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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A-1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended June 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
c/o Bradley-Alison Smith, Acting CFO
iRV, Inc.
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock - $.001 Par Value
(Title of class)
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 Exchange Act of
1934 during the preceding 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[ ]
The number of shares outstanding of the Registrant's $.001 par value
common stock as of June 30, 2000 was 7,861,470.
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Forward-Looking Statements
In addition to historical information, this Annual 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 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 - June 30, 2000 4
Consolidated Statement of Operations for the
three-month period ended June 30, 2000 6
Consolidated Statement of Cash Flows for the
three-months ended June 30, 2000 8
Notes to Consolidated Financial Statements 10
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<TABLE>
<CAPTION>
iRV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
ASSETS
<S> <C>
Current Assets:
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Cash and cash equivalents $ 9,389
Funding Receivable 230,459
Inventory 1,370,333
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Total current assets 1,610,181
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Property and equipment, net 106,801
Refundable deposits 850
Intangible assets, net 193,602
Investment in restricted common stock 40,000
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341,253
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$1,951,434
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
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Floor Financing $1,472,001
Notes payable 574,311
Accounts payable-
Related parties 60,101
Other 186,527
Accrued liabilities 7,273
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Total Current Liabilities 2,300,213
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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 7,811
Additional paid in capital 2,412,669
Accumulated deficit (2,769,309)
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Total stockholders' deficit (348,779)
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Total liabilities and stockholders'
deficit $1,951,434
============
</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 MONTHS ENDED JUNE 30, 2000
<S> <C>
Revenue:
RV sales $1,056,247
Cost of sales 870,372
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Gross profit 185,875
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Operating expenses:
Sales and marketing 15,310
Interest 37,861
General and administrative 207,227
Internet Web site development 27,250
Stock issuance costs 280,500
Consulting-
Related Parties 22,248
Other 18,015
Travel and entertainment 15,517
Depreciation and amortization 30,538
Rent 31,093
Salaries and benefits 94,030
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Total Operating expenses 779,589
Net loss $ (593,714)
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Basic loss per share $ (0.08)
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Fully diluted loss per share $ (0.08)
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Weighted average shares outstanding
Basic 7,944,470
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Fully Diluted 7,944,470
============
</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 THREE MONTH PERIOD ENDED JUNE 30, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net Loss $ (593,714)
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Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 30,538
Stock issued for services 280,500
Settlement agreement with former
officer and director 15,229
Loss on disposal of property 3,634
Changes in operating assets and liabilities:
Funding Receivable (230,459)
Inventory (615,308)
Other 21,106
Accounts payable 57,108
Accrued liabilities (33,963)
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(471,615)
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Net cash used in operating activities (1,065,329)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (14,051)
Refundable deposits (850)
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Net cash used in investing activities (14,901)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in floor financing payable 776,588
Proceeds from borrowings from related
parties 324,850
Payments on notes (2,154)
Payments on advances from related parties (38,500)
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Net cash provided by financing
activities 1,060,784
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Net decrease in cash and cash equivalents (19,446)
Cash and cash equivalents, beginning 28,835
Cash and cash equivalents, ending $ 9,389
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 29,717
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SUPPLEMENTAL DISCLOSURE OF NON CASH
FINANCING ACTIVITIES:
Company canceled 500,000 shares of
common stock $ 500
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Company re-issued 50,000 shares of
restricted shares common stock $ 500
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A major shareholder of the Company
arranged for the issuance of
100,000 shares of common stock $ 112,000
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Company issued 140,000 shares of
restricted common stock $ 105,000
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Company issued 10,000 shares of
restricted common stock $ 7,500
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Company eliminated $910 receivable
by reducing amount of note payable
to the same related party $ 910
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</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
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The Company considers all highly liquid instruments with an original
maturity of three months or less to be cash equivalents.
2. FLOOR FINANCING PAYABLE
In February 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 June 30, 2000 we had used $1,456,397 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 period was $25,643. We were in full
compliance with our floor financing agreement during the period ended June 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 June 30, 2000:
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<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 320,940
9% note payable to related party,
due on demand, without collateral 30,000
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$ 450,940
</TABLE>
During the period ended June 30, 2000 the Company's note between itself
and one of its shareholders increased $255,440. At the end of the period the
Company owed The Rockies Fund a total of $320,940.
In addition the Company borrowed $55,000 from a shareholder who is also a
director as well as legal counsel. The funds were used toward the settlement
agreement with the Company's former president. As part of the settlement
agreement the Company paid its former president $55,000 in cash. As of June
30, 2000 $25,000 of the $55,000 note had been re-paid.
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<CAPTION>
<S> <C> <C>
9.74% Note payable to financial institution,
payable in monthly installments,
due September 2000, collateralized by
a recreational vehicle $ 64,784
9.74% Note payable to financial institution,
due September 2000, collateralized by
a recreational vehicle 58,587
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$ 123,371
</TABLE>
4. LEASE COMMITMENT
As of June 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 August 2000, the real property
requires monthly payments of $7,200, and expires August 2003. Additionally,
the Company leases, on a month-to-month basis, a trailer and temporary housing
for two of its employees. Rent expense for the period ended June 30, 2000 was
$31,093. This also included amounts paid for temporary corporate office space
and temporary housing for the Company's former president.
5. CAPITAL STRUCTURE
In May, 2000 the Company and its president reached a separation agreement
and the president resigned. The former president returned 500,000 shares of
his stock to the Company and the Company canceled these shares. The Company
re-issued 50,000 shares of restricted common stock. In addition as part of
the separation agreement a stockholder caused the issuance of 100,000 shares
of freely traded common stock to the former president. The former president
received $55,000 in cash and approximately $16,000 in assets that included an
automobile, computer, and cellular telephone. The shareholder who arranged
for the transfer of freely tradable shares received 140,000 shares of
restricted common stock from the Company.
In June 2000 the general manager of the dealership located in Knoxville
received 10,000 shares of restricted common stock. An expense in the amount
of $7,500 was recorded in association by this action of the board of
directors.
Item 2. Management's Discussion and Analysis of Operations
Overview
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We offer retail sales of recreational vehicles through our dealership in
Knoxville, TN. Additionally, we have developed an interactive Web site that
enables nationwide shopping for RVs via the Internet.
Results of Operations
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Period April 1, 2000 through June 30, 2000
RV SALES AND SERVICE. Sales of $1,056,247 were recorded for the period.
90% of revenue was derived from sales of new and used vehicles. Starting next
quarter, we plan to add an additional rental unit to our rental program during
the high season. We have experienced an increase in sales every month since
acquiring the dealership in Knoxville. Although some of the increase in sales
can be attributed to seasonal fluctuations, we believe the increase in product
assortment, increased marketing, additional staff, and capital improvements
are all contributing to the increase in sales.
COST OF RV SALES AND SERVICE. Cost of sales and services were $870,372.
We achieved a gross profit level of 18%. Presently, we have $1,472,001 of RVs
financed. During the period we incurred $25,643 on interest expense in
relation to our inventory.
STOCK COMPENSATION. Stock compensation expense in the amount of $280,500
was recorded during the period ended June 30, 2000. This represents multiple
separate events. In May 2000 when the president resigned, a shareholder
provided the former president with 100,000 shares of freely tradable common
stock. A stock compensation expense in the amount of $112,000 was recorded.
The shareholder who provided the stock received 140,000 shares of restricted
common stock. A stock compensation expense of $105,500 was recorded. The re-
issuance of 50,000 shares of restricted common stock to the former president
is associated with a stock expense of $56,000. Finally, the General Manager
of the RV dealership received 10,000 shares of common stock as compensation.
A stock compensation of $7,500 was recorded.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$207,227. The major portion of these expense are attributable to professional
fees. These fees were paid for legal services and accounting services.
Included in general and administrative were expenses associated with the
separation settlement between the Company and the former president in the
amount of $70,229.
INTERNET WEB SITE DEVELOPMENT. Internet Web site development expenses
were approximately $27,000. This represents the final development related to
Web site enhancements and on-going adjustments. In order to encourage usage
of the purchase segment of the Web site the fees associated with purchasing an
RV on-line were waived. Therefore, no revenue was recorded during this
period. The Company believes that this strategy has proved successful.
CONSULTING. Consulting expenses were paid to a real estate consultant,
who is actively pursuing additional RV dealerships, an RV operations'
consultant, and a financial consultant who is also a shareholder of the
Company. The total amount paid to consultants for the period was
approximately $41,000. 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 $15,516. These expenses are attributable to transportation
to visit potential acquisition candidates, the dealership in Knoxville, TN,
and transportation for temporarily located employees at the dealership in
Knoxville, TN to return to their permanent homes.
SALES AND MARKETING. The RV dealership generated all 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.
RENT. The majority of this expense was related a residential house that
the Company rented for the Company's former president and temporary office
space. The additional expense relates to temporary housing provided to two
employees at the RV dealership in Knoxville, TN.
Liquidity and Capital Resources
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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 $1,065,329.
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. However, during the period our equity
in our inventory increased 71%, from approximately $75,216 to $128,791.
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, $367,540 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 $283,286 during this period.
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 $776,588 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 June 30, 2000 floor financing and notes payable in the aggregate
totaled $2,046,312 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.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
In May 2000, the Company entered into a Settlement Agreement and Mutual
Release with the former president and director. Pursuant to the Settlement
Agreement the Company paid the former president $55,000 in cash and conveyed
title to an automobile and certain other equipment. Additionally the Company
provided the former president with 100,000 freely tradable shares of the
Company's common stock, which were provided by a stockholder of the company.
The former president surrendered 500,000 shares of stock and the Company re-
issued 50,000 shares of restricted common stock. The shareholder who arranged
for the issuance of freely tradeable stock was issued 140,000 of restricted
common stock.
In connection with the Settlement Agreement, a stockholder and directory,
who is also the Company's legal counsel advanced $55,000 to the Company to pay
the cash portion of the Settlement Agreement. A note evidences this advance.
$25,000 of the original note has been repaid.
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) 8K/A. This filing reflected the inclusion of financial
statements for the 8K that was originally filed March
2000. The 8K and 8K/A discussed the acquisitions of the
assets of the Coach & Campers of Knoxville RV dealership.
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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: December 20, 2000 By: /s/ Bradley Smith
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Bradley Smith,
Chief Financial Officer
