UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to________
Commission file number 33-55254-28
FIRST CAPITAL RESOURCES.COM, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0438641
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 East Oakland Park Drive, Suite 100
Fort Lauderdale, Florida 33334
(Address of principal executive office) (Zip Code)
(954) 568-3989
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of November 19, 1999
--------------------- -----------------------------------
Common Stock, par value $0.001 11,082,500
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FIRST CAPITAL RESOURCES.COM, INC.
INDEX
Part I. Financial Information Page #
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Item 1. Financial Statements
Condensed consolidated balance sheet - September 30, 1999 and December 31, 3
1998
Condensed consolidated statement of operations - Nine months ended 4
September 30, 1999, and three month periods ended June 30, 1999 and
September 30, 1999
Consolidated statement of changes in stockholders' equity - 5
Nine months ended September 30, 1999
Consolidated statement of cash flows - Nine months ended September 30, 1999 6 - 7
Notes to condensed consolidated financial statements 8
Item 2. Management's discussion and analysis 9
Part II. Other Information 10
Signatures 11
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2
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PART I. FINANCIAL INFORMATION
Item I. Financial Statements
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FIRST CAPITAL RESOURCES.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
September 30, 1999 December 31, 1998
(Unaudited) (Unaudited)
-------------------------------------------------------
ASSETS:
<S> <C> <C>
Cash $ 600,180 $ 124,268
Inventory 134,398 86,901
Finance receivables, net 1,657,265 -
Floor plan receivable, net 2,725,514 402,780
Notes receivable, net 580,700 20,000
Prepaid compensation 292,096 -
Advances to employees and consultants (Note 3 ) 83,286
Property and equipment, net 651,246 604,359
Other assets 160,190 1,332
-------------------------------------------------------
TOTAL ASSETS $ 6,884,875 $ 1,239,640
=======================================================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Accounts payable and accrued liabilities $ 127,523 $ -
Mortgage note payable 190,846 196,600
Due to parent company 1,674,039 1,047,752
-------------------------------------------------------
TOTAL LIABILITIES 1,992,408 $ 1,244,352
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Stockholders' equity:
Common stock, par value $.001 per share; 100,000,000 shares
authorized, 11,082,500 shares issued and outstanding 11,083 2,000
Additional paid-in capital 5,303,542 -
Retained earnings ( 422,158) ( 6,712)
-------------------------------------------------------
Total stockholders' equity 4,892,467 ( 4,712)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,884,875 $ 1,239,640
=======================================================
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<CAPTION>
FIRST CAPITAL RESOURCES.COM, INC.
CONDENSED CONLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Nine-months Three-months Three-months
Ended Ended Ended
September 30, June 30, September 30,
1999 1999 1999
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<S> <C> <C> <C>
REVENUES:
Loan interest and fee income $ 778,922 $ 240,949 $ 404,610
Automobile sales 367,066 168,335 22,128
Telemarketing income 86,845 - 86,845
------------------------------------------------------------------
Total revenues 1,232,833 409,284 513,583
------------------------------------------------------------------
Provision for credit losses 110,000 - 100,000
Cost of automobile sales 316,915 172,114 20,015
Salaries and consultant fees 487,528 129,226 256,530
Reserve for receivables (Note 3 ) 262,000 - 262,000
G & A expenses 471,836 74,948 332,135
------------------------------------------------------------------
Total expenses 1,648,279 376,288 970,680
------------------------------------------------------------------
Income (loss) before income taxes ( 415,446) $ 32,996 ( 457,097)
Income tax expense - - -
------------------------------------------------------------------
Net income ( $ 415,446) $ 32,996 ( $457,097)
==================================================================
Net income (loss) per share ( $ 0.054 ) $ 0.003 ( $ 0.041)
Weighted average number of shares
outstanding 7,718,778 11,000,000 11,082,500
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4
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FIRST CAPITAL RESOURCES.COM, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1999
Number of Additional Retained
Shares Common stock paid-in capital earnings Total
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<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 1,000,000 $ 2,000 $ - ( $ 6,712) ( $4,712)
Acquisition of net assets of First Capital
Resources.Com (1) 10,000,000 9,000 ( 9,000) - -
Contributed capital (2) - - 5,265,600 - 5,265,600
Acquisition of assets of American Marketing of
South Florida, Inc. (3) 82,500 83 46,942 47,025
Net income ( 415,446) ( 415,446)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances - September 30, 1999 11,082,500 $ 11,083 $ 5,303,542 ( $422,158) $4,892,467
=================================================================================
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(1) Relates to the exchange of common stock of First Capital Resources.Com
for the stock of Affordable, Southeast and Carnet at $.047 per share.
Note that these transactions were pursuant to reverse acquisitions, and
were considered to be capital transactions, rather than business
combinations. Accordingly, the transactions were treated for accounting
purposes as a recapitalization.
(2) Contributed by FACT South LLC (the Parent Company)
(3) Issued in conjunction with the acquisition of certain assets of
American Marketing of South Florida, Inc. at $0.57 per share.
5
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FIRST CAPITAL RESOURCES.COM, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ( $ 415,446)
- ---------------------------------------------------------------------------------------------------------------------------
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Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation 112,696
Provision for losses on advances 262,000
Provision for finance credit losses 110,000
Increase in:
Inventory ( 47,497)
Advances to employees ( 345,286)
Prepaid compensation ( 292,096)
Other assets ( 111,834)
Accounts payable and accrued liabilities 127,524
- ---------------------------------------------------------------------------------------------------------------------------
Total adjustments ( 184,493)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities ( 599,939)
- ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable ( 560,700)
Purchase of finance contracts, net ( 1,632,363)
Increase in floor plan receivables ( 2,322,734)
Capital expenditures ( 91,107)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities ( 4,606,904)
- ---------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock 1,000
Proceeds from advances from parent 1,674,039
Repayment of notes payable ( 5,754)
Cash contributed by parent company 4,013,470
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 5,682,755
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH $ 475,912
CASH BALANCE - December 31, 1998 124,268
- ---------------------------------------------------------------------------------------------------------------------------
CASH BALANCE - September 30, 1999 $ 600,180
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6
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FIRST CAPITAL RESOURCES.COM, INC.
STATEMENT OF CASH FLOWS (UNAUDITED) (Continued)
NINE MONTHS ENDED SEPTEMBER 30, 1999
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Supplemental Disclosures of Non-Cash Transactions:
- --------------------------------------------------------------------------------------------------------------------------------
Land and building acquired from Parent Company, net of related
Mortgage of $196,600 in exchange for debt 103,400
- --------------------------------------------------------------------------------------------------------------------------------
Note receivable assigned by Parent Company, in exchange for debt 20,000
- --------------------------------------------------------------------------------------------------------------------------------
Conversion of debt owed to Parent Company to equity 1,047,752
- --------------------------------------------------------------------------------------------------------------------------------
Property and equipment contributed to capital 134,902
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Finance contracts contributed to capital 68,476
- --------------------------------------------------------------------------------------------------------------------------------
Issuance of stock for the acquisition of telemarketing operation 47,025
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7
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NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated (unaudited) financial statements of
First Capital Resources.com, Inc., have been prepared in accordance with the
instructions to form 10-Q and, therefore, do not include all information and
footnotes necessary for a complete presentation of financial position, results
of operations, cash flows and changes in stockholders' equity in conformity with
generally accepted accounting principles. These financial statements do not
include a statement of operations or a statement of cash flows for the
comparable period of the preceding fiscal year as there were no assets or
operations in the comparable period of the previous fiscal year and a comparison
would not be meaningful.
In the opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature. Operating
results for the quarter ended September 30, 1999, are not necessarily indicative
of the results that can be expected for the year ended December 31, 1999. These
financial statements should be read in conjunction with the audited financial
statements of Affordable Dealer Services, Inc. (Affordable) and Southeast Dealer
Acceptance, Inc. (Southeast) and notes thereto for the periods ending December
31, 1998 and March 31, 1999, respectively, included in the Company's form 8-K/A
filed with the Securities and Exchange Commission.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation - The condensed consolidated financial statements include
First Capital Resources.com, Inc., and its subsidiaries Affordable Dealer
Services, Inc. (Affordable), Southeast Dealer Acceptance, Inc. (Southeast),
Carnet, Inc. (Carnet) and American Marketing, Inc. All material intercompany
accounts and transactions have been eliminated.
3. ADVANCES TO EMPLOYEES AND CONSULTANTS
The Company loaned money to officers, directors, and employees. A reserve has
been established in the amount of $ 127,000 against an unsecured note and
advances to a former officer and director, and an additional $ 135,000 against
an advance to a former consultant of the Company.
4. ACQUISITIONS AND DISPOSALS
On July 1, 1999, the Company purchased the operating assets of American
Marketing of South Florida, Inc. for $ 100,000 in cash, 82,500 shares of common
stock, and agreed to provide $25,000 in services to the former owner.
On July 5, 1999, the Company sold the operation of CarNet, Inc., including
certain assets to an unrelated third party in exchange for a $80,000 promissory
note. The note bears interest at 10% and calls for monthly interest-only
payments for the first year (commencing September 1, 1999) and then monthly
principal and interest payments of $2,029 for the following 48 months.
Approximately $195,000 of Carnet's inventory and related debt were excluded from
this sale, and were retained by the Company.
8
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated financial condition and results of operations and cash flows. The
discussion should be read in conjunction with the condensed consolidated
financial statements and notes thereto.
RESULTS OF OPERATIONS
Net revenues increased by 25%, or $104,299 to $513,583 for the quarter ended
September 30, 1999 as compared to $409,284 for the quarter ended June 30, 1999.
This increase was due primarily to an increase in the number of dealers serviced
and the acquisition of the operating assets and operation of American Marketing
.
Net expenses increased by 158%, or $594,392 to $970,680 for the quarter ended
September 30, 1999 as compared to $376,288 for the quarter ended June 30, 1999.
This increase relates to additional reserves required for floor plan receivables
and employee/consultant advances, and the addition of the telemarketing
operation.
Net income/loss decreased $490,093 to a loss $457,097 for the quarter ended
September 30, 1999 as compared to income of $32,996 for the quarter ended June
30, 1999. This loss relates primarily to the acquisition of the telemarketing
operations, a loss of $92,000, the reserves required for advances to a former
officer and advances to a former consultant, $ 262,000, and additional financing
reserves, $100,000 in the third quarter.
LIQUIDITY AND CAPITAL RESOURCES
Since the Company's inception, it has started a network of used car dealers
interested in obtaining inventory financing for its floor plan operation. The
Company has also used this network for purchasing automotive financing paper.
The primary source of capital has been from infusions from First American
Capital Trust through Fact South, LLC, the Company's parent. First American
Capital Trust has filed for bankruptcy protection on 9/30/99. As of September
30, 1999, Fact South, LLC has contributed $5,256,600 into the Company and has
advanced to the Company an additional $1,674,000. As of this time, the Company
does not anticipate any additional funding from its parent. Any future expansion
of the Company's operations will require alternate funding sources.
IMPACT OF THE "YEAR 2000" COMPUTER ISSUE
The Company has undertaken a review of its exposure to computer malfunctions
relating to the year 2000 ("Y2K"). The Y2K issue exists because many computer
systems and applications currently use two digit date fields to designate a
year. As the century date change occurs, date sensitive systems may recognize
the year 2000 as 1900 or not recognize the year at all. This inability to
recognize or properly treat the Y2K issue may cause systems to process critical
financial and operational information incorrectly.
The Company has several systems that it considers critical to operations
including the finance company software, floor plan software and financial
accounting software. The Company is in the process of evaluating all of these
systems to determine the specific risks related to the year 2000 and intends to
implement any necessary changes to these systems.
9
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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
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
The following exhibits are followed as part of this report:
Exhibits:
27.1 Financial Data Schedule
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
First Capital Resources.com, INC.
Registrant
Date: November 22, 1999 /s/ Derri Davisson
-------------------------
Derri Davisson
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jul-1-1999
<PERIOD-END> Sep-30-1999
<CASH> 600,180
<SECURITIES> 0
<RECEIVABLES> 5,073,479
<ALLOWANCES> 110,000
<INVENTORY> 134,398
<CURRENT-ASSETS> 0
<PP&E> 763,246
<DEPRECIATION> 112,000
<TOTAL-ASSETS> 6,884,875
<CURRENT-LIABILITIES> 127,523
<BONDS> 0
0
0
<COMMON> 11,083
<OTHER-SE> 4,881,384
<TOTAL-LIABILITY-AND-EQUITY> 6,884,875
<SALES> 0
<TOTAL-REVENUES> 1,232,833
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,276,279
<LOSS-PROVISION> 372,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (415,446)
<INCOME-TAX> 0
<INCOME-CONTINUING> (415,446)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (415,446)
<EPS-BASIC> (0.054)
<EPS-DILUTED> (0.054)
</TABLE>
