SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 0-30857
ORDERPRO LOGISTICS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 86-0982348
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6700 N. Oracle Road, Suite 412, Tucson, AZ 85704
(Address of principal executive offices)
(520) 575-5745
(Issuer's telephone number)
FifthCAI, Inc.
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
As of November 16, 2000, the number of shares of Common Stock issued and
outstanding was 4,900,000.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
ORDERPRO LOGISTICS, INC.
INDEX
Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 2000 1
Statement of Operations - For the three months
ended September 30, 2000. 2
Satement of Stockholders' Equity from Inception
to September 30, 2000 3
Statement of Cash Flows - For the three months
ended September 30, 2000 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORDERPRO LOGISTICS, INC.
(FORMERLY FIFTHCAI, INC.)
BALANCE SHEET
SEPTEMBER 30, 2000
ASSETS
Current Assets
Cash and cash equivalents $ 41,456
Accounts receivable - trade 215,124
Due from officer and employee 86,945
---------
Current Assets 343,525
---------
Property and equipment, net of accumulated depreciation 87,628
Deferred tax asset 16,000
---------
Total Assets $ 447,153
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts payable $ 271,736
Accrued liabilities 34,705
---------
Current Liabilities 306,441
---------
Total Liabilities 306,441
Stockholders' Equity
Common Stock - No par value, authorized 100,000,000
shares, issued and outstanding 4,900,000 490
Additional paid in capital 165,085
Retained Earnings (24,863)
---------
Total Stockholders' Equity 140,712
---------
Total Liabilities and Stockholders' Equity $ 447,153
=========
The accompanying notes are an integral part of these financial statements.
1
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ORDERPRO LOGISTICS, INC.
(FORMERLY FIFTHCAI, INC.)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION TO SEPTEMBER 30, 2000
Revenue $ 465,937
Direct cost of revenue 383,869
-----------
Gross Profit 82,068
Expenses
Administrative costs 28,222
Amortization and depreciation 5,478
Rent and occupancy costs 15,629
Employee costs 73,602
-----------
Total Costs 122,931
-----------
Loss before income tax benefit (40,863)
Benefit of income taxes 16,000
-----------
Net Loss $ (24,863)
===========
Loss per common share $ (0.01)
===========
Weighted average shares outstanding 4,900,000
===========
The accompanying notes are an integral part of these financial statements.
2
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ORDERPRO LOGISTICS, INC.
(FORMERLY FIFTHCAI, INC.)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION TO SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Common Stock Additional
------------------- Paid In Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance at February 2, 2000,
(date of incorporation) 5,040,000 $ 504 $ 996 $ 00 $ 1,500
Merger with OrderPro (140,000) (14) 94,207 00 94,193
Sale of Stock 00 00 69,882 00 69,882
Net Loss 00 00 00 (24,863) (24,863)
---------- ----- -------- -------- ---------
Balance at September 30, 2000 4,900,000 $ 490 $165,085 $(24,863) $ 140,712
========== ===== ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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ORDERPRO LOGISTICS, INC.
(FORMERLY FIFTHCAI, INC)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION TO SEPTEMBER 30, 2000
Loss from operations $ (24,863)
Adjustments to reconcile net income from operations
to net cash provided by (from) operating activities:
Deferred tax asset (16,000)
Amortization and depreciation 5,478
---------
Net cash provided/(used) by operations (35,385)
Changes in operating assets and liabilities
(Increase) in accounts receivable (215,124)
(Increase) in other receivables (86,945)
Increase in accounts payable 271,736
Increase in accrued liabilities 34,705
---------
Net cash (used in) operating activities (31,013)
Cash Flows from Investing Activities
Acquisition of property and equipment (7,613)
---------
Net cash (used in) investing activities (7,613)
Cash flows from financing activities
Proceeds from sale of common stock 80,082
---------
Net cash provided by financing activities 80,082
Net increase in cash and cash equivalents 41,456
Cash and cash equivalents at beginning of period 0
---------
Cash and cash equivalents at end of period $ 41,456
=========
The accompanying notes are an integral part of these financial statements.
4
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ORDERPRO LOGISTICS, INC.
(FORMERLY FIFTHCAI, INC.)
NOTES TO FINANCIAL STATEMENT
FOR THE PERIOD FROM INCEPTION TO ENDED SEPTEMBER 30, 2000
NOTE 1 - THE COMPANY
OrderPro Logistics, Inc. (formerly FifthCAI, Inc.) (the "Company") was
incorporated in the state of Arizona on May 12, 2000. The Company had no
operations until July 2000. The Company provides freight brokerage, and
logistics services through internet access, on-sight presence and custom
designed software. The Company's year end is December 31.
FifthCAI, Inc. was incorporated on February 2, 2000 and had only limited
operations until the reverse acquisition with OrderPro Logistics on September
29, 2000. In conjunction with the reverse acquisition, FifthCAI, Inc.
transferred 4,660,000 shares to the former stockholders of OrderPro, cancelled
140,000 shares of stock then outstanding, and changed its name to OrderPro
Logistics, Inc. On a pro forma basis, had the merger occurred on February 2,
2000, the combined loss before income tax benefit would have been $1,300 greater
and the net loss would have been $800 more for a net loss of $25,663.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
REVENUE AND EXPENSE RECOGNITION - The Company recognized revenue when the
freight is tendered to the carrier at origin, and the Company records the
concurrent liability to the carrier and any other expenses related to shipment
for which the Company is liable. Where the Company does not assume the liability
for payment of expenses, or risk of collection it recognizes commission upon
performance of services.
ACCOUNTS RECEIVABLE - The Company recognizes revenue based on its revenue
recognition policy and provides an allowance for doubtful accounts based on the
Company's evaluation of credit worthiness and collection prospects for each
client. At September 30, 2000, all amounts are estimated to be collectible.
PROPERTY AND EQUIPMENT - Property and equipment are carried at cost less
accumulated depreciation. Cost was determined based on the depreciated carrying
value of the stockholder at the time the assets were placed in the Company.
Property and equipment is depreciated on a straight line basis over the
estimated useful life of the asset, ranging from three to seven years,
The Company is committed to completion of an internet and software system for
its internal use and potentially for sale or lease to third parties. The
remaining development costs related to completion of this asset is estimated to
be $200,000. The amounts expended for this programming and development is being
capitalized as an asset of the Company and depreciated over its estimated useful
life.
5
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ORDERPRO LOGISTICS, INC.
(FORMERLY FIFTHCAI, INC.)
NOTES TO FINANCIAL STATEMENT
FOR THE PERIOD FROM INCEPTION TO ENDED SEPTEMBER 30, 2000
(continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME TAXES - Income taxes are accounted for under the asset and liability
method of accounting. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
NOTE 3. - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Computers $13,772
Software and libraries 15,262
Internally developed software 52,773
Furniture and equipment 11,299
-------
93,106
Less: accumulated depreciation 5,478
-------
$87,628
=======
Depreciation and amortization expense for the period ended September 30, 2000
was $5,478.
6
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ORDERPRO LOGISTICS, INC.
(FORMERLY FIFTHCAI, INC.)
NOTES TO PROFORMA FINANCIAL STATEMENT
FOR THE PERIOD FROM INCEPTION TO ENDED JULY 31, 2000
(continued)
NOTE 4. - INCOME TAXES
At September 30, 2000, the Company has approximately $41,400 of net operating
losses available to offset future income tax liability. There is no certainty as
to the timing of such recognition nor that the Company will be able to fully
utilized these amounts.
Income tax benefit for the period ended September 30, 2000 includes the
following components:
Federal State Total
------- ----- -----
Current credit $(12,680) $ (3,120) $(15,800)
Deferred credit (160) (40) (200)
-------- -------- --------
$(12,840) $ (3,160) $(16,000)
======== ======== ========
Income tax expense differs from amounts computed by applying the U.S. Federal
income tax annualized rate of 34% to earnings before income taxes as a result of
the following:
Computed "expected" tax expense $13,900
Increase in income taxes resulting from:
State income taxes, net of Federal income tax benefit 2,100
-------
$16,000
=======
The tax effects of temporary differences that give rise to a deferred tax asset
at September 30 2000 is the excess of financial statement deduction over tax
amortization of organizational expenses. The deferred tax asset is $200 to be
recognized for tax purposes over the next 52 months.
Realization of the net deferred tax assets is dependent on generating sufficient
taxable income prior to their expiration. Tax effects are based on a 8.0% state
and 34.0% federal income tax rates for a net combined rate of 39.3%. The
realized net operating losses expire over the next 20 years, as follows:
Expiration Amount
---------- ------
2021 $41,400
-------
Total $41,400
=======
Management believes that it is more likely than not that the Company will
realize the benefits of the deferred tax credits before each expires through
2021, therefore, no valuation reserve has been provided for this against the
asset.
7
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ORDERPRO LOGISTICS, INC.
(FORMERLY FIFTHCAI, INC.)
NOTES TO PROFORMA FINANCIAL STATEMENT
FOR THE PERIOD FROM INCEPTION TO ENDED JULY 31, 2000
(continued)
NOTE 5 - RELATED PARTY TRANSACTIONS
As part of the formation of the Company, the major stockholder contributed
furniture, property and related assets to the Company in exchange for stock of
the Company. These assets were recorded at the net depreciated value of the
assets held by the stockholders.
At September 30, 2000, the Company has a receivable for an officer and director
of the Company in the amount of $84,080. The loan is to be repaid to the Company
by December 31, 2000.
NOTE 6. - LEASE COMMITMENTS
The Company is obligated under a long term lease for office space in Tucson
Arizona. The annual lease payments require monthly payments of $3,521 with
annual escalation through May 31, 2003. Annual commitments for the calendar
years are as follows:
2000 $ 17,603
2001 $ 43,478
2002 $ 45,652
2003 $ 19,406
NOTE 7 - STOCKHOLDERS' EQUITY
The Company has 100,000,000 shares of $0.0001 par value stock authorized and
4,900,000 shares outstanding at July 31, 2000 after giving effect to the
reorganization and related reverse acquisition between FifthCAI, Inc. and
OrderPro Logistics, Inc.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
INTRODUCTION
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report. Certain
statements made in this report relating to trends in the Company's business, as
well as other statements including words such as "believe", "expect",
"estimate", "anticipate", and similar expressions, constitute forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. The matters referred to in these forward looking statements that could be
affected by the risks and uncertainties include, but are not limited to, the
effect of general economic and market conditions, including downturns in
customers' business cycles, the availability and cost of qualified shippers, the
availability and price of diesel fuel, the impact and cost of government
regulations and taxes on the operations of the business, competition, as well as
certain other risks described herein. Subsequent written and oral forward
looking statements attributable to the Company or persons acting on its behalf
are expressly qualified in their entirety by the cautionary statements in this
paragraph and elsewhere herein.
REVENUES AND OPERATING MARGINS
The Company reported a net loss of $24,863 on revenues of $465,937 in the three
months of operation from July 1, 2000 through September 30, 2000. Revenues for
the period are less than anticipated due to a dramatic decline from one of the
Company's largest customer. An agreement to provide logistical services expired
and the customer declined to renew the contract due to major marketing and
operational difficulties within their Company. It is unknown if this customer
will require services at previous levels. The Company continues to provide
limited brokerage services to the customer but does not believe that the
customer will return to its previous revenue levels unless they are able to
solve their internal problems. The Company's operating margin is less than
originally anticipated due to overall negative marketing conditions within the
trucking industry and the higher price of diesel fuel. During the third quarter
of 2000 fewer owner-operators were willing to haul loads due to such higher fuel
costs. Pricing to customers was not readily adjustable due to contractual
restrictions and the competitive environment. Additionally, management was
deeply involved in effectuating the reverse merger during the third quarter of
2000. At the end of the quarter management began an aggressive marketing
strategy designed to add additional customers to the revenue base. During
October and November (to date) multi-year contracts have been signed with two
new logistics customers. It is anticipated that the addition of these two new
customers will have an immediate positive impact on both the Company's revenues
and operating margins. Also, during October 2000 a new customer was added to the
freight brokerage segment of the business. This customer has a nation-wide
presence and management believes that it will increase both the revenue base and
the operating margin. Hence, management expects improved operating results
during the fourth quarter of 2000 and for the year 2001.
OPERATING EXPENSES
During the third quarter 2000 (the first quarter of operations by the Company)
operating expenses reflected the costs associated with funding Company growth
and effectuating the reverse merger. Administrative costs were higher due to
one-time costs incurred in the reverse merger and travel costs associated with
the marketing strategy implemented at the end of the quarter. Employee costs
reflect the addition of the new personnel necessary to effectively manage and
operate the Company as the marketing strategy is implemented. As new customers
are signed to contracts additional personnel are required for both on-site and
9
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in supporting services. It is believed during the fourth quarter of 2000 hiring
and training for all administrative functions will be completed. Additional
hiring and training of on-site and support personnel will continue as needed to
fulfill contractual obligations with new customers. In an effort to expedite
full implementation of OrderPro software, the Company has entered into a
contract with outside sources to deliver a completed product by December 31,
2000. The increased functionality that the software will provide is a key
element in the Company's marketing and business development strategy.
FINANCIAL CONDITION
During the third quarter, 2000 the Company began the process of increasing
equity capital to fund the growth of the Company. The Company's strategic plan
requires additional capital to gain market advantage with both carriers and
customers. Significant costs have been incurred in the development of the
proprietary software and it is expected these costs to increase dramatically
during the fourth quarter, 2000. Another major aspect of the strategic plan
calls for rapid payment of carriers. Until such time as sufficient capital is
available to fund both rapid payment of carriers and growth of the Company this
segment of the plan cannot be implemented. Currently, trade accounts receivable
are less than trade accounts payable due to the use of cash to fund the growth
of the Company. During the third quarter 2000 a net $69,882 was raised in the
sale of stock and $84,080 was loaned to the Company founder. It is believed that
the loan to the founder will be fully repaid during the fourth quarter, 2000. If
additional capital is not provided to the Company it is believed that full
implementation of the strategic plan would be in jeopardy.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
(a) The following Exhibits are filed herein:
27 Financial Data Schedule
(b) Reports on Form 8-K filed:
8-K filed October 2, 2000 reporting on Items 1, 2, 5, 6, and 7
regarding change in the registrant with related exhibits.
10
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SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, duly authorized.
ORDERPRO LOGISTICS, INC,
DATED: November 20, 2000 By: /s/ Richard L. Windorski
-----------------------------------
Richard L. Windorski, President
and Chief Executive Officer
By: \s\ Alvan W. Lafrenz
-----------------------------------
Alvan W. Lafrenz, Chief Financial
Officer and Treasurer
11
