SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 2002.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____________ to ___________
Commission File No. 0-25319
TRANSPORTATION LOGISTICS INT'L, INC.
----------------------------------------------------
(Exact name of the Registrant as specified in Charter)
Colorado 84-1191355
--------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer ID Number)
of incorporation or organization)
136 Freeway Drive East, East Orange, NJ 07018
---------------------------------------------
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code: 973-266-7020
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, no par value per share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for at least the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the issuer's revenues for its most recent fiscal year: $3,620,897.
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and ask prices of
such stock, as of a specified date within 60 days prior to the date of filing.
The aggregate market value of the Registrant's common stock, no par value,
held by non-affiliates as of May 10 2003 was $216,820.
As of May 10, 2003, the number of shares outstanding of the Registrant's
common stock was 41,548,338 shares, no par value.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
DOCUMENTS INCORPORATED BY REFERENCE: None
FORWARD-LOOKING STATEMENTS: NO ASSURANCES INTENDED
This Report contains certain forward-looking statements regarding
Transportation Logistics, its business and financial prospects. These
statements represent Management's present intentions and its present belief
regarding the company's future. Nevertheless, there are numerous risks and
uncertainties that could cause our actual results to differ from the results
suggested in this Report. Among the more significant risks are:
* the fact that Transportation Logistics requires additional capital
to sustain its operations through the next year;
* the fact that Transportation Logistics' growth will be limited by
its ability to obtain additional capital; and
* the fact that the industry in which Transportation Logistics
operates is dominated by large logistics companies, against whom
Transportation Logistics must compete.
Because these and other risks may cause the Company's actual results
to differ from those anticipated by Management, the reader should not place
undue reliance on any forward-looking statements that appear in this Report.
Readers should also take note that Transportation Logistics will not
necessarily make any public announcement of changes affecting these forward-
looking statements, which should be considered accurate on this date only.
PART 1
Item 1. BUSINESS
Transportation Logistics Int'l Inc. is a transportation logistics
management company. We organized our company in 1999, and since then have
been involved in offering a wide variety of services necessary to facilitate
the movement of raw materials and finished products worldwide. The core
philosophy that unites our transportation ventures into a unified business
plan is the minimization of our commitment to fixed assets.
At the present time, our major operating subsidiary is Xcalibur
Xpress, Inc., whose business consists primarily of the delivery of
international containerized materiel. After goods arrive at a port, our
services are used to be deliver the goods to their consignee, either directly
from the port of debarkation or from a railroad head where the goods has been
transferred after landing. Similarly, our customers use our intermodal
services to transport products manufactured in the U.S. from the factory to a
port for shipment to its designated foreign country.
Our intermodal trucking services are performed by Xcalibur Agents
located in various cities. The Agents operate under our name, using our
insurance and our U.S. Federal Department of Transportation authority. The
Agents' business, however, is their own: they hire, fire, dispatch, set their
own prices, and perform all operating functions independent of Xcalibur.
Xcalibur does the actual billing to customers under the Xcalibur name,
sets all credit limits, and is responsible for all collection efforts.
Each Agent is paid a fixed percentage weekly of their gross billings
(averaging 86%), with a charge back for credits of any kind issued to
customers, in addition to unpaid invoices that have aged over 90 days.
Xcalibur is also responsible for approving all drivers, supervising a
stringent safety program, insuring all general liability, equipment and cargo,
and performing a myriad of other back-office functions.
Our principal markets today consist of the six cities where we have an
Agent. They are Newark, NJ, Chicago, IL, Charleston, SC, Savannah, GA,
Charlotte, NC, and Jacksonville, FL. We plan to add six more agents in 2003
and ten additional Agents in 2004.
We market our services through three very simple methods:
- Agents who join us bring with them their own "book of
business," which usually is between one to two million
dollars in sales revenue.
- Xcalibur has developed its own loyal customer following
(e.g Weyerhauser Paper) who await our signing an Agent in
a new terminal city. They then consign their needs in
that city to our Agent, thus enhancing the Agent's revenue
and 86% advance, and of course adding to Xcalibur's
gross, which results in a good percentage flowing to our
bottom line.
- The international shipping industry is dominated by 40 to
45 companies, each of them doing more than one billion
dollars in annual revenue. They all know of us and our
capabilities.
In sales revenue, we are limited first by the number of cities in
which we have representation, then by the limitation of equipment controlled
by the Agent in that city, and finally by cash flow requirements, primarily
the expense outlays for at least eight weeks until a customer pays for the
first weeks work we performed.
Employees
The Company currently employs six individuals, all of whom, other than
our Chief Executive Officer, are involved in the business of Xcalibur Xpress.
We believe that our relations with our employees are good.
Item 2. PROPERTIES
Transportation Logistics does not own any real property. Its offices
and the offices of Xcalibur Xpress are located at the Company's headquarters
in East Orange, which we lease on an at will basis.
Item 3. LEGAL PROCEEDINGS
In December 2001 Transportation Logistics commenced action in the United
States District Court for the District of New Jersey against Columbine
Financial Solutions, Inc. and Lawrence G. Alpert. The action alleges that the
defendants breached a contract to purchase 1,200,000 shares of our common
stock for $600,000. Since the defendants did pay a total of $214,000,
$386,000 in damages are alleged. The defendants have not yet answered the
complaint and we have petitioned for a default judgment.
In April 2002 Transportation Logistics commenced action in the United
States District Court for the District of New Jersey against Rewico Investment
Limited, a U.K. corporation, and Rewico International GMBH. The action
alleges that the defendants defrauded Transportation Logistics in connection
with its acquisition of the U.S. operations of Rewico in 2000. $546,000_ in
damages are alleged, and rescission of the issuance of 2,487,432 shares of
Transportation Logistics common stock is demanded. The defendants have not
yet answered the complaint.
Michael Seeley, the holder of a Convertible Debenture issued by the
Company in the principal amount of $200,000, has commenced action in the
District Court for the City and County of Denver, State of Colorado, against
the Company. The action alleges that the Company has defaulted in payment of
the principal and $40,000 in interest accrued on the debenture.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information
Our common stock is listed for quotation on the OTC Bulletin Board under
the trading symbol "TRPL" The following table sets forth the bid prices
quoted for our common stock on the OTC Bulletin Board during the last two
years.
Bid
Period: High Low
----------------------------------------------
Jan. 1, 2001 - Mar. 31, 2001 $ 1.88 $ .34
Apr. 1, 2001 - June 30, 2001 $ .53 $ .30
July 1, 2001 - Sep. 30, 2001 $ .55 $ .12
Oct. 1, 2001 - Dec. 31, 2001 $ .16 $ .01
Jan. 1, 2002 - Mar. 31, 2002 $ .22 $ .06
Apr. 1, 2002 - June 30, 2002 $ .13 $ .05
July 1, 2002 - Sep. 30, 2002 $ .06 $ .02
Oct. 1, 2002 - Dec. 31, 2002 $ .04 $ .01
(b) Shareholders
Our shareholders list contains the names of 99 registered shareholders
of record. The number of beneficial shareholders who hold their shares in
street name is much greater and cannot be determined at this time.
(c) Dividends
The Company has never paid or declared any cash dividends on its Common
Stock and does not anticipate doing so in the foreseeable future. The Company
intends to retain any future earnings for the operation and expansion of the
business. Any decision as to future payment of dividends will depend on the
available earnings, the capital requirements of the Company, its general
financial condition and other factors deemed pertinent by the Board of
Directors.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
During 2002, the Company discontinued all of the businesses in which it
had been engaged at the beginning of the year:
- We sold Transportation Logistics (U.K.) to the individuals from
whom we had originally acquired it. They gave us a promissory note for
$35,000, 940,867 shares of Transportation Logistics common stock, and a
promise to pay us 50% of any profits they realize from operating a global
network.
- We surrendered our interest in HumanaForce Logistics LLC, which
had provided personnel services to the transportation industry.
- We ceased the operations of Pupil Transportation, Inc. after that
subsidiary lost its principal contract to a larger competitor.
- We terminated the operations of our financial services division,
as we lacked the capital needed to fund its ongoing operations.
Because these businesses have been discontinued, we have restated our
financial results for 2001. As restated, our 2001 statement of operations
shows no revenue for 2001, and a loss attributable to the discontinued
operations.
In May 2002 we acquired Xcalibur Xpress, Inc., which is now our only
operating business. Our financial statements reflect the results of
operations of Xcalibur Xpress from May 2002 through the end of the year. Note
18 to the financial statements contains a pro forma summary of our results of
operations during 2001 and 2002 if Xcalibur Xpress had been acquired on
January 1, 2001 and our other operations had been terminated on that date.
In the seven months after we acquired Xcalibur Xpress, it contributed
$3,620,807 in revenue. Because our operations involve little personnel and
virtually no hard assets, we realized a gross margin of 35% from that revenue.
The gross profit was not sufficient to offset all of the expenses of operating
our public company for the year. However, if the non-cash expense of $302,700
that we incurred as a result of issuance of stock to consultants is
eliminated, our operating loss would be only $58,186.
Because of the efficiency of the operations of Xcalibur Xpress, we
believe that it can be the foundation for rebuilding Transportation Logistics.
Our success in that regard will depend, however, on our ability to satisfy the
liabilities that remain from our earlier efforts to expand.
Liquidity and Capital Resources
The primary roadblock facing our plans for growth is our need for
capital. We are actively seeking additional capital resources, through sale
of equity or debt, and hope to increase our available resources. With
additional capital resources, we expect to be able to expand the operations of
Xcalibur Xpress and to initiate complementary businesses that will permit us
to achieve the economies of scale that will facilitate profitability and
growth.
Our working capital deficit at December 31, 2002 totaled $24,556, a
significant reduction from the deficit of $440,325 with which we started 2002.
The improvement occurred as we discontinued the operations which were
responsible for the earlier working capital shortfall.
Although our working capital deficit is not great, our cash flow remains
insufficient to satisfy the requirements of our existing liabilities. For
this reason we require additional capital resources. Management, therefore,
is actively engaged in exploring opportunities for equity or debt financing,
to obtain the funds needed to sustain our operations through the coming year.
Item 7. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Item 8. FINANCIAL STATEMENTS
The Company's financial statements, together with notes and the Report
of Independent Certified Public Accountants, are set forth immediately
following Item 13 of this Form 10-KSB.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
This table identifies our management team. Directors serve until the
next annual meeting of shareholders and until their successors are elected and
qualify. Officers serve at the pleasure of the Board of Directors.
Director
Name Age Position with the Company Since
---------------------------------------------------------------------------
Michael Margolies 75 Chairman, Chief Executive 2000
Officer, Chief Financial
Officer, Secretary
Stanley Chason 74 Director 2001
Michael Margolies founded our operating company in 1998. Mr. Margolies
previously served as Chief Executive Officer of U.S. Transportation Systems,
Inc. from its creation in 1975. USTS was a NASDAQ-listed holding company
involved in a diversified group of transportation-related businesses (e.g. bus
charters, freight-hauling, bus leasing, limousines, etc.). Mr. Margolies
left USTS in 1998 when it was sold to Precept Business Services, Inc. for
approximately $43 million. He then organized Transportation Logistics in
order to apply, in a non-asset-based environment, the skills in organization
and consolidation of transportation services that he developed at USTS.
Stanley Chason became a director of Transportation Logistics in November
2001. From 1962 until his retirement in 1984, Mr. Chason held various
positions with Gelco Corporation, a company listed on the New York Stock
Exchange which is involved in all aspects of vehicle leasing. His last
position with Gelco was as Executive Vice President and member of the Board of
Directors. Mr. Chason was also Chairman and Chief Executive Officer of the
Fleet and Management Services Division of Gelco.
Item 10. EXECUTIVE COMPENSATION
This table itemizes the compensation we paid to Michael Margolies, who
served as our Chief Executive Officer during 2002. There was no other officer
whose salary and bonus for services rendered during the year ended December
31, 2002 exceeded $100,000.
Compensation
Year Salary Stock Grant
---------------------------------------
Michael Margolies....... 2002 $ 0 (1)
2001 0
2000 0
________________________
(1) Mr. Margolies received a restricted stock grant of 10,000,000 shares
during 2002. The terms of the grant are described below.
Restricted Stock Grant Program
On May 28, 2002 the Company granted 10,000,000 shares of its common
stock to Michael Margolies, its Chief Executive Officer, pursuant to the
Company's Restricted Stock Grant Program (the "Program"). The grant
represented the entirety of the 10,000,000 shares included in the Program.
The shares issued under the Program are subject to the following restrictions:
1. After 2002 and each of the following four fiscal years (2003
through 2006) one-fifth of the shares granted (the "At-Risk Shares") will be
forfeited if the Company's' revenue during the year does not exceed the
following thresholds:
2002 - $ 4,000,000
2003 - $ 6,000,000
2004 - $ 8,000,000
2005 - $ 10,000,000
2006 - $ 12,000,000
2. All of the restricted shares shall be forfeited if Mr. Margolies'
employment by the Company terminates prior to the date the restrictions lapse.
3. The shares granted under the Program cannot be sold, assigned,
pledged, transferred or hypothecated in any manner, by operation of law or
otherwise, other than by writ or the laws of descent and distribution, and
shall not be subject to execution, attachment or similar process. These
restrictions will lapse with respect to any At-Risk Shares that are not
forfeited as described above. In addition, the restrictions will lapse with
respect to all unforfeited shares if in any year the Company's revenue exceeds
$12,000,000.
4. The restrictions shall also lapse as to all restricted shares on the
first to occur of (i) the termination of Mr. Margolies' employment with the
Company by reason of his disability, (ii) Mr. Margolies' death, (iii)
termination of Mr. Margolies'employment by the Company without good reason, or
(iv) a change of control of the Company. The Program defines "Change of
Control" as an acquisition by a person or group of more than 50% of the
Company's outstanding shares, a transfer of the Company's property to an
entity of which the Company does not own at least 50%, or the election of
directors constituting a majority of the Board who have not been approved by
the existing Board.
Compensation of Directors
Our directors are reimbursed for out-of-pocket expenses incurred on our
behalf, but receive no additional compensation for service as directors.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to us with respect to
the beneficial ownership of our common stock as of the date of this prospectus
by the following:
* each shareholder known by us to own beneficially more than 5% of our
common stock;
* each officer named in the Executive Compensation table above.
* each of our directors; and
* all directors and executive officers as a group.
There are 41,548,338 shares of our common stock outstanding on the date
of this Report. Except as otherwise indicated, we believe that the beneficial
owners of the common stock listed below have sole voting power and investment
power with respect to their shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission.
In computing the number of shares beneficially owned by a person and the
percent ownership of that person, we include shares of common stock subject to
options or warrants held by that person that are currently exercisable or will
become exercisable within 60 days. We do not, however, include these
"issuable" shares in the outstanding shares when we compute the percent
ownership of any other person.
Amount and
Nature of
Name and Address Beneficial Percentage
of Beneficial Owner(1) Ownership(2) of Class
---------------------------------------------------------------
Michael Margolies 21,834,939(3) 52.6%
Stanley Chason 2,500 0.1%
All Officers and Directors
As a Group (2 persons) 21,837,439 52.5%
Rewico Investment Limited 2,487,432 6.0%
City House
9, Cranbrook Road
Ilford, Essex UK IG14EA
____________________________________
(1) Except as noted, the address of all shareholders is c/o Transportation
Logistics Int'l, Inc., 136 Freeway Drive East, East Orange, NJ 07018
(2) All shares are owned of record unless otherwise indicated
(3) Includes 2,618,350 shares owned by the Margolies Family Trust. The
Trustee of the Margolies Family Trust is Mr. Margolies' spouse, and the
beneficiaries of the Trust are Mr. Margolies' spouse and children. Also
includes 10,000,000 shares which are subject to the terms of the
Restricted Stock Grant Program.
Equity Compensation Plan Information
The information set forth in the table below regarding equity
compensation plans (which include individual compensation arrangements) was
determined as of December 31, 2002.
Number of Weighted Number of
securities to average securities
be issued upon exercise price remaining
exercise of of outstanding available
outstanding options, for future
options, warrants issuance under
warrants and and equity
rights rights compensation plans
-------------------------------------------------------------------------------
Equity compensation
plans approved by
security holders..... 0 - 0
Equity compensation
plans not approved by
security holders*.... 0 - 812,500
--------------------------------------------
Total................. 0 - 812,500
============================================
* Our Board of Directors has adopted three equity compensation plans without
shareholder approval. The three plans are identical in their material
terms. They permit the Board to award to employees, directors or
consultants (other than consultants whose services to Transportation
Logistics are related to capital-raising transactions) stock, restricted
stock, stock options or performance shares.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, Transportation Logistics has borrowed money from the
Margolies Family Trust. The trustee of the Margolies Family Trust is the wife
of our Chairman, and the beneficiaries of the Trust are his wife and children.
The balance due from Transportation Logistics to the Trust at December 31,
2002 was $908,793. The loan does not bear interest. Although there is no
agreement as to when the loan will be repaid, the Trust has waived payment
until after 2003. Accordingly, the loan is classified as a "long-term
liability" on our balance sheet.
Item 13. EXHIBIT LIST AND REPORTS ON FORM 8-K
(a) Financial Statements
Report of Independent Auditors F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidates Statements of Comprehensive
Income F-4
Consolidated Statements of Shareholders'
Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
(b) Exhibit List
3-a Articles of Amendment and Restatement of the Articles of Incorporation -
filed as an exhibit to the Annual Report on Form 8-K for the year ended
December 31, 2000 and incorporated herein by reference.
3-b Restated By-laws - filed as an exhibit to the Current Report on Form 8-K
dated November 17, 2000 and incorporated herein by reference.
10-a 2002 Stock and Stock Option Plan - filed as an exhibit to the
Registration Statement on Form S-8 (333-81232) and incorporated herein
by reference.
10-b 2002 Stock Incentive Plan - filed as an exhibit to the Registration
Statement on Form S-8 (333-84750) and incorporated herein by reference.
10-c Purchase Agreement dated May 23, 2002 between Transportation Logistics
Int'l, Inc. and Rickey L. Kelly - filed as an exhibit to the Current
Report on Form 8-K dated May 23, 2002 and incorporated herein by
reference.
10-d Executive Employment Agreement dated May 23, 2002 between Xcalibur
Xpress Inc. and Rickey L. Kelly - filed as an exhibit to the Current
Report on Form 8-K dated May 23, 2002 and incorporated herein by
reference.
21 Subsidiaries - Transportation Logistics Int'l, Inc., a New York
corporation
Xcalibur Express, Inc.
(c) Reports on Form 8-K
None
Item 14 CONTROLS AND PROCEDURES
Michael Margolies, our Chief Executive Officer and Chief Financial
Officer, performed an evaluation of the Company's disclosure controls and
procedures within 90 days prior to the filing date of this report. Based on
his evaluation, he concluded that the controls and procedures in place are
sufficient to assure that material information concerning the Company which
could affect the disclosures in the Company's quarterly and annual reports is
made known to him by the other officers and employees of the Company, and that
the communications occur with promptness sufficient to assure the inclusion of
the information in the then-current report.
There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect those controls
subsequent to the date on which Mr. Margolies performed his evaluation.
Independent Auditors' Report
To the Board of Directors and Stockholders of
Transportation Logistics Int'l Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Transportation
Logistics Int'l Inc. and Subsidiaries as of December 31, 2002, and the related
consolidated statements of operations, comprehensive income, shareholders
equity, and cash flows for the years ended December 31, 2002 and 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Transportation Logistics
Int'l Inc. and Subsidiaries as of December 31, 2002, and the results of their
operations and their cash flows for the years ended December 31, 2002 and 2001
in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's significant operating loss raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Rosenberg Rich Baker Berman & Company
-----------------------------------------
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
April 20, 2003
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Balance Sheet
December 31, 2002
Assets
Current Assets
Cash and equivalents (NOTE 1 and 8) $ 2,757
Accounts receivable, net of allowance
for doubtful accounts of $20,000
(NOTES 1 and 8) 1,143,891
Unbilled receivables 77,473
Prepaid expenses 38,996
---------
Total Current Assets 1,263,117
---------
Property and equipment, at cost, less
accumulated depreciation of $1,313
(NOTES 1 and 2) 5,437
---------
Total Assets 1,268,554
=========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 115,013
Convertible debenture (NOTE 15) 200,000
Notes payable to bank (NOTES 1 and 11) 797,490
Current maturities of long-term debt (NOTE 13) 25,000
Other current liabilities 7,700
Net liabilities of discontinued operations
(NOTE 6) 142,470
---------
Total Current Liabilities 1,287,673
---------
Long-term debt, net of current maturities
(NOTE 13) 5,833
Loan payable (NOTE 12) 908,793
---------
Total Liabilities 2,292,299
Commitments and Contingencies (NOTE 14)
Stockholders' Equity
Preferred stock, $.01 par value;
5,000,000 shares authorized, and 0 shares
issued and outstanding (NOTE 1) -
Common stock, no par value; 50,000,000
shares authorized, 40,631,990 shares
issued and 40,396,338 shares outstanding
(NOTE 1) 3,659,492
Additional paid-in capital - stock
options (NOTE 4) 36,748
Retained earnings (3,101,948)
Consulting services to be provided
(NOTE 9) (1,095,500)
Less: treasury stock, 235,652 shares
at cost (522,537)
---------
Total Stockholders' Equity (1,023,745)
---------
Total Liabilities and Stockholders' Equity $ 1,268,554
=========
See notes to the consolidated financial statements.
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Statements of Operations
Year Ended December 31,
------------------------
2002 2001
(Restated)
------- --------
Operating Revenues (NOTES 7 and 12) $3,620,807 $ -
Direct Operating Expenses 2,364,058 -
--------- ---------
Gross Profit 1,256,749 -
--------- ---------
Operating Expenses
Selling, general and administrative 1,313,622 -
Depreciation and amortization (NOTE 1) 1,313 -
Stock issued for consulting services 302,700 446,775
--------- ---------
Total Operating Expenses 1,617,635 446,775
--------- ---------
Operating (Loss) (360,886) (446,775)
Other Income (Expense)
Interest expense
(16,542) -
--------- ---------
Total Other Income (Expense) (16,542) -
--------- ---------
(Loss) Before Income Taxes (377,428) (446,775)
(Provision) Benefit for Income Taxes (NOTE 3) - -
--------- ---------
(Loss) Before Discontinued Operations (377,428) (446,775)
Discontinued Operations (NOTE 7)
Loss from discontinued operations of
subsidiary (net of tax effect of $0) (382,623) (1,440,032)
--------- ----------
Net (Loss) $ (760,051) $(1,886,807)
========= =========
Earnings (Loss) Per Share (NOTE 1)
(Loss) from continuing operations $ (0.01) $ (0.02)
(Loss) from discontinued operations (0.01) (0.07)
--------- ----------
Basic and diluted earnings (loss) per share $ (0.02) $ (0.09)
========= ==========
Weighted Average Number of Common Shares
Outstanding (Restated)
Basic 34,374,627 21,624,816
========== ==========
Diluted 34,374,627 21,624,816
========== ==========
See notes to the consolidated financial statements.
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
Year Ended December 31,
2002 2001
(Restated)
Net (Loss) $ (760,051) $ (1,886,807)
Other Comprehensive Income
Foreign Currency Translation Adjustment 54,706 (63,348)
-------- ---------
Other Comprehensive (Loss) Income Before Tax 54,706 (63,348)
Income Tax Expense Related to Other Comprehensive
Income - -
-------- ---------
Other Comprehensive (Loss) Income Net of Tax 54,706 (63,348)
-------- ---------
Comprehensive (Loss) $ (705,345) $ (1,950,155)
======== =========
See notes to the consolidated financial statements.
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Statement of Shareholders' Equity
Years Ended December 31, 2002 and 2001
Accumulated Additional Consulting
Preferred Stock Common Stock Other Paid-in Services
--------------- ------------------ Retained Comprehensive Treasury Capital to be
Shares Amount Shares Amount Earnings Income Stock Stock Options Provided Total
---------------------------------------------------------------------------------------------------------------------------------
Balance
December 31, 2000 - - 20,865,000 1,600,517 122,281 8,642 (456,675) 29,300 - 1,304,065
Issuance of common
stock for consulting
services - - 640,000 391,775 - - - - - 391,775
Issuance of common
stock for legal
settlement - - 294,205 55,000 - - - - - 55,000
Issuance of common
stock for cash - - 428,000 214,000 - - - - - 214,000
Foreign currency
translation - - - - - (63,348) - - - (63,348)
Issuance of stock
warrants - - - - - - - 7,448 - 7,448
Elimination of goodwill
of CDA purchased by
Humanaforce - - - - (577,371) - - - - (577,371)
Net loss year ended
December 31, 2001 - - - - (1,886,807) - - - - (1,886,807)
-------------------------------------------------------------------------------------------------------------
Balance
December 31,2001 - $ - 22,227,205 $2,261,292 $(2,341,897)$(54,706) $(456,675) $36,748 $ - $ (555,238)
-------------------------------------------------------------------------------------------------------------
Foreign currency
translation - - - - 54,706 - - - 54,706
Issuance of common
stock for consulting
services - - 9,110,000 798,200 - - - - (798,200) -
Shares issued for
other compensation - - 10,000,000 600,000 - - - - (600,000) -
Shares surrendered
in connection with
sale of TLI (UK) - - (940,867) - - - (65,862) - - (65,862)
Net loss for the years
ended December
31, 2002 - - - - (760,051) - - - - (760,051)
Amortization of
prepaid consulting
services - - - - - - - - 302,700 302,700
-------------------------------------------------------------------------------------------------------------
Balance
December 31, 2002 - $ - 40,396,338 $3,659,492 $(3,101,948) $ - $ (522,537) $36,748 $(1,095,500) $( 1,023,745)
=============================================================================================================
See notes to the consolidated financial statements.
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31,
----------------------
2002 2001
------ ------
(Restated)
Cash Flows From Operating Activities
Continuing Operations
(Loss) Income before income taxes $ (377,428) $ (446,775)
Stock issued for services/consulting 302,700 391,775
Depreciation and amortization 1,313 -
Stock issued for legal settlement - 55,000
Adjustments to Reconcile Net Income to
Net Cash Used In Operating Activities
(Increase) in accounts receivable (1,221,364) -
(Increase) in prepaid expenses (38,996) -
(Increase) in other assets - -
Increase in accounts payable and
accrued expenses 115,013 -
Increase in other liabilities 7,700 -
--------- ---------
Cash (Used in) Continuing Operations (1,211,062) -
--------- ---------
Discontinued Operations
Income before income taxes (382,623) (1,440,032)
Adjustments to reconcile income
(loss) to net cash provided by (Used In)
discontinued operations
(Increase) decrease in net assets of
discontinued operations 1,342,796 134,061
--------- ---------
Cash Provided By Discontinued Operations 960,173 (1,305,971)
--------- ---------
Net Cash Used in Operating Activities (250,889) (1,305,971)
Cash Flows From Financing Activities
Issuance of capital stock - 214,000
Proceeds from issuance of convertible
debentures - 200,000
Loan payable, net 243,855 488,928
Repayment of long-term debt (205,000) 231,094
Proceeds from long-term debt 191,124 -
--------- ---------
Net Cash Provided by Financing Activities 229,979 1,134,022
--------- ---------
Net Increase (Decrease) in Cash and
Equivalents (20,910) (171,949)
Cash and Equivalents at Beginning of Period 23,667 195,616
-------- ---------
Cash and Equivalents at End of Period $ 2,757 $ 23,667
======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 16,542 $ 59,152
======== ========
Income taxes $ - $ -
======== ========
See notes to the consolidated financial statements.
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Transportation Logistics Int'l, Inc. (TLI or the Company) is an
international logistics management company which owned and operated several
subsidiaries, each of which does business within the various facets of
transportation including intermodal trucking, factoring receivables and
employee leasing for logistic companies. In 2002 the Company discontinued
all of the operations except intermodal trucking.
The Company's financial statements have been presented on the basis that
it is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
incurred a substantial loss, and has a working capital deficit as of December
31, 2002. The Company's continued existence is dependent upon its ability to
secure adequate financing. The Company plans to raise additional capital in
the future; however there are no assurances that such plan will be successful.
The financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
Effective April 1, 1999 the Company was assigned all of the issued and
outstanding capital stock of Transportation Logistics Int'l (UK), a United
Kingdom corporation, Pupil Transportation, Inc., a New Jersey corporation and
CDA North America, Inc., a New York corporation (the subsidiaries) from
Transportation Equities, Inc. (assignor). The Company was sold in 2002.
Effective March 26, 1999 the Company acquired all the shares and assets of
Transportation Logistics Int'l UK (TLIUK) formerly Avair Freight Services Ltd.
(UK), an international freight brokerage company, deemed to be effective March
26, 1999. The Company issued 100,000 common shares (524,000 restated common
shares) to the former shareholders of Avair Freight Services (UK) Ltd.
Effective June 4, 2001, the Company entered into an operating agreement
with Humanaforce Logistics, LLC and Subsidiaries. In accordance with the
operating agreement the Company has a 51% interest in Humanaforce Logistics,
LLC and Subsidiaries. The Company ceased operations in October 2002.
Effective May 23, 2002, the Company acquired all of the outstanding
capital stock of Xcalibur Express, Inc., which provides intermodal trucking
and delivery, warehousing and third party logistics for its clients. The
capital stock was acquired in exchange for (1) the Company's understanding
to provide financial services to Xcalibur Express and (2) the agreement by
the Company to forebear immediate collection of $200,000 owed by Xcalibur
Express to the Company.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenue and expenses during the
reporting period.
Actual results could differ from these estimates.
Principles of Consolidation
The accompanying consolidated balance sheet at December 31, 2002 includes
the accounts of the Company and its wholly owned subsidiaries Transportation
Logistics Int'l (UK), Pupil Transportation, Inc. Excalibur Express, Inc. and
its majority owned subsidiary Humanaforce Logistics, LLC and Subsidiaries.
All material inter-company accounts and transactions have been eliminated.
Property and Equipment
Property and equipment are valued at cost. Gains and losses on
disposition of property are reflected in income. Depreciation is computed
using the straight-line method over three to five year estimated useful lives
of the assets. Repairs and maintenance which do not extend the useful life
of the related assets are expensed as incurred. Depreciation expense charged
to operations in 2002 and 2001 was $1,313 and $0 (restated), respectively.
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Cash and Equivalents
For purposes of the statement of cash flows, cash equivalents include
time deposits, certificates of deposit and all highly liquid debt instruments
with original maturities of three months or less.
Income Taxes
The Company and its wholly owned subsidiaries file a consolidated Federal
income tax return. Transportation Logistics Int'l, Inc. uses the asset and
liability method in providing income taxes on all transactions that have been
recognized in the consolidated financial statements. The asset and liability
method requires that deferred taxes be adjusted to reflect the tax rates at
which future taxable amounts will be settled or realized. The effects of tax
rate changes on future deferred tax liabilities and deferred tax assets, as
well as other changes in income tax laws, are recognized in net earnings in
the period such changes are enacted. Valuation allowances are established
when necessary to reduce deferred tax assets to amounts expected to be
realized.
Financial Instruments
The following methods and assumptions were used by the Company to
estimate the fair values of financial instruments as disclosed herein:
Cash and Equivalents: The carrying amount approximates fair value because
of the short period to maturity of the instruments.
Accounts Receivable/Payable: The carrying amount approximated fair value.
Revenue Recognition
Revenue from freight brokerage is recognized upon delivery of goods, and
direct expenses associated with the cost of transportation are accrued
concurrently. Revenue from driver temporary services and leasing is
recognized when earned based upon standard billing rates charged by the
hours worked. Factoring revenue is recognized when the service is
provided. Direct expenses associated with the cost of driver leasing
are accrued concurrently. Revenue from subcontracted transportation
services is recognized upon completion of each trip. Direct expenses
associated with the cost of transportation are accrued concurrently.
Monthly provision is made for doubtful receivables, discounts, returns and
allowances.
Long-lived Assets
In March, 1995 the Financial Accounting Standards Board issued SFAS No.
121 "Accounting for the Impairment of Long-Lived Assets for Long-Lived Assets to
be Disposed of". SFAS 121 required that long-lived assets and certain identi-
fiable intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable and long-lived assets and certain identifi-
able intangibles to be disposed of to be reported at the lower of carrying
amount or fair value less cost to sell. SFAS No. 121 also establishes the
procedures for review of recoverability and measurement of impairment, if
necessary, of long-lived assets and certain identifiable intangibles to be
held and used by an entity. Management has determined that no impairment of
the respective carrying value has occurred as of December 31, 2002.
Acquisition of TLI Bangladesh
Effective March 31, 2000 the Company acquired all of the issued and
outstanding common stock of TLI Bangladesh, and international freight brokerage
company, through an acquisition through the issuance of 36,450 common shares
(190,800 restated common shares) of TLI common stock. The total value of the
acquisition is approximately $9,000 (exclusive of acquisition costs). The
acquisition was accounted for as a purchase in accordance with Accounting
Principles Board Opinion No. 16. The Company ceased operations in 2001.
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Advertising Costs
Advertising costs are charged to operations when incurred. Advertising
costs during the periods ended December 31, 2002 and 2001 amounted to $2,531 and
$4,301, respectively.
Foreign Currency Transactions
In the normal course of business the Company has accounts receivable and
accounts payable that are transacted in foreign currencies. The Company
accounts for transaction differences, in accordance with Statement of
Financial Standard No. 52, "Foreign Currency Translation", and accounts for
the gains and losses in operations.
Comprehensive Income
For foreign operations outside the United States that prepare financial
statements in currencies other than the U.S. dollar, results of operations and
cash flows are translated at average exchange rates. Translation adjustments
are included as a separate component of accumulated other comprehensive income
(loss) in shareholders' equity. The foreign currency translation at December
31, 2002 and 2001 was $54,706 and ($63,348), respectively.
Earnings Per Share
The Company computes earnings per share in accordance with Statements of
Financial Accounting Standard ("SFAS") No. 128. Basic EPS excludes dilution
and is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock
or resulted in the issuance of common stock that then shared in the earnings
of the entity. Common equivalent shares have been excluded from the
computation of diluted EPS since their affect is antidilutive.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment at cost, less accumulated depreciation and
amortization, consists of the following:
Furniture and equipment $ 6,750
------
Subtotal 6,750
Less accumulated depreciation
and amortization 1,313
------
Total $ 5,437
======
NOTE 3 - INCOME TAXES
Deferred income taxes arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or noncurrent,
depending on the classification of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or noncurrent
depending on the periods in which the temporary differences are expected to
reverse. In addition deferred taxes are also recognized from operating losses
that are available to offset future federal and state income taxes.
The deferred tax assets are attributable to net operating losses.
Deferred taxes consist of the following:
Total deferred tax assets, non current $ 1,000,000
Total valuation allowance (1,000,000)
---------
Net deferred tax assets $ -
=========
During 2002 and 2001 the valuation allowance increased $400,000 and
$600,000, respectively.
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 3 - INCOME TAXES, Continued
The reconciliation of income tax computed at the U.S. Federal statutory
rates to income tax expense is as follows:
December 31,
2002 2001
------ ------
Tax at US statutory rate 34% 34 %
State income taxes, net of
federal benefit 6% 6 %
Foreign taxes - (21)%
Other reconciling items and
valuation allowance (40)% (19)%
---- ----
Income tax provision 0% (0)%
==== ====
As of December 31, 2002, the Company has approximately $2,500,000
available net operating loss carryforwards which may be used to reduce
Federal and State taxable income and tax liabilities in future years. The
net operating loss carryforward expires in 2021.
NOTE 4 - STOCKHOLDERS' EQUITY
Stock and Stock Option Plan
On November 15, 2000, the Company adopted its 2000 Stock and Stock Option
Plan (the "Plan"). The Plan provides that certain options to purchase the
Company's common stock granted thereunder are intended to qualify as
"incentive stock options" within the meaning of Section 422A of the United
States Internal Revenue Code of 1986, while non-qualified options may also
be granted under the Plan. The initial plan provides for authorization of up
to 2,000,000 shares. The option price per share of stock purchasable under
an Incentive Stock Option shall be determined at the time of grant but shall
not be less than 100% of the Fair Market Value of the stock on such date, or,
in the case of a 10% Stockholder, the option price per share shall be no less
than 110% of the Fair Market Value of the stock on the date an Incentive
Stock Option is granted to such 10% Stockholder.
Qualified and Non-Qualified Shares Under Option as of December 31, 2002
Weighted
Average
Option
Options Price
-------------------------
Outstanding, January 1, 2002 $ 195,000 $ 1.75
Granted during the year -
Canceled during the year 195,000 1.75
Exercised during the year - -
-------- -----
Outstanding, December 31, 2002 $ - $ -
-------- -----
Eligible for exercise, end of year $ - $ -
======== =====
At December 31, 2002, there were 812,500 shares reserved for future grants.
The Company follows Accounting Principles Board Opinion 25, Accounting for
Stock Issued to Employees, to account for its stock option plan. An
alternative method of accounting for stock options is SFAS 123, Accounting
for Stock-Based Compensation. Under SFAS 123, employee stock options are
valued at grant date using the Black-Scholes valuation model, and this
compensation cost is recognized ratably over the vesting period. Had
compensation cost for the Company's stock option plan been determined as
prescribed by SFAS 123, there would have been no effect on the pro forma
income statements for 2002 and 2001.
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 4 - STOCKHOLDERS' EQUITY, Continued
For stock transactions with other than employees, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock Based Compensation". Accordingly, compensation expense of
$0 and $7,448 has been recognized for stock options and warrants during 2002 and
2001, respectively.
The fair value of each option is estimated on the date of grant using the
Black-Scholes pricing model with the following weighted average assumptions
for grants in 2001 and 2000: dividend yield of 0% and 0%; expected volatility
of 242.4% and 105.05%, risk-free interest rate of 4.5% per annum and expected
lives of 10 and 5 years, respectively.
NOTE 5 - TRANSACTIONS WITH RELATED PARTIES
Effective April 2001, the Company rents its student transportation service
facilities from a corporation owned in majority by the Chairman of the Board.
Rent is on a month to month lease. Rent was $0 and $40,000 for 2002 and 2001,
respectively.
NOTE 6 - DISCONTINUED OPERATIONS
Effective April 19, 2002 the Company sold Transportation Logistic Int'l to
four individuals, including James Thorpe, who had been a Member of the Board
of Directors and President of the Company. The purchase price consisted of (a)
$35,000 to be paid between November 2002 and April 2003 and (b) 940,867 shares
of its common stock which were surrendered by Mr. Thorpe. As part of the
transaction TLI (UK) and its purchasers agreed that if within the next two years
they participated in the Translogistics Network or any similar cooperative
global network of logistics provided, then 50% of the profits they derive
from the network during the next five years will be paid to the Company. Net
sales during 2002 and 2001 was $858,842 and $2,289,505, respectively.
In September 2002, the Company ceased providing employee leasing options
through its 51% subsidiary Human Force Logistics, LLC and Subsidiaries. Net
sales of Human Force Logistics, LLC was $3,857,071 and $6,130,071 in 2002 and
2001, respectively.
In December 2002, the Company ceased its operations of student
transportation services through its subsidiary Pupil Transportation, Inc.
Net sales of Pupil Transportation, Inc. was $2,328,074 and $2,446,157 in 2002
and 2001, respectively.
In 2002 the Company ceased its financial services (factoring) division.
Net sales of the financial services division was $686,129 and $2,526,383 in 2002
and 2001, respectively.
The 2001 income statement has been restated to reflect these changes.
NOTE 7 - EMPLOYMENT AND CONSULTANT AGREEMENTS
The Company has employment and consultant agreements with certain employees
and consultants expiring at various times through April 2004. Such agreements
provide for minimum compensation levels and for incentive bonuses which are
payable if specified management goals are attained.
NOTE 8 - CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of non-interest bearing cash deposit and
accounts receivable.
At times throughout the year, the Company may maintain certain bank
accounts in excess of FDIC insured limits.
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
The Company provides credit in the normal course of business. The Company
performs ongoing credit evaluations of its customers and maintains allowances
for doubtful accounts based on factors surrounding the credit risk of
specific customers, historical trends, and other information.
NOTE 9 - CONSULTING SERVICES TO BE PROVIDED
Consulting services to be provided are recorded in connection with common
stock issued to consultants for future services and are amortized over the
period of the agreement, ranging from one to three years.
NOTE 10 - NON CASH INVESTING AND FINANCING ACTIVITIES
In 2001, the Company issued 640,000 shares of common stock for consulting
services valued at $391,775.
In 2001, the Company issued 294,205 shares of common stock to settle a legal
issue valued at $55,000.
NOTE 11 - NOTES PAYABLE TO BANK
The Company has the following short-term notes payable:
Note Payable to Bank - the Company has a line of credit of
1,200,000 with interest at prime plus 4% due April 30,
2003, secured by Company assets and the personal
guarantee of the Company's Chairman. The borrowing
shall not exceed 60% of eligible accounts receivable.
The Company is in default of the covenants. $ 797,490
-------
$ 797,490
=======
NOTE 12 - LOAN PAYABLE
The loan payable of $908,793 is from a family trust, of which the wife of
the chairman of the Company is the trustee. The loan is unsecured with no
specific repayment terms and will not be repaid until after 2003.
NOTE 13 - LONG-TERM DEBT
Long-term debt is comprised of the following:
Interest at 5.116% payable in monthly installments
of $2,083 due October 2007. $ 120,833
Less current maturities 25,000
-------
Long-term debt, net of current maturities $ 95,833
=======
Total maturities of long-term debt is as follows:
Year ending December 31,
2003 $ 25,000
2004 25,000
2005 25,000
2006 25,000
2007 20,833
-------
$120,833
=======
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 14 - LITIGATION
The Company, several related companies, its chairman and certain employees
are defendants in a lawsuit filed by an alleged acquisition candidate for
alleged breach of contract. The complaint does not specify an amount for
damages. The Company believes the suit is completely without merit and
intends to vigorously defend its position.
The Company, several related companies, its chairman and its subsidiaries
are defendants in a lawsuit filed by one of its former vendors. At this
stage in the proceedings, the probable outcome is unknown. The Company has a
counter claim based upon defective services provided by the vendor. The
Company believes the settlement of the lawsuit will not exceed amounts already
recorded in the financial statements.
NOTE 15 - CONVERTIBLE DEBENTURES
On June 14, 2001, the Company issued a convertible debenture for $200,000
which bears interest at the rate of 20% per annum and is due one year from
the date of issue. In accordance with the agreement the debenture is
convertible into common stock of the Company at a conversion rate of $.75
from the date of issuance through September 30, 2001. The conversion period
has been extended. In addition, the debenture includes warrants to purchase
20,000 shares of common stock at $1.50 that expire on June 30, 2003.
NOTE 16 - NEW ACCOUNTING PRONOUNCEMENTS
Standards Implemented
In April 2002, the Financial Accounting Standards Board (FASB) issued
SFAS No. 145, "Rescission of FASB Statements No. 4,44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections," effective May 15, 2002.
SFAS No. 145 eliminates the requirement that gains and losses from the
extinguishment of debt be aggregated and classified as an extraordinary item,
net of tax, and makes certain other technical corrections. SFAS No. 145 did
not have a material effect on the company's Consolidated Financial Statements.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses
significant issues relating to the implementation of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of," and develops a single accounting model, based on the
framework established in SFAS No. 121 for long-lived assets to be disposed
of by sale, whether such assets are or are not deemed to be a business. SFAS
No. 144 also modifies the accounting and disclosure rules for discontinued
operations. The standard was adopted on January 1, 2002, and did not have
a material impact on the company's Consolidated Financial Statements.
In July 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires
the use of the purchase method of accounting for business combinations and
prohibits the use of the pooling of interests method. Under the previous
rules, the company used the purchase method of accounting. SFAS No. 141 also
refines the definition of intangible assets acquired in a purchase business
combination. As a result, the purchase price allocation of current business
combinations may be different than the allocation that would have resulted
under the old rules. Business combinations must be accounted for using SFAS
No. 141 effective July 1, 2001.
SFAS No. 142 eliminates the amortization of goodwill, requires annual
impairment testing of goodwill and introduces the concept of indefinite life
intangible assets. The company adopted SFAS No. 142 on January 1, 2002. The
new rules also prohibit the amortization of goodwill associated with business
combinations that closed after June 30, 2001. The adoption of SFAS No. 141 and
142 did not have a material effect on the company's Consolidated Financial
Statements.
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 16 - NEW ACCOUNTING PRONOUNCEMENTS, Continued
New Standards to be Implemented
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 provides accounting and reporting
guidance for legal obligations associated with the retirement of long-lived
assets that result from the acquisition, construction or normal operation of
a long-lived asset. SFAS No. 143 requires the recording of an asset and a
liability equal to the present value of the estimated costs associated with
the retirement of long-lived assets where a legal or contractual obligation
exists. The asset is required to be depreciated over the life of the related
equipment or facility, and the liability is required to be accreted each year
based on a present value interest rate. The standard is effective for the
company on January 1, 2003. The company has reviewed the provisions of this
standard, and its adoption is not expected to have a material effect on the
company's Consolidated Financial Statements.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 supersedes EITF
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit and Activity (Including Certain Costs Incurred in a
Restructuring)," and requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. Such
liabilities should be recorded at fair value and updated for any changes in the
fair value of each period. The company is currently evaluating the possible
effect on future Consolidated Financial Statements.
NOTE 17 - RESTRICTED STOCK GRANT PROGRAM
On May 28, 2002 the Company granted 10,000,000 shares of its common stock to
Michael Margolies, its Chief Executive Officer, pursuant to the Company's
Restricted Stock Grant Program (the "Program"). The grant represented the
entirety of the 10,000,000 shares included in the Program. The shares issued
under the Program are subject to the following restrictions:
1. After this fiscal year and each of the following four fiscal years (2002
through 2006) one-fifth of the shares granted (the "At-Risk Shares")
will be forfeited if the Company's revenue during the year does not
exceed the following thresholds:
2002 - $ 4,000,000
2003 - $ 6,000,000
2004 - $ 8,000,000
2005 - $ 10,000,000
2006 - $ 12,000,000
2. All of the restricted shares shall be forfeited if Mr. Margolies'
employment by the Company terminates prior to the date the restrictions
lapse.
3. The shares granted under the Program cannot be sold, assigned, pledged,
transferred or hypothecated in any manner, by operation of law or
otherwise, other than by writ or the laws of descent and distribution,
and shall not be subject to execution, attachment or similar process.
These restrictions will lapse with respect to any At-Risk Shares that are
not forfeited as described above. In addition, the restrictions will
lapse with respect to all unforfeited shares if in any year the
Company's revenue exceeds $12,000,000.
4. The restrictions shall also lapse as to all restricted shares on the
first to occur of (i) the termination of Mr. Margolies' employment
with the Company by reason of his disability, (ii) Mr. Margolies'
death, (iii) termination of Mr. Margolies' employment by the Company
without good reason, or (iv) a change of control of the Company. The
Program defines "Change of Control" as an acquisition by a person or
group of more than 50% of the Company's outstanding shares, a transfer
of the Company's property to an entity of which the Company does not
own at least 50%, or the election of directors constituting a majority
of the Board who have not been approved by the existing Board.
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 18 - ACQUISITION
Effective May 23, 2002, the Company acquired all of the capital stock of
Xcalibur Express, Inc. The capital stock was acquired in exchange for (1) the
Company's understanding to provide financial services to Xcalibur Express and
(2) the agreement by the Company to forebear immediate collection of $200,000
owed by Xcalibur Express to the Company. The following represents the
unaudited proforma results as if the business combination had occurred at the
beginning of the respective year in which the Company was acquired as well as
the beginning of the immediate preceding year.
Year Ended December 31,
2002 2001
------ ------
Net Sales $5,745,646 $ 6,531,698
========= =========
Loss from continuing operations $ (600,299) $ (440,279)
========= =========
Loss per share from continuing operations $ (.02) $ (.02)
========= =========
Net loss $ (982,922) $(1,880,311)
========= =========
Net loss per share $ (.03) $ (.09)
========= ========
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
By: /s/ Michael Margolies
--------------------------------------------
Michael Margolies, Chief Executive Officer
In accordance with the Exchange Act, this Report has been signed below
on May14, 2003 by the following persons, on behalf of the Registrant and in
the capacities and on the dates indicated.
/s/ Michael Margolies Chief Executive Officer, Chief Financial
--------------------- Officer, Chief Accounting Officer
Michael Margolies
/s/ Stanley Chason Director
---------------------
Stanley Chason
CERTIFICATION
I, Michael Margolies, certify that:
1. I have reviewed this annual report on Form 10-KSB of
Transportation Logistics Int'l, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements and other
financial information included in this annual report fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is being
prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for
the registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes
in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 15, 2003 /s/ Michael Margolies
------------------------------------------
Michael Margolies, Chief Executive Officer
and Chief Financial Officer
* * * * *
EXHIBIT 99
Section 906 Certification
The undersigned officer certifies that this report fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934, and that
the information contained in the report fairly presents, in all material
respects, the financial condition and results of operations of Transportation
Logistics Int'l, Inc.
A signed original of this written statement required by Section 906 has been
provided to Transportation Logistics Int'l, Inc. and will be retained by
Transportation Logistics Int'l, Inc. and furnished to the Securities and
Exchange Commission or its staff upon request.
May 15, 2003 /s/ Michael Margolies
--------------------------------------
Michael Margolies (Chief executive
officer and chief financial officer)