INTEREST OF NAMED EXPERTS AND COUNSEL
Our financial statements for the year ended December 31, 2003, contained in this prospectus have been audited by Jewett, Schwartz & Associates, registered independent certified public accountants, to the extent set forth in their
report, and are set forth in this prospectus in reliance upon such report given upon their authority as experts in auditing and accounting. Jewett, Schwartz & Associates does not own any interest in us.
Richardson & Patel LLP passed upon the validity of the issuance of the
common shares to be sold by the selling security holders under this prospectus. As of January 18, 2005, Richardson & Patel LLP owns 100,000 common shares, all of which are being registered for sale under this prospectus.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Neither our Articles of Incorporation nor Bylaws prevent us from indemnifying
our officers, directors and agents to the extent permitted under the Nevada Revised Statute (“NRS”). NRS Section 78.502, provides that a corporation shall indemnify any director, officer, employee or agent of a corporation against
expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with any the defense to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to Section 78.502(1) or 78.502(2), or in defense of any claim, issue or matter therein.
NRS 78.502(1) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (a) is not liable pursuant to NRS 78.138; or (b) acted in good faith and in a manner which he reasonably
27
believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
NRS Section 78.502(2)
provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason
of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (a) is not liable pursuant to NRS
78.138; or (b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion of all appeals there from, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
NRS Section 78.747, provides that except as otherwise provided by specific
statute, no director or officer of a corporation is individually liable for a debt or liability of the corporation, unless the director or officer acts as the alter ego of the corporation. The court as a matter of law must determine the question of
whether a director or officer acts as the alter ego of a corporation.
No pending material litigation or proceeding involving our directors, executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation
that may result in claims for indemnification by any of our directors or executive officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed hereby in the Securities Act and we will be governed by the final adjudication of such issue.
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DESCRIPTION OF BUSINESS
General
Coach is a
holding company which, through its subsidiaries, manufactures specialty vehicles for commercial fleet operators and offers an array of financial services and insurance products to commercial fleet operators and independent contractors in the courier
industry.
Coach owns four wholly owned subsidiaries that
operate in two business segments: financial services to commercial fleet operators and third party contract rights management for commercial fleet operators; and manufacturing specialty vehicles. Commercial Transportation Manufacturing Corporation
(“CTMC”) and Springfield Coach Industries Corporation, Inc. (“SCB”) manufacture specialty vehicles, such as limousine buses, Lincoln Town Car limousines and Ford Excursion limousines. Coach Financial Services, Inc.
(“CFS”) offers financial services to CDS, SCB and CTMC customers and other commercial fleet operators. Corporate Development Services, Inc. (“CDS”) provides the services of independent contractors, subcontractor settlement
processing and specialty insurance products to commercial fleet operators.
The Company’s long-term strategy is to offer and expand our array of specialty vehicles and limousines and to offer financial services to existing customers as well as other commercial fleet operators. We plan to
leverage our manufacturing business segment to expand our financial services to commercial fleet operators, specifically the 7,000 courier companies and the 14,000 limousine operators, throughout the United States. Coach will actively pursue
acquisition candidates that can support the expansion of these products and financial services.
Manufacturing Segment
Coach
manufactures specialty vehicles for commercial fleet operators through SCB and CTMC. CTMC is a New York corporation. Its sales office is located in Bohemia, New York. SCB is a Missouri corporation. Its principal executive offices are located in
Springfield, Missouri.
SCB and CTMC are two of the nine
limousine manufacturers in the limousine manufacturing industry operating under a Qualified Vehicle Modifier Agreement (“QVM”) and a Cadillac Master Coachbuilders Agreement (“CMC”). Securing a QVM or CMC with one of the major
automobile manufacturers is a barrier to entering the specialty vehicle manufacturing industry due to the scrutiny and rigid manufacturing facility requirements imposed by the automobile manufacturer. Companies operating without CMC, QVM or similar
agreements will not receive technological updates or support through service warranties from the manufacturers, nor will they be able to participate in special rebate and advertising programs.
Commercial Transportation Manufacturing Corporation
.
CTMC’s operation consists of manufacturing, selling and servicing specialty vehicles, limousine buses and to a lesser extent, Lincoln Town Cars. Its operations require a 30,000 square foot manufacturing facility. CTMC manufactures its vehicles
pursuant to a QVM Agreement with Ford Motor Company.
Springfield Coach Industries Corporation, Inc.
SCB manufactures its vehicles pursuant to a QVM Agreement with Ford Motor Company and a CMC Agreement with General Motors Corporation. SCB’s operations consist of
manufacturing, selling and servicing Lincoln Town Cars and Ford Excursions Limousines. The operations is housed in a 45,000 square foot manufacturing facility with approximately 60 employees involved in the direct manufacture of the modified
chassis.
The Company has signed an agreement with Ford Motor
Company for a $2.0 million line of credit for the purchase of chassis inventory from Ford. We believe that the line of credit with the supplier will be adequate to meet the funding requirements for the manufacturing facilities. In addition, the
Company is negotiating with various lenders to provide floor plan financing for non-conforming chassis purchases and for vehicles that are built as showroom models. This will enable the sales force to present completed vehicles to their prospects in
locations outside of the factory.
In addition, Company has
established a $1.6 million floor plan line of credit with a local automotive dealership located in New York. The dealership funds the purchase of chassis inventory that is purchased from the dealership, interest free for 90 days.
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After our acquisition of certain assets and liabilities of Springfield in December 2003, we determined
that the production of the various vehicles needed to be segregated as to eliminate any duplication of production processes at the CTMC and SCB facilities. CTMC personnel have extensive depth of knowledge in prototype development, modification and
engineering of specialty vehicles, such as the buses and sports utility vehicles (“SUV”). As a result, in January 2004, the Company made a strategic decision for CTMC to focus on manufacturing specialty vehicles and limousine buses and for
SCB to focus on manufacturing the Lincoln Town Car limousines and the Ford Excursion limousines. Based on these manufacturing changes and focus on specialty vehicles, the Company plans on expending $1.0 million on research and development during the
next twelve months, in addition to the $829,840 already incurred for the nine months ended September 30, 2004.
During the third quarter of 2004, we assessed the labor market and the cost structure of the manufacturing plant in Bohemia, New York and determined that
it was necessary to relocate the manufacturing facility to Springfield, Missouri to eliminate redundant back-office activities at SCB and CTMC and to take advantage of the lower cost structure and abundant labor market, in Springfield. The
Springfield, Missouri area has three limousine manufacturing companies, thus providing a cost effective labor market, rich with the skills that are required to manufacture quality products. The cost of relocating the CTMC facility was $635,000, of
which $491,000 related to the disposal of leasehold improvements and inventory that was considered obsolete, or too costly to move to the new location. The overhead reduction that will be attained on an annual basis for administrative salaries and
related overhead is approximately $300,000 and the reduction in overhead expense is anticipated to be between $150,000 and $300,000, for a total annual savings of between $450,000 and $600,000. We anticipate that the manufacturing facility will be
fully operational in Springfield by the first quarter of 2005 and expects to see benefits relating to this relocation in both manufacturing facilities. The Company will continue to maintain a significant sales presence in the New York area. The
sales office is still housed in this facility and the Company is obligated to the landlord on the CTMC facility through December 2007. The Company is currently negotiating the settlement of the lease agreement with the landlord and anticipates
having the negotiations completed by the end of its fiscal year. It is anticipated that the settlement will include a portion of cash and a larger percentage of the settlement in common stock.
Financial Services Segment
Coach
offers an array of financial services and insurance products to commercial fleet operators and independent contractors in the courier industry through CDS and CFS. CFS is a Florida corporation. Its principal executive offices are located in Cooper
City, Florida. CDS is a New York corporation. Its principal executive offices are located in Glens Falls, New York.
Coach Financial Services, Inc.
CFS offers financial services to CDS, SCB and CTMC customers and other commercial fleet operators. CFS
targets small to mid-size businesses and professionals. In addition, the Company plans to offer an array of financial products, including financing for luxury limousines, commercial fleets and high-end automobiles and specialty lines of insurance
products. CFS provides various leases, including commercial motor vehicle leases, equipment leases and retail installment loans to commercial customers who purchase vehicles from SCB or CTMC, CDS customers and other commercial fleet operators.
The Company received a secured guidance line of credit from
New World Funding in the amount of $5.0 million to be used for funding leases for customers of CFS. The interest rate charged by New World Funding is specific to the leases funded, on a lease- by-lease basis. The interest paid on the lease includes
a component for servicing the leases for the Company. The leases typically have terms between 36 and 60 months and do not have a significant payment due at the end of the lease. The average interest charged by Sovereign Bank on these leases is
approximately 7.00 percent.
Corporate Development
Services, Inc.
CDS provides the services of independent contractors, subcontractor settlement processing and specialty insurance products to commercial fleet operators. CDS is one of three entities providing independent contractors to the
commercial fleet industry. CDS provides services that insulate the commercial fleet operator from workplace concerns relating to employment by creating an independent operator status for the individual drivers. CDS provides specialty insurance
products to these drivers, as well as health benefits and other insurance products they require through various relationships with independent brokers. The Company currently provides its products to approximately 5,000 drivers and 250 courier
companies.
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The Company received a secured guidance line of credit from Sovereign Bank in the amount of $4.5 million
to be used for funding leases for customers of CDS. The interest rate charged by Sovereign Bank is specific to the leases funded, on a lease- by-lease basis. The interest paid on the lease includes a component for servicing the leases for the
Company. The leases typically have terms between 36 and 60 months and do not have a significant payment due at the end of the lease. The average interest charged by Sovereign Bank on these leases is between 6.25 percent and 6.75 percent.
The Company received an ACH (Automatic Clearing house) line of credit from
North Fork Bank in the amount of $1.5 million to be used to facilitate the direct deposit function for customers of CDS. The line of credit is collateralized by a certificate deposit (or Money Market Account) held at the North Fork Bank.
Industries
Specialty
Vehicle Manufacturing
The limousine industry consists
of the manufacturing of modified chassis, both through manufacturer supported programs, such as through QVM and CMC agreements, as well as non-conforming, non-manufacturer supported chassis modifications. The chassis is purchased from the
manufacturer under a manufacturer supported program and modified based on the specifications provided and monitored by the manufacturer. The modification manufacturer may provide some changes to the design and aesthetics of the product, but not the
engineering of the product. The manufacturer closely monitors and reviews the performance of all those modification manufacturers in their programs. In addition, there are those vehicles that are not supported by the manufacturer. These vehicles are
manufactured based on the customer specifications or the marketplace. These vehicles do not receive the same warranty from the manufacturer, thus require additional support by the modification manufacturer.
Once a vehicle is manufactured, it is typically sold to one of 14,000
limousine operators. These operators utilize these vehicles to provide livery service. The livery service industry provides drivers and short term rentals for airport shuttle service, weddings, business travel, proms, funerals and various other
special occasions.
Based on the Limousine and Chauffeured
Transportation Industry statistic, the limousine manufacturing industry generates approximately $400 million in annual revenues through the sale of luxury limousines, specialty vehicles and limousine buses to approximately 14,000 limousine operators
located throughout the United States. These limousine operators are located in the following regions of the United States: 59% in the Northeast; 16% in the Southeast; 11% in the Midwest; and 14% in the West.
Courier Industry
The courier industry consists of approximately 7,200 same day, messenger and
expedited courier companies according to US Census data with combined annual sales of approximately $521 million, with about 562,000 couriers in the field. Approximately 400,000 of those couriers are independent contractors. The couriers utilize
some form of transportation to provide their service: 3% by bicycle; 34% by small cars; 48% by pick-up trucks or vans; 13% by small or large trucks; and 1% by foot.
Financial Services
The financial services business consists of savings and loans, banks, leasing companies, insurance companies, insurance brokers and other providers of
financial services. The industry is highly competitive and the rates charged by the competition may be lower than those rates that we may be able to charge because our cost of funds and overhead costs are higher than these other companies. We intend
to offer our services primarily to businesses in our niche markets. These businesses are largely under-served by the financial community. We will offer various services to our drivers and purchasers of our vehicles that will differentiate us from
our competition. By doing so, we believe that we can make our services less sensitive to rate and more focused on the service aspect of the business.
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Products and Services
The
Company’s development of products and services is performed by its four subsidiaries. New products and services are evaluated and analyzed by management, with an additional focus on the business and financial impact to the overall company and
its subsidiaries.
Manufacturing Products and Services
Lincoln Town Car.
A Lincoln Town Car is
modified into a luxury limousine through a thirteen step manufacturing process completed over a period of approximately eleven days. The Company maintains a 35 to 45 day inventory of Lincoln Town Car limousines and the Ford Excursion limousines to
meet customer demand. The Lincoln Town Car market makes up approximately 90% of the modified limousine chassis market.
Specialty Vehicles.
The Specialty vehicles and buses include various SUV’s and buses, as well as other models that are made to order.
The customer has many more options in this market however pricing is based on the time, materials manufacturing overhead plus profit margin. The specialty vehicles and buses manufactured at CTMC are primarily built to order. This is a small
percentage of the limousine market, however we believe that we can sustain higher profit margins and significant customization is available based on the customers specifications.
Financial Services and Products
We offer commercial vehicle lease, commercial vehicle loans, balloon notes, equipment leasing/financing, fleet refinancing
and high line automobile lease/financing to the commercial fleet operators throughout the United States.
Our financial services products are funded to the commercial fleet operators for a period between twelve to seventy-two months, based on the year, make
and model of the collateral. The rate of interest is between 6.9% and up to a rate of 18%, based on the applicable lending guidelines. The typical loan balance is between $20,000 and $50,000, however based on the collateral, the Company would lend
up to $500,000. Based on the credit score and classification the borrower is required to conform to a minimal credit application and documentation for those borrowers classified as “A” credit to a full documentation and review of the
credit standing, collateral, source of proceeds and review of documentation for those borrowers falling into the “C” or “D” credit criteria. Also the amount of borrowings and down payment on the loan or lease will have a bearing
on the amount of documentation that is required by the lending officer. The collateral typically is a vehicle that is the primary source of revenue for our borrowers, such as limousine operators and courier drivers.
In addition, the Company has established a loan and lease committee that
meets at least twice a month to go over all credits made during the period. Also, all loans or leases over $100,000 requires that at least two members of the loan committee review the credit decision of the lending officer and that they review and
approve the credit as well.
The committee also reviews all
troubled and delinquent assets twice a month. The Company intends to proceed on repossession on vehicles or collateral that is delinquent sixty days. All loans or leases considered delinquent 90 days or greater are considered non-interest earning
assets or non-accrual. Any loan or lease on non-accrual will be evaluated on a loan by loan basis.
Competition
Limousine
Manufacturing
SCB and CTMC are two of the nine major
limousine manufacturers in the industry operating under a QVM agreement with Ford Motors and a CMC agreement with Cadillac. There are many companies in the marketplace that do not operate under the manufacturer sponsored programs, such as the QVM
and CMC. Operating within QVM and CMC agreements enables the Company to provide enhanced warranty coverage to the purchasers of our vehicles, through superior engineering design and by utilizing the resources provided by the Ford and Cadillac. Our
competition offers similar products to these limousine operators however; our sales, design and engineering team have focused our products on specifications that commercial fleet operators demand. We intend to further differentiate ourselves by
offering to these commercial fleet
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operator’s financial solutions including automotive leases, contract settlement processing and insurance products. The subcontractor settlement
processing to commercial fleet operators enables the Company to communicate our products and services to our clients on a weekly basis versus once every three to four years, when they are in the market for a new vehicle. We believe that due to our
focused market niche, and our experience, both with the drivers and the collateral, we will be highly competitive within the marketplace.
Subcontractor Settlement Processing
The Company is one of three entities providing independent contractors to the commercial fleet industry. CDS provides services that insulate the
commercial fleet operator from workplace concerns relating to employment by creating and reinforcing an independent operator status for the individual drivers. The Company provides specialty insurance products to these drivers, as well as health
benefits and other insurance products they require. The software platform and the relationship with the insurance carrier are the key to the success of this business. The business is run on a low gross profit margin and automation is the key to
gaining market share in this industry.
Lease Financing
The Company is one of many financial service
providers offering lease products to business customers. The competition consists of banks, savings and loans, finance companies, consumer product companies and independent brokers. Some of our competitors may have more financial resources and offer
better pricing than us. Legal and regulatory developments have made it easier for new and sometimes unregulated entities to compete with us. Consolidation among financial service providers has resulted in fewer large national and regional banking
and financial institutions holding a large accumulation of assets. These institutions may have significantly greater resources, a wider geographic presence or greater accessibility. Competition for loans comes principally from other banks, savings
institutions and other lenders. This competition could decrease the number and size of loans that we make and the interest rates and fees that we receive on these loans.
Marketing
Limousine and
Specialty Vehicle Manufacturing
The specialty
manufacturing business has slowed down since the attack on the World Trade Centers on September 11, 2001 (“9/11”) from a peak of production of 9,000 units produced to 1,800 units produced during 2001. The industry is slowly recovering, but
we do not expect the industry to reach the same production levels in the near future. The current production for the limousine manufacturing business is anticipated to be approximately 3,000 units for 2004. We expect the industry production level to
increase, however it is not anticipated that the production will ever reach the 9,000 unit level.
The Company markets its specialty vehicles through tradeshows, print advertising 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 sales and service team focused on building lasting relationships with its
customers. This is accomplished by delivering vehicles and services that management believes will inspire customer loyalty and enthusiasm.
The Company typically attends two tradeshows annually to exhibit their products and services, as well as to stay abreast of current trends in the
marketplace. In addition to tradeshows, our sales team typically attends local limousine operator association meetings on a monthly basis. This enables the sales team to stay in front of the operators on an on-going basis. The Company and its sales
team actively call the operators in their sales market to maintain a personal relationship with the operators. The Company sends out direct mail marketing pieces to select customers or contacts with products or services that we believe will result
in a future sale of our products.
The Company has implemented
a new software package that enables management to track the sales calls by region, salesperson and operator. This provides a tool for management to assess the sales process as well as the individual performance of the sales staff. We intend to
continue to refine the process through further implementation of this software package. This software package will be utilized by our sales force to sell all the products that the Company has to offer,
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including loans and lease financing, financial services, subcontracting settlement processing and limousines and specialty vehicles.
In addition, the Company places print advertisement in various trade
publications, which are supported by QVM and CMC agreements. The Company believes that maintaining a presence in the limousine community provides the recognition necessary to further their other forms of advertising and marketing.
Financial Services - Loan and Lease Financing
. The Company
markets its lease financing and other financial services through both the sales force for the limousine operators as well as through a directed sales force, specific to the industry that targets fleet operators and independent dealers within the
specific niches that we intend to target. The Company also sends out direct mail marketing pieces to select customers or contacts with products or services that they believe will result in a future sale of our products.
Financial Services - Subcontractor Settlement Processing
. With
the acquisition of CDS, the Company anticipates access to 5,000 courier drivers that we believe have specific needs that we intend to address immediately. CDS provides solutions to problems that are endemic to the courier industry on an individual
level, as well as an association. Classification of drivers that service the courier business are an issue for the owner operator, whereby they may subject themselves to questions relating to the driver’s status as an employee or independent
contractor. The Company provides the support, education, products and insulation to enhance the independent contractor relationship. We intend to spend approximately $100,000 during the fourth quarter of 2004, to set up town hall meetings throughout
the country to educate these drivers about the various services that are available to them. We believe that the key to the success of this acquisition is to further provide the couriers with leases, cars and additional insurance products and
services.
In addition, Company will continue to meet with
local and national limousine associations to present them with CDS’s business solutions. The Company intends to market to the limousine industry the subcontractor settlement processing, insurance products and to expand and implement products
and services offerings to this market segment.
Source and Availability of Raw Material for Production
The Company’s two major suppliers are Ford Motor Company and General Motors Corporation, which provide the chassis for the Lincoln Town Car and the
Cadillac products that the Company then manufactures into a modified vehicle under a QVM agreement with Ford and a CMC agreement with General Motors Corporation. The Company believes that its relationship with these major suppliers is in good
standing at this time and that the supply of chassis inventory is adequate to meet our operating needs.
Agreements with Major Suppliers
The Company manufactures luxury limousines, specialty vehicles and limousine buses under a QVM with Ford Motor Company and a CMC with General Motors Corporation. These agreements are evaluated and renewed annually by
Coach. The Company is able to utilize the expertise of the supplier for engineering expertise, warranty support, rebates for chassis purchases and a source of marketing funds.
Research and Development
The
Company did not have any research and development expenses for the year ended December 31, 2003. Research and development was $829,840 for the nine months ended September 30, 2004. After our acquisition of Springfield in December 2003, we determined
that the production of the various vehicles needed to be segregated as to eliminate any duplication of production processes at the CTMC and SCB facilities. CTMC personnel have extensive depth of knowledge in prototype development, modification and
engineering of specialty vehicles, such as the buses and SUV’s. As a result, in January 2004, the Company made a strategic decision for CTMC to focus on manufacturing specialty vehicles and limousine buses and for SCB to focus on manufacturing
the Lincoln Town Car limousines and the Ford Excursion limousines. Based on these manufacturing changes and focus on specialty vehicles, the Company plans on expending $1.00 million on research and development during the next twelve months, in
addition to the $829,840 already incurred for the nine months ended September 30, 2004.
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Seasonality
The specialty
vehicle business is seasonal, whereby most purchases are made during the second and fourth quarters of the fiscal year. The plants close for a week in the summer and a week in December. The Company plans on diversifying its business to mitigate some
of the seasonality of the current operations.
Subsidiaries
We own four wholly
owned operating subsidiaries: (1) Springfield Coach Industries Corporation, Inc., a Missouri corporation; (2) Commercial Transportation Manufacturing Corporation, a New York corporation; (3) Coach Financial Services, Inc., a Florida corporation; and
(4) Corporate Development Services, Inc. and its subsidiaries, a New York corporation.
Employees
As of December 1,
2004, we had 83 full-time employees, 57 of which are in manufacturing personnel and the remainder of which serve in a managerial, sales, marketing or administrative capacity. We currently outsource our sales and marketing function. We have 21
employees relating to the acquisition of CDS that are employed through a professional employment organization. We believe that our employee relations are good. None of our employees are represented by a collective bargaining unit.
The Company is continually evaluating the staffing needs of the organization.
The leasing operation will be required to hire approximately 5 employees over the next three months. The holding company intends to hire approximately four new employees over the next three months, mostly in the administrative and finance areas. The
manufacturing facilities will hire approximately 5 employees over the next three months, primarily to support the relocation of the CTMC operation. CDS is adequately staffed and we do not intend to hire any new staff upon acquisition or within the
next three months.
Government Regulation
Our
Cadillac Master CoachBuilder Agreement with General Motors Corporation and the Quality Vehicle Modifier Agreement with Ford Motor Company require that we maintain and adhere to strict engineering and manufacturing standards set by the National
Highway Traffic and Safety Agency (“NHTSA”) for manufactured vehicles. The National Highway Traffic Safety Administration (NHTSA), under the U.S. Department of Transportation, was established by the Highway Safety Act of 1970, as the
successor to the National Highway Safety Bureau, to carry out safety programs under the National Traffic and Motor Vehicle Safety Act of 1966 and the Highway Safety Act of 1966. We purchase our vehicles directly from the original manufacturers, such
as Ford Motor Company, General Motors Corporation and Daimler-Chrysler, and then modify the vehicles based on our customer’s requirements or the specific product lines. As such, we are not subject to the same regulations as other automotive
manufacturers.
History
Coach was incorporated
in the State of Nevada in October 1998. Its principal executive offices are located at 12330 SW 53rd Street, Suite 703, Cooper City, FL 33330. Our telephone number is (954) 862-1425.
Coach owns 100% of four subsidiaries. On September 1, 2003, Coach acquired CTMC through a reverse merger. Coach issued
approximately 3 million shares of common stock to CTMC in a stock for stock exchange. CTMC is a New York corporation. Its sales offices are located in Bohemia, New York.
On December 31, 2003, Coach, through SCB, its newly formed wholly owned subsidiary, acquired certain assets and liabilities
from Springfield Coach Builders, Inc. The acquisition was valued at $2.66 million based on 2 million shares of common stock, at $1.33 per share, the closing market price on November 6, 2003. SCB is a Missouri corporation. Its principal executive
offices are located in Springfield, Missouri.
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On July 9, 2004, Coach, through CFS, its newly formed wholly owned subsidiary, entered into an agreement
to purchase all of the common stock of Go Commercial Leasing Corporation (“Go Commercial”) and merged Go Commercial into CFS. We issued 423,529 shares of common stock, valued at $720,000, to the shareholders of CDS. CFS is a Florida
corporation. Its principal executive offices are located in Cooper City, Florida.
On August 6, 2004, Coach signed a letter of intent to acquire CDS, whereby the Company issued to the shareholder of CDS a combination of stock and cash. The acquisition was completed on August 31, 2004 and is
reflected in our financial statements as of September 1, 2004. The Company paid $4.8 million for CDS through the issuance of 3.2 million shares of common stock valued at $1.19 per share, of which 504,202 shares of common stock are held in escrow. On
December 6, 2004, CDS satisfied its conditions subsequent under the purchase agreement by signing a 2 year agreement with Transguard, for which the Company paid to CDS an additional $1.2 million through the issuance of 806,724 shares of common stock
valued at $1.19 per share and $240,000 in cash. In addition, Coach paid $500,000 in cash and issued a promissory note in the amount of $460,000 to the shareholders of CDS. The CDS is a New York corporation. Its principal executive offices are
located in Glens Falls, New York.
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