U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10Q-SB
(Mark One)
_X_ Quarterly report under section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended JUNE 30, 2002.
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___ Transition report under section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from____________________ to
______________________.
Commission File No: 33-9640-LA
LOGISTICS MANAGEMENT RESOURCES, INC.
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(Formerly U.S. Trucking, Inc.)
(Name of small business in its charter)
COLORADO 68-0133692
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(State or other jurisdiction of incorporation) (IRS Employer Id. No.)
10602 Timberwood Circle, Suite 9
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Louisville, Ky 40223
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(Address of Principal Office including Zip Code)
Issuer's telephone Number: (502) 339-4000
Applicable only to issuers involved in bankruptcy proceedings during the past
five years:
Check whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
after the distribution of securities under a plan confirmed by a court.
Yes_X_ No ___
Applicable only to corporate issuers:
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Common Stock, no par value, 43,250,465 Shares at July 31, 2002.
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Transitional Small Business Disclosure Format (Check one): Yes___ NO _X_
LOGISTICS MANAGEMENT RESOURCES, INC.
(Formerly U.S. Trucking, Inc.)
Form 10-QSB - Quarter Ended June 30, 2002
INDEX
Page
PART I FINANCIAL INFORMATION...............................................2
Item 1. Financial Statements...............................................2
Condensed Balance Sheet at June 30, 2002 and December 31, 2001.....3
Condensed Statements of Operations for the Six Months and
Three Months Ended June 30, 2002 and June 30, 2001..............4
Condensed Statements of Cash Flows for the Six Months Ended
June 30, 2002 and June 30, 2001.................................5
Notes to Condensed Financial Statements............................6
Item 2. Management's Discussion and Analysis...............................7
PART II OTHER INFORMATION...................................................8
Item 1. Legal Proceedings..................................................8
Item 6. Exhibits and Reports on Form 8-K..................................11
SIGNATURE PAGE....................................................12
EXHIBITS..........................................................13
____________________
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed financial statements of registrant as of June
30, 2002 and for the six months and three months ended June 30, 2002 and June
30, 2001 follow. The condensed financial statements reflect all adjustments that
are, in the opinion of management, necessary to a fair statement of the results
for the interim periods presented.
2
Logistics Management Resources, Inc. and Subsidiary
F.T.A. U.S. Trucking, Inc.
Condensed Balance Sheets
June 30, December 31,
2002 2001
Unaudited (Audited)
Assets
Equipment, net of accumulated depreciation $ 5,810 $ 6,696
Investment in Unconsolidated Subsidiary 182,328 -
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Total Assets 188,138 6,696
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Liabilities and Stockholders' Equity
Current Liabilities
Current portion of long-term debt 50,000 -
Accrued expenses 144,249 264,825
Accrued interest 5,609,010 4,996,675
Due to related parties 829,222 773,835
Loans payable 2,584,015 2,584,015
Convertible debentures 5,198,460 5,198,460
Net liabilities of discontinued operations 16,960,504 16,960,504
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Total Current Liabilities 31,375,460 30,778,314
Long-term debt, net of current portion 150,000 -
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Total Liabilities 31,525,460 30,778,314
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Stockholders' Equity (Impairment)
Preferred stock, no par value; (10,000,000 shares authorized)
Series A (99,000 shares outstanding) 132 132
Series B (2,000 shares outstanding) 2,000,000 2,000,000
Series C (50,000 shares outstanding) 15,000 15,000
Series D (950 shares outstanding) 950,000 950,000
Series E (2,300 shares outstanding) 2,300,000 2,300,000
Common stock, no par value; 75,000 shares authorized,
43,250,465 shares issued and outstanding - -
Treasury stock (68,401) (68,401)
Additional paid-in capital 14,781,602 14,781,602
Accumulated (deficit) (51,315,655) (50,749,951)
Total Stockholders' Equity (Impairment) (31,337,322) (30,771,618)
Total Liabilities and Stockholders' Equity $ 188,138 $ 6,696
============ ============
See notes to the condensed financial statements.
3
Logistics Management Resources, Inc. and Subsidiary
F.T.A. U.S. Trucking, Inc.
Condensed Statements of Operations
Three Months Three Months Six Months Six Months
Ended Ended Ended June Ended June
June 30, 2002 June 30, 2001 30, 2002 30, 2001
Continuing Operations:
Net Revenue $ - $ - $ - $ -
--------------- -------------- -------------- --------------
Operating Expenses
Depreciation and amortization 443 - 886 -
Interest expense - 694,430 612,335 1,322,021
Administrative expenses - 162,357 9,160 221,414
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Total Operating Expenses 443 856,787 622,381 1,543,435
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Operating (Loss) before Discontinued Operations (443) (856,787) (622,381) (1,543,435)
Other Income (Expense)
Loss on investment (17,672) - (17,672) -
--------------- -------------- -------------- --------------
Total Other Income (Expense) (17,672) - (17,672) -
--------------- -------------- -------------- --------------
Loss Before Discontinued Operations (18,115) (856,787) (640,053) (1,543,435)
Discontinued Operations:
Gain (loss) on disposal of discontinued
operations net of tax of $0 74,349 (1,638,949) 74,349 (1,971,582)
--------------- -------------- -------------- --------------
Net Income (Loss) $ 56,234 $ (2,495,736) $ (565,704) $ (3,515,017)
=============== ============== ============== ==============
Earnings (Loss) Per Common Share
(Loss) from continuing operations $ 0.00 $ (0.14) $ (0.02) $ (0.25)
Income (Loss) from discontinued operations 0.00 (0.26) 0.00 (0.31)
Basic and diluted earnings per share $ 0.00 $ (0.40) $ (0.02) $ (0.56)
Weighted Average Number of Common Shares Outstanding 43,250,465 6,292,527 43,250,465 6,292,527
=============== ============== ============== ==============
See notes to the condensed financial statements.
4
Logistics Management Resources, Inc. and Subsidiary
F.T.A. U.S. Trucking, Inc.
Condensed Statements of Cash Flows
Six Months Six Months
Ended Ended
June 30, 2002 June 30, 2001
Cash Flows From Operating Activities
Continuing Operations:
(Loss) before income taxes $ (640,053) $ (1,543,435)
Adjustments to Reconcile Net (Loss) to Net Cash Used By
Operating Activities
Depreciation and amortization expense 886 -
Loss on investment 17,672 -
Increase in Liabilities
Accrued expenses - 59,057
Accrued interest 612,335 1,484,378
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Net Cash Used in Continuing Operations (9,160) -
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Discontinued Operations:
Income (loss) before income taxes 74,349 (1,971,582)
Adjustments to Reconcile Net Income (Loss) to Net Cash Used By
Operating Activities
Increase (decrease) in net liability of discontinued operations (74,349) 1,971,582
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Net Cash Used in Discontinued Operations - -
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Net Cash Used in Operating Activities - -
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Cash Flows from Financing Activities
Net proceeds from related parties $ 9,160 $ -
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Net Cash Provided By Financing Activities 9,160 -
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Net Increase (Decrease) in Cash - -
Cash at beginning of period - -
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Cash at end of period $ - $ -
=============== ==============
Supplemental Disclosure of Non-Cash Investing and Financing Activities
On April 1, 2002, the Company issued a $200,000 promissory note in exchange
for ninety-nine percent (99%) of the issued and outstanding common stock of
Interstate University, Inc.
See notes to the condensed financial statements.
5
Logistics Management Resources, Inc. and Subsidiary
F.T.A. U.S. Trucking, Inc.
Notes to the Condensed 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 and six months ended June 30,
2002 and 2001 are not necessarily indicative of the results that may be
expected for the years ended December 31, 2002 and 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, 2001.
FINANCIAL STATEMENT PRESENTATION
Certain amounts in the 2001 financial statements have been reclassified to
conform to the 2002 presentation.
ACQUISITION
On April 1, 2002 the Company acquired ninety-nine percent (99%) of the issued
and outstanding common stock of Interstate University, Inc. (Interstate),
located in Evansville, Indiana, from Midwest Merger Management, LLC
(Midwest). The purchase price consisted of a $200,000 promissory note payable
over five years commencing April 1, 2003, with interest at 4% per annum. The
promissory note is secured by a pledge of the shares. Also, Midwest has the
right, in the event of a default by the Company, to return all payments made
by the Company, with interest, and retain the shares.
Midwest will receive earnout payments equal to ten percent (10%) of
Interstate's net income through December 31, 2006. In addition, Midwest has
retained ownership of Interstate's preferred stock, which carries no economic
rights, but controls the election of Interstate's Board of Directors.
Midwest is partially owned by the spouse of an individual who owns 3,250,000
shares of the Company's common stock and the trustee of a trust, which owns
200,000 shares of the Company's Series C Preferred Stock, with voting rights
equivalent to 20,000,000 shares of common stock.
At April 1, 2002, the date of acquisition, the net book value of Interstate
(net of the minority interest retained by Midwest) amounted to $(661,615)
which sum, in addition to the $200,000 promissory note described above,
represents goodwill.
EARNINGS PER SHARE
The convertible preferred stock and debentures were not included in computing
diluted EPS because their effects were antidilutive.
INCOME TAXES
For the three and six months ended June 30, 2002, the Company has no income
tax provision. At June 30, 2002 the Company has available approximately
$60,000,000 of net operating loss carryforwards which may be used to reduce
future federal and state taxable income and expire between December 31, 2008
and December 31, 2021.
6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion contains forward-looking statements regarding
us, our business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation, our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude customers from using our products
for certain applications, delays in our introduction of new products or
services, and failure by us to keep pace with emerging technologies.
When used in this discussion, words such as "believes," "anticipates,"
"expects," "intends," and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. We undertake no obligation to revise any forward-looking statements in
order to reflect events or circumstances that may subsequently arise. Readers
are urged to carefully review and consider the various disclosures made by us in
this report and other reports filed with the Securities and Exchange Commission
that attempt to advise interested parties of the risks and factors that may
affect our business.
Six-Month Periods Ended June 30, 2002 and 2001:
Revenue - Total revenue for the six months ended June 30, 2001 ("6M1") was $-0-
compared to $-0- for the six months ended June 30, 2002 ("6M2"). The principle
reason for the Company having $-0- revenue is the fact that the Company has been
in a restructuring phase since placing its operating subsidiaries into
bankruptcy in November of 2000. The Company continues working through the
restructure of its debt and the mitigation of outstanding litigation.
Operating Expenses - Operating expenses for 6M1 were $1,543,435.as compared to
$622,381 for 6M2. The principle reason for the decrease is the elimination of
all administrative expenses not required in the restructuring of the company and
the Company's decision to freeze any additional increases of interest as related
to ongoing litigation with G.E. Capital Corporation.
Operating Loss before Discontinued Operations - Operating loss before
discontinued operations for 6M1 was ($1,543,435) as compared to ($622,381) for
6M2. The reason for the decrease is the non-existence of business activity in
6M2.
Discontinued Operations - The Company's loss from discontinued operations for
the 6M1 of ($1,971,582) was reduced to a gain during 6M2 of $74,349. The reason
for the reduction is the non-existence of expenses attributable to the Company's
previously discontinued operations in 6M2.
Net Loss - The Company had net a loss of ($3,515,017) for 6M1 compared to a net
loss of ($565,704) for 6M2. The decrease in the net loss is attributable to the
non-existence of business activity in the 6M2, the non-existence of expenses
attributable to the Company's previously discontinued operations, and the
elimination of all administrative expenses not required in the Company's
restructuring efforts.
Quarters Ended June 30, 2002 and 2001:
7
Revenue - Total revenue for the second quarter 2001 ("2Q1") was $-0- compared to
$-0- for the second quarter 2002 ("2Q2"). The principle reason for the Company
having $-0- revenue is the fact that the Company has been in a restructuring
phase since placing its operating subsidiaries into bankruptcy in November 2000.
The Company continues working through the restructure of its debt and the
mitigation of outstanding litigation.
Operating Expenses - Operating expenses for 2Q1 were $856,787 compared to $443
for 2Q2. The principle reason for the decrease is the elimination of all
administrative expenses not required in the restructuring of the company and the
Company's decision to freeze any additional increases of interest as related to
on going litigation with G.E. Capital Corporation.
Operating Loss before Discontinued Operations - Operating loss before
discontinued operations for 2Q1 was ($856,787) compared to ($443) for 2Q2. The
reason for the decrease is the non-existence of business activity in the 2Q2.
Discontinued Operations - The Company's loss from discontinued operations for
the 2Q1 of ($1,638,949) was reduced during 2Q2 to a gain of $74,349. The reason
for the reduction is the non-existence of expenses attributable to the Company's
previously discontinued operations in the 2Q2.
Net Loss - The Company had net a loss of ($2,495,736) for 2Q1 compared to a net
profit of $56,234 for 2Q2. This reduction in net loss is attributable to the
non-existence of business activity in the 2Q2, the non-existence of expenses
attributable to the Company's previously discontinued operations and the
elimination of all administrative expenses not required in the Company's
restructuring efforts.
Liquidity and Capital Resources - The Company's present operations are limited;
consisting primarily of efforts to mitigate or otherwise resolve, through
litigation, negotiation, or settlement, its material liabilities. Future
operations are dependent upon the Company's success in resolving its existing
liabilities, and its access to additional sources of capital sufficient to allow
it to acquire or merge with another business operation. There can be no
assurance that the Company will be successful in these efforts.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS -
CIT Group/Equipment Financing, Inc. filed suit against the Company and
certain other parties in the Superior Court of NJ, Law Division Union County,
Docket No. UNN-L-3556-00 on July 7, 2000 for the return of six tractors formerly
used in the business of American Intermodal Services, Inc., some of the
operations of which Gulf Northern Transport took over in the spring of 2000. We
denied we ever received the tractors. A default judgment was granted in November
of 2001 against all defendants in the amount of $384,599.89. We understand that
certain of the tractors have since been recovered by CIT. We deny that CIT had
jurisdiction over us in the New Jersey court wherein the lawsuit was brought and
that the judgment is therefore invalid. CIT has not pursued collecting the
judgment.
8
Allstates World Cargo, filed suit against the Company and its chairman
for $678,000. The suit claims the Company and the chairman defaulted on certain
business guarantees related to the acquisition of Trans-Logistics as of January
1, 2001. The Company and the chairman filed an answer in this matter, on or
about August 2001. Recently, this action was settled among all of the parties.
The terms of settlement included a judgment by consent as against the Company in
the amount of $728,242.23, inclusive of interest and costs and subject to
further offset for payments made on behalf of the defendant officer.
Southtrust Bank, filed suit against the Company and numerous other
parties in the U.S. District Court for the Northern District of Alabama,
Southern Division on April 30, 2001 (No. CV-01-AR-1068-S). The suit claimed that
we are liable as guarantor on approximately $4.7 million of debt owed by
Professional Transportation Group Ltd., Inc. and Timely Transportation, Inc. as
primary obligors. PTG and Timely are entities with which we were engaged in
merger negotiations in 2000. Southtrust received a judgment in the amount of
$2.8 million against the Company, but has not taken any actions to collect the
judgment to date.
General Electric Capital Corporation, filed suit against the Company on
October 25, 2001 in Circuit Court of Randolf County, Missouri for $60,000 in
unpaid copier lease payments and the return of three copiers. The suit is in the
discovery stage.
Porter, Levay & Rose, Inc., sued us in Jefferson Circuit Court,
Jefferson County Kentucky in September 2000 to collect $30,000 allegedly due for
public relations services. We have denied the claim for a lack of consideration
and breach of contract. The suit is in the discovery stage.
Sandra Sherman, sued the Company in the Iowa District Court, Des Moines
County Iowa for unspecified damages for claims relating to Ms. Sherman's
participation in the Company's bankrupt subsidiary, Gulf Northern Transport's
health care plan. The claims relating to unpaid benefits is believed to amount
to approximately $50,000. The suit is in the discovery stage.
G.E. Capital Corporation, commenced an action against the Company on
October 1, 2001 in the U.S. District Court for the Western District of Kentucky,
Louisville Division, alleging a breach of the Company's obligations under a
Restructuring Agreement executed by G.E. Capital Corporation, the Company, its
subsidiaries and certain affiliates on November 28, 2000. The agreement between
the Company and G.E. Capital Corporation related to the restructuring of certain
obligations to G.E. Capital Corporation in connection with its revolving line of
credit and an equipment loan. The Company has filed a responsive pleading
asserting substantial counterclaims. On January 4, 2002 G.E. Capital Corporation
made a motion to dismiss the Company's counterclaims and on March 1, 2002 the
Company opposed that motion and filed a cross-motion to dismiss the complaint
filed by G.E.Capital Corporation, or, the alternative, to stay this action
pending the resolution of certain proceedings pending in the U.S. Bankruptcy
Court for the Middle District of Florida, which involve certain subsidiaries of
the Company. The Company intends to aggressively defend against this action and
to seek recovery under its counterclaim against G.E. Capital Corporation. Both
parties have moved to dismiss the other's pleading, which motions have recently
been denied by the court.
Emergent Capital, L.P., filed suit against the Company in the U.S.
District Court for the Southern District of New York on September 20, 2000. The
complaint alleged that Emergent Capital was owed $300,000 in contractual
penalties for the failure to register certain shares for resale, which Emergent
9
purchased in September of 1999. The matter was settled for the sum of $140,000
payable over several months, and the action discontinued by the order of the
court dated May 17, 2001. The Company has not met all of its obligations under
the settlement agreement and judgment in the amount of $130,846.54 was entered
on September 10, 2001. To date Emergent Capital has made no attempt to enforce
the judgement against the Company.
First Insurance Funding Corporation, filed suit against the Company in
Circuit Court of Cook County Illinois on February 19, 2002 in connection with a
settlement the Company had allegedly entered into with respect to payments
allegedly owed First Insurance by the Company and certain other parties in an
insurance premium finance arrangement. The amount claimed due under the
promissory note entered into in connection with the agreement is $123,000. The
Company is evaluating the claims and has reached a settlement in principle. The
action has been withdrawn without prejudice.
Michael P. Forbes and P/R Strategies International, Inc., filed suit
against the Company, its President Dan L. Pixler and several other defendants on
May 13, 2002 in the Supreme Court of New York, County of Suffolk. The Plaintiffs
allege that the Company had breached a contract for professional services
rendered and that they were damaged in the amount of $11,500. The Company has
filed a motion to dismiss the action against the Company and Mr. Pixler and will
vigorously defend.
Mr. Chester Bedell filed an action against the Company in the Supreme
Court of the State of New York, County of Suffolk on or about March 28, 2002.
The Company filed an Answer and affirmative defenses shortly thereafter. The
parties are in the process of finalizing the terms of a settlement, which the
company believes will be completed on or before September 1, 2002. The terms
provide for the payment of $10,000 upon execution and monthly installments of
$3,125, until such time that the settlement amount of $80,000 is paid in full.
Boutine Capital, II, LLC and its principal Gary J. Graham have filed
a Third-Party Complaint against the Company and several of its officers in an
action commenced by A.B. Goldberg, as plaintiff, in the District Court of the
State of Colorado, Arapahoe County. Boutine and Graham allege that the Company
is responsible for their failure to perform under a contract with A.B. Goldberg
in connection with certain fund raising activities, seeking judgment in the
approximately sum of $200,000. The Company asserts that there is no third-party
liability and intends to vigorously defend this litigation.
Freightliner of Savanah filed a civil action against U.S. Trucking,
Inc. in or about 2001. The action has since languished and has not been actively
pursued. In February 2002, plaintiff filed a second amended complaint seeking
recovery against defendant Chancellor Corporation for a total of $3,806,100 for
the purchase of certain tractors and equipment. The Company has filed an Answer
and intends to vigorously defend this litigation should it be actively pursued.
Legion Insurance Company filed an action against the Company in the
Kentucky State Court sitting in Louisville seeking to recover payment for
insurance premiums in an undisclosed amount. The action was filed in January
2002 and is currently in the discovery phase. The Company has denied all
material allegations of wrongdoing and intends to vigorously defend this case.
10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits: 15. Letter on Unaudited Interim Financial Information
(b) Reports Form 8-K filed April 16, 2002.
11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed by the undersigned, thereunto duly authorized.
LOGISTICS MANAGEMENT RESOURCES, INC.
(formerly U.S. Trucking, Inc.)
(Registrant)
/s/ Danny L. Pixler
-------------------
Danny L. Pixler
Chief Executive Officer
/s/ Anthony R. Russo
--------------------
Anthony R. Russo
Chief Financial Officer
12
Exhibit A
Letter of Rosenberg Rich Baker Berman & Company
To the Board of Directors and Stockholders of
Logistics Management Resources, Inc. and Subsidiary
We have reviewed the accompanying consolidated balance sheet of Logistics
Management Resources, Inc. and Subsidiary as of June 30, 2002 and 2001 and the
related consolidated statements of operations for the three and six months then
ended, and the consolidated cash flows for the six months then ended. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquires of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements in order for them
to be in conformity with generally accepted accounting principles.
/s/ Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
August 14, 2002
13