-----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, BH/LhmnYvUxJVK2H0tiDT1DYwRgFf+rbWsVEv/qZzWWDAubNoctmxyccmvMhAwBs 6OrTAZfi9fpNUvnwYQdLfA== 0001005477-01-500585.txt : 20010815 0001005477-01-500585.hdr.sgml : 20010815 ACCESSION NUMBER: 0001005477-01-500585 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOINFO INC CENTRAL INDEX KEY: 0000351017 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 132867481 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-11497 FILM NUMBER: 1708485 BUSINESS ADDRESS: STREET 1: PO BOX 4383 CITY: STAMFORD STATE: CT ZIP: 06907-0383 BUSINESS PHONE: 2019301800 MAIL ADDRESS: STREET 1: PO BOX 4383 CITY: STAMFORD STATE: CT ZIP: 06907-0383 10QSB 1 d01-34143.txt FORM 10-QSB FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: JUNE 30, 2001 |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the transition period from ______________ to _________________ Commission File Number: 0-14786 AUTOINFO, INC. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) DELAWARE 13-2867481 - -------------------------------------------------------------------------------- (State or other jurisdiction or (I.R.S. Employer Identification of incorporation organization) number) 6401 Congress Ave., Suite 230, Boca Raton, FL 33487 - -------------------------------------------------------------------------------- (Address of principal executive office) (561) 988-9456 - -------------------------------------------------------------------------------- (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 |_| Number of shares outstanding of the Registrant's common stock as of August 13, 2001: 27,297,923 shares of common stock, $.001 par value. Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES |X| NO |_| Transitional Small Business Format YES |_| NO |X| AUTOINFO, INC. AND SUBSIDIARIES INDEX Part I. Financial Information: Item 1. Consolidated Financial Statements: Page Balance Sheets June 30, 2001 (unaudited) and December 31, 2000 (audited) ....... 3 Statements of Operations (unaudited) Three and six months ended June 30, 2001 and 2000 ............... 4 Statements of Cash Flows (unaudited) Three and six months ended June 30, 2001 and 2000 ............... 5 Notes to Unaudited Financial Statements ........................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ............................... 10 Part II. Other Information ................................................ 14 Signatures ................................................................ 15 2 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, 2001 2000 ------------ ------------ Unaudited Audited ASSETS Cash $ 473,000 $ 725,000 Short-term investments 55,000 216,000 Accounts receivable 976,000 720,000 Other current assets 88,000 67,000 ------------ ------------ 1,592,000 1,728,000 Fixed assets, net of depreciation 29,000 12,000 ------------ ------------ $ 1,621,000 $ 1,740,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Loan payable $ -- $ 101,000 Accounts payable and accrued liabilities 869,000 805,000 ------------ ------------ Total liabilities 869,000 906,000 ------------ ------------ Convertible subordinated debentures 575,000 575,000 ------------ ------------ Stockholders' Equity Common stock - authorized 100,000,000 shares $.001 par value; issued and outstanding - 27,298,000 shares as of June 30, 2001 and December 31, 2000 27,000 27,000 Additional paid-in capital 18,015,000 18,015,000 Retained deficit (17,865,000) (17,783,000) ------------ ------------ Total stockholders' equity 177,000 259,000 ------------ ------------ $ 1,621,000 $ 1,074,000 ============ ============ See notes to condensed unaudited financial statements 3 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended Three Months Ended June 30, June 30, 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Revenues $ 3,276,000 $ 1,518,000 $ 1,794,000 $ 825,000 ------------ ------------ ------------ ------------ Costs and expenses: Direct freight 2,629,000 1,109,000 1,428,000 593,000 Commissions 243,000 169,000 139,000 105,000 Operating expenses 503,000 276,000 236,000 134,000 Depreciation 5,000 -- 2,000 -- (Gain) loss on investments (22,000) 18,000 (17,000) 18,000 ------------ ------------ ------------ ------------ Total operating expenses 3,358,000 1,572,000 1,788,000 850,000 ------------ ------------ ------------ ------------ (Loss) income from continuing operations before income taxes (82,000) (54,000) 6,000 (25,000) ncome tax (benefit) -- (8,000) -- (4,000) ------------ ------------ ------------ ------------ (Loss) income from continuing operations (82,000) (46,000) 6,000 (19,000) Loss from discontinued operations -- (732,000) -- (323,000) ------------ ------------ ------------ ------------ Net (loss) income $ (82,000) $ (778,000) $ 6,000 $ (342,000) ============ ============ ============ ============ Basic and diluted net (loss) income per share: $(.00) $(.04) $ .00 $(.02) ============ ============ ============ ============ Weighted average number of common and common equivalent shares 27,298,000 18,482,000 27,298,000 18,482,000 ------------ ------------ ------------ ------------
See notes to condensed unaudited financial statements 4 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2001 2000 --------- --------- Cash flows from operating activities: Net loss $ (82,000) $(778,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,000 8,000 (Gain) loss on sales of securities (10,000) 18,000 Net unrealized holding gain (4,000) Changes in assets and liabilities: Accounts receivable (256,000) 24,000 Other assets (21,000) 2,000 Accounts payable and accrued liabilities 64,000 531,000 --------- --------- Net cash used in operating activities (304,000) (195,000) --------- --------- Cash flows from investing activities: Capital expenditures (22,000) Proceeds from sale of short-term investments 175,000 28,000 --------- --------- Net cash provided by investing activities 153,000 28,000 --------- --------- Cash flows from financing activities: Decrease in borrowings, net (101,000) -- --------- --------- Net cash used in financing activities (101,000) -- --------- --------- Net decrease in cash (252,000) (167,000) Cash at beginning of period 725,000 637,000 --------- --------- Cash at end of period $ 473,000 $ 470,000 ========= ========= See notes to condensed unaudited financial statements 5 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Forward Looking Statements Certain statements made in this Quarterly Report on Form 10-QSB are "forward-looking statements"(within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the factors set forth under the headings "Business", and "Certain Factors That May Affect Future Growth," under Part I, Item 1, of the Company's Annual Report on Form 10-K for the year ended December 31, 2000 as filed with the Securities and Exchange Commission. Note 1. - Business and Summary of Significant Accounting Policies Business In December 1995, AutoInfo, Inc., (the "Company"), a Delaware corporation, acquired the operating assets of Falk Finance Company ("FFC"), a Norfolk, Virginia based specialty financial services company and, as a result, the Company became a specialized consumer finance company that acquired and serviced automobile receivables from automobile dealers selling new and used vehicles to non-prime customers. The Company experienced material operating losses during 1996, 1997 and 1998. As a result of these losses, the adverse changes in the non-prime automobile finance industry and the deterioration in the Company's financial condition, during 1998, the Company discontinued the operation of its non-prime automotive finance business. During 1999, the Company continued to reduce operating overhead by negotiating the termination of its lease in Montvale, New Jersey and vacating the premises. On February 2, 2000, the Company filed a disclosure statement and reorganization plan (the "Reorganization Plan") pursuant to Chapter 11 of Title 11 of the United States Bankruptcy Code. On June 22, 2000, the Company entered into a Merger Agreement with Sunteck Transport, Inc. ("Sunteck"), a full service third party transportation logistics provider, and it's wholly owned subsidiary, Ubidfreight.com, in exchange, upon closing, for 10 million shares of AutoInfo Common Stock, which constituted approximately 37% of the proposed outstanding Common Stock of reorganized AutoInfo under the Reorganization Plan. The consummation of the transaction was contingent upon, among other things, the approval of the Merger Agreement and AutoInfo's Disclosure Statement by 6 the Bankruptcy Court, approval of the Disclosure Statement by AutoInfo's unsecured creditor class, the entry of an order confirming the Reorganization Plan and the securing of additional financing. Sunteck, which was formed in 1997, is a full service third party transportation logistics provider. Its services include ground transportation coast to coast, local pick up and delivery, warehousing, air freight and ocean freight. Sunteck has developed strategic alliances with Less than Truckload (LTL), truckload, air, rail and ocean common carriers to service its customers' needs. Sunteck's personnel have in excess of forty years of freight industry experience. On June 27, 2000, the Company's Amended Disclosure Statement and Amended Plan of Reorganization (the "Plan") was approved by the Bankruptcy Court. The Plan provided for the issuance of one share of our common stock and a cash payment of $ 0.03 for each dollar of approximately $9.5 million of unsecured debt. On August 1, 2000, the Company announced that the Reorganization Plan had been confirmed by the Honorable Adlai S. Hardin, Jr., United States Bankruptcy Judge to become effective, without further action by the Court, upon the closing of AutoInfo's merger with Sunteck. On December 7, 2000, the Company announced that it obtained new financing totaling $575,000 in the form of ten year 12% Convertible Debentures (the "Debentures") and had consummated the acquisition of Sunteck pursuant to the Merger Agreement dated June 22, 2000. As a result, the Reorganization Plan, conditionally confirmed by the Bankruptcy Court on August 1, 2000, became effective without further action by the Court. The $575,000 financing was provided by certain officers, directors and other parties and is being used for working capital to support planned business expansion. The Debentures are convertible into common stock at the option of the debenture holder at a conversion price of $0.25 per share and are redeemable, at the option of the holder, after December 31, 2003. Harry Wachtel, President of Sunteck, became President and Chief Executive Officer of AutoInfo and William Wunderlich became Executive Vice President and Chief Financial Officer. In addition, the Board of Directors was reconstituted to include Harry M. Wachtel (Chairman), Mark Weiss, Thomas Robertson and Peter Einselen. All documents on file in our bankruptcy proceeding, case no. 00-10368, including the Sunteck merger agreement can be viewed on the Bankruptcy Court's Internet site at: http://ecf.nysb.uscourts.gov/index.html. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions for Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2001 and 2000 are not necessarily indicative of the results that may be expected for a full fiscal year. For further information, refer to the financial statement and footnotes thereto included in the Company's report on Form 10-K for the year ended December 31, 2000. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation. 7 Revenue Recognition The Company recognizes revenues at the time goods are picked up at the customers' location. Provision for Doubtful Accounts The Company has established an allowance for doubtful accounts based upon historical trends. Short-term Investments Short-term investments as of June 30, 2001 consist of marketable securities. Investments were carried at market value as of June 30, 2000. Fixed Assets Fixed assets as of June 30, 2001, consisting primarily of furniture, fixtures and equipment, were carried at cost net of accumulated depreciation. Depreciation of fixed assets was provided on the straight-line method over the estimated useful lives of the related assets which range from three to five years. Net (Loss) Income Per Share Basic (loss) income per share is based on net (loss) income divided by the weighted average number of common shares outstanding. Common stock equivalents outstanding were excluded from the calculation as they were antidilutive for the periods presented. Use of Estimates The preparation of these financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. The Company believes that all such assumptions are reasonable and that all estimates are adequate, however, actual results could differ from those estimates. Income Taxes The Company utilizes the asset and liability method for accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Note 2 - Business Acquisition On December 7, 2000, the Company, in a merger transaction, acquired Sunteck in exchange for 10 million shares of AutoInfo common stock. The acquisition has been accounted for under the pooling of interest method of accounting 8 and accordingly, the accompanying financial statements are presented on a combined basis as if the acquisition occurred on January 1, 2000. Note 3 - Discontinued Operations During 1998, the Company ceased to operate as a specialty consumer finance company and discontinued its operations. On December 7, 2000 based upon the acquisition of Sunteck, the Company commenced operations as a full service third party transportation logistics provider. Accordingly, the results of operations of the Company prior to the date of acquisition of Sunteck have been categorized as discontinued operations. Summarized results of operations and financial position data of the discontinued operations are as follows: Period from Period from January 1, April 1, through June 30, through June 30, 2000 2000 ---------------- ---------------- Results of Operations: Revenues $ 32,000 $ 14,000 ----------- ----------- Loss before tax benefit (732,000) (323,000) Income tax benefit -- -- ----------- ----------- Loss from discontinued operations $ (732,000) $ (323,000) =========== =========== Note 4- Short-Term Investments At June 30, 2001 and 2000, short-term investments, consisting primarily of marketable securities, are classified as trading securities and are reported at fair market value. Gains and losses on disposition of securities are recognized on the specific identification method in the period in which they occur. Unrealized holding gains and losses on trading securities based upon the fair market value as of the balance sheet date, if material, would be included in earnings in the period in which they occur. Investment return is summarized as follows:
Six Months Ended Three Month Ended June 30, June 30, 2001 2000 2001 2000 -------- -------- -------- -------- Continuing operations: Unrealized gain $ 4,000 $ -- $ 7,000 $ -- Gain (loss) on sale of securities 10,000 (18,000) 8,000 (18,000) Dividends 8,000 -- 2,000 -- -------- -------- -------- -------- $ 22,000 $(18,000) $ 17,000 $(18,000) ======== ======== ======== ========
9 AUTOINFO, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition And Results of Operations Cautionary statement identifying important factors that could cause our actual results to differ from those projected in forward looking statements. Pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, readers of this report are advised that this document contains both statements of historical facts and forward looking statements. Forward looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those indicated by the forward looking statements. Examples of forward looking statements include, but are not limited to (i) projections of revenues, income or loss, earnings per share, capital expenditures, dividends, capital structure and other financial items, (ii) statements of our plans and objectives with respect to business transactions and enhancement of shareholder value, (iii) statements of future economic performance, and (iv) statements of assumptions underlying other statements and statements about our business prospects. The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our financial statements and the notes thereto appearing elsewhere in this report. General In December 1995, AutoInfo, Inc., (the "Company"), a Delaware corporation, acquired the operating assets of Falk Finance Company ("FFC"), a Norfolk, Virginia based specialty financial services company and, as a result, the Company became a specialized consumer finance company that acquired and serviced automobile receivables from automobile dealers selling new and used vehicles to non-prime customers. The Company experienced material operating losses during 1996, 1997 and 1998. As a result of these losses, the adverse changes in the non-prime automobile finance industry and the deterioration in the Company's financial condition, during 1998, the Company discontinued the operation of its non-prime automotive finance business. During 1999, the Company continued to reduce operating overhead by negotiating the termination of its lease in Montvale, New Jersey and vacating the premises. On February 2, 2000, the Company filed a disclosure statement and reorganization plan (the "Reorganization Plan") pursuant to Chapter 11 of Title 11 of the United States Bankruptcy Code. On June 22, 2000, the Company entered into a Merger Agreement with Sunteck Transport, Inc. ("Sunteck"), a full service third party transportation logistics provider, and it's wholly owned subsidiary, Ubidfreight.com, in exchange, upon closing, for 10 million shares of AutoInfo Common Stock, which constituted approximately 37% of the proposed outstanding Common Stock of reorganized AutoInfo under the Reorganization Plan. The consummation of the transaction was contingent upon, among other things, the approval of the Merger Agreement and AutoInfo's Disclosure Statement by the Bankruptcy Court, approval of the Disclosure Statement by AutoInfo's unsecured creditor class, the entry of an order confirming the Reorganization Plan and the securing of additional financing. 10 Sunteck, which was formed in 1997, is a full service third party transportation logistics provider. Its services include ground transportation coast to coast, local pick up and delivery, warehousing, air freight and ocean freight. Sunteck has developed strategic alliances with Less than Truckload (LTL), truckload, air, rail and ocean common carriers to service its customers' needs. Sunteck's personnel have in excess of forty years of freight industry experience. On June 27, 2000, the Company's Amended Disclosure Statement and Amended Plan of Reorganization (the "Plan") was approved by the Bankruptcy Court. The Plan provided for the issuance of one share of our common stock and a cash payment of $ 0.03 for each dollar of approximately $9.5 million of unsecured debt. On August 1, 2000, the Company announced that the Reorganization Plan had been confirmed by the Honorable Adlai S. Hardin, Jr., United States Bankruptcy Judge to become effective, without further action by the Court, upon the closing of AutoInfo's merger with Sunteck. On December 7, 2000, the Company announced that it obtained new financing totaling $575,000 in the form of ten year 12% Convertible Debentures (the "Debentures") and had consummated the acquisition of Sunteck pursuant to the Merger Agreement dated June 22, 2000. As a result, the Reorganization Plan, conditionally confirmed by the Bankruptcy Court on August 1, 2000, became effective without further action by the Court. The $575,000 financing was provided by certain officers, directors and other parties and is being used for working capital to support planned business expansion. The Debentures are convertible into common stock at the option of the debenture holder at a conversion price of $0.25 per share and are redeemable, at the option of the holder, after December 31, 2003. Harry Wachtel, President of Sunteck, became President and Chief Executive Officer of AutoInfo and William Wunderlich became Executive Vice President and Chief Financial Officer. In addition, the Board of Directors was reconstituted to include Harry M. Wachtel (Chairman), Mark Weiss, Thomas Robertson and Peter Einselen. All documents on file in our bankruptcy proceeding, case no. 00-10368, including the Sunteck merger agreement can be viewed on the Bankruptcy Court's Internet site at: http://ecf.nysb.uscourts.gov/index.html. Results of Operations Three and Six Month Periods Ended June 30, 2001 and 2000 Revenues Revenues consisting of freight fees and other related services revenues totaled $1,794,000 and $3,276,000, respectively, for the three and six month periods ended June 30, 2001 as compared with $825,000 and $1,518,000, respectively, in the prior year periods. This increase is directly related to the expansion of operations resulting from the implementation of the Company's strategic business growth plan. Costs and expenses Direct freight consisting primarily of delivery costs totaled $1,428,000 and $2,269,000, respectively, for the three and six month periods ended June 30, 2001 as compared with $593,000 and $1,109,000, respectively, in the prior year periods. This increase is directly related to the expansion of operations resulting from the implementation of the Company's strategic business growth plan and lower gross margins on certain incremental revenue. Commissions totaled $139,000 and $243,000, respectively, for the three and six month periods ended June 30, 2001 as compared with $105,000 and $169,000, respectively, in the prior year periods. This increase is directly related to the expansion of operations resulting from the implementation of the Company's strategic business growth plan. 11 Operating expenses totaled $236,000 and $503,000, respectively, for the three and six month periods ended June 30, 2001 as compared with $134,000 and $276,000, respectively, in the prior year periods. This increase is directly related to the expansion of operations resulting from the implementation of the Company's strategic business growth plan. Depreciation totaled $2,000 and $5,000, respectively, for the three and six month periods ended June 30, 2001. There was no depreciation for the three and six month periods ended June 30, 2000. (Gain) loss on investments of ($17,000) and ($22,000), respectively, for the three and six month periods ended June 30, 2001 as compared with a net losses of $18,000 and $18,000, respectively, in the prior year periods consisted of the gain or loss on the sale of marketable securities, the unrealized holding gain on trading securities and dividends. Income tax benefit Income tax benefit of $4,000 and $8,000, respectively, for the three and six month periods ended June 30, 2000 relates to the operating results of Sunteck prior to the date of acquisition. (Loss) income from continuing operations Income from continuing operations totaled $6,000 for the three month period ended June 30, 2001 as compared with a loss of $25,000 in the prior year period. The loss form operations was $11,000 for the three month period ended June 30, 2001 as compared with a loss of $7,000 in the prior year period. The gain on investments was $17,000 for the three month period ended June 30, 2001, as compared with loss on investments of $18,000 in the prior year period. Loss from continuing operations before the gain from investing activities totaled $104,000 for the six months period ended June 30, 2001 as compared with losses of $36,000 in the prior year period. This net increase directly related to costs associated with the expansion of operations in furtherance of the implementation of the Company's strategic business growth plan and lower gross margins on certain incremental revenue. The gain on investments was $22,000 for the six month period ended June 30, 2001 as compared with loss on investments of $18,000 in the prior year period. Discontinued operations The loss from discontinued operations totaled $323,000 and $732,000 for the three and six month periods ended June 30, 2000, reflecting our operating results prior to the merger with Sunteck and consisted primarily of interest expense of $233,000 and general and administrative expenses. Net (loss) income Net income totaled $6,000 for the three month period ended June 30, 2001 as compared with a loss of $342,000 in the prior year period. The decrease is primarily related to the loss from discontinued operations of $323,000 in the prior year period. Net loss totaled $82,000 for the six month period ended June 30, 2001 as compared with a loss of $778,000 in the prior year period. The decrease is primarily related to the loss from discontinued operations of $732,000 in the prior year period. Trends and uncertainties 12 In December 2000, as a result of our acquisition of Sunteck, we became a full service third party transportation logistics provider. Our services include ground transportation coast to coast, local pick up and delivery, warehousing, air freight and ocean freight. We have strategic alliances with less than truckload (LTL), truckload, air, rail and ocean common carriers to service our customers' needs. The transportation industry is highly competitive and highly fragmented. Our primary competitors are other non-asset based as well as asset based third party logistics companies, freight brokers, carriers offering logistics services and freight forwarders. We also compete with customers' / shippers internal traffic / transportation departments as well as carriers internal sales and marketing departments directly seeking shippers' freight. We anticipate that competition for our services will continue to increase. Many of our competitors have substantially greater capital resources, sales and marketing resources and experience. We cannot assure you that we will be able to effectively compete with our competitors in effecting our business expansion plans. Our operations to date have not been profitable. As of June 30, 2001, we had an accumulated deficit of $17.9 million. We expect to continue operating at a loss during the current fiscal year as we implement our new business plan. These losses are primarily attributable to costs associated with scaling up Sunteck's business as well as general and administrative expenses. Other factors that could adversely affect our operating results include: o the success of Sunteck in expanding its business operations; and o changes in general economic conditions. We cannot assure you that our revenues will increase sufficiently to offset our operating costs or that, even if they do, that our operations will ever be profitable. Depending on our ability to generate revenues, we may require additional funds to expand Sunteck's business operations and for working capital and general corporate purposes. At this time, we do not believe that revenues will reach the level required to sustain our operations and growth plans in the near term. Therefore, we are actively pursuing additional financing alternatives. However, we do not have any commitments for additional financing and we cannot assure you that any additional financing will be available or, if available, will be offered on acceptable terms. Any additional equity financing may be dilutive to stockholders, and debt financings, if available, may involve restrictive covenants that further limit our ability to make decisions that we believe will be in our best interests. In the event we cannot obtain additional financing on terms acceptable to us when required, our ability to expand Sunteck's operations may be materially adversely affected. Liquidity and capital resources At June 30, 2001, we had outstanding $575,000 of subordinated convertible debentures. The debentures are convertible into common stock at the option of the debenture holder at a conversion price of $0.25 per share and are redeemable, at the option of the holder, after December 31, 2003. At June 30, 2001, we had liquid assets of approximately $528,000. The total amount of debt outstanding as of June 30, 2001 was $575,000. This following table presents our debt instruments and their weighted average interest rates as of June 30, 2001: 13 Weighted Average Balance Rate Subordinated Debt $575,000 12.0% Inflation and changing prices had no material impact on revenues or the results of operations for the period ended June 30, 2001. AUTOINFO, INC. AND SUBSIDIARIES Part II - OTHER INFORMATION Item 1 - 6: Inapplicable 14 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized. AUTOINFO, INC. (Registrant) --------------------------------------------------- /s/ William I. Wunderlich --------------------------------------------------- William I. Wunderlich Executive Vice President and Principal Financial Officer Date: August 10, 2001 15 -----END PRIVACY-ENHANCED MESSAGE-----