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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Period Ended Commission File No.
April 30, 2004 333-103083
USED KAR PARTS, INC.
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(Exact name of Registrant as specified in its Charter)
Florida 04-372895
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(State or jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3 West 57th Street, New York, New York 10019
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (646) 442-4988
Former name, former address and former fiscal year, if changed since last
report: N/A
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for a shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the Registrant's Common Stock, $.001 par
value, as of June 22, 2004 was 2,068,000.
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PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
USED KAR PARTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
APRIL 30, 2004
(UNAUDITED)
ASSETS
Current Assets
Cash $ - 0 -
Other Assets
Deferred Acquisition Costs 137,822
------------
Total Assets $ 137,822
============
LIABILITIES AND STOCKHOLDERS - EQUITY
Current Liabilities
Accrued Expenses $ 148,072
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Total Liabilities 148,072
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Stockholders' Equity (deficit)
Common Stock, $.001 par value, authorized
50,000,000 shares, 2,068,000 issued and outstanding 2,068
Additional paid-in capital 3,332
Accumulated deficit during development stage (15,650)
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Total Stockholders' Equity (deficit) $ (10,250)
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Total Liabilities and Stockholders' Equity $ 137,822
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See accompanying notes to financial statements.
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USED KAR PARTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 2004 AND 2003 AND THE
PERIOD COMMENCING APRIL 26, 2002 (DATE OF INCEPTION)
TO APRIL 30, 2004
(UNAUDITED)
Operations During
Development Stage
Inception
April 26, 2002
2004 2003 To April 30, 2004
---- ---- -----------------
Revenue $ - 0 - $ - 0 - $ - 0 -
Expenses: 10, 456 58 15,650
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Net income (loss) before provision for income taxes (10,456) (58) (15,650)
Provision for income taxes - 0 - - 0 - - 0 -
----------- ----------- -----------
Net income (loss) $ (10,456) $ (58) $ (15,650)
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Weighed average of shares outstanding 2,068,000 2,007,556
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Net income (loss) per share - basic and diluted $ (0.00) $ (0.00)
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See accompanying notes to financial statements.
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USED KAR PARTS, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED APRIL 30, 2004 AND 2003 AND THE
PERIOD COMMENCING APRIL 26, 2002 (DATE OF INCEPTION)
TO APRIL 30, 2004
(UNAUDITED)
Operations During
Development Stage
Inception to
2004 2003 April 30, 2004
---- ---- --------------
Cash Flows From Operating Activities:
Net Income (loss) $ (10,456) $ (58) $ (15,650)
Adjustments to Reconcile Net Income (Loss)
To Net Cash Provided by Operating Activities
Common stock issued to founder - 0 - - 0 - 2,000
Increase in Accrued Expenses 148,072 - 0 - 148,072
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Net Cash Provided by Operating Activities 137,616 (58) 134,422
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Cash flows From Investing Activities:
Deferred Acquisition Costs (137,822) - 0 - (137,822)
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Net Cash Used for Investing Activities (137,822) - 0 - (3,400)
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Cash Flows From Financing Activities:
Issuance of Common Stock - 0 - - 0 - 3,400
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Net Cash Provided From Financing Activities - 0 - - 0 - 3,400
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Net increase (decrease) in cash (206) (58) - 0 -
Cash - beginning 206 3,876 - 0 -
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Cash - ending $ - 0 - $ 3,818 $ - 0 -
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See accompanying notes to financial statements.
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USED KAR PARTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2004 (UNAUDITED)
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
Organization and Operations
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The Company was organized under the laws of the State of Florida on
April 26, 2002. The Company is in the development stage. The Company
plans to develop a website where individuals subscribe to and interact
in an online marketplace for used car parts. The Company currently has
no operations.
On February 24, 2004, the principal shareholder and founder of the
Company sold their controlling interest in the Company. The Company
plans to enter the biotechnology industry.
Basis of Accounting
-------------------
The Company's policy is to prepare its financial statements using the
accrual basis of accounting in accordance with generally accepted
accounting principles. The Company has retained elected to use January
31 as its annual year end.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Cash and equivalent
-------------------
Cash and cash equivalents include cash and cash in banks. The company
maintains cash and cash equivalent balances at a financial institution
that is insured by the federal deposit Insurance Corporations up to
$100,000. At April 30, 2004, there is no concentration of credit risk
from uninsured bank balances
Deferred Acquisition Costs
--------------------------
The Company has deferred various professional and other related costs
attributed to the planned acquisition of an Company involved in the
bio-technology field. These costs will expensed or capitalized in the
period that the acquisition occurred.
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USED KAR PARTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2004 (UNAUDITED)
NOTE 2 CAPITAL TRANSACTIONS
The Company in January, 2003 issued to its founder 2,000,000 restricted
shares of common stock at par value of $.001. The Company in January,
2003 issued 68,000 restricted shares of common stock for $.05 per
share. The offering was made in reliance upon exemption from
registration provided by Regulation D, Rule 504 of the Securities
Exchange Commission.
NOTE 3 INCOME TAX
In February 1992, the Financial Standards Board issued Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes.
Under SFAS No. 109, deferred assets and liabilities are recognized for
the estimated future tax consequences between the financial statement
carrying amounts of the existing assets and their respective basis.
Deferred assets and liabilities are measured using enacted tax rates in
effect for the year in which temporary differences are expected to be
recovered or settled. Under SFAS No. 109 the effect on deferred assets
and liabilities of a change in tax rates is recognized in the period
that includes the enactment date.
The company has a net operating loss carry forward of $ 15,650 which is
offset by a 100% valuation allowance due the uncertainty surrounding
the ultimate realization of these assets. The loss carryforward expires
in 15 years.
NOTE 5 NEW ACCOUNTING PRONOUNCEMENTS
In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation --
Transition and Disclosure an Amendment of FASB Statement No. 123 (SFAS
148). SFAS 148 amends SFAS 123 Accounting for Stock-Based Compensation,
providing for an alternative method of transition for a voluntary
change to the fair value based method of accounting for stock-based
employee compensation. Additionally, it amends the disclosure
requirements of SFAS 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. SFAS 148 is effective for fiscal years beginning
after December 15, 2002. The interim disclosure provisions are
effective for financial reports containing financial statements for
interim periods beginning after December 15, 2002. The Company's
adoption of the interim disclosure provisions of SFAS 148 did not
affect our financial position.
The FASB issued FASB Interpretation No. 46, Consolidation of Variable
Interest Entities (FIN 46) in January 2003. FIN 46 requires that if an
entity has a controlling financial interest in a variable interest
entity, the assets, liabilities and results of activities of the
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USED KAR PARTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2004 (UNAUDITED)
NOTE 5 NEW ACCOUNTING PRONOUNCEMENTS - continued
variable interest entity should be included in the consolidated
financial statements of the entity. This FASB is not applicable to the
company since the company does not have any variable interest entities.
In May 2003, the FASB issued Statement of Financial Accounting
Standards No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (SFAS 150). sets
standards for an issuer as to how to classify and measure financial
instruments with characteristics of both liabilities and equity. SFAS
150 is effective for financial instruments entered into after May 31,
2003, and is effective after June 15, 2003. Adoption of SFAS 150 is not
expected to have a material effect on the Company.
NOTE 6 SUBSEQUENT EVENTS
The May 18, 2004, the Company entered into a " Securities Exchange
Agreement" with Xenomics, (A California Corporation involved in
biotechnology. The Company will exchange 2,258,001 shares of its on
stock for the 3,807,055 outstanding shares of common stock of Xenomics.
The closing of the transaction is expected to be concluded in early
July 2004.
The Company anticipates that it will close on a private placement to
redeem in July 2004 1,971,173 of its shares for $500,000.
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Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Background
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We were incorporated in the State of Florida on April 26, 2002 and
planned to develop an on-line marketplace for used car parts. In an effort to
develop that business, we entered into a contract with a web hosting service on
a month to month basis to provide storage for website development and
transaction processing. Our temporary website arrangement was suspended to
preserve cash and pending new management's evaluation of the business.
On February 24, 2004, Jeannine Karklins, formerly our President,
Treasurer, Secretary and principal shareholder of entered into a Capital Stock
Purchase Agreement (the "Stock Purchase Agreement") with Panetta Partners, Ltd.,
a Colorado limited partnership ("Panetta"). All conditions to the closing were
fulfilled and funds released to Ms. Karklins on February 26, 2004.
Under the Stock Purchase Agreement:
o Panetta purchased an aggregate of 2,000,000 restricted shares
of our common stock from Ms. Karklins for $386,400
o Ms. Karklins resigned as an officer and director of the
Company.
The 2,000,000 shares represented approximately 97% of our outstanding
shares of common stock. Of the $386,400 purchase price, $295,000 was borrowed
from a private investor in technology companies based in the United Kingdom, and
the balance came from the working capital of Panetta and its limited partners.
The loan is due February 28, 2005, bears annual interest at 2% and is secured by
a pledge of 1,520,000 of the 2,000,000 shares of the registrant's common stock
acquired by Panetta.
Panetta, acting in its capacity as our principal stockholder, appointed
Christoph Bruening to serve as sole director, filling the vacancy created by the
resignation of Ms. Karklins. Mr. Bruening also became President, Secretary and
Treasurer.
On May 18, 2004, we entered into an agreement for the acquisition of
Xenomics, a company organized under the laws of the State of California
("Xenomics"). The transaction, and related transactions, are expected to close
in July 2004 and will be reflected in a Form 8-K report. As contemplated by the
acquisition agreement, we will have completed a private placement, redeemed
1,971,173 shares of our common stock for $500,000 (and an additional 410 shares
surrendered which were held in escrow) and split our remaining outstanding
shares 111 for 1.
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Critical Accounting Policies
----------------------------
Our accounting policies are described in Note 1 of the consolidated
financial statements included in this Quarterly Report on Form 10-QSB for the
quarter ended April 30, 2004. The financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America, which requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Since we are in the development stage and have had only limited
expenditures and no estimates we do not consider any accounting policy to be
critical to the understanding of our business.
Results of Operations
---------------------
Our audited financial statements, which are set forth in Item 1 of this
report, reflect our operating results from April 26, 2002 (inception) to April
30, 2004 and for the year ended January 31, 2004. During the period from
inception to April 30, 2004, we had no revenue and our expenses totaled $10,456,
substantially all of which was incurred in the three months ended April 30,
2004. In addition, we accrued expenses of $137,822 in connection with the
proposed acquisition which we treated as deferred acquisition costs. The costs
will either be expensed if the acquisition plan is abandoned or capitalized in
the period in which the acquisition occurred.
Panetta Partners, Ltd, our principal shareholder, provides us with an
office location without any expectation of repayment.
Liquidity and Capital Resources
-------------------------------
Most of our operating expenses not relating to the acquisition are
borne by Panetta Partners, our principal shareholder, without any expectation of
reimbursement.
If the acquisition is completed, we will require substantial additional
funds to conduct and sponsor research and development activities, to conduct
pre-clinical and clinical testing, and to market the target company's products.
Our future capital requirements will depend on many factors, including continued
scientific progress, progress with pre-clinical testing and clinical trials, the
time and costs involved in obtaining regulatory approvals, the costs involved in
filing, prosecuting and enforcing patent claims, competing technological and
market developments, our ability to establish collaborative arrangements,
effective commercialization activities and arrangements and the purchase or
development of additional equipment and facilities. We will need to raise
additional funds as a condition of closing. We intend to seek such additional
funding through private financings. There can be no assurance that additional
financing will be available, or, if available, that such additional financing
will be available on terms acceptable to us. If additional funds are raised by
issuing debt, we will incur fixed payment obligations, which could delay the
time, if any, when we may achieve profitability. If adequate funds are not
available, we may be required to delay, scale back or eliminate one or more of
its principal product candidates or obtain funds through arrangements with
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collaborative partners or others that may require us to relinquish rights to
certain of its technologies, product candidates or products that our prospective
acquisition would not otherwise relinquish.
If the acquisition is not completed, we will have to either negotiate
with the providers of services to us in connection with the acquisition to
compromise their billing or with Panetta Partners for financing to satisfy our
obligations. There is no assurance that such negotiations will be successful.
Item 3: Controls and Procedures
Our Chief Executive Officer, based on evaluation of our disclosure
controls and procedures (as defined in Rules 13a-5(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended) required by paragraph (b) of Rule
13a-15 or Rule 15d-15, as of January 31, 2004, has concluded that our disclosure
controls and procedures were effective to ensure the timely collection,
evaluation and disclosure of information relating to our company that would
potentially be subject to disclosure under the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
There has been no significant change in our internal controls over
financial reporting that could significantly affect internal controls subsequent
to April 30, 2004.
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PART II - OTHER INFORMATION
Item 6.: Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
31.1 Certification of Chief Executive and Financial
Officer of Periodic Report Pursuant to Rule 13a-14(a)
and Rule 15d-14(a).
32.1 Certification of Chief Executive and Financial
Officer pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K
Form 8-K Report dated May 18, 2004 reported under Items 5 and
7, relating to a Securities Exchange Agreement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: June 30, 2004 USED KAR PARTS, INC.
By: /s/ Christoph Bruening
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Christoph Bruening, President
(Chief Executive Officer and
Financial Officer)
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