CARSUNLIMITED.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
1. NATURE OF OPERATIONS
CARSUNLIMITED.COM, INC. (The Company) was formed in Nevada on March 7, 2000.
The Company is a development stage company with limited operations and revenues
and only nominal assets. Its intended purpose is to offer users the ability to
search a database that contains products and information about the Automobile
Industry, new and used car sales (classified ads), as well as automotive
products such as extended warranty information and anti-theft body part marking.
The Company has adopted December 31 as its year end.
As the Company develops its website, its operations are currently limited to
marketing various lease products directly through automobile dealers. The
Company arranges for the dealer to market the products to their automotive
customers and collect the costs and fees. The Company receives commissions from
the third party administrators.
The Company is a development stage company with limited operations and revenues
and only nominal assets. The company's ability to commence its intended
operations is based on the successful placement of 1,500,000 units at a price of
$0.10 per unit, each unit consisting of 1 share of common stock valued at $0.10
per share, and, an option to purchase 3 warrants exercisable at $0.30 per
warrant. The Private Placement Memorandum (PPM) is being offered without
registration under the exemption from registration afforded by Section 4(2) of
the Securities Act 0f 1933.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
which affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues an expenses during the
reporting period. Actual results could differ from those estimates.
COMMISSIONS RECEIVABLE
Commissions receivable represent the Company's commissions for sales of
automotive products (extended warranties, GAP insurance and other lease
products) through automobile dealers (dealers). These dealers have agreed to
market the Company's automotive products directly to their customers and to
collect the fees and costs. The Company is responsible for servicing the dealer
and transmitting the checks to a third party administrator. No provision for
uncollectibles has been recorded as the Company believes none is necessary.
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ADVERTISING AND INTERNET MARKETING
In May, the Company entered into a celebrity endorsement agreement wherein the
celebrity has agreed to serve as a Company spokesperson and to endorse the
Company's products and services. The Company has expensed the full cost
($25,000) of the agreement. The celebrity was compensated in cash ($5,000) and
the fair value ($0.10 per share or $20,000) of the stock offered to him at par
value. The $25,000 has been included in advertising and Internet marketing in
the statement of operations.
EQUIPMENT AND FURNITURE
Equipment and furniture is stated at cost. Depreciation is recorded on a
straight-line basis over the estimated useful lives of 5 years.
WEBSITE
Website development consists of fees and costs in designing the Company's
website. The cost of this development has been expensed and is included in
start-up expenses. Maintenance costs will be charged to expense as incurred.
COSTS ASSOCIATED WITH RAISING CAPITAL
The Company has recorded the fees paid to consultants, attorney, and other
professionals for assistance in raising funds as a charge to the statement of
operations. These fees and costs were paid primarily in common stock recorded
at its fair value of $0.10 per share as determined by management.
COMMON STOCK
The Company offered 389,000 shares at $0.10 per share through a promissory note
wherein the Company received the proceeds of the notes and in return agreed to
issue the shares upon the note holder completing a subscription agreement from
the PPM. Through June 30, 2000, the Company collected $38,900 in cash.
The Company intends to raise $1,500,000 by offering 1,500,000 units at a price
of $0.10 per unit, each unit consisting of one share of common stock valued at
$0.10 per share and an option to purchase three warrants exercisable at $0.30
per warrant. The Private Placement Offering (PPM) is being offered without
registration under the Securities Act of 1933 or under the securities laws of
any state. Through June 30, 2000, the Company raised $150,000 in the first
round of financing and expects to have the warrants exercised at $0.30 per
warrant in the coming year.
The Company has issued 3,170,000 shares of its common stock for services and has
valued all of the issuances at fair value of $0.10 per share as determined by
management for a total of $317,000. Of this total, $140,000 was for the
services of officers and directors, $20,000 for advertising under the celebrity
endorsement agreement, and $152,000 for fees associated with raising equity and
$5,000 in computer services.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Substantially all of the Company's assets and liabilities are carried at fair
value or contracted amounts which approximate fair value.
(LOSS) PER COMMON SHARE
Net (loss) per common share is based on the weighted average of common shares
outstanding during the period.
INCOME TAXES
The Company has a net operating loss (NOL) carryforward of $202,743 expiring in
2020. No tax benefit has been reported in the financial statements because the
potential tax benefit of the net operating loss carryforwards are completely
offset by a valuation allowance of the same amount because of the uncertainty of
the Company realizing future taxable income. Deferred taxes on the differences
between book and tax accounting are immaterial.
3. GOING CONCERN
The Company is a development stage company with limited operations, no
substantial, continuing source of revenues and only nominal assets. The
Company's intended operations will require substantial capital and until
revenues are sufficient to fund ongoing operations, the Company will be highly
dependent on external sources of financing. The Company has no internal sources
of liquidity and does not expect to generate any positive cash flows in the
immediate future. These conditions raise substantial doubt about its ability to
continue as a going concern.
The Company has begun to raise $1,500,000 through a Private Placement Memorandum
(PPM) as discussed above.
Although the Company believes that it can successfully complete the PPM there
can be no assurance that it will do so or even if completed it will be
sufficient to permit the Company to implement its intended operations.
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4. OFFICE LEASE
The Company has signed a 3-year lease for office space commencing April 1, 2000
through March 31, 2000. Monthly rentals for the first year are $14,400 and
$16,800 per year in the remaining 2 years.
