U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 000-15216
AUTOCORP EQUITIES, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0522501
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
911 W. Parker Road, Suite 306
Plano, Texas 75023
(Address of principal executive offices)
972.378.5355
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,168,749 shares of Common
Stock, $.001 par value, as of April 30, 2000.
Transitional Small Business Disclosure Format (check one): Yes____ No X
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 2000 and September 30, 1999
March 31, September 30,
2000 1999
----------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 27,985 $ 347,046
Accounts receivable, net 95,512 737,391
Other receivables - 5,783
Inventory 243,284 1,607,538
Prepaid expenses 19,763 59,066
----------- ------------
Total current assets 386,544 2,756,824
PROPERTY AND EQUIPMENT
Furniture and fixtures 11,543 11,295
Office equipment 218,376 208,513
Computer equipment 46,476 42,134
Automobiles 2,500 2,500
Machinery and equipment 91,865 91,865
Leasehold improvements 15,108 21,674
----------- ------------
385,868 377,981
Less accumulated depreciation
and amortization 67,686 36,216
----------- ------------
318,182 341,765
----------- ------------
OTHER ASSET
Deposits 3,812 7,743
----------- ------------
Total assets $ 708,538 $ 3,106,332
=========== ============
See accompanying notes to condensed consolidated financial statements.
2
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AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 2000 and September 30, 1999
March 31, September 30,
2000 1999
----------- ------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Bank overdraft $ 89,031 $ -
Current portion, long-term debt 72,889 683,001
Line of credit 253,870 1,196,921
Accounts payable and accrued expenses 576,686 822,074
Sales tax payable 1,174,436 641,824
Related party payables 6,995,075 5,129,464
Other current liabilities 197,351 219,077
----------- ------------
Total current liabilities 9,359,338 8,692,361
Long-term debt, net of current portion - -
Allowance for recourse liability 3,340,000 2,884,000
Related party payable 6,578,485 6,578,485
Commitments and contingencies - -
SHAREHOLDERS' DEFICIT:
Convertible preferred stock, no par value,
5% non-cumulative; liquidation preference
of $1.00 per share; 10,000,000 shares
authorized, no shares issued and outstanding
at March 31, 2000 and September 30, 1999 - -
Common stock, par value $.001; 110,000,000
shares authorized, 6,189,971 and 6,137,184
shares issued and outstanding at March 31,
2000 and September 30, 1999, respectively 6,190 6,137
Additional paid-in capital 11,555,415 11,536,718
Accumulated deficit (29,893,390) (26,353,869)
Less shares held in trust (227,500) (227,500)
Less stock subscriptions receivable (10,000) (10,000)
----------- -----------
Total shareholders' deficit (18,569,285) (15,048,514)
----------- -----------
Total liabilities and
shareholders' deficit $ 708,538 $ 3,106,332
=========== ===========
See accompanying notes to condensed consolidated financial statements.
3
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AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three and Six Months Ended March 31, 2000 and 1999
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
----------- ---------- ----------- -----------
Net revenues $ 3,608,360 $1,994,456 $10,156,889 $ 3,021,534
Cost of sales 3,377,195 1,325,351 8,856,557 2,344,582
----------- ---------- ----------- -----------
Gross profit 231,165 669,105 1,300,332 676,952
Selling, administrative and
other operating expenses 1,545,645 880,776 3,018,973 1,269,984
Provision for recourse
liability 285,916 (152,608) 1,505,431 69,694
----------- ---------- ----------- -----------
Operating loss (1,600,396) (59,063) (3,224,072) (662,726)
Other expense:
Interest expense (158,393) (3,707) (315,449) (45,036)
Gain on disposition
of subsidiaries - - - 595,245
----------- ---------- ----------- -----------
Net loss $(1,758,789)$ (62,770)$(3,539,521) $ (112,517)
=========== ========== =========== ===========
Net loss per share,
basic and diluted $ (.28)$ (.01)$ (.57) $ (.02)
========== ========== =========== ===========
Weighted average number
of shares outstanding,
basic and diluted 6,189,971 6,083,848 6,213,700 6,153,353
========== ========== =========== ===========
See accompanying notes to condensed consolidated financial statements.
4
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AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three and Six Months Ended March 31, 2000 and 1999
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
----------- ---------- ----------- -----------
Net loss $(1,758,789)$ (62,770) $(3,539,522) $ (112,517)
Adjustments to reconcile
net loss to net cash
provided by/(used in)
operating activities:
Depreciation and
amortization 25,190 12,288 31,470 22,076
Provision for
recourse liability 112,000 (610,000) 456,000 (280,000)
Loss on disposal of assets 7,463 - 6,566 -
Gain on disposition
of subsidiaries - - - (595,245)
Changes in:
Accounts receivable 362,565 (143,475) 641,879 (331,099)
Related party payables 1,132,262 988,301 1,865,611 988,301
Inventory 1,157,973 262,955 1,364,254 (339,252)
Prepaid expenses 34,520 - 39,303 -
Deposits 3,952 (1,000) 3,931 (1,000)
Accounts payable and
accrued expenses (338,594) 13,730 (226,637) 625,321
Bank overdrafts 89,031 - 89,031 -
Sales tax payable 226,948 - 532,612 -
Line of credit (1,143,263) (169,974) (943,051) 432,986
Other 15,736 2,080 (15,943) 3,780
---------- ---------- ----------- -----------
Total adjustments 1,685,783 354,905 3,845,026 525,868
---------- ---------- ----------- -----------
Net cash provided by/(used
in) operating activities (73,006) 292,135 305,504 413,351
---------- ---------- ----------- -----------
Cash flows from investing activities:
Capital expenditures - (48,207) (14,453) (220,602)
---------- ---------- ----------- -----------
Net cash used in
investing activities - (48,207) (14,453) (220,602)
---------- ---------- ----------- -----------
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
For the Three and Six Months Ended March 31, 2000 and 1999
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
---------- --------- --------- ---------
Cash flows from financing activities:
Principal payments
on long-term debt $ (58,334)$(128,333) $(610,112)$(154,077)
Proceeds from issuance of
long-term debt - - - 170,000
---------- --------- --------- ---------
Net cash (used in) provided
by financing activities (58,334) (128,333) (610,112) 15,923
---------- --------- --------- ---------
Net increase/(decrease) in
cash and cash equivalents (131,340) 115,595 (319,061) 208,672
Cash and cash equivalents
at beginning of period 159,325 145,056 347,046 51,979
---------- --------- --------- ---------
Cash and cash equivalents
at end of period $ 27,985 $ 260,651 $ 27,985 $ 260,651
========== ========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 80,501 $ 1,226 $ 164,914 $ 163,623
========== ========= ========= =========
Cash paid for income taxes $ - $ - $ - $ -
========== ========= ========= =========
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
For the Three and Six Months Ended March 31, 2000 and 1999
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
---------- ---------- --------- ---------
Non-cash transactions
Stock issued for
services $ - $ - $ 18,750 $ 2,737
During the three months ended December 31, 1998, the Company tendered preferred
shares valued at $6,578,485 and net other equity of $355,803 in exchange for the
extinguishment of $2,223,159 of debt, $4,278,068 of related party payables and
$1,028,306 of other liabilities resulting in a net gain on disposition of
subsidiaries of $595,245. The other equity consisted of $1,724,775 in treasury
stock obtained in the disposition of the Company's subsidiaries, $227,500 of
treasury stock received into a trust, other treasury stock of $2,293,775 issued
in extinguishment of debt and liabilities and $14,303 for 22,000 shares of
common stock converted from debt at $0.65 per share.
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2000
NOTE 1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly its financial position and the results of its operations
and cash flows for the periods shown.
Certain prior period amounts have been reclassified to conform to the
current period's presentation.
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles necessarily 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates. The results of
operations for the respective three and six month periods are not
necessarily indicative of the results to be expected for a full year of
operations.
These unaudited condensed consolidated financial statements should be
read in conjunction with the Company's annual report of Form 10-KSB for
the year ended September 30, 1999.
A summary of significant accounting policies is currently on file with
the Securities and Exchange Commission on Form 10-KSB.
During the three and six months ended March 31, 2000 and the year ended
September 30, 1999, the Company's operations were negatively impacted
by the loss of the flooring plan line of credit and the resulting
inability of the Company to purchase additional inventory.. The Company
has a shareholder deficit of approximately $16,000,000 at March 31,
2000 and a history of operating losses. Management is currently
assessing new business models in an effort to make the Company
financially self-sufficient. The Company is also currently looking for
alternate capital sources.
It is not possible to predict the success of management's subsequent
efforts to achieve profitability. If management is unable to achieve
its goals, the Company may find it necessary to undertake other actions
as may be appropriate.
8
<PAGE>
AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2000
NOTE 1. BASIS OF PRESENTATION (continued)
The accompanying condensed consolidated financial statements do not
include any adjustments relating to the recoverability and
classification of the recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the
Company be unable to continue in existence.
NOTE 2. LONG-TERM DEBT
Long-term debt at March 31, 2000 and September 30, 1999 consisted of
the following:
March 31, Sept. 30,
2000 1999
---------- ---------
Note payable, unsecured, for
acquisition of car lot, payable in
quarterly installments of $50,000.
No interest is charged on note.
Matured March 2000 $ 54,000 $ 134,000
Note payable, secured by retail
installment notes, payable at
maturity. Interest on matured,
unpaid principal at 12% per annum.
Matured December 1999 - 473,445
Note payable, unsecured, for
acquisition of finance servicing
facility, payable in monthly
installments of $9,444. No
interest is charged on note.
Matures May 2000. 18,889 75,556
---------- ---------
72,889 683,001
Less current portion 72,889 683,001
---------- ---------
$ - $ -
========== =========
9
<PAGE>
AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2000
NOTE 3. LINE OF CREDIT
The Company had two lines of credit totaling $1,000,000 with AutoPrime
to purchase used and repossessed cars for resale on the Company lots.
Both lines of credit, or flooring plans, were secured 100% by the
vehicle inventory. The line to purchase used cars was for $750,000 and
bore interest at a rate 15% per annum. This agreement was renewed on
September 9, 1999 and matured on March 8, 2000. At March 31, 2000,
$200,020 was owed on this line and $0 was available.
The second line of is for $250,000 and bears interest at 15.25% per
annum. This agreement matures on June 8, 2000, but AutoPrime has
declined to issue any additional advances on this line. There are
certain covenants in the agreement that allow for an earlier due date.
At March 31, 2000, $53,850 was owed on this line and $0 was available.
NOTE 4. COMMITMENTS AND CONTINGENCIES
The Company leases office space and auto lots under non-cancelable
operating lease agreements which require monthly payments of $22,666
per month and expire in June 2004. Future minimum annual payments
required under the lease are as follows:
March 31, 2001 $ 253,692
March 31, 2002 129,826
March 31, 2003 44,500
March 31, 2004 42,000
March 31, 2005 10,500
----------
$ 480,518
==========
The Company sells used automobiles using auto financing contracts. The
Company then sells the contracts to a finance company, generally under
a recourse agreement, whereby the Company guarantees the repayment of
the note. If the note holder defaults, the Company is responsible for
repossessing the automobile and then either paying the amount due the
finance company or substituting a new loan for the one in default.
In October 1997, the Company entered into an agreement with AutoPrime
to provide financing for the Company's automobile transactions. The
agreement allows AutoPrime to buy the notes at a percentage of face
value (averaging approximately 75%) and then to pay the Company an
additional percentage (averaging approximately
10
<PAGE>
AUTOCORP EQUITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2000
NOTE 4. COMMITMENTS AND CONTINGENCIES (continued)
15%) on all principal collections. The loss ratios of the notes sold
have been much greater than expected to date. However, with the change
in management and a change in the Company's lending criteria,
management expects to have better loan collection results in future
periods. The loan balances and contingent losses reserved are as
follows:
March 31, September 30,
2000 1999
------------ ------------
Total liability, including
the contracts sold by
related parties. $ 13,360,000 $ 11,536,000
Recorded liability, estimated
at 25% of total contracts
outstanding $ 3,340,000 $ 2,884,000
The Company has issued for tender to AutoPrime 6,578,485 preferred
shares, valued at $1.00 per share, which includes 3,078,485 shares
relating to recourse liability on contracts owned by AutoPrime. The
Company has an obligation to maintain the $1.00 per share value on the
remaining 3,237,956 preferred shares (net of 262,044 shares released
from pledge) issued to AutoPrime (in trust), and is contingently liable
for the issuance of additional preferred shares as may be necessary to
maintain such value.
NOTE 5. SALES TAX PAYABLE
In the process of selling cars, sales tax is added to the financing
agreement for its customers. The Company currently estimates, and has
recorded, a sales tax liability of approximately $1,174,000 at March
31, 2000 for the remaining balances on the related installment note
portfolio. The Company currently pays sales taxes as proceeds are
collected from the financing agreements. An additional amount has been
accrued against any contingent liabilities which may arise from the
sale of its installment notes and any acceleration of the sales taxes
due.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of
Operation.
(a) Plan of Operation.
Not Applicable.
(b) Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Forward looking statements:
This report contains forward looking statements. Additional written or oral
forward looking statements may be made by the Company from time to time in
filings with the Securities and Exchange Commission or otherwise. Such forward
looking statements are within the meaning of that term in Section 27A of the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Such statements may include, but not be limited
to, projections of revenue, income or loss, estimates of capital expenditures,
plans for future operations, products or services, financing needs or plans, as
well as assumptions relating to the foregoing. The words "believe", "expect",
"anticipate", "estimate", "project", and similar expressions identify forward
looking statements, which speak only as of the date the statement was made.
Forward looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified. Future events and actual
results could differ materially from those set forth in, contemplated by, or
underlying the forward looking statements. The Company undertakes no obligation
to publicly update or revise any forward looking statements, whether as a result
of new information, future events, or otherwise. The following disclosures, as
well as other statements in this Report on Form 10-QSB, including those in the
notes to the Company's consolidated financial statements, describe factors,
among others, that could contribute to or cause such differences, or that could
affect the Company's stock price.
RESULTS OF OPERATIONS
Overview
Through the first quarter and into the second quarter of fiscal 2000, the
Company operated "Buy Here - Pay Here" used car dealerships which underwrote,
financed and serviced retail installment contracts generated by sales of used
cars by the Company's dealerships. The installment contracts were sold, at a 30%
to 45% discount, to various lending sources on a full recourse basis.
Beginning in the second fiscal quarter of 2000, as a result of limitations
placed on the use of its' floor plan line of credit, the Company is unable to
continue to purchase cars for its used car lots. At the present time the Company
generates revenue from service fees for selling repossessed units relating to
contracts previously sold to AutoPrime as well as from the continued servicing
of retail installment contracts.
The Liquidity section following discusses this at greater length.
General Discussion
Net sales of used cars amounted to $9,179,000 for the six months ended March 31,
2000 compared to $2,383,000 for the similar period in 1999. This is attributable
to having five used cars lots in 2000 compared to two in the prior year. In the
fiscal second quarter of 2000 net sales of used car were $3,056,000 while the
comparable number in 1999 was $1,570,000. This quarter reflects the impact of
the loss of the Company's floor plan line of credit mentioned above.
Revenues from servicing retail installment contracts increased in this year's
second quarter to $978,000, an increase of $339,000 over last year's amount of
$639,000. This situation is the same for the quarter to quarter comparison, and
represents an increase in the level of loan servicing activity.
12
<PAGE>
Gross profit for the six-month period ended March 31, 2000 was approximately
$1,300,000, most of which ($1,069,000) was earned in the first quarter. Gross
profit as a percentage of sales was 12.8%. For the comparable six-month period
of the prior year, this figure was 22.4%. For the three-month period ended
December 31, 1999, gross profit as a percentage of sales was 16.3%. The lower
margins during the current fiscal year were caused primarily by the high
proportion of repossessed cars in the sales mix, exacerbated by the loss of the
Company's floor plan line of credit.
Selling, administrative and other operating expenses were 42.8% of sales for the
second quarter of the 2000 fiscal year, an increase from the first quarter's
rate of 22.5% of sales. The figures for the comparable quarters of the prior
year were 44.2% of sales and 37.9% of sales, respectively. Although these
numbers reflect improvement in the year-over-year percentage of sales
relationship, the absolute level of spending increased from approximately
$1,270,000 for the six months ended March 31, 1999 to approximately $3,020,000
for the six months ended March 31, 2000. These expenses should decrease,
however, in line with the Company's anticipated reduced level of operations
during future quarters.
The provision for recourse liability amounted to approximately $1,505,000 during
the six-month period ended March 31, 2000, a substantial increase from the
comparable period of the prior year. The provision reflects the high level of
loan defaults which occurred during the current fiscal year. The current year's
numbers do show significant improvement during the second fiscal quarter, as
more than 80% ($1,220,000) of the aggregate provision made for the six-month
period ended March 31, 2000 was recorded in the quarter ended December 31, 1999.
Interest expense was incurred by the Company in connection with its line of
credit that was used to floor purchased automobiles and from the outstanding
note payable to AutoPrime. For the six months ended March 31, 2000, interest
expense amounted to approximately $315,000, a six-fold increase from the
comparable six-month period of the prior year, due predominantly to the
increased debt level with AutoPrime.
LIQUIDITY
As a result of the Company's continuing need to improve its cash flow and
overall liquidity, during the first two quarters of fiscal 2000, a thorough
review of the Company's business model was performed in conjunction with
AutoPrime and AutoPrime's U.S. parent. The conclusion was that the Company's
current business model is unable to generate sufficient cash flow to support the
ongoing viability of the Company.
In connection with this review, further analysis was performed, and is
continuing to be performed, to try to develop a business model for the Company
that would allow the Company to be financially self -sufficient. The Company
needs to obtain additional capital in order to continue business operations. The
Company has been exploring various alternatives for obtaining the necessary
capital which includes a proposal to issue shares to AutoPrime and/or
AutoPrime's parent in exchange for debt owed to AutoPrime. Implementation of
such a plan would provide the Company with the opportunity to acquire capital
from alternate sources. There is no assurance that the plan would be accepted by
AutoPrime or its parent.
In addition, a recent change in the Board of Directors has resulted in the
Company considering additional possibilities for developing a new business
model. The Company has a three person Board of Directors. Messrs. Heath and
Ennis resigned as Directors and officers in February and May 2000, respectively.
13
<PAGE>
The remaining Director, Mr. Norman, appointed William O. Merritt to fill one of
the vacancies on May 4, 2000. Mr. Merritt is the second largest individual
shareholder of the Company and was the Chief Executive Officer of the Company on
December 30, 1998, when a previously reported change of control transaction
occurred. He was also serving as a Director at the time and continued as a
Director until April 29, 1999.
With the return of Mr. Merritt, the alternatives being considered for a new
business model for the Company have been expanded to include various
possibilities suggested by Mr. Merritt.
There can be no assurance the Company will be able to develop a new business
model. If one is developed, there is no assurance Management will be able to
obtain the necessary additional capital to implement the new business model.
Further, if a new business model is developed and adequately capitalized, there
is no assurance it will become profitable for the Company or its shareholders.
During the current quarter, the Company renewed its floor plan line of credit
with AutoPrime through June 8, 2000. However, AutoPrime has made no additional
advances to the Company under the line of credit since December 1999, and has
notified Management that it does not plan to make any additional advances and
the line of credit will not be renewed at its maturity.
Given the Company's financial position, the Company is unable to replace this
line of credit and as a result the Company is no longer able to purchase cars
for its used car lots. Virtually all the cars that the Company currently has for
sale are repossessed units, which are not owned by the Company but are security
for contracts previously sold to AutoPrime. As a result, when sold, these cars
will not generate any revenue for the Company other than the service fees the
Company charges AutoPrime for reselling the cars.
The Company's revenues declined during the quarter ended March 31, and they have
continued to decline during the first two months of the current quarter. The
Company's only sources of revenue at the present time are fees from re-selling
repossessed vehicles and servicing fees from servicing the contracts previously
sold to AutoPrime.
The Company has been in a negative monthly cash flow situation and has had a
negative working capital position since June 1998. At March 31, 2000, the
Company had a working capital deficit of approximately $8,970,000, as compared
to a working capital deficit of approximately $5,940,000 at September 30, 1999.
The $3,030,000 difference is primarily attributable to the decrease in inventory
and the increase in the payable to its related party, AutoPrime. The Company has
been relying on AutoPrime to supplement internally generated cash flow with
monthly advances to fund its cash operating needs. This situation has worsened
as a result of the Company no longer having a floor plan line of credit and
consequently no ability to purchase cars to sell.
Unless a new business model can be developed, capitalized and implemented in a
profitable manner, Management believes this monthly need for cash advances from
some source will continue. The monthly advances from AutoPrime have been ranging
from $20,000 to $95,000. At March 31, 2000, the advances totaled $138,200. At
present, the Company does not have the financial resources to repay any of these
advances.
There can be no assurance that AutoPrime will continue to provide this monthly
cash requirement. If AutoPrime discontinues its funding support and no
additional capital can be raised, the Company will not be able to continue
business operations.
14
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AutoCorp Equities, Inc.
Registrant
Date: June 27, 2000 By: /s/ Charles Norman
-----------------------------------------
Charles Norman
President and Chief Executive Officer
