become
involved in other business opportunities. If a specific
business opportunity becomes available, such persons may
face a conflict in selecting between the Company and their
other business interests. The Company has not formulated a
policy for the resolution of such conflicts.
NOTE #7 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any
additional shares of common stock.
NOTE #8 - OFFICERS ADVANCES
While the Company is seeking additional capital through a
merger with an existing company, an officer of the Company
has advanced funds on behalf of the Company to pay for any
costs incurred by it. These funds are interest free.
NOTE #9 - CONVERTIBLE NOTES PAYABLE
The Company has issued five convertible notes payable
totaling $100,000.00. All five notes were issued on various
days during the first quarter of 2000. Each note carries
interest at the rate of 12-1/2%. Each note may be converted
to common shares not earlier than nine months from date of
issuance, up to one year. At the time of conversion, the
holder shall be entitled to receive one warrant for each
share of common stock so received.
- 12 -
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and
"forward-looking statements" as that term is defined in Section
27A of the Securities Act of 1933 as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"). All statements that are included in
this Registration Statement, other than statements of historical
fact, are forward-looking statements. Although Management
believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors
that could cause actual results to differ materially from the
expectations are disclosed in this Statement, including, without
limitation, those expectations reflected in forward-looking
statements contained in this Statement.
The following discussion should be read in conjunction with the
financial statements of the Registrant and notes thereto
contained elsewhere in this report.
Twelve Month Plan of Operation.
The vehicles that the Registrant intends to sell differ
significantly from Volkswagens "new style" bug introduced in
1998. The Registrant's vehicles are based on the rear engine, air
cooled, "old style" bugs last sold in the United States in 1979.
These new "old style" bugs, although basic in operation and
styling, remain faithful to the personality, charm and friendly
quirks of the bug best known by America.
The "old style" bug has remained in full production at
Volkswagen's state of the art automotive plant in Pueblo, Mexico,
and over the years Volkswagen has refined the car, producing a
first class fit, finish and overall quality never before offered
in a Bug. New upgrades such as Bosch fuel injection, front disc
brakes, three way catalytic converter, and a remote security
system have been added to ensure it keeps pace with the needs of
today's consumer. Despite this, however, the "old style" bug
remains unavailable for sale in the U.S., because it does not
meet current U.S. Department of Transportation ("DOT"), U.S.
Environmental Protection Agency ("EPA") and California Air
Resources Board ("CARB") standards.
Fortunately, current Federal laws permit the importation,
conversion and sale of virtually any automobile, provided that
the finished cars meet strict DOT and EPA standards and proper
licensing is secured. Accordingly, the Registrant intends to
purchase new Bugs directly from the Pueblo, Mexico VW factory (or
from several of the over 200 dealers in Mexico) and modify each
car so that it fully complies with U.S. safety and emission
standards, making them fully legal for sale in the U.S.
There are several ways for the Registrant to obtain the necessary
regulatory clearances for new Bug certification; however, the
Registrant has chosen to pursue what it believes to be the most
respected and credible license, known as a "small volume
manufacturer" ("SVM") license, If granted by the EPA, a SVM
license would permit the Registrant to modify and sell in the
U.S. up to 10,000 cars per, year.
The Registrant expects to sell the cars through direct sales to
automotive dealers, national wholesale car auctions and through
the Internet (on a site to be developed). Current management of
the Registrant will be initially responsible for securing such
sales. The Registrant expects to secure letters of credit from
contracted buyers, and proposes to borrow sufficient capital
through a revolving credit facility to finance the purchase,
modification and transportation of the cars on order. The
Registrant has not as yet secured such a credit facility.
To the Registrant's knowledge, there are currently no other
manufacturers or suppliers of new "old style" bugs in the U.S.;
however, there is direct competition by Volkswagen who sell a
"new style" bug, and indirect competition by numerous other
"economical" cars offered by established manufactures.
The Registrant proposes to offer "old style" bugs with a 2 year
limited, bumper to bumper warranty, which will be self
administered by the Registrant (made possible by the well
documented and proven reliability of the car over many years).
The Registrant expects that the Bugs will retail for
approximately $13,000. The purchase cost of each car from sources
in Mexico (as discussed below) will be approximately $6,500. The
cost of converting each vehicle, as set forth in the contract
with LPC of New York, Inc., will not exceed $1,600 per car for
the following structural modifications and the emissions
modifications necessary to meet all regulatory requirements
(including the cost of all parts):
(a) Bumper modifications
(b) O.B. II Computer System
(c) Emission Vapor Canister
(d) Required temperature and pressure sensors
(e) Modified speedometer
(f) Warning lights and buzzers for seat belts, parking brakes,
etc.
(g) Proper labeling
(h) Door beams
(i) Dual air bags
Other approximate costs will be $500 for shipping, $700 for
insurance reserves, and $700 for accessories. This will leave a
profit margin of approximately $3,000 per vehicle.
The Registrant expects to sell its cars through automobile
wholesalers, new car dealers, and the Internet. The Registrant
has not yet secured any sales or contracted specific
distributors.
The Registrant has undertaken the necessary steps to begin the
process of securing a SVM license and has contracted with a very
reputable vehicle certification laboratory, LPC of New York, Inc.
("LPC"), of Ronkonkoma, New York (see Exhibit 10.1, incorporated
by reference to the Form 10-SB, filed on December 8, 1999). LPC
is currently conducting the necessary testing and assessments to
determine the exact modifications necessary to ensure DOT and EPA
certification and a SVM license. Upon completion of all necessary
government licensing and the issuance of a SVM license, the
Registrant would be in a position to legally import new bugs from
Mexico, modify each car and retail them as new "classic bugs" in
the U.S. marketplace.
The LPC contract, which has an effective date of September 29,
1999, guarantees certification and a SVM license within 3 to 6
months and will cost $375,000,00 (this has been extended by the
parties to at least September 1, 2000 in order for the
certification to be completed). LPC has indicated that although
original crash tests on the VW Beetle are still available and
valid, updated crash tests will have to be conducted, which will
entail an additional cost to the Registrant under that contract
of up to $175,000. The Registrant has secured a total of $300,000
in invested capital from the two principals of the Registrant to
date (as evidenced by two Promissory Notes attached as Exhibits,
incorporated by reference to the amended Form 10-SB, filed on
December 8, 1999); these individuals have committed to
contributing up to an additional total of $250,000 to the capital
of the Registrant in order to complete the LPC contract and fund
initial operations of the Registrant.
The Registrant has no direct control over the testing and
licensing necessary to complete the certification and is
dependent on the successful completion of the testing and
modifications. Once completed, LPC and the Registrant will file
the appropriate documentation with DOT, EPA, and CARB; the
Registrant has been advised that the final approval process takes
approximately one month to complete (counted in the guaranteed
timeframe quoted by LPC). Once all tests are completed, then it
will be determined the exact modifications that will be needed
for the Bugs to be purchased.
The Registrant intends to purchase vehicles directly from the
Volkswagen manufacturing plant in Pueblo, Mexico and/or from
several of the more than 200 dealers throughout Mexico (there are
approximately 100,000 "old style" bugs manufactured and they are
primarily sold in Mexico per year). There are no contracts in
place with any supplier at this time. However, from the
production at this plant, as well as excess supply, it is the
opinion of management that there will be adequate supply of
automobiles for purchase by the Registrant. There is no license
or other agreement needed from Volkswagen in order for the
Registrant to buy and convert these automobiles for sale in the
U.S. once the SVM license is in place.
Once the car is purchased from Volkswagen, it will be converted
to meet DOT, EPA, and CARB standards. The Registrant intends to
subcontract out all modifications and certification work to a
qualified third party conversion facility. There are several such
facilities available and the Registrant to be contracted by the
Registrant. Although there is no firm agreement with any such
firm, the Registrant has contacted International Auto Processors,
based in Brunswick, Georgia, about converting the Registrant
purchased automobiles. This is a large and credible company which
has substantial experience with large volume conversion
facilities, which currently converts approximately 175,000
automobiles per year for such companies BMW and Ford Motor
Company. It is anticipated that a contract with this firm can be
concluded within thirty days from the time that the Registrant
advised this firm that cars are ready to be shipped.
Although the Registrant has no major customers, it believes that
will not be dependent on such. Sales are expected to be
geographically widespread and with many small orders.
Except for those outlined above, the Registrant is not aware of
any government regulations required or any probable governmental
regulation change which would have an adverse effect on the
Registrant.
Capital Expenditures.
No material capital expenditures were made during the quarter
ended on September 30, 2000.
Year 2000 Issue.
The Year 2000 issue arises because many computerized systems use
two digits rather than four to identify a year. Date sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using the year 2000 date is
processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something
other than a date. The effects of the Year 2000 issue may be
experienced after January 1, 2000, and if not addressed, the
impact on operations and financial reporting may range from minor
errors to significant system failure which could affect the
Registrant's ability to conduct normal business operations. This
creates potential risk for all companies, even if their own
computer systems are Year 2000 compliant. It is not possible to
be certain that all aspects of the Year 2000 issue affecting the
Registrant, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
The Registrant currently believes that its systems are Year 2000
compliant in all material respects. Although management is not
aware of any material operational issues or costs associated with
preparing its internal systems for the Year 2000, the Registrant
may experience serious unanticipated negative consequences (such
as significant downtime for one or more of its suppliers) or
material costs caused by undetected errors or defects in the
technology used in its internal systems. Furthermore, the
purchasing patterns of consumers may be affected by Year 2000
issues. The Registrant does not currently have any information
about the Year 2000 status of its potential material suppliers.
The Registrant's Year 2000 plans are based on management's best
estimates.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action has
been threatened by or against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No such matters were submitted during the most recent quarter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
EXHIBIT INDEX
Number Description
3.1 Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Form 10-SB/A filed on
December 8,
1999).
3.2 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.2 of the Form 10-
SB/A
filed on December 8, 1999).
3.3 Bylaws of the Registrant (incorporated by reference to
Exhibit 3.3 of the Form 10-SB/A filed on December 8, 1999).
10.1 Agreement to Provide Services for Certification between the
Registrant and LPC of New York, Inc., dated September 28,
1999
(incorporated by reference to Exhibit 10.1 of the Form 10-
SB/A
filed on December 8, 1999).
10.2 Promissory Note made by Brad Randolph in favor of the
Registrant, dated June 11, 1999 (incorporated by reference
to
Exhibit 10.2 of the Form 10-SB/A filed on December 8, 1999).
10.3 Promissory Note made by Anoop Pittalwala in favor of the
Registrant, dated June 11, 1999 (incorporated by reference
to
Exhibit 10.3 of the Form 10-SB/A filed on December 8, 1999).
23 Consent of Certified Public Accountant
27 Financial Data Schedule (see below).
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Nostalgia Motorcars, Inc.
By: /s/ Brad Randolph
Brad Randolph, President
Date: November 28, 2000
