<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(CHECK ONE): /X/Form 10-K / /Form 20-F / /Form 11-K / /Form 10-Q / /Form N-SAR
For Period Ended: June 30, 1996
--------------------------------------------
/ / Transition Report on Form 10-K
/ / Transition Report on Form 20-F
/ / Transition Report on Form 11-K
/ / Transition Report on Form 10-Q
/ / Transition Report on Form N-SAR
For the Transition Period Ended:
------------------------------
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READ INSTRUCTION (ON BACK PAGE) BEFORE PREPARING FORM. PLEASE PRINT OR TYPE.
NOTHING IN THIS FORM SHALL BE CONSTRUED TO IMPLY THAT THE COMMISSION HAS
VERIFIED ANY INFORMATION CONTAINED HEREIN.
- -------------------------------------------------------------------------------
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I -- REGISTRANT INFORMATION
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Full Name of Registrant: FRC Racing Products, Inc.
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Former Name if Applicable
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Address of Principal Executive Office (Street and Number)
101 North Industrial Parkway, West Union, Iowa 52175
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City, State and Zip Code
<PAGE>
PART II -- RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box if appropriate)
/X/ (a) The reasons described in reasonable detail in Part III of this
form could not be eliminated without unreasonable effort or
expense;
/ / (b) The subject annual report, semi-annual report, transition report
on Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof,
will be filed on or before the fifteenth calendar day following
the prescribed due date; or the subject quarterly report of
transition report on Form 10-Q, or portion thereof will be filed
on or before the fifth calendar day following the prescribed due
date; and
/ / (c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
PART III -- NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
N-SAR, or the transition report or portion thereof, could not be filed within
the prescribed time period.
Due to the timing and difficulty of the reporting process and auditor review
the additional expense would be unreasonable.
Unavailable of financial information sufficient to accurately complete
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Form 10-KSB.
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PART IV -- OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Todd A. Duckson (612) 305-4404
---------------------------------- ----------------- ----------------------
(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period
that the registrant was required to file such report(s) been filed? If
answer is no, identify report(s). /X/ Yes / / No
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(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be reflected
by the earnings statements to be included in the subject report or
portion thereof? /X/ Yes / / No
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
2
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Anticipated loss of $1,700,000. However, sufficient records to not exist at
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this time to supply audited financials.
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FRC Racing Products, Inc.
---------------------------------------------------
(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: 10/1/96 FRC RACING PRODUCTS, INC.
-------------------------------------
By: /s/ Brent Johnson
--------------------------
Brent Johnson
Its: CEO
-------------------------
INSTRUCTION: The form may be signed by an executive officer of the registrant
or by any other duly authorized representative. The name and title of the
person signing the form shall be typed or printed beneath the signature. If
the statement is signed on behalf of the registrant by an authorized
representative (other than an executive officer), evidence of the
representative's authority to sign on behalf of the registrant shall be filed
with the form.
ATTENTION
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INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL
VIOLATIONS (SEE 18 U.S.C. 1001).
- -------------------------------------------------------------------------------
GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 (17 CFR 240.12b-25) of the General
Rules and Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and amendments
thereto must be completed and filed with the Securities and Exchange
Commission, Washington, D.C. 20549, in accordance with Rule O-3 of the
General Rules and Regulations under the Act. The information contained in
or filed with the form will be made a matter of public record in the
Commission files.
3. A manually signed copy of the form and amendments thereto shall be filed
with each national securities exchange on which any class of securities of
the registrant is registered.
4. Amendments to the notifications must also be filed on form 12b-25 but need
not restate information that has been correctly furnished. The form shall
be clearly identified as an amended notification.
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5. ELECTRONIC FILERS. This form shall not be used by electronic filers unable
to timely file a report solely due to electronic difficulties. Filers unable
to submit a report within the time period prescribed due to difficulties in
electronic filing should comply with either Rule 201 or Rule 202 of
Regulation S-T (Section 232.201 or Section 232.202 of this chapter) or apply
for an adjustment in filing date pursuant to Rule 13(b) of Regulation S-T
(Section 232.13(b) of this chapter).
4
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 33-55254-17
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FRC RACING PRODUCTS, INC.
-------------------------
(Exact name of small business issuer in its charter)
NEVADA 87-0434298
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
101 NORTH INDUSTRIAL PARKWAY
WEST UNION, IOWA 52175
- ----------------------------
(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code (319) 422-6244
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the issuer (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.
[ x ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by referenced in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ x ]
State the issuer's revenues for the most recent fiscal year: $1,121,275.00.
As of July 31, 1996, the aggregate market value of the voting stock held by
non-affiliates of the registrant as $178,312.00.
<PAGE>
Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of the latest practicable dates.(1)
CLASS OUTSTANDING AS OF JUNE 30, 1996
- ----------------------- -------------------------------
$.01 PAR VALUE CLASS A COMMON STOCK 12,652,060 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
Form 10-K filed during the fiscal year ending June 30, 1995 and all
Forms 10-Q filed in the fiscal year 1996.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: No
- ----------
(1) The Board of Directors has recommended that the Company issue
200,000 shares of Preferred Stock. However, such issuance has not been
approved by the shareholders.
2
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PART I
ITEM 1. BUSINESS.
FRC Racing Products, Inc. (the "Company" and unless otherwise
designated, including all subsidiaries) was originally incorporated in
February, 1986, in the state of Utah under the name of Highland Mfg., Inc.
In December, 1993, the Company re-domiciled as a Nevada corporation. The
Company was initially formed without any specific business plan other than to
seek potential business opportunities for acquisition and was essentially
inactive until 1995.
In April 1995, the Company issued 8,900,000 shares of its common stock
(representing a majority interest in the Company) in exchange for all the
outstanding common stock of FRC Racing Products, Inc., an Iowa corporation
and subsequently changed its name to FRC Racing Products, Inc. The reverse
acquisition transaction resulted in FRC Racing Products, Inc. (Iowa) becoming
a wholly owned subsidiary of the successor FRC Racing Products, Inc.
Pursuant to the acquisition, the Company, located at 101 North
Industrial Parkway, West Union, Iowa, engaged in the manufacture and
distribution of specialty automotive components for the "short track" racing
industry through a nationally distributed catalog. The Company also provided
general metal fabrication services.
The Company was unable to generate revenue or obtain sufficient
financing or equity to fully implement its plan of operations. Consequently,
the Company became delinquent with its trade vendors and lenders. Pressure
from these creditors has forced the Company to curtail operations. It will
be extraordinarily difficult for the Company to resume substantial operations
in the same or similar line of business.
The Company has approximately 30 full time employees, however, the
Company intends to lay off additional employees until such time that its
business can be reorganized. SEE: MANAGEMENT DISCUSSION AND ANALYSIS.
ITEM 2. PROPERTIES.
In May, 1995, the Company acquired a 63,000 square foot warehouse,
office, and manufacturing facility at 101 North Industrial Parkway, West
Union, Iowa. The building was constructed in 1995 and is 85% complete.
The building is subject to a mortgage held by Farmers Savings Bank, West
Union, Iowa. The mortgage secures a $3,000,000 Revolving Note dated
September 5, 1995, amortized as follows:
a. $800,000 amortized for a period not to exceed 29 years, interest at
1.25% over prime adjusted quarterly;
b. $1,480,000 amortized for a period not to exceed 14 years, interest
at 1.25% over prime adjusted quarterly; and
3
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c. $720,000 amortized for a period not to exceed 6 years, interest
1.25% over prime adjusted quarterly.
As of June 30, 1996, the outstanding principal balance is approximately $2.25
million. The Company has only drawn approximately $2.25 million of the $3
million Revolving Note.
THE COMPANY IS IN DEFAULT ON THE REVOLVING NOTE AND THE LENDER HAS
NOTIFIED THE COMPANY OF ITS INTENTION TO FORECLOSE. Without additional
equity or financing, which is not imminent or expected, the Company will
be unable to cure its defaults and will be forced to sell the properties or
surrender them in foreclosure.
There are also the following mechanic's liens on the Company's property:
Hudson Construction Services $1,472.00
Joe Lensing, d/b/a Joe's Construction$9,285.80
Lester Timp $1,984.04
All mechanic's liens were recorded in March, 1995. The Company disputes
these claims and no payment has been made toward these claimed obligations.
The Company believes that the property is adequately covered by insurance.
ITEM 3. LEGAL PROCEEDINGS.
Litigation has been commenced, or threatened, by various trade vendors.
A negative result, which is predicted, will materially and substantially
effect the Company's ability to reorganize.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
By written action of the holders of a majority of the Company's Common
Stock, effective as of April 17, 1995, the Company's shareholders approved
the amendment of the Company's Articles of Incorporation to change the
Company's corporate name from Highland Mfg., Inc. to FRC Racing Products,
Inc.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.
The Company's common stock is traded infrequently on the
over-the-counter market.
4
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As of June 30, 1996, there were 789 record holders of the Company's
common stock. The Company has not previously declared or paid any dividends
on its common stock and does not anticipate declaring any dividends in the
foreseeable future.
The management of the Company has assembled the following range of high
and low bid information for the Company's common stock. Note, the Management
of the Company is not aware of any actual transactions, market for the
Company's stock, or pricing information prior to April 1, 1995, and does not
believe any exists. The information reflects actual transactions and does
not include commissions, retail pricing, or inter-dealer pricing:
PERIOD HIGH LOW
4/1/95- $8.00 $7.75
6/30/95
7/1/95- $8.75 $1.25
9/30/95
10/1/95- $4.25 $0.75
12/31/95
1/1/96- $1.75 $0.50
3/31/96
4/1/96- $1.50 $0.75
6/30/96
7/1/96- $0.30 $0.15
9/20/96
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
BUSINESS
The Company was unable to generate revenue or obtain sufficient
financing or equity to fully implement its plan of operations. Consequently,
the Company became delinquent with its trade vendors and lenders. Pressure
from theses creditors has forced the Company to curtail operations. It will
be extraordinarily difficult for the Company to resume substantial operations.
RESTRUCTURING
The Company is currently negotiating with creditors in an attempt to
restructure its debt. To date, no party has proposed a plan of
reorganization and management is of the opinion that a feasible plan not
obtainable.
5
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BANKRUPTCY OR LIQUIDATION
If the Company is not able to restructure its debt, which it does not
believe it can, it will be forced to seek protection under the United States
Bankruptcy Code or sell its assets. The Company believes that such bankruptcy
or liquidation will be limited to its wholly owned subsidiary. However, no
assurance can be given that the parent company (FRC Nevada) will have no
liability for the subsidiary's (FRC Iowa) debts.
REORGANIZATION
If, and no assurance can be given that it can, FRC Nevada is found not
to be liable for the debts of its subsidiary, it plans to attempt to merge
with another operating company or raise capital sufficient to acquire an
operating company.
6
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
MARK SHELLEY CPA
110 S. Mesa Dr. #1
Mesa, Arizona 85210
(602)833-4054
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
FRC Racing Products, Inc.
I have audited the accompanying balance sheet of FRC Racing Products,
Inc. as of June 30, 1996 and 1995, and the related statements of
stockholders' equity, operations and cash flow for the years then ended.
These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on our audit. I did not audit the year prior to the year
ended June 30, 1995. That year was audited by other auditors.
I have conducted the audit in accordance with generally accepted
auditing standards. Those standards require that I plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well by management, as well as
evaluating the overall financial statements presentation. I believe that the
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above presently
fairly, in all material aspects, the financial position of FRC Racing
Products, Inc. as of June 30, 1996 and 1995, and the results of its
operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. It is management's opinion
that sufficient working capital can be raised from various sources to provide
for the on-going operation and development of the Company and allow it to
develop an effective marking plan to achieve market penetration, provide for
continuing research and development, allow for growth to a profitable status
and acquire additional companies in related industries. However, no
assurance can be made that the necessary funding will in fact be achieved or
the needed sales can be achieved. As of the report date the Company current
liabilities exceed its current assets. The Company's current financial
situation raises substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include all of the
adjustments that might result from the outcome of this uncertainty.
Mark Shelley CPA
September 10, 1996
7
<PAGE>
FRC RACING PRODUCTS, INC.
Balance Sheet
as of June 30, 1996 and 1995
ASSETS
6/30/96 6/30/95
Cash 0 77,378
Receivables 156,959 9,780
Inventory 348,184 142,908
Prepaid Expenses 0 2,546
--------- ---------
Total Current Assets 505,143 232,612
--------- ---------
Property, Plant and Equipment 2,662,288 995,234
Patterns, Organization Costs,
Trade Name 214,526 271,733
Deposits 7,899 0
Prepaid Advertising 500,000 0
--------- ---------
Total Assets 3,889,856 1,499,579
========= =========
LIABILITIES
Accounts Payable 647,903 135,979
Accrued Payroll and Taxes 38,045 0
Accrued Interest on Bank Loan 31,832 11,795
Notes Payable-Stockholder 25,000 35,422
Current Portion of Long Term Debt 73,152 0
-------- -------
Total Current Liabilities 815,932 183,196
======== =======
Bank Mortgage Loan 2,151,712 600,000
Equipment Loans 207,751
Other Loans 187,613
Total Liabilities 3,363,008 783,196
========= =======
STOCKHOLDERS' EQUITY
Preferred Stock
200,000 shares issued at $.001 2000
par onvertible to common
1 to 1
Common Stock, 100,000,000 shares
authorized, 12,652,060 and
9,900,000 shares outstanding,
par $.001 12,653 9,900
Paid in Capital 2,157,221 743,627
Retained Earnings (Loss) (1,643,226) (37,144)
---------- -------
Total Stockholders' Equity 526,848 716,383
Total Liabilities and
Stockholders' Equity 3,889,856 1,499,579
========== =========
The accompanying notes are an integral part of these statements.
8
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FRC RACING PRODUCTS, INC.
Statement of Stockholders' Equity
for the three years ended June 30, 1996
<TABLE>
<CAPTION>
Preferred Stock Common Stock Paid in Retained Total
Shares Amount Shares Amount Capital Earnings Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance June 30, 1993 0 0 1,000,000 1,000 1,000 (2,000) 0
Retained Earnings (Loss) 0
------- --- ---------- ------ --------- --------- ---------
Balance, June 30, 1994 0 0 1,000,000 1,000 1,000 (2,000) 0
Sale of Stock 8,900,000 8,900 625,379 634,279
Donated Capital 117,248 117,248
Retained Earnings (Loss) (35,144) (35,144)
------- --- ---------- ------ --------- --------- ---------
Balance June 30, 1995 0 0 9,900,000 9,900 743,627 (37,144) 716,383
Stock Issued for Previous
Work 150,000 150 (150) 0
Conversion of Debt to
Equity 1,768,560 1,769 248,231 250,000
Stock Issued for
Consulting 573,500 574 574
Stock Sale 50,000 50 24,950 25,000
Stock Sale 100,000 100 49,900 50,000
Stock Sale 10,000 10 8,690 8,700
Preferred Stock Sale 200,000 200 199,800 200,000
Stock Issued for
Advertising 100,000 100 499,900 500,000
Donated Capital 382,273 382,273
Retained Earnings (1,606,082) (1,606,082)
(Loss) ------- --- ---------- ------ --------- --------- ---------
Balance June 30, 1996 200,000 200 12,652,060 12,653 2,157,221 (1,643,226) 526,848
======= === ========== ====== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
9
<PAGE>
FRC RACING PRODUCTS, INC.
Statement of Operations
for the years ended June 30, 1996, 1995 and 1994
06/30/96 06/30/95 06/30/94
Sales and Revenues
Sales 1,116,394
Discounts (2,851)
Other Income 7,732
Total 1,121,275
Costs of Goods Sold 1,532,620
---------- --------- ---------
Gross Profit (411,345) --------- ---------
Expenses
Selling Expenses 502,921 0 0
General and
Administrative 691,816 36,230 0
Total Expenses 1,194,737 36,230 0
---------- --------- ---------
Net Income (1,606,082) (32,230) 0
========== ========== =========
Earnings (Loss) per
Common Share (0.15) (0.01) 0.00
---------- --------- ---------
Weighted Average Number 10,666,477 3,121,370 1,000,000
of Shares
Fully Diluted (Loss)
per Share (0.13)
----------
Fully Diluted Number
of Shares 12,666,477
----------
The accompanying notes are an integral part of these statements.
10
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FRC RACING PRODUCTS, INC.
Statement of Cash Flow
for the three years ended June 30, 1996, 1995 and 1994
06/30/96 06/30/95 06/30/94
Cash Provided by Operations
Net Loss (1,606,082) (35,144)
Depreciation Expense 108,911 12,050
Amortization Expense 57,207 14,302
Change in Receivables (147,179) (9,780)
Prepaid Expenses 2,546 (2,546)
Increase in Inventory (205,276) (142,908)
Increase in Payables 570,006 147,774
Deposits (7,899)
Organization Costs (88,680)
---------- -
Cash Provided by
Operations (1,227,766) (104,932) 0
--------- ---------- -
Cash Used for Investing
Purchase of Property (1,775,965) (1,007,284)
and Equipment
Purchase of CAD (160,955)
Patterns
Trade Name (36,400)
Development --------- ---------- -
Total Cash Invested (1,775,965) (1,204,639)
--------- --------- -
Cash Provided by Financing
Stock Sales 534,274 634,279
Donated Capital 382,273 117,248
Bank Financing 1,575,000 600,000
Equipment Financing 257,615 35,422
Other Loans 177,191 0
2,926,353 1,386,949 0
--------- --------- -
Cash Difference (77,378) 77,378
Beginning Cash Balance 77,378 0
-
Ending Cash Balance 0 77,378 0
========= ========= =
The accompanying notes are an integral part of these statements.
11
<PAGE>
FRC RACING PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Business History and Organization
FRC Racing Products, Inc., (the Company), was originally incorporated in
February 1986, in the State of Utah under the name Highland MFG., Inc., In
December 1993, the Company redomiciled as a Nevada corporation. The Company
initially was formed without any specific business plan other than to seek
potential business opportunities for acquisition and was essentially inactive
until 1995.
On April 4, 1995, the Company entered into a Stock Exchange Agreement
whereby it issued 8,9000,000 shares of its Common Stock (representing a
controlling interest in the Company) in exchange for all of the outstanding
shares of capital stock of FRC Racing Products, Inc., an Iowa corporation.
Immediately following, the Company changed its name (Highland MFG., Inc.) to
FRC Racing Products, Inc. The merger transaction resulted in FRC Racing
Products, Inc. (Iowa) becoming a wholly-owned subsidiary of the successor FRC
Racing Products, Inc. FRC Racing Products, Inc. (Iowa) was incorporated on
October 17, 1994, to manufacture, distribute and retain automotive chassis,
part and related supplies. As of April 4, 1995 the Company had not commenced
operations of its intended business and, as a result, had no operational
history. The transaction was a reverse acquisition whereby the stockholders
of FRC Racing Products, Inc. become the controlling stockholders of the
Company. This acquisition was recorded at the historical cost of the
acquired company.
In January 1995, the Company applied for a $3,000,000 loan to be
guaranteed in part by the Farmers Home Association (FMHA). The bank if
continuing to loan the Company funds based on a conditional commitment by
FMHA.
Operations started during the last fiscal quarter of the fiscal year
ended June 30, 1995. However, no sales were made until the first quarter of
the fiscal year ended June 30, 1996.
Note 2. Summary of Significant Accounting Policies
BASIS OF ACCOUNTING
The Company and financial statements follow generally accepted
accounting principles.
REVENUE RECOGNITION
Revenue from sales is recognized when an order is made and the finished
product is shipped. For the year ended June 30, 1995, the Company had no
sales.
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INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined by the first-in first-out method. Work in process utilizes
standard costing for labor and overhead applications.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred unless the
development can be specifically tied to a particular product or asset that is
being utilized. In that case, the development costs are capitalized and
amortized over the products useful life.
Note 3. Property and Equipment
Below is a summary of the Property, Plant and Equipment.
Land, 5 acres 37,500
Building and Improvements 40 years 1,465,353
Franklin Building -------- 115,000
Machinery and Equipment 12 years 938,359
Jigs 12 years 92,483
Office Equipment 3-7 years 65,136
Vehicles 5 years 69,418
----------
Total 2,783,249
Accumulated Depreciation 120,961
----------
Net Amount 2,662,288
==========
Note 4. CAD Patterns, Catalogue
Below is a schedule of costs capitalized. These are amortized over
their estimated useful lives which is 5 years. All assets set up represent
actual expenditures made by the Company.
Catalogue 66,500
Trade Show Booths and Set up 20,100
Purchased Customer Mailing Lists 12,200
Company Promotional Video 8,300
CAD Software Patterns 53,855
-------
Total 160,955
Accumulated Amortization 40,239
-------
Net Catalogue, CAD Patterns 120,716
-------
13
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Note 5. Organizational Costs and Trade Name Development.
The organizational costs and trade name development costs are
capitalized and amortized over 5 years. All amounts represent actual
expenditures. Amortization is for April through June of 1995.
Organizational Costs 88,680
Accumulated Amortization 22,170
------
Net Organizational Costs 66,510
------
Trade Name Development 36,400
Accumulated Amortization 9,100
------
Net Trade Name Development 27,300
------
Grand Total Net Patterns,
Organization Costs and Trade
Name 214,526
=======
Note 6. Bank Debt.
The Company purchased its present building from the West Union
Development Corp. for $500,000 in April 1995. The Farmers Savings Bank of
West Union Iowa in conjunction with two other Iowa banks financed the
purchase and improvements of this property. This loan is interest only until
September 1996, at which time interest and principle will begin. The
amortization of the loan is for 30 years. The building, improvements and all
personal property of the company is the collateral for the loan.
Building New York Prime + 1.25% $2,175,000
6/30/96 9.5%
Accrued interest 31,832
----------
Total Bank Debt $2,206,832
==========
Note 7. Related Party Transactions.
The Company purchases OEM sub components from a company owned by a
director. A director has loaned the Company funds prior to the obtaining of
the bank loan. Two officers and directors have $1,000,000 of life insurance
with the bank as the beneficiary as a requirement for the bank loan. Two
directors have personally guaranteed the bank loan.
14
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Note 8. Letter of Intent.
On June 29, 1996, the Company signed a letter of intent with X-L
Specialized Trailers, Inc. of Oelwein, Iowa. This transaction has not been
consummated as of the report date. Management feels that this purchase will
not happen at this time.
Note 9. Donated Capital
As part of the economic development program of Fayette County the
Company was given funds to refurbish their building. These funds were paid
to subcontractors to improve the building and are listed on the depreciation
schedule with the building. These funds were booked as Property, Plant and
Equipment and Paid in Capital on the Balance Sheet.
Donated Capital 6/30/95 117,248
Donated Capital 6/30/96 382,273
Total Donated Capital 499,521
=======
Note 10. Leases.
In December 1995, the Company purchased two pieces of equipment on
lease. These operating leases require a payment of $4,168 per month.
Payments required on this for the next five years is as follows:
Year 1 29,173
Year 2 50,011
. Year 3 50,011
Year 4 50,011
Year 5 20,838
Note 11. Selected Expenses.
The Company had the following expenses for the year ended 6/30/96.
Interest Expense 193,176
Depreciation Expense 108,911
Amortization Expense 57,207
Advertising and Marketing Expenses 27,607
Note 12. Significant Non Cash Transactions.
During the fiscal year 6/30/96, the Company issued stock for consulting
at 573,500 shares of common stock and purchased advertising for 100,000
shares of common stock.
15
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Coopers & Lybrand L.L.P. resigned in June, 1996. Management of the
Company has subsequently engaged Mark Shelly, CPA, 110 South Mesa Drive, #1,
Mesa Arizona 85210 (see attached audited financial statements) as of June 1,
1996. Coopers & Lybrand recommended to the Company that it employ a
controller with SEC experience.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH 16(a) OF THE EXCHANGE ACT.
The following table shows the positions held by the Company's officers
and directors. The directors were appointed at inception and will serve
until the next annual meeting of the Company's stockholders, and until their
successors have been elected and have qualified. The officers were appointed
to their positions, and continue in such positions, at the discretion of the
directors.
NAME AGE POSITION TERM PERIOD SERVED
Brent A. Johnson 36 Director, CEO 4/4/95 to present
Blaine J. Blessing 35 Director, 4/4/95 to present
Bernard Pattison Director 1996 to present
John P. Shaw 32 Director, President,
CFO, and COO 5/1/96 to 8/1/96
BRENT JOHNSON. Mr. Johnson currently holds several business interests
in the medical and service industries. His company, Main Street Ventures
Holdings, has an interest in developing small businesses with the assistance
of Main Street's managerial and financial resources. Mr. Johnson is expected
to bring financial planing and strategies to the Company.
BLAINE BLESSING. Mr. Blessing began in his own steel fabrication
business in 1988. Since then, Blessing Industries has grown to a 22,500
square foot production facility and is one of the largest employers in Iowa's
Fayette County. Blessing Industries produces many key components for several
fortune 500 Companies, and has received numerous quality awards. Mr.
Blessing has over ten years of race car driving experience in the short oval
dirt track circuit.
JOHN SHAW. Mr. Shaw is President of the Company and serves a dual role
as Chief Financial Officer and Chief Operating Officer at FRC. He is a
graduate of the University of Iowa MBA program and has expertise in corporate
finance, business management, and strategic planning. Mr. Shaw has worked in
the investment banking and retail industries, and has over ten years of
management experience at companies including Walgreens and Metropolitan Life.
16
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The Company has made no arrangements for the remuneration of its
officers and directors, except that they will be entitled to receive
reimbursement for actual, demonstrable out-of-pocket expenses, including
travel expenses, if any, made on the Company's behalf in the investigation of
business opportunities. Except for John Shaw, who has resigned, no cash
remuneration has been paid to the Company's officers or directors prior to
the filing of this form. There are no agreements or understanding with
respect to the amount or remuneration that officers and directors are
expected to receive in the future. Management takes no salaries from the
Company and does not anticipate receiving any salaries in the foreseeable
future. No present prediction or representation can be made as to the
compensation or other consummation of a business opportunity, substantial
changes may occur in the structure of the Company and its management. Use of
the term "new management" is not intended to preclude the possibility that
any of the present officers or directors of the Company may be elected to
serve in the same or similar capacities upon the Company's decision to
participate in one or more business opportunities or that the Company's
business will require the employment of a management staff.
The Company's management may benefit directly or indirectly by payments
of consulting fees, payment of finders fees to others, sales of insiders'
stock positions in whole or in part to the private company, the Company or
management of the Company, or through the payment of salaries, or any other
methods of payments through which insiders or current investors receive
funds, stock, other assets or anything of value whether tangible or
intangible. There are no plans, proposals, arrangements or understandings
with respect to the sale of additional securities to affiliates or current
shareholders.
The following sets forth Executive Compensation:
<TABLE>
<CAPTION>
NAME YEAR SALARY BONUS($) OTHER RESTRICTED SECURITIES LTIP OTHER
AND ($) ANNUAL STOCK UNDERLYING PAYOUT
PRINCIPAL COMP.($) AWARDS($) OPTIONS/SAR
POSITION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BRENT 1994 0
JOHNSON -
CEO/DIRECTOR 1995 0
1996 0
BLAINE 1994
BLESINGS,
DIR. 1995
1996
JOHN 1994 N/A N/A
SHAW,
COO 1995 N/A N/A
1996 42,000 0 *5,OOO * *2%
SHARES A CAPITAL
MONTH RAISED
</TABLE>
17
<PAGE>
* Since these shares are restricted and there is no readily available market,
the fair market value is difficult to determine. However, the management of
the Company estimates that the current fair market value of the shares are
$.50 per share. As of June 30, 1996, John Shaw owns 110,000 restricted
shares. The Company does not anticipate paying dividends on any restricted
shares in the foreseeable future.
** No amounts were paid pursuant to this bonus prior to Shaw's resignation.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information regarding the beneficial
ownership of Shares by each person known by the Companies to own five percent
or more of the outstanding Shares, by each of the directors and by the
officers and directors as a group, after June 30, 1996.
Name and Address Amount of
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP % OF CLASS
- -------------- ------------------- -------------------- ----------
Common Stock Brent Johnson (1) 1,293,560 10.2%
15004 Keller Lake Drive
Burnsville, Minnesota
55306
(1) Main Street Ventures Holdings, Inc. is a private corporation. The
majority of its shares (94%) are owned by Mr. Brent Johnson. Mr. Johnson
beneficially owns shares owned by Main Street Venture Holdings, Inc. in that
he has the power to vote or direct voting of the shares and the power to
dispose of or to direct the disposition of shares. Similarly, Home Care
Helping Hands, Inc. is a private corporation in which Mr. Johnson owns 94% of
the shares. Mr. Johnson beneficially owns shares owned by Home Care Helping
Hands, Inc. in that he has the power to vote or direct voting of the shares
and the power to dispose of or to direct the disposition of shares.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
No officer, director, nominee for election as a director, or associate
of such officer, director or nominee is or has been in debt to the Company.
However, Brent Johnson, the Company's principal shareholder, had made an
undertaking, although no assurances can be made that these loans will
continue and it is anticipated that they will not continue, to make loans to
the Company in amounts sufficient to enable it to satisfy its vital
obligations. The loans are interest bearing and are intended to be repaid at
a future date, if or when the Company shall have received sufficient funds
through any business acquisition. The loans are intended to provide the
payment of filing fees, professional fees, printing and copying fees and
other on-going operating expenses.
In addition, the Company has had the following transactions:
a. Effective April 4, 1995, the Company entered into a Stock Exchange
Agreement whereby the Company issued 4,450,000 to Brent Johnson
and Blaine Blessing, respectively, in exchange for all the
outstanding common shares of FRC Racing Products, Inc. (Iowa).
18
<PAGE>
b. Effective April 6, 1995, the Company issued 200,000 common shares
to Brent Johnson and Blaine Blessing, respectively, in
consideration for certain organization and founding efforts by
Johnson and Blessing.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
Financial Statements - June 30, 1995 and 1996
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FRC RACING PRODUCTS, INC.
Dated: 9/30/96 By: /s/ Brent Johnson
------------------- ----------------------------------
Its: Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
FRC RACING PRODUCTS, INC.
Dated: 9/30/96 By: /s/ Blaine Blessing
--------------------- -----------------------------------
Its: Director
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000894500
<NAME> FRC RACING
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 156,959
<ALLOWANCES> 0
<INVENTORY> 348,184
<CURRENT-ASSETS> 505,143
<PP&E> 2,662,288
<DEPRECIATION> 108,911
<TOTAL-ASSETS> 3,889,856
<CURRENT-LIABILITIES> 815,932
<BONDS> 0
0
200
<COMMON> 12,653
<OTHER-SE> 526,848
<TOTAL-LIABILITY-AND-EQUITY> 3,889,856
<SALES> 1,116,394
<TOTAL-REVENUES> 1,121,275
<CGS> 1,532,620
<TOTAL-COSTS> 1,194,737
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,037
<INCOME-PRETAX> (1,606,082)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,606,082)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,606,082)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
