-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FCZ1goeb2sXLH5KA7Ge7iMBS6/gL+AdSvRtaNqYubEP1/AnbqcQ4EJxykgWlRRwi 5zWVxw3OivBuoAuDiCD7ag== 0001010549-02-000150.txt : 20020415 0001010549-02-000150.hdr.sgml : 20020415 ACCESSION NUMBER: 0001010549-02-000150 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020327 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KARTS INTERNATIONAL INC CENTRAL INDEX KEY: 0001010077 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 752639196 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23041 FILM NUMBER: 02593550 BUSINESS ADDRESS: STREET 1: 62204 COMMERCIAL STREET STREET 2: PO BOX 695 CITY: ROSELAND STATE: LA ZIP: 70456 BUSINESS PHONE: 5047471111 MAIL ADDRESS: STREET 1: 62204 COMMERCIAL STREET STREET 2: P O BOX 695 CITY: ROSELAND STATE: LA ZIP: 70456 8-K 1 karts8k032702.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: March 27, 2002 -------------- Karts International Incorporated (Exact name of small business issuer as specified in its charter) Commission File Number: 0-23041 ------- Nevada 75-2639196 - ---------------------------- ------------------------- (State of incorporation) (IRS Employer ID Number) 62204 Commercial Street, Roseland, LA 70456 ------------------------------------------- (Address of principal executive offices) (985) 747-1111 -------------- (Issuer's telephone number) Item 5 - Other Events On March 27, 2002, Karts International Incorporated announced that it will not file it's Annual Report on Form 10-KSB by the deadline of March 31, 2002. Timotheus benHarold, the Company's President, Chief Executive Officer, Chief Accounting Officer and one of the Company's two remaining Directors stated that the Company's financial condition and on-going negotiations with The Schlinger Foundation, the Company's lead lender were contributing factors to this situation. The Company has been notified by The Schlinger Foundation that it may foreclose its security interest in substantially all of the Company's assets as a result of defaults under the Company's $2,500,000 promissory note and related agreements. The Company will strive to complete the required filing as soon as practicable upon the conclusion of negotiations with The Schlinger Foundation. If the negotiations with The Schlinger Foundation are unsuccessful, the Company may have to seek protection under Chapter 11 of the Federal Bankruptcy Code. The Company wishes to make the following unaudited financial information available prior to the release of its audited financial statements: (Unaudited) December 31, December 31, 2001 2000 ------------ ------------ Current Assets Cash on hand and in banks $ 324,683 $ 232,593 Accounts receivable Trade, net of allowance for doubtful account of $290,000 and $45,250, respectively 666,088 2,392,290 Other -- 11,433 Inventory 2,296,612 4,113,038 Prepaid expenses 265,668 646,137 ------------ ------------ Total current assets 3,553,051 7,395,491 ------------ ------------ Net property and equipment 2,070,874 2,432,958 ------------ ------------ Other Assets Surplus assets held for sale 614,616 -- Other 210,251 310,179 ------------ ------------ Total other assets 824,867 310,179 ------------ ------------ Total Assets $ 6,448,792 $ 10,138,628 ============ ============ Current Liabilities Debenture payable to a related party $ 2,500,000 $ 2,500,000 Working capital advances 5,044,152 -- Notes payable to affiliates -- 150,000 Current maturities of long-term debt 47,982 56,025 Accounts payable - trade 1,409,664 2,940,788 Other accrued liabilities 704,395 1,005,473 Accrued interest payable 18,593 85,092 Accrued dividends payable 557,147 257,147 Accrued income and franchise taxes payable 45,672 45,100 ------------ ------------ Total current liabilities 10,327,605 7,039,625 ------------ ------------ 2 Long-Term Liabilities Long-term debt, net of current maturities 220,899 269,878 ------------ ------------ Total liabilities 10,548,504 7,309,503 ------------ ------------ Shareholders' Equity Preferred stock - $0.001 par value 10,000,000 shares authorized 5,638,000 shares issued and outstanding 5,638 5,638 Common stock - $0.001 par value 14,000,000 shares authorized 8,079,642 and 7,498,392 shares issued and outstanding 8,080 7,498 Additional paid-in capital 25,329,573 24,976,651 Accumulated deficit (29,443,003) (22,160,754) ------------ ------------ Total shareholders' equity (4,099,712) 2,829,125 ------------ ------------ Total Liabilities and Shareholders' Equity $ 6,448,792 $ 10,138,628 ============ ============ Year ended Year ended December 31, December 31, 2001 2000 ------------ ------------ Revenues Kart sales - net $ 4,227,722 $ 8,854,343 Cost of Sales 6,616,596 10,918,625 ------------ ------------ Gross Profit (2,388,874) (2,064,282) ------------ ------------ Operating Expenses Research and development expenses 591,635 127,377 Selling expenses 242,563 488,564 General and administrative expenses Salaries and related costs 1,259,906 1,317,476 Other operating expenses 1,147,346 1,329,276 Depreciation and amortization 202,341 182,885 ------------ ------------ Total operating expenses 3,443,791 3,445,578 ------------ ------------ Income (loss) from Operations (5,832,665) (5,509,860) Other Income (Expenses) Interest and other miscellaneous 36,037 51,850 Expiration of option to acquire another entity -- (138,001) Write off of uncollectible note receivable -- (425,060) Write off of obsolete inventory (53,186) (51,385) Loss on consigned inventory (143,520) -- Loss on abandonment of fixed assets (5,218) (5,200) Impairment of assets held for sale (127,189) -- Interest expense (670,455) (702,907) ------------ ------------ Loss before Income Taxes (6,796,196) (6,770,563) Income Tax (Expense) Benefit (46,553) (52,304) ------------ ------------ Net Loss $ (6,842,749) $ (6,822,767) ============ ============ 3 Loss per weighted-average share of common stock outstanding - basic and fully diluted $ (0.88) $ (0.98) ========== ========== Weighted-average number of shares of common stock outstanding - basic and fully diluted 7 ,791,406 6,956,046 ========== ========== The Company has experienced significant declines in revenues from approximately $12,000,000 in Calendar 1999 to approximately $9,000,000 in Calendar 2000 to approximately $4,000,000 in Calendar 2001. Further, the Company has limited opportunity to reduce variable costs. Management has identified various assets and designated them "Surplus and held for sale"' including the Company's former production facility in Prattville, Alabama and various non-utilized equipment. Management notes that during the six years ended December 31, 2001, the Company has experienced cumulative net losses from operations and has utilized cash in operating activities of approximately $17,000,000. The Company's continued existence is dependent upon its ability to generate sufficient cash flows from operations to support its daily operations as well as provide sufficient resources to retire existing liabilities and obligations on a timely basis. To support operations during 2001, the Company received approximately $5,000,000 in non-interest bearing working capital advances from Morgan Creek Company, an unaffiliated entity and experienced net reductions in accounts receivable through cash collections of approximately $1,400,000. During 2000, the Company supported operations and retired certain short-term lines of credit from a non-financial institution lender with the receipt of approximately $615,000 and $9,600,000 in private transactions from the sale of common and preferred stock, respectively. The Company restructured its management during the third and fourth quarter of 2000 and during the first quarter of 2001. At the present time, the Company is not performing at levels significant enough to support daily operations. The Company remains dependent upon additional external sources of financing; however, there can be no assurance that the Company will be able to obtain additional funding or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company. The Company is in default on the debenture payable to The Schlinger Foundation. A distinct possibility exists that The Schlinger Foundation may post a notice of foreclosure on the secured Company assets. This action will significantly impair the Company's ability to continue operations. The Company's independent certified public accountants, S. W. Hatfield, CPA, has notified the Company that its audit report on the 2001 consolidated financial statements will contain a "going concern" opinion , as did their opinion on the 2000 consolidated financial statements, which will state that "substantial doubt about the Company's ability to continue as a going concern" exists. Item 7 - Financial Statements, ProForma Financial Information and Exhibits Exhibit 99.1 - Press Release dated March 27, 2002 4 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Karts International Incorporated Dated: March 27, 2002 /s/ Timotheus benHarold -------------- -------------------------------- Timotheus benHarold President, Chief Executive Officer Chief Accounting Officer and Director 5 EX-99.1 3 karts8kex991032702.txt PRESS RELEASE EXHIBIT 99.1 PRESS RELEASE March 27, 2002 For Immediate Release Contact: Timotheus benHarold Phone 985-747-1111 - -------------------------------------------------------------------------------- KARTS INTERNATIONAL INCORPORATED ANNOUNCES IT WILL NOT TIMELY FILE IT'S ANNUAL REPORT ON FORM 10-KSB Roseland, Louisiana - March 27, 2002 The management of Karts International Incorporated announces that it will not file it's Annual Report on Form 10-KSB by the deadline of March 31, 2002. Timotheus benHarold, the Company's President, Chief Executive Officer, Chief Accounting Officer and one of the Company's two remaining Directors stated that the Company's financial condition and on-going negotiations with The Schlinger Foundation, the Company's lead lender were contributing factors to this situation. The Company has been notified by The Schlinger Foundation that it may foreclose its security interest in substantially all of the Company's assets as a result of defaults under the Company's $2,500,000 promissory note and related agreements. The Company will strive to complete the required filing as soon as practicable upon the conclusion of negotiations with The Schlinger Foundation. If the negotiations with The Schlinger Foundation are unsuccessful, the Company may have to seek protection under Chapter 11 of the Federal Bankruptcy Code. The Company wishes to make the following unaudited financial information available prior to the release of its audited financial statements: (Unaudited) December 31, December 31, 2001 2000 ------------ ------------ Current Assets Cash on hand and in banks $ 324,683 $ 232,593 Accounts receivable Trade, net of allowance for doubtful accounts of $290,000 and $45,250, respectively 666,088 2,392,290 Other -- 11,433 Inventory 2,296,612 4,113,038 Prepaid expenses 265,668 646,137 ------------ ------------ Total current assets 3,553,051 7,395,491 ------------ ------------ Net property and equipment 2,070,874 2,432,958 ------------ ------------ Other Assets Surplus assets held for sale 614,616 -- Other 210,251 310,179 ------------ ------------ Total other assets 824,867 310,179 ------------ ------------ Total Assets $ 6,448,792 $ 10,138,628 ============ ============ - Continued - Current Liabilities Debenture payable to a related party $ 2,500,000 $ 2,500,000 Working capital advances 5,044,152 -- Notes payable to affiliates -- 150,000 Current maturities of long-term debt 47,982 56,025 Accounts payable - trade 1,409,664 2,940,788 Other accrued liabilities 704,395 1,005,473 Accrued interest payable 18,593 85,092 Accrued dividends payable 557,147 257,147 Accrued income and franchise taxes payable 45,672 45,100 ------------ ------------ Total current liabilities 10,327,605 7,039,625 ------------ ------------ Long-Term Liabilities Long-term debt, net of current maturities 220,899 269,878 ------------ ------------ Total liabilities 10,548,504 7,309,503 ------------ ------------ Shareholders' Equity Preferred stock - $0.001 par value 10,000,000 shares authorized 5,638,000 shares issued and outstanding 5,638 5,638 Common stock - $0.001 par value 14,000,000 shares authorized 8,079,642 and 7,498,392 shares issued and outstanding 8,080 7,498 Additional paid-in capital 25,329,573 24,976,651 Accumulated deficit (29,443,003) (22,160,754) ------------ ------------ Total shareholders' equity (4,099,712) 2,829,125 ------------ ------------ Total Liabilities and Shareholders' Equity $ 6,448,792 $ 10,138,628 ============ ============ Year ended Year ended December 31, December 31, 2001 2000 ------------ ------------ Revenues Kart sales - net $ 4,227,722 $ 8,854,343 Cost of Sales 6,616,596 10,918,625 ------------ ------------ Gross Profit (2,388,874) (2,064,282) ------------ ------------ Operating Expenses Research and development expenses 591,635 127,377 Selling expenses 242,563 488,564 General and administrative expenses Salaries and related costs 1,259,906 1,317,476 Other operating expenses 1,147,346 1,329,276 Depreciation and amortization 202,341 182,885 ------------ ------------ Total operating expenses 3,443,791 3,445,578 ------------ ------------ Income (loss) from Operations (5,832,665) (5,509,860) - Continued -
Other Income (Expenses) Interest and other miscellaneous 36,037 51,850 Expiration of option to acquire another entity -- (138,001) Write off of uncollectible note receivable -- (425,060) Write off of obsolete inventory (53,186) (51,385) Loss on consigned inventory (143,520) -- Loss on abandonment of fixed assets (5,218) (5,200) Impairment of assets held for sale (127,189) -- Interest expense (670,455) (702,907) ----------- ----------- Loss before Income Taxes (6,796,196) (6,770,563) Income Tax (Expense) Benefit (46,553) (52,304) ----------- ----------- Net Loss $(6,842,749) $(6,822,767) =========== =========== Loss per weighted-average share of common stock outstanding - basic and fully diluted $ (0.88) $ (0.98) =========== =========== Weighted-average number of shares of common stock outstanding - basic and fully diluted 7,791,406 6,956,046 =========== ===========
The Company experienced significant declines in revenues from approximately $12,000,000 in Calendar 1999 to approximately $9,000,000 in Calendar 2000 to approximately $4,000,000 in Calendar 2001. Further, the Company has limited opportunity to reduce variable costs. Management has identified various assets and designated them "Surplus and held for sale"' including the Company's former production facility in Prattville, Alabama and various non-utilized equipment. Management notes that during the six years ended December 31, 2001, the Company has experienced cumulative net losses from operations and has utilized cash in operating activities of approximately $17,000,000. The Company's continued existence is dependent upon its ability to generate sufficient cash flows from operations to support its daily operations as well as provide sufficient resources to retire existing liabilities and obligations on a timely basis. To support operations during 2001, the Company received approximately $5,000,000 in non-interest bearing working capital advances from Morgan Creek Company, an unaffiliated entity and experienced net reductions in accounts receivable through cash collections of approximately $1,400,000. During 2000, the Company supported operations and retired certain short-term lines of credit from a non-financial institution lender with the receipt of approximately $615,000 and $9,600,000 in private transactions from the sale of common and preferred stock, respectively. The Company restructured its management during the third and fourth quarter of 2000 and during the first quarter of 2001. At the present time, the Company is not performing at levels significant enough to support daily operations. The Company remains dependent upon additional external sources of financing; however, there can be no assurance that the Company will be able to obtain additional funding or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company. The Company is in default on the debenture payable to The Schlinger Foundation. A distinct possibility exists that The Schlinger Foundation may post a notice of foreclosure on the secured Company assets. This action will significantly impair the Company's ability to continue operations. The Company's independent certified public accountants, S. W. Hatfield, CPA, has notified the Company that its auditor's report on the 2001 consolidated financial statements will contain a "going concern" opinion , as did their opinion on the 2000 consolidated financial statements, which will state that "substantial doubt about the Company's ability to continue as a going concern" exists. -----END PRIVACY-ENHANCED MESSAGE-----