SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
January 13, 1999
Date of report (Date of earliest event reported)
U-SHIP, INC.
(Exact Name of Registrant as Specified in Charter)
UTAH 000-28452 41-1823559
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
5583 West 78th Street, Edina, MN 55439
--------------------------------------
(Address of Principal Executive Offices)
(612) 941-4080
--------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
U-Ship, Inc. (the "Company") filed with the Commission a Current Report
on Form 8-K on January 27, 1999. At Item 7 of the Report, the Company indicated
that it would file audited historical financial statements of the business
acquired and pro forma financial information at a later date. Set forth below is
Item 7 of such Report amended to include the audited financial statements of the
business acquired and pro forma financial information.
(a) Financial Statements of Business Acquired.
INDEX TO TWIN CITY TRANSPORTATION, INC. FINANCIAL STATEMENTS
(1) Independent Auditor's Report
(2) Balance Sheet as of December 31, 1998
(3) Statement of Income and Retained Earnings for the
year ended December 31, 1998
(4) Statement of Cash Flows for the year ended December
31, 1998
(5) Notes to Financial Statements
(b) Pro Forma Financial Information.
INDEX TO FINANCIAL STATEMENTS
(1) Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of December 31, 1998
(2) Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the twelve months ended June 30,
1998
(3) Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the six months ended December 31,
1998
(4) Notes to Unaudited Pro Forma Condensed Consolidated
Statements of Operations
(c) Exhibits
Consent of Lurie, Besikof, Lapidus & Co., LLP
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Twin City Transportation, Inc.
Edina, Minnesota
We have audited the accompanying balance sheet of TWIN CITY TRANSPORTATION, INC.
as of December 31, 1998, and the related statements of income and retained
earnings and of cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TWIN CITY TRANSPORTATION, INC.
as of December 31, 1998, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
LURIE, BESIKOF, LAPIDUS & CO., LLP
Minneapolis, Minnesota
February 19, 1999
<PAGE>
TWIN CITY TRANSPORTATION, INC.
BALANCE SHEET
December 31, 1998
<TABLE>
<S> <C> <C>
ASSETS
CURRENT ASSETS
Accounts receivable, less allowance for doubtful
accounts of $6,000 $ 242,981
Due from shareholder 15,160
-----------
TOTAL CURRENT ASSETS 258,141
PROPERTY AND EQUIPMENT
Vehicles $ 66,492
Furniture, fixtures, and equipment 67,456
-----------
133,948
Less accumulated depreciation 79,041 54,907
-----------
INTANGIBLE ASSETS 255,356
Less accumulated amortization 54,383 200,973
----------- -----------
$ 514,021
===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Checks issued in excess of deposits $ 10,474
Notes payable 309,627
Accounts payable and accrued liabilities 42,164
-----------
TOTAL CURRENT LIABILITIES 362,265
SHAREHOLDER'S EQUITY
Common stock - no par value
(authorized - 100,000 shares; outstanding - 1,000 shares) $ 100
Retained earnings 151,656 151,756
----------- -----------
$ 514,021
===========
</TABLE>
See notes to financial statements.
<PAGE>
TWIN CITY TRANSPORTATION, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Year Ended December 31, 1998
<TABLE>
<S> <C> <C>
REVENUES $ 1,307,052
DIRECT COSTS 1,048,221
------------
GROSS MARGIN 258,831
OPERATING EXPENSES 201,484
------------
INCOME FROM OPERATIONS 57,347
OTHER EXPENSE
Interest $ 10,804
Other 6,248 17,052
------------- ------------
NET INCOME 40,295
RETAINED EARNINGS
Beginning of year, as restated (Note 5) 144,989
Distributions (33,628)
------------
End of year $ 151,656
============
</TABLE>
See notes to financial statements.
<PAGE>
TWIN CITY TRANSPORTATION, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1998
<TABLE>
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 40,295
Adjustments to reconcile net income to net
cash provided by operating activities:
Bad debts 30,634
Depreciation 22,908
Amortization 19,824
Other 6,248
Changes in operating assets and liabilities:
Accounts receivable $ (96,812)
Other current assets 3,977
Accounts payable and accrued expenses 5,805 (87,030)
------------ ------------
Net cash provided by operating activities 32,879
INVESTING ACTIVITIES
Advances collected from shareholder 3,863
Purchases of property and equipment (15,189)
Proceeds from sale of property and equipment 2,001
Cash paid for acquisition (100,000)
------------
Net cash used by investing activities (109,325)
FINANCING ACTIVITIES
Increase in checks issued in excess of deposits 8,558
Proceeds from notes payable 117,743
Payments on notes payable (19,914)
Distributions (29,941)
------------
Net cash provided by financing activities 76,446
------------
NET INCREASE IN CASH -
CASH
Beginning of year -
------------
End of year $ -
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 10,804
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Assets distributed to shareholder $ 3,687
Refinancing of bank debt $ 129,647
Assets acquired and liabilities incurred in connection with the acquisition of
Northland Courier, Inc.:
Property and equipment $ 12,910
Intangible assets 187,090
------------
200,000
Note payable incurred (100,000)
------------
Cash paid for acquisition $ 100,000
============
</TABLE>
See notes to financial statements.
<PAGE>
TWIN CITY TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS
1. The Company and Summary of Significant Accounting Policies -
The Company
Twin City Transportation, Inc. (TCT) provides intraday delivery
services focusing on point-to-point deliveries, predominately using
owner-operators as drivers. TCT is a general delivery service, however
medical related items accounted for approximately 70% of 1998 revenues.
TCT operates primarily in the Twin Cities metropolitan area as well as
in Duluth, Minnesota, and Western Wisconsin.
Use of Estimates
The preparation of these financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that may affect certain reported amounts and
disclosures in the financial statements and accompanying notes. Actual
results could differ from these estimates. The most significant area
which requires the use of management's estimates relates to
amortization periods for intangibles assets.
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is provided generally using accelerated
methods over the estimated useful lives of the related assets as
follows:
Vehicles 5 years
Furniture, fixtures, and equipment 5 - 7 years
Intangible Assets
Intangible assets consist mainly of goodwill, which is amortized using
the straight-line method over five years.
Income Taxes
The shareholder of TCT elected to be taxed as an S corporation under
the provisions of the Internal Revenue Code and applicable state
regulations; therefore, no provision for income taxes is included in
these financial statements.
<PAGE>
Fair Value of Financial Instruments
The carrying amounts of financial instruments consisting of accounts
receivable, checks issued in excess of deposits, accounts payable,
accrued liabilities, and notes payable approximate their fair values.
Revenue Recognition
Revenue is recognized when a delivery is completed.
(continued)
<PAGE>
TWIN CITY TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS
1. The Company and Summary of Significant Accounting Policies -
(continued)
Concentrations of Credit Risk
Concentrations of credit risk with respect to accounts receivable are
limited to the geographic areas of operations and the emphasis of
revenues generated from medical and medical related industries. TCT
does not require collateral for customer receivables. An allowance for
doubtful accounts is evaluated periodically based on management's
evaluation of collectibility, historical experiences, and economic
factors.
2. Acquisition -
On September 23, 1998, TCT acquired certain assets of Northland
Courier, Inc., which provided intraday delivery services in the Twin
Cities metropolitan area and Western Wisconsin. The acquisition was
accounted for as a purchase. The following unaudited pro forma
consolidated results of operations for the year ended December 31,
1998, assume that the purchase occurred on January 1, 1998:
Unaudited
---------
Revenues $1,734,000
Net income 61,000
The pro forma results do not purport to be indicative of the results
which would have been obtained had the acquisition occurred on January
1, 1998, or which may be obtained in the future.
<PAGE>
3. Notes Payable -
Interest
Description Rate Amount
-------------------------------------------- -------- ------
Bank term loan, paid January 8, 1999. Prime + $ 196,706
1.0%
Unsecured note payable to Northland Courier,
Inc., paid January 20, 1999. None 100,000
Unsecured note payable to a company with
common ownership and control, assumed by
shareholder in January 1999. None 7,482
Unsecured note payable, assumed by share-
holder in January 1999. 8.0% 5,439
---------
$ 309,627
=========
In connection with the shareholder assumption of the above notes, the
balance due from shareholder, included in current assets on the balance
sheet, was distributed to the shareholder in January 1999.
4. Commitments and Contingencies -
Operating Leases
TCT leases office space on a month-to-month basis. Rent expense was
approximately $14,200 for 1998.
Guarantees
TCT guarantees a bank term loan of another company under common
ownership and control. The balance outstanding at December 31, 1998 is
$440,000, which is collateralized by substantially all TCT assets. TCT
was released from this guarantee and the collateral agreement in
January 1999.
TCT entered into a lease requiring monthly payments of $823 through
December 2000. TCT, along with another company under common ownership
and control, agreed that the other company is responsible for all lease
payments, which are guaranteed by TCT. The approximate future minimum
lease commitments guaranteed by TCT at December 31, 1998, is $18,900.
<PAGE>
5. Prior Period Adjustments -
Certain errors in the previously compiled 1997 financial statements
were discovered in the current year. Corrections of these errors, which
related to accounts receivable, resulted in a decrease of previously
reported net income and retained earnings of $63,450 for the year ended
and as of December 31, 1997.
6. Subsequent Event -
On January 13, 1999, TCT merged with Advanced Courier Services, Inc.
(the surviving corporation), a wholly-owned subsidiary of U-Ship, Inc.,
in exchange for 423,330 shares of U-Ship, Inc. common stock, a warrant
to purchase 1,000 additional shares exercisable at $1.063 per share,
and $400,000.
<PAGE>
U-SHIP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet as of
December 31, 1998 and statements of operations for the twelve months ended June
30, 1998 and for the six months ended December 31, 1998, give effect to the
acquisition of Twin City Transportation, Inc. ("TCT") by U-Ship, Inc. ("U-Ship")
as if the acquisition had occurred on July 1, 1997. The unaudited pro forma
condensed consolidated financial statements have been prepared for informational
purposes only and do not purport to present the financial position or the
results of operations of U-Ship had the acquisition assumed therein occurred on
the dates indicated, nor are they necessarily indicative of the results of
operations which may be achieved in the future.
The unaudited pro forma condensed consolidated financial statements include the
historical operations of U-Ship and the historical operations of the acquired
business and should be read in conjunction with the notes to the unaudited pro
forma condensed consolidated financial statements.
<PAGE>
U-SHIP, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 31, 1998
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------------- -----------------------------------
Twin City
ASSETS U-Ship, Inc. Transportation Inc. Adjustments Adjusted
------------- ------------------- ------------- -------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 281,521 $ -- $ (281,521)(1) $ --
Accounts receivable 140,235 242,981 -- 383,216
Inventories 1,046,194 -- -- 1,046,194
Other 204,192 15,160 -- 219,352
------------- ------------- ------------- -------------
Total current assets 1,672,142 258,141 (281,521) 1,648,762
Property and equipment 693,441 54,907 -- 748,348
Intangible and other assets 185,517 200,973 1,179,144(1) 1,565,634
------------- ------------- ------------- -------------
$ 2,551,100 $ 514,021 $ 897,623 $ 3,962,744
============= ============= ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and current
maturities of long-term debt $ 45,445 $ 309,627 $ 118,479(1) $ 473,551
Other payables 474,171 52,638 -- 526,809
------------- ------------- ------------- -------------
Total current liabilities 519,616 362,265 118,479 1,000,360
Long-term debt 31,126 -- -- 31,126
Shareholders' equity 2,000,358 151,756 779,144(1) 2,931,258
------------- ------------- ------------- -------------
$ 2,551,100 $ 514,021 $ 897,623 $ 3,962,744
============= ============= ============= =============
</TABLE>
See notes to pro forma condensed consolidated statements of operations.
<PAGE>
U-SHIP, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Twelve Months Ended June 30, 1998
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------------------- ----------------------------------
Twin City
ASSETS U-Ship, Inc. Transportation Inc. Adjustments Adjusted
------------- ------------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES $ 952,858 $ 1,223,046 $ -- $ 2,175,904
------------- ------------- ------------- -------------
EXPENSES
Direct shipping and
equipment sales 775,438 1,015,924 -- 1,791,362
General and administrative 1,822,171 119,789 87,344(2) 2,029,304
Marketing and sales 92,292 20,884 -- 113,176
Research and development 167,741 -- -- 167,741
------------- ------------- ------------- -------------
2,857,642 1,156,597 87,344 4,101,583
------------- ------------- ------------- -------------
INCOME (LOSS) FROM
OPERATIONS (1,904,784) 66,449 (87,344) (1,925,679)
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest income 25,863 -- -- 25,863
Interest expense (22,209) (10,540) -- (32,749)
Other -- (1,920) -- (1,920)
------------- ------------- ------------- -------------
3,654 (12,460) -- (8,806)
------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (1,901,130) $ 53,989 $ (87,344) $ (1,934,485)
============= ============= ============= =============
NET LOSS PER COMMON SHARE,
basic and diluted $ (.38) $ (.36)(3)
============= =============
SHARES USED TO COMPUTE NET
LOSS PER COMMON SHARE,
basic and diluted 4,977,469 5,400,799 (3)
============= =============
</TABLE>
See notes to pro forma condensed consolidated statements of operations.
<PAGE>
U-SHIP, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Six Months Ended December 31, 1998
<TABLE>
<CAPTION>
Historical Pro Forma
--------------------------------------- ----------------------------------
Twin City
ASSETS U-Ship, Inc. Transportation Inc. Adjustments Adjusted
------------- ------------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES $ 272,086 $ 713,976 $ -- $ 986,062
------------- ------------- ------------- -------------
EXPENSES
Direct shipping and
equipment sales 246,739 575,221 -- 821,960
General and administrative 949,449 94,535 43,672(2) 1,087,656
Marketing and sales 165,691 11,613 -- 177,304
Research and development 205,830 -- -- 205,830
------------- ------------- ------------- -------------
1,567,709 681,369 43,672 2,292,750
------------- ------------- ------------- -------------
INCOME (LOSS) FROM
OPERATIONS (1,295,623) 32,607 (43,672) (1,306,688)
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest income 41,570 -- -- 41,570
Interest expense (6,334) (5,907) -- (12,241)
Other -- (6,248) -- (6,248)
------------- ------------- ------------- -------------
35,236 (12,155) -- 23,081
------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (1,260,387) $ 20,452 $ (43,672) $ (1,283,607)
============= ============= ============= =============
NET LOSS PER COMMON SHARE,
basic and diluted $ (.25) $ (.24)(3)
============= =============
SHARES USED TO COMPUTE NET
LOSS PER COMMON SHARE,
basic and diluted 4,990,579 5,413,909 (3)
============= =============
</TABLE>
See notes to pro forma condensed consolidated statements of operations.
<PAGE>
U-SHIP, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
(1) To record the TCT acquisition accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price was allocated to
the tangible and intangible assets and liabilities of TCT based upon their
respective estimated fair values as of January 13, 1999, the date of the
acquisition, based upon preliminary valuations and other studies which are not
yet finalized. The actual allocation of purchase price and the resulting effect
on loss from operations may differ significantly from the pro forma amounts
included herein.
(2) To record amortization of the excess of the purchase price over the net book
value of the assets acquired in the acquisition of TCT over the estimated useful
life of 15 years.
(3) The pro forma common shares outstanding includes the 423,330 shares of
U-Ship issued in connection with the acquisition of TCT.
<PAGE>
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.
Date: March 29, 1999 By: /s/ Timothy G. Booker
-------------------------------------
Name: Timothy G. Booker
Title: Treasurer, Chief Financial Officer
and Director
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the registration
statements of U-Ship, Inc. on Form S-3/A (File No. 333-34411) and Form S-8 (File
No. 333-06269) of our report dated February 19, 1999, on the audit of the
financial statements of Twin City Transportation, Inc. as of December 31, 1998.
/s/ LURIE, BESIKOF, LAPIDUS & CO., LLP
---------------------------------------
LURIE, BESIKOF, LAPIDUS & CO., LLP
Minneapolis, Minnesota
March 29, 1999
