U.S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2001
[ ] TRANSITION REPORT UNDER 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.
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(Name of Small Business Issuer in its Charter)
COLORADO 84-1191355
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
136 Freeway Drive, East Orange, NJ 07018
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (973) 266-7020
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the Registrant's classes of common stock, as of the
latest practicable date:
November 19, 2001
Common Voting Stock: 20,902,500
Transitional Small Business Disclosure Format (check one): Yes [X] No [ ]
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Balance Sheet
September 30, 2001
Assets
Current Assets
Cash and equivalents $ 86,036
Accounts receivable, net of allowance
for doubtful accounts of $37,497 1,895,262
Prepaid expenses 120,549
Net assets of discontinued operations 186,291
Deferred income taxes 11,270
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Total Current Assets 2,299,408
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Property and equipment, at cost, less
accumulated depreciation 505,519
Goodwill and customer lists, net of
accumulated amortization 434,536
Other Assets
Security deposits 78,085
Other assets 99,614
Loans receivable - affiliates 323,403
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Total Other Assets 501,102
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Total Assets $3,740,565
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Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $1,779,024
Accrued expenses 237,589
Notes payable to bank 732,202
Income taxes payable 12,639
Loans payable - affiliates 210,662
Convertible debentures 200,000
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Total Current Liabilities 3,172,116
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Stockholders' Equity
Common stock, no par value; 50,000,000
shares authorized, 20,902,500 shares
issued and outstanding 1,647,122
Additional paid-in capital - stock options 36,748
Retained earnings (640,243)
Accumulated other comprehensive income (2,937)
Less: treasury stock, 235,652 shares at cost (456,675)
Consulting services to be provided (15,566)
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Total Stockholders' Equity 568,449
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Total Liabilities and Stockholders' Equity $3,740,565
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Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
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2001 2000 2001 2000
Operating Revenues $4,136,884 $2,907,293 $8,541,441 $8,804,687
Direct Operating Expenses 3,351,216 2,327,181 6,682,246 5,924,571
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Gross Profit 785,668 580,112 1,859,195 2,880,116
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Operating Expenses
Selling, general and
administrative 1,034,848 486,567 2,459,276 2,734,756
Depreciation and amortization 65,539 29,810 187,494 134,452
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Total Operating Expenses 1,100,387 516,377 2,646,770 2,869,208
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Operating Income (Loss) (314,719) 63,735 (787,575) 10,908
Other Income (Expense)
Interest Income (Expense) 48,894 (9,604) 25,051 (13,052)
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Total Other Income (Expense) 48,894 (9,604) 25,051 (13,052)
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Income (Loss) Before
Income Taxes (265,825) 54,131 (762,524) (2,144)
(Provision) Benefit for
Income Taxes - (13,386) - 6,914
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Income (Loss) Before
Discontinued Operations (265,825) 40,745 (762,524) 4,770
Income (Loss) From
Discontinued Operations of
Subsidiary (net of tax effect
of $43,000 and $22,000,
respectively - (20,785) - 20,784
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Net Income (Loss) $ (265,825) $ 19,960 $ (762,524) $ 25,554
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Earnings Per Share
Income from continuing
operations $ (0.01) $ - $ (0.04) $ -
Discontinued operations - - - -
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Basic and diluted earnings
per share $ (0.01) $ 0.00 $ (0.04) $ 0.00
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Weighted Average Number of
Common Shares Outstanding
Basic 20,902,500 20,000,000 20,902,500 20,000,000
Diluted 20,902,500 20,000,000 20,902,500 20,000,000
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Statements of Cash Flows
Nine Months Ended
September 30,
2001 2000
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Cash Provided by (Used in) Operating
Activities $ (754,484) $ 193,048
Cash Flows From Investing Activities
Purchase of property and equipment (175,730) (249,864)
Investments in joint ventures and
subsidiaries (35,244) (19,338)
Collection of notes receivable 508,579 -
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Net Cash Provided by Investing Activities 297,605 (269,202)
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Cash Flows From Financing Activities
Repayments of loans payable to
affiliates and capital leases (75,902) -
Proceeds from bank loans 274,952 (141,652)
Loans to affiliates and shareholders (78,460) 256,351
Issuance of convertible debentures 200,000 -
Issuance of common stock and options 26,709 37,835
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Net Cash Provided by (Used in) Financing
Activities 347,299 152,534
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Net Increase (Decrease) in Cash
and Equivalents (109,580) 76,380
Cash and Equivalents at Beginning
of Period 195,616 110,968
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Cash and Equivalents at End of Period $ 86,036 $ 187,348
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 23,843 $ 3,447
Income taxes $ - $ -
Transportation Logistics Int'l Inc. and Subsidiaries
Notes to the Consolidated Condensed Interim Financial Statements
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 2001 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2001 . The unaudited condensed financial statements should be
read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 2000.
CONVERTIBLE DEBENTURES
On June 14,2001, the Company issued $200,000 of Convertible Debentures which
bear interest at the rate of 20% per annum and are due one year from the date
of issue. The Debentures include warrants to purchase 20,000 shares of Common
Stock at $1.50 that expire on June 30,2003.
OPERATING SEGMENTS
The Company's operations are classified into four principal reportable segments
that provide different products or services. U.S. Logistics Services , Foreign
Logistics Services, Student Transportation, and Commercial Driver Leasing.
Separate management of each segment is required because each business unit is
subject to different marketing, and operating strategies and different
geographic locations.
U.S. Foreign Student Commercial
Logistics Logistics Transport. Driver
Services Services Services Leasing Total
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Reportable Segments Nine Months Ended September 30, 2001:
External Revenue $4,368,473 $1,704,325 $1,955,875 $ 512,768 $8,541,441
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Depreciation and
Amortization $ 42,413 $ 12,282 $ 126,746 $ 6,053 $ 187,494
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Operating Income
(Loss) $ (556,713) $ (404,252) $ 196,347 $ (22,956) $ (787,574)
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Assets $1,197,644 $1,173,563 $1,022,010 $ 347,348 $3,740,565
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Capital Expenditures $ 13,809 $ 5,387 $ 154,913 $ 1,621 $ 175,730
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U.S. Foreign Student Commercial
Logistics Logistics Transport. Driver
Services Services Services Leasing Total
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Reportable Segments Nine Months Ended September 30, 2000:
External Revenue $2,608,996 $3,168,456 $1,722,693 $1,304,542 $8,804,687
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Depreciation and
Amortization $ 30,486 $ - $ 96,024 $ 7,942 $ 134,452
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Operating Income
(Loss) $ (171,467) $ (110,053) $ 327,811 $ (35,383) $ 10,908
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Assets $1,951,233 $ 913,412 $1,074,384 $ 623,582 $4,562,611
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Capital Expenditures $ 46,957 $ - $ 249,864 $ - $ 296,821
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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
Forward-looking Statements:
This Report contains certain forward-looking statements regarding
Transportation Logistics, its business and financial prospects. These
statements represent Manage ment's present intentions and its present belief
regarding the company's future. Nevertheless, there are numerous risks and
uncertainties that could cause actual results to differ from the results
suggested in this Report. Among the more significant risk factors are:
1. Transportation Logistics may experience controlled growth in expanding
markets due to capital needs;
2. TLI operates in a highly competitive environment where the volume of
existing contractual relationships can be of significant advantage;
3. Potential profitability is difficult to estimate when utilizing a newly
constructed systems technology platform;
4. The company has the usual constraints in attracting key management
personnel.
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.
Results of Operations
In its first 21 months of operations, through December 31, 2000,
Transportation Logistics experienced steady growth and profitable operations,
despite the fact that the core of our business plan, the Translogistics
Network, was in the development stage throughout this period and consumed
$1.5 million of our resources. Our revenue grew consistently from one quarter
to the next, as we expanded our logistics operations.
Our revenue through December 31, 2000 did not, however, include any
significant revenue attributable to the Translogistics Network. Although
intra-network operations commenced in 2000, there has been no significant
revenue from Network operations to date, primarily because we were still
engaged in developing a domestic U.S. presence sufficient to meet the needs
of Network members. We are currently in contract negotiations with a major
U.S. freight carrier with operations in most major U.S. cities which will
enable us to service almost all of the U.S. requirements of the members of
the Translogistics Network. We expect that our revenue by the first quarter
of 2002 will include a substantial component of business generated by the
Translogistics Network, which should propel our expected revenue growth.
The first nine months of 2001 was a transition period. As a result, our
financial results did not reflect the growth pattern that our Company has
established. The reported operating revenues for the first nine months were
3% less than the first nine months of 2000. Similarly, our operating expenses
continue to reflect our development of the infrastructure we will need to
function within the Translogistics Network, even though we are not yet
realizing revenue from our participation in the Network. Network development
expenses during the period exceeded $200,000, none of which was capitalized.
The overall result of these situations was a reported operating loss
for the nine months of 2001 of $787,574, compared to an operating profit of
$10,908 for the same period in 2000.
On June 4, 2001, the Company closed on the acquisition of HumanaForce
Logistics, LLC with annual sales of over $13.8 million in 2000. HumanaForce
Logistics, LLC adapts and installs supply chain management systems, provides
personnel for material handling and distribution, provides intermodal delivery
services and performs warehouse and distribution services. Goodwill and
customer lists increased by $331,670 from the December 31, 2000 balances as a
result of the goodwill recorded on this acquisition. The Company incurred
pre-acquisition costs of over $100,000 that were included in operating expenses
during the second quarter.
The combination of acquisition costs, the start-up expenses associated with
the HumanaForce Logistics, LLC acquisition, seasonality issues relative to
our student transport services, lost TLI U.K. revenues and network development
costs resulted in an operating loss for the quarter of $314,719 compared to
an operating profit of $63,735 for the third quarter of 2000, however, revenues
increased 46% to $4.1 million from $2.8 million in comparison with the second
quarter of 2001. Thus, our actual business is growing according to our plan
and we expect the reported annual results of Transportation Logistics to be
significantly improved as the Company begins to realize revenues from the
HumanaForce acquisition and Translogistics Network.
Liquidity and Capital Resources
The primary potential challenge 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 capital resources in
the near future. We obtained $200,000 of short-term convertible debt during
the second quarter. With additional capital resources, we expect to be able
to expand our international presence, and accelerate domestic transactions
through our Translogistics Network. That development would have a
significant positive effect on our revenue and profits.
At September 30, 2001 we had a working capital deficit of $872,708, which
represents a decrease of $1,068,324 from our working capital balance of
$195,616 at December 31, 2000. The primary reason for the reduction in our
working capital was that we were required to utilize our cash and credit
resources to offset the loss from operations, including the Network development
costs and acquisition costs associated with HumanaForce Logistics LLC, that
were expensed during the nine month period. Overall, our operations consumed
$754,484 in working capital that was primarily offset by $508,579 that was
collected pursuant to the note we received on the sale of CDA North America.
It is important to be aware that in the 30 months of TLI's existence, the
Company has expended almost $2,000,000 in network development costs and for
needed proprietary software - all of it expensed and not one penny capitalized.
We view the utilization of working capital that resulted from the first nine
months operations as an aberration caused by the transition of our operations
to a Network-focused environment. In general, our operations have
historically consumed little cash, having required only $20,963 in cash during
2000, and only $17,427 in cash during 1999. Therefore, we expect to be able to
sustain operations for the indefinite future, despite our current working
capital needs. However, as a new entrant into the logistics industry, much of
the business we obtain requires us to finance orders from our own resources.
In April 2001 the Company acquired a credit facility of up to $2,000,000, based
on eligible receivables to help fund a portion of our projected revenue growth.
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K.
Reports on Form 8-K:
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None
Exhibits
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None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSPORTATION LOGISTICS INT'L, INC.
Date: November 19, 2001 By: /s/ Michael Margolies
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Michael Margolies, CEO & CFO