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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File No. 000-22571
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PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
(Exact name of registrant as specified in its charter)
Georgia 58-1915632
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(State of Incorporation) (I.R.S. Employer Identification No.)
1950 Spectrum Circle, Suite B-100, Marietta, Georgia 30067
(Address of principal executive offices)
(678) 264-0400
-------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the registrant has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 12 months (or for such shorter period that the registrant was required to
file such reports), and has been subject to such filing requirements for the
past 90 days.
Yes [X] No[ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
Yes [ ] No[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common Stock, no par value per share, 4,467,348 shares issued and
outstanding as of August 13,1999.
Redeemable Common Stock Purchase Warrants, 1,437,500 issued and
outstanding as of August 13, 1999.
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [X]
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QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998....................... 3
Consolidated Statements of Operations for the three months and six months
Ended June 30, 1999 and 1998................................................................ 4
Consolidated Statements of Cash Flows for the six months ended
June 30, 1999 and 1998 ..................................................................... 5
Notes to the Consolidated Financial Statements.............................................. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operation........ 8
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings........................................................................... 13
ITEM 4. Submission of Matters to a Vote of Security Holders......................................... 15
ITEM 5. Other Information .......................................................................... 15
ITEM 6. Exhibits and Reports on Form 8-K............................................................ 15
Signatures.................................................................................. 16
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements -
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
-------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 116,302 $ 1,003,783
Trade accounts receivable, net of allowance for doubtful accounts of
$793,765 at June 30, 1999 and $757,765 at December 31, 1998 9,734,958 6,633,732
Due from affiliate 429,365 429,365
Due from shareholder 306,177 577,197
Prepaid expenses 1,025,257 662,176
Other current assets 718,327 583,311
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Total current assets 12,330,386 9,889,564
PROPERTY AND EQUIPMENT, net 6,473,697 6,940,060
NONCURRENT NOTES AND RECEIVABLES 2,950,262 2,831,248
OTHER ASSETS 151,163 157,847
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Total assets $ 21,905,508 $ 19,818,719
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,965,294 $ 3,226,222
Accrued liabilities 2,861,172 3,074,145
Line of credit 6,486,289 6,666,722
Current maturities of long-term debt and capital lease obligations 1,551,016 1,487,025
------------ ------------
Total current liabilities 16,863,771 14,454,114
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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of
current maturities 3,209,109 4,268,887
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DEFERRED INCOME TAXES 237,209 237,209
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SHAREHOLDERS' EQUITY:
Preferred stock; 100,000 shares authorized, no shares issued and outstanding -- --
Common stock; no par value, 20,000,000 shares authorized, 4,467,348 and
3,868,160 shares issued and outstanding at June 30, 1999 and
December 31, 1998, respectively -- --
Common stock purchase warrants 353,867 353,867
Additional paid-in capital 6,239,716 5,711,466
Accumulated deficit (4,998,164) (5,206,824)
------------ ------------
Total shareholders' equity 1,595,419 858,509
------------ ------------
Total liabilities and shareholders' equity $ 21,905,508 $ 19,818,719
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
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PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
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1999 1998 1999 1998
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 11,604,670 $ 13,923,998 $ 21,706,894 $ 33,797,044
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Salaries, wages and benefits 5,177,298 6,292,818 9,647,129 15,908,797
Purchased transportation 1,468,041 1,957,729 2,427,753 3,775,088
Operating supplies and expenses 2,301,643 2,458,060 4,463,155 7,181,862
Fuel and fuel taxes 1,270,323 1,745,290 2,381,903 4,495,949
Communications and utilities 221,195 350,511 441,209 776,489
Depreciation 241,693 301,253 487,893 528,808
Operating taxes and licenses 86,597 157,412 233,581 352,179
Bad debt expense 33,000 3,000 36,000 56,000
Other operating expenses 544,805 809,381 1,041,637 2,058,506
------------ ------------ ------------ ------------
Total operating expenses 11,344,595 14,075,454 21,160,260 35,133,678
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 260,075 (151,456) 546,634 (1,336,634)
OTHER INCOME (EXPENSE):
Interest expense (231,713) (237,787) (504,149) (519,338)
Other income, net 94,130 152,369 166,175 154,907
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
INCOME TAXES 122,492 (236,874) 208,660 (1,701,065)
PROVISION FOR INCOME TAXES -- -- -- --
NET INCOME (LOSS) $ 122,492 $ (236,874) $ 208,660 $ (1,701,065)
============ ============ ============ ============
NET LOSS PER COMMON SHARE - basic $ 0.03 $ (0.06) $ 0.05 $ (0.44)
============ ============ ============ ============
Weighted average common and common
equivalent shares outstanding - basic 4,236,950 3,867,850 4,065,728 3,867,625
============ ============ ============ ============
NET LOSS PER COMMON SHARE - diluted $ 0.02 $ (0.06) $ 0.04 $ (0.44)
============ ============ ============ ============
Weighted average common and common
equivalent shares outstanding - diluted 4,950,429 3,867,850 4,852,786 3,867,625
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Six Months
Ended June 30,
1999 1998
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 208,660 $(1,701,065)
----------- -----------
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 487,893 528,808
Changes in operating assets and liabilities:
Trade accounts receivable, net (3,101,226) 2,422,567
Due from affiliate -- 29,250
Other current assets (498,097) (963,280)
Accounts payable and accrued liabilities 2,526,099 559,447
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Total adjustments (585,331) 2,576,792
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Net cash (used in) provided by operating activities (376,671) 875,727
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (21,530) (2,781,023)
Increase in other assets (112,330) (577,577)
----------- -----------
Net cash used in investing activities (133,860) (3,358,600)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (repayment of) line of credit (180,433) 897,370
Repayments of long-term debt and capital lease obligations (667,537) (673,619)
Proceeds from long-term debt -- 2,649,393
Net proceeds from sale of common stock and common stock
purchase warrants 200,000 2,286
Due from shareholder 271,020 --
----------- -----------
Net cash (used in) provided by financing activities (376,950) 2,875,430
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (887,481) 392,557
CASH AND CASH EQUIVALENTS, beginning of period 1,003,783 1,422,732
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 116,302 $ 1,815,289
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
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PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 and 1998
1. ORGANIZATION AND OPERATION
Professional Transportation Group Ltd., Inc. ("PTG, Ltd.") serves as a
holding company for its three operating subsidiaries: Timely Transportation,
Inc. ("Timely"), Truck-Net, Inc. ("Truck-Net) and PTG, Inc. (collectively, the
"Subsidiaries"). PTG, Ltd. together with the Subsidiaries is hereafter referred
to as the "Company." The Company, through the Subsidiaries, provides
transportation and logistics services primarily for the air freight and
expedited delivery and floor covering industries throughout the continental
United States. Timely operates a fleet of company-owned and leased vehicles to
provide time-definite truckload transportation services for companies in the
air freight, expedited delivery and floor covering markets. Truck-Net provides
brokerage services to companies, mainly in the air freight industry, that are
in need of third-party transportation. PTG, Inc. operates a courier service in
the Atlanta, Georgia metropolitan region (d.b.a. Rapid Transit) and provides
third-party logistics services in recovering copiers, fax machines, and
telephone equipment that are in need of repair or under expired leases.
FINANCIAL CONDITION
The Company had a working capital deficit of $4.5 million at June 30,
1999, which includes a liability of $6.5 million under the Company's line of
credit agreement. This agreement is currently due to expire on September 30,
1999. Management is negotiating an extension of its line of credit agreement
and expects that if it is unable to extend the line of credit, it will seek
additional third-party financing to satisfy its anticipated cash requirements
through 1999. There can be no assurance that the Company will be successful in
obtaining an extension of its credit agreement or in arranging alternative
financing under commercially reasonable terms or at all. If the Company is not
successful in negotiating a satisfactory outcome, there is doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of PTG,
Ltd. and the Subsidiaries. All significant inter-company balances and
transactions have been eliminated.
INCOME TAXES
Net operating loss carryforwards will be utilized to fully offset
income generated in the first six months of 1999. Therefore, no income tax
provision was recorded.
3. BASIS OF PRESENTATION
In the opinion of management, the unaudited consolidated financial
statements contain all normal and recurring adjustments necessary to present
fairly the consolidated financial position of the Company at June 30, 1999 and
the consolidated results of the Company's operations for the three month and
six month periods ended June 30, 1999 and 1998. Certain information and
footnote disclosures usually found in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. Operating results for the interim periods are not necessarily
indicative of the results that may be expected for the year ended December 31,
1999.
4. RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
current year presentation.
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5. BUSINESS SEGMENT INFORMATION
The following table summarizes revenues and operating income by business
segment for the six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
TIMELY AND
TIMELY NORTH TRUCK-NET PTG, INC. TOTAL
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999:
Revenues from external customers 18,873,873 3,961,211 387,867 23,222,951
Intersegment revenues 1,305,005 211,052 0 1,516,057
Operating profit 444,583 108,728 91,391 644,702
1998:
Revenues from external customers 30,030,835 3,902,513 311,459 34,244,807
Intersegment revenues 375,103 72,660 0 447,763
Operating profit (loss) (958,836) 63,796 (102,080) (997,120)
</TABLE>
The following table reconciles segment profit (loss) to consolidated income for
the six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
Total operating profit (loss) for reportable segments 644,702 (997,120)
Interest expense (504,149) (519,338)
Salaries, wages and benefits 0 (222,955)
Other unallocated amounts 68,107 38,348
---------------------------
Total consolidated net income (loss) 208,660 (1,701,065)
---------------------------
</TABLE>
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following analysis of the Company's financial condition as of June
30, 1999 and the Company's results of operations for the three and six month
periods ended June 30, 1999 and 1998 should be read in conjunction with the
Company's Consolidated Financial Statements and notes thereto. The following
discussion contains statements which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements appear in a number of places in this Quarterly Report and include
all statements that are not statements of historical fact regarding the intent,
belief or current expectations of the Company, its directors or its officers
with respect to, among other things: (i) the Company's financing plans; (ii)
trends affecting the Company's financial condition or results of operations
(including, but not limited to, its ability to extend its credit facility or
enter into new arrangements to replace such facility); (iii) the Company's
growth strategy and operating strategy (including, but not limited to, issues
related to Year 2000 compliance); and (iv) the declaration and payment of
dividends. The words "may," "would," "could," "will," "expect," "estimate,"
"anticipate," "believe," "intend," "plans," and similar expressions and
variations thereof are intended to identify forward-looking statements.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, many of
which are beyond the Company's ability to control. Actual results may differ
materially from those projected in the forward-looking statements as a result
of various factors. Among the key risks, assumptions and factors that may
affect operating results, performance and financial condition are the Company's
reliance on a small number of customers for a larger portion of its revenues,
fluctuations in its quarterly results, ability to continue and manage its
growth, Year 2000 risks and concerns, liquidity and other capital resources
issues, competition and the other factors discussed in detail in the Company's
filings with the Securities and Exchange Commission, including the "Risk
Factors" section of the Company's Registration Statement on Form S-3
(Registration Number 333-70985), as declared effective by the Securities and
Exchange Commission on February 5, 1999. The financial information provided
below has been rounded in order to simplify its presentation. However, the
percentages provided below are calculated using the detailed financial
information contained in the Consolidated Financial Statements and the notes
thereto.
OVERVIEW
Through December 31, 1996 the Company, Timely and Truck-Net operated
as three separate entities. At such time, Dennis A. Bakal, the Company's
majority stockholder and then sole director owned all of the shares of Timely
and Truck-Net. Effective January 1, 1997, Mr. Bakal contributed his ownership
in Timely and Truck-Net to the Company, along with his ownership of PTG, a
previously inactive company. On December 31, 1996, PTG acquired certain assets
(subject to certain liabilities), business, operating authorities, names and
customer lists of Rapid Transit ("Rapid"), the courier division of a company
controlled by Mr. Bakal, and certain fixed assets from another company owned by
Mr. Bakal, all in exchange for amounts due the Company, Timely and Truck-Net
from the former corporate owner of Rapid. On June 19, 1997, the Company
completed its initial public offering, which resulted in net proceeds to the
Company of approximately $5.7 million.
Timely, organized in 1991, performs contract truckload ground
transportation services primarily for customers in the air freight and
expedited delivery markets. In November 1995, Timely entered into an agreement
to perform trucking services for FedEx and became one of FedEx's eight core
carriers. Under the core carrier concept, a limited number of carriers are
selected by a shipper to provide scheduled services between points for a
contractually determined period of time. Such agreements specify routes,
pricing (normally determined by route), equipment specifications and
performance standards. In addition, such agreements generally provide for
pricing adjustments based on fuel pricing or changes in cost structure at
predetermined times. For the six months ended June 30, 1999 and 1998, FedEx
accounted for approximately 41% and 26%, respectively, of the Company's
consolidated revenues. Since the inception of the agreement, the Company has
consistently exceeded the required performance standards under the agreement,
and management anticipates the renewal of the agreement when it expires in May
2000. There can be no assurance, however, that this agreement will be renewed.
In developing its niche in the industry, Timely has concentrated,
since January 1994, on the contract carriage of truckload freight for the air
freight and expedited delivery markets. By concentrating in these markets, the
8
<PAGE> 9
Company has eliminated the need for terminals and has been able to focus its
efforts on acquiring equipment and recruiting drivers and other personnel.
In October 1997, the Company organized Timely North, Inc. in order to
enter into a marketing agreement (the "Marketing Agreement") with Continental
American Transportation, Inc. ("Continental"). Under that agreement, Timely
North, on November 1, 1997, leased or sub-leased from Continental and its two
main operating subsidiaries, Carpet Transport, Inc. and Blue Mack Transport,
Inc., (collectively "CTI"), substantially all of their operating assets and
terminals. In addition, all of the employees of CTI were hired by Timely North
effective November 1, 1997.
The primary business of CTI was the truckload and less-than-truckload
("LTL") cartage of carpet from manufacturing facilities located in north
Georgia to customers primarily located in the eastern and southern United
States. The business was headquartered in Calhoun, Georgia, the heart of the
carpet manufacturing industry in the United States, and served most of the
major carpet mills. The movement of carpet is primarily a one direction
movement with most of the carpet movement being outbound from north Georgia,
making it necessary to find sufficient back-haul business to bring the trucks
back to Georgia at the lowest possible cost. CTI operated 17 remote terminals
to handle the LTL freight it received from the mills. These terminals were
located in 10 states. On November 1, 1997 Timely North began operating these
terminals and began an analysis of the LTL business. In January 1998, Timely
North announced a substantial rate increase to its LTL customers in an attempt
to bring this part of the operation to a profitable level. On March 27, 1998,
Timely North entered into an agreement with CSI/Crown, Inc. ("CSI/Crown"), an
industry competitor and subsidiary of US Xpress Enterprises, Inc., under which
Timely North terminated its LTL operations as of April 1, 1998 and used its
reasonable best efforts to persuade the LTL customers to transfer their
business to CSI/Crown. At the time of termination, all LTL terminals were
closed, employees terminated and equipment and records prepared for return to
the Calhoun location. All terminal location leases were either leased by CTI or
are owned by a former subsidiary of Continental. Neither the Company nor Timely
North is a party to any of the leases or finance contracts entered into by CTI
or Continental.
During the second quarter of 1998, the Company ceased operating Timely
North, which allowed it to eliminate duplicative functions, personnel and
equipment. Timely restructured to discontinue less profitable full truckload
routes and assumed the most profitable carpet routes from Timely North. The
Company believes that this restructuring has improved customer service, lowered
"deadhead" miles and lowered its operating costs.
Truck-Net, a licensed freight broker, performs truckload brokerage
services in the same air freight and expedited delivery markets served by
Timely. As a broker, Truck-Net matches a shipper with a specific routing and/or
equipment need with a carrier able to satisfy the shipper's particular
requirements. All carriers used by Truck-Net are required to be properly
certificated and to have a current certificate of insurance. When logistically
feasible, Truck-Net utilizes Timely's equipment to complete the brokerage
contracts. In 1998 the Company began dedicating a portion of the Timely fleet
to servicing Truck-Net customers.
Truck-Net offers its services to customers on a contract basis. Some
of its services provide specific scheduled runs for a definite time period, and
others provide deliveries on an as needed basis by the shipper. Truck-Net's
largest customer, Panalpina, the U.S. subsidiary of a major European air
freight forwarder, accounted for approximately 11% of the Company's
consolidated operating revenues for the six months ended June 30, 1999, as
compared to approximately 5% for the six months ended June 30, 1998.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1999 compared Six Months Ended June 30, 1998
Operating revenues decreased 35.8%, or $12.1 million, to $21.7 million
in the first six months of 1999 from $33.8 million for the same period last
year. Timely's revenue decreased $1.5 million to $17.5 million primarily due to
revenues generated from the carpet industry during the second quarter of 1998
which the Company did not operate during the comparable period of 1999. Timely
North revenues included in the six month period of 1998 were $10.7 million.
Truck-Net and PTG, Inc. recorded revenues of $3.8 million and $388,000,
respectively, in the first six months of 1999 compared to $3.8 million and
$311,000 in the same period of 1998.
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<PAGE> 10
Operating expenses decreased $13.9 million to $21.2 million for the
six month period ended June 30, 1999 from $35.1 million for the same period of
1998. Timely accounted for $1.7 million of this decrease, primarily as a result
of lower revenue discussed above, while the discontinuance of Timely North
operations accounted for $11.8 million of the decrease.
Net operating loss carryforwards will be utilized to fully offset
income generated in the first six months of 1999. Therefore, no provision for
income taxes has been recorded.
The Company's net income increased approximately $1.9 million to net
income of $209,000 for the first six months of 1999 compared to a net loss of
$1.7 million for the comparable period of 1998, primarily as a result of
discontinuing the Timely North LTL operations on April 1, 1998.
Three Months Ended June 30, 1999 compared to Three Months Ended June 30, 1998
The Company's operating revenues decreased approximately $2.3 million,
or 16.7%, to approximately $11.6 million for the three months ended June 30,
1999, from approximately $13.9 million for the three months ended June 30,
1998. In its efforts to return to profitability after entering into the
Marketing Agreement and realizing the unprofitability of the LTL operations,
the Company reduced service and discontinued marginally profitable routes
during the last three quarters of 1998, primarily in the carpet industry
segment, resulting in an overall reduction in revenues. Timely's revenues
decreased $2.3 million, or 19%, to $9.5 million in the second quarter of 1999
from $11.8 million for the same period in 1998. The reduction in Timely's
revenue is attributable to the reduction of carpet business discussed above,
offset by growth in the contract business performed for FedEx, new dedicated
lane traffic acquired and the initiation of an agency division. Truck-Net and
PTG recorded revenues of $2.0 million and $142,000, respectively, in the second
quarter of 1999 compared to $2.1 million and $199,000, respectively, for the
same period in 1998.
During the second quarter of 1999, Timely began operating its agency
division with one agent. The division is essentially a cooperative for smaller,
time-definite, expedited truckload carriers whereby the Company bills the agent
carrier's customers and collects the revenues for these shipments. The agent
carriers receive economies of scale by participating with the Company in the
purchase of certain overhead and other items such as maintenance and fuel. The
division accounted for approximately $225,000 of Timely's revenue during the
quarter. A second agent began operations in August 1999.
The Company's operating expenses decreased approximately $2.7 million,
or 19.4%, to approximately $11.3 million in the three months ended June 39,
1999 from approximately $14.1 million in the three months ended June 30, 1998.
The decrease in the Company's operating expenses is primarily due to direct
costs associated with the reduction in revenue. The Company relocated its
corporate offices in May 1999 from Calhoun, Georgia to Marietta, Georgia,
realizing some cost reductions in rent, utilities, salaries and other overhead.
Timely's operating expenses declined $2.6 million, or 22%, to $9.3 million from
$11.9 million.
The Company's net income was approximately $123,000 for the three
months ended June 30, 1999 compared to a loss of $237,000 in the similar period
of 1998. This improvement in net income was primarily the result of revenues
generated from more profitable contract and dedicated lane segments and the
realization of cost containment measures initiated over the past fifteen
months.
LIQUIDITY AND CAPITAL RESOURCES
The Company had negative working capital of approximately $4.5 million
at June 30, 1999 compared to negative working capital of $4.6 million at
December 31, 1998. During the fourth quarter of 1998, certain notes and
accounts receivable associated with Timely North's marketing agreement with CTI
were reclassified from current to non-current assets due to the
unpredictability of the time required to settle accounts due to the bankruptcy
of the principal debtors. In addition, the Company's primary credit facility,
which is discussed below, has been classified as a current liability due to a
September 30, 1999 maturity date.
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<PAGE> 11
Net cash used in operating activities totaled approximately $377,000
for the six month period ended June 30, 1999, compared to net cash provided of
approximately $876,000 in the comparable period ended June 30, 1998. This
increase in usage arose mainly from losses incurred from the LTL operations of
Timely North in the first three months of 1998 offset by collections of that
division's trade accounts receivable. Cash used in investing activities
decreased to approximately $134,000 in 1999 from $3.4 million in 1998 primarily
due to the acquisition of approximately $1.1 million of satellite
communications equipment and $1.2 million of trailers during the first six
months of 1998. During the first six months of 1999, the Company repaid
$848,000 of its obligations under long-term debt and capital leases and retired
approximately $180,000 of its line of credit.
Since the end of the second quarter, the Company has entered into
arrangements with several of its lessors and financial institutions to defer
certain lease and debt payments, some of which are in arrears, to the end of
the original contract, thereby improving current cash flows. Accounts payable
at June 30, 1999 reflect approximately $1.2 million of deferred payments for
which the Company has executed extension contracts at the date of this filing.
The Company is continuing negotiations with certain others to defer additional
amounts.
The Company has available a combined $9.0 million line of credit with
a lending institution to provide for the Company's working capital and letter
of credit requirements. The loan is guaranteed by the Company's principal
shareholder and bears interest at a rate equal to 0.75% above the bank's base
rate (as defined in the agreement). At June 30, 1999, the Company had $6.5
million outstanding under the line of credit with no availability remaining
pursuant to the terms of the agreement. This facility, which was originally
scheduled to mature on December 31, 1998, has been extended by the bank until
September 30, 1999. The Company has received verbal assurances that the
facility will be further extended if certain financial conditions are met.
However, there can be no assurance that the Company will be able to further
extend or enter into new arrangements with the bank or another lending
institution on terms favorable to the Company, if at all, which might
necessitate that the Company raise additional funds through the issuance of
equity or convertible debt securities. Pursuant to the loan agreement with the
bank, the Company must satisfy certain financial and other covenants. As of
June 30, 1999, the Company was in default under several non-monetary covenants.
The Company has requested from the bank waivers of compliance with these
covenants.
The Company is in negotiations, with its current lender and other
financial institutions, on new credit arrangements which it anticipates it will
enter into within the next few months to replace its current line of credit.
The Company believes that these new arrangements, if entered into will be
sufficient to satisfy its contemplated cash requirements over the next 12
months. The Company's financial requirements will depend upon, among other
things, the growth rate of the Company's business, the amount of cash generated
by operations and the Company's ability to borrow funds or enter into lease or
purchase financing arrangements for the acquisition of new equipment or for
working capital purposes. Should the Company require additional debt or equity
financing to support its operations or to make acquisitions, there can be no
assurance that such additional financing will be available to the Company on
commercially reasonable terms, or at all. If the company is unable to replace
its existing line of credit prior to any extended maturity date, the Company's
business, financial condition and results of operations would be materially
adversely affected. As a result of this uncertainty, the Company's independent
certified public accountants added an explanatory paragraph to their report on
the Company's financial statements for the year ended December 31, 1998 which
makes references to the uncertainties regarding the Company's ability to
continue as a going concern. Certain of the statements in this paragraph are
"forward-looking" statements which are subject to the risks and uncertainties
discussed above.
INFLATION
Inflation has not had a material effect on the Company's operations.
If inflation increases, the Company will attempt to increase its rates to
offset its increased expenses. No assurances can be given, however, that the
Company will be able to adequately increase its prices in response to
inflation.
YEAR 2000 ISSUES
The Company's business and relationships with its customers depends
significantly on a number of computer software programs, internal operating
systems and connections to other networks. If any of these software
11
<PAGE> 12
programs, systems or networks are not programmed to recognize and properly
process dates after December 31, 1999 (the "Year 2000" issue), significant
system failures or errors may result which could have a material adverse effect
on the business, financial condition, or results of operations of both the
effected customers and the Company. The Company has conducted a preliminary
review of its internal accounting and operating programs and systems and
currently believes that these programs and systems and the network connections
it maintains are adequately programmed to address the Year 2000 issue or can be
modified or replaced to address the Year 2000 issue without incurring costs or
delays which would have a material adverse effect on the Company's financial
condition. However if the Company and third parties upon which it relies are
unable to address this issue in a timely manner it could result in a material
financial risks to the Company. The Company plans to devote all resources
required to resolve any significant Year 2000 issues in a timely manner.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
An involuntary bankruptcy petition was filed on or about May 26, 1998
against Continental American, the parent corporation of Carpet Transport, Inc.
("CTI"), in the case styled In re: Continental American Transportation, Inc.,
Case No. 98-41900 HR, U.S. Bankruptcy Court for the Northern District of
Georgia (Rome Division). This action was initiated by several parties
purporting to be creditors of Continental American. The involuntary bankruptcy
petition resulted in the appointment of a trustee. The trustee has pursued all
bankruptcy claims against the Company under the CTI Properties, Inc.
bankruptcy. See below.
An involuntary bankruptcy petition was filed on or about August 7,
1998 by CTI Properties, Inc. a wholly-owned subsidiary of Continental American,
in the case styled In re: CTI Properties, Inc., Case No. R98-42886-HR, U.S.
Bankruptcy Court for the Northern District of Georgia (Rome Division). The same
trustee has been appointed for both Continental American and CTI Properties.
The trustee has filed an adversary proceeding against the Company asserting
that the Company's first priority security deed may be avoided as a preference.
The Company intends to deny that its first priority security interest may be
avoided, but even if the trustee's argument is accepted by the court, the
Company has title insurance on the property as well as the personal guarantee
of one of the owners of the property.
On or about June 17, 1998, a lawsuit was filed against Timely North
and the Company in the case styled CIT Finance Group, Inc. v. Timely North,
Inc. and Professional Transportation Group Ltd., Inc., Case No. 98-CV2280-2,
Superior Court of Clayton County, Georgia. This action was filed by a lessor of
rolling stock to CTI. The complaint alleges generally that Timely North and the
Company are indebted to CIT in an amount to be determined at trial, but that
CIT alleges to be approximately $350,000, an amount disputed by the Company.
While neither Timely North nor the Company has had any contractual relationship
with CIT, CIT asserts in its complaint that the use of its rolling stock
entitles CIT to receive from Timely North and the Company the fair rental value
of the rolling stock during the period of time that Timely North used the
rolling stock. Timely North and the Company have timely filed answers to CIT's
complaint, and intend to contest the case vigorously. Discovery in the case is
progressing.
An involuntary bankruptcy petition was filed on or about June 17, 1998
against CTI in the case styled In re: Carpet Transport, Inc., Case No. 98-42224
HR, U.S. Bankruptcy Court for the Northern District of Georgia (Rome Division).
This action was filed by several parties purporting to be creditors of CTI and
alleges among other things that Timely North or its affiliates had collected a
portion of CTI's receivables, that a representative of the Company had caused
CTI's withholding tax payments to the IRS to be diverted to Timely North's
benefit (to pay Form 2290 taxes), and that Timely North had sold portions of
CTI's equipment without an accounting for the sales proceeds. A trustee has
been appointed and is investigating these potential claims. The trustee has
also questioned the receipt by the Company of a payment it received for a
consulting and non-competition agreement. The trustee also questioned the
fully-secured status and priority of the Company's September 12, 1997 secured
loan to CTI and its affiliates of $1.5 million. The Company denies that its
first priority secured status should be challenged, but even if this challenge
is successful, the Company has title insurance on the property and a personal
guarantee of one of the owners of the property. The trustee also questioned
whether the Company was entitled to the proceeds of the sale of certain rolling
stock formerly leased by CTI. In the event that the trustee should pursue any
of these claims against the Company or its affiliates, the Company and/or its
affiliates will file a timely response to any such claim denying all of the
material allegations and any liability on its part, and will vigorously defend
against any such claim.
On or about July 30, 1998, an action was brought against Timely and
other defendants in the case styled The CIT Group/Equipment Financing, Inc. v.
Timely Transportation, Inc. et al., Case No. 98-14395, Court of Common Pleas of
Montgomery County, Pennsylvania. The plaintiff as a secured creditor of various
defendants other than Timely alleges that those defendants defaulted in their
installment payments to the plaintiff, that the plaintiff sold the collateral
in a foreclosure sale, that the plaintiff has been damaged in the amount of
approximately $151,000, and that Timely is a "successor" to the other
defendants and therefore owes to CIT Group its damages. Timely was not a party
to any of the documents under which the plaintiff bases its cases, has filed a
timely answer to the complaint denying all of the material allegations and any
liability on its part, and intends to vigorously defend this action.
On or about September 4, 1998, an action was filed against the
Company, Timely and Timely North in the case styled U.S. Bancorp Leasing &
Financial v. Timely North, Inc., Timely Transportation, Inc. and Professional
13
<PAGE> 14
Transportation Group Ltd., Inc., Case No. 34611, Superior Court of Gordon
County, Georgia. This action was filed by a lessor of rolling stock to CTI. The
complaint alleges generally that the Company, Timely and Timely North are
indebted to U.S. Bancorp in an amount to be determined at trial. U.S. Bancorp
is seeking $290,534.50, an amount disputed by the Company. While neither
Timely, Timely North nor the Company has had any contractual relationship with
U.S. Bancorp, U.S. Bancorp asserts in its complaint that the use of its rolling
stock entitles it to receive from Timely, Timely North and the Company the fair
rental value of the rolling stock during the period of time that Timely North
used the rolling stock. Timely, Timely North and the Company have filed answers
to U.S. Bancorp's complaint, and intend to contest the case vigorously.
Scott Logistics Corporation v. Timely North, Inc. and Timely
Transportation, Inc., Civil Action File No. 34324, Superior Court of Gordon
County, Georgia. The plaintiff filed suit in response to Timely North's efforts
to collect $9,709.23 due on account from the plaintiff. The plaintiff filed
suit against both Timely North and Timely seeking claims for $8,342.34 for
alleged damages to freight and approximately $60,000 based on allegations of
tortious interference with plaintiff's relationships with one or more of its
customers. Timely and Timely North have filed an answer to the suit and are
vigorously defending against plaintiff's claims. In addition, Timely North has
filed a counterclaim in the amount of $9,709.23 for sums due on account from
the plaintiff.
T.M.B. Inc. v. Timely Transportation Inc. and Timely North, Inc., Case
No. 98-CV-1931, U.S. District Court for the Northern District of Georgia,
Atlanta Division. The plaintiff seeks to recover $99,998.52 for services
rendered and goods supplied. Timely has filed an answer denying liability, and
intends to vigorously defend on the merits. The plaintiff has attempted to add
Professional Transportation Group Ltd., Inc. as a defendant and to bring
additional claims based on alleged breaches of certain equipment leases. The
amount of the plaintiff's additional claims has yet to be determined, but the
court has, thus far, denied the plaintiff's attempts to add such additional
claims. In any event, the Company was not the lessee under the equipment lease
in issue, and intends to vigorously to defend against such claims in the event
an additional lawsuit is filed.
L.T.D. Logistics, Inc. and Arrow Lines Services, Inc. v. Timely
Transportation, Inc., Timely North, Inc. and Professional Transportation Group
Ltd., Inc., Civil Action File No. 981-6827-99, Superior Court of Cobb County,
Georgia. The plaintiffs claim that they are owed $71,328.30 for services
allegedly rendered. The Company filed an answer denying liability and asserting
that the liability, if any, is solely that of Timely North, Inc. In addition,
Timely North, Inc. has asserted setoffs to the plaintiff's claims..
USF&G v. Timely Transportation, et al, Civil Action No. 98A5879-4,
State Court of Cobb County, Georgia. USF&G is seeking recovery in the amount of
$52,229.66 for alleged workers' compensation insurance audit premiums, dating
back to 1994. Timely has filed an answer denying responsibility for such
premiums and intends to vigorously defend this matter.
Gainey Transportation Services, Inc. v. Timely Transportation, Inc.,
Timely North, Inc. and Professional Transportation Group Ltd., Inc., Civil
Action File No. 99-1-5811-99, Superior Court of Cobb County, Georgia. The
plaintiff filed suit claiming that it is owed approximately $65,356.22 for
services rendered. The Company intends to file an answer denying liability and
asserting that the liability, if any, is solely that of Timely North.
Client Server Solutions, Inc. v. Professional Transportation Group
Ltd., Inc., Case No. 99-CV-01909D, State Court of Clayton County, Georgia. The
plaintiff seeks to recover approximately $87,448.62 for services allegedly
rendered. The Company disputes the plaintiff's claim and filed an answer denying
liability. It appears that the Company may have counterclaims against the
plaintiff, and counsel if presently investigating such counterclaims, which will
likely be added to the lawsuit in the near future.
The Company is not a party to any other material legal proceedings.
14
<PAGE> 15
Item 4. Submission of Matters to a Vote of Security Holders - The Annual
Meeting of the Shareholders of the Company was held on May 21, 1999
for the following purpose:
1. to elect five directors to serve for one-year terms
Only shareholders of record at the close of business on March 22, 1999
were entitled to vote at the Annual Meeting. Proxies for the meeting
were solicited pursuant to the Georgia Business Corporation Code, and
there was no solicitation in opposition to management's solicitations.
Proxies and ballots were received from the holders of 3,925,029 shares
of the Company's common stock, representing 98.91% of the outstanding
shares of common stock. The results were as follows:
1. The five individuals nominated to serve as directors were
elected with the number of votes for and withheld as
indicated below:
2.
<TABLE>
<CAPTION>
Nominee For Withheld
------------------- --------- --------
<S> <C> <C>
Dennis A. Bakal 3,922,179 2,850
Linda K. Roberts 3,922,179 2,850
Susan P. Dial 3,922,179 2,850
Robert E. Altenbach 3,922,179 2,850
Gregory G. Hardwick 3,922,179 2,850
</TABLE>
Item 5. Other Information
The Company has received correspondence from the Nasdaq Stock Market
with respect to the fact that the Company currently does not satisfy Nasdaq's
continued listing requirements. Nasdaq has given the Company until October 20,
1999, at which time if the Company does not meet the requirements, Nasdaq may
issue an order delisting its securities from the Nasdaq SmallCap Market. The
Company may request a hearing to appeal the delisting. The Company believes
that it will meet the requirements by the October 20, 1999 deadline, or be
close enough that Nasdaq will either grant a further extension or that an
appeal of the delisting will be successful. The preceding sentence is a
forward-looking statement.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No. Description
- -- -----------
3.1 Amended and Restated Articles of Incorporation of the Company
(Incorporated by reference to Exhibit 3.1 from the Company's
Registration Statement on Form SB-2, File No. 333-24619 (the
"Registration Statement"))
3.2 Bylaws of the Company (Incorporated by reference to Exhibit
3.2 from the Registration Statement)
4.1 Specimen Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 from the Registration Statement)
4.2 Specimen Redeemable Warrant Certificate (Incorporated by
reference to Exhibit 4.2 from the Registration Statement)
10.1 Loan Documents Modification Agreement (May 31, 1999) by and
between the Company, Dennis A. Bakal and SouthTrust Bank,
N.A.
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K. -The Company filed one Form 8-K during
the three month period ended June 30, 1999. This report, dated April
14, 1999, concerned the reduction in the exercise price of the
Company's public warrants.
15
<PAGE> 16
SIGNATURES
In accordance with 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.
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
Date: August 13, 1999 By: /s/ Dennis A. Bakal
---------------- -----------------------
Dennis A. Bakal
President and Chief Executive Officer
(principal executive officer)
Date: August 13, 1999 By: /s/ Susan P. Dial
--------------- --------------------
Susan P. Dial
Chief Financial Officer
(principal financial and accounting officer)
16
<PAGE> 1
EXHIBIT 10.1
LOAN DOCUMENTS MODIFICATION AGREEMENT
(May 31, 1999)
THIS LOAN DOCUMENTS MODIFICATION AGREEMENT (hereinafter referred to as
this "Amendment") is made and entered into as of the 31st day of May, 1999, by
and among PROFESSIONAL TRANSPORTATION GROUP LTD., INC., a Georgia corporation,
and TIMELY NORTH, INC., a Georgia corporation (hereinafter collectively
referred to as "Borrower"), TRUCK-NET, INC., a Georgia corporation, TIMELY
TRANSPORTATION, INC., a Georgia corporation, PTG, INC., a Georgia corporation,
and DENNIS A. BAKAL, a Georgia resident (hereinafter collectively referred to
as "Guarantors"), and SOUTHTRUST BANK, N.A., a national banking association
(hereinafter referred to as "Lender").
BACKGROUND STATEMENT
Borrower and Lender are parties to that certain Amended, Restated and
Consolidated Commercial Revolving Note dated March 2, 1998, in the original
principal amount of $9,000,000.00 (hereinafter referred to as the "Note", and
the loan evidenced thereby as the "Loan"). The Note is secured by (a) that
certain Amended and Restated General Security Agreement from Borrower and
Guarantors, as "Debtor" therein, to Lender, as "Secured Party" therein, dated
November 19, 1997 (hereinafter referred to as the "Security Agreement"), and
(b) all of the "Loan Documents," as that term is defined in that certain
Amended and Restated Commercial Loan Agreement dated March 2, 1998 (hereinafter
referred to as the "Loan Agreement"). Certain payment and performance
obligations of Borrower provided for in the Note, the Security Agreement, and
the other Loan Documents are guaranteed by Guarantors pursuant to separate
Guaranty of Payment and Performance, each dated November 19, 1997 (hereinafter
each referred to as a "Guaranty"). The Loan Documents have previously been
amended pursuant to that certain Loan Documents Modification Agreement dated
June 30, 1998, that certain Loan Documents Modification Agreement dated
September 15, 1998, that certain Loan Documents Modification Agreement dated
October 31, 1998, and that certain Loan Documents Modification Agreement dated
December 31, 1998. Borrower and Lender have agreed to amend the Note and all of
the other Loan Documents, Guarantors have each agreed to reaffirm their
Guaranty, and the parties hereto are entering into this Amendment to evidence
their agreements.
AGREEMENT
FOR AND IN CONSIDERATION of the sum of Ten and No/l00 Dollars ($10,00),
the foregoing recitals, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Borrower, Guarantors and
Lender do hereby agree as follows:
1. LOAN BALANCE. The foregoing recitals are true and correct and are
incorporated herein by reference. Borrower and Lender acknowledge and agree
that as of May 31, 1999, the outstanding principal balance of the Note is Six
Million Three Hundred Eighty-Six Thousand Two Hundred Eighty-Eight and 93/100
Dollars ($6,386,288.93).
2. MODIFICATION OF NOTE. The terms of the Note are hereby modified and
amended, effective as May 31, 1999, by deleting the principal and interest
payment schedule set forth in the Note in the paragraph titled "Payment
Schedule" and replacing it with the following:
"PAYMENT SCHEDULE. Principal and interest shall be due and payable as
follows. Interest only on the outstanding principal amount shall be
due and payable monthly, in
<PAGE> 2
arrears, beginning on April 1, 1998, and continuing on the first day
of each month thereafter until maturity. On September 30, 1999, all
unpaid principal, plus accrued and unpaid interest, shall be due and
payable in full."
The purpose of this modification is to extend the maturity date of the Loan to
September 30, 1999.
3. RATIFICATION; EXPENSES. Except as herein expressly modified or
amended, all the terms and conditions of the Note are hereby ratified,
affirmed, and approved. In consideration of Lender agreeing to extend the
maturity date of the Note, Borrower agrees to pay all fees and expenses
incurred in connection with this Amendment.
4. MODIFICATION OF LOAN DOCUMENTS. (a) As of the date hereof, Borrower
and Guarantors hereby reaffirm and restate each and every warranty and
representation set forth in the Loan Documents. The terms of the Loan Documents
are hereby modified and amended, effective as of the date hereof, so that any
reference in any of the Loan Documents (including, without limitation, the Loan
Agreement) to the Note shall refer to the Note as herein amended.
b) The notice address for Borrower in each Loan Document is amended
to read as follows:
Professional Transportation Group Ltd., Inc.
1950 Spectrum Circle
Suite B-100
Marietta, Georgia 30067
5. GUARANTOR'S REAFFIRMATION. The undersigned Guarantors hereby ratify,
confirm, reaffirm and covenant that the Guaranty which they have executed is
validly existing and binding against them under the terms of such Guaranty.
Guarantors hereby reaffirm and restate, as of the date hereof, all covenants,
representations and warranties set forth in the Guaranty.
6. NO DEFENSES; RELEASE. For purposes of this Paragraph 6, the terms
"Borrower Parties" and "Lender Parties" shall mean and include Borrower and
Guarantors, and Lender, respectively, and each of their respective
predecessors, successors and assigns, and each past and present, direct and
indirect, parent, subsidiary and affiliated entity of each of the foregoing,
and each past and present employee, agent, attorney-in-fact, attorney-at-law,
representative, officer, director, shareholder, partner and joint venturer of
each of the foregoing, and each heir, executor, administrator, successor and
assign of each of the foregoing; references in this paragraph to "any" of such
parties shall be deemed to mean "any one or more" of such parties; and
references in this sentence to "each of the foregoing" shall mean and refer
cumulatively to each party referred to in this sentence up to the point of such
reference. Borrower hereby acknowledges, represents and agrees: that Borrower
has no defenses, setoffs, claims, counterclaims or causes of action of any kind
or nature whatsoever with respect to the Note and the other Loan Documents or
the indebtedness evidenced and secured thereby, or with respect to any other
documents or instruments now or heretofore evidencing, securing or in any way
relating to the Loan, or with respect to the administration or funding of the
Loan, or with respect to any other transaction, matter or occurrence between
any of the Borrower Parties and any Lender Parties or with respect to any acts
or omissions of any Lender Parties (all of said defenses, setoffs, claims,
counterclaims or causes of action being hereinafter referred to as "Loan
Related Claims"); that, to the extent that Borrower may be deemed to have any
Loan Related Claims, Borrower does hereby expressly waive, release and
relinquish any and all such
-2-
<PAGE> 3
Loan Related Claims, whether or not known to or suspected by Borrower; that
Borrower shall not institute or cause to be instituted any legal action or
proceeding of any kind based upon any Loan Related Claims; and that Borrower
shall indemnify, hold harmless and defend all Lender Parties from and against
any and all Loan Related Claims and any and all losses, damages, liabilities,
costs and expenses suffered or incurred by any Lender Parties as a result of
any assertion or allegation by any Borrower Parties of any Loan Related Claims
or as a result of any legal action related thereto. Borrower hereby reaffirms
and restates, as of the date hereof, all covenants, representations and
warranties set forth in the Loan Documents.
7. NO NOVATION. Borrower and Lender hereby acknowledge and agree that
this Amendment shall not constitute a novation of the indebtedness evidenced by
the Loan Documents, and further that the terms and provisions of the Loan
Documents shall remain valid and in full force and effect except as may be
hereinabove modified and amended.
8. NO WAIVER OR IMPLICATION. Borrower hereby agrees that nothing herein
shall constitute a waiver by Lender of any default, whether known or unknown,
which may exist under the Note or any other Loan Document. Borrower hereby
further agrees that no action, inaction or agreement by Lender, including,
without limitation, any extension, indulgence, waiver, consent or agreement of
modification which may have occurred or have been granted or entered into (or
which may be occurring or be granted or entered into hereunder or otherwise)
with respect to nonpayment of the Loan or any portion thereof, or with respect
to matters involving security for the Loan, or with respect to any other matter
relating to the Loan, shall require or imply any future extension, indulgence,
waiver, consent or agreement by Lender. Borrower hereby acknowledges and agrees
that Lender has made no agreement, and is in no way obligated, to grant any
future extension, indulgence, waiver or consent with respect to the Loan or any
matter relating to the Loan.
9. NO RELEASE OF COLLATERAL. Borrower further acknowledge and agree that
this Agreement shall in no way occasion a release of any collateral held by
Lender as security to or for the Loan, and that all collateral held by Lender
as security to or for the Loan shall continue to secure the Loan.
10. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of Borrower, Guarantors and Lender and their respective
heirs, successors and assigns, whether voluntary by act of the parties or
involuntary by operation of law.
11. AUTHORITY. By executing this Amendment as hereinafter provided,
Dennis A. Bakal hereby certifies that he is the President of each Borrower and
is duly authorized to execute this Amendment on behalf of each Borrower.
-3-
<PAGE> 4
IN WITNESS WHEREOF, this Amendment has been duly executed under seal by
Borrower, Guarantors and Lender, as of the day and year first above written.
BORROWER:
PROFESSIONAL TRANSPORTATION GROUP LTD.,
INC., a Georgia corporation
By: /s/Dennis A. Bakal
------------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
TIMELY NORTH, INC., a Georgia corporation
By: /s/Dennis A. Bakal
------------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
GUARANTORS:
TRUCK-NET, INC., a Georgia corporation
By: /s/Dennis A. Bakal
-----------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
TIMELY TRANSPORTATION, INC., a Georgia
corporation
By: /s/Dennis A. Bakal
-----------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
/s/Dennis A. Bakal
-----------------------------------(SEAL)
DENNIS A. BAKAL,
-4-
<PAGE> 5
PTG, INC., a Georgia corporation
By: /s/Dennis A. Bakal
--------------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
LENDER:
SOUTHTRUST BANK, N.A., a national banking
association
By: /s/Barbara A. Gewert
--------------------------------------
Barbara A. Gewert
Vice President
-5-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ISSUER'S
UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1999,
SET FORTH IN THE ACCOMPANYING FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 116,302
<SECURITIES> 0
<RECEIVABLES> 10,528,723
<ALLOWANCES> 793,765
<INVENTORY> 0
<CURRENT-ASSETS> 12,330,386
<PP&E> 8,708,504
<DEPRECIATION> 2,234,807
<TOTAL-ASSETS> 21,905,508
<CURRENT-LIABILITIES> 16,863,771
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,595,419
<TOTAL-LIABILITY-AND-EQUITY> 21,905,508
<SALES> 21,706,894
<TOTAL-REVENUES> 21,706,894
<CGS> 0
<TOTAL-COSTS> 21,160,260
<OTHER-EXPENSES> (166,175)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 504,149
<INCOME-PRETAX> 208,660
<INCOME-TAX> 0
<INCOME-CONTINUING> 208,660
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 208,660
<EPS-BASIC> .05
<EPS-DILUTED> .04
</TABLE>
