UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
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Commission File Number: 000-33321
Fuel Centers, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 33-0967648
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9323 Vista Serena, Cypress, California 90630
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(Address of principal executive offices)
(714) 220.1806
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(Issuer's Telephone Number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of August 13, 2003, there were
12,550,450 shares of the issuer's $.001 par value common stock issued and
outstanding.
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FUEL CENTERS, INC.
FINANCIAL STATEMENTS
JUNE 30, 2003 AND 2002
2
FUEL CENTERS, INC.
CONTENTS
PAGE
----
Financial Statements (Unaudited)
Balance Sheet 1
Statements of Operations 2
Statements of Cash Flows 3
Notes to Financial Statements 4
3
FUEL CENTERS, INC.
BALANCE SHEET
JUNE 30, 2003
(UNAUDITED)
ASSETS
------
CURRENT ASSETS
Cash $ 87
Prepaid expenses 3,991
Interest receivable 35,308
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Total current assets 39,386
OTHER ASSETS ---
-------------
Total assets $ 39,386
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 16,360
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Total current liabilities 35,000
NOTE PAYABLE 51,360
STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value;
Authorized shares -- 5,000,000
Issued and outstanding share - 0 ---
Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 12,550,450 12,550
Additional paid-in capital 42,165
Accumulated deficit (66,689)
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Total stockholders' deficit (11,974)
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Total liabilities and stockholders' equity $ 39,386
=============
See accompanying notes to financial statements.
4
FUEL CENTERS, INC.
STATEMENTS OF OPERATIONS
JUNE 30, 2003 AND 2002
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- ---------------------------
2003 2002 2003 2002
---- ---- ---- ----
Net revenues $ --- $ --- $ --- $ ---
Operating expenses
Consulting services --- --- --- 9,087
Legal and professional fees 12,888 15,710 23,597 16,885
Occupancy 605 605 1,210 1,210
Office supplies and expense 48 366 96 1,451
------------ ----------- ------------ -----------
Total operating expenses 13,541 16,681 24,903 28,633
Other income/(expense)
Interest income --- 1,753 --- 1,753
Interest expense --- (1,789) --- (1,789)
------------ ----------- ------------ ------------
Total other income/(expense) --- (36) --- (36)
------------ ----------- ------------ ------------
Loss from operations (13,541) (16,717) (24,903) (28,669)
Provision for income tax expense
(benefit) --- --- --- ---
------------ ----------- ------------ ------------
Net loss/comprehensive loss $ (13,541) $ (16,717) $ (24,903) $ (28,669)
============ =========== ============ ============
Net loss/comprehensive loss per common
share --- basic and diluted
$ --- $ --- $ --- $ ---
============ =========== ============ ============
Weighted average of common shares ---
basic and diluted 12,550,450 6,437,000 12,550,450 6,222,000
============ =========== ============ ============
See accompanying notes to financial statements.
5
FUEL CENTERS, INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
June 30,
-------------------------------
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (24,903) $ (28,669)
Adjustments to reconcile net loss to net cash used in operating
activities
Expenses paid by officer --- 35
Occupancy cost contributed by officer 1,210 1,210
Changes in operating assets and liabilities
Decrease (increase) in prepaid expenses 3,889 (37,711)
Increase in interest receivable --- (1,753)
(Decrease) increase in accounts payable
and accrued expenses (15,292) 11,786
Increase in interest payable --- 1,789
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Net cash used in operating activities (35,096) (53,313)
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CASH FLOWS FROM INVESTING ACTIVITIES
Payment in exchange of 8% convertible note receivable --- (2,000,000)
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Net cash used by investing activities --- (2,000,000)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of note payable 35,000 ---
Proceeds from issuance of 8% convertible note payable --- 2,041,000
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Net cash provided by financing activities 35,000 2,041,000
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NET DECREASE IN CASH (96) (12,313)
CASH, beginning of period 183 12,637
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CASH, end of period $ 87 $ 324
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ --- $ ---
============ ============
Interest paid $ --- $ ---
============ ============
See accompanying notes to financial statements.
6
FUEL CENTERS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 1 - NATURE OF OPERATIONS
Fuel Centers, Inc. (the "Company") is a business consulting firm that
specializes in strategy and development of high-volume, multi-revenue source,
and retail fuel service stations for the oil and petroleum industry. The Company
was incorporated in the state of Nevada on April 9, 2001 and is headquartered in
Cypress, California.
NOTE 2 - BASIS OF PRESENTATION
The unaudited financial statements included herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six months ended June 30,
2003 and 2002 are not necessarily indicative of the results that may be expected
for the years ended December 31, 2003 and 2002. For further information, these
financial statements and the related notes should be read in conjunction with
the Company's audited financial statements for the period ended December 31,
2002 included in the Company's annual report on Form 10-KSB.
NOTE 3 - NOTE PAYABLE
On June 25, 2003, the Company entered into a loan agreement with an unrelated
third party for a demand loan in the amount of $35,000. Simple interest on the
loan accrues at an annual rate of 8%. Interest and principal are due in full on
December 25, 2003.
NOTE 4 - COMMON STOCK
On June 17, 2002, the Company's Board of directors declared a two and nine
hundredths to one (2:09:1) forward stock split to the stockholders of record as
of June 21, 2002. The stock dividend was paid on June 24, 2002 and resulted in
an increase of the Company's issued and outstanding common stock to 12,550,450
shares.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company occupies office space provided by its officer. Accordingly,
occupancy costs have been allocated to the Company based on the square foot
percentage assumed multiplied by the officer's total monthly costs. These
amounts are shown in the accompanying statements of operations for the three and
six months ended June 30, 2002 and are considered additional contributions of
capital by the officer and the Company.
7
ITEM 2. PLAN OF OPERATION
--------------------------
THIS FOLLOWING INFORMATION SPECIFIES CERTAIN FORWARD-LOOKING STATEMENTS OF
MANAGEMENT OF THE COMPANY. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT
ESTIMATE THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACT.
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY, SUCH AS "MAY", "SHALL", "WILL", "COULD", "EXPECT", "ESTIMATE",
"ANTICIPATE", "PREDICT", "PROBABLE", "POSSIBLE", "SHOULD", "CONTINUE", OR
SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION HAVE BEEN
COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND
CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE OPERATING RESULTS,
HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY
IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN
THE FOLLOWING INFORMATION REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT
TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND
OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF DATA
AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS FROM
AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO THE
EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY
FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED
ON THE ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. WE CANNOT GUARANTY
THAT ANY OF THE ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS SPECIFIED
IN THE FOLLOWING INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION TO UPDATE
ANY SUCH FORWARD-LOOKING STATEMENTS.
CRITICAL ACCOUNTING POLICY AND ESTIMATES. Our Management's Discussion and
Analysis of Financial Condition and Results of Operations section discusses our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, management evaluates
its estimates and judgments, including those related to revenue recognition,
accrued expenses, financing operations, and contingencies and litigation.
Management bases its estimates and judgments on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. The most significant accounting estimates inherent in
the preparation of our financial statements include estimates as to the
appropriate carrying value of certain assets and liabilities which are not
readily apparent from other sources. These accounting policies are described at
relevant sections in this discussion and analysis and in the notes to the
financial statements included in our Quarterly Report on Form 10-QSB for the
period ended June 30, 2003.
Our business is to offer a full range of business consulting services in the
retail automobile fueling industry. Our plan has been to offer advice and
assistance on issues of business strategy and development of high-volume,
multi-revenue source, retail automobile fueling centers or "Superstations".
Superstations typically include retail fueling facilities, quick service
restaurants, car wash facilities and a convenience store. We intended to provide
services to owners of existing fueling stations who desire to convert their
facilities into a Superstation, as well as to parties who are not currently
engaged in the retail sale of motor fuel but wish to establish fueling
facilities. We anticipated that a majority of our revenue would be derived from
fees paid by clients for our advice, services and business development products.
We have also contemplated acquiring a third party, merging with a third party or
pursuing a joint venture with a third party in order to support our development.
Accordingly, we have been researching potential acquisitions or other suitable
business partners which will assist us in realizing our business objectives. In
8
that regard, during 2002 we entered into negotiations to acquire another entity
and certain of its shareholders wherein we would acquire that entity n exchange
for shares of our common stock, and as part of the same transaction we would
conduct a private placement of our equity securities, and the other entity would
acquire contracts other business entities that would bring a certain net value
in revenues. In November 2002, we concluded that we would not be able to
complete the transaction to acquire that entity as described herein. We cannot
guaranty that we will acquire any other third party in lieu of that transaction,
or that in the event that we acquire another entity, this acquisition will
increase the value of our common stock. We intend to continue providing our
business consulting services to the retail automotive fueling industry.
LIQUIDITY AND CAPITAL RESOURCES. We had cash of $87 as of June 30, 2003, along
with prepaid expenses of $3,991 and interest receivable of $35,308. Our total
current assets as of June 30, 2003 were $39,386, as were our total assets. Our
total current liabilities were $51,360 as of June 30, 2003, which was
represented by accounts payable and accrued expenses of $16,360 and $35,000 in a
note payable with an unrelated third party, which we entered into on June 25,
2003, which is due on December 25, 2003 and bears interest at the rate of 8%. We
had no other long term commitments or contingencies.
FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002.
--------------------------------------------------
REVENUES. For the three month period ending June 30, 2003, we realized no
revenues from providing consulting services.
OPERATING EXPENSES. For three month period ending June 30, 2003, our total
operating expenses were $13,541. Those expenses were represented by $12,888 in
legal and professional fees, and $605 in occupancy expenses and $48 in office
supplies expenses. For the three month period ending June 30, 2003, we
experienced a net loss of $13,541. This is in comparison to the three month
period ending June 30, 2002, where our total operating expenses were $16,681.
That amount was represented by $15,710 in legal and professional fees, and $605
in occupancy expenses and $366 in office supplies expenses. We also had $1,753
in interest income and $1,789 in interest expenses, making our net loss $16,717.
During 2002, we entered into an agreement to acquire another company however,
the transaction was never consummated. Our operation expenses were slightly
lower for the three month period ending June 30, 2003, as compared to the same
period ending June 30, 2002 because we were in the process of making
arrangements to conclude that acquisition, for which we incurred significant
general and administrative expenses. In order to either continue operations or
enter into a similar agreement with another entity, we anticipate we will
continue to incur significant general and administrative expenses.
FOR THE SIX MONTH PERIOD ENDING JUNE 30, 2003.
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RESULTS OF OPERATIONS. For the six months ended June 30, 2003, we realized no
revenue from operations. Our total operating expenses and net loss for the six
months ended June 30, 2003 was $24,903. This is in comparison to the same period
ending June 30, 2002, where our total operating expenses were $28,633, and net
loss of $28,669. Our operating expenses and net losses were somewhat lower
during the six months ending June 30, 2003 as compared to the same period ending
June 30, 2002 because we were making arrangements to acquire another company.
OPERATING EXPENSES. For the six month period ended June 30, 2003, our operating
expenses were $24,903. This was represented by legal and professional fees of
$23,597, along with occupancy expenses of $1,210 and office supplies and
expenses of $96. In comparison, for the six month period ended June 30, 2002,
our operating expense were $28,633, which were represented mostly by legal and
professional fees of $16,885, consulting expenses of $9,087, occupancy expenses
of $1,210 and office expenses of $1,451. We also had interest income of $1,753
and interest expense of $1,789, making our net loss from operations $28,669. The
decrease in operating expenses is due to the fact that during 2002 we were
positioned to acquire another company.
OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS. We had cash of $87 and prepaid
expenses of $3,991 as of June 30, 2003. In the opinion of management, available
funds will not satisfy our working capital requirements through the next twelve
months. Our forecast for the period for which our financial resources will be
adequate to support our operations involves risks and uncertainties and actual
results could fail as a result of a number of factors. Because we were not able
to complete the proposed acquisition during 2002 as described, we anticipate
that we may need to raise additional capital to continue operations. Such
additional capital may be raised through public or private financing as well as
borrowings and other sources. We cannot guaranty that additional funding will be
available on favorable terms, if at all. If adequate funds are not available,
then our ability to expand our operations may be adversely affected. If adequate
funds are not available, we hope that our officers and directors will contribute
funds to pay for our expenses, although we cannot guaranty that our officers
will pay those expenses.
9
We are not currently conducting any research and development activities and do
not anticipate conducting such activities in the near future. We do not
anticipate hiring additional employees or independent contractors unless we are
able to expand our current operations. Until recently, we had been focusing our
efforts on completing the acquisition described herein. We do not anticipate
that we will purchase or sell any significant equipment.
ITEM 3. CONTROLS AND PROCEDURES
-------------------------------
(a) Evaluation of disclosure controls and procedures. We maintain controls and
procedures designed to ensure that information required to be disclosed in the
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the Securities and Exchange Commission. Based upon
their evaluation of those controls and procedures performed as of June 30, 2003,
our chief executive officer and the principal financial officer concluded that
our disclosure controls and procedures were adequate.
(b) Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation of those controls by the chief
executive officer and principal financial officer.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
--------------------------
None.
ITEM 2. CHANGES IN SECURITIES.
------------------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
----------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
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None.
ITEM 5. OTHER INFORMATION
--------------------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
None.
10
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Fuel Centers, Inc.,
a Nevada corporation
August 13, 2003 By: /s/ John R. Muellerleile
-----------------------------------
John R. Muellerleile
Chief Executive Officer, President,
Secretary, Director
11
CERTIFICATIONS
--------------
I, John R. Muellerleile, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Fuel
Centers, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting , to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant`s
internal control over financial reporting.
Date: August 13, 2003
/s/ John R. Muellerleile
----------------------
John R. Muellerleile
Chief Executive Officer
12
CERTIFICATIONS
--------------
I, K. John Shukur, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Fuel
Centers, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting , to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
(c) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(d) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant`s
internal control over financial reporting.
Date: August 13, 2003
/s/ K. John Shukur
-----------------------
K. John Shukur
Chief Financial Officer
13