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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-14474
AMERTRANZ WORLDWIDE HOLDING CORP.
(Exact name of registrant as specified in its charter)
Delaware 11-3309110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2001 Marcus Avenue
Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 326-9000
Inapplicable
(Former name, former address and former fiscal year if changed
from last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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
At November 12, 1996, the number of shares outstanding of the registrant's
common stock was 5,926,504.
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TABLE OF CONTENTS
Part I - Financial Information Page
Item 1. Financial Statements:
Consolidated Balance Sheets,
September 30, 1996 and June 30, 1996 3
Consolidated Statement of Operations
for the Three Months Ended
September 30, 1996 4
Consolidated Statement of
Cash Flows for the Three Months Ended
September 30, 1996 5
Notes to Unaudited Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II - Other Information
Item 1. Legal Proceedings 8
Item 6. Exhibits and Reports on Form 8-K 8
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1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1996 June 30, 1996
------------------ -------------
ASSETS (unaudited)
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $3,650,129 $ 377,490
Accounts receivable less allowance
(September 30, $357,542; June 30, $371,322) 7,841,303 7,598,390
Prepaid expenses and other current assets 564,516 557,192
---------- ------------
Total current assets 12,055,948 8,533,072
PROPERTY AND EQUIPMENT, net 983,870 829,442
DEBT ISSUANCE COST, net of accumulated amortization
(September 30, $3,367,698; June 30, $3,264,232) - 103,466
OTHER ASSETS 254,774 1,373,314
GOODWILL, net of accumulated amortization
(September 30, $312,382; June 30, $191,460) 11,779,813 11,900,735
---------- ----------
Total assets 25,074,405 $ 22,740,029
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable 6,445,276 $ 7,699,721
Accrued expenses 1,984,615 2,028,274
Note payable to bank 1,720,750 1,641,347
Note payable to affiliate 4,043,843 3,954,989
Current portion of long-term debt 2,466,670 7,125,000
Lease obligation-current portion 15,979 21,034
Taxes payable 20,967 -
---------- ------------
Total current liabilities 16,698,100 22,470,365
LONG-TERM DEBT 4,453,559 8,000,000
LEASE OBLIGATION--LONG-TERM 18,314 18,315
---------- ------------
Total liabilities 21,169,973 30,488,680
----------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, $10 par value; 2,500,000 shares authorized,
shares issued and outstanding: 200,000 2,000,000 -
Common stock, $.01 par value; 15,000,000 shares authorized,
shares issued and outstanding: September 30,
5,926,504; June 30, 3,626,504 59,265 36,265
Paid-in capital 19,694,977 8,567,675
Accumulated deficit (17,838,560) (16,341,341)
Less: Treasury stock, 106,304 shares held at cost (11,250) (11,250)
------------ -----------
Total stockholders' equity (deficit) 3,904,432 (7,748,651)
Total liabilities and stockholders' equity (deficit) 25,074,405 $ 22,740,029
</TABLE>
The accompanying notes are an integral part of this
consolidated balance sheet.
2
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AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended
September 30,
1996
Operating revenue $15,267,768
Direct costs 11,571,685
Gross profit 3,696,083
Selling, general and administrative
expenses 4,811,260
Loss from operations (1,115,177)
Interest (expense) (436,410)
Other income 54,368
------
Net loss $(1,497,219)
Net loss per share $ (0.26)
===========
Weighted average shares outstanding 5,851,504
The accompanying notes are an integral part of this
consolidated statement.
3
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AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30, 1996
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,497,219)
Bad debt expense (13,780)
Depreciation and amortization 184,671
Decrease in debt issuance costs 103,466
Adjustments to reconcile net loss to net cash used in operating activities-
Increase in accounts receivable (229,133)
Increase in prepaid expenses and other current assets (140,429)
Decrease in other assets 74,251
Decrease in accounts payable and accrued expenses (1,298,104)
Increase in taxes payable 20,967
----------
Net cash used in operating activities (2,795,310)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (218,177)
Net cash used in investing activities (218,177)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial public offering - net of costs 12,304,696
Issuance of common stock 23,000
Net borrowings from note payable to bank 79,403
Repayment of short-term debt (4,658,330)
Repayment of long-term debt (1,546,441)
Proceeds from revolving loan due to affiliate 88,854
Payment of lease obligations (5,056)
-----------
Net cash provided by financing activities: 6,286,126
----------
Net increase in cash and cash equivalents 3,272,639
CASH AND CASH EQUIVALENTS, beginning of the period 377,490
-----------
CASH AND CASH EQUIVALENTS, end of the period $ 3,650,129
===========
CASH PAYMENTS FOR:
Interest 60,965
Income taxes 8,263
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTMENT AND FINANCING ACTIVITIES:
Issuance of preferred stock as partial repayment of long-term debt 2,000,000
</TABLE>
The accompanying notes are an integral part of this
consolidated statement.
4
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AMERTRANZ WORLDWIDE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Notes to Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions for Form 10-Q and Regulation S-X related to
interim period financial statements and, therefore, do not include all
information and footnotes required by generally accepted accounting principles.
However, in the opinion of management, all adjustments (consisting of normal
recurring adjustments and accruals) considered necessary for a fair presentation
of the consolidated financial position of the Company and its subsidiaries at
September 30, 1996 and their consolidated results of operations and cash flows
for the quarter ended September 30, 1996 have been included. The results of
operations for the interim periods are not necessarily indicative of the results
that may be expected for the entire year. Reference should be made to the annual
financial statements, including footnotes thereto, included in the Amertranz
Worldwide Holding Corp. (the "Company") Form 10-K for the six months ended June
30, 1996.
Note 2 - Subsequent Events
(a) On October 10, 1996, Consolidated Air Services, Inc., an Arizona Corporation
("Consolidated") merged (the "Merger") with and into the Company pursuant to the
terms of an Agreement of Merger dated as of September 30, 1996.
In the Merger, all of the issued and outstanding shares of Consolidated were
exchanged for an aggregate of 20,000 shares of the Company's Class B Preferred
Stock. Each share of the Company's Class B Preferred Stock is convertible, at
the option of the holder thereof at any time after October 10, 1997, into 10
shares of the Company's Common Stock. In addition, the Company issued a
promissory note to the Consolidated Stockholders in the aggregate principal
amount of $150,000.
For the 12 months ended June 30, 1996, Consolidated generated gross revenues of
$5,995,000 and net income of $347,000. The acquisition will be accounted for as
a purchase.
(b) Amertranz is a defendant in a lawsuit initiated by the trustee in bankruptcy
of Aeronautics Express, Inc. ("AEI"), a company with whom Amertranz engaged in
discussions concerning a prospective business combination during the early
spring of 1994. The complaint was filed in the United States Bankruptcy Court
for the Southern District of New York in December, 1995, and alleges that
Amertranz improperly obtained control over the assets of AEI, committed fraud in
connection with the business discussion, breached an agreement not to solicit
the business or customers of AEI, induced AEI to convey property to Amertranz
for less than fair value and failed to pay AEI compensation for services
rendered by AEI to Amertranz. The complaint sought damages in excess of $11
million. The Company has reached an agreement with the trustee in bankruptcy to
settle the litigation for $50,000, and this settlement was approved by the
United States Bankruptcy Court on October 30, 1996. The Company has paid $25,000
of this settlement, with the balance due 45 days following the finalization of
the Court's order.
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains certain forward-looking statements reflecting the
Company's current expectations and there can be no assurances that the Company's
actual future performance will meet such expectations. Forward-looking
statements are preceded by an asterisk.
Results of Operations
Three Months ended September 30, 1996
The Company began its existence as the holding company for the combined
operations of Amertranz Worldwide, Inc. ("Amertranz") and the freight forwarding
business of TIA, Inc. ("TIA") and Caribbean Freight System, Inc. ("CFS") on
February 8, 1996. From and after February 8, 1996, the freight forwarding
business of TIA and CFS was operated through the Company's Caribbean Air
Services subsidiary. Prior to such date, the operations of AmerTranz and the
freight forwarding business of TIA and CFS were independent of each other. The
following discussion relates to the combined results of the Company for the
period July 1, 1996 through September 30, 1996.
Operating Revenue. Operating revenue was $15.3 million for the period
July 1, 1996 through September 30, 1996.
Cost of Transportation. Cost of transportation was 75.8% of operating
revenue for the period.
Gross Profit. Gross profit for the period was 24.2% of operating
revenue.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the period was 31.5% of operating revenue.
Liquidity and Capital Resources
On July 3, 1996, the Company completed an initial public offering ("IPO") of
2,300,000 shares of common stock and redeemable common stock purchase warrants
at an initial offering price of $6.00 per share and $0.10 per warrant. The
proceeds from the IPO, net of underwriting discounts and commissions and after
deducting expenses of the IPO, were approximately $12.3 million. Of this amount,
$4,137,000 was used to repay the outstanding principal and interest balance on
earlier bridge financings, $373,000 was used to repay the outstanding principal
and interest balance on earlier interim financing, $2 million was used as
partial payment on a pre-IPO obligation to TIA and CFS ("Exchange Note"), and
approximately $700,000 was used to repay overdue trade payables. The remaining
balance of the proceeds was retained by the Company for working capital
purposes. Additionally, TIA and CFS exchanged $2,000,000 principal amount of the
Exchange Note for 200,000 shares of the Company's Class A Preferred Stock.
Capital expenditures for the three months ended September 30, 1996 were
$218,177.
*The Company believes that funds raised in the IPO, cash flows generated from
operations and available funds under its existing loan facilities will be
sufficient to finance its operations and obligations for the foreseeable future.
However, the Company's actual working capital needs will depend upon numerous
factors, including the Company's operating results, the cost of increasing the
Company's sales and marketing activities, changes in law which affect doing
business in Puerto Rico, and competition, none of which can be predicted with
certainty.
6
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Amertranz is a defendant in a lawsuit initiated by the trustee in bankruptcy of
Aeronautics Express, Inc. ("AEI"), a company with whom Amertranz engaged in
discussions concerning a prospective business combination during the early
spring of 1994. The complaint was filed in the United States Bankruptcy Court
for the Southern District of New York in December, 1995, and alleges that
Amertranz improperly obtained control over the assets of AEI, committed fraud in
connection with the business discussion, breached an agreement not to solicit
the business or customers of AEI, induced AEI to convey property to Amertranz
for less than fair value and failed to pay AEI compensation for services
rendered by AEI to Amertranz. The complaint seeks damages in excess of $11
million. The Company has reached an agreement with the trustee in bankruptcy to
settle the litigation for $50,000, and this settlement was approved by the
United States Bankruptcy Court on October 30, 1996. The Company has paid $25,000
of this settlement, with the balance due 45 days following the finalization of
the Court's order.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) Form 8-K:
No reports on Form 8-K were filed during the three
months ended September 30,
1996.
7
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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.
Dated: November 12, 1996 AMERTRANZ WORLDWIDE HOLDING CORP.
Registrant
/S/ Stuart Hettleman
President, Chief Executive Officer,
Principal Financial Officer
C66755.198
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