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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year ended December 31, 2003
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 Identification No.)
incorporation or organization)
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
SearchHound.com, Inc.
12817 Woodson, Overland 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
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports, and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $472,000.
State the aggregate market value of the voting stock held by non-affiliates of
the registrant on March 15, 2004, computed by reference to the price at which
the stock was sold on that date: $9,100,000
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
9,785,531 shares of Common Stock, $.001 par value, as of December 31,
2003.
Transitional Small Business Disclosure Format (check one)
Yes [ ] No [X]
DOCUMENTS INCORPORATED BY REFERENCE
None
COACH INDUSTRIES GROUP, INC.
Report on Form 10KSB
For the Fiscal Year Ended December 31, 2003
TABLE OF CONTENTS
PAGE
PART I
Item 1. Description of the Business...................................... 1
Item 2. Description of the Property...................................... 11
Item 3. Legal Proceedings................................................ 11
Item 4. Submission of Matters to Vote of Security Holders................ 12
PART II
Item 5. Market for Common Equity and Related Stockholder Matters......... 13
Item 6. Management's Discussion and Analysis............................. 14
Item 7. Financial Statements............................................. 18
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure......................................... 18
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons..... 19
Item 10. Executive Compensation........................................... 21
Item 11. Security Ownership of Certain Beneficial Owners and Management... 23
Item 12. Certain Relationships and Related Transactions................... 24
PART IV
Item 13. Exhibits and Reports on Form 8-K................................. 26
Item 14. Principal Accountant Fees and Services........................... 27
Signatures .................................................................... 28
PART I
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A "SAFE HARBOR"
FOR FORWARD LOOKING STATEMENTS. This Form 10-KSB contains statements that are
not historical facts. These statements are called "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These statements involve important known
and unknown risks, uncertainties and other factors and can be identified by
phrases using "estimate," "anticipate," "believe," "project," "expect,"
"intend," "predict," "potential," "future," "may," "should" and similar
expressions or words. Our future results, performance or achievements may differ
materially from the results, performance or achievements discussed in the
forward-looking statements. There are numerous factors that could cause actual
results to differ materially from the results discussed in forward-looking
statements, including:
o Changes in existing product liability, tort or warranty laws or the
introduction of new laws, regulations or policies that could affect our
business practices: these laws, regulations or policies could impact our
industry as a whole, or could impact only those portions in which we are
currently active.
o Changes in environmental regulations: these regulations could have a
negative impact on our earnings; for example, laws mandating greater fuel
efficiency could increase our research and development costs.
o Changes in economic conditions, including changes in interest rates,
financial market performance and our industry: these types of changes can
impact the economy in general, resulting in a downward trend that impacts
not only our business, but all companies with which we compete; or, the
changes can impact only those parts of the economy upon which we rely in a
unique fashion, including, hotels, restaurants and business travel.
o Changes in relationships with major customers and/or suppliers: an adverse
change in our relationships with major customers and/or suppliers would
have a negative impact on our earnings and financial position.
o Armed conflicts and other military actions: the considerable political and
economic uncertainties resulting from these events, could adversely affect
our order intake and sales, particularly in the limousine market.
o Factors that we have discussed in previous public reports and other
documents filed with the Securities and Exchange Commission.
This list provides examples of factors that could affect the results described
by forward-looking statements contained in this Form 10-KSB. However, this list
is not intended to be exhaustive; many other factors could impact our business
and it is impossible to predict with any accuracy which factors could result in
which negative impacts. Although we believe that the forward-looking statements
contained in this Form 10-KSB are reasonable, we cannot provide you with any
guarantee that the anticipated results will be achieved. All forward-looking
statements in this Form 10-KSB are expressly qualified in their entirety by the
cautionary statements contained in this section and you are cautioned not to
place undue reliance on the forward-looking statements contained in this Form
10-KSB. In addition to the risks listed above, other risks may arise in the
future, and we disclaim any obligation to update information contained in any
forward-looking statement.
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS
GENERAL
Coach Industries Group, Inc. (the "Company" or "CIGI"), formerly known as
Searchhound.com, was organized as a Nevada corporation in 2000, and is currently
headquartered in Coral Springs, Florida.
SearchHound.com, Inc., the predecessor to CIGI, 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.
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.
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:
o 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.
o 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 a director and acting Chief Executive Officer: 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.
o 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.
o 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 year ended December 31, 2003.
o 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
year ended December 31, 2003.
o 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 year ended December 31, 2003.
o As of March 31, 2003, the Company 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.
o In March 2003, the Company increased the shares available to be issued by
62,500. The Company issued common stock to employees, consultants and
members of the Board of Directors for services rendered to the Company.
o 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 year ended December 31, 2003.
o 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 a former officer and
director of SearchHound.com, Inc.
On July 10, 2003, the Company's sole officer and director 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.
On August 26, 2003, the Company effected a 1-for-4 stock split of each
outstanding share of common stock. The financial statements disclosed in the
Company's filings with the Securities and Exchange Commission reflect this
reverse stock split on retroactive basis.
PLAN OF OPERATION
The Company is the currently the holding company for two manufacturers of
limousines, primarily for the livery industry which modify and custom fabricate
stock vehicles that are manufactured by automotive manufacturers, principally
General Motors and Ford Motor Company. During 2003, the Company had two wholly
owned subsidiaries: Commercial Transportation Manufacturing Corporation
("CTMC"), located at the in Bohemia, New York and Springfield Coach Industries
Corporation, Inc. ("SCB"), located in Springfield, Missouri. The Company's
long-term strategy is to acquire companies that will provide financial and other
similar services to its existing customers and to expand its current customer
base.
The business strategy of the Company currently is to further diversify product
lines and develop innovative design, engineering and manufacturing expertise in
order to be the best value producer of custom vehicle products in the
marketplace. The Company sells its custom limousine chassis to limousine
companies principally in New York, Florida and throughout the United States. The
Company markets its limousines through tradeshows, print and direct marketing to
limousine operators. The Company is focusing on certain custom niches within its
geographical markets and believes that opportunities for growth remain strong
for modified limousine chassis.
The Company has an innovative team focused on building lasting relationships
with its customers. This is accomplished by striving to deliver vehicles and
services that management believes will inspire customer enthusiasm. The Company
believes that it can best carry out its long-term business plan and obtain
optimal financial flexibility by using a combination of borrowings under the
Company's credit facilities, as well as internally or externally generated
equity capital, as sources of expansion capital. The Company currently has a
$1.6 million floor plan facility for CTMC through a local dealership and in
early 2004 the Company expects to secure a $3.0 million floor plan facility for
SCB through Ford Motor Company.
On September 1, 2003, CTMC, a New York corporation specializing the
manufacturing and selling of limousines, was merged into Coach Industries Group,
Inc. The Company issued 3 million shares of common stock valued at $1.35 million
as of August 26, 2003.
Effective December 31, 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. The Company issued 2.0 million shares of common stock valued at
$2.7 million as of November 3, 2003.
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. The shares are issued and classified as
treasury stock as of December 31, 2003.
SEASONALITY
The limousine business is somewhat seasonal, whereby most purchases are made
during the second and fourth quarters of the fiscal year. The plants close for a
week in July and a week in December. The Company plans on diversifying its
business to mitigate some of the seasonality of the current operations.
EMPLOYEES
As of December 31, 2003, the Company employed 80 full-time employees and two
part-time employees, four of whom are sales personnel, 12 (2 are part-time
employees) of which are managers and administrative personnel and 65 of who are
direct manufacturing personnel. Employees of the Company are not represented by
labor unions. The Company considers its relationship with its employees to be
good.
ITEM 2. DESCRIPTION OF PROPERTIES
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 was one year with a two-year renewal option (at the Company's option) at a
rate totaling $10,000 a month. Rental expense totaled $28,397 for the year ended
December 31, 2002. The agreement was terminated effective with his resignation
on May 31, 2002. The second agreement was terminated on January 3, 2003.
Pursuant to the acquisition of CTMC, the Company is a party to a non-cancelable
operating lease pertaining to the office and plant facilities located in
Bohemia, New York. The facility is approximately 30,000 square feet. The lease
term, as amended, expires in December 2007 with payments commencing in July
2003. The lease is to a related party.
Current and future minimum rental payments under the lease for the years ended
are as follows:
Year Ending December 31, Annual Payments
------------------------ ---------------
2004 $ 288,000
2005 288,000
2006 288,000
2007 288,000
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$ 1,152,000
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Effective December 31, 2003, the Company acquired the assets and liabilities of
Springfield Coach Industries Corporation, Inc. and assumed a lease agreement
dated August 1, 2001, whereby the Company will occupy a manufacturing facility
with approximately 35,000 square feet and a warehouse facility with
approximately 16,000 square feet for $11,000 a month, expiring on July 31, 2006.
The lease agreement has five two year renewal options. Current and future
minimum rental payments under the lease for the years ended are as follows:
2004 $ 132,000
2005 132,000
2006 77,000
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$ 341,000
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In August 2003, the Company relocated their corporate offices to Coral Springs,
Florida. The Company does not pay rent for this office space.
ITEM 3. LEGAL PROCEEDINGS
Certain claims, suits and complaints arising in the normal course with respect
to the Company's services have been filed or are pending against the Company
including its subsidiaries. Generally, these matters are all covered by a
general liability insurance policy. In the opinion of management, the resolution
of all such matters would not have a significant effect on the financial
position, results of operations or cash flows of the Company, if disposed of
unfavorably.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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 was not affected.
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.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Company's Common Stock is quoted on the NASD's OTC Bulletin Board electronic
system under the ticker symbol CIGI, effective August 2003, formally SHND.
The following table sets forth the quarterly high and low bid prices for the
Company's Common Stock during the years ended December 31, 2003 and 2002. These
prices have been adjusted to reflect the1 for 67 reverse-stock split which was
effective on December 30, 2002 and the one for four reverse stock split
effective on August 25, 2003. Quotations set forth below reflect inter-dealer
prices, without retail mark-up, markdown or commission, and may not represent
actual transactions.
Year Quarter High Low
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2003 Jan-Mar 2.60 .80
2003 Apr-Jun 2.68 1.12
2003 Jul-Sep 2.04 1.00
2003 Oct-Dec 1.84 1.10
2002 Jan-Mar 14.20 5.64
2002 Apr-Jun 9.40 1.36
2002 Jul-Sep 2.68 0.01
2002 Oct-Dec 2.68 0.40
As of December 31, 2003 there were approximately 250 holders of record of the
Registrant's common stock.
During the years ended December 31, 2003 and 2002; the Registrant did not
declare or pay any cash dividends. Management and the Board of Directors do not
anticipate the payment of cash dividends within the foreseeable future. The
Company's Board of Directors approved a one for sixty-seven share reverse stock
split effective on December 30, 2002 and a one for four reverse stock split
effective on August 26, 2003. The accompanying financial statements and related
disclosures reflect this reverse stock split on retroactive basis.
Recent Sales of Unregistered Securities
For the year ended December 31, 2003, the Company issued 9.5 million shares of
its common stock as follows:
On August 26, 2003, the Company issued 3,000,000 million
unregistered shares of common stock issued for the purchase of CTMC. The Company
believes that the transaction was exempt from registration pursuant to Rule 506
and Section 4(2) of the Securities Act as a transaction by an Issuer not
involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
On August 26, 2003, the Company issued 1,800,000 million registered
shares issued to consultants for past and present services. The Company believes
that the transaction was exempt from registration pursuant to Rule 506 and
Section 4(2) of the Securities Act as a transaction by an Issuer not involving a
public offering as the recipient had sufficient knowledge and experience in
financial and business matters that it was able to evaluate the merits and risks
of an investment in the Company, it had access to the type of information
normally provided in a prospectus, and since the transaction was non-recurring
and privately negotiated.
On August 26, 2003, the Company issued 433,333 unregistered shares
of common stock issued to settle notes and accounts payable totaling $65,000.
The Company believes that the transaction was exempt from registration pursuant
to Rule 506 and Section 4(2) of the Securities Act as a transaction by an Issuer
not involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
On August 26, 2003, the Company issued 677,333 unregistered shares
of common stock issued to settle accounts payable totaling $101,000. The Company
believes that the transaction was exempt from registration pursuant to Rule 506
and Section 4(2) of the Securities Act as a transaction by an Issuer not
involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
On September 15, 2003, the Company issued 100,000 unregistered
shares issued for consulting services, which were cancelled effective December
31, 2003. The Company believes that the transaction was exempt from registration
pursuant to Rule 506 and Section 4(2) of the Securities Act as a transaction by
an Issuer not involving a public offering as the recipient had sufficient
knowledge and experience in financial and business matters that it was able to
evaluate the merits and risks of an investment in the Company, it had access to
the type of information normally provided in a prospectus, and since the
transaction was non-recurring and privately negotiated.
On November 13, 2003, the Company issued 2,000,000 unregistered
shares issued for the purchase of Springfield Coach Industries Corporation, Inc.
effective December 31, 2003. The Company believes that the transaction was
exempt from registration pursuant to Rule 506 and Section 4(2) of the Securities
Act as a transaction by an Issuer not involving a public offering as the
recipient had sufficient knowledge and experience in financial and business
matters that it was able to evaluate the merits and risks of an investment in
the Company, it had access to the type of information normally provided in a
prospectus, and since the transaction was non-recurring and privately
negotiated.
On August 26, 2003, the Company issued 1,600,000 unregistered shares
issued into treasury for the consideration for a potential transaction. The
Company believes that the transaction was exempt from registration pursuant to
Rule 506 and Section 4(2) of the Securities Act as a transaction by an Issuer
not involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
For the year ended December 31, 2002, the Company issued 254,850 (not split
adjusted) shares of its common stock as follows:
The Company issued 1,492 unregistered shares were issued to members
of the Board of Directors (746 shares to each of 2 members) for services
rendered. The Company believes that the transaction was exempt from registration
pursuant to Rule 506 and Section 4(2) of the Securities Act as a transaction by
an Issuer not involving a public offering as the recipient had sufficient
knowledge and experience in financial and business matters that it was able to
evaluate the merits and risks of an investment in the Company, it had access to
the type of information normally provided in a prospectus, and since the
transaction was non-recurring and privately negotiated.
The Company issued 16,418 shares were issued to the officers of the
Company in lieu of cash compensation. The Company believes that the transaction
was exempt from registration pursuant to Rule 506 and Section 4(2) of the
Securities Act as a transaction by an Issuer not involving a public offering as
the recipient had sufficient knowledge and experience in financial and business
matters that it was able to evaluate the merits and risks of an investment in
the Company, it had access to the type of information normally provided in a
prospectus, and since the transaction was non-recurring and privately
negotiated.
The Company issued 1,120 unregistered shares were issued to
employees and consultants of the Company in lieu of cash compensation. The
Company believes that the transaction was exempt from registration pursuant to
Rule 506 and Section 4(2) of the Securities Act as a transaction by an Issuer
not involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
The Company issued 223,880 shares of common stock were issued to
treasury and serve as collateral for Note payable to a related party. The
Company believes that the transaction was exempt from registration pursuant to
Rule 506 and Section 4(2) of the Securities Act as a transaction by an Issuer
not involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
The Company issued 11,940 shares were issued to a law firm as
compensation for legal services performed on behalf of the Company. The Company
believes that the transaction was exempt from registration pursuant to Rule 506
and Section 4(2) of the Securities Act as a transaction by an Issuer not
involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
A total of 29,851 shares of common stock was returned and cancelled during 2002,
pursuant to the settlement agreement with Brett Warner relative to a lawsuit
involving the Company's investment in JobBankUSA.
For the period ended December 31, 2001, the Company issued 8,463,205 shares (not
split adjusted) as follows:
The Company issued 1,700,000 unregistered shares were issued to
shareholders of Godado UK, Ltd., FreeAirMiles, Inc., MoneyMessage, LLC,
FastCashOffers.com and EarlyBirdDomain.com, Mesia.com, Inc. and Speak Globally,
LLC. The Company believes that the transaction was exempt from registration
pursuant to Rule 506 and
Section 4(2) of the Securities Act as a transaction by an Issuer not involving
a public offering as the recipient had sufficient knowledge and experience in
financial and business matters that it was able to evaluate the merits and risks
of an investment in the Company, it had access to the type of information
normally provided in a prospectus, and since the transaction was non-recurring
and privately negotiated.
The Company issued 2,000,000 shares were issued to the shareholder
of JobBank USA, Inc. for the acquisition of 49% of its common stock. The Company
believes that the transaction was exempt from registration pursuant to Rule 506
and Section 4(2) of the Securities Act as a transaction by an Issuer not
involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
The Company issued 566,658 unregistered shares were issued pursuant
to a Private Placement memorandum during the year ended December 31, 2001. The
Company believes that the transaction was exempt from registration pursuant to
Rule 506 and Section 4(2) of the Securities Act as a transaction by an Issuer
not involving a public offering as the recipient had sufficient knowledge and
experience in financial and business matters that it was able to evaluate the
merits and risks of an investment in the Company, it had access to the type of
information normally provided in a prospectus, and since the transaction was
non-recurring and privately negotiated.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET CONDITIONS.
FOR THE YEAR ENDED DECEMBER 31, 2003
COMPARED TO DECEMBER 31, 2002
Gross Revenues and Costs of Operations
GROSS REVENUES. Gross revenues increased from zero for the year ended December
31, 2002 to $471,762 for the year ended December 31, 2003, an increase of
$471,762, primarily as a result of the Company acquiring CTMC effective
September 1, 2003 and the gross revenues for the period reflect revenues through
December 31, 2003 from CTMC.
COSTS OF GOODS SOLD. Costs of goods sold increased from zero for the year ended
December 31, 2002 to $647,574 for the year ended December 31, 2003, an increase
of $647,574, as a result of the Company acquiring CTMC effective September 1,
2003 and the costs of goods sold for the period reflect costs through December
31, 2003.
OPERATING EXPENSES. Operating expenses increased from $219,815 for the year
ended December 31, 2002 to $1.5 million for the year ended December 31, 2003, an
increase of $1.3 million.
General and administrative expenses increased from $110,807 for the year ended
December 31, 2002 to $486,626 for the year ended December 31, 2003, an increase
of $375,819, primarily due to increase in general and administrative expenses as
a result of the Company acquiring CTMC effective September 1, 2003 and the
general and administrative expenses for the period reflect expenses through
December 31, 2003. In addition, the Company incurred expenses associated with
securing a merger candidate.
Depreciation and amortization expense decreased from $479,745 for the year ended
December 31, 2002 to amortization of deferred rent ($9,600) for the year ended
December 31, 2003, a decrease of $469,875, primarily as a result of the Company
disposing of all of its operating assets/businesses and discontinuing all
operating activities. The depreciation and amortization expense is classified as
discontinued operations in the statement of operations for the year ended
December 31, 2002.
Loss on reduction of trade payable increased from a zero for the year ended
December 31, 2002 to a $94,118 for the year ended December 31, 2003, an increase
of $94,118, primarily due to the Company issuing shares of stock to settle
certain liabilities.
Impairment charges decreased from $4.3 million for the year ended December 31,
2002 to zero for the year ended December 31, 2003, a decrease of $4.3 million,
primarily as a result of the Company disposing of all of its operating
assets/businesses and discontinuing all operating activities. The impairment
charge was included in discontinued operations in the statement of operations
for the year ended December 31, 2002.
During January 2003, the Company issued an aggregate of 95,024 shares of common
stock in consideration for the cancellation of outstanding notes payable
approximating $175,000, accrued interest approximating $22,850 and accrued wages
payable of $114,500.
On March 3, 2003, the Company filed a Registration Statement, which increased
the shares available to be issued by 62,500. The Registration Statement provides
the Company common stock for issuance to employees, consultants and Board
Members for services rendered to the Company. The Registration Statement
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
aggregating $75,000.
During the year ended December 31, 2003, the Company issued shares or common
stock to various related parties for future consulting services. The Company
recognized $810,000 of amortization of deferred compensation relating to this
issuance. During the year ended December 31, 2002, there was no amortization of
deferred compensation. The total value of these agreements is $810,000 to settle
past services, as well as future services to the Company which was included in
amortization of deferred compensation for the year ended December 31, 2003.
Included in the $810,000 was $260,000 for past services rendered. The shares of
common stock were issued to these individuals with a three month restriction.
The agreements are for consulting services for periods between 6 months to 2
years.
INCOME (LOSS) FROM DISCONTINUED OPERATIONS. Income (loss) from discontinued
operations improved from $4.6 million loss for the year ended December 31, 2002
to $135,100 income for the year ended December 31, 2003, an improvement of $4.7
million, primarily due to the Company completing its plan of disposal in 2002
and early 2003.
NET INCOME (LOSS). Net loss decreased from $4.8 million for the year ended
December 31, 2002 to $1.6 million for the year ended December 31, 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 $401,000 relating to the
operations of CTMC for the period and expenses relating to the consulting
agreement totaling $810,000 and the remaining expenses associated to the
operating expenses relating to the operations of CIGI.
FOR THE YEAR ENDED DECEMBER 31, 2002
COMPARED TO THE YEAR ENDED DECEMBER 31, 2001
During 2002, the Board of Directors approved a change in the Company's strategic
direction, because of significant operating losses, continued cash flow
challenges, its depressed stock price and difficulties raising debt/equity
capital faced by all companies and specifically the high technology industry.
The Board committed the Company to a plan which would include the disposal of
all operating businesses, the reduction of cash operating costs, the reduction
of outstanding debt through the exchange of stock or other nonmonetary assets,
and to seek a merger opportunity with another company with more financial
resources than the Company currently has available. As of December 31, 2002, the
Company has disposed of most of its operating businesses and ceased all
operating activities. The businesses that have not been disposed of at December
31, 2002, have been reduced to their estimated fair value. The consolidated
financial statements reflect the businesses sold or to be sold as discontinued
operations as of December 31, 2002 and retroactively for the year ended December
31, 2001. Revenues attributable to the discontinued operations aggregated
$1,103,041 and $257,927 for the years ended December 31, 2001 and 2002,
respectively. Net losses attributable to the discontinued operations aggregated
$13.5 million and $4.6 million for the years ended December 31, 2001 and 2002,
respectively. During January 2003, all remaining businesses have been disposed.
The Company consummated the following transactions in order to implement the
plan:
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 an officer and director of the Company. The
net book value of the net assets sold approximated $52,750. Pursuant to the
asset sale agreement the Company agreed to transfer such assets in settlement of
the following: 1) an employment agreement, 2) all accrued but unpaid
compensation which approximated $100,000, and 3) a promissory note in the amount
of $285,000.
In addition, the Company agreed to pay $7,500 in cash, in exchange for, and in
sole consideration and settlement of any other liabilities that may exist as of
May 31, 2002, including the liabilities that accrue pursuant to a Promissory
Note with a principle amount of $147,030, and any liability that may exist
pursuant to the Employment Agreement. The net effect of the sale of these assets
was a gain of $446,430, which was classified as a gain from disposal of
discontinued operations in the Statement of Operations for the year ended
December 31, 2002.
Concurrent with the asset sale agreement this director tendered his resignation
from the Company.
During 2002, the Board terminated an employment contract whereby, under the
settlement salary ceased accruing on August 15, 2002 and the severance provision
was forgiven. It was replaced with a consulting agreement whereby he will
continue in his position as acting chief executive officer of the Company. The
agreement calls for the following: 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 the Company. 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 an officer
and director of the Company:
a. Certain domains including: www.searchhound.com, www.solosearch.com,
www.godado.co.uk, www.freeairmiles.com, and www.moneymessage.com ,
b. Customer lists, email names and addresses (for each domain)
c. Software, programming code, intellectual property (for each domain)
d. Certain computer and office equipment
The net book value of the net assets sold approximated $8,000. Pursuant to the
asset sale agreement the Company agreed to transfer such assets in settlement of
the remaining outstanding principal balance owed by the Company pursuant to a
Promissory Note with a principle balance of $179,359 together with all accrued
but unpaid interest. Previously, the Company had made partial reductions to the
unpaid note balance by the issuance of 45,323 shares of SearchHound.com, Inc.
common stock and a cash payment of $7,500.
In addition, the former Chief Executive Officer agreed to cancel the rental
payments owed to him by the Company for its use of web hosting and office space.
On January 3, 2003 the Company also entered into an asset sale agreement, which
sold the following assets of the Company to an unaffiliated entity:
a. EarlyBirdDomain.com domain,
b. Database for EarlyBirdDomain.com including all subscribers (active,
inactive, and unsubscribed), and
c. EarlyBirdDomain clients, customers
The net book value of the net assets sold approximated zero as of the date of
sale. Pursuant to the asset sale agreement the Company agreed to transfer such
assets in exchange for nominal cash consideration.
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. In addition, the Company effected a one for
four reverse stock split effective August 26, 2003.The consolidated financial
statements reflect this reverse stock split on retroactive basis.
OPERATING EXPENSES Operating expenses consists primarily of legal, accounting
and investor relations costs that are associated with the company continuing as
a public reporting entity. The increase in such costs ($41,974) from 2001 as
compared to 2002, reflect the legal costs associated with the JobBankUSA
litigation and the Company's proxy costs in 2002. Management believes such costs
will be minimal in 2003 as a result of the Company's disposal of its operating
businesses and lack of litigation.
Other income (expense) primarily consists of interest expense, impairment loss
on marketable securities and equity in income of nonconsolidated subsidiary.
Interest expense declined $2,762 during 2002 as compared to 2001, which is
attributable to the cancellation of notes as a result of the sale of Mesia.com
and SpeakGlobally.com to Brad Cohen, which occurred May 31, 2002.
During 2002, the Company recorded a permanent impairment with respect to
Globalnet Financial.com, Inc. common stock, which was its only marketable
security and recorded a loss of $68,954 in the year ended December 31, 2002. The
equity in earnings of an unconsolidated subsidiary represents the Company's
investment in JobBankUSA, Inc., which was terminated during 2002 as a result of
the settlement of a lawsuit The Company's investment in marketable securities
has been reduced to zero at December 31, 2002 as a result of the impairment loss
recognized in 2002.
DISCONTINUED OPERATIONS Loss from discontinued operations aggregated $5.1
million in 2002 as compared to $13.5 million 2001, which represents the
operating results of the Company's operating businesses. Such losses include
impairment charges totaling $4.3 million in 2002 and $8.7 million in 2001
related to the write-down of goodwill associated with the discontinued
businesses. In addition, depreciation and amortization expenses totaled $469,885
in 2002 and $4.1 million in 2001 related to the discontinued businesses. Net
assets held for sale have been reduced to their estimated net realizable value
at December 31, 2002.
Gain from disposal of discontinued operations totaled $446,430 in 2002, which
resulted from the disposal of Mesia.com and SpeakGlobally.com on May 31, 2002.
In exchange for these operating businesses, and $7,500 cash,a former director
and officer agreed to cancel: 1)his employment agreement, 2) all accrued but
unpaid compensation approximating $100,000, 3) a promissory note with an
outstanding principal balance of $285,000 together with accrued but unpaid
interest and 4) a promissory note with an outstanding principal balance of
$147,030 together with accrued but unpaid interest. The net effect of this
transaction was classified as a gain from disposal of discontinued operations of
$446,430 during 2002.
NET LOSS. As a result of the factors described above, the Company incurred a net
loss of $4.8 million or ($42.76) per basic and diluted share for the year ended
December 31, 2002, compared to a net loss of $13.6 million or ($137.40) per
basic and diluted share for year ended December 31, 2001.
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. In addition, the Company plans on converting some
of its related party payables to common stock in an effort to conserve its cash
resources.
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. There can be no assurances that the Company can
realize sufficient revenues to satisfy its business plan and further, there can
be no assurance that alternative sources of financing can be procured on behalf
of the Company.
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 $0.45
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.
In addition, Management continues to evaluate various business opportunities for
future expansion and diversification.
ASSETS
CASH AND CASH EQUIVALENTS. Cash and cash equivalents increased from $14,790 at
December 31, 2002 to $91,565 at December 31, 2003, an increase of $76,775,
primarily as a result of the Company acquiring CTMC effective September 1, 2003
and SCB effective December 31, 2003.
SUPPLY INVENTORY. Supply inventory increased from zero at December 31, 2002 to
$1.3 million at December 31, 2003, an increase of $1.3 million, primarily as a
result of the Company acquiring SCB, effective December 31, 2003 totaling
$946,567. In addition, CTMC acquired approximately $133,000 of raw materials
inventory effective December 31, 2003 as part of a settlement with a related
party.
TOTAL CURRENT ASSETS. Total current assets increased from $22,790 at December
31, 2002 to $1.5 million at December 31, 2003, an increase of $1.5 million,
primarily related to the supply inventory discussed above.
PROPERTY AND EQUIPMENT. Property and equipment increased from zero at December
31, 2002 to $901,865 at December 31, 2003, an increase of $901,865, related to
the acquisition of SCB effective December 31, 2003. In addition, CTMC acquired
approximately $767,000 of property and equipment, effective December 31, 2003 as
part of a settlement with a related party. No depreciation was taken relating to
either of these transactions for the year-ended December 31, 2003.
LIABILITIES
ACCRUED WAGES. Accrued wages decreased from $122,000 at December 31, 2002 to
$32,921 at December 31, 2003, a decrease of $89,079, 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
zero at December 31, 2002 to $367,669 at December 31, 2003, an increase of
$367,669, relating to the operations of CTMC.
RELATED PARTY PAYABLE. Related party payable increased from zero at December 31,
2002 to $305,739, specifically relating to funding cash funding requirements of
CTMC and SCB. In addition, professional fees were paid directly by a related
party.
ACCRUED INTEREST. Accrued interest decreased from $30,635 at December 31, 2002
to zero at December 31, 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 increased from
$316,229 at December 31, 2002 to $613,659 at December 31, 2003, a increase of
$297,430, primarily as a result of restructuring the remaining liabilities due
to certain related parties during 2002, offset by loans to related parties
totaling $613,659 relating to the acquisition of SCB effective December 31,
2003, specifically relating to the chassis inventory financed.
NOTES PAYABLE. Notes payable decreased from $63,539 at December 31, 2002 to zero
at December 31, 2003, a decrease of $63,539, primarily as a result of reaching
various settlements with certain note holders.
TOTAL CURRENT LIABILITIES. Total current liabilities increased from $532,403 at
December 31, 2002 to $1.7 million at December 31, 2003, an increase of $1.2
million, primarily as a result of the Company related to the acquisition of CTMC
and SCB. In addition, the Company funded operations through increased accounts
payable and related parties accounts payable.
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. In
addition, the Company has secured lines of credit for funding floor plan
liabilities. CTMC secured a line of credit totaling $1.6 million for the
purchase of chassis inventory from a local dealership. The line of credit will
be utilized by CTMC to fund the purchase of chassis for production.
In addition, during early 2004 SCB expects to secure funding from Ford Motor
Credit totaling $3.0 million for the purchase of chassis vehicles for
production.
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 7. FINANCIAL STATEMENTS
See "Index to Financial Statements" for a description of the financial
statements included in this Form 10-KSB.
Consolidated balance sheet at December 31 December 31, 2003
Consolidated statements of operations for the years ended December 31, 2003 and
2002
Consolidated statements of shareholders' equity at December 31, 2003 and 2002
Consolidated statements of cash flows for the year ended December 31, 2003 and
2002
Notes to consolidated financial statements for the years ended December 31, 2003
and 2002
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 8A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Company carried
out an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This
evaluation was done under the supervision and with the participation of the
Company's Principal Executive Officer and Principal Financial Officer. Based
upon that evaluation, the Principal Executive Officer and Principal Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in gathering, analyzing and disclosing information needed to satisfy
the Company's disclosure obligations under the Exchange Act.
CHANGES IN INTERNAL CONTROLS
There were no significant changes in the Company's internal controls or
in other factors that could significantly affect those controls since the most
recent evaluation of such controls.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
EXECUTIVE OFFICERS AND DIRECTORS
The director and executive officer as of December 31, 2003 is as follows:
NAME AGE POSITION
---- --- --------
Francis O'Donnell 46 Chairman of the Board, Chief Executive Officer
/Chief Accounting Officer
FRANCIS O'DONNELL has served as Chief Executive Officer and Chairman of the
Board of Directors of the Company since July 10, 2003. Mr. O'Donnell is also the
Managing Member of International Equities and Finance, LLC, a company
specializing in recapitalizing and re-engineering entities and has held this
position since February, 2001. From November, 1996 to February, 2001, Mr.
O'Donnell was the President and Chief Executive Officer of Inorganic Recycling
Corporation. Prior to November, 1996, Mr. O'Donnell was a Group Director for
Ryder Systems (November, 1993 to November, 1996), President and Chief Executive
Officer of Business Telecom, Inc. (February, 1991 to November, 1993) and Vice
President Strategic Planning of MCI Telecommunications (January, 1987 to
February, 1991). Mr. O'Donnell holds a Business and Mathematics degree from
Rollins College, Winter Park, Florida and Masters in Business Administration
(MBA) from Columbia University, New York, NY.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that the Company directors and executive officers, and persons who own
more than ten percent (10%) of the Company's outstanding common stock, file with
the Securities and Exchange Commission (the "Commission") initial reports of
ownership and reports of changes in ownership of Common Stock. Such persons are
required by the Commission to furnish the Company with copies of all such
reports they file. The Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representation, as
of December 31, 2003, all of the Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% beneficial owners have been
satisfied.
CODE OF ETHICS
The Company has adopted a code of business conduct and ethics that applies to
its directors, officers, and employees, including its principal executive
officers, principal financial officer, principal accounting officer, controller
or persons performing similar functions. A copy of the code is attached to this
report as Exhibit 14.
ITEM 10. EXECUTIVE COMPENSATION
During the years ended December 31, 2003 and 2002, executive compensation was as
follows:
SUMMARY COMPENSATION TABLE
LT Options/ All Other
Name and Principal Position Year Salary Stock Bonus Compensation
----------------------------- ------------ ------------- --------------- -----------------
Francis O'Donnell 2003 - - 965,450 (d)
Chairman of the Board/
CEO/Principal Accounting
Officer
Dave Mullikin (c) 2003 - - -
President/CEO 2002 130,000 - 20,068 (a)
Brad Cohen (b) 2003 - - -
EVP 2002 104,167 - 9,800 (a)
(a)- 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 was one year with a two-year renewal option (at the Company's
option) at a rate totaling $10,000 per month. Rental expense totaled $29,868 for
the year ended December 31, 2002. The agreement between the Company and Brad
Cohen was terminated effective with his resignation on May 31, 2002. The
agreement between the Company and Mr. Mullikin was terminated on January 3,
2003.
(b) - Mr. Cohen resigned as an officer and a director of the Company on May 31,
2002.
(c)- 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.
(d) - Mr. O'Donnell received 1.4 million shares of common stock on August 26,
2003 valued at $0.45 a share, for past and future consulting services to the
Company. The value of the issuance of stock was $632,250. In addition, companies
that Mr. O'Donnell controls have settled outstanding liabilities with the
Company through the issuance of common stock totaling 1.1 million shares valued
at $0.45 a share as of August 26, 2003 reflecting a loss to the Company totaling
$333,200.
Because no options, stock appreciation rights or Long-Term Incentive Plans have
been granted to any of the executive officers as of December 31, 2003, the
information and tables otherwise required by this Item, which relate to such
forms of compensation has been omitted. The above noted table reflects
compensation received by officers in the form of registered S-8 stock.
The Board of Directors consists of Francis O'Donnell as Chairman of the Board
and currently the sole director of the Company. The Company is in the process of
recruiting additional members to the Board of Directors and subsequently
establishing an Audit Committee and Compensation Committee. Currently the Audit
Committee and Compensation Committee are performed by the Board of Directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 2003, the beneficial
ownership of Common Stock of all directors of the Company, all directors and
officers of the Company as a group, and each person who is known to the Company
to own beneficially more than 5% of the Company's Common Stock.
Amount/ Nature of
Name of Beneficial Owner Ownership (1) Percentage of Class
----------------------------- ---------------------------------- -----------------------
Francis O'Donnell 4,966,066 (3) 50.75 %
Springfield Coach
Industries Corporation 1,800,000 (2) 18.39
Elm Street Partners 1,311,700 (2) 13.40
Addresses of beneficial owners are on record with the company and are available
by written request.
(1) Pursuant to applicable rules of the Securities and Exchange Commission,
"beneficial ownership" as used in this table means the sole or shared power to
vote shares (voting power) or the sole or shared power to dispose of shares
(investment power). Unless otherwise indicated, the named individual has sole
voting and investment power with respect to the shares shown as beneficially
owned. In addition, a person is deemed the beneficial owner of those securities
not outstanding which are subject to options, warrants, rights or conversion
privileges if that person has the right to acquire beneficial ownership within
sixty days.
(2) Included in beneficial ownership for Francis O'Donnell.
(3) Francis O'Donnell owns 417,500 shares of common stock directly. Companies
that he controls directly and indirectly own 548,866 shares of common stock.
Shares were distributed by Francis O'Donnell totaling 1,022,500 shares of common
stock to investors of a previous transaction entered into by ELM Street
Partners. The voting rights for these shares of common stock collectively are
maintained by Francis O'Donnell.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED 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 December
2007 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
years ended are summarized as follows:
2004 $ 288,000
2005 288,000
2006 288,000
2007 288,000
--------------------
$ 1,152,000
====================
Rental expense under all operating leases totaled approximately $86,400 and
$28,397 for the years ended December 31, 2003 and 2002, respectively, that
includes amortization of approximately $9,600 and $0 for the years ended
December 31, 2003 and 2002, respectively of deferred rental expense.
As of December 31, 2003 and December 31, 2002 the Company had receivable
balances for $31,593 and zero 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. Effective December 31, 2003, the Company acquired the equipment and
inventory for $859,046. The transaction was settled through a mortgage on
property owned by a related party. The mortgage is not a liability of the
Company and was considered an equity contribution from the related party.
During the year ended December 31, 2003, the Company issued 1.8 million shares
or common stock to various related parties for future consulting services. The
Company recognized $810,000 of amortization of deferred compensation relating to
this issuance. During the year ended December 31, 2002, there was no
amortization of deferred compensation. The total value of these agreements is
$810,000 to settle past services, as well as future services to the Company
which was included in amortization of deferred compensation for the year ended
December 31, 2003. Included in the $810,000 was $260,000 for past services
rendered. The shares of common stock were issued to these individuals with a
three month restriction. The agreements are for consulting services for periods
between 6 months to 2 years.
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
year ended December 31, 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 year ended December 31, 2003.
Related party accounts payable totaled $305,739 at December 31, 2003. The amount
pertains to a related party funding professional fees and cash flow requirements
of CTMC and SCB.
Notes payable- related parties totals $613, 659 due to the former owner of SCB,
as of December 31, 2003. Those balance pertain to the chassis inventory
purchased at acquisition. 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 approximated $8,000
as of the date of sale. Pursuant to the asset sale agreement the Company agreed
to transfer such assets 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
year ended December 31, 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 year ended December 31, 2003.
Item 7. Financial Statements
Report of Independent Certified Public Accountants
Consolidated balance sheet at December 31 December 31, 2003
Consolidated statements of operations for the years ended December 31, 2003 and
2002
Consolidated statements of shareholders' equity at December 31, 2003 and 2002
Consolidated statements of cash flows for the year ended December 31, 2003 and
2002
Notes to consolidated financial statements for the years ended December 31, 2003
and 2002
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the shareholders and board of directors
Coach Industries Group, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Coach Industries
Group, Inc. f/k/a SearchHound.com Inc. (a Nevada corporation) as of December 31,
2003, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for the year then ended December 31, 2003.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial statements of Coach
Industries Group, Inc. f/k/a SearchHound.com Inc. as of and for the year ended
December 31, 2002 were audited by other auditors whose report dated March 26,
2003, on those statements included an explanatory paragraph that described the
financial statements were prepared assuming that the company will continue as a
going concern and those statements did not include any adjustments resulting
from that uncertainty.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provided a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Coach Industries Group, Inc.
and its subsidiaries as of December 31, 2003, and the results of their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States.
JEWETT, SCHWARTZ & ASSOCIATES
HOLLYWOOD, Florida,
March 22, 2004
COACH INDUSTRIES GROUP, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2003
-----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................. 91,565
Accounts receivable, net ................................... 12,939
Due from Related party accounts receivable ................. 31,593
Supply inventory ........................................... 1,310,483
Prepaid expenses and other current assets .................. 57,680
-----------
Total current assets ............................... 1,504,260
-----------
PROPERTY AND EQUIPMENT, net .................................. 901,865
GOODWILL ..................................................... 2,678,896
-----------
$ 5,085,021
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses ...................... $ 367,669
Related party accounts payable ............................. 305,739
Deferred rent .............................................. 115,200
Warranty reserve ........................................... 20,535
Customer deposits .......................................... 230,273
Accrued wages .............................................. 32,921
Notes payable - related parties ............................ 613,659
-----------
Total current liabilities .......................... 1,685,996
-----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock $0.001 par value; 50,000,000 shares authorized
9,785,531 issued and outstanding 9,785
Additional paid in capital ................................... 5,675,277
Deferred compensation ....................................... --
Accumulated deficit restated effective January 1, 2003 ...... (1,566,037)
Treasury stock, 1.6 million shares at cost ................. (720,000)
-----------
Total shareholders' equity ......................... 3,399,025
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................... $ 5,085,021
===========
The accompanying notes are an integral part of these
financial statements.
COACH INDUSTRIES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
DECEMBER 31,
------------------------------
2003 2002
----------- -----------
REVENUES ................................. $ 471,762 $ --
----------- -----------
COST OF GOODS SOLD ....................... 647,574 --
----------- -----------
GROSS LOSS ............................. (175,812) --
OPERATING EXPENSES:
General and
Administrative ...................... 486,626 110,807
Sales and marketing ................... 33,575 --
Rent .................................. 86,400 28,397
Interest expense ...................... 3,768 15,090
Other ................................. 10,838 (3,333)
Amortization of deferred
Compensation ......................... 810,000 --
Impairment charges - marketable
equity securities ................... -- 68,854
Loss on reduction of trade
Payable ............................ 94,118 --
----------- -----------
Total operating expenses ............. 1,525,325 219,815
----------- -----------
Loss from continuing operations .......... (1,701,1367) (219,815)
----------- -----------
Income (loss) from discontinued
operations (including gain on
disposition of $135,100 and $446,430,
respectively) ............................ 135,100 (4,616,499)
----------- -----------
Loss before income taxes ................. (1,566,037) (4,836,314)
----------- -----------
Income taxes ............................. -- --
----------- -----------
NET LOSS ................................. $(1,566,037) $(4,836,314)
=========== ===========
Basic and diluted net income
(loss) per share :
Continuing operations .................... $ (0.77) $ (1.94)
Discontinued operations .................. 0.06 (40.82)
----------- -----------
Total .................................. $ (0.71) $ (42.76)
=========== ===========
Basic and diluted weighted average
common shares outstanding ................ 2,219,699 113,089
=========== ===========
The accompanying notes are an integral part of these
financial statements.
COACH INDUSTRIES GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
COMMON STOCK ADDITIONAL
PAID IN ACCUMULATED TREASURY
SHARES AMOUNT CAPITAL DEFICIT STOCK
------------ ------------ ------------ ------------ ------------
BALANCE, January 1, 2002 ................... 112,242 $ 458 20,124,780 (15,852,767) (19)
Return and cancellation of
Common Stock ............................... (7,463) (30) 30 -- --
Issuance of common stock for
services rendered .......................... 7,743 31 54,219 -- --
Issuance of common stock held
in treasury ................................ 55,970 -- -- -- --
Issuance of common stock held
in treasury ................................ 4,820 224 -- -- (224)
Marketable securities permanent
impairment ................................. -- -- -- -- --
Net Loss ................................... -- -- -- (4,836,314) --
------------ ------------ ------------ ------------ ------------
BALANCE, December 31, 2002 ................. 173,312 683 20,179,029 (20,689,081) (243)
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
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 -- --
Issuance of common stock for
services rendered .......................... 62,500 250 74,750 -- --
Unearned compensation - restricted stock ... 1,900,000 1,900 859,100 -- --
Cancellation of restricted stock ........... (100,000) (100) (50,900) -- 51,000
Amortization of unearned
compensation - restricted stock ............ -- -- -- -- --
Issuance of common stock upon
acquisition of CTMC ........................ 3,000,000 3,000 1,347,000 -- --
Issuance of common stock into
treasury for settlement of a
pending acquisition ........................ 1,600,000 1,600 718,400 -- (720,000)
Issuance of common stock upon
acquisition of SCB ......................... 2,000,000 2,000 2,658,000 -- --
Net loss ............................. (1,566,037)
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 2003 ................. 9,785,531 $ 9,785 $ 5,675,277 $ (1,566,037) $ (720,000)
============ ============ ============ ============ ============
ACCUMULATED UNEARNED
OTHER COMPENSATION
COMPREHENSIVE RESTRICTED STOCK
INCOME GRANTS TOTAL
------------ ------------ ------------
BALANCE, January 1, 2002 ................... (68,954) -- 4,203,498
Return and cancellation of
Common Stock ............................... -- -- --
Issuance of common stock for
services rendered .......................... -- -- 54,250
Issuance of common stock held
in treasury ................................ -- --
Issuance of common stock held
in treasury ................................ -- -- --
Marketable securities permanent
impairment ................................. 68,954 -- 68,954
Net Loss ................................... -- -- (4,836,314)
------------ ------------ ------------
BALANCE, December 31, 2002 ................. -- -- (509,612)
Restatement of accumulated
deficit subject to quasi reorganization .... -- -- --
Issuance of treasury stock to
settle notes and accounts payable .......... -- -- 48,632
Adjust common stock for stock split ........ -- -- --
Issuance of common stock to
settle notes and accounts payable .......... -- -- 531,042
Issuance of common stock for
services rendered .......................... -- -- 75,000
Unearned compensation - restricted stock ... -- (861,000) --
Cancellation of restricted stock ........... --
Amortization of unearned
compensation - restricted stock ............ -- 810,000 810,000
Issuance of common stock upon
acquisition of CTMC ........................ -- -- 1,350,000
Issuance of common stock into
treasury for settlement of a
pending acquisition ........................ -- -- --
Issuance of common stock upon
acquisition of SCB ......................... -- -- 2,660,000
Net loss ............................. (1,566,037)
------------ ------------ ------------
BALANCE, DECEMBER 31, 2003 ................. -- -- $ 3,399,025
============ ============ ============
The accompanying notes are an integral part of these
financial statements.
COACH INDUSTRIES GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
2003 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ......................................... $(1,566,037) $(4,836,314)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization .................. (9,600) 469,885
Amortization of deferred compensation .......... 810,000 --
Gain on sale of assets - discontinued operations (135,100) (446,430)
Loss on settlement of trade payable ............ 94,118 --
Impairment charges ............................. -- 4,304,078
Impairment loss on marketable securities ....... -- 68,954
Issuance of common stock for services rendered . 75,000 54,250
Changes in operating assets and liabilities:
Accounts receivable .......................... 9,811 191,813
Inventory .................................... (46,214) --
Prepaid expenses and other ................... (3,460) --
Accounts payable and accrued expenses ........ 359,627 (28,425)
Other current assets ......................... -- 794
Other current liabilities .................... 218,272 137,090
----------- -----------
Net cash provided by (used in) operating
activities ........................... (193,583) (84,305)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash received from business acquisitions, net .... 43,548 --
----------- -----------
Net cash used in investing activities .. 43,548 --
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable ........................ -- (13,251)
Related party accounts payable, net .............. 226,810 10,183
----------- -----------
Net cash (used in) financing
activities ........................... 226,810 (3,068)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 76,775 (87,373)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ....... 14,790 102,163
----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR ............. $ 91,565 $ 14,790
=========== ===========
The accompanying notes are an integral part of these
financial statements.
COACH INDUSTRIES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
1. BACKGROUND
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. 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 early 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.
The following represents the history of the Company:
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.
The Company's Board of Directors approved a one for sixty-seven share reverse
stock split effective on December 30, 2002. The accompanying financial
statements and related disclosures reflect this reverse stock split on a
retroactive basis.
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.
On July 10, 2003, the Company's sole officer and director resigned his positions
as President, Secretary, Treasurer and sole Director and appointed a new sole
director. The new sole member diectorof the Company, has approved the change of
the address of the corporate office.
In August 2003, 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 in the manufacturing and selling
of limousines, was merged into Coach.
Effective December 31, 2003 the Company acquired the certain assets and
liabilities of Springfield Coach Industries Corporation, Inc.("SCB"), a Missouri
corporation specializing in manufacturing and selling limousines.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of the Company, and
its wholly owned subsidiaries CTMC and SCB. All significant inter-company
balances and transactions have been eliminated.
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.
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 December 31, 2003, 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. Customer deposits for partial payment of
vehicles are deferred and treated as current liabilities until the vehicle is
completed and recognized as revenue. Repairs and other services are recorded
when the service is performed. Inventory is relieved upon delivery of the
vehicle.
PROPERTY AND EQUIPMENT, NET
Property and equipment, net are stated at cost. Depreciation and amortization
are provided using the straight-line method over the estimated economic lives of
the assets, which are typically three to seven years.
Expenditures and major renewals and betterments that extend the useful lives of
property and equipment are capitalized. Expenditures for maintenance and repairs
are charged to expense as incurred.
SUPPLY INVENTORY
Supply inventory includes 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 December 31, 2003, the Company believes that there has been
no impairment of its long-lived assets.
During 2002 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 year ended December 31, 2002.
ADVERTISING
The Company expenses advertising production costs as they are incurred.
Advertising costs for the years ended December 31, 2003 and 2002 were
approximately $6,600 and $0, respectively.
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 and cash equivalents, 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.
Warranty reserve was $20,535 as of December 31, 2003.
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 December
31, 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, 2003 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 December 31, 2003, the Company
has not recognized an impairment loss.
During 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 $4.2 million was recorded for the year ended December 31, 2002.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In April 2002, the Financial Accounting Standards Board ("FASB") issued
Statement No. 145 ("Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13 and Technical Corrections"). This statement rescinds FASB
Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, and
FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements. Any gain or loss on the extinguishment of debt that was classified
as an extraordinary item in prior periods has been reclassified into continuing
operations.
In June 2002, the FASB issued Statement No. 146, ("Accounting for Costs
Associated with Exit or Disposal Activities"). This statement requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. Prior to this statement, a liability was
recognized when the entity committed to an exit plan. Management believes that
this statement will not have a material impact on the Company's financial
statements; however, the statement will result in a change in accounting policy
associated with the recognition of liabilities in connection with future
restructuring charges.
In November 2002, the FASB issued Interpretation No. 45, ("Guarantor's
Accounting and Disclosure Requirements for Guarantees Including Indirect
Guarantees of Indebtedness of Others.") This interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. This interpretation does not prescribe a specific
approach for subsequently measuring the guarantor's recognized liability over
the term of the related guarantee. This interpretation also incorporates,
without change, the guidance in FASB Interpretation No. 34, "Disclosure of
Indirect Guarantees of Indebtedness of Others," which is being superseded.
In December 2002, the FASB issued Statement No. 148 ("Accounting for Stock-Based
Compensation - Transition and Disclosure"). This statement amends FASB Statement
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, to provide alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this statement
amends the disclosure requirements of FASB Statement No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results.
In January 2003, the FASB issued Interpretation No. 46 ("Consolidation of
Variable Interest Entities"). The interpretation defines a variable interest
entity as corporation, partnership, trust or any other legal structure used for
business purposes that either (a) does not have equity investors with voting
rights nor (b) has equity investors that do not provide sufficient financial
resources for the equity to support its activities. A variable interest entity
often holds financial assets, including loans or receivables, real estate or
other property. A variable interest entity may be essentially passive or it may
engage in research and development or other activities on behalf of another
company. This interpretation requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk
of loss from the variable interest entity's activities or entitled to receive a
majority of the entity's residual returns or both. The Company would have to
consolidate any of its variable interest entities that meet the above criteria
as of July 1, 2003. The interpretation also requires disclosures about variable
interest entities that the company is not required to consolidate but in which
it has a significant variable interest. Management is in the process of
determining if its interests in unconsolidated entities qualify as variable
interest entities and, if so, whether the assets, liabilities, non-controlling
interest, and results of activities are required to be included in the Company's
consolidated financial statements.
In May 2003, the FASB issued Statement No. 150 ("Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity").
This Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. The Statement requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in some circumstances).
Many of those instruments were previously classified as equity. The Company is
currently classifying financial instruments within the scope of this Statement
in accordance with this Statement. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. Management does not believe that this Statement will have a material
impact on the Company's financial statements.
3. CONCENTRATION OF CREDIT RISK
The amounts on deposit at December 31, 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. SUPPLY INVENTORY
Supply inventory consist of the following components as of December 31, 2003:
Vehicle Chassis $ 952,948
Parts 357,535
----------
$1,310,483
==========
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 December
2007 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
years ended is summarized as follows:
2004 $ 288,000
2005 288,000
2006 288,000
2007 288,000
--------------------
$ 1,152,000
====================
Rental expense under all operating leases totaled approximately $86,400 and
$28,397 for the years ended December 31, 2003 and 2002, respectively, that
includes amortization of deferred rental expense of approximately $9,600 and $0
for the years ended December 31, 2003 and 2002, respectively.
As of December 31, 2003 and December 31, 2002 the Company had receivable
balances for approximately $31,593 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. Effective December 31, 2003, the Company acquired the equipment and
inventory for $859,046. The transaction was settled through a mortgage on
property owned by a related party. The mortgage is not a liability of the
Company and was considered an equity contribution from the related party.
During the year ended December 31, 2003, the Company issued 1.8 million shares
of common stock to various related parties for future consulting services. The
Company recognized $810,000 of amortization of deferred compensation relating to
this issuance. During the year ended December 31, 2002, there was no
amortization of deferred compensation. The total value of these agreements is
$810,000 to settle past services, as well as future services to the Company
which was included in amortization of deferred compensation for the year ended
December 31, 2003. Included in the $810,000 was $260,000 for past services
rendered. The shares of common stock were issued to these individuals with a
three month restriction. The agreements are for consulting services for periods
between 6 months to 2 years.
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.
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.
Related party accounts payables totaled $305,739 at December 31, 2003 which were
due for funding professional fees and cash flow requirements of CTMC and SCB.
Notes payable - related parties totaled $613,659 at December 31, 2003 due to the
former owner of SCB at December 31, 2003, specifically relating to chassis
inventory purchased at acquisition.
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 an officer and director of the Company. The
net book value of the net assets sold approximated $52,750. Pursuant to the
asset sale agreement the Company agreed to transfer such assets in settlement of
the following: 1) an employment agreement, 2) all accrued but unpaid
compensation which approximated $100,000, and 3) a promissory note in the amount
of $285,000.
In addition, the Company agreed to pay $7,500 in cash, in exchange for, and in
sole consideration and settlement of any other liabilities that may exist as of
May 31, 2002, including the liabilities that accrue pursuant to a Promissory
Note with a principle amount of $147,030, and any liability that may exist
pursuant to the Employment Agreement. The net effect of the sale of these assets
was a gain of $446,430, which was classified as a gain from disposal of
discontinued operations in the Statement of Operations for the year ended
December 31, 2002.
Concurrent with this asset sale agreement the director tendered his resignation
from the Company.
During 2002, the Board terminated an employment contract whereby, under the
settlement salary ceased accruing on August 15, 2002 and the severance provision
was forgiven. It was replaced with a consulting agreement whereby he will
continue in his position as acting chief executive officer of the Company. The
agreement calls for the following: 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 the Company.
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 an officer and director of the Company:
a. Certain domains including: www.searchhound.com, www.solosearch.com,
www.godado.co.uk, www.freeairmiles.com, and www.moneymessage.com ,
b. Customer lists, email names and addresses (for each domain)
c. Software, programming code, intellectual property (for each domain)
d. Certain computer and office equipment
The net book value of the net assets sold approximated $8,000. Pursuant to the
asset sale agreement the Company agreed to transfer such assets in settlement of
the remaining outstanding principal balance owed by the Company pursuant to a
Promissory Note with a principle balance of $179,359 together with all accrued
but unpaid interest. Previously, the Company had made partial reductions to the
unpaid note balance by the issuance of 45,323 shares of SearchHound.com, Inc.
common stock and a cash payment of $7,500.
In addition, the former Chief Executive Officer agreed to cancel the rental
payments owed to him by the Company for its use of web hosting and office space.
On January 3, 2003 the Company also entered into an asset sale agreement, which
sold the following assets of the Company to an unaffiliated entity:
a. EarlyBirdDomain.com domain,
b. Database for EarlyBirdDomain.com including all subscribers (active,
inactive, and unsubscribed), and
c. EarlyBirdDomain clients, customers
The net book value of the net assets sold approximated $0 as of the date of
sale. Pursuant to the asset sale agreement the Company agreed to transfer such
assets in exchange for nominal cash consideration.
6. ACQUISITIONS
On August 29, 2003 the Company acquired CTMC 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.
Effective December 31, 2003 the Company acquired certain assets and liabilities
from SCB. The acquisition is valued at $2.66 million based on 2 million shares
of common stock, valued at $1.33 per share on November 6, 2003.
The following is pro forma information for the year ended December 31, 2003, as
if the CTMC and SCB 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 YEAR ENDED DECEMBER 31, 2003
------------------------------------
HISTORICAL PRO FORMA
---------- ---------
Revenue ............................................. $ 471,762 $ 10,821,938
Operating loss ...................................... (1,701,137) (997,379)
Net income (loss) ................................... $ (1,566,037) $ (862,279)
============ ============
Basic and diluted net income (loss) per share ....... $ (0.71) $ (0.14)
============ ============
Basic and diluted weighted average shares outstanding 2,219,699 6,219,699
============ ============
7. SUPPLEMENTAL CASH FLOW INFORMATION
The following table displays the net non-cash assets that were acquired during
the year ended December 31, 2003, as a result of the business acquisitions:
CTMC SCB TOTAL
----------- ----------- -----------
Non-cash assets (liabilities):
Current assets ....................................... $ 259,792 $ 946,567 $ 1,206,359
Property and equipment ............................... 1,877 174,741 176,618
Goodwill ............................................. 1,351,347 2,186,595 3,537,942
Current liabilities .................................. (282,522) (671,945) (954,467)
----------- ----------- -----------
Net non-cash assets acquired ......................... 1,330,494 2,635,958 3,966,452
Less: common issued .................................. (1,350,000) (2,660,000) (4,010,000)
----------- ----------- -----------
Cash received from business acquisitions, net .......... $ (19,506) $ (24,042) $ (43,548)
=========== =========== ===========
In addition the Company, as part of its restructuring settled various
obligations for the years ended December 31:
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 --
Cancellation of restricted stock (51,000)
Issuance of treasury stock 720,000 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. SHAREHOLDERS' 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:
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. 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 year ended December 31,
2003.
The Company issued shares (excluding 60,790 treasury shares issued) of its
common stock through June 30, 2003 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.
During the year ended December 31, 2003, the Company issued 1.8 million shares
of common stock to various related parties for future consulting services. The
Company recognized $810,000 of amortization of deferred compensation relating to
this issuance. The shares of common stock were issued to these individuals with
a three month restriction.
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. Effective
December 31, 2003, the restricted stock was cancelled and the resulting
consulting expense reversed.
For the year ended December 31, 2003, the Company issued approximately 1.1
million shares of common stock for the following:
1) Related party in settlement of $65,000 due as of June 30, 2003,
recognizing a loss from settlement of $130,000,
2) $101,600 due for various expenses paid for by the related party,
recognizing a loss from settlement of $203,200, and
3) The settlement of various related party liabilities through June 30, 2003
whereby recognizing a gain on settlement of $239,082.
The statement of operations reflects a loss from settlement of trade payable of
$94,118 for the year ended December 31, 2003.
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.
Effective December 31, 2003 the Company acquired certain assets and liabilities
from Springfield Coach Industries Corporation, Inc. The acquisition is valued at
$2.66 million based on 2 million shares of common stock, valued at $1.33 per
share on November 6, 2003.
For the year ended December 31, 2002, the Company issued 63,713 shares of its
common stock as follows:
748 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
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 Steve, Helder, Siegel LLP
for legal work
Treasury stock:
As of August 26, 2003, the Company reserved 1.6 million shares, valued at $0.45
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. The shares were has been reserved in
treasury stock amounting to $720,000 as of December 31, 2003.
9. COMMITMENTS AND CONTINGENCIES
Effective December 31, 2003, the Company assumed an operating lease pertaining
to the office and plant facilities in Springfield, Missouri. The lease term,
expires in July 2006.
The minimum lease commitment, for the non-cancelable operating lease for the
years ended is summarized as follows:
2004 $ 132,000
2005 132,000
2006 77,000
--------------------
$ 341,000
====================
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 5. Other Information
Not applicable
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are filed as a part of this report or are incorporated
by reference to previous filings, if so indicated:
(a) Exhibits
3.1 Company's Amended and Restated Articles of Incorporation(1)
3.2 Company's Revised Amended and Restated Bylaws(1)
4.3 Specimen of Common Stock Certificate.(1)
14. Code of Ethics (2)
23.1 Consent of Independent Auditors (2)
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act.(2)
31.2 Certification of Principal Financial and Accounting Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act.(2)
32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act.(2)
32.2 Certification of Chief Accounting Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act.(2)
(1) Incorporated by reference from the Company's Registration Statement, as
amended, on Form SB-2 filed with the Securities and Exchange Commission
and declared effective on October 29, 1996.
(2) Filed herewith.
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 shall be 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 December 31,
2003, for which this report is filed.
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Year ended December 31, 2003
Audit Fees: The aggregate fees, including expenses, billed by the Company's
principal accountant in connection with the audit of our consolidated financial
statements for the most recent fiscal year and for the review of our financial
information included in our Annual Report on Form 10-KSB; and our quarterly
reports on Form 10-QSB during the fiscal year ending December 31, 2003 was
$27,000.
Audit Related Fees: The aggregate fees, including expenses, billed by the
Company's principal accountant for services reasonably related to the audit for
the year ended December 31, 2003 were $27,000.
All Other Fees: The aggregate fees, including expenses, billed for all other
services rendered to the Company by its principal accountant during year 2003
was $-0-.
Year ended December 31, 2002
Audit Fees: The aggregate fees, including expenses, billed by the Company's
principal accountant in connection with the audit of our consolidated financial
statements for the fiscal year ended December 31, 2002 and for the review of our
financial information included in our Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2002; and our quarterly reports on Form 10-QSB
during the fiscal year ending December 31, 2002 was approximately $20,000.
Audit Related Fees: The aggregate fees, including expenses, billed by the
Company's principal accountant for services reasonably related to the audit for
the year ended December 31, 2002 were $-0-.
All Other Fees: The aggregate fees, including expenses, billed for all other
services rendered to the Company by its principal accountant during year 2002
was $-0-.
The Board of Directors has considered whether the provisions of the services
covered above under the captions "Financial Information Systems Design and
Implementation Fees" and "All Other Fees" is compatible with maintaining the
auditor's independence.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Coach Industries Corporation, Inc. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Coach Industries Group, Inc.
By /s/ Francis O'Donnell
------------------------------
Chief Executive Officer
and Chief Accounting Officer
Date: March 25, 2004