<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission file number 0-19949
iRV, Inc.
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(Exact Name of Registrant as Specific in its Charter)
Colorado 84-1153522
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(State or other jurisdiction of IRS Employer
incorporation or organization) Identification
Number
5373 North Union Blvd., Suite 100 Colorado Springs, CO 80918
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 719 590-4900
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(Former Name or Address if Changed Since Last Report)
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 Issuer was required to file such reports), and (2) has been
subject to filing requirements for the past 90 days.
Yes [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the Registrant has filed all documents and reports required
to be filed by Sections 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No[ ]
*** not applicable ***
APPLICABLE ONLY TO CORPORATE ISSUERS
As of September 30, 2000, the Company had 7,840,475 shares of its $0.001
par value common stock outstanding.
Transitional Small Business Disclosure Format (Check one). Yes [ ] No [X]
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Forward-Looking Statements
In addition to historical information, this Quarterly Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and is thus prospective. The forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those reflected in the forward-
looking statements. Factors that might cause such a difference include, but
are not limited to, competitive pressures, changing economic conditions such
as changes in gasoline prices and the fluctuation of interest rates,
popularity of product lines, the addition or deletion of a relationship with a
particular manufacturer, the success of the Company's efforts in identifying
and entering into an agreement with an acquisition or merger candidate, and
other items that iRV, Inc. discusses in the Management Discussion and Analysis
Section of this document. Readers are cautioned not to place undue reliance
on these forward-looking statements, which reflect only management's opinions.
iRV, Inc. does not have any obligation to revise these forward-looking
statement to reflect subsequent events or circumstances. Readers should refer
to and carefully review the information future documents the Company files
with the Securities and Exchange Commission.
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Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet - September 30, 2000 . . . . . . . . . . . . 4
Consolidated Statement of Operations for the three-month and six-
month periods ended September 30, 2000. . . . . . . . . . . . . . . . . 5
Consolidated Statement of Cash Flows for the six-month ended
September 30, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . 8
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<TABLE>
<CAPTION>
iRV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 2000
ASSETS
<S> <C>
Current Assets:
Cash and cash equivalents $ 135,446
Funding Receivable 129,730
Advances due from related parties -
Inventory 1,800,543
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Total current assets 2,065,719
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Property and equipment, net 77,542
Refundable deposits 850
Intangible assets, net 193,224
Investment in restricted common stock 40,000
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311,616
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$ 2,377,335
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Floor Financing $ 1,886,576
Notes payable 680,887
Checks written in excess of bank
balance -
Accounts payable-
Related parties 70,490
Other 199,043
Accrued liabilities 67,731
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Total Current Liabilities 2,904,727
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Stockholders deficit:
Preferred stock, $.01 par value;
50,000,000 shares authorized; no
shares issued and outstanding -
Common stock, $.001 par value;
100,000,000 shares authorized;
7,811,470 shares issued and
outstanding 7,841
Additional paid in capital 2,418,689
Accumulated deficit (2,953,922)
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Total stockholders' deficit (527,392)
Total liabilities and stockholders'
deficit $ 2,377,335
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
iRV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three For the Six
Months Ended Months Ended
September 30, September 30,
2000 2000
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<S> <C> <C>
Revenue:
RV sales $ 1,007,384 $2,063,632
Cost of sales 855,037 1,725,409
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Gross profit 152,347 338,223
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Operating expenses:
Sales and marketing 27,512 42,822
Interest 60,925 98,786
General and administrative 49,814 257,041
Internet Web site development 860 28,110
Stock issuance costs 6,000 286,500
Consulting-
Related Parties 12,938 35,186
Other 3,699 21,715
Travel and entertainment 9,118 24,635
Depreciation and amortization 29,923 60,461
Rent 24,620 55,713
Salaries and benefits 111,599 205,629
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Total Operating expenses 337,008 1,116,598
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Net loss $ (184,661) $ (778,375)
============ ==============
Basic loss per share $ (0.02) $ (0.10)
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Fully diluted loss per share $ (0.02) $ (0.10)
============ ==============
Weighted average shares outstanding
Basic 7,820,475 7,913,806
============ ==============
Fully Diluted 7,820,475 7,913,806
============ ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
iRV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2000
CASH FLOWS FORM OPERATING ACTIVITIES:
<S> <C>
Net Loss $ (778,327)
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Adjustments to reconcile net income to
net cash used in operating activities:
Expenses not requiring an outlay of
cash 365,824
Changes in operating assets and
liabilities: (1,066,823)
Net cash used in operating activities (1,479,326)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (9,298)
Refundable deposits 15,150
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Net cash used in investing
activities 5,852
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in floor financing payable 1,206,767
Checks written in excess of bank
balance (14,673)
Proceeds from borrowings from related
parties 442,075
Payments on notes (8,764)
Payments to related parties (45,320)
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Net cash provided by financing
activities 1,580,085
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Net increase in cash and cash
equivalents (19,446)
Cash and cash equivalents, beginning 28,835
Cash and cash equivalents, ending $ 135,446
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 74,046
===============
SUPPLEMENTAL DISCLOSURE OF NON CASH
FINANCING ACTIVITIES:
Company retired 500,000 shares of
restricted common stock, par value
$.001 $ 500
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Company issued 140,000 shares of
restricted common stock, par value
$.001 $ 140
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Company issued 50,000 shares of
restricted common stock, par value
$.001 $ 50
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Company issued 140,000 shares of
restricted common stock, par value
$.001 $ 10
=============
On the Company's behalf, 100,000
shares of common stock, par value
$.001 were issued $ 100
=============
Company eliminated $910 receivable
by reducing amount of note payable
to the same related party $ 910
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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iRV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Significant Accounting Policies
iRV, Inc. ("the Company") was incorporated in Colorado on August 1, 1999
as RV Holiday.com, Inc. The Company changed its name to iRV, Inc. in
December 1999. The Company is engaged in the retail sales of recreational
vehicles primarily in Tennessee, and the development of an interactive Web
site that enables nationwide shopping for RVs via the Internet.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries, iRV.com, Inc. and iRV -
Dealerships, Inc. Internet development activities are conducted through
iRV.com, Inc., while the acquisitions of RV dealerships is conducted through
iRV - Dealerships, Inc. All material inter-company accounts have been
eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original
maturity of three months or less to be cash equivalents.
Comparable Period Statements
iRV, Inc. was in its initial development stage and comparable operating
financial statements will be available during the period ending December 31,
2000.
2. Floor Financing Payable
In February 2000 the Company executed a floor financing agreement with
Deutsche Financial Services, whereby the Company may draw up to $2,000,000 to
purchase inventory in connection with the operation of its RV dealership. As
of the period ended September 30, 2000 we had used approximately $1,800,000 of
our inventory credit line. The financing agreement bears interest at prime
plus 1% and is collateralized by essentially all the assets of the Company.
Interest expense associated with floor financing for the three-month period
ended September 30,2000 was $45,189. We were in full compliance with our
floor financing agreement during the period ended September 30, 2000.
In connection with obtaining the floor financing, an entity controlled by
a stockholder of the Company provided an irrevocable letter of credit in favor
of Deutsche Financial Services in the amount of $300,000. In consideration of
providing the irrevocable letter of credit, the Company agreed to grant this
entity warrants to purchase 2,500 shares of the Company's common stock at
$2.00 per share for each month that the letter of credit is issued and
outstanding. The warrants are exercisable over a three-year period.
3. Notes Payable
Notes payable consist of the following at September 30, 2000:
<TABLE>
<CAPTION>
<S> <C> <C>
10% Note payable to related party,
due on demand, without collateral $ 100,000
10% Note payable to related party
due on demand, without collateral 433,165
9% note payable to related party,
due on demand, without collateral 30,000
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$ 563,165
</TABLE>
During the period ended September 30, 2000 the Company's note between the
Company and one of its shareholders increased $112,225. At the end of the
period the Company owed The Rockies Fund a total of $433,165.
<TABLE>
<CAPTION>
<S> <C> <C>
9.74% Note payable to financial institution,
payable in monthly installments,
due September 2000, collateralized by
a recreational vehicle $ 61,731
9.74% Note payable to financial institution,
due September 2000, collateralized by
a recreational vehicle 55,991
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$ 117,722
</TABLE>
4. Lease Commitment
As of September 30, 2000 the Company's only lease commitments were at the
RV dealership in Knoxville, TN. The Company leases land and a building under
a non-cancelable operating lease. Beginning September 2000, the monthly
payments on the land and the building is $6,000, and expires August 2003.
Additionally, the Company leases, on a month-to-month basis, two trailers used
for as sales' offices and temporary housing for one of its employees. Rent
expense for the period ended September 30, 2000 was $24,620.
5. Capital Structure
In September 2000 an amendment to the initial asset purchase agreement
was signed. One of the partners of the partnership that owned Coach &
Campers, Knoxville, TN received 30,000 shares of restricted iRV, Inc. common
stock and the other two partners received 10,000 options each to purchase iRV,
Inc. restricted stock at $1.00 per share. A stock issuance expense of $6,000
was incurred due to this transaction. At the time of the grant the common
stock of iRV, Inc. was trading below the $1.00 strike price, and therefore, no
financial expense was incurred by the Company in relation to the issuance of
these options.
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Item 2. Management's Discussion and Analysis of Operations
Overview
We have developed an interactive Web site, www.irv.com, that enables
nationwide shopping for RVs via the Internet. As of this juncture, no major
advertising has been implemented or is planned in order to promote this Web
site. Consumers have, for a minimal fee, the ability to shop the entire
nation for the RV of their choice and ideally purchase the RV at the best
possible price and value. iRV, Inc. established a network of dealers that
recognize the importance that the Internet will have on the way business is
transacted.
Additionally, we offer retail sales of new and used recreational vehicles
through our dealership, Passport RV, located in Knoxville, TN.
We have been in discussion with potential acquisition and, or, merger
candidates in the RV industry as well as other industries. We will continue
to explore opportunities. The future success of our business depends on our
ability to operate more efficiently, increase revenue in our existing
businesses, and expand either in the RV industry or other industries.
Results of Operations
Period July 1, 2000 through September 30, 2000
RV sales and service. After adjustment revenue of $1,007,384 were
recorded for the period. 95% of revenue attained at the dealership was
derived from sales of new and used vehicles.
As of September 30, 2000 virtually all of the revenue has been obtained
through its wholly owned subsidiary, that operates Passport RV, rather than
through its Web site.
Cost of RV sales and service. Cost of sales and services were $855,037.
We achieved a gross profit level of 18%. Presently, we have $1,886,575 of RVs
financed. The Cost of Goods Sold was reduced during this period versus the
initial period of the fiscal year for two reasons: the gross profit unit
average increased, and we were able to finance a greater number of the units
we sold. This is due to an increase in the number of financing sources with
which we now do business. During the period we incurred $45,188 on interest
expense in relation to our inventory.
Stock compensation. Stock compensation expense in the amount of $6,000
was recorded during the period ended September 30, 2000. This represents the
issuance of 30,000 restricted shares of common iRV, Inc. stock to one of the
members of Coach & Campers LLC, a Tennessee limited liability company, that
owned the RV dealership that we purchased certain assets in order to begin
business operations in Knoxville, Tennessee.
General and administrative. General and administrative expenses were
$49,814. The major portion of these expense are attributable to professional
fees. These fees were paid for legal services and accounting services.
Internet Web site development and on-going fees. There were
approximately $900 Internet Web site development expenses. These expenses
were related to the development of a Web site for Passport RV.
All fees related to the iRV, Inc.'s Web site, www.irv.com, were
contractual monthly fees in order to provide specific services to the
customers of the Web site such as free e-mail.
Consulting. Consulting expenses were paid to a consultant for his
assistance in previously assisting in the negotiation between the Company and
its former president. No additional or on-going expenses will be further
incurred in relation to this event. A member of the corporate staff provided
consulting services to an affiliate during the period. The Company will
continue to engage consultants as the Company expands in order to maximize its
changing needs.
Travel and entertainment. The total costs incurred for travel and
entertainment were $9,066. These expenses are attributable to the moving
expenses of an employee to relocate to Knoxville, TN and the expenses of a
temporarily located employees at the RV dealership in Knoxville, TN. The only
additional travel expenses were incurred by the consultant previously
discussed.
Sales and marketing. The RV dealership generated the majority of
expenses related to this category. As we evaluate each marketing campaign's
results, we anticipate costs to increase and be used effectively to generate
traffic and sales. During the period the dealership used radio, newspaper,
and direct mail. In addition we have determined that satellite locations on a
temporary basis can create opportunities to reach new customers, especially
first-time RV purchasers and purchasers of used RVs. We will continue this
practice throughout the year.
During this period we advertised the Web site in various newspapers
across the nation in order to analyze whether Web site traffic increased when
we targeted specific markets on specific days. In certain markets we
experienced a substantial increase in traffic. However, we choose not to
dedicate any additional funding to this type of advertising at this time.
Rent. The majority of this expense, $24,620, was related to the
building and sales lot where the RV dealership operates in Knoxville, TN. The
additional expense relates to temporary housing provided to one employee at
the RV dealership in Knoxville, TN.
Salaries and Benefits. This $111,599 represents the Company's major
expense. This includes all personnel at the dealership and corporate office.
This figure includes health insurance and taxes paid for all employees.
Period April 1, 2000 through September 30, 2000
RV sales and service. Revenue totaled $2,063,632, of this, sales and
service of RVs represent 98% of total revenue. Revenue was divided evenly
between each three-month period and the actual number of units sold was
divided evenly between operating periods.
As of September 30, 2000 virtually all of the revenue has been obtained
through its wholly owned subsidiary, that operates Passport RV, rather than
through its Web site. During the initial three-month period of this fiscal
year, management decided not to collect any type of user-fees for the use of
the www.irv.com Web site. This decision was made in order to build consumer
traffic.
Cost of RV sales and service. Cost of sales and service were $1,725,409.
We achieved a gross profit level of 16%. However, gross profit, on the sale
of RVs was three percentage points higher for the second quarter than the
initial period.
Stock compensation. Stock compensation expense in the amount of $286,500
was recorded for the six-month period ended September 30, 2000. This
represents:
* stock expense associated with the issuance of 100,000 shares of
freely traded shares of common stock by a major shareholder to the
former president of the Company as part of his separation agreement
in May, 2000.
* stock expense associated with the re-issuance of 50,000 shares of
restricted stock to the former president of the Company as part of
his separation agreement in May, 2000.
* stock expense associated with the issuance of 140,000 shares of
restricted common stock to the shareholder who arranged to have
100,000 shares of freely traded iRV, Inc. stock received by the
former Company president.
* stock expense associated with the issuance of 10,000 shares of
restricted stock to the General Manager of the RV dealership in
Knoxville, TN.
* 30,000 restricted shares of common iRV, Inc. stock to one of the
partners of Coach & Campers, the RV dealership that we purchased
certain assets in order to begin business operations in Knoxville,
Tennessee.
General and administrative. General and administrative expenses were
$257,041. The major portion of these expense are attributable to professional
fees. These fees were paid for legal services and accounting services.
Internet Web site development and on-going fees. During the initial
three-month period of this fiscal year there were $27,500 on expense incurred
with the development of the Web site www.irv.com. In the second quarter there
were approximately $900 Internet Web site development expenses. These
expenses were related to the development of a Web site for Passport RV,
Knoxville, TN.
All fees related to the iRV, Inc.'s Web site, www.irv.com, were
contractual monthly fees in order to provide specific services to the
customers of the Web site such as free e-mail.
Consulting. During the first quarter of the fiscal year some consulting
expenses were incurred due to the use of a real estate consultant. He was
hired in order to search for potential acquisition sites. The Company will
continue to engage consultants as the Company expands in order to maximize its
changing needs.
Travel and entertainment. The total costs incurred for travel and
entertainment were $24,635.
Sales and marketing. The RV dealership generated the majority of
expenses related to this category. As we evaluate each marketing campaign's
results, we anticipate costs to increase and be used effectively to generate
traffic and sales. During the period the dealership used radio, newspaper,
and direct mail. In addition we have determined that satellite locations on a
temporary basis can create opportunities to reach new customers, especially
first-time RV purchasers and purchasers of used RVs. We will continue this
practice throughout the year.
During this period we advertised the Web site in various newspapers
across the nation in order to analyze whether Web site traffic increased when
we targeted specific markets on specific days. In certain markets we
experienced a substantial increase in traffic. However, we choose not to
dedicate any additional funding to this type of advertising at this time.
Rent. During the initial quarter of the fiscal year rent expense was
substantially higher than in the second quarter due to office expenses
incurred by the corporate staff and the rental of a house for the Company's
former President.
Salaries and Benefits. These expenses were dived evenly between the
initial quarter and second quarter. The majority of these expenses are at the
dealership level.
Liquidity and Capital Resources
The Company depends on its major shareholders for its funding. The
Company does not internally generate sufficient funds to meet its present
spending levels.
Net cash used by operating activities during the period were $1,479,326.
This includes a substantial increase in our inventory of RVs at the dealership
in Knoxville, TN. The Company's major asset is its inventory; and the
majority of its inventory is financed. During the period our equity in our
inventory decreased 18%, or approximately $24,000.
We continue to finance our operations by advances provided from financing
activities of our major shareholders. This includes three notes from
shareholders in the amounts of $100,000, $433,165 and $30,000. All notes are
due on demand, are not secured and the interest rates are 10%, 10%, and 9%
respectively. Total notes due increased by $112,225 during the second quarter
of the fiscal year and $286,283 during the initial quarter.
In addition we have continued to finance our operations by using our
$2,000,000 floor financing line provided by Deutsche Financial Services. We
have increased our financing by $414,755 during this period.
We do not believe that our cash resources are sufficient to fund our
anticipated working capital and capital expenditures for the next twelve
months. We will continue to rely on our major investors. However, there can
be no assurances that their funding will continue. We will also continue to
explore alternative debt and equity means of raising capital.
Item 3. Qualitative and Quantitative Disclosures About Market Risk.
As of September 30, 2000 floor financing and notes payable in the
aggregate totaled $2,449,741 with various interest rates associated with
different portions of the debt. We may incur additional debt in the future.
A change in interest rates would not affect our obligations with respect to
the notes payable to related parties. However, an increase in interest rates
should cause us to pay additional interest expense for our floor financing
that would decrease our profitability. Also, the continued higher prices of
gasoline may have a negative effect on RV sales. In addition customer
preference may change with regards to the popularity of certain models and
therefore, alter sales.
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Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds.
We issued 30,000 shares of common stock to the former owner of our
dealership in Knoxville, Tennessee. The shares were issued without
registration under the Securities Act of 1933, were restricted as to resale,
were taken for investment purposes, and were issued in reliance upon Section
4(2) under the Act.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
In the period ended September 30,2000 the Company entered into an
Amendment to the Asset Purchase and Sale Agreement originally entered into
January 2000. This amendment further defines the rights and obligations of
the members of Coach & Campers LLC, a limited liability company of the State
of Tennessee and iRV - Knoxville, a Colorado corporation and a wholly owned
subsidiary of iRV, Inc. The members of the Tennessee LLC were granted the
following: one member, Mr. Donald Hannay was granted 30,000 restricted shares
of iRV, Inc. stock and the other two members, Mr. Jeffrey Sharp and Mr. Gaines
Walker were each granted 10,000 options to purchase iRV, Inc. restricted
common stock at the price of $1.00 per share.
Item 6. Exhibits and Reports on Form 8-K
(a) 10.0 Amendment to Asset Purchase and Sale Agreement
27.0 Financial Data Schedule
(b) None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
iRV, INC.
Date: November 20, 2000 By: /s/ Bradley Smith
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Bradley Smith, Chief Financial
Officer
