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 March 31, 2003
[ ] 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, 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:
May 20, 2003
Common Voting Stock: 41,548,338
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PART 1 - FINANCIAL INFORMATION
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Balance Sheet
March 31, 2003
Assets
Current Assets
Cash and equivalents $ -
Accounts receivable, net of allowance
for doubtful accounts of $20,000 1,414,911
Prepaid expenses 83,804
---------
Total Current Assets 1,498,715
---------
Property and equipment, at cost, less
accumulated depreciation 5,108
Other Assets
Deposits 25,000
---------
Total Other Assets 25,000
---------
Total Assets 1,528,823
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Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses 261,280
Convertible debenture 200,000
Notes payable to bank 907,667
Current maturities of long term debt 125,000
Net liabilities of discontinued operations 150,259
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Total Current Liabilities 1,644,206
Long-term debt, net of current maturities 112,583
Loan payable 871,825
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Total Liabilities 2,628,614
Stockholders' Equity
Common stock, no par value; 50,000,000
shares authorized, 40,631,990 shares
issued and 40,396,338 outstanding 3,659,492
Additional paid-in capital - stock options 36,748
Retained earnings (3,239,769)
Less: treasury stock, 235,652 shares at cost (522,537)
Consulting services to be provided (1,033,725)
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Total Stockholders' Equity (1,099,791)
---------
Total Liabilities and Stockholders' Equity $ 1,528,823
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Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Statements of Operations
Three Months Ended
March 31,
--------------------
2003 2002
------ ------
Restated
Operating Revenues $ 1,693,203 $ -
Direct Operating Expenses 1,455,720 -
--------- --------
Gross Profit 237,483 -
Operating Expenses
Selling, general and administrative 179,683 -
Depreciation and amortization 329 -
Stock issued for consulting services 61,775 24,920
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Total Operating Expenses 241,787 24,920
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Operating Income (Loss) (4,304) (24,920)
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Other Income (Expense)
Lawsuit settlements (113,469) -
Interest expense (20,048) -
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Total Other Income (Expense) (133,517) -
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Income (Loss) Before Income Taxes (137,821) (24,920)
Provision for Income Taxes - -
Income (Loss) Before Discontinued Operations (137,821) (24,920)
Discontinued Operations - 83,301
Gain from discontinued operations of
subsidiary (net of tax of $0) - -
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Net Income (Loss) $ (137,821) $ 58,381
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Earnings Per Share
Income from continuing operations $ 0.00 $ 0.00
Discontinued operations 0.00 0.00
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Basic and diluted earnings per share $ 0.00 $ 0.00
========= ========
Weighted Average Number of Common Shares
Outstanding
Basic 40,396,338 25,412,881
Diluted 40,396,338 25,412,881
Transportation Logistics Int'l Inc. and Subsidiaries
Consolidated Condensed Interim Statements of Cash Flows
Three Months Ended
March 31,
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2003 2002
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Restated
Cash Provided by (Used in) Operating
Activities
Continued $ (229,507) $ -
Discontinued - 106,675
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Net Cash Provided by (Used in)
Operating Activities (229,507) 106,675
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Cash Flows From Financing Activities
Loan payable, net 110,177 (130,342)
Proceeds from long-term debt 116,750 -
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Net Cash Provided by (Used in)
Financing Activities 226,927 (130,342)
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Net (Decrease) in Cash and Equivalents (2,757) (23,667)
Cash and Equivalents at Beginning of Period 2,757 23,667
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Cash and Equivalents at End of Period $ - $ -
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 20,048 $ 11,985
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 three months ended March 31, 2003 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2003. 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, 2002.
RESTATEMENT OF 2002 STATEMENT OF OPERATIONS
During 2002 the Company discontinued all of the operations which had comprised
its business at the beginning of 2002. The Statement of Operations for the
first quarter of 2002 has been restated to reflect that change.
SHORT-TERM LOAN
During the first quarter of 2003 the Company borrowed $100,000 from a private
lender. The debt bears interest at 8% per annum, and is due on June 25, 2003.
The principal amount of the loan is included in "Current maturities of long
term debt" on the March 31, 2003 balance sheet.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
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:
1. the fact that Transportation Logistics requires additional capital to
sustain its operations through the next year;
2. the fact that Transportation Logistics' growth will be limited by its
ability to obtain additional capital; and
3. 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.
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 the first quarter of 2002. As restated, our statement
of operations for the three months ended March 31, 2002 shows no revenue and a
loss attributable to the discontinued operations.
In May 2002 we acquired Xcalibur Xpress, Inc., which is now our only
operating business. In the three months ended March 31, 2003 Xcalibur Xpress
contributed $1,693,203 in revenue. We realized a gross margin of 14% from
that revenue, which was less than the 35% gross margin that we realized from
the operations of Xcalibur Xpress in 2002. The reduction in gross margin
reflects transitional expenses; over the long-term we expect the gross margin
to range between 14% and 22%.
The gross profit from Xcalibur Xpress was not sufficient to offset all
of the expenses of operating our public company for the quarter. As a result
we reported an operating loss of $4,304. However, that loss reflected the
effect of a non-cash expense of $61,775 that we incurred as a result of
issuance of stock to consultants during 2002. But for that expense, we would
have reported an operating profit of $57,471.
We expect the operations of Xcalibur Xpress to grow, which will increase
their efficiency. 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
raise capital.
Liquidity and Capital Resources
The primary roadblock facing our plans for growth is our need for
capital. At the present time, our only source of capital is a $1.5 million
secured line of credit, on which we can draw funds equal to 85% of the
amount of our eligible accounts receivable. We are actively seeking addi
tional 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 March 31, 2003 totaled $ 145,491. The
deficit increased by $120,935 from the deficit at December 31, 2002, as we
borrowed $100,000 from a private lender on a short-term basis. Those funds,
which we received in March, have enabled us to expand our operations, which
should be reflected in our financial results for the remainder of the year.
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 3. 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.
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K.
Reports on Form 8-K. None
Exhibits:
99 Section 906 Certification
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 thereunto duly authorized.
TRANSPORTATION LOGISTICS INT'L, INC.
Date: May 21, 2003 By: /s/ Michael Margolies
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Michael Margolies, Chief
Executive Officer, Chief
Financial Officer, Chief
Accounting Officer
CERTIFICATION
I, Michael Margolies, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
Transportation Logistics Int'l, Inc.;
2. Based on my knowledge, this quarterly 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 quarterly 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
quarterly 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 quarterly 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 quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly 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 quarterly 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 21, 2003 /s/ Michael Margolies
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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 21, 2003 /s/ Michael Margolies
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Michael Margolies (Chief executive officer and
chief financial officer)