SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO 13 OR 15(D)
OF THE SECURITES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1998
Commission file number 0-15216
AUTOCORP EQUITIES, INC.
Exact name of registrant as specified in its charter
NEVADA 87-0522501
(State of Incorporation) (I.R.S. Employer ID#)
2980 E. Northern Ave Suite B1
Phoenix, Arizona 85028
(Address of principal office & Zip Code)
(602) 482-5737
(Registrants telephone number including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities and Exchange act of 1934 during the preceding 12 months
and (2) has been subject to such filing requirements for the past 90 days.
Yes _____ No ___x___
Common Stock, $.001 par value 4,656,018
- ----------------------------- ---------
(Title of class) (Number of shares
outstanding 3/31/98)
<PAGE>
Item 1. Financial Statements
AutoCorp Equities, Inc.
Consolidated Balance Sheet
(Unaudited)
as of March 31, 1998 and June 30, 1997
Assets 3/31/98 6/30/97
Cash (16,913) 391,278
Accounts Receivable 467,959 1,064,399
Inventory 1,334,465 1,597,748
Prepaids 3,282
---------- ----------
Total Current Assets 1,788,793 3,053,425
---------- ----------
Property and Equipment 785,174 178,574
Prepaid Advertising 400,000
Long Term Note Receivable-Austin 3,550,000
Deposits 23,555 18,000
---------- ----------
Total Assets 6,547,522 3,249,999
========== ==========
Liabilities
Accounts Payable 806,664 549,280
Vehicle Flooring 980,079
Recourse Debt 473,814
Note Payable Guarantee 182,507
---------- ----------
Total Current Liabilities 2,443,064 549,280
Investor Notes Payable 2,495,335 3,025,974
Mortgage Payable 448,000
Austin Note Payable 3,550,000
---------- ----------
Total Liabilities 8,936,399 3,575,254
---------- ----------
Stockholders' Equity
Preferred Stock, authorized 10,000,000
shares, no shares issued -- --
Common Stock, authorized 110,000,000
shares, 4,656,018 and 4,331,000
shares outstanding at 3/31/98 and
6/30/97 respectfully, par value $.001 4,656 4,331
Paid in Capital 2,448,808 458,148
Stock Subscribed (12,000)
Retained Earnings (Loss) (4,830,341) (787,734)
---------- ----------
Total Stockholders' Equity (2,388,877) (325,255)
---------- ----------
Total Liabilities and Stockholders'
Equity 6,547,522 3,249,999
========== ==========
<PAGE>
AutoCorp Equities, Inc.
Consolidated Statement of Stockholders Equity
(Unaudited)
for the period from June 30, 1996 through March 31, 1998
<TABLE>
<CAPTION>
Common Stock Additional Stock Retained Total
Shares Amount Paid In Subscriptions Earnings Equity
Capital Receivable (Loss)
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996 4,331,000 4,331 458,148 (63,112) 399,367
Retained Earnings (Loss) (724,622) (724,622)
------------------------------------------------------------------------------------
Balance, June 30, 1997 4,331,000 4,331 458,148 -- (787,734) (325,255)
Reverse Acquisition 685,928 686 202,705 (12,000) 191,391
Autocorp Equities, Inc.
Issuance of Stock for Consulting 13,000 13 7,267 7,280
Issuance of Stock for Consulting 50,000 50 11,450 11,500
Retained Earnings (Loss) 6 mths (3,740,045) (3,740,045)
------------------------------------------------------------------------------------
Balance, December 31, 1997 5,079,928 5,080 679,570 (12,000) (4,527,779) (3,855,129)
Converstion of Debt to Equity 435,674 436 1,298,304 1,298,740
Transfer of Division to Former Officer (859,584) (860) 470,934 470,074
Retained Earnings 3 months 3/31/98 (302,562) (302,562)
------------------------------------------------------------------------------------
Balance March 31, 1998 4,656,018 4,656 2,448,808 (12,000) (4,830,341) (2,388,877)
====================================================================================
</TABLE>
<PAGE>
AutoCorp Equities, Inc.
Consolidated Statement of Operations
(Unaudited)
for the three months ended March 31, 1998 and 1997
and the nine months ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
3 mths 3 mths 9 mths 9 mths
ended ended ended ended
3/31/98 3/31/97 3/31/98 3/31/97
<S> <C> <C> <C> <C>
Sales Revenue 1,593,082 338,192 3,847,125 338,192
Service Revenue 356,894 28,316 494,237 102,961
---------------------------------------------------
Total Revenue 1,949,976 366,508 4,341,362 441,153
---------------------------------------------------
Costs of Goods Sold 1,537,045 477,631 4,572,336 477,631
---------------------------------------------------
Gross Profit 412,931 (111,123) (230,974) (36,478)
---------------------------------------------------
Expenses
Interest and Finance 84,074 -- 606,736
Advertising 23,989 -- 137,488
Consulting 47,568 119,001 245,053 251,256
Payroll and Taxes 428,123 35,062 1,090,803 35,062
Gen. and Adm 131,739 77,376 1,731,553 161,226
---------------------------------------------------
Total Expenses 715,493 231,439 3,811,633 447,544
---------------------------------------------------
Net Income (Loss) from
Operations (302,562) (342,562) (4,042,607) (484,022)
Provision for Income Taxes -- -- -- --
---------------------------------------------------
Net Income (Loss) (302,562) (342,562) (4,042,607) (484,022)
===================================================
Earnings per Common
Share (0.06) (0.08) (0.90) (0.11)
---------------------------------------------------
Weighted Average Number
of Shares Outstanding 4,867,973 4,331,000 4,493,509 4,331,000
---------------------------------------------------
</TABLE>
<PAGE>
AutoCorp Equities, Inc.
Consolidated Statement of Cash Flow
(Unaudited)
for the nine months ended March 31, 1998 and 1997
Cash from Operations 3/31/98 3/31/97
Net Income (Loss) (4,042,607) (476,454)
Net Change in Receivables 971,500 59,218
Net Change in Inventory 263,283 (648,758)
Prepaids (3,282)
Deposits (5,555) (3,500)
Net Change in Payables 1,680,189 61,606
---------- ----------
Cash from Operations (1,136,472) (1,007,888)
---------- ----------
Cash Used for Investing
Fixed Assets Purchased 506,600 (55,888)
Investor Notes 1,298,740
---------- ----------
Cash Used for Investing 1,805,340 (55,888)
---------- ----------
Cash from Financing
Mortgage Debt 448,000
Notes Payable 768,101 980,704
Stock Sales 1,317,520
---------- ----------
Cash from Financing 2,533,621 980,704
---------- ----------
Net Change in Cash (408,191) (83,072)
Beginning Cash Balance 391,278 16,974
---------- ----------
Ending Cash Balance (16,913) (66,098)
========== ==========
Significant non cash transactions
Transfer of Austin lot to former president for stock
Reverse acquisition with Autocorp Equities
<PAGE>
Notes to Condensed Consolidated Financial Statements
Autocorp Equities, Inc.
Note 1. Business and Accounting Policies
Autocorp Equities, Inc. (the Company) and its wholly owned subsidiaries, Lenders
Liquidation Centers, Inc., Consumer Investment Corporation and Consumer
Insurance Services, Inc. operated six sales lots for pre-owned vehicles in
Arizona and New Mexico.
The condensed consolidated balance sheet as of March 31, 1998 and June 30, 1997
and the consolidated statements of operations and the consolidated statements of
cash flows for the quarters and periods shown were prepared by the Company
without audit. In the opinion of management, all adjustments necessary to
present fairly the financial position, results of operations and changes in cash
flows at March 31, 1998 and for all periods shown have been made.
Inventory
Inventory includes the original costs of the vehicle on an historic basis plus
and reconditioning costs and flooring costs associated with that vehicle.
Inventory is maintained on a specific identification basis of accounting.
Net Earnings (Loss)
Net loss per share is computed upon the weighted average number of shares
outstanding during the period.
2. Prepaid Advertising
The prepaid advertising consists of $800,000 of media due bills which were
exchanged for prepaid rent in 1994. The credits expire on July 2004 and are
usable on the American Independent Network. A valuation allowance of $400,000
has been recorded as an offset to this asset.
3. Austin Note Receivable/Payable
In January 1998 the Company sold to its former president and corporate secretary
the car lots it owned in Austin, Texas. The Company received back all of the
president's and corporate secretary's stock plus received a note for the amount
that it previously owed on the Austin lots. This transaction netted the Company
approximately $470,000 in equity enhancement.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Company operates a used motor vehicle sales and finance business. Autocorp
presently operates six (6) used motor vehicle dealerships through its subsidiary
Lenders Liquidation Centers, Inc. ("LLC") dba "Lenders Auto Resale Centers".
Through its subsidiary Consumer Investment Corporation ("CIC"), the Company
underwrites, finances and services installment sales contracts generated by its
own financing and vehicle sales operations. CIC concentrates on financing
vehicles purchased by sub-standard credit purchasers, i.e. persons with low
incomes and credit problems. The Company also operates an insurance company
through its subsidiary Consumer Insurance Services, Inc. ("CIS") formed to
provide all of the finance and insurance products and services used by LLC
operations.
The following discussion of the operations and financial condition should be
read in conjunction with the unaudited financial statements and notes thereto
appearing elsewhere in this Form 10-QSB.
Liquidity and Capital Resources:
At March 31, 1998, the Company had total assets of $6,547,522 and total
stockholders equity of $(2,388,877). At March 31, 1997 the Company had assets of
$3,249,999 and total stockholders equity of $(325,255). The Company continues to
experience a liquidity problem. Historically the Company's working capital needs
have been satisfied through financing activities primarily consisting of the
sale of shares of the Company's Common Stock.
As of March 31, 1998 the Company's current position was $(654,271). This
negative current position has limited the growth the Company has desired.
Pursuant to an October 21, 1997 Offering Circular, the Company is currently
converting debt from promissory notes to equity in the form of restricted common
stock. During the quarter the Company converted $1,298,740 of note holders into
stockholders. This conversion has helped reduce the amount of interest due in
the future on the converted securities.
The Company anticipates meeting its working capital needs during the current
quarter primarily with proceeds resulting from the private placement of Company
securities and a small profit which the Company expects to generate. The Company
will seek to borrow and/or raise such funds through the private or public sale
of its Common Stock. No assurances can be given that such financing will be
available or that it can be obtained on terms satisfactory to the Company. If
the Company is
<PAGE>
unable to secure financing from the sale of its securities or from private
lenders, management believes that the Company will be unable to continue with
its current business plan. In the opinion of management, inflation has not had a
material effect on the operations of the Company.
During the next twelve months the Company will stress the acquisition of
existing automotive related businesses. The Company is currently contemplating
undertaking a new offering of its debt and/or equity securities in order to
achieve its business objectives over the next twelve months. Unless the Company
is able to raise additional capital from borrowing or the sale of corporate debt
and/or equity securities, the Company will encounter a shortage of capital to
accomplish its business objectives.
Results of Operations:
Included herein are unaudited financial statements of the Company covering the
three month period ended March 31, 1998. The Company had a net loss for the
quarter of $302,562 compared to the two previous quarters in which the Company
had a net loss of $3,740,045. In January 1998, the Company replaced its
Co-Chairman and CEO resulting in a substantial turnaround in Company
performance. This improved performance is also the result of the Company making
substantial personnel and system changes coupled with a sharp reduction in
overhead expenses. These efforts have resulted in a net gross profit for the
quarter and the first profitable month in Company history for the month of
March. Expenses of the months of January and February were such that the Company
still had a loss in those months. The Company expects to generate a net income
for the final quarter of the fiscal year. The Company expects to show a loss for
the fiscal year ending June 30, 1998.
<PAGE>
Part II Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a vote of Shareholders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Forms 8-K
None
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 thereunto duly authorized.
AUTOCORP EQUITIES, INC.
May 6, 1998 /s/ Mark A. Shelley
--------------------------------
Mark A. Shelley, CFO, Chief Accountant
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> AUG-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> (16,913)
<SECURITIES> 0
<RECEIVABLES> 3,607,959
<ALLOWANCES> 0
<INVENTORY> 1,334,465
<CURRENT-ASSETS> 1,788,793
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,547,522
<CURRENT-LIABILITIES> 2,443,064
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,547,522
<SALES> 1,597,086
<TOTAL-REVENUES> 1,949,976
<CGS> 1,537,045
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (302,562)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (302,562)
<EPS-PRIMARY> 0
<EPS-DILUTED> (0.06)
</TABLE>
