UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 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 Number 000-29825
ELITE LOGISTICS, INC.
----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Idaho 91-0843203
---------------------- ----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1201 North Avenue H, Freeport, Texas 77541
-------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(979) 230-0222 or (713) 446-7130
--------------------------------
(Registrant's Telephone Number)
Check whether the (issuer) (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or such shorter
period that registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
As of January 15, 2002, the number of shares outstanding of the registrant's
class of common stock was 19,722,445.
Transitional Small Business Disclosure Format (Check one): Yes[ ] No: [X]
ELITE LOGISTICS, INC.
TABLE OF CONTENTS
Part I. Financial Information
Page
----
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
November 30, 2002 and May 31, 2002 2
Consolidated Statements of Operations for the
Three Months and Six Months
ended November 30, 2002 and 2002 3
Consolidated Statement of Stockholders' Equity (Deficit)
for the Six Months ended November 30, 2002 4
Consolidated Statements of Cash Flows for the Six Months ended
November 30, 2002 and 2001 5
Notes to the Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Operations 12
Part II. Other Information
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
PART I
Item 1. Financial Statements.
Elite Logistics, Inc.
Consolidated Balance Sheets (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
November 30, May 31,
2002 2002
------------ -----------
Assets
CURRENT ASSETS
Cash $ 2,045 $ 739
Accounts receivable, net of an allowance for doubtful accounts of
$98,848 and $33,141 at November 30, 2002 and May 31, 2002, respectively 28,803 62,809
Inventory 156,212 204,302
Other current assets 28,897 2,482
----------- -----------
TOTAL CURRENT ASSETS 215,957 270,332
PROPERTY AND EQUIPMENT
Computer equipment 142,811 142,811
Software 118,788 118,788
Furniture and equipment 63,978 63,978
Less: accumulated depreciation and amortization (247,046) (226,581)
----------- -----------
TOTAL PROPERTY AND EQUIPMENT, NET 78,531 98,996
PATENTS 146,885 145,696
----------- -----------
TOTAL ASSETS $ 441,373 $ 515,024
----------- -----------
Liabilities and Stockholders' Equity (Deficit)
CURRENT LIABILITIES
Accounts payable $ 531,400 $ 890,383
Accrued expenses 165,345 150,728
Leases payable 12,207 25,110
Accrued salaries 271,794 163,002
Accrued preferred stock dividends -- 61,873
Convertible promissory notes payable, net of discount 307,500 --
Shareholder loans payable 365,115 359,743
Notes payable -- 7,024
----------- -----------
TOTAL CURRENT LIABILITIES 1,653,361 1,657,863
----------- -----------
LONG-TERM LIABILITIES
Leases payable, net of current portion 2,190 2,190
----------- -----------
TOTAL LIABILITIES 1,655,551 1,660,053
----------- -----------
COMMITMENTS AND CONTINGENCIES -- --
REDEEMABLE PREFERRED STOCK -- 244,500
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock - $0.01 par value: 50,000,000 shares authorized,
19,722,455 and 15,575,435 issued and outstanding at November 30, 2002
and May 31, 2002, respectively 197,225 155,755
Warrants 1,119,725 937,581
Additional paid in capital 4,460,860 3,659,883
Accumulated deficit (6,954,863) (6,105,623)
Treasury stock, 18,000 shares, at cost (37,125) (37,125)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIT (1,214,178) (1,389,529)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 441,373 $ 515,024
----------- -----------
See accompanying ntoes to consolidated financial statements.
2
Elite Logistics, Inc.
Consolidated Statements of Operations (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
November 30, November 30,
------------------------------- -------------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenues $ 103,831 $ 145,105 $ 228,231 $ 442,074
Cost of revenues 88,713 130,381 211,606 373,613
------------ ------------ ------------ ------------
Gross profit 15,118 14,724 16,625 68,461
Expenses
Sales and marketing 45,902 84,644 98,787 186,482
General and administrative 292,998 439,080 557,312 756,024
Research and development 67,853 109,347 157,836 223,303
------------ ------------ ------------ ------------
Total expenses 406,753 663,071 813,935 1,165,809
------------ ------------ ------------ ------------
Operating loss (391,635) (618,347) (797,310) (1,097,348)
------------ ------------ ------------ ------------
Other income (expense)
Interest income -- 28 -- 74
Interest expense (35,275) (108,266) (52,024) (133,207)
93
Other income 54 131 7,686
------------ ------------ ------------ ------------
Total other income (expense) (35,221) (108,107) (51,930) (125,447)
------------ ------------ ------------ ------------
Loss before income taxes (426,856) (726,454) (849,240) (1,222,795)
Income taxes -- -- -- --
------------ ------------ ------------ ------------
Net loss $ (426,856) $ (726,454) $ (849,240) $ (1,222,795)
------------ ------------ ------------ ------------
Basic and diluted loss per common share $ (0.02) $ (0.06) $ (0.05) $ (0.09)
Basic and diluted weighted average number
of common shares outstanding 19,672,064 13,154,538 17,797,300 13,127,684
- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
3
Elite Logistics, Inc.
Consolidated Statement of Stockholders' Equity (Deficit) (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock
----------------------- Total
Additional Stockholders'
Number of Paid in Accumulated Treasury Equity
Shares Amounts Warrants Capital Deficit Stock (Deficit)
---------- ---------- ----------- ----------- ----------- ---------- ------------
Balance at May 31, 2002 15,575,429 $ 155,755 $ 937,581 $ 3,659,883 $(6,105,623) $ (37,125) $(1,389,529)
Issuance of 1,368,747 shares of
common stock for payment of
$166,742 of shareholder loans
and $8,272 of accrued interest 1,368,747 13,688 -- 161,326 -- -- 175,014
Issuance of 1,512,777 shares of
common stock for payment of
accounts payable 1,512,777 15,127 -- 335,933 -- -- 351,060
Issuance of 985,492 shares of
common stock upon redemption
of 1,845 shares of preferred
stock and $61,873 of
accrued dividends 985,492 9,855 -- 236,518 -- -- 246,373
Issuance of 280,000 shares of
common stock for repayment
of a loan 280,000 2,800 -- 67,200 -- -- 70,000
Issuance of 615,000 warrants in
conjunction with the issuance
of convertible promissory notes -- -- 20,909 -- -- -- 20,909
Issuance of 511,500 warrants
for consulting services -- -- 45,865 -- -- -- 45,865
Issuance of 480,709 warrants
for payment of accrued salaries -- -- 115,370 -- -- -- 115,370
Net loss -- -- -- -- (849,240) -- (849,240)
----------- ---------- ----------- ----------- ----------- --------- -----------
Balance at November 30, 2002 19,722,445 $ 197,225 $ 1,119,725 $ 4,460,860 $(6,954,863) $ (37,125) $(1,214,178)
----------- ---------- ----------- ----------- ----------- --------- -----------
4
Elite Logistics, Inc.
Consolidated Statements of Cash Flows (Unaudited)
- ----------------------------------------------------------------------------------------------------------
Six Months Ended
November 30,
-----------------------------------
2002 2001
----------- -----------
Cash flows from operating activities:
Net loss $ (849,240) $(1,222,795)
Adjustments to reconcile net loss
to net cash used by operating activities
Depreciation 24,489 25,407
Amortization of convertible note discount 20,909 81,453
Allowance for doubtful accounts 65,707 (60,894)
Common stock issued for services -- 78,673
Warrants issued for services 2,754 100,450
Loss on sale of equipment -- 1,002
Changes in operating assets and liabilities
Accounts receivable and other current assets (31,701) 140,559
Inventory 48,090 132,802
Other current assets 5,292 --
Accounts payable 62,076 67,901
Accrued liabilities 22,889 59,992
Accrued salaries 235,565 40,288
----------- -----------
Net cash used in operating activities (393,170) (555,162)
----------- -----------
Cash flows from investing activities:
Patent costs (5,214) (20,283)
----------- -----------
Net cash (used in) provided by investing activities (5,214) (20,283)
----------- -----------
Cash flows from financing activities:
Payments on leased equipment (12,903) (16,049)
Payments on notes payable (7,024) (102,474)
Proceeds from notes payable -- 14,284
Proceeds from convertible promissory notes payable 307,500 660,000
Payments on shareholder notes payable -- (994)
Proceeds from shareholder loans payable 112,115 14,475
Purchase of treasury stock -- (7,125)
----------- -----------
Net cash provided by financing activities 399,688 562,117
----------- -----------
Net increase (decrease) in cash 1,306 (13,328)
Cash, beginning of period 739 34,591
----------- -----------
Cash, end of period $ 2,045 $ 21,263
----------- -----------
5
Elite Logistics, Inc.
Notes to Consolidated Financial Statements
NOTE 1 - BUSINESS ORGANIZATION
The financial statements included herein, which have not been audited pursuant
to the rules and regulations of the Securities and Exchange Commission, reflect
all adjustments which, in the opinion of management, are necessary for a fair
presentation of financial position, the results of operations and cash flows for
the interim periods on a basis consistent with the annual audited consolidated
financial statements. All such adjustments are of a normal recurring nature. The
results of operations for the interim periods are not necessarily indicative of
the results to be expected for a full year. Certain information, accounting
policies and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. These financial statements should
be read in conjunction with the Company's audited consolidated financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended May 31, 2002 filed with the Securities and Exchange Commission on
September 13, 2002 and amended on October 1, 2002. This Form 10-QSB for the
three and six month period ended November 30, 2002 has been filed by the Company
without review by our independent accounting firm.
Nature of Operations
- --------------------
Elite Logistics, Inc. (hereinafter "ELI" or the "Company"), an Idaho
corporation, through its wholly owned subsidiary, Elite Logistics Services, Inc.
("Elite"), is in the telematics business. Telematics is the broad term used to
describe products and services enabled by the convergence of communications
(including wireless and the Internet) and Information Technology in the
automotive industry. Elite is a telematics services provider (TSP) providing
hosted Internet-based telematics services including asset tracking, access to
roadside assistance, automatic collision notification, stolen vehicle recovery
and a variety of remote vehicle management solutions. Elite designs and sells
the PageTrack(R) range of intelligent vehicle management hardware. PageTrack(R),
which includes a Global Positioning Systems (GPS) receiver, links a vehicle, or
other asset, to Elite's Internet servers via ReFLEXTM two-way wireless telemetry
networks. The Company's products and services are marketed nationally and in
certain international markets through a dealer/distributor channel.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of the Company and
its subsidiary. All significant intercompany balances and transactions have been
eliminated upon consolidation.
Reclassifications
- -----------------
Certain prior period amounts have been reclassified to conform to current period
presentation. Such reclassifications had no affect on net loss or equity
(deficit).
Basic and Diluted Loss Per Share
- --------------------------------
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 128
"Earnings Per Share" basic earnings (loss) per share is computed using the
weighted average number of common shares outstanding. Due to the Company having
a net loss during the three and six month periods ended November 30, 2002 and
November 30, 2001, diluted net loss per share is the same as basic net loss per
share as the inclusion of common stock equivalents would be antidilutive.
New Accounting Standards
- ------------------------
In July 2001, the Financial Accounting Standards Board issued SFAS 141,
"Business Combinations", and SFAS 142, "Goodwill and Other Intangible Assets".
SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated or completed after June 30, 2001. SFAS 141
6
Elite Logistics, Inc.
Notes to Consolidated Financial Statements
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
also specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill. SFAS
142 requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of SFAS 142. SFAS 142 also requires that
intangible assets with definite useful lives be amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for
impairment in accordance with SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".
The provisions of SFAS 141 are effective immediately. The provisions of SFAS 142
are effective for fiscal years beginning after December 15, 2001. Earlier
adoption is permitted for entities with fiscal years beginning after March 15,
2001 but not required.
SFAS No. 141 requires that upon adoption of SFAS No. 142, the Company evaluate
its existing intangible assets and make any necessary reclassifications in order
to conform to the new criteria in SFAS No. 141. Effective June 1, 2002 the
Company adopted the provisions of SFAS No. 142 and reassessed the useful lives
and residual values of all recorded intangible assets. In addition, to the
extent an intangible asset was identified as having an indefinite useful life,
the Company was required to test the intangible asset for impairment in
accordance with the provisions of SFAS No. 142 and to record, if necessary, any
impairment loss as a cumulative effect of a change in accounting principle. As
of November 30, 2002, an impairment loss was not considered necessary and the
provisions of SFAS No. 141 and SFAS No. 142 had no significant effect on our
financial position or operating results.
In October 2001, the FASB also issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," applicable to financial statements
issued for fiscal years beginning after December 15, 2001. The FASB's new rules
on asset impairment supersede SFAS No. 121 and portions of Accounting Principles
Bulletin Opinion 30, "Reporting the Results of Operations." SFAS No. 144
provides a single accounting model for long-lived assets to be disposed of and
significantly changes the criteria that would have to be met to classify an
asset as held-for-sale. Classification as held-for-sale is an important
distinction since such assets are not depreciated and are stated at the lower of
fair value and carrying amount. SFAS No. 144 also requires expected future
operating losses from discontinued operations to be displayed in the period(s)
in which the losses are incurred, rather than as of the measurement date, as
presently required. As of November 30, 2002, the Company had no such assets to
which the provisions of SFAS No. 144 would apply thus this standard had no
significant effect on our financial position or operating results.
NOTE 3 - PATENTS
We currently have one issued domestic patent and two patent applications
pending. Our patent applications relate to internet-enabled, global positioning
system technology for the commanding, controlling, identification and routing of
items in transit and end-to-end supply chain management. The costs of patent
applications and any cost incurred defending its patents are capitalized as
incurred. The costs of patents are being amortized over their statutory lives of
15 years. As of November 30, 2002, we have recorded accumulated amortization of
$10,673 on patents.
NOTE 4 - DEBT
Capital leases
- --------------
Elite has capital leases with various leasing companies payable monthly at
$3,013, including interest at rates ranging from 14% to 24%. Capital leases
outstanding as of November 30, 2002 were $14,381.
7
Elite Logistics, Inc.
Notes to Consolidated Financial Statements
NOTE 4 - DEBT (CONTINUED)
Shareholder loans payable
The Company has cash loans from its shareholders in the amount of $365,115 at
November 30, 2002. The notes bear interest at an annual rate of 5% to 8.25%, are
unsecured and mature during the first quarter of 2004.
Notes payable
- -------------
Elite had an unsecured notes payable with American Express in the amount of
$7,024 at may 31, 2002, 2002 payable monthly, including interest at a rate of
15.9%. This note was repaid in full during the six months ended November 30,
2002.
Factoring agreement
- -------------------
On June 21, 2000, the Company entered into a factoring agreement with a national
banking organization. Under the agreement, the bank advances the Company 80% of
each receivable purchased up to a maximum of $750,000, subject to full recourse
to the Company and renewal on an annual basis. Finance charges equal 1.25% per
month of the average daily account balance outstanding and an administrative fee
of 0.25% of each purchased receivable. At November 30, 2002, there is no
outstanding balance owed under the factoring agreement.
Convertible promissory notes
- ----------------------------
During July, 2001, the Company entered into an agreement with an investment
capital group to assist with the placement of an offering of 10% convertible
promissory notes (the "Convertible Notes") including warrants. This offering
expired on December 31, 2001. Each $10,000 investment provided for the issuance
of 10,000 warrants to purchase common stock of the Company with an exercise
price of $0.625 per share, expiring five years from the date of issuance. During
the six months ended November 30, 2001 the Company raised $660,000 through the
issue of the Convertible Notes. In conjunction with the issuance of these
Convertible Promissory Notes the Company issued 660,000 warrants which would
provide total cash proceeds to the Company of $412,500 ($0.625 per share) if all
of the warrants are exercised. A debt discount of $131,807 was recorded in
conjunction with the issuance of these warrants, of which $81,453 has been
amortized to interest expense during the six months ended November 30, 2001.
At the offering's expiration (December 31, 2001), the Company generated proceeds
of $1,169,500 through the issue of the Convertible Notes. In conjunction with
the issuance of these Convertible Notes the Company issued 1,169,500 warrants
which would provide total cash proceeds to the Company of $730,938 ($0.625 per
share) if all of the warrants are exercised. A debt discount of $231,536 was
recorded in conjunction with the issuance of these warrants, which was amortized
to interest expense during the six months ended December 31, 2001. On December
31, 2001, 100% of the holders of these notes converted the amounts outstanding
plus accrued interest of $20,235 into 2,371,381 shares of common stock of the
Company using a conversion price of $0.50 per share for principal and $0.625 per
share for accrued interest.
During the six months ended November 30, 2002, Elite received proceeds of
$307,500 through the issue of Convertible Notes bearing interest at a rate of
12% per annum and maturing on September 30, 2002. In conjunction with the
issuance of these Convertible Notes the Company issued 615,000 warrants which
would provide total cash proceeds of $92,250 ($0.15 per share) if all of the
warrants are exercised. A debt discount of $20,909 was recorded in conjunction
with the issuance of these warrants, of which $20,909 has been amortized to
interest expense during the six months ended November 30, 2002. Beginning
October 1, 2002, the Convertible Notes are accruing interest at a rate of 18%
per annum until such time that the notes are converted. We are currently in
discussion with the noteholders to extend the maturity of these notes.
8
Elite Logistics, Inc.
Notes to Consolidated Financial Statements
NOTE 5 - EQUITY
Common Stock
- ------------
From time to time, in order to fund operating activities of the Company, common
stock is issued for cash or in exchange for goods or services. Generally,
offerings of the Company's common stock often include warrants to acquire common
stock of the Company at fixed exercise prices. Occasionally, depending on the
nature of the offering and restrictions imposed on the shares being acquired,
the exercise price of the warrant may be below the fair market value of the
underlying common stock on the date of issuance.
During the six months ended November 30, 2001, the Company issued 85,790 shares
of common stock in exchange for services valued at $78,673.
During the six months ended November 30, 2002, the Company issued 1,368,747
shares of common stock (at $0.13 per share) for payment of shareholder loans and
accrued interest of $175,014. Additionally, the Company issued (i) 1,512,777
shares of common stock (at $0.25 per share) for the payment of accounts payable
valued of $351,060, (ii) 985,492 shares of common stock (at $0.25 per share) to
redeem 1,845 shares of preferred stock valued at $184,500 and to settle accrued
dividends valued at $61,873, and (iii) 280,000 shares of common stock (at $0.25
per share) for repayment of a note payable.
Warrants
- --------
During the six months ended November 30, 2001, the Company issued 1,210,000
warrants in conjunction with an offering of 10% Convertible Promissory Notes.
This included 660,000 warrants issued to holders of the Convertible Promissory
Notes and a further 550,000 warrants issued to the placement agent and a
consultant who assisted in structuring the Convertible Note offering. A non-cash
charge of $100,450 arising from the issuance of these warrants was recorded
against general and administrative expenses.
During the six months ended November 30, 2002, the Company issued 485,000
warrants in conjunction with the 10% Convertible Note offering referred to
above. Included were 235,000 warrants issued to holders of the notes were
recorded as a debt discount. An additional 250,000 warrants were issued to the
investment capital group and a consultant for assisting in promoting the
Convertible Note offering. Accordingly, $42,100 was recorded as general and
administrative expenses in conjunction with the issuance of these warrants.
During the six months ended November 30, 2002, the Company issued 615,000
warrants to purchase common stock of the Company with an exercise price of $0.15
per share in conjunction with the issuance of Convertible Notes. The fair value
of these warrants was $20,909 and was recorded as a discount to the value of the
Convertible Notes. Additionally, the Company issued 511,500 warrants to purchase
common stock of the Company (61,500 warrants have an exercise price of $0.10 per
share and 450,000 warrants have an exercise price of $0.01 per share) for
consulting services valued at $45,865 and issued 480,709 warrants to purchase
common stock of the Company with an exercise price of $0.01 per share in payment
of accrued salaries valued at $115,370.
The fair value of each warrant granted is estimated on the grant date using the
Black-Scholes Option Price Calculation. The following assumptions were made in
estimating fair value. The risk-free interest rate range was 1.74%, volatility
was 30% and the expected life of the warrants was three to five years. The fair
value of warrants issued in conjunction with Convertible Notes and for
consulting services during the six months ended November 30, 2002 was $66,774.
The fair value of the warrants issued for accrued salaries was determined based
on the value of the liabilities extinguished, which totaled $115,370, and
approximated the fair value of these warrants using the Black-Scholes Option
Price Calculation thus no additional compensation expense was required to be
recorded.
9
Elite Logistics, Inc.
Notes to Consolidated Financial Statements
NOTE 5 - EQUITY (CONTINUED)
Preferred Stock
- ---------------
Total authorized shares of Series A Redeemable Preferred Stock ("Preferred
Stock") is 10,000,000 which have preferences as to dividends and upon
liquidation. The cumulative dividends are payable at prime plus 2% (prime was
4.25% at November 30, 2002). The Company had outstanding 2,445 shares of
Preferred Stock at $0.01 par value with a $100 redemption price per share. As
referred to above within "Common Stock", during the six months ended November
30, 2002, the Company redeemed 1,845 shares of Preferred Stock and settled the
accrued dividends outstanding of $61,873 by the issuance of 985,492 shares of
common stock. The remaining 600 shares of Preferred Stock were redeemed by the
issuance of a $60,000 note payable to the shareholder.
NOTE 6 - SUPPLEMENTAL CASH FLOW DISCLOSURES
For cash flow purposes, various, non-cash transactions have been entered into by
the Company during the six month periods ended November 30, 2002 and 2001. These
items are as follows:
Six Months Ended
November 30,
---------------------------------
2002 2001
---------------- ----------------
Supplemental cash flow disclosures:
Cash paid for interest $ 3,665 $ 2,725
Non cash transactions:
Common stock issued in payment of shareholder loans and accrued interest $ 312,530 $ -
Common stock issued for services $ - $ 78,673
Common stock issued in payment of accounts payable $ 351,060 $ -
Common stock issued in payment of a loan $ 70,000 $ -
Common stock issued to redeem preferred stock and accrued dividends $ 246,373 $ -
Warrants issued for convertible note discount $ 20,909 $ -
Warrants issued for services $ 45,865 $ 100,450
Warrants issued for accrued salaries $ 115,370 $ -
Notes payable issued to redeem preferred stock $ 60,000 $ -
NOTE 7 - GOING CONCERN
The Company has a history of net losses and continues to experience negative
cash flows from operations. Management will continue to attempt to raise capital
resources and may do so through a registered offering of securities or through
additional private offerings of debt or common stock of the Company. The Company
is dependent on raising capital resources from outside sources and will continue
to do so until such time as the Company generates revenues and cash flows
sufficient to maintain itself as a viable entity. Management believes that these
actions will assist the Company in reaching the point of profitability from
operations and enable the Company to raise further capital from private
placements or public offerings. If successful, these actions will serve to
mitigate the factors which have raised substantial doubt about the Company's
ability to continue as a going concern and increase the availability of
resources for funding of the Company's current operations and future market
development.
10
Elite Logistics, Inc.
Notes to Consolidated Financial Statements
NOTE 8 - SUBSEQUENT EVENTS
During the three months ended November 30, 2002, the Company negotiated the sale
of its existing subscriber bases to a third party for proceeds of $15,000 and
the receipt of future royalties on active subscribers as well as on hardware
sales. This transaction was necessary in order for the Company to realign itself
with its new business strategy brought about by the company's current liquidity
crisis and challenges in raising new capital in the current equity markets. The
Companies operations are now focused on deploying its infrastructure and
intellectual property to a limited number of Original Equipment Manufacturers
verses providing direct sales and support to end users and channel partners.
This change in business strategy will have an immediate negative impact on the
volume of revenue that the Company will report in the future but will also
require less cost to continue in operation and will move the Company closer to
achieving near-term positive cash flow and operating profitability.
11
Elite Logistics, Inc.
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein should be read in conjunction with the unaudited
consolidated financial statements and notes to the consolidated financial
statements of Elite Logistics, Inc. and subsidiary included in Item 1 above and
the Company's Audited Consolidated Financial Statements included in the
Company's Annual Report on Form 10-KSB for the year ended May 31, 2002. All
significant inter-company balances and transactions have been eliminated in
consolidation. The Company's financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. This Form 10-QSB for the three and six month period ended November 30,
2002 has been filed by the Company without review by our independent accounting
firm.
The financial information in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" refers to the continuing operations of the
Company.
Since inception, the Company has incurred significant losses and as of November
30, 2002 has an accumulated deficit of $(6,954,863). The Company's auditors
issued a going concern opinion in connection with their audit of the Company's
consolidated financial statements as of May 31, 2002, due to substantial doubt
that the Company can continue as an on-going business for the next twelve (12)
months, unless the Company obtains additional capital to cover its operating
expenses. In order to meet its capital needs, the Company will have to continue
to raise capital from sources other than the sale of its products and services.
The Company has historically raised its cash through private placements. There
is no assurance that the Company will be able to raise the additional funds it
needs to continue in business. The Company will cease operations if it is unable
to raise additional funds until it becomes a viable entity.
Results of Operations
Net revenues for the three and six month periods ended November 30, 2002 were
$103,831 and $228,231, compared to $145,105 and $442,074 for the three months
and six months ended November 30, 2001, respectively. Revenues include sales of
the Company's PageTrack(R) products to distributors, monitoring and control
service contracts and miscellaneous third party hardware sales. The Company
continues to be adversely affected by a lack of working capital to fund sales
and marketing activities and inventory purchases. This and the condition of the
economy have constrained the Company's ability to generate revenues.
Cost of revenues for the six month period ended November 30, 2002 were $211,606
compared to $373,613 for the six month period ended November 30, 2001. Cost of
revenues includes the manufactured cost of our PageTrack(R) products, wireless
telemetry network services provided by SkyTel, an MCI Worldcom Company, and
Weblink Wireless, Inc., internet connectivity and the costs of operating Elite's
24-hour Control Center. The decrease in cost of revenues for the six month
period ending November 30, 2002 is attributable to the corresponding decrease in
revenues.
Gross profit margin for the six months ended November 30, 2002 decreased by
$51,836 to $16,625 as compared to $68,461 for the same six month period ended
November 30, 2001. Gross profit margin for the period ended November 30, 2002
consists of margins on our PageTrack(R) products, activations and resale of
wireless telemetry network services provided by SkyTel and Weblink offset by the
costs of Internet connectivity and operating Elite's 24-hour Control Center. The
significant decline in gross profit margin for the quarter was directly
attributable to lower sales volume of PageTrack(R) products which have a higher
overall margin and the rising cost of services provided by SkyTel and Weblink.
Sales and marketing expenses for the three month and six month periods ended
November 30, 2002 were $45,902 and $98,787 compared to $84,644 and $186,482 for
the three and six month periods ended November 30, 2001. Sales expenses consist
primarily of compensation for our sales and marketing personnel, advertising,
marketing literature, trade show and other promotional costs, design and
12
creation expenses for marketing literature and our website. Costs decreased
84.4% for the quarter and 88.8% for the six months compared to the same periods
last year due primarily to a decrease in salary expense resulting from staff
reductions and voluntary reductions in management compensation. We expect that
sales and marketing expenses will decrease in absolute dollars and as a
percentage of total net revenues in future periods due to a shift to the
business model to sell through OEMs.
General and administrative ("G&A") expenses for the three month and six month
periods ended November 30, 2002 were $292,998 and $557,312 compared to $439,080
and $756,024 for the three and six month periods ended November 30, 2001. G&A
expenses consist primarily of compensation for personnel and payments to outside
contractors for general corporate functions, including finance, legal fees,
information systems, human resources, facilities, general management, bad debt
expense and our occupancy costs and other overhead. The decrease of 49.9% for
the quarter and 35.7% for the six months ended November 30, 2002 was primarily
due to a decrease of $262,795 in outside consulting fees slightly offset by an
increase in wages due to the replacement of two executives with new executives
with higher compensation. We expect that the G&A expenses will decrease in
absolute dollars due to a shift to the business model to sell through OEMs.
Research and development expenses for the three and six month periods ended
November 30, 2002 were $67,853 and $157,836 respectively, compared to $109,347
and $223,303 for the three and six month periods ended November 30, 2001. The
decrease consists primarily of staff reductions as well as reductions in
compensation for the Company's research and development personnel. The Company
expects, subject to future capital funding, that research and development
expenses will increase in absolute dollars in future periods as the Company
develops new and enhanced telematics products and services to meet a variety of
market opportunities.
Other income (expense) for the three and six month periods ended November 30,
2002 were $(35,221) and $(51,530) compared to $(108,107) and $(125,447) for the
three and six month periods ended November 30, 2001. The largest component of
the other income and (expense) is interest expense. Interest expense consists of
costs related to the Company's financing obligations, which include borrowings
under equipment loans, short-term loans from American Express, capital lease
obligations, shareholder loans, convertible promissory notes and the
amortization of debt discount.
Cash Flow for Six Months Ending November 30, 2002
Net cash used in operating activities was $393,169 for the three months ended
November 30, 2002. Net cash used for operating activities was primarily the
result of the net loss of $(849,240), which was further offset by $24,489 of
depreciation expense, $20,909 from the amortization of debt discount, and an
increase in the allowance for doubtful account of $65,707. The loss from
operations was further offset by $342,211 of working capital assets and
liabilities which was comprised of an increase in accounts receivable of
$31,701, a decrease in inventory of $48,090, a decrease in other current assets
of $5,292 and a net increase in accounts payable, accrued expenses and salaries
of $320,530. The reduction in inventory reflects the lower levels of operations
as well as tighter credit control and inventory management to conserve cash
flow. The increase in accounts payable and accrued liabilities was due to the
lack of cash flow generated from operations to pay its current obligations. The
increase in accrued salaries was due to insufficient cash flows to cover payroll
thus certain of the officers and employees of the Company agreed to defer
payment of their salaries until cash resources become available.
Net cash used in investing activities of $5,214 consists of patent application
and acquisition costs.
Net cash provided by financing activities during the three month period ended
November 30, 2002 was $399,688, which comprised of net proceeds from the
issuance of Convertible Notes of $307,500 and the issuance of shareholder loans
of $112,115 offset by repayments of notes payable and capital leases of $19,927.
13
The Company currently depends on cash from financing activities to sustain its
business operations subject to significant constraints as described below within
"Liquidity and Capital Resources".
Liquidity and Capital Resources
As shown in the accompanying consolidated financial statements, we incurred a
net loss of $(849,240) for the six month period ended November 30, 2002 and
continue to experience negative cash flows from operations. We will be required
to raise additional capital through offerings of securities in order to fund our
operating requirements, and will attempt to continue raising capital resources
until such time as we generate revenues sufficient to maintain ourselves as a
viable entity. Management believes that these actions will assist us in reaching
the point of profitability from operations and enable us to raise further
capital from private placements or public offerings. If successful, these
actions will serve to mitigate the factors which have raised substantial doubt
about our ability to continue as a going concern and increase the availability
of resources for funding of our current operations and future market
development.
Since inception, we have financed our operations primarily through the private
placement of our common stock, loans from shareholders, equipment financing,
lines of credit, short-term loans and deferral of employee compensation. We
believe that if we can obtain the capital required to fund our business plan
that we will achieve positive cash flow within the 2003 fiscal year, but there
can be no assurance that we will achieve this target.
Our business plan is based on working with a limited number of OEMs (Original
Equipment Manufacturers) to build their distribution channel of PageTrack(R)
dealers and distributors. The plan requires providing advanced level three
technical support and warranty, once the OEM is trained and installed with
Elite's technology infrastructure. We estimate that a minimum of $800,000 of
additional capital will be required to fund our current business plan and
address critical requirements once we achieve positive cash flow from
operations. There can be no assurance that we will be successful in obtaining
any such funds on terms acceptable to us, if at all.
We have taken steps to restructure the company and reduce our dependencies on
obtaining additional funding. We have taken these steps to ensure our survival,
although our growth will be at slower pace. Failure to capitalize on current
market opportunities could allow competitors to overtake us and significantly
impair our long-term growth and value.
It is possible that we may register our common stock or preferred stock for sale
to the public; however, turmoil in the equity markets has greatly impaired our
access to such funding opportunities. If we were to register our common stock or
preferred stock for sale, there can be no assurance that market conditions would
facilitate a successful sale. Management is also exploring avenues to increase
sales in order to fund operations from cash flow sooner than projected.
Until such time as we have successfully completed additional funding
arrangements and are cash flow positive from operations, we remain at
significant risk of closing our operations from our lack of capitalization. It
is highly likely that our shareholders will incur additional dilution as a
result of future capital fundings involving issuance of common stock or common
stock derivatives.
Credit Facilities
During June 2000, we entered into a factoring agreement with a national banking
organization. The bank will advance us 80% of each receivable purchased up to a
maximum of $750,000, subject to full recourse to us. Finance charges equal 1.25%
per month of the average daily account balance outstanding and an administrative
fee of 0.25% of each purchased receivable. At November 30, 2002, we had no
contingent amounts owed under this agreement.
14
From time to time, we have obtained short-term loans from our primary
shareholders, who are or were officers and management of the Company. As of
November 30, 2002, shareholder loans totaled $365,115. The loans bear interest
at an annual fixed interest rate ranging from 5% to 8.25%, are unsecured and
mature during the fourth quarter of 2002. During the six months ended November
30, 2002, $166,742 of shareholder loans and $8,272 of accrued interest were
converted to 1,368,747 shares of our common stock. We may continue to borrow
funds from these shareholders in the future but there is no assurance that funds
will be made available or under similar terms.
Related Party Disclosure
As referred to above, we have loans with certain of our shareholders, directors,
and officers. During the six months ended November 30, 2002 we borrowed $112,115
under these loan agreements and repaid principal and accrued interest of
$175,014 by the issuance of 1,368,747 of common stock, as referred to above,
which approximated the fair market value of common stock on the date of
issuance. Total interest expense incurred during the six months ended November
30, 2002 under these loan arrangements was $10,533. At November 30, 2002,
accrued but unpaid interest on these shareholder notes was $26,514. The total of
shareholder loans outstanding at November 30, 2002 was $365,115.
During the six months ended November 30, 2002, the Company issued 511,500
warrants to purchase common stock of the Company (61,500 warrants to a third
party consultant having an exercise price of $0.10 per share and 450,000
warrants to a former employee having an exercise price of $0.01 per share) for
consulting services valued at $45,865 and issued 480,709 warrants to purchase
common stock of the Company with an exercise price of $0.01 per share in payment
of accrued salaries valued at $115,370. The accrued salaries settled were for
officers of the Company.
The fair value of each warrant granted is estimated on the grant date using the
Black-Scholes Option Price Calculation. The following assumptions were made in
estimating fair value. The risk-free interest rate range was 1.74%, volatility
was 30% and the expected life of the warrants was three to five years. The fair
value of warrants issued in conjunction with the consulting services during the
six months ended November 30, 2002 was $45,865. The fair value of the warrants
issued for accrued salaries was determined based on the value of the liabilities
extinguished, which totaled $115,370, and approximated the fair value of these
warrants using the Black-Scholes Option Price Calculation thus no additional
compensation expense was required to be recorded.
From time to time, when cash flow is not sufficient to cover payroll, certain
officers and employees of the company forego receipt of payment of certain
salaries earned. As of November 30, 2002, $271,794 of salaries has been accrued
and will be paid as cash resources become available.
During the year ended May 31, 2000, we entered into agreements with certain
officers that provided for those officers to convert debt amounts owing to them
for deferred compensation into equity in the form of 2,445 shares of Series A
Preferred Redeemable Preferred Stock. The preferred stock has a par value of
$0.01 per share, is redeemable at $100 per share, carries an annual dividend of
prime plus 2% per share, and was redeemable on or before May 15, 2002, with
Board of Directors approval. During the six month period ended November 30,
2002, the Company redeemed all 2,445 shares of the Series A Preferred Stock plus
accrued dividends, which in the aggregate amounted to $306,373, in exchange for
985,492 shares of common stock and a note payable of $60,000 bearing interest at
rate of 8.00% per annum.
Going Concern
The Company has a history of net losses and continues to experience negative
cash flows from operations. Management will continue to attempt to raise capital
resources and may do so through a registered offering of securities or through
15
additional private offerings of debt or common stock of the Company. The Company
is dependent on raising capital resources from outside sources and will continue
to do so until such time as the Company generates revenues and cash flows
sufficient to maintain itself as a viable entity. Management believes that these
actions will assist the Company in reaching the point of profitability from
operations and enable the Company to raise further capital from private
placements or public offerings. If successful, these actions will serve to
mitigate the factors which have raised substantial doubt about the Company's
ability to continue as a going concern and increase the availability of
resources for funding of the Company's current operations and future market
development.
Forward-Looking Statements
Except for historical information contained herein, certain other matters
discussed herein are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical facts, that address future
activities, events or developments, including such things as future revenues,
projected break-even points, ability to raise capital through private or public
offerings, product development, market acceptance, responses from competitors,
capital expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, competitive strengths, goals,
expansion and growth of Elite Logistics, Inc., and its subsidiaries' business
and operations, plans, references to future success and other such matters, are
forward-looking statements. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends," "should," "seek," "will," and similar expressions
are intended to identify these forward-looking statements, but are not the
exclusive means of identifying them. These statements are based on certain
historical trends, current conditions and expected future developments as well
as other factors we believe are appropriate in the circumstances. However,
whether actual results will conform to our expectations and predictions is
subject to a number of risks and uncertainties that may cause actual results to
differ materially, our success or failure to implement our business strategy,
our ability to successfully market our on-line location, tracking and logistics
management concept, changes in consumer demand, changes in general economic
conditions, the opportunities (or lack thereof) that may be presented to and
pursued by us, changes in laws or regulations, changes in technology, the rate
of acceptance of the Internet as a commercial vehicle, competition in the online
logistics management business and other factors, many of which are beyond our
control.
Consequently, all of the forward-looking statements made in this Report are
qualified by these cautionary statements and there can be no assurance that the
actual results we anticipate will be realized or, even if substantially
realized, that they will have the expected consequences to or effects on us or
our business or operations.
Item 3. Controls and Procedures
Stephen M. Harris, Chief Executive Officer and Chief Financial Officer of Elite
Logistics, Inc., has established and is currently maintaining disclosure
controls and procedures for the Company. The disclosure controls and procedures
have been designed to ensure that material information relating to the Company
is made known to them as soon as it is known by others within the Company.
Our Chief Executive Officer and Chief Financial Officer conducts an update and a
review and evaluation of the effectiveness of the Company's disclosure controls
and procedures and have concluded, based on their evaluation within 90 days of
the filing of this Report, that our disclosure controls and procedures are
effective for gathering, analyzing and disclosing the information we are
required to disclose in our reports filed under the Securities Exchange Act of
1934. There have been no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
date of the previously mentioned
16
PART II Other Information
Item 1. Legal Proceedings
VIP Finance vs. Elite Logistics, Inc. - On September 19, 2001, the Company was
served legal notice that a customer had filed claims in court regarding facts
and circumstances surrounding a purchase entered into by and between the
plaintiff and the Company during August 2000. The plaintiff is seeking actual
and punitive damages, post judgment interest and reimbursement of court costs.
The Company believes that the claims are without merit and intends to defend
this case vigorously. This lawsuit is currently in the discovery phase.
Richard Andros vs. Elite Logistics Services, Inc. - On July 2, 2002, Mr. Andros,
an independent contractor, filed a petition in County Civil Court at Law #4 in
Harris County, Texas alleging that he is owed $32,017. We are reviewing these
claims with our legal counsel.
Other than those referred to above, we are not a party to any material legal
proceedings nor are we aware of any which are pending or are known to be
contemplated. Furthermore, we know of no legal proceedings pending or
threatened, or judgments entered against, any of our directors or officers in
their capacity as such. From time to time we are involved in lawsuits that occur
in the normal conduct of our business and are not material to us.
Item 2. Changes in Securities
The following shares were sold pursuant to Section 4(6) of the
Securities Act of 1933 (the "Act"). All purchasers were accredited investors as
that term is defined in Rule 501 of the Securities Act of 1933.
Shares of
Date Common Stock $ Price Conversion Warrants $ Price Expiration
- ---------- ------------ ---------- ---------------- ------------ --------- -----------
5/20/02 215,474 $0.25 $ 53,869 $ - - -
7/12/02 280,000 0.25 70,000 - - -
8/30/02 197,800 0.25 49,450 - - -
8/31/02 180,000 0.10 18,000 - - -
8/31/02 765,000 0.25 191,250 - - -
8/31/02 985,492 0.25 246,373 - - -
8/31/02 254,262 0.25 63,566 - - -
8/31/02 1,114,485 0.10 111,449 - - -
8/07/02 - - - 50,000 0.15 9/30/05
8/19/02 - - - 350,000 0.15 9/30/05
8/20/02 - - - 50,000 0.15 9/30/05
8/22/02 - - - 100,000 0.15 9/30/05
8/23/02 - - - 65,000 0.15 9/30/05
8/31/02 - - - 61,500 0.10 8/31/07
8/31/02 - - - 930,709 0.01 8/31/07
9/30/02 154,503 0.25 38,625
Item 3. Defaults Upon Senior Securities
As of November 30, 2002 the convertible shareholder notes are in default
and accruing interest at a rate of 18%. We are currently in discussion with the
noteholders to extend the maturities of the notes.
Item 4. Submission of Matters to a Vote of Security Holders
None
17
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
See the Index to Exhibits
(b) REPORTS ON FORM 8-K
July 18, 2002 - Form 8-K filed to announce the resignation of Russell
Naisbitt as a member of the Board of Directors and to announce the
appointing of Matthew Hutchins, Sr. as the Chairman of the Board of
Directors.
November 8, 2002-Form 8K filed to announce the restructuring and change
in business strategy of Elite Logistics, Inc.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons, in the capacities and on the dates indicated below, have
signed this report.
ELITE LOGISTICS SERVICES, INC.
Name Title Date
- ------------------------ ---------------------------- ----------------
/s/ Stephen M. Harris President, January 20, 2003
- ------------------------ Chief Executive Officer
Stephen M. Harris And Interim Chief Financial Officer
19
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
3.1 * Articles of Incorporation (incorporated by reference to Exhibit 3.1 of Registrant's
Form 10SB as filed on March 7, 2000).
3.2 * Amended (No. 1) Articles of Incorporation (incorporated by reference to Exhibit
3.2 of Registrant's Form 10SB as filed on March 7, 2000).
3.3 * Amended (No. 2) Articles of Incorporation (incorporated by reference to Exhibit
3.3 of Registrant's Form 10SB as filed on March 7, 2000).
3.4 * Amended (No. 3) Articles of Incorporation (incorporated by reference to Exhibit
3.4 of Registrant's Form 10SB as filed on March 7, 2000).
3.5 * Amended (No. 4) Articles of Incorporation (incorporated by reference to Exhibit
3.5 of Registrant's Form 10SB as filed on March 7, 2000).
3.6 * Bylaws (incorporated by reference to Exhibit 3.6 of Registrant's Form 10SB as
filed on March 7, 2000).
4.1 * Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 of
Registrant's Form 10SB as filed on March 7, 2000).
4.2 * Management Services Agreement dated September 1, 2000 by and between Elite Logistics, Inc. and Joseph D.
Smith (incorporated by reference to Exhibit 4.2 of Registrant's Form 10QSB as filed on October 16, 2000).
4.3 * Management Services Agreement dated September 1, 2000 by and between Elite Logistics, Inc. and Diana M.
Smith. (incorporated by reference to Exhibit 4.3 of Registrant's Form 10QSB as filed on October 16, 2000).
4.4 * Management Services Agreement dated September 1, 2000 by and between Elite Logistics, Inc. and
Richard L. Hansen (incorporated by reference to Exhibit 4.4 of Registrant's Form 10QSB as filed on October 16,
2000).
4.5 * Management Services Agreement dated September 1, 2000 by and between Elite Logistics, Inc. and Thien K.
Nguyen (incorporated by reference to Exhibit 4.5 of Registrant's Form 10QSB as filed on October 16, 2000).
4.6 * Elite Logistics 2001 Equity Incentive Plan dated March 2, 2000 (incorporated by
reference to Exhibit 4.6 of Registrant's Form 10QSB as filed on October 16, 2000).
4.7 * Elite Logistics Services, Inc. 401K Plan dated May 24, 2000 (incorporated by
reference to Exhibit 4.7 of Registrant's Form 10QSB as filed on October 16, 2000).
4.8 * Common Stock Purchase Agreement - Koyah. (incorporated by reference to Exhibit 4.8 of Registrant's Form 10QSB
as filed on January 5, 2001).
4.9 * Investor Rights Agreement - Koyah. (incorporated by reference to Exhibit 4.9 of Registrant's Form 10QSB
as filed on January 5, 2001).
4.10* Warrant Agreement - Koyah. (incorporated by reference to Exhibit 4.10 of Registrant's Form
10QSB as filed on January 5, 2001).
4.11* Investment Banking Agreement - Schneider Securities. (incorporated by reference to Exhibit 4.11 of
Registrant's Form 10QSB as filed on April 11, 2001).
4.12* Termination of Investment Banking Agreement - Schneider Securities. (incorporated by reference to
Exhibit 4.12 of Registrant's Form 10KSB as filed on August 29, 2001).
4.13* Promissory Note (incorporated by reference to Exhibit 4.13 of Registrant's Form 10QSB as filed on
January 14, 2002).
4.14* Class A Warrant Agreement (incorporated by reference to Exhibit 4.14 of Registrant's Form 10QSB as filed on
January 14, 2002).
4.15* Management Services Agreement dated March 4, 2002 by and between
Elite Logistics, Inc. and Stephen M. Harris (incorporated by reference to Exhibit 4.15 of Registrant's Form
10KSB as filed on September 13, 2002).
4.16* Management Services Agreement dated July 11, 2002 by and between Elite Logistics, Inc. and Matthew Hutchins,
Sr. (incorporated by reference to Exhibit 4.16 of Registrant's Form 10KSB as filed on September 13, 2002).
10.1* Acquisition Agreement (incorporated by reference to Exhibit 10.1 of Registrant's Form 10SB as filed
on March 7, 2000).
10.2* Agreement between the Company and Motorola, Inc. (incorporated by reference to Exhibit 10.2 of Registrant's
Form 10SB12G/A as filed on June 15, 2000).
10.3* Agreement between the Company and Motorola, Inc. (incorporated by reference to Exhibit 10.3 of Registrant's
Form 10SB12G/A as filed on June 15, 2000).
10.4* Distribution Agreement (incorporated by reference to Exhibit 10.4 of Registrant's Form 10SB12G/A as filed on
July 11, 2000).
99.1* Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes - Oxley
Act of 2002.
99.2* Certification pursuant to Section 302 of the Sarbanes -Oxley Act of 2002.
*Incorporated by reference as indicated.