10QSB 1 d01-35044.txt FORM 10QSB 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: SEPTEMBER 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 of incorporation (I.R.S. Employer or organization) Identification 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 November 9, 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 |_| AUTOINFO, INC. AND SUBSIDIARIES INDEX Part I. Financial Information: Item 1. Consolidated Financial Statements: Page Balance Sheets September 30, 2001 (unaudited) and December 31, 2000 (audited) . 3 Statements of Operations (unaudited) Three and nine months ended September 30, 2001 and 2000 ........ 4 Statements of Cash Flows (unaudited) Three and nine months ended September 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 .............................. 11 Part II. Other Information ................................................... 15 Signatures ................................................................... 16
2 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
September 30, December 31, 2001 2000 ------------- ------------ Unaudited Audited ASSETS Current assets Cash $ 914,000 $ 725,000 Short-term investments 14,000 216,000 Accounts receivable 1,169,000 720,000 Other current assets 79,000 67,000 ------------ ------------ Total current assets 2,176,000 1,728,000 Fixed assets, net of depreciation 37,000 12,000 ------------ ------------ $ 2,213,000 $ 1,740,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Loan payable $ 500,000 $ 101,000 Accounts payable and accrued liabilities 947,000 805,000 ------------ ------------ Total current liabilities 1,447,000 906,000 ------------ ------------ 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 September 30, 2001 and December 31, 2000 27,000 27,000 Additional paid-in capital 18,015,000 18,015,000 Retained deficit (17,851,000) (17,783,000) ------------ ------------ Total stockholders' equity 191,000 259,000 ------------ ------------ $ 2,213,000 $ 1,740,000 ============ ============
See notes to condensed unaudited financial statements 3 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, 2001 2000 2001 2000 ------------ ------------ ----------- ------------ Revenues $ 5,317,000 $ 2,205,000 $ 2,041,000 $ 687,000 ------------ ------------ ----------- ------------ Costs and expenses: Direct freight 4,235,000 1,601,000 1,606,000 492,000 Commissions 423,000 234,000 180,000 65,000 Operating expenses 748,000 389,000 240,000 113,000 (Gain) loss on investments (22,000) 18,000 -- -- ------------ ------------ ----------- ------------ Total operating expenses 5,384,000 2,242,000 2,026,000 670,000 ------------ ------------ ----------- ------------ (Loss) income from continuing operations before income taxes (67,000) (37,000) 15,000 17,000 Income tax (benefit) -- (6,000) -- 2,000 ------------ ------------ ----------- ------------ (Loss) income from continuing operations (67,000) (31,000) 15,000 15,000 Loss from discontinued operations -- (1,000,000) -- (268,000) ------------ ------------ ----------- ------------ Net (loss) income $ (67,000) $ (1,031,000) $ 15,000 $ (253,000) ============ ============ =========== ============ Basic and diluted net (loss) income per share: $ (.00) $ (.06) $ .00 $ (.01) ============ ============ =========== ============ 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) Nine Months Ended September 30, 2001 2000 --------- ----------- Cash flows from operating activities: Net loss $ (67,000) $(1,031,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 8,000 11,000 Gain on sales of securities (10,000) (26,000) Net unrealized holding gain (4,000) (31,000) Changes in assets and liabilities: Accounts receivable (449,000) 9,000 Other assets (13,000) 8,000 Accounts payable and accrued liabilities 142,000 790,000 --------- ----------- Net cash used in operating activities (393,000) (270,000) --------- ----------- Cash flows from investing activities: Capital expenditures (33,000) -- Redemption of short-term investments 216,000 306,000 Purchases of short-term investments -- (46,000) --------- ----------- Net cash provided by investing activities 183,000 260,000 --------- ----------- Cash flows from financing activities: Proceeds of loan payable 500,000 Decrease in borrowings, net (101,000) -- --------- ----------- Net cash provided by financing activities 399,000 -- --------- ----------- Net increase (decrease) in cash 189,000 (10,000) Cash at beginning of period 725,000 637,000 --------- ----------- Cash at end of period $ 914,000 $ 627,000 ========= =========== 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, 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 6 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 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 September 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 will be used as 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 nine months ended September 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. Revenue Recognition The Company recognizes revenues at the time goods are picked up at a customer's location. 7 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 September 30, 2001 consisted of marketable securities. Investments were carried at market value as of September 30, 2001 and 2000. Fixed Assets Fixed assets as of September 30, 2001, consisting predominantly 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. Income (Loss) Per Share Basic income (loss) per share is based on net income (loss) 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 accounting principles generally accepted in the United States of America 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 and accordingly, the accompanying financial statements are presented on a combined basis as if the acquisition occurred on January 1, 2000. 8 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, July 1, through through September 30, September 30, 2000 2000 ------------- ------------- Results of Operations: Revenues $ 43,000 $ 10,000 ----------- --------- Loss before tax benefit (1,000,000) (268,000) Income tax benefit -- -- ----------- --------- Loss from discontinued operations $(1,000,000) $(268,000) =========== ========= Note 4- Short-Term Investments At September 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: Nine Months Ended Three Month Ended September 30, September 30, 2001 2000 2001 2000 -------- -------- ---- ---- Continuing operations: Unrealized gain $ 4,000 $ -- $ -- $ -- Gain (loss) on sale of securities 10,000 (18,000) -- -- Dividends 8,000 -- -- -- -------- -------- ---- ---- $ 22,000 $(18,000) $ -- $ -- ======== ======== ==== ==== 9 Note 5 - Loan Payable In August 2001, the Company obtained a $500,000 loan from a related party secured by accounts receivable. The loan provides for interest at 17% per annum and matures in August 2002. 10 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, 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. 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. 11 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 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 September 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 will be used as 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 Nine Month Periods Ended September 30, 2001 and 2000 Revenues Revenues consisting of freight fees and other related services revenue totaled $2,041,000 and $5,317,000 for the three and nine month periods ended September 30, 2001 as compared with $687,000 and $2,205,000 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. The Company presently has twenty sales agents in eleven states as compared with six sales agents in two states as of September 30, 2000. Costs and expenses Direct freight consisting primarily of delivery costs totaled $1,606,000 and $4,235,000 for the three and nine month periods ended September 30, 2001 as compared with $492,000 and $1,601,000 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 revenues generated by the Company's new sales agents. Commissions totaled $180,000 and $423,000 for the three and nine month periods ended September 30, 2001 as compared with $65,000 and $234,000 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. Operating expenses totaled $240,000 and $748,000 for the three and nine month periods ended September 30, 2001 as compared with $113,000 and $389,000 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. 12 (Gain) loss on investments, consisting of the gain or loss on the sale of marketable securities, the unrealized holding gain on trading securities and dividends, totaled net gains of $0 and $22,000 for the three and nine month periods ended September 30, 2001 as compared with a net losses of $0 and $18,000 in the prior year periods. Income tax benefit Income tax of $2,000 and the income tax benefit of $6,000 for the three and nine month periods ended September 30, 2000 relate to the operating results of Sunteck prior to the date of acquisition. (Loss) income from continuing operations Income from continuing operations totaled $15,000 for each of the three month periods ended September 30, 2001 and 2000. Revenues increased by 197% to $2,041,000 from $687,000 in the prior year period. This net increase directly related to the expansion of operations in furtherance of the implementation of the Company's strategic business growth plan offset by the cost associated with the expansion and lower gross margins on certain incremental revenue. Loss from continuing operations totaled $67,000 for the nine months period ended September 30, 2001 as compared with losses of $31,000 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, lower gross margins on certain incremental revenue, offset by the gain on investments of $22,000 for the nine month period ended September 30, 2001 as compared with loss on investments of $18,000 in the prior year period. Discontinued operations The loss from discontinued operations totaled $268,000 and $1,000,000 for the three and nine month periods ended September 30, 2000, reflecting our operating results prior to the merger with Sunteck and consisted primarily of interest expense of $233,000 and $700,000 for the three and nine month periods, respectively, and general and administrative expenses. Net (loss) income Net income totaled $15,000 for the three month periods ended September 30, 2001 as compared with a net loss of $253,000 in the prior year period. Net loss totaled $67,000 for the nine month period ended September 30, 2001 as compared with a loss of $1,031,000 in the prior year period. The decrease is directly related to the loss from discontinued operations in the prior year period. Trends and uncertainties 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. Since the merger in December 2000, we have had initial success at implementing our business expansion plan and, at present, are represented by twenty 13 sales agents in eleven states. We cannot assure you that we will continue to be able to effectively compete with our competitors in effecting our business expansion plans. We reported our first operating profit since the merger with Sunteck in December 2000 for the three months ended September 30, 2001. Our operations for the year-to-date have not been profitable. 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 continue to increase sufficiently to offset our operating costs or that, even if they do, that our operations we will continue to be profitable. Liquidity and capital resources In August 2001, the Company obtained a $500,000 loan from a related party secured by accounts receivable. The loan provides for interest at 17% per annum and matures in August 2002. In addition, at September 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 September 30, 2001, we had liquid assets of approximately $928,000. The total amount of debt outstanding as of September 30, 2001 was $1,075,000. This following table presents our debt instruments and their weighted average interest rates as of September 30, 2001: Weighted Average Balance Rate Loan $500,000 17.0% 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 September 30, 2001. At this time, the Company has sufficient funds for working capital to continue to implement strategic growth plans and for general corporate purposes. However, we cannot assure you that our revenues will continue to increase sufficiently to offset our operating costs or that, even if they do, that we will have sufficient funds to continue our long-term strategic plan. 14 AUTOINFO, INC. AND SUBSIDIARIES Part II - OTHER INFORMATION Item 1 - 6: Inapplicable 15 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: November 9, 2001 16