-----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, NS1auvS8iz1sQrYHIjFNQseYDt7FQjIgjZtigq/KHCPSQ6FmfGqIMJK76rltaEjO heDLsxmQHVu05EhZxFBzhg== 0000950005-00-000677.txt : 20000516 0000950005-00-000677.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950005-00-000677 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZAPWORLD COM CENTRAL INDEX KEY: 0001024628 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600] IRS NUMBER: 943210624 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-30300 FILM NUMBER: 633996 BUSINESS ADDRESS: STREET 1: 117 MORRIS ST CITY: SEBASTOBOL STATE: CA ZIP: 95472 BUSINESS PHONE: 7078244150 MAIL ADDRESS: STREET 1: 117 MORRIS ST CITY: STBASTOPOL STATE: CA ZIP: 95472 FORMER COMPANY: FORMER CONFORMED NAME: ZAP POWER SYSTEMS INC DATE OF NAME CHANGE: 19970319 10QSB 1 10QSB - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- Form 10-QSB QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ----------------------------- For the quarterly period ended March 31, 2000 ZAPWORLD.COM (Name of small business issuer in its charter) CALIFORNIA 94-3210624 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 117 Morris Street Sebastopol, CA 95472 (707) 824-4150 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Securities registered under section 12(b) of the Exchange Act: None Securities registered under section 12(g) of the Exchange Act: None Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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 XNo State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 5,212,663 shares of common stock as of April 30, 2000. Transitional Small Business Disclosure Format Yes[ ] No[x ] - -------------------------------------------------------------------------------- Part I. FINANCIAL INFORMATION Item 1. Financial Statements ZAPWORLD.COM CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands)
March 31, 2000 - ---------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash $2,660 Accounts receivable, net of allowance for doubtful accounts of $53 461 Inventories 1,357 Notes receivable 35 Prepaid expenses and other assets 353 ------------------- Total current assets 4,866 PROPERTY AND EQUIPMENT, net of accumulated depreciation of $400 395 OTHER ASSETS Patents & Trademarks, net of accumulated amortization of $53 1,314 Goodwill, net of amortization of $3 109 Advances to retail stores & technology companies 260 Deposits 36 ------------------- Total other assets 1,719 ------------------- Total assets $6,980 =================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $458 Accrued liabilities and other expenses 177 Current maturities of long-term debt 12 Current maturities of obligations under capital leases 7 ------------------- Total current liabilities 654 OTHER LIABILITIES Long-Term Debt, less current maturities 24 Obligations under capital leases, less current maturities 13 ------------------- Total other liabilities 37 ------------------- Total liabilities 691 STOCKHOLDERS' EQUITY Preferred stock, authorized 10,000,000 shares; no shares Issued or outstanding Common stock, authorized 20,000,000 shares of no par value; issued and outstanding 5,212,663 12,257 Accumulated deficit (5,601) Unearned compensation (82) ------------------- 6,574 Less: notes receivable from shareholders (285) ------------------- Total stockholders' equity 6,289 ------------------- Total liabilities and stockholders' equity $6,980 =================== The accompanying notes are an integral part of the financial statements.
2 ZAPWORLD.COM CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Thousands, except share amounts)
Three months ended March 31, 2000 1999 ---- ---- (UNAUDITED) (UNAUDITED) NET SALES $ 1,897 $ 1,164 COST OF GOODS SOLD 1,183 756 --------- --------- GROSS PROFIT 714 408 OPERATING EXPENSES Selling 401 200 General and administrative 680 218 Research and development 145 48 --------- --------- 1,226 466 --------- --------- LOSS FROM OPERATIONS (512) (58) --------- --------- OTHER INCOME (EXPENSE) Interest income 37 1 Other income (expense) (8) (75) --------- --------- 29 (74) --------- --------- NET LOSS $ (483) $ (132) ========= ========= NET LOSS PER COMMON SHARE, BASIC AND DILUTED $ (0.09) $ (0.05) ========= ========= WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING 5,149,721 2,833,180 ========= ========= The accompanying notes are an integral part of the financial statements.
3 ZAPWORLD.COM CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three months ended March 31, 2000 1999 - ------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss ($483) ($132) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 99 24 Allowance for doubtful accounts 18 - Amortization of the fair market value of warrants 13 108 Changes in: Receivables (141) (84) Inventories 333 (20) Deposits (11) (116) Advances to retail stores & technology companies 291 - Prepaid expenses and other assets (51) - Accounts payable (284) 113 Accrued liabilities and customer deposits (191) (27) ----------- --------------- Net cash used by operating activities (407) (134) ----------- --------------- CASH FLOWS FROM INVESTING ACTIVITES Purchase of equipment (153) (42) Purchase of Patents (162) - Payment advance for acquisitions - (15) ----------- --------------- Net cash provided by (used for) investing activities (315) (57) ----------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loans payable - 19 Sale of common stock, net of stock offering costs 204 1,955 Principal repayments on long-term debt (4) (290) Payments on obligations under capital leases (2) (4) ----------- --------------- Net cash provided by financing activities 198 1,680 ----------- --------------- NET INCREASE/(DECREASE) IN CASH (524) 1,489 CASH, beginning of period 3,184 475 ----------- --------------- ----------- --------------- CASH, end of period $2,660 $1,964 =========== =============== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the quarter for interest $2 $1 The accompanying notes are an integral part of the financial statements. - ------------------------------------------------------------------------------------------------------------------
ZAPWORLD.COM 4 NOTES TO THE INTERIM UNAUDITED FINANCIAL STATEMENTS (1) Basis of Presentation The financial statements included in this Form 10-QSB have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, pursuant to such rules and regulations, although management believes the disclosures are adequate to make the information presented not misleading. The results of operations for any interim period are not necessarily indicative of results for a full year. These statements should be read in conjunction with the financial statements and related notes included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999. The financial statements presented herein, for the three months ended March 31, 2000 and 1999 reflect, in the opinion of management, all material adjustments consisting only of normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flow for the interim periods. The net loss per common share is based on the weighted average number of common shares outstanding in each period. Common stock equivalents associated with stock options have been excluded from the weighted average shares outstanding since the effect of these securities would be anti-dilutive. (2) - PRINCIPALS OF CONSOLIDATION--The accounts of the Company and its consolidated subsidiaries are included in the consolidated financial statements after elimination of significant inter-company accounts and transactions. (3) - COMMON STOCK ZAPWORLD.COM's Common Stock is traded on the OTC Bulletin Board under the stock symbol "ZAPP". In the first quarter of 2000, the Company 1) realized $195,000 in proceeds from the exercise of stock options and issued 94,000 shares, and 2) realized $7,351 on the sale of stock to employees through a stock purchase plan and issued 1,036 shares. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Special Note Regarding Forward-Looking Statements Certain statements in this Form 10-QSB, including information set forth under this Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations" constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "ACT"). ZAPWORLD.COM (the "Company" or ZAP) desires to avail itself of certain "safe harbor" provisions of the Act and is therefore including this special note to enable the Company to do so. Forward-looking statements included in this Form 10-QSB or hereafter included in other publicly available documents filed with the Securities and Exchange Commission, reports to the Company's stockholders and other publicly available statements issued or released by the Company involve known and unknown risks, uncertainties, and other factors which could cause the Company's actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward looking statements. Such future results are based upon management's best estimates based upon current conditions and the most recent results of operations. Overview The Company designs, assembles, manufactures, and distributes electric bicycle power kits, electric bicycles and tricycles, and other low-power electric transportation vehicles. 5 The Company manufactures several electric motor kits that have up to 62 unique parts. The electric motor kit manufacturing and installation of the motor systems to the bicycles is done at its Sebastopol location. The electric motors are purchased from an original equipment manufacturer (OEM) in the auto and air-conditioning industry. The Company is using one company for its motors, although there are other companies that could be used with slight modifications to the motor support brackets. The batteries are standard batteries used in the computer industry for power interrupt systems. The electronic system uses standard electronic components. The Company has a contractual relationship with Smith & Wesson who provides the Company with Law Enforcement Bicycles. The Company has agreed to purchase at least 250 bikes from Smith & Wesson in exchange for specific exclusive distribution and pricing rights. The Company has no other contractual agreements with any of its other vendors. The Company as of March 31, 2000 had a $751,900 sales backlog. The company expects to fill these orders within the next 45 days. The Company's growth strategy is to increase net sales by augmenting its marketing and sales force, increasing distribution channels through the internet, retail organizations, and wholesale distributors both domestically and overseas. The Company will continue to increase its production capability to meet the increasing demand for its product. The Company will continue to develop products so that it is the low cost leader in the industry. Product improvements will continue to enlarge ZAP's presence in the electric vehicle industry. The Company acquired Electric Vehicles Systems, Inc. (EVS) in February 2000. EVS provides the Company with access to patented technology for the Powerski(tm). The Powerskitm is a recreational transportation product that the Company began marketing in the second quarter of 2000. The Company acquired ZAP of Santa Cruz, a bicycle retailer in March 2000. ZAP of Santa Cruz will provide an additional sales channel for ZAP products. On March 21, 2000 the Company announced its plan to distribute the E-Kart, an electric go-kart. The Company began marketing the E-Kart in the second quarter of 2000. On April 17 ZAP announced that it terminated its agreement to merge with neighborhood electric vehicle manufacturer Global Electric MoterCars, LLC and rental company EV Rentals, LLC both of Fargo, ND. Results of Operations The following table sets forth, as a percentage of net sales, certain items included in the Company's Income Statements (see Financial Statements and Notes) for the periods indicated: Three months ended March 31, 2000 1999 ---------- ---------- Statements of Income Data: Net sales................................... 100.0% 100.0% Cost of sales............................... 62.4 65.0 Gross profit ............................... 37.6 35.0 Operating expenses......................... 64.6 40.0 Loss from operations........................ (27.0) (5.0) Other income (expense)..................... 1.5 (6.3) Loss before income taxes.................... (25.5) (11.3) Provision for income taxes.................. 0.0 0.0 Net loss.................................... (25.5) (11.3) Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999 6 Net sales for the quarter ended March 31, 2000, were $1,897,000 compared to $1,164,000 in the prior year, an increase of $733,000 or 63%. The increase in sales in 2000 over the same period in 1999 was primarily due to increased sales of ZAP products to overseas markets. Gross profit increased as a percentage of net sales to 38% in 2000 from 35% in 1999. The total gross profit increased $306,000 or 75%. The increase in gross profit dollars can be attributed to gross profits generated from the sales of the ZAP(tm) products to overseas markets. Selling expenses in the quarter ended March 31, 2000 were $401,000 as compared to $200,000 for the quarter ended March 31, 1999. This was an increase of $201,000 or 100% from 1999 to 2000. As a percentage of sales, selling expenses increased from 17% to 21% of sales in the first quarter of 2000. The increase in selling expenses can be attributed to the hiring of personnel to handle additional sales volume. Also, the Company's increased spending to market and promote ZAP products in the first quarter of 2000. General and administrative expenses for the quarter ended March 31, 2000 were $680,000 as compared to $218,000 for the quarter ended March 31, 1999. This is an increase of $462,000 or 212%. As a percentage of sales, general and administrative expense increased to 36% from 19% of net sales from 1999. This increase can be partially attributed to the hiring of management personnel to oversee the expanding business, including the subsidiary store operations. In the first quarter of 2000 the Company incurred legal and consulting costs associated with the restructuring of the Company and acquisition activity. Also, beginning in 2000 the Company began amortizing patents, trademarks, and goodwill costs associated with the acquisitions of electrical vehicle companies in the last quarter of 1999. Research and development increased $97,000 or 202% in the 1st quarter of 2000 as compared to the 1st quarter of 1999. As a percentage of net sales it increased to 8% of sales in the 1st quarter of 2000 as compared to 4% of sales in the 1st quarter of 1999. Expense increases in the first quarter of 2000 as compared to the first quarter of 1999 were the result of increased personnel hired to assist in the development of new products. Interest income increased $36,000 from the first quarter of 2000 compared to the first quarter of 1999. The increase is attributed primarily to interest income derived from proceeds from financing. Other income (expense) decreased from $75,000 to $8,000 in the 1st quarter of 2000, a decrease of $67,000 over the 1st quarter of 1999. This decrease can be attributed to the completion of the amortization of the fair value of warrants issued to an investment banker for securing equity financing for the company in 1999. Liquidity and Capital Resources In the first quarter of 2000 net cash used by the Company for operating activities was $407,000. In the first quarter of 1999, the Company used cash from operations of $134,000. Cash provided in the first quarter of 2000 was comprised of the net loss incurred for the quarter of $483,000 offset by net non-cash expenses of $130,000 and the net change in operating assets and liabilities resulting in a use of cash of $54,000. Cash used in operations in the first quarter of 1999 was comprised of the net loss incurred for the quarter of $132,000, offset by net non-cash expenses of $132,000, and the net change in operating assets and liabilities resulting in a further use of cash of $134,000. Investing activities used cash of $315,000 in the first quarter of 2000 and used $57,000 during the first quarter ended March 31, 1999. The uses of cash were for the purchase of fixed assets and patents. Financing activities provided cash of $198,000 and $1,680,000 during the first quarters ended March 31, 2000 and 1999 respectively. In both years, the cash provided by financing activities resulted from the sales of common stock, $204,000 and $1,955,000 for the first quarters ended March 31, 2000 and 1999 respectively, partially offset by principal payments on outstanding debt. At March 31, 2000 the Company had cash of $2,660,000 as compared to $1,964,000 at March 31, 1999. At March 31, 2000, the Company had working capital of $4,212,000, as compared to working capital of $2,253,000 at March 31, 1999. The increases in both cash and working capital in the first quarter of 2000 over the first quarter of 1999 are primarily due to the proceeds received from the Company's private placement offering which more than offset 7 the Company's net losses during the same period. The Company, at present, does not have a credit facility in place with a bank or other financial institution. The Company believes that the cash on hand at March 31, 2000 will be sufficient to allow the Company to continue its expected level of operations for the remainder of the year. The Company's primary capital needs are to fund its growth strategy, which includes increasing its internet shopping mall presence, increasing distribution channels, establish company owned and franchised ZAP stores, introducing new products, improving existing product lines and development of strong corporate infrastructure. Seasonality and Quarterly Results The Company's business is subject to seasonal influences. Sales volumes in the bicycle industry typically slow down during the winter months, November to March. The Company is marketing worldwide and is not impacted 100% by U.S. seasonality. Inflation The Company's raw materials are sourced from stable cost competitive industries. As such, the Company does not foresee any material inflationary trends for its raw material sources. PART II - OTHER INFORMATION Item 1. Legal Proceedings There were no legal proceedings. Item 2. Changes in Securities There were no changes in rights of securities holders. Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to the vote of security holders. Item 5. Other Information There were no major contracts signed during the period. Item 6. Exhibits and Reports on Form 8-K No reports on Form 8-K were filed during the quarter. 8 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ZAPWORLD.COM - --------------------------------- (Registrant) Date ---------------- ---------------------------------------- Gary Starr - President and Director 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF ZAPWORLD.COM FOR THE THREE MONTHS ENDED MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. AMOUNTS IN THOUSANDS 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 2,660 0 514 (53) 1,357 4,866 795 (400) 6,980 654 0 0 0 12,257 (5,601) 6,980 1,897 1,934 1,183 1,226 0 (53) (8) (483) 0 (483) 0 0 0 (483) (0.09) (0.09)
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