**U.S. SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON,DC 20549**

 

**FORM 10-QSB/A**

 

| ý**Quarterly report  under Section 13 or 15 9(d) of the Securities Exchange Act of 1934A**                         |
|-----------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                              | ** ** | ** ** |
| **For the  quarterly period ended June 30, 2003**                                                                            |
| ** **                                                                                                                        |
| o  **Transition report  under Section 13 or 15(d) of the Securities Exchange Act**                                 |
|                                                                                                                              |   | ** ** |
| **For the  transition period from         to        ** |

 

**Commission file****number 000-49738**

 

**Carroll ShelbyInternational Inc.**

(Exact Name of SmallBusiness Issuer as Specified in Its Charter)

 
| **Nevada**                                                                          | ** ** | **86-1012155**                        |
|-------------------------------------------------------------------------------------|------------|---------------------------------------|
| (State or Other  Jurisdiction of Incorporation or Organization)                     |       | (I.R.S. Employer  Identification No.) |
|                                                                                |       |                                  |
| **11150 W.  Olympic Boulevard, Suite 1050 Los Angeles, CA 90064**              |
| (Address of Principal  Executive Offices)                                           |
|                                                                                |       |                                  |
| **(310) 914-1843**                                                             |
| (Insurer’s Telephone  Number, Including Area Code)                             |
| ** **                                                                          |       |                                  |
| **Ginseng  Forest, Inc.**                                                           |
| (Former Name, Former  Address and Former Fiscal Year, If Changed Since Last Report) |

 

Check whether the issuer:(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the restraint was required to file such reports), and(2) has been subject to such filing requirements for the past90 days. Yes  ý   No o

 

**APPLICATIONONLY TO ISSUERS INVOLVED INBANKRUPTCY PROCEEDINGS DURING THEPRECEDING FIVE YEARS**

 

Check whether the registrantfiled all documents and reports required to be filed by Section 12, 13 or15 (d) of the Exchange Act after the distribution of securities under aplan confirmed by a court.

 

Yes  o   No ý

 

**APPLICATIONONLY TO CORPORATE ISSUERS**

 

State the number of sharesoutstanding of each of the issuer’s classes of common equity, as of the latestpracticable date: 12,855,866 shares of common stock, $0.001 per value pershare, as of August 19, 2003. Transition Small Business Disclosure Format(check one):

 

Yes   ý  No o

 

----

 

**Part I.FINANCIAL INFORMATION**

 

**Item 1.****Financial Statements**

 

**CARROLLSHELBY INTERNATIONAL INC.**

 

**CONTENTS**

 

| **FINANCIAL STATEMENTS**                    |   |
|---------------------------------------------|--------|
| ** **                                  |   |
| Consolidated  Balance Sheets                | 3      |
| Consolidated Statements of  Operations      | 4      |
| Consolidated  Statements of Cash Flows      | 5      |
| Notes  to Consolidated Financial Statements | 6-10   |

 

2

----

 

**CARROLLSHELBY INTERNATIONAL, INC.**

**CONSOLIDATED BALAN****CE SHEETS**

**June 30,2003 (unaudited) and December 31, 2002**

 

 
| ** **                                                                                                                                                                                                                | ** ** | **June 30,  2003** | ** ** | **December 31,  2002** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                                                                                                                | ** ** | **(unaudited)**         | ** ** | ** **                  | ** ** |
| ASSETS                                                                                                                                                                                                                    |       |                    |       |                        |       |
| CURRENT ASSETS:                                                                                                                                                                                                           |       |                    |       |                        |       |
| Cash                                                                                                                                                                                                                      |       | $                       | 29,682     |                        | $          | 22,929 |   |
| Accounts receivable                                                                                                                                                                                                       |       | 30,940                  |       | 132,143                     |       |
| Note receivable from related party                                                                                                                                                                                   |       | —                  |       | 7,321                       |       |
| Other current assets                                                                                                                                                                                                      |       | 15,815                  |       | —                      |       |
| Total  current assets                                                                                                                                                                                                     |       | 76,437                  |       | 162,393                     |       |
| Property and equipment, net                                                                                                                                                                                               |       | 147,729                 |       | 219,994                     |       |
| Other assets                                                                                                                                                                                                              |       | —                  |       | 8,282                       |       |
| Total  assets                                                                                                                                                                                                             |       | $                       | 224,166    |                        | $          | 390,669 |   |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                                                                |       |                    |       |                        |       |
| CURRENT LIABILITIES:                                                                                                                                                                                                      |       |                    |       |                        |       |
| Accounts payable and accrued expenses                                                                                                                                                                                     |       | $                       | 85,935     |                        | $          | 148,609 |   |
| Customer deposit                                                                                                                                                                                                          |       | 2,000                   |       | —                      |       |
| Advances from shareholder                                                                                                                                                                                                 |       | 396,434                 |       | 314,467                     |       |
| Note payable to shareholder                                                                                                                                                                                               |       | 2,000,000               |       | —                      |       |
| Notes payable                                                                                                                                                                                                             |       | 17,016                  |       | 83,167                      |       |
| Total  current liabilities                                                                                                                                                                                                |       | 2,501,385               |       | 546,243                     |       |
| COMMITMENTS (Note 6)                                                                                                                                                                                                 |       |                    |       |                        |       |
| STOCKHOLDERS’ DEFICIT                                                                                                                                                                                                |       |                    |       |                        |       |
| Common stock—25,000,000 shares authorized, 12,855,866 issued and  outstanding; $.001 par value as of June 30, 2003 (unaudited), 9,087,866  issued and outstanding; $.001 par value as of December 31, 2002 |       | 12,856                  |       | 1,000                       |       |
| Additional paid in capital                                                                                                                                                                                                |       | (2,011,856              | )          | —                      |       |
| Accumulated deficit                                                                                                                                                                                                       |       | (278,219                | )          | (156,574                    | )          |
| Total  stockholders’ deficit                                                                                                                                                                                         |       | (2,277,219              | )          | (155,574                    | )          |
| Total liabilities and stockholders’ deficit                                                                                                                                                                          |       | $                       | 224,166    |                        | $          | 390,669 |   |

 

The accompanying notes arean integral part of these consolidated financial statements.

 

3

----

 

**CARROLLSHELBY INTERNATIONAL, INC.**

**CONSOLIDATED STATEM****ENTS OF OPERATIONS**

**For theThree and Six Months Ended June 30, 2003 and 2002 (unaudited)**

 
| ** **                                                         | ** ** | **For the  Three Months Ended  June 30,** | ** ** | **For the  Six Months Ended  June 30,** | ** ** |
|--------------------------------------------------------------------|------------|------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                         | ** ** | **2003**                                       | ** ** | **2002**                                     | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                                                         | ** ** | **(unaudited)**                                | ** ** | **(unaudited)**                              | ** ** | **(unaudited)** | ** ** | **(unaudited)** | ** ** |
| Revenues:                                                          |       |                                           |       |                                         |       |   |   |   |   |
| Royalty income                                                     |       | $                                              | 60,723     |                                         | $          | 83,519 |   | $ | 160,436 |   | $ | 202,754 |   |
| Equipment rental (related party)                                   |       | —                                         |       | 29,648                                       |       | — |   | 59,296 |   |
| Automobile sales, net                                              |       | —                                         |       | —                                       |       | 357,696 |   | — |   |
| Total revenues, net                                                |       | 60,723                                         |       | 113,167                                      |       | 518,132 |   | 262,050 |   |
|                                                               |       |                                           |       |                                         |       |   |   |   |   |
| Cost of goods sold                                                 |       | 227,975                                        |       | —                                       |       | 227,975 |   | — |   |
|                                                               |       |                                           |       |                                         |       |   |   |   |   |
| Gross profit (loss)                                                |       | (167,252                                       | )          | 113,167                                      |       | 290,157 |   | 262,050 |   |
|                                                               |       |                                           |       |                                         |       |   |   |   |   |
| Expenses:                                                          |       |                                           |       |                                         |       |   |   |   |   |
| Selling and marketing                                              |       | 110,763                                        |       | 89,667                                       |       | 187,036 |   | 220,300 |   |
| General and administrative                                         |       | 123,019                                        |       | 124,651                                      |       | 234,297 |   | 379,891 |   |
|                                                               |       | 233,782                                        |       | 214,318                                      |       | 421,333 |   | 600,191 |   |
| Loss from operations                                               |       | (401,034                                       | )          | (101,151                                     | )          | (131,176 | ) | (338,141 | ) |
| Other income (expense):                                            |       |                                           |       |                                         |       |   |   |   |   |
| Sublease rental income                                             |       | 6,000                                          |       | 6,000                                        |       | 12,000 |   | 10,000 |   |
| Interest income (expense), net                                     |       | (896                                           | )          | (6,564                                       | )          | (1,670 | ) | (13,852 | ) |
| Total other income (expense)                                       |       | 5,104                                          |       | (564                                         | )          | 10,330 |   | (3,852 | ) |
| Net loss before provision for income taxes                         |       | (395,930                                       | )          | (101,715                                     | )          | (120,846 | ) | (341,993 | ) |
| Provision for income taxes                                         |       | 800                                            |       | 800                                          |       | 800 |   | 800 |   |
| Net loss                                                           |       | $                                              | (396,730   | )                                            | $          | (102,515 | ) | $ | (121,646 | ) | $ | (342,793 | ) |
| Basic and diluted net loss per share                               |       | $                                              | (0.04      | )                                            | $          | (0.01 | ) | $ | (0.01 | ) | $ | (0.04 | ) |
| Weighted average number of common shares outstanding—Basic    |       | 9,422,799                                      |       | 9,087,866                                    |       | 9,255,333 |   | 9,087,866 |   |
| Weighted average number of common shares outstanding—Dilutive |       | 9,422,799                                      |       | 9,087,866                                    |       | 9,255,333 |   | 9,087,866 |   |

 

The accompanying notes arean integral part of these consolidated financial statements.

 

4

----

 

**CARROLLSHELBY INTERNATIONAL, INC.**

**CONSOLIDATEDSTATEMENTS OF CASH F****LOWS**

**For the SixMonths Ended June 30, 2003 and 2002 (unaudited)**

 
| ** **                                                                  | ** ** | **For the  Six Months Ended  June 30,** | ** ** |
|-----------------------------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                                  | ** ** | **2003**                                     | ** ** | **2002** | ** ** |
| ** **                                                                  | ** ** | **(unaudited)**                              | ** ** | **(unaudited)** | ** ** |
| Cash flows from operating activities:                                       |       |                                         |       |   |   |
| Net loss                                                                    |       | $                                            | (121,646   | ) | $ | (342,793 | ) |
| Adjustments to reconcile net loss to net cash used in operating  activities |       |                                         |       |   |   |
| Depreciation and amortization                                               |       | 71,508                                       |       | 70,986 |   |
| Change in operating assets and liabilities                                  |       | 32,997                                       |       | 196,010 |   |
| Net cash flows used in operating activities                                 |       | (17,141                                      | )          | (75,797 | ) |
| Cash flows from investing activities:                                       |       |                                         |       |   |   |
| Purchase of property and equipment                                          |       | (16,547                                      | )          | — |   |
| Sale of fixed asset, net                                                    |       | 17,304                                       |       | — |   |
| Net cash flows provided by investing activities                             |       | 757                                          |       | — |   |
| Cash flows from financing activities:                                       |       |                                         |       |   |   |
| Repayment of notes payable                                                  |       | (66,151                                      | )          | (86,887 | ) |
| Net advances from shareholder                                               |       | 89,288                                       |       | (17,152 | ) |
| Net cash flows provided by used in financing activities                     |       | 23,137                                       |       | (104,039 | ) |
| Net increase (decrease) in cash and equivalents                             |       | 6,753                                        |       | (179,836 | ) |
| Cash, at beginning of period                                                |       | 22,929                                       |       | 179,836 |   |
| Cash, at end of period                                                      |       | $                                            | 29,682     |   | $ | — |   |

 

The accompanying notes arean integral part of these consolidated financial statements.

 

5

----

 

**CarrollShelby International Inc.**

**Notes to the Cons****olidated FinancialStatements**

**June 30,2003**

 

**NOTE 1—BUSINESS DESCRIPTION, HISTORY AND ORGANIZATIONOF THE COMPANY**

 

Carroll ShelbyInternational, Inc. (“CSI” or “the Company”) is the exclusive holder ofautomotive manufacturer and entrepreneur Carroll Shelby’s trademarks, vehicledesign rights and other intellectual properties, which include some of theworld’s most famous muscle cars and high performance vehicles, including thecar that brought home to the U.S. it first and only FIA World ManufacturersChampionship in 1965, the famous Shelby Cobra Daytona Coupe. Carroll ShelbyLicensing, Inc. (“CSL”) (a Texas corporation formed on April 18,1988) holds trade name and trademark rights for Shelby branded apparel,accessories and collectibles.

 

In addition, the Companywill manufacture component cars (sometimes referred to as “kit” cars as theygenerally do not have engines or transmissions installed at time of delivery tothe customer) under the brand name “Shelby Cobra” at its wholly ownedsubsidiary Shelby Automobiles, Inc. (“Autos”) (a Nevada corporation formedin May, 2003) in Las Vegas, Nevada. It will begin manufacturing a new series ofthe CobraTM automobile to replicate the original CobraTM last produced in 1967and of which only approximately 1,000 units were ever produced. The company’sCobraTM will be substantially built to its original specifications forenthusiasts desiring a genuine replica of the first and only American producedsports car to claim the aforementioned championship. A significant enthusiastmarket exists in the United States for this historic automobile.

 

CSI was originally organizedunder the laws of the State of Nevada on December 4, 2000 (date ofinception) as Ginseng Forest, Inc. (“GFI”) GFI had no operations throughJune 23, 2003 and was considered a development stage company in accordancewith Statement of Financial Accounting Standards No. 7. On June 23,2003, GFI acquired all of the outstanding common stock of CSL and Autos, arecently formed entity, for 9,087,866 shares of GFI common stock and a$2,000,000 secured promissory note to Carroll Shelby. The Company recorded theoffset of this Note Payable as a distribution. The exchange of stockconstituted a reverse merger with CSL as the acquiring company. GFI changed itsname to Carroll Shelby International, Inc. in September 2003.

 

On June 23, 2003, whichwas the closing date of the Exchange Agreement, the Company’s two directors,Harold W. Sciotto and Sam H. Sciotto, resigned after electing Carroll Shelby,John Luft and M. Neil Cummings as new directors of the Company.

 

Carroll ShelbyLicensing, Inc. was originally incorporated as O T C Packaging Company inTexas on April 22, 1986. In June 1998, the Company became Shelby AmericanManagement, Inc. and a final name change to Carroll ShelbyLicensing, Inc. was approved in March, 1999. Carroll ShelbyLicensing, Inc. owns and licenses various trademarks and intellectualproperties for Carroll Shelby and related names.

 

Carroll ShelbyLicensing, Inc. revenues are substantially royalties derived fromlicensing agreements with domestic companies including manufacturers ofautomobiles and accessories, clothing, video games and miscellaneous items.

 

As noted above, ShelbyAutomobiles Inc. was incorporated for the purpose of manufacturing highperformance Shelby vehicles under the guidance of Carroll Shelby and will beinvolved in prototype manufacturing, design and engineering projects; and plansto increase production and availability of these Shelby products through anexpanded dealer network and direct sales under a license agreement with CSL. Inthe second quarter of 2003 Autos began the production of Cobra automobiles dueto the financial failure of a licensee Shelby American Inc. (“SAI”) whowas engaged in manufacturing these component cars. SAI lost its license toproduce Shelby licensed automobiles due to its failure to make its requiredroyalty payments to CSL. Autos continued the production of the ordered ShelbyCobras in order to protect the Company’s brand name and maintain its customerloyalty. The Company believes these properties are the foundation of its futuredevelopment.  During the second quarterof 2003 the Company expended $227,975 for the continued production of theseautomobiles.

 

Carroll Shelby, director, chief executive officer and principleshareholder of the Company is a 25% shareholder of SAI.

 

**NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

*Interim Unaudited Financial Information*

 

The unaudited financial informationfurnished herein reflects all adjustments, consisting only of normal recurringadjustments, which in the opinion of management, are necessary to fairly statethe Company’s financial position, the results of operations, and cash flows forthe periods presented. The results of operations for the three andsix months ended June 30, 2003 are not necessarily indicative ofresults for the entire fiscal year ending December 31, 2003.

 

*Consolidation*

 

The consolidated financialstatements include the accounts of CSI and all majority-owned domestic andforeign subsidiaries in which it has control. All significant intercompanyaccounts and transactions are eliminated in consolidation.

 

6

----

 

The information with respectto the three and six months ended June 30, 2003 and 2002 isunaudited.

 

*Revenue Recognition*

 

Revenue from automobiles andaccessories sales is recognized when the sale transaction is complete includingphysical delivery of the merchandise and/or transfer of title. Depositsreceived from customers for sales contracts are recorded as a liability pendingcompletion of the sales transaction. CSL recognizes revenue from royalties whenearned, in accordance with the terms of the licensing agreements with manufacturersof automobiles, accessories, clothing, video games and other. For other productsales, revenue is recognized at the time of shipment. All revenue is shown netof discounts and returns taken.

 

 

*Cash Equivalents*

 

For purposes of thestatement of cash flows, the Company considers money market funds withmaturities of three months or less to be cash equivalents.

 

*Accounts Receivable*

 

A valuation allowance isprovided on the Company’s accounts receivable in management’s judgment thatwill not be collected. All accounts receivable are reviewed on a case by casebasis for collectibility. There is no valuation allowance on the accountsreceivable as of June 30, 2003.

 

*Property and Equipment*

 

Property and equipment arestated at cost. Depreciation is computed using the straight-line methods overuseful lives ranging from 3 to 10 years.

 

*Comprehensive Income*

 

The Company utilizes SFASNo. 130, “Reporting Comprehensive Income”. This statement establishesstandards for reporting comprehensive income and its components in a financialstatement. Comprehensive income as defined includes all changes in equity (netassets) during a period from non-owner sources. Examples of items to beincluded in comprehensive income, which are excluded from net income, include foreigncurrency translation adjustments and unrealized gains and losses onavailable-for-sale securities. Comprehensive income is not presented in theCompany’s financial statements since the Company did not have any of the itemsof comprehensive income in any period presented.

 

*Impairment of Long-lived Assets*

 

The Company reviewslong-lived assets for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. If thesum of the expected future cash flows (undiscounted and without interestcharges) is less than the carrying amount of the asset, the Company wouldrecognize an impairment loss based on the estimated fair value of the asset.

 

*Income Taxes*

 

By virtue of the exchangeagreement Carroll Shelby Licensing Inc. was converted from an SCorporation to a C Corporation. The impact on this conversion is not materialto the financial position or statement of operations of the Company.

 

Since June 23, 2003,the Company uses the asset and liability method of accounting for income taxes.The asset and liability method accounts for deferred income taxes by applyingenacted statutory rates in effect for periods in which the difference betweenthe book value and the tax bases of assets and liabilities are scheduled toreverse. The resulting deferred tax asset or liability is adjusted to reflectchanges in tax laws or rates. Because the Company has incurred loses fromoperations in prior years and in the second quarter of 2003, no benefit isrealized for the any tax assets.

 

The provision for incometaxes as of June 30, 2003 and 2002 reflects the minimum state tax due.

 

*Income (Loss) per Share*

 

Basic income (loss) pershare is computed by dividing income (loss) available to common stockholders bythe weighted-average number of common shares outstanding. Diluted income (loss)per share is computed similar to basic income (loss) per share except that thedenominator is increased to include the number of additional common shares thatwould have been outstanding if the potential common shares had been issued andif the additional common shares were dilative. When the Company has incurrednet losses, basic and diluted loss per share are the same.

 

7

----

 

*Estimates*

 

The preparation of financialstatements in conformity with generally accepted account principles requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements, as well as the reported amounts ofrevenues and expenses during the reporting period. Actual results could differfrom those estimates.

 

*Fair Value of Financial Instruments*

 

The carrying amount of cash, accounts receivable and accounts payable and accruedexpenses approximate fair value due to the short-term nature of thoseinstruments.

 

*Statement of Cash Flow*

 

In connection with theacquisition of CSL and Autos the following non cash transaction was recorded inthe second quarter of 2003:

 

| Issuance of 3,768,000 shares of common stock   |   |   |
|------------------------------------------------|--------|--------|
| Issuance of Note Payable for common stock |   | $      | 2,000,000 |

 

For the three andsix months ended June 30, 2003 and 2002 income taxes paid was $800.For the three and six months ended June 30, 2003 no interest waspaid. Interest paid for the three and six months ended June 30, 2002was $3,269 and $5,366, respectively.

 

*Reclassification*

 

Certain prior year itemshave been reclassified to conform to the current year’s presentation.

 

*Recently issued accounting pronouncements*

 

In December 2002, theFASB issued SFAS No. 148, “Accounting for Stock-BasedCompensation—Transition and Disclosure,” an amendment of SFAS No. 123.SFAS No. 148 provides alternative methods of transition for a voluntary changeto the fair value based method of accounting for stock-based employeecompensation. In addition, SFAS No. 148 amends the disclosure requirementsof SFAS No. 123 to require more prominent and more frequent disclosures infinancial statements about the effects of stock-based compensation. Thisstatement is effective for financial statements for fiscal years endingafter December 15, 2002. SFAS No. 148 will not have any impact on theCompany’s financial statements as management does not have any intention tochange to the fair value method.

 

In April 2003, the FASBissued SFAS No. 149, “Amendment of Statement 133 on Derivative Instrumentsand Hedging Activities.” SFAS No. 149 amends and clarifies accounting andreporting for derivative instruments and hedging activities under SFASNo. 133, “Accounting for Derivative Instruments and Hedging Activities.”SFAS No. 149 is effective for derivative instruments and hedgingactivities entered into or modified after June 30, 2003, except for certainforward purchase and sale securities. For these forward purchase and salesecurities, SFAS No. 149 is effective for both new and existing securitiesafter June 30, 2003. Management does not expect adoption of SFASNo. 149 to have an impact on the Company’s statements of earnings,financial position, or cash flows.

 

In May 2003, the FASBissued SFAS No. 150, “Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity.” SFAS No. 150 establishesstandards for how an issuer classifies and measures in its statement offinancial position certain financial instruments with characteristics of bothliabilities and equity. In accordance with the standard, financial instrumentsthat embody obligations for the issuer are required to be classified asliabilities. SFAS No. 150 will be effective for financial instrumentsentered into or modified after May 31, 2003 and otherwise will beeffective at the beginning of the first interim period beginning afterJune 15, 2003. SFAS No. 150 will not have any impact on the Company’sfinancial statements.

 

**NOTE 3—PROPERTY AND EQUIPMENT**

 

Property and equipment atJune 30, 2003 and December 31, 2002 consisted of the following:

 

 

| ** **                    | ** ** | **2003**  | ** ** | **2002**  | ** ** |
|-------------------------------|------------|-----------|------------|-----------|------------|
| Truck with trailer            |       | $         | 478,079    |      | $          | 478,079 |   |
| Airplane                      |       | 310,384   |       | 300,000   |       |
| Automobiles                   |       | 206,450   |       | 306,587   |       |
| Furniture and equipment       |       | 43,716    |       | 37,553    |       |
| Leasehold improvements        |       | 11,557    |       | 11,557    |       |
|                          |       | 1,050,186 |       | 1,133,776 |       |
| Less accumulated depreciation |       | (902,457  | )          | (913,782  | )          |
|                          |       | $         | 147,729    |      | $          | 219,994 |   |

 

8

----

 

Depreciation expense for thethree and six months ended June 30, 2003 is $35,754 and $71,508,respectively. Depreciation expense for the three and six months endedJune 30, 2002 is $35,493 and $70,986, respectively.

 

 

**NOTE 4—NOTES PAYABLE**

 

In accordance the ExchangeAgreement the Company has a $2,000,000 note payable to the Shelby Companiessecurity holders which is due on December 23, 2003. This note isnon-interest bearing.

 

The Company has aninstallment note payable, due $9,883 monthly including interest at 7.5%,secured by transportation equipment, due September 2003. Total principaloutstanding on this note as of June 30, 2003 is $17,016

 

**NOTE 5—RELATED PARTY TRANSACTIONS**

 

The Company’s principalshareholder holds the trademarks that are the subject of its licensingagreement. The shareholder has assigned all rights and obligations of thetrademarks to the Company and it enters into the related licensing agreementsdirectly. The Company had a non-exclusive licensing agreement for thetrademarks with SAI.  The Companyreceived nothing for the three and six months ended June 30, 2003.However, the Company received $0 and $135,000, respectively for the three andsix months ended June 30, 2002.

 

In addition, the Companyrents certain of its transportation equipment to a related entity partiallyowned by its principal shareholder.  TheCompany received no revenue from this lease in fiscal 2003. For the three andsix months ended June 30, 2002 the Company received $29,648 and$59,296, respectively.

 

The Company also subleases aportion of its office space to related entities. During the three andsix months ended June 30, 2003 and 2002 it received $6,000 and$12,000, respectively and $6,000 and $10,000, respectively.

 

The Company’s principalshareholder advances funds for operating capital from time to time. Theseadvances are non-interest bearing and do not have a due date. Repayments aremade when working capital is adequate. The outstanding balances of suchadvances as of June 30, 2003 and December 31, 2002 were $396,434 and$314,467, respectively.

 

**NOTE6—COMMITMENTS**

 

The Company leases certainoffice space under the terms of a joint and several lease agreement with anunrelated cotenant. If the cotenant could not meet its obligation under thelease, the Company would be required to assume additional rental expenses.

 

9

----

 

NOTE 7—SEGMENT REPORTING

 

Our business consists of tworeportable segments: Royalty income generated from licensing (“CSL”), revenuegenerated from the production of automobiles and sale of automobile performanceparts (“Autos” and “SA”) and corporate headquarters (“CSI”). These businesssegments are distinct and separate. There are no allocations of costs amongstthese segments or intercompany revenues.

 

Business segment informationfor the three and six months ended June 30, 2003 and 2002 consists of:

 

 
| ** **                      | ** ** | **For the three months ended** | ** ** | **For the six months ended** | ** ** |
|---------------------------------|------------|--------------------------------|------------|------------------------------|------------|
| ** **                      | ** ** | **2003**                       | ** ** | **2002**                     | ** ** | **2003** | ** ** | **2002** | ** ** |
|                            |       |                           |       |                         |       |   |   |   |   |
| Revenue:                        |       |                           |       |                         |       |   |   |   |   |
| CSL and CSI                     |       | $                              | 60,723     |                         | $          | 113,167 |   | $ | 518,132 |   | $ | 262,050 |   |
| Autos and SA                    |       | —                         |       | —                       |       | — |   | — |   |
|                            |       |                           |       |                         |       |   |   |   |   |
| Operating  income (loss)        |       |                           |       |                         |       |   |   |   |   |
| CSL                             |       | (127,403                       | )          | (101,151                     | )          | 142,455 |   | (338,141 | ) |
| Autos and SA                    |       | (256,056                       | )          | —                       |       | (256,056 | ) | — |   |
| CSI                             |       | (17,575                        | )          | —                       |       | (17,575 | ) | — |   |
|                            |       |                           |       |                         |       |   |   |   |   |
| Depreciation  and Amortization: |       |                           |       |                         |       |   |   |   |   |
| CSL                             |       | 35,754                         |       | 35,493                       |       | 71,508 |   | 70,986 |   |
| Autos and SA                    |       | —                         |       | —                       |       | — |   | — |   |
| CSI                             |       | —                         |       | —                       |       | — |   | — |   |
|                            |       |                           |       |                         |       |   |   |   |   |
| Assets:                         |       |                           |       |                         |       |   |   |   |   |
| CSL                             |       | 188,321                        |       | 465,625                      |       | 188,321 |   | 465,625 |   |
| Autos and SA                    |       | 35,854                         |       | —                       |       | 35,845 |   | — |   |
| CSI                             |       | —                         |       | —                       |       | — |   | — |   |
|                            |       |                           |       |                         |       |   |   |   |   |
| Capital  expenditures:          |       |                           |       |                         |       |   |   |   |   |
| CSL                             |       | —                         |       | —                       |       | 16,547 |   | — |   |
| Autos and SA                    |       | —                         |       | 6,163                        |       | — |   | — |   |
| CSI                             |       | —                         |       | —                       |       | — |   | — |   |
|                                 |            |                                |            |                              |            |  |  |  |  |  |  |  |  |

 

 

For the three and six months ended June 30,2002 the Company’s operations consisted only of CSL.

 

**NOTE 8 — RESTATEMENT OF THE JUNE 30, 2003 FINANCIALSTATEMENTS**

 

The financial statements forthe three and six months ended June 30, 2003 have been restated from theoriginally filed financial statements to reflect the proper accounting for the$2,000,000 note payable to the Shelby Companies (See Note 1 and 2).  On the original filing the Company recordedthe offset of the Note Payable as an intangible asset “Trademarks”.  Upon further review of this accounting, theCompany has determined that offset of this Note Payable should be shown as adistribution of equity.  Further theCompany included the activity of its Auto’s subsidiary from its inception (May2003) through June 30, 2003.  Thisactivity resulted in addition general and administrative expenses of $28,081and cost of goods sold of $227,975 (See Note 1).  In addition, as a result of the consolidationof the Autos operations the Company eliminated its tax provision of $54,000.

 

In addition the Company hasupdated its Business Description, History and Organization (See Note 1) andSummary of Significant Accounting Policies (See Note 2) of the Company footnoteto accurately reflect the description of the Company and its accountingpolicies.  In addition, the Company hasincluded segment information for the three and six months ended June 30, 2003and 2002

 

10

----

 

**Item 2 Management’s Discussion andAnalysis or Plan of Operation.**

 

*Cautionary Statement*

 

You should read thefollowing discussion and analysis in conjunction with the Financial Statementsand related Notes thereto contained elsewhere in this Form 10-QSB/A(“Report”). The information in this Report is not a complete description of ourbusiness or the risks associated with an investment in our common stock. Weurge you to carefully review and consider the various disclosures made by us inthis Report and in our other reports filed with the SEC.

 

The section entitled“Risk Factors” set forth in this Report in our other SEC filings,discuss some of the important risk factors that may affect our business,results of operations and financial condition. You should carefully considerthose risks, in addition to the other information in this Report and in ourother filings with the SEC, before deciding to invest in our company or tomaintain or increase your investment.

 

This Report containsforward-looking statements. These statements relate to future events or ourfuture financial performance. In some cases, you can identify forward-lookingstatements by terminology such as “may,” “will,”“should,” “except,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”“potential” or “continue,” the negative of such terms or other comparableterminology. These statements are only predictions. These statements are notguarantees of future performance and are subject to certain risks,uncertainties and assumptions that are difficult to predict.

 

Therefore, our actualresults could differ materially and adversely from those expressed in anyforward-looking statements as a result of various factors. Moreover, neither wenor any other person assumes responsibility for the accuracy and completenessof the forward-looking statements. We are under no duty to update any of theforward-looking statements after the date of this Report to conform suchstatements to actual results or to changes in our expectations.

 

*Overview*

 

The Company was originallyorganized on December 4, 2000 (Date of inception) under the laws of theState of Nevada, as Ginseng Forest, Inc. Through June 23, 2003 theCompany had no operations and in accordance with SFASNo. 7, the Company wasconsidered a development stage company.

 

On June 23, 2003, theCompany closed its previously announced agreement (the “Exchange Agreement”) toacquire all of the outstanding common stock of Carroll ShelbyLicensing, Inc. and Shelby Automobiles, Inc. (the “Shelby Companies”)for 9,087,866 shares of Ginseng Forest, Inc. common stock and a promissorynote issued by Ginseng Forest, Inc. to the Shelby Companies securityholders in the amount of $2,000,000 due December 31, 2003.

 

*Plan of Operations*

 

The Company’s strategy is toaggressively pursue new licensing channels for its historic and prominentintellectual properties and hallmark brands such as Shelby Cobra, 427 S/C, FIA289, Cobra Daytona Coupe, GT 350 and GT 500. This process will be achievedthrough possible acquisitions and strategic alliances.

 

*Company’s Description*

 

Carroll ShelbyLicensing Inc.

 

Carroll ShelbyLicensing, Inc. was originally incorporated as O T C Packaging Company inTexas on April 22, 1986. In June 1998, the Company became ShelbyAmerican Management, Inc. and a final name change to Carroll ShelbyLicensing, Inc. was approved in March 1999. Carroll Shelby Licensing, Inc.is the exclusive holder of automotive manufacturer and entrepreneur CarrollShelby’s trademarks, vehicle design rights, and other intellectual properties,which include some of the world’s most famous muscle cars and high performancevehicles, including the car that brought home to the U.S. its first and onlyFIA World Manufactures Championship in 1965, the famous 1965 Shelby CobraDaytona Coupe. CSL also holds trademark rights for Shelby-branded apparel,accessories and collectibles.

 

Carroll ShelbyLicensing, Inc. revenues are substantially royalties derived fromlicensing agreements with foreign and domestic companies includingmanufacturers of automobiles parts and accessories, die-cast, plastic and othermodels of famous Shelby vehicles, clothing, computer and video games,collectables and various products.

 

Shelby Automobiles Inc.

 

Shelby Automobiles Inc.was incorporated as a Nevada corporation in 2003 for the purpose ofmanufacturing high performance Shelby vehicles under the guidance of CarrollShelby and will be involved in prototype manufacturing, design and engineeringprojects; and plans to increase production and availability of these Shelbyproducts through an expanded dealer network and direct sales under a licenseagreement with CSL.

 

11

----

 

*Revenues:*

 

Revenues increased by$256,083 or 98% from $262,050 for the six months ended June 30, 2002,to $518,132 for the six months ended June 30, 2003, and revenuesdecreased by $52,444 or 46% from $113,167 for the three months endedJune 30, 2002, to $60,723 for the three months ended June 30,2003. Revenue consists of royalty income, equipment rental income and a sale ofa vintage Daytona Coupe. For the six months ended June 30, 2003, theincrease in sales over the same period in 2002 is primarily attributable to thesale of the vintage Daytona Coupe in the first quarter of 2003. Royalty revenuefor the first half of 2003 compared to the first half of 2002 decreased$42,318, from $202,754 in fiscal 2002 versus $160,436 in fiscal 2003. Thedecrease in royalty revenue for the six months ended June 30, 2003versus the same period in 2002 is attributable to the loss of royalty incomefrom certain related affiliates under common ownership. For the six monthsended June 30, 2002 this affiliate accounted for $135,000 of the royaltyrevenue. However, in fiscal 2003, the Company has begun to expand and improveits royalty and licensee base by increasing the number of licensees and placingless reliance on revenue from these related entities.

 

Equipment rental income ismade up of a tractor-trailer display that is used to promote various Shelbylicensed automobiles. In 2002 this equipment was being leased by a relatedentity for $59,296 for the six months ended June 30, 2002 and $29,648for the three months ended June 30, 2002. In 2003 the related entitywas unable to pay its monthly lease payments and as a result no revenue wasrecorded for the six and three months ended June 30, 2003. Thisdecrease in equipment rental revenue was a significant reason for the decreasein total revenue for the quarter ended June 30, 2003 versus the quarterended June 30, 2002. The Company does not anticipate any significantrevenue for the second half of 2003 for the rental of this equipment.

 

*Cost of Goods Sold*

 

For the three and six monthsended June 30, 2003 the assumption of SAI’s Cobra vehicle production by Autosresulted in cost of goods sold of $227,975 with no corresponding productionrevenue.  The Company made this decisionto protect the Shelby trade name and reputation by completing those vehiclesstarted by SAI, but unfinished due to a lack of working capital and cessationof business.

 

*Selling and Marketing Expense*

 

Selling and marketingexpense decreased by $33,264 or 15% from $220,300 for the six months endedJune 30, 2002, to $187,036 for the six months ended June 30,2003, and selling and marketing expenses increased by $21,096 or 24% from$89,667 for the three months ended June 30, 2002, to $110,763 for thethree months ended June 30, 2003.

 

Selling expenses during thesix and three month periods ended June 30, 2003 included expenditures fortransportation, depreciation, meals and entertainment, printing andreproduction, promotion and public relations, research, trademark support,travel and video duplication. In 2002 CSL was promoting the 40 thanniversary of the Shelby Cobra.The overall decrease in selling and marketing expenditures from 2003 versus2002 is the result of not having any extraordinary marketing campaigns in 2003.The increase in selling expenses in the second quarter of fiscal 2003 versusfiscal 2002 is primarily attributable to the timing of CSL’s payment for itstrademark support. In 2003 the trademark support payment was made in the secondquarter however in 2002 this payment was made in the first quarter.

 

*General and Administrative Expenses*

 

General and Administrativeexpense decreased by $145,593 or 38% from $379,891 for the six monthsended June 30, 2002, to $234,297 for the six months ended June 30,2003, and general and administrative expenses decreased by $1,632 or 1% from$124,651 for the three months ended June 30, 2002, to $123,019 forthe three months ended June 30, 2003.

 

General and Administrativeexpenses during the six and three month periods ended June 30, 2003 and2002 include expenditures for payroll, legal, bank services charges, variousoffice expenditures and property taxes. Protection of the Company’s trade name and trademarks is paramount tothe Company’s existence. During fiscal 2002, the Company (“CSL”) was incurringlegal fees associated with its Superformance lawsuit. No expenditures for thislawsuit were incurred in 2003. Through June 30, 2003 the Company has notincurred any significant fees for legal proceedings. The reduction in legalfees was offset by the inclusion of $28,081 of general and administrativeexpenses in the second quarter of 2003 associated with the start up of theAutos operations.

 

*Other Income (Expense)*

 

Other income (expense)increased by $14,182 or 368% from ($3,852) of expense for the six monthsended June 30, 2002, to $10,330 of income for the six months endedJune 30, 2003, and other income (expense) increased by $5,668 or 1005%from $(564) of expense for the three months ended June 30, 2002,to $5,104 of income for the three months ended June 30, 2003.

 

The increase in other incomefor the three and six months ended June 30, 2003 versus the same timeperiod for 2002 is primarily attributable to less interest accrued on theequipment note in 2003 versus 2002.

 

*Provision for Income Taxes*

 

The provision for incometaxes as of June 30, 2003 and 2002 reflects the minimum state tax due.

 

12

----

 

*Liquidity and Capital Resources*

 

During the first half of2003 cash used in operations was $17,141. The net cash used in operations isprimarily attributable to the Company’s loss before depreciation andamortization. In addition, the Company increased its working capital throughthe collection of its outstanding accounts receivables net of payments of itsaccounts payable.

 

During the first half of2003, net cash provided by investing activities of $757, was generatedprimarily from the accounting for the sale of the Daytona Coupe. The cash flowfrom investment activities was offset by the purchase of property andequipment.

 

During the first half of2003, net cash provided by financing activities of $23,137, consisted ofpayments on the Company’s installment note for its transportation equipment andnet advances from the Company’s shareholder of $89,288 for operations.

 

In August 2003 theCompany retained an investment banker to provide, among other services,assistance with Company’s financing efforts as it attempts to secure additionalcapital for product development, possible acquisitions and working capital anassist the Company with general business strategy and advice regarding listingon a national exchange.

 

Currently, the Company isdependent upon its majority shareholder to provide liquidity form any shortfallin cash provided by operations. If this shareholder does notcontinue to provide funding for the Company this will have an adverse materialimpact on the statement of financial position for the Company and itsoperations.

 

The Company believes thatinflation has not had a material impact on it operations.

 

*Critical Accounting Policies*

 

We believe that ouraccounting policy for long-lived assets and fair value of financial instrumentsare critical accounting policies that significantly impact our financial statements.Our accounting policy of long-lived assets is as follows:

 

We assess the fair value andrecoverability of our long-lived assets whenever events and circumstancesindicate the carrying value of an asset may not be recoverable from estimatedfuture cash flows expected to result from its use and eventual disposition. In doing so, we make assumptions and estimates regarding futurecash flows and other factors to make our determination. The fair valueof our long-lived assets is dependent upon the forecasted performance of ourbusiness, changes in the various industries, and the overall economicenvironment. When we determine that the carrying value of our long-lived assetsmay not be recoverable, we measure any impairment based upon the excess of thecarrying value that exceeds the estimated fair value of the assets. As a resultof these reviews, we have not yet recognized any impairment losses as ofJune 30, 2003.

 

Our accounting policy forrecognition of revenue is a critical accounting policy because it determinesthe amount of sales we recognize from the sale of CobraTM automobiles and therevenues we recognize from the licensing of our trade names, trademarks andintellectual properties. We have determined that sales of automobiles andaccessories are recognized when the sale transaction is complete includingphysical delivery of the merchandise and transfer of title for automobiles.Deposits received from customers for sales contracts will be recorded as aliability pending completion of the sales transaction. Revenues from ourlicensing activities are recognized when earned, based on actual reporting fromlicensees or may be estimated when historical data related to a licensee isadequate.

 

**RiskFactors**

 

You should carefullyconsider the following risks and the other information contained in this Reportand in our other filings with the Securities and Exchange Commission before youdecide to invest in us or to maintain or increase your investment. The risksand uncertainties described below are not the only ones facing us. Additionalrisks and uncertainties may also adversely impact and impair our business. Ifany of the following risks actually occur, our business, results of operationsor financial condition would likely suffer. In such case, the trading price ofour Common Stock could decline, and you may lose all or part of yourinvestment.

 

• Our cash or cash equivalents reserves maynot be adequate to cover our costs of operations. To date, we have covered ouroperating losses through loans from our majority shareholder.

 

• It is likely that we will need to raiseadditional capital at some point in the future. If additional funds are raisedthrough the issuance of equity, our shareholders’ ownership will be diluted.There can be no assurance that additional financing will be available on termsfavorable to us or at all. If funds are not available or are not available onterms acceptable to us, we may not be able to continue the development of ourproduct, respond to our competitors or continue our business.

 

• Our business depends on the protection ofour intellectual property and may suffer if we are unable to protect adequatelyour intellectual property.

 

• Our business is dependent on ourrelationships with other parties, specifically with Carroll Shelby. If we areunable to use the Carroll Shelby name this will have a material adverse impacton the financial position of the Company.

 

13

----

 

• Our future revenues and profitability areunpredictable.

 

• Our Common Stock is not widely traded, and,as a result, the prices quoted for our stock may not reflect its fair marketvalue. Because of the low volume of trading in our Common Stock, ourshareholders may find it difficult to sell their shares.

 

• Our principal shareholders can exercisesignificant control over us and could limit the ability of our othershareholders to influence the outcome of transactions requiring a shareholdervote. As of June 30, 2003 approximately 70% of our outstanding CommonStock is owned by our executive officers, directors and principal shareholders.These shareholders will have the ability to exercise influence over all mattersrequiring approval by our shareholders, including the election of directors andapproval of significant corporate transactions.

 

   Our Common Stock is currently quoted on theOTC Bulletin Board under the symbol: CSBI.

 

 

**ITEM 3.****  Quantitative and Qualitative Disclosures about Market Risk**

 

 

*None*

 

 

**Item 4.****Controls and Procedures**

 

Within the 90 daysprior to the date of filing this Quarterly Report of Form 10-QSB/A, theCompany carried out an evaluation, under the supervision and with theparticipation of the Company’s management, including its President (principalexecutive officer) and its Chief Financial Officer, of the effectiveness of thedesign and operation of the Company’s disclosure controls and procedurespursuant to Exchange Act Rule 13a-14. Based upon that evaluation, theCompany’s President (principal executive officer) and its Chief Financial Officerconcluded that the Company’s disclosure controls and procedures are effectivein alerting them on a timely basis to material information relating to theCompany required to be included in the Company’s periodic SEC filings.Subsequent to the date of that evaluation, there have been no significantchanges in the Company’s internal controls or in other factors that couldsignificantly affect internal controls, nor were any corrective actionsrequired with regard to significant deficiencies and material weaknesses.

 

14

----

 

**PART II.****OTHER INFORMATION**

 

**Item 1.****LegalProceedings.**

 

There are no known legalactions that are either pending or threatened against Carroll ShelbyInternational, Inc., nor are there any asserted or unasserted potentialclaims of which management is aware. With respect to the wholly ownedsubsidiaries of Carroll Shelby International, Inc., specifically: CarrollShelby Licensing, Inc. and Shelby Automobiles, Inc., there are nopending or threatened legal actions of which management is currently aware.Contingent claims, however, have been asserted against Carroll ShelbyLicensing, Inc. by a representative of one of its former licensees, andcertain shareholders and creditors of said former licensee (to wit: the companyformerly known as Shelby American, Inc., now American Inc.,Venture-Nevada LLC, Larry Winget and Venture Mold & Engineering).These contingent claims arise from allegations to the effect that the licenseagreement with the company formerly known as Shelby American, Inc. shouldnot have been terminated for lack of payment of royalties due under saidagreement. Management has investigated the basis under which Carroll ShelbyLicensing, Inc. terminated the license agreement with ShelbyAmerican, Inc. and has determined that there were in fact good, validlegal reasons for termination of said license agreement based upon, among otherreasons, the undisputed nonpayment of royalties over a 3-year time period of anamount in excess of $1 million. Furthermore the Company believes thatCarroll Shelby Licensing, Inc. has a good and valid legal claim againstthe company formerly known as Shelby American, Inc., for nonpayment ofroyalties in an amount in excess of $1 million. Collection of theseroyalties, however, would be dependent upon the outcome of future legalproceedings and the ability of Carroll Shelby Licensing, Inc. to collecton the assets of the company formerly known as Shelby American, Inc., aprivately held Texas corporation.

 

**Item 2.****Changesin Securities and Use of Proceeds.**

 

None.

 

**Item 3.****Defaults UponSenior Debt.**

 

None.

 

**Item 4.****Submissionof Matters to a Vote of Security Holders.**

 

None.

 

**Item 5.****Other Information**

 

None.

 

**Item 6.****Exhibits and Reports on 8-K**

 

**Exhibits**

 

 
| **Number** | ** ** | **Description**                                                                                            | ** ** |
|------------|------------|------------------------------------------------------------------------------------------------------------|------------|
| ** ** | ** ** | ** **                                                                                                 | ** ** |
| 31.1       |       | Certification of Chief  Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of  2002. |       |
| 31.2       |       | Certification of Chief  Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of  2002. |       |
| 32.1       |       | Certification of Chief  Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of  2002. |       |
| 32.2       |       | Certification of Chief  Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of  2002. |       |

 

 

**Reports of Form 8-K**

 

On June 23, 2003, theRegistrant filed a report of Form 8K disclosing the closing of itspreviously announced acquisition of the Shelby Companies.

 

15

----

 

**SIGNATURES**

 

In accordance with therequirements of the Exchange Act, the registrant caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.

 

 
| ** **                 | ** ** | **CARROLL SHELBY INTERNATIONAL INC.** |
|----------------------------|------------|--------------------------------------------|
| ** **                 | ** ** | (Registrant)                               |
| Date: August 16, 2004 |       | By:                                        | /s/ | JOHN LUFT |   |
|                       |       |                                       |   | President, Chief Financial Officer and Director |
| Date: August 16, 2004 |       | By:                                        | /s/ | CARROLL SHELBY |   |
|                       |       |                                       |   | Chief Executive Officer and Director |

 

16

----