Edgar Filing: COACH INDUSTRIES GROUP INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarter ended September 30, 2003

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________to___________

Commission file number: 0-19471

COACH INDUSTRIES GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada 91-1942841
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

9600 W. SAMPLE ROAD, SUITE 505, CORAL SPRINGS, FLORIDA 33065
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (305) 531-1174
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SearchHound.com, INC.
12817 Woodson, Oveland Park, Kansas 66209
(Former name or former address, if changed since last report)

Copies of all communications, including all communications sent to the
agent for service, should be sent to:

Joseph I. Emas, Attorney at Law
1224 Washington Avenue
Miami Beach, Florida 33139
Telephone: 305.531.1174
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COACH INDUSTRIES GROUP, INC.
----------------------------

Index

PART I. FINANCIAL INFORMATION
------------------------------

Item 1. Financial Statements (unaudited)

Consolidated Condensed balance sheets at September 30, 2003 and December 31,
2002

Consolidated Condensed statements of operations for the Three Months and Nine
Months ended September 30, 2003 and 2002

Consolidated statements of shareholders' equity at December 31, 2002 and
September 30, 2003

Consolidated Condensed statements of cash flows for the Nine Months ended
September 30, 2003 and 2002

Notes to consolidated condensed financial statements for the three and nine
months ended September 30, 2003 and 2002

Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations

PART II OTHER INFORMATION
--------------------------

Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K

Signatures
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COACH INDUSTRIES GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

September 30, December 31,
2003 2002
-----------------------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 19,603 $ 14,790
Accounts receivable, net............................ 31,051 -
Supply inventory.................................... 150,971 -
Assets held for sale................................ - 8,000
Prepaid expenses and other current assets........... 58,584 -
------------ -------------
Total current assets.......................... 260,209 22,790
------------ -------------
PROPERTY AND EQUIPMENT, net........................... 1,877 -
GOODWILL.............................................. 1,351,347 -
------------ -------------
$ 1,613,433 $ 22,790
============ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses.............. $ 184,727 $ -
Deferred rent ...................................... 122,400 -
Warranty reserve.................................... 15,000 -
Customer deposits................................... 5,000 -
Accrued wages....................................... 18,140 122,000
Accrued interest.................................... - 30,635
Note payable - related parties...................... 25,000 316,229
Notes payable....................................... - 63,539
------------ -------------
Total current liabilities..................... 370,267 532,403
------------ -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock $0.001 par value; 50,000,000 shares
authorized; 6,285,531 and 173,312 shares issued
and outstanding, respectively......................... 6,284 682
Additional paid in capital............................ 2,349,777 20,179,029
Deferred compensation................................ (543,412) -
Retained earnings (accumulated deficit) restated
effective January 1, 2003........................... (569,483) (20,689,081)
Treasury stock, 0 and 60,790 shares at cost......... - (243)
------------ -------------
Total shareholders' equity.................... 1,243,166 (509,613)
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 1,613,433 $ 22,790
============ ==============

The accompanying notes are an integral part of these financial statements.

COACH INDUSTRIES GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended
September 30, September 30,

2003 2002 2003 2002
----------- ---------- --------- ----------

REVENUES ........................................... $ 92,036 $ 37,948 $ 92,036 $ 209,794
---------- ----------- ------------ ------------
COST OF GOODS SOLD ................................. 138,587 5,000 138,587 146,180
---------- ----------- ------------ ------------
GROSS PROFIT ..................................... (46,551) 32,948 (46,551) 63,614

OPERATING EXPENSES:
General and
Administrative ................................ 130,988 25,219 212,667 441,831
Sales and marketing ............................. 4,502 1,513 4,502 2,004
Rent ............................................ 21,600 -- 21,600 28,397
Interest expense ................................ -- 3,159 3,159 9,476
Other ........................................... 4,398 -- 4,398 --
Amortization of deferred compensation........... 317,588 -- 317,588 --
Impairment charges - marketable equity securities -- -- -- 68,954
Depreciation and
amortization .................................. -- 156,181 -- 469,877
(Gain) loss on reduction of trade payable ........ 333,200 (30,000) 94,118 (30,000)
Impairment charges - goodwill ................... -- 3,252,635 -- 4,300,673
---------- ----------- ------------ ------------
Total operating expenses ....................... 812,276 3,408,707 658,032 5,291,212
---------- ----------- ------------ ------------
Loss from continuing operations .................... (858,827) (3,375,759) (704,583) (5,227,598)
---------- ----------- ------------ ------------
Income from discontinued operations
(including gain on disposition of
$135,100 and $446,430) .................... -- -- 135,100 352,936
---------- ----------- ------------ ------------
Loss before income taxes .................. (858,827) (3,375,759) (569,483) (4,874,662)
---------- ----------- ------------ ------------
Income taxes .............................. -- -- -- --
---------- ----------- ------------ ------------
NET LOSS .................................. $ (858,827 $ (3,375,759) $ (569,483) $ (4,874,662)
========== ========== ============ ============
Basic and diluted net
(loss) per share :

Continuing operations ..................... $ (3.12) $ (28.81) $ (2.92) $ (45.74)
Discontinued operations ................... -- -- 0.56 3.09
---------- ----------- ------------ ------------
Total ................................... $ (3.12) $ (28.81) $ (2.36) $ (42.65)
========== ========== =========== =============
Basic and diluted weighted average
common shares outstanding ................ 274,865 117,176 241,014 114,292
========== ========== =========== =============

The accompanying notes are an integral part of these financial statements.

COACH INDUSTRIES GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

ADDITIONAL RETAINED UNEARNED
PAID EARNINGS COMPENSATION -
COMMON STOCK IN (ACCUMULATED TREASURY RESTRICTED STOCK
SHARES AMOUNT CAPITAL DEFICIT) STOCK GRANTS TOTAL
--------------------------------------------------------------------------------------------

BALANCE, December 31, 2002 173,312 $ 682 $ 20,179,029 $ (20,689,081) $ (243) $ - $ (509,613)
Restatement of accumulated
deficit subject to quasi
reorganization - - (20,689,081) 20,689,081 - - -
Issuance of treasury stock to
settle notes and accounts payable - - 48,389 - 243 - 48,632
Adjust common stock for stock
split - (814) 814 - - - -
Issuance of common stock to
settle notes and accounts payable 1,149,719 1,266 529,776 - - - 531,042
Issuance of common stock for
services rendered 62,500 250 74,750 - - - 75,000
Unearned compensation -
restricted stock 1,900,000 1,900 859,100 - - (861,000) -
Amortization of unearned
compensation - restricted stock - - - - - 317,588 317,588
Issuance of common stock
upon acquisition of CTMC 3,000,000 3,000 1,347,000 - - - 1,350,000
Net loss (569,483) (569,483)
---------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30,
2003 (unaudited) 6,285,531 $6,284 $2,349,777 $ (569,483) $ - $ (543,412) $ 1,243,166
=============================================================================================

The accompanying notes are an integral part of these financial statements.

COACH INDUSTRIES GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

SEPTEMBER 30,
2003 2002
------------ -------------

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) ........................................... $ (569,483) $ (4,874,662)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization........................ (2,400) 469,877
Amortization of unearned compensation................ 317,588 --
Gain on sale of assets ............... (135,100) (446,430)
(Gain) loss on settlement of trade payable .......... 94,118 (30,000)
Impairment charges ................... -- 4,300,673
Impairment loss on marketable securities............. -- 68,954
Issuance of common stock for services rendered....... 75,000 54,250
Bad debt write-off ................... -- 99,890
Changes in operating assets and liabilities:
Accounts receivable .............................. (8,301) 99,433
Inventory ........................................ 32,931 --
Prepaid expenses and other ....................... 2,556 --
Accounts payable and accrued expenses............. 169,610 143,574
Other current assets ............................. -- 500
Related party accounts, net....................... 8,788 10,183
Other current liabilities ........................ -- 9,476
------------ -------------
Net cash provided by (used in) operating
activities.................................... (14,693) (94,282)
------------ -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Business acquisitions, net of cash acquired........... 19,506 --
------------ -------------
Net cash used in investing activities........... 19,506 --
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable ............................ -- (5,518)
------------ -------------
Net cash provided by (used in) financing
activities.................................... -- (5,518)
------------ -------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ....................................... 4,813 (99,800)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD .............................................. 14,790 102,163
------------ -------------
CASH AND CASH EQUIVALENTS, END OF
PERIOD.................................................. $ 19,603 $ 2,363
============ ============

The accompanying notes are an integral part of these financial statements.

COACH INDUSTRIES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

1. BACKGROUND

SearchHound.com, Inc., the predecessor to Coach Industries, Group, Inc. (the
"Company" or "Coach"), is the result of the June 1, 2000 merger of Pan
International Gaming, Inc. ("Pan International") and Searchound.com 2000 Ltd.
This transaction was treated as a "reverse merger" for financial accounting and
reporting purposes.

The "reverse merger" with Searchound.com 2000 Ltd. was consummated on June 1,
2000. In fiscal year 2000 and prior to June 1, 2000, Pan International was not
engaged in operating activities and there were no revenues or business
operations. Immediately following the reverse merger with PAN International,
Searchhound.com 2000 Ltd. changed its name to SearchHound.com, Inc. effective
June 6, 2000.

In 2002, the Company's Board of Directors changed its strategy due to poor
operating conditions and operating results in its primary businesses coupled
with difficulties in raising capital through debt and equity sources. The Board
of Directors adopted the new strategy during 2002, which committed to the
disposal of all of its current assets/businesses and to seek a
merger/acquisition transaction with a company having better financial resources.

As of March 31, 2003, the Company has disposed of all of its operating
assets/businesses and ceased all operating activities. The financial statements
disclosed in the Company's filings with the Securities and Exchange Commission
reflect the businesses sold as discontinued operations.

The Company consummated the following transactions in order to implement the
Board of Director's committed plan to restructure the Company and seek a merger
candidate.

On May 31, 2002 the Company entered into an asset sale agreement, which sold
certain assets related directly with two of the Company's subsidiary operations
(Mesia.com and SpeakGlobally.com) to Bradley Cohen. Mr. Cohen was an officer and
director of SearchHound.com, Inc. prior to the sale.

Concurrent with the asset sale agreement with Mr. Cohen, Mr. Cohen tendered his
resignation from SearchHound.com, Inc. and as a member of the Board of
Directors.

During 2002, the Board terminated the employment contract of Dave L. Mullikin.
Under the settlement Mr. Mullikin's salary ceased accruing on August 15, 2002
and the severance provision was forgiven. It was replaced with a Consulting
Agreement between the Company and Mr. Mullikin whereby Mullikin will continue in
his position as acting chief executive officer of the Company. The agreement
calls for Mr. Mullikin to 1) contract outsourced services to maintain selected
ongoing operations of the Company, 2) attempt to sell the assets of the Company
and 3) focus on a merger opportunity for SearchHound.com, Inc. The terms of the
Consulting Agreement include the following provisions: Mr. Mullikin agreed to
remain on the Board and Mr. Mullikin would receive a monthly compensation of
$1.00 and health benefits.

As of November 14, 2002, Mr. Mullikin agreed to amend his Consulting Agreement
and extend its term indefinitely; retaining the monthly compensation of $1.00,
but discontinuing the health benefits provision.

On January 3, 2003 the Company entered into an asset sale agreement, which sold
the following assets of the Company to Solutions.com, LLC, an entity controlled
by David L. Mullikin: certain domains, customer lists, email names and addresses
(for each domain) software, programming code, intellectual property (for each
domain) and certain computer and office equipment. At the time of the asset sale
agreement, Mr. Mullikin was a director of SearchHound.com, Inc. and was its
acting Chief Executive Officer.

On January 3, 2003 the Company also entered into an asset sale agreement, which
sold the following assets of the Company to Summit Ridge Technologies Group, LLC
(an unaffiliated entity): EarlyBirdDomain.com domain, database for
EarlyBirdDomain.com including all subscribers (active, inactive, and
unsubscribed), and EarlyBirdDomain.com clients and customers lists.

The Company's Board of Directors approved a one for sixty-seven share reverse
stock split. The split is for shareholders of record on December 27, 2002 and
was effective on December 30, 2002. The financial statements disclosed in the
Company's filings with the Securities and Exchange Commission reflect this
reverse stock split on retroactive basis. Subsequently, on August 26, 2003, the
Company effected a 1-for-4 stock split of each outstanding share of common
stock, which is reflected on a retroactive basis.

During January 2003, the Company partially settled a note payable to a related
party whereby it issued 3,655 shares of common stock in consideration for a
$20,000 reduction in the principal balance (and related accrued interest). The
settlement of this note payable resulted in a gain of $17,076 based upon the
market value of the common stock at the date issued and was classified as gain
on settlement of notes and accounts payable during the nine months ended
September 30, 2003.

During January 2003, the Company settled a note payable to a related party
whereby it issued 20,155 shares of common stock in consideration for the full
and complete settlement of the outstanding principal balance (and related
accrued interest aggregating $33,795). The settlement of this note payable
resulted in a gain of $109,541 based upon the market value of the common stock
at the date issued and was classified as gain on settlement of notes and
accounts payable in the Statement of Operations during the nine months ended
September 30, 2003.

During January 2003, the Company settled a note payable to a trade creditor
whereby it issued 4,820 shares of common stock held in treasury and 3,391 shares
of common stock in consideration for the full and complete settlement of the
outstanding note balance (and related accrued interest). The settlement of this
note payable resulted in a gain of $56,970 based upon the market value of the
common stock at the date issued and was classified as gain on settlement of
notes and accounts payable in the Statement of Operations for the nine months
ended September 30, 2003.

In March 2003, the Company increased the shares available to be issued by
62,500. The Company issued common stock to employees, consultants and Board
Members for services rendered to the Company. During March 2003, the Company
issued 62,500 shares to consultants for administrative, corporate accounting and
public relations services in lieu of cash compensation totaling $75,000 which
was reflected in the statement of operations for the nine months ended September
30, 2003. The Company is attempting to conserve cash resources by issuing stock
for these services.

On July 10, 2003, the Company's sole officer and director, Dave L. Mullikin,
resigned his positions as President, Secretary, Treasurer and sole Director and
appointed Francis O'Donnell as the sole director. Francis O'Donnell, as the sole
member of the Board of Directors of the Company, has approved the change of the
address of the corporate office of the Company from Overland Park, Kansas to
Coral Springs, Florida. Specifically, the address of the Company's principal
executive office changed from 12817 Woodson, Overland Park, Kansas 66209 to 9600
W. Sample Road, Suite 505, Coral Springs, Florida 33065.

The Company's shareholders approved the election of directors, the appointment
of independent certified public accountants for the fiscal year ending December
31, 2003, effect a 1-for-4 reverse stock split of the Company's issued and
outstanding shares of common stock and amended the Company's Articles of
Incorporation to change the name of the Company to Coach Industries Group, Inc.

On September 1, 2003, Commercial Transportation Manufacturing Corporation
("CTMC"), a New York corporation specializing the manufacturing and selling of
limousines, was merged into Coach.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying financial statements include the accounts of Coach, and its
wholly owned subsidiary CTMC. All significant inter-company balances and
transactions have been eliminated.

The Company has operated as a holding Company for internet-based
assets/businesses, primarily through the acquisitions of operating
assets/businesses through the issuance of common stock. The Company acquired
multiple businesses during 2000 and 2001 in this manner. During 2002, the
Company's Board of Directors changed its strategy due to poor operating
conditions and results in its primary businesses coupled with difficulties in
raising capital through debt and equity sources. The Board of Directors adopted
the new strategy during 2002, which committed to the disposal of all of its
current assets/businesses and to seek a merger/acquisition transaction with a
Company having better financial resources. As of September 30, 2003, the Company
has disposed of all of its operating assets/businesses and ceased all operating
activities. The accompanying financial statements reflect the businesses sold as
discontinued operations. On September 1, 2003, the Company became the holding
company for a manufacturer of limousines, primarily for the livery industry by

modifying and custom fabricating stock vehicles that are manufactured by
automotive manufacturers.

USE OF ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosures at the date of the financial statements and during
the reporting period. Accordingly, actual results could differ from those
estimates.

INTERIM FINANCIAL STATEMENTS

The interim financial statements presented herein have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations. The interim financial statements should be read in
conjunction with the Company's annual financial statements, notes and accounting
policies included in the Company's annual report on Form 10-KSB for the year
ended December 31, 2002 as filed with the SEC. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) which are
necessary to provide a fair presentation of financial position as of September
30, 2003 and the related operating results and cash flows for the interim period
presented have been made. The results of operations, for the period presented
are not necessarily indicative of the results to be expected for the year.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. At September 30, 2003 and December
31, 2002, cash and cash equivalents include cash on hand and cash in the bank.

REVENUE AND COST RECOGNITION

Revenues are reported at the time the custom re-fabrication or modification is
complete and delivered to the customer. Repairs and other services are recorded
when the service is performed. Inventory is relieved at the time of sale.

INVENTORIES

Inventories include the cost of the unmodified vehicle chassis and parts related
to vehicles in the process of being modified and remanufactured. Shipping and
handling costs are included in inventory.

All inventories are valued at the lower of cost or market. The cost of new and
used vehicles is determined using the specific identification method. The cost
of new parts is valued using the first in first out basis.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recovered. At September 30, 2003, the Company believes that there has
been no impairment of its long-lived assets.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

Cash, prepaid expenses, other assets, and accounts payable carrying amounts
approximate fair value.

WARRANTY RESERVES

The Company provides warranties to its new car customers of the earlier of three
years or fifty thousand miles, only on parts and labor performed by the Company.

INCOME TAXES

Deferred income taxes arise from timing differences resulting from income and
expense items reported for financial accounting and tax purposes in different
periods. A deferred tax asset valuation allowance is recorded when it is more
likely than not that deferred tax assets will not be realized. The financial
statements reflect a deferred tax asset of approximately $200,000 as of
September 30, 2003 and a valuation allowance of the same amount, since the
Company did not have the revenue history to support the future recognition of
the deferred tax asset. It is more likely that the deferred tax asset will not
be recognized. The deferred tax asset as of December 31, 2002 was restated as
part of a quasi reorganization and presented as a $0 balance.

Utilization of the net operating loss carry-forwards may be subject to a
substantial annual limitation due to ownership change limitations provided by
the Internal Revenue Code. The annual limitation may result in the expiration of
net operating loss carry-forwards before utilization.

GOODWILL

The Company adopted SFAS No.142, "Goodwill and Other Intangible Assets," on
January 1, 2002. As of the adoption date, the Company no longer amortizes
goodwill over its useful life. Instead, goodwill is tested for impairment
annually. The impairment test consists of two steps. In the first step, the
Company determines the carrying value of each reporting unit by assigning the
assets and liabilities, including the existing goodwill and intangible assets,
to those reporting units. If the fair value of the reporting unit is greater
than its carrying value, the test is completed and goodwill assigned to the
reporting unit is not impaired. To the extent a reporting unit's carrying amount
exceeds its fair value, an indication exists that the reporting unit's goodwill
may be impaired, and the Company must perform the second step of the impairment
test. In the second step, the Company must compare the implied fair value of the
reporting unit's goodwill, determined by allocating the reporting unit's fair
value to all of its assets (recognized and unrecognized) and liabilities in a
manner similar to a purchase price allocation in accordance with SFAS No.141, to
its carrying amount. The Company will recognize a goodwill impairment charge if
the carrying amount of the goodwill assigned to the reporting unit is greater
than the implied fair value of the goodwill. At September 30, 2003, the Company
has not recognized an impairment loss.

The Company conducted an asset evaluation based on impairment for long-lived
assets, which included its five web site, database, and exchange servers (asset
group) and found that they no longer support revenue or income from continuing
operations. This asset group was evaluated based on fair market value of like
equipment for sale. The amount written off as a result of this valuation process
was $102,635 for the three and nine months ended September 30, 2002.

Management's review of the SearchHound.com and SoloSearch.com intangible assets
yielded that they no longer are capable of generating ongoing revenue as the
costs to maintain the sites is in excess of any potential revenue source and
therefore their value has been impaired. As a result, an impairment charge of
$3.2 million and $4.2 million was recorded for the three and nine months ended
September 30, 2002, respectively.

NET INCOME (LOSS) PER SHARE

The Company has presented basic and diluted net income (loss) per share pursuant
to SFAS No. 128, "Earnings per Share," and the Securities and Exchange
Commission SAB No. 98. In accordance with SFAS No. 128, basic net income (loss)
per share has been computed by dividing net income (loss) by the
weighted-average number of shares of common stock outstanding during the period.
Diluted net income (loss) per share includes the effect, if any, from the
potential exercise or conversion of securities, such as stock options, which
would result in the issuance of shares of common stock.

STOCK SPLIT

On August 26, 2003, the Company effected a 1-for-4 stock split of each
outstanding share of common. On December 30, 2002, the Company effected a
1-for-67 share reverse stock split. The accompanying financial statements
reflect this reverse stock split on a retroactive basis. All share data have
been restated to reflect these stock splits.

3. CONCENTRATION OF CREDIT RISK

The amounts on deposit at September 30, 2003 did not exceed the $100,000
federally insured limit for bank deposits. The Company purchases a significant
portion of its inventory from two major suppliers. The relationships with these
suppliers are significant to the ongoing operations of the business and are
subject to licensing agreements.

4. INVENTORIES

Inventories consist of the following components as of September 30, 2003 and
December 31, 2002:

September 30, December 31,
2003 2002
------------- --------------
Vehicle Chassis $ 108,874 $ -
Parts 42,097 -
-------------- --------------
$ 150,971 $ -
============== ==============

5. RELATED PARTY TRANSACTIONS

The Company is a party to a non-cancelable operating lease pertaining to the
office and plant facilities. The lease term, as amended, expires in January 2008
with payments commencing in July 2003. The lease is to a related party.

The minimum lease commitment for the non-cancelable operating lease for the
subsequent five year periods are summarized as follows:

2004 $ 288,000
2005 288,000
2006 288,000
2007 288,000
2008 72,000
--------------
$ 1,224,000
==============

Rental expense under all operating leases totaled approximately $21,600 and $0
and $21,600 and $28,397 for the three and nine months ended September 30, 2003
and 2002, respectively, that includes amortization of approximately $2,400 and
$2,400 for the three and nine months ended September 30, 2003, respectively of
deferred rental expense.

As of September 30, 2003 and December 31, 2002 the Company had receivable
balances for approximately $19,000 and $0 due from related parties,
respectively.

The Company maintained certain equipment used for manufacturing currently owned
by a related party in anticipation of a pending purchase agreement for that
equipment. It is expected that this equipment will be purchased for its fair
value based upon an independent valuation.

On August 29, 2003, the Company registered 1.8 million shares of common stock,
issued pursuant to consultant agreements entered into between the Company and
certain consultants in satisfaction of compensation owed to these parties. The
total value of these agreements is $810,000 to settle past services, as well as
future services to the Company. The agreements are for periods between 6 months
to 2 years. Compensation expense recorded for past services rendered by these
individuals was approximately $260,000 included in the three and nine months
ended September 30, 2003. In addition, the amortization of the deferred
compensation expense relating to the consulting agreements was approximately
$32,000 included in the three and nine months ended September 30, 2003.

On August 26, 2003, the Company issued 433,333 shares of common stock to a
related party in settlement of $65,000 due as of June 30, 2003. The statement of
operations reflects an extraordinary loss from settlement of $130,000 for the
three and nine months ended September 30, 2003.

On August 26, 2003, the Company issued 677,333 shares of common stock to a
related party in settlement of $101,600 due for various expenses paid for by the
related party. The statement of operations reflects an extraordinary loss from
settlement of $203,200 for the three and nine months ended September 30, 2003.

On January 3, 2003 the Company entered into an asset sale agreement, which sold
the certain assets of the Company to Solutions.com, LLC, an entity controlled by
David L. Mullikin.

Mr. Mullikin was a director of SearchHound.com, Inc. and was its acting Chief
Executive Officer. The net book value of the net assets sold to Mr. Mullikin
approximated $8,000 as of the date of sale. Pursuant to the asset sale agreement
the Company agreed to transfer such assets to Mr. Mullikin in settlement of a
portion of the then outstanding principal balance of $179,359 together with all
accrued but unpaid interest. The settlement of this note payable resulted in a
gain of $135,100 based upon the market value of the common stock at the date
issued and was classified as gain on disposal of discontinued operations in the
Statement of Operations for the nine months ended September 30, 2003.

Concurrent with this transaction, the Company's previous president also agreed
to accept the issuance of 42,589 shares held in treasury and 47,411 shares of
common stock to settle wages payable resulted in a gain of $54,795 based upon
the market value of the common stock at the date issued and was classified as
gain on settlement of notes and accounts payable in the Statement of Operations
for the nine months ended September 30, 2003.

In addition, Mr. Mullikin agreed to cancel the rental payments owed to him by
the Company for its use of web hosting and office space.

Effective January 1, 2002, the Company entered two separate lease agreements
with officers and directors of the Company to lease space to be utilized for
office purposes at a rate totaling $5,134 per month. The initial term of the
lease is one year with a two-year renewal option (at the Company's option) at a
rate totaling $10,000 per month. Rental expense totaled $28,397 for the nine
months ended September 30, 2002. The agreement between the Company and Bradley
N. Cohen was terminated effective with his resignation May 31, 2002.

On May 31, 2002 the Company entered into an asset sales agreement, which sold
certain assets related directly with two of the Company's subsidiary operations
(Mesia.com and SpeakGlobally.com) to Bradley N. Cohen. Mr. Cohen was an officer
and director of SearchHound.com, Inc. The net book value of the net assets sold
to Mr. Cohen approximated $52,750 as of the date of sale. Pursuant to the asset
sale agreement the Company agreed to transfer such assets to Mr. Cohen in
settlement of the following: 1) an employment agreement with Mr. Cohen dated
September 1, 2000, 2) all accrued but unpaid compensation owed to Mr. Cohen
which approximated $100,000 as of the date of sale, and 3) a promissory note
payable to Cohen Capital Technologies, LLC. in the amount of $285,000 as of the
date of sale.

In addition, SearchHound.com, Inc., agreed to pay Mr. Cohen $7,500 in cash, in
exchange for, and in sole consideration and settlement of any other liabilities
of SearchHound.com, Inc. to Mr. Cohen that may exist as of May 31, 2002,
including the liabilities that accrue pursuant to a Promissory Note to Mr. Cohen
with a principle amount of $147,030.41, dated March 20, 2002, and any liability
that may exist pursuant to the Employment Agreement between SearchHound.com,
Inc. and Mr. Cohen dated September 1, 2000.

Concurrent with the asset sale agreement with Mr. Cohen, Mr. Cohen tendered his
resignation from SearchHound.com, Inc. and as a member of the Board of
Directors.

Gain of $30,000 for the three and nine months ended September 30, 2003, as a
reduction in liabilities came as a result of negotiating a cash settlement with
Bryan Cave through the Company's ability to remit cash in the amount of $10,000.

6. ACQUISITION

On August 29, 2003 the Company acquired Commercial Transportation Manufacturing
Corp. through an Agreement and Plan of Merger effective September 1, 2003,
whereby all the common stock were converted by virtue of the merger at the
closing date of the merger, September 1, 2003 into an equal number of Coach
Acquisition Sub, Inc. common stock. The Merger is valued at $1.35 million based
on 3 million shares of common stock, valued at $0.45 per share on August 26,
2003.

The following is pro forma information for the nine months ended September 30,
2003, as if the CTMC acquisition were consummated on January 1, 2003. The pro
forma information is not necessarily indicative of the combined financial
position or results of operations, which would have been realized had the
acquisition been consummated during the period for which the pro forma financial
information is presented.

FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2003
HISTORICAL PRO FORMA
------------ -------------

Revenue................................................. $ 92,036 $ 688,761
Operating loss.......................................... (704,583) (1,286,430)
Net income (loss)....................................... $ (569,483) $ (1,151,330)
============ ===========
Basic and diluted net income (loss) per share........... $ (2.36) $ ( 0.36)
============ ===========
Basic and diluted weighted average shares outstanding... 241,014 3,241,014
============ ===========

7. SUPPLEMENTAL CASH FLOW INFORMATION

The following table displays the net non-cash assets that were acquired during
the nine months ended September 30, 2003, as a result of the business
acquisition:

Non-cash assets
(liabilities):
Current assets........... $ 279,298
Property and equipment... 1,877
Goodwill................. 1,351,347
Current liabilities...... (282,522)
--------------
Net non-cash assets acquired................... 1,350,000
Less: Common and preferred
stock issued............... (1,350,000)
--------------
Cash paid for business acquisitions, net.......... $ -
==============

In addition the Company, as part of its restructuring settled various
obligations for each of the nine months ended September 30:

Non cash financing/investing activities: 2003 2002
----------- -----------
Issuance of related party notes payable in
payment of accrued expenses $ 620,656 $ 316,206
Issuance of common stock held in
Treasury for settlement of accounts
payable, related party notes payable
and accrued expenses (48,632) --
Issuance of common stock in settlement
of accounts payable, related party
notes payable and accrued expenses (531,042) --
Reclassification of common stock to
additional paid in capital related to
the common stock split 814 --
Issuance of restricted stock related to
deferred compensation 861,000 --
Issuance of treasury stock - 15,000
Transfer of assets and liabilities related to
business disposition:
Accounts receivable - 44,910
Fixed assets, net - 37,357
Notes payable and accrued expenses - 528,697

8. STOCKHOLDERS' EQUITY

QUASI-REORGANIZATION:

Effective January 1, 2003, the Company had disposed of all of its operating
assets and was in the process of settling all of its outstanding liabilities and
seeking a merger partner. Accordingly, the Company has changed its business
focus. The Board of Directors elected to restate the balance sheet as "a
quasi-reorganization". In a quasi-reorganization, the deficit in retained
earnings is eliminated by charging paid-in capital. In effect, this gives the
balance sheet a "fresh-start". Beginning January 1, 2003 and continuing forward,
the Company will be crediting net income and charging net losses to retained
earnings.

STOCK TRANSACTIONS:

For the nine months ended September 30, 2003 the Company issued, shares
(excluding 60,790 treasury shares issued) of its common stock as follows:

39,053 shares were issued to settle notes and accounts payable of the
Company.

62,500 shares were issued to consultants to the Company in lieu of cash
compensation.

60,790 shares of common stock held in treasury were issued to settle
outstanding notes and accounts payable.

On March 3, 2003, the Company filed Amendment No. 3 to its Registration
Statement on Form S-8, which increased the shares available to be issued by
62,500. The Form S-8 Registration Statement provides the Company common stock
for issuance to employees, consultants and Board Members for services rendered
to the Company. The Form S-8 authorizes the issuance of common stock for
services, provides for a grant of incentive stock options, non-qualified stock
options, restricted stock, performance grants and other types of awards to
officers, key employees, board members, consultants and independent contractors
of the Company. During March 2003, the Company issued 62,500 shares to
consultants for administrative, accounting and public relations services in lieu
of cash compensation. The Company charged $75,000 to operations as a result of
the issuance of these shares for the nine months ended September 30, 2003.

On August 15, 2003, the Company entered into a consulting and retainer agreement
whereby the consultant received 100,000 shares of common stock on September 15,
2003 for consulting services relating to enhancing the financial structure of
the Company. The contract is for 90 day, through November 15, 2003. Expenses
accrued for the consulting services through September 30, 2003 were $25,500.

For the nine-month period ended September 30, 2002, the Company issued 63,713
shares of its common stock as follows:

746 unregistered shares were issued to the Board of Directors (187 shares
to each of four Board members)

14,925 unregistered shares were issued to the Officers of the Company
(187 shares each)

280 unregistered shares were issued to employees and consultants of the
Company

55,970 unregistered shares were issued to SearchHound.com in the form of
Treasury Stock as collateral for a pledge Note agreement

2,985 unregistered shares were issued to Steuve, Helder, Siegel LLP for
legal work

9. NOTES PAYABLE

The $10,000 note payable-related party represents unsecured loans incurred for
working capital purposes and bears interest at 11.5%. The original maturity date
of the note was September 30, 2001 and was due on demand. During January 2003,
the Company partially settled this note whereby it issued 3,655 shares of common
stock in consideration for a $20,000 reduction in the principal balance (and
related accrued interest). The settlement of this note payable resulted in a
gain of $17,076 based upon the market value of the common stock at the date
issued and was classified as a gain on settlement of notes and accounts payable
in the Statement of Operations for the nine months ended September 30, 2003.

The $40,000 note payable represents loans incurred for unpaid wages and cash
advances to the Company. During January 2003, the Company partially settled this
note whereby it issued 45,323 shares of common stock in consideration for a
$173,564 reduction in the principal balance (and related accrued interest) and
the transfer of certain Company assets with a carrying value of $8,000. The
settlement of this note payable resulted in a gain of $135,100 based upon the
market value of the common stock at the date issued and was classified as gain
on disposal of discontinued operations for the nine months ended September 30,
2003. The $40,000 note was due on August 15, 2003 and was settled for 266,666
shares of common stock on August 26, 2003 for a loss on settlement for the three
and nine months ended September 30, 2003 of $80,000.

Concurrent with this transaction, the Company's president also agreed to accept
the issuance of 10,647 shares held in treasury and 11,853 shares of common stock
to settle $72,795 of other wages payable to him. The settlement of wages payable
resulted in a gain of $54,795 based upon the market value of the common stock at
the date issued and was classified as gain on settlement of notes and accounts
payable in the Statement of Operations. Amounts due to related party in the
amount of $15,000 as of December 31, 2002 represents payments due to the
previous owners of SoloSearch relating to the cash consideration portion of the
acquisition of SoloSearch. Due to Searchhound.com, Inc.'s current working
capital deficiencies, the cash consideration was not paid at closing (July 11,
2000) and the previous owners have informally agreed to not demand payment or
charge interest until cash is available through the sale of assets or a merger
occurs. On August 26, 2003, the note was settled for the issuance of 100,000
shares of common stock for a loss on settlement of $30,000 for the three and
nine months ended September 30, 2003.

The $91,870 note payable is secured by substantially all assets of the Company,
bears a variable interest rate equivalent to prime (6.5% at December 31, 2002)
and was due on demand. During January 2003, the Company settled this note
whereby it issued 20,155 shares of common stock in consideration for the full
and complete settlement of the outstanding principal balance (and related
accrued interest aggregating $33,795). The settlement of this note payable
resulted in a gain of $109,541 based upon the market value of the common stock
at the date issued and was classified as a gain on settlement of notes and
accounts payable in the Statement of Operations for the nine months ended
September 30, 2003.

The note payable-trade creditor bears interest at a variable rate equivalent
mid-term applicable Federal rate (4.49% at December 31, 2002), and was due on
demand. During January 2003, the Company settled this note whereby it issued
4,820 shares of common stock held in treasury and 3,391 shares of common stock
in consideration for the full and complete settlement of the outstanding note
balance (and related accrued interest). The settlement of this note payable
resulted in a gain of $56,970 based upon the market value of the common stock at
the date issued and was classified as gain on settlement of notes and accounts
payable in the Statement of Operations for the nine months ended September 30,
2003.

10. SUBSEQUENT EVENT

Effective November 10, 2003, the Company, through its wholly owned subsidiary,
Springfield Coach Industries Corporation, Inc., a Missouri corporation,
consummated the purchase of substantially all of the assets of Springfield Coach
Builders, Inc.

As of August 26, 2003, the Company reserved 1.6 million shares, valued at .45
cents per share, for the purpose of using as agreed consideration for a
potential transaction. The shares shall vest on the effective date of the
aforementioned potential transaction.

FORWARD-LOOKING STATEMENTS
--------------------------

The following discussion contains, in addition to historical information,
forward-looking statements regarding Coach Industries, Group, Inc. (the
"Company" or "CIGI"), that involve risks and uncertainties. The Company's actual
results could differ materially. For this purpose, any statements contained in
this Report that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may," "will," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue" or the negative or other variations thereof
or comparable terminology are intended to identify forward-looking statements.
Factors that could cause or contribute to such difference include, but not
limited to, history of operating losses and accumulated deficit; possible need
for additional financing; competition; dependence on management; risks related
to proprietary rights; government regulation; and other factors discussed in
this report and the Company's other filings with the Securities and Exchange
Commission.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Summary Overview and Overall Business Strategy
----------------------------------------------

SearchHound.com, Inc., the predecessor to Coach Industries, Group, Inc., is the
result of the June 1, 2000 merger of Pan International Gaming, Inc. ("Pan
International") and Searchound.com 2000 Ltd. This transaction was treated as a
"reverse merger" for financial accounting and reporting purposes.

The "reverse merger" with Searchound.com 2000 Ltd. was consummated on June 1,
2000. In fiscal 2000 and prior to June 1, 2000, Pan International was not
engaged in operating activities and there were no revenues or business
operations. Immediately following the reverse merger with PAN International,
changed its name to SearchHound.com, Inc. effective June 6, 2000.

The Company consummated the following transactions in order to implement the
Board of Director's committed plan to restructure the Company and seek a merger
candidate:

Concurrent with the asset sale agreement with Mr. Cohen, Mr. Cohen tendered his
resignation from SearchHound.com, Inc. and as a member of the Board of
Directors.

As of November 14, 2002, Mr. Mullikin agreed to amend his Consulting Agreement
and extend its term indefinitely, retaining the monthly compensation of $1.00,
but discontinuing the health benefits provision.

During January 2003, the Company settled a note payable to a trade creditor
whereby it issued 4,820 shares of common stock held in treasury and 13,562
shares of common stock in consideration for the full and complete settlement of
the outstanding note balance (and related accrued interest). The settlement of
this note payable resulted in a gain of $56,970 based upon the market value of
the common stock at the date issued and was classified as gain on settlement of
notes and accounts payable in the Statement of Operations for the nine months
ended September 30, 2003.

The Board of Directors has approved resolutions for the Company's Annual Meeting
of Shareholders, held on Friday August 22, 2003, to elect directors of the
Company, ratify the appointment of Jewett, Schwartz & Associates, as the
Company's independent certified public accountants for the fiscal year ending
December 31, 2003, effect a 1-for-4 reverse stock split (pro-rata reduction of
outstanding shares) of the Company's issued and outstanding shares of common
stock and amend the Company's Articles of Incorporation to change the name of
the Company to Coach Industries Group, Inc. (or other such name as may be
available). There is no assurance that the shareholders of the Company will vote
in favor of these resolutions.

On September 1, 2003, CTMC, a New York corporation specializing the
manufacturing and selling of limousines, was merged into Coach Industries Group,
Inc.

NINE MONTHS ENDED SEPTEMBER 30, 2003
COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2002

Gross Revenues and Costs of Operations
--------------------------------------

GROSS REVENUES. Gross revenues decreased from $209,794 for the nine month period
ended September 30, 2002 to $92,036 for the nine month period ended September
30, 2003, a decrease of $117,758, primarily as a result of the Company disposing
of all of its operating assets/businesses and discontinuing all operating
activities. The Company acquired CTMC effective September 1, 2003 and the gross
revenues for the period reflect revenues through September 30, 2003 from CTMC.

COSTS OF GOODS SOLD. Costs of goods sold decreased from $146,180 for the nine
months ended September 30, 2002 to $138,587 for the nine months ended September
30, 2003, a decrease of $7,593, primarily as a result of the Company disposing
of all of its operating assets/businesses and discontinuing all operating
activities. The Company acquired CTMC effective September 1, 2003 and the costs
of goods sold for the period reflect costs through September 30, 2003.

OPERATING EXPENSES. Operating expenses decreased from $5,291,212 million for the
nine months ended September 30, 2003 to $658,032 for the nine months ended
September 30, 2003, a decrease of $4,633,180, primarily as a result of
elimination of impairment charges-goodwill.

General and administrative expenses decreased from $441,831 for the nine months
ended September 30, 2002 to $212,667 for the nine months ended September 30,
2003, a decrease of $229,164, primarily due to decrease in general and
administrative expenses as a result of the Company disposing of all of its
operating assets/businesses and discontinuing all operating activities and
expenditures related to the Company's business plan of restructuring the Company
and securing a merger candidate. The Company acquired CTMC effective September
1, 2003 and the general and administrative expenses for the period reflect
expenses through September 30, 2003. In addition, the Company incurred expenses
associated with securing a merger candidate.

Depreciation and amortization expense decreased from $469,877 for the nine
months ended September 30, 2002 to $-0- for the nine months ended September 30,
2003, a decrease of $469,877, primarily as a result of the Company disposing of
all of its operating assets/businesses and discontinuing all operating
activities.

(Gain) loss on reduction of trade payable increased from a gain of $30,000 for
the nine months ended September 30, 2002 to a net loss of $94,118 for the nine
months ended September 30, 2003, an increase of $124,118, primarily due to the
Company issuing shares of stock to settle certain liabilities.

Impairment charges decreased from $4,300,673 million for the nine months ended
September 30, 2002 to $-0- for the nine months ended September 30, 2003, a
decrease of $4,300,673 million, primarily as a result of the Company disposing
of all of its operating assets/businesses and discontinuing all operating
activities.

During the nine months ended September 30, 2003, the Company issued shares or
common stock to various related parties for future consulting services. The
Company recognized $317,588 of amortization of deferred compensation relating to
this issuance. During the nine months ended September 30, 2002, there was no
amortization of deferred compensation.

INCOME FROM DISCONTINUED OPERATIONS. Income from discontinued operations
decreased from $353,936 for the nine months ended September 30, 2002 to $135,100
for the nine months ended September 30, 2003, a decrease of $217,836, primarily
due to the Company completing its plan of disposal in 2002 and early 2003.

NET INCOME (LOSS). Net loss decreased from $4,874,662 million for the nine
months ended September 30, 2002 to $569,483 for the nine months ended September
30, 2003, primarily due to the Company reducing its expenses as a consequence of
disposing of all of its operating assets/businesses and discontinuing all
operating activities and realizing a gain on settlement of accounts and notes
payable and a gain on disposal of assets, offset by a loss of $106,439 relating
to the operations of CTMC for the period.

THREE MONTHS ENDED SEPTEMBER 30, 2003
COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2002

GROSS REVENUES. Gross revenues increased from $37,948 for the three month period
ended September 30, 2002 to $92,036 for the three month period ended September
30, 2003, an increase of $54,088, primarily as a result of the Company disposing
of all of its operating assets/businesses and discontinuing all operating
activities. The Company acquired CTMC effective September 1, 2003 and the gross
revenues for the period reflect revenues through September 30, 2003.

COSTS OF GOODS SOLD. Costs of goods sold increased from $5,000 for the three
months ended September 30, 2002 to $138,587 for the three months ended September
30, 2003, an increase of $133,587, primarily as a result of the Company
disposing of all of its operating assets/businesses and discontinuing all
operating activities. The Company acquired CTMC effective September 1, 2003 and
the costs of goods sold for the period reflect costs through September 30, 2003.

OPERATING EXPENSES. Operating expenses decreased from $3,408,707 million for the
three months ended September 30, 2002 to $812,276 for the three months ended
September 30, 2003, a decrease of $2,596,431, primarily as a result of
elimination of impairment charges-goodwill.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased from $25,219 for the three months ended September 30, 2002 to $130,988
for the three months ended September 30, 2003, a increase of $105,769, primarily
due to decrease in general and administrative expenses as a result of the
Company disposing of all of its operating assets/businesses and discontinuing
all operating activities and expenditures related to the Company's business plan
of restructuring the Company and seeking a merger candidate. The Company
acquired CTMC effective September 1, 2003 and the general and administrative
expenses for the period reflect expenses through September 30, 2003. In
addition, the Company incurred expenses associated with securing a merger
candidate.

During the three months ended September 30, 2003, rent expense was $21,600
relating to the facility that CTMC occupies for their operations. During the
three months ended September 30, 2002, the Company had terminated an agreement
with a officer of the Company in May 2002 and did not incur rent expense for the
period.

Recorded depreciation and amortization expense decreased from $156,181 for the
three months ended September 30, 2002 to $-0- for the three months ended
September 30, 2003, a decrease of $156,181, primarily as a result of the Company
disposing of all of its operating assets/businesses and discontinuing all
operating activities.

(Gain) loss on reduction of trade payable increased from a gain of $30,000 for
the three months ended September 30, 2002 to a net loss of $333,200 for the nine
months ended September 30, 2003, an increase of $363,200, primarily due to the
Company issuing shares of stock to settle certain liabilities.

Impairment charges decreased from $3,252,635 million for the three months ended
September 30, 2002 to $-0- for the three months ended September 30, 2003, a
decrease of $3,252,635 million, primarily as a result of the Company disposing
of all of its operating assets/businesses and discontinuing all operating
activities.

During the three months ended September 30, 2003, the Company issued shares or
common stock to various related parties for future consulting services. The
Company recognized $317,588 of amortization of deferred compensation relating to
this issuance. During the three months ended September 30, 2002, there was no
amortization of deferred compensation.

NET LOSS. Net loss decreased from $33,375,759 million for the three months ended
September 30, 2002 to $858,827 for the three months ended September 30, 2003,
primarily due to the Company reducing its expenses as a consequence of disposing
of all of its operating assets/businesses and discontinuing all operating
activities and realizing a gain on settlement of accounts and notes payable,
offset by a net loss of $106,439 relating to the operations of CTMC for the
period.

LIQUIDITY AND CAPITAL RESOURCES. The Company has historically satisfied its cash
requirements primarily through private placements of restricted stock and the
issuance of debt securities.

The Company anticipates that its cash requirements will continue to increase as
it continues to expend substantial resources to build its infrastructure,
develop its business plan and establish its sales and marketing network
operations, customer support and administrative organizations. The Company
currently anticipates that its available cash resources and cash generated from
operations will be sufficient to meet its presently anticipated working capital
and capital expenditure requirements for the next twelve months. If the Company
is unable to maintain profitability, or seeks further expansion, additional
funding will become necessary. No assurances can be given that either equity or
debt financing will be available.

CURRENT ASSETS
--------------

CASH AND CASH EQUIVALENTS. Cash and cash equivalents increased from $14,790 at
December 31, 2002 to $19,603 at September 30, 2003, an increase of $4,813,
primarily as a result of the Company acquiring CTMC effective September 1, 2003.

TOTAL CURRENT ASSETS. Total current assets increased from $22,790 at December
31, 2002 to $260,209 at September 30, 2003, an increase of $237,419, primarily
as a result of the Company issuing common stock for the acquisition of CTMC,
effective September 1, 2003.

LIABILITIES
-----------

ACCRUED WAGES. Accrued wages decreased from $122,000 at December 31, 2002 to
$18,140 at September 30, 2003, a decrease of $103,860, primarily as a result of
the Company disposing of all of its operating assets/businesses and
discontinuing all operating activities as of and settling all outstanding
employment agreement obligations, offset by accrued wages relating to the
operations of CTMC.

ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES. Accounts payable increased from -0-
at December 31, 2002 to $184,727 at September 30, 2003, an increase of $184,727,
primarily relating to the operations of CTMC.

ACCRUED INTEREST. Accrued interest decreased from $30,635 at December 31, 2002
to $-0- at September 30, 2003, a decrease of $30,635, primarily as a result of
the Company disposing of all of its operating assets/businesses and
discontinuing all operating activities as of March 31, 2003 and settling all
outstanding employment agreement obligations.

NOTES PAYABLE-RELATED PARTIES. Notes payable-related parties decreased from
$316,229 at December 31, 2002 to $25,000 at September 30, 2003, a decrease of
$291,229, primarily as a result of restructuring the remaining liabilities due
to certain related parties, offset by a loan from a related party.

NOTES PAYABLE. Notes payable decreased from $63,539 at December 31, 2002 to $-0-
at September 30, 2003, a decrease of $63,539, primarily as a result of reaching
various settlements with certain note holders.

TOTAL CURRENT LIABILITIES. Total current liabilities decreased from $532,403 at
December 31, 2002 to $370,267 at September 30, 2003, a decrease of $162,136,
primarily as a result of the Company disposing of all of its operating
assets/businesses and discontinuing all operating activities and settling all
outstanding employment agreement obligations and reducing its notes
payable-related parties and notes payable, offset by liabilities assumed in
connection to the acquisition of CTMC effective September 1, 2003, including a
$15,000 warranty reserve and $5,000 for customer deposits.

The Company has historically issued stock in lieu of cash compensation, which
has helped reduce the Company's cash needs. Management will try to maintain the
Company in its current operating form through the issuance of common stock to
consultants for the Company's ongoing administrative and reporting duties.

ACCOUNTING POLICIES SUBJECT TO ESTIMATION AND JUDGMENT

Management's Discussion and Analysis of Financial Condition and Results of
Operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. When preparing our financial statements, we make estimates and
judgments that affect the reported amounts on our balance sheets and income
statements, and our related disclosure about contingent assets and liabilities.
We continually evaluate our estimates, including those related to revenue,
allowance for doubtful accounts, reserves for income taxes, and litigation. We
base our estimates on historical experience and on various other assumptions,
which we believe to be reasonable in order to form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily ascertained from other sources. Actual results may deviate from these
estimates if alternative assumptions or condition are used.

ITEM 3. CONTROLS AND PROCEDURES

The Company's Chief Executive Officer has concluded, based on an evaluation
conducted within 90 days prior to the filing date of this Quarterly Report on
Form 10-QSB, that the Company's disclosure controls and procedures have
functioned effectively so as to provide those officers the information necessary
whether:

(i) this Quarterly Report on Form 10-QSB contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this Quarterly Report on Form
10-QSB, and

(ii) the financial statements, and other financial information included in this
Quarterly Report on Form 10- QSB, fairly present in all material respects the
financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this Quarterly Report on Form 10-QSB.

There have been no significant changes in the Company's internal controls or in
other factors since the date of the Chief Executive Officer's evaluation that
could significantly affect these internal controls, including any corrective
actions with regards to significant deficiencies and material weaknesses.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 2. Changes in Securities

On August 22, 2003, the Shareholders effected a 1-for-4 reverse stock split. The
principal effect of the reverse split will be that the number of shares of
Common Stock issued and outstanding was reduced from 1,088,159 shares as of
August 25, 2003 to approximately 272,039 shares. The number of authorized shares
of Common Stock will not be affected.

Item 3. Defaults upon Senior Securities
Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

On August 22, 2003, the Company held its Annual Meeting of Shareholders. The
Shareholders elected Mr. Francis O'Donnell to serve as director until the
Company's Annual Meeting of stockholders in 2004. The Shareholders effected a
1-for-4 reverse stock split (pro-rata reduction of outstanding shares) of the
Company's issued and outstanding shares of Common Stock. The Shareholders
amended the Company's Articles of Incorporation to change the name of the
Company to Coach Industries Group, Inc. A majority of the issues and outstanding
shares voted in favor of the resolutions, no votes were cast against the
resolutions, and there were no abstentions.

Item 5. Other Information

Not applicable

Item 6. Exhibits and Reports on Form 8-K

A. Exhibits:

31.1 Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act.

31.2 Certification of Principal Financial and Accounting Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act.

32.1 Certification of Chief Executive Officer Pursuant to Section
906 of the Sarbanes-Oxley Act.

31.1 Certification of Principal Financial and Accounting Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act.

B. Reports on Form 8-K

On August 25, 2003, the Registrant announced that on May 19, 2003, the Board of
Directors was notified by Pickett, Chaney & McMullen LLP, the Company's
independent auditor, that it would decline to stand for reelection as the
Company's independent auditor for the fiscal year ending December 31, 2003. At
the Annual Meeting of the Company, held on August 22, 2003, the Shareholders
ratified the appointment of Jewett, Schwartz & Associates, as the Company's
independent certified public accountants, for the fiscal year ending December
31, 2003. On August 22, 2003, the Company held its Annual Meeting of
Shareholders. The Shareholders elected Mr. Francis O'Donnell to serve as
director until the Company's Annual Meeting of stockholders in 2004. The
Shareholders effected a 1-for-4 reverse stock split (pro-rata reduction of
outstanding shares) of the Company's issued and outstanding shares of Common
Stock. The Shareholders amended the Company's Articles of Incorporation to
change the name of the Company to Coach Industries Group, Inc. The Registrant
announces that effective as of the opening of business on Monday, August 25,
2003, the 1-for-4 reverse stock split will be effective and the Company will be
trading under the name Coach Industries Group, Inc. The new symbol for the
Company is CIGI.OB.

On August 29, 2003, the Registrant announced, effective September 1, 2003, that
Commercial Transportation Manufacturing Corporation, a New York corporation
specializing the manufacturing and selling of limousines, was to be merged into
Coach Industries Group, Inc.

On September 15, 2003, the Registrant announced that the merger with Commercial
Transportation Manufacturing Corporation, a New York corporation specializing
the manufacturing and selling of limousines, was completed on September 1, 2003.

No other reports on Form 8-K were filed during the quarter ended September 30,
2003, for which this report is filed.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934 the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Coach Industries Group, Inc.

November 14, 2003 /s/ Francis O'Donnell
-------------------------------------
Francis O'Donnell,
Acting President and Chairman of the
Board of Directors
(PRINCIPAL EXECUTIVE OFFICER)

November 14, 2003 /s/ Francis O'Donnell
--------------------------------------
Francis O'Donnell,
Acting Chief Financial Officer
(PRINCIPAL ACCOUNTING OFFICER)