U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 1998
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 33-8067-NY
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U S JET, INC.
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(Name of Small Business Issuer in its Charter)
NEVADA 84-1422609
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
111 Airport Road
Butte, Montana 59701
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (406) 494-7512
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 Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the issuer has 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 a court. Yes____ No ___
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
November 18, 1998
Common - 11,298,789 shares
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is
contained in Item 6 of this report.
Transitional Small Business Issuer Format Yes X No
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Consolidated Financial Statements of the Company required
to be filed with this 10-QSB Quarterly Report were prepared by management and
commence on the following page, together with related Notes. In the opinion
of management, the Consolidated Financial Statements fairly present the
financial condition of the Company.
<TABLE>
U S JET, INC. AND SUBSIDIARIES
Unaudited Combined Consolidated Balance Sheet
September 30, June 30,
1998 1998
<CAPTION>
<S> <C> <C>
ASSETS
Current Assets:
Cash and Equivalents 223,137 98,868
Deposits 190,434 182,717
Accounts Receivable 1,238,094 1,110,803
Inventory 869,398 702,339
Escrowed Funds 120,443 120,257
Deposits Paid 37,995 18,000
Total Current Assets 2,679,501 2,232,984
Property and Equipment:*
Real-estate Properties* 2,149,887 1,611,926
Support Equipment 391,781 185,000
Aircraft Parts & Rotables 2,461 2,500
Transportation Equipment 769,816 419,563
Computer Equipment 530,792 535,250
Office Equipment 93,072 34,500
Other-Tech & Manuals 1,275,025 1,275,351
Goodwill 143,323 -0-
Total Property and Equipment* 5,356,157 4,084,090
Total Assets* 8,035,658 6,317,074
*Excludes $8,400,000 in appreciated value based upon real estate
appraisal of principal properties.
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts Payable 97,568 91,422
Notes Payable 1,025,887 1,012,554
Taxes Payable 18,453 12,197
Total Current Liabilities 1,141,908 1,116,173
Long Term Debt
Notes Payable 2,707,323 1,039,221
Long Term Debt 3,650,000 1,977,358
Total Liabilities 7,499,231 4,132,752
Shareholders Equity*
Capital Stock 984,835 887,000
Additional Paid in Capital* 303,012 1,989,052
Retained Earnings (Accumulated Deficit) (751,420) (691,730)
Total Stockholders' Equity 536,427 2,184,322
Total Liabilities and
Stockholders' Equity 8,035,658 6,317,074
*Excludes $8,400,000 in appreciated value based upon real estate
appraisal of principal properties.
</TABLE>
<TABLE>
US JET, INC., and Subsidiaries
Unaudited Combined Consolidated Income Sheet
3 Months Ended September 30, 1998
and Year Ended June 30, 1998
<CAPTION>
September 30, June 30,
1998 1998
Income
<S> <C> <C>
Sales 3,431,115 6,628,984
Cost of goods Sold (2,628,510) (5,657,919)
Gross Profit from Sales 802,605 71,065
Rental Income 24,307 48,614
Misc. Service Income 6,946 13,892
Transportation Income 4,061 6,122
Other Revenue
Interest Income 2,221 4,203
Purchase Discounts 49,366 102,735
TOTAL INCOME 889,506 1,146,631
Expenses
Operating Expenses
Advertising 2,168 3,816
Accounting 2,419 11,058
Amortization 3,739 841
Bank Charges 1,603 735
NSF Checks 719 1,506
Computer supplies/software 4,605 13,210
Consulting fees 5,152 8,904
Contributions 1,770 3,747
Contract Labor 10,470 20,556
Dues & Subscriptions 1,112 2,083
Data Processing 3,319 6,769
Depreciation 17,684 21,954
Drug testing - Employees 690 1,095
Equipment Rental 2,091 6,190
Equipment repair/supplies 2,594 3,188
Fire Equipment & supplies 733 1,388
Freight (1,340) (4,689)
Insurance - General 33,628 50,789
Insurance - Emp. Group 32,182 65,262
Interest 107,671 174,610
Legal 5,544 7,709
Misc 3,595 11,373
Office Supplies 6,899 10,776
Printing 146 321
Postage 3,536 4,726
Rent 40,341 65,136
Repairs & Maintenance 16,789 14,064
Salaries 364,661 658,266
Sales Expense 7,208 10,309
Security & Alarm 1,053 2,069
Taxes & Licenses 3,527 5,636
Taxes - Payroll 51,623 90,823
Taxes - Property 582 1,941
Telephone 14,281 24,319
Travel & Ent 25,538 52,732
Utilities 45,952 90,458
vehicles - leased 46,304 90,608
Vehicle Licenses 692 903
Vehicle repairs 24,282 54,564
Gas, Tires & Oil 34,875 63,375
Warehouse supplies 16,626 20,972
Workers Comp. Ins 2,133 3,324
Total Expenses 949,196 1,677,416
Pre-Tax Net Income (59,690) (530,785)
</TABLE>
The accompanying notes are an integral part of this financial statement
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U S Jet, Inc. and Subsidiaries
Note 1 - Significant Accounting Policies
Nature of Operations - U S Jet, Inc, a Nevada corporation (the Company), is an
international transportation and logistics service provider. The Company's
services are provided through its offices, distribution center, and employees
located in Butte, Montana. The Company's principal lines of business are air
freight transportation, surface truck transportation, customs brokerage and
value added services in the materials management area, such as warehousing and
distribution. The principal markets for all lines of business are North
America, Europe, the Far East, Latin America and the South Pacific.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Risk Factors - The Company's operations are influenced by many factors,
including economic and political conditions around the world, international
laws, and industry trends.
Principles of Consolidation - The accompanying consolidated financial
statements include U S Jet Inc and its wholly-owned subsidiaries. There are no
Investments in 100% or less owned affiliates. All significant inter-company
balances and transactions have been eliminated.
Cash and Equivalents include demand deposits and investments with original
maturities of three months or less.
Short-term Investments include deposits of cash in interest bearing securities
which have original maturities of greater than 90 days and less than one year.
Trade Receivables include disbursements made by the Company on behalf of its
customers for transportation costs and custom duties. The billings to
customers for these disbursements, which are several times the amount of
revenue and fees derived from these transactions, are not recorded as revenue
and expense on the Company's income statement. Management establishes reserves
based on the expected ultimate recovery of these receivables.
Property and equipment are stated at cost. Depreciation is computed
principally by the straight-line method at rates based on the estimated useful
lives of the various classes of property as follows: building, 20-50 years;
leasehold improvements, life of the improvements, life of the lease or
estimated useful life if shorter; equipment and furniture, 3-10 years.
Revenue Recognition - Revenue and freight consolidation costs are recognized
at the time the freight departs the terminal of origin. Custom brokerage and
other revenue are recognized upon completing the documents necessary for
customs clearance.
Revenue realized as an indirect air carrier or a freight consolidator includes
the direct carrier's charges to the Company for carrying the shipment.
Revenue realized in other capacities includes only the commissions and fees
received.
Note 2 - Acquisitions
Effective August 25, 1998, U S Jet, Inc. ("USJ"), a Delaware corporation; all
of the stockholders of USJ; and American Coal Corporation ("ACC") entered into
an Agreement and Plan of Merger (the "Agreement"). ACC was an inactive public
company that had been dormant since 1990. ACC had been exploring business
opportunities in an attempt to enter into a transaction with a company where
the controlling interest in ACC would be acquired by the successor company,
Pursuant to the Agreement, ACC conducted a 100 for one, reverse split of its
shares and all of the outstanding shares of USJ were exchanged for 10,200,000
shares of validly issued, fully paid and non-assessable common stock of ACC
(approximately 88% of the issued and outstanding shares of ACC, after giving
effect to the reverse split and the issuance of 995,401 post-split shares to
certain persons for services rendered in connection with the transaction). For
accounting purposes, the transaction has been recorded as if USJ acquired ACC,
a reverse acquisition. Subsequent to the business combination, the former
Board of Directors of USJ control a majority of the common stock of ACC.
As a result of the large number of shares being issued in connection with the
transaction, the fact that the shares represent unregistered securities, and
the market for the securities is thin, the fair value of USJ's net assets was
used to determine the value of the shares exchanged. The Company is the
successor entity.
During the relevant quarter of 1998, the Company entered into an agreement to
acquire a 100% interest in Service Distributing, Inc. (SDI) in a merger
transaction to be treated as a reorganization for tax purposes and
accounted for as a pooling of interests. The estimated value of the equity
shares to be issued by the Company in the transaction is $300,000. As a
consolidated subsidiary of the Company, SDI is engaged in the warehousing,
marketing and distribution, throughout the State of Montana, of a wide range
of food and related products to various retail, grocery and convenience store
customers, SDI currently maintains business premises in Bozeman, Montana.
During the relevant quarter of 1998, the Company entered into an agreement to
acquire a 100% interest in Butte Aviation, Inc. (BAI) in a merger transaction
to be treated as a reorganization for tax purposes and accounted for as a
pooling of interests. The estimated value of the equity shares to be issued by
the Company in the transaction is $15,000. As a consolidated subsidiary of
the Company, BAI is a certificated air carrier engaged in the business of
providing fuel, air taxi, charter and aircraft maintenance services at its
fixed base operator property located at the Bert Mooney Airport in Butte,
Montana.
Subsequent to the relevant quarter of 1998, the Company entered into and
closed an agreement to acquire a 100% interest in Western Air Couriers, Inc.
(WAC) in a merger transaction to be treated as a reorganization for tax
purposes and accounted for as a pooling of interests. The estimated value of
the equity shares issued by the Company in the transaction is $170,000. A
consolidated subsidiary of the Company, WAC is also a certificated air carrier
engaged in the business of providing fuel, air taxi, air freight, charter and
aircraft maintenance and pilot training services at its fixed base operator
property located at the Bremerton National Airport, in Port Orchard,
Washington.
The Company's financial statements assume that each of the foregoing
transactions took place as of the beginning of the periods presented. The
financial information is presented for illustrative purposes only and is not
necessarily indicative of the operating results that would have occurred had
the transactiom been consummated at the beginning of the period presented, nor
is it necessarily indicative of future operating results. The financial
information should be read in conjunction with the historical unaudited
financial statements and the related notes thereto of USJ, BAI and WAC, the
historical audited financial statements and related notes thereof SDI, and the
historical financial statements and related notes thereto of ACC, included in
ACC's annual reports filed on Form 10-KSB as of and for the years ended June
30,1998, June 30,1997, and June 30,1996.
Note 3 - Borrowing Capacity
At September 30, 1998, the Company had limited borrowing capacity, primarily
as a result of encumbrances on substantially all of its fixed assets.
Note 4 - Lease Commitments
At September 30,1998, the Company had commitments on long-term operating lease
agreements for the following facilities:
The Company's executive office building, located at 111 Airport Road, Butte,
Montana; the Company's flight operations, freight hangar facilities at the
Bert Mooney Airport, in Butte, Montana; the office, air taxi, fuel and
aircraft maintenance and hangar facilities of BAI, at the Bert Mooney Airport,
in Butte, Montana; the office and warehouse facilities of SDI located at 6730
Tawnay Brown Lane, in Bozeman, Montana; and the office, air taxi, charter and
freight, fuel and aircraft maintenance and training facilities of WAC, at the
Bremerton National Airport, in Port Orchard, Washington.
Note 5 - Contingencies
The Company is party to routine litigation incidental to its business, which
primarily involves contract disputes. It is management's opinion that the
resolution of such litigation will not have a material adverse effect on the
Company's consolidated financial statements taken as a whole.
Item 2. Management's Discussion and Analysis of Plan of Operation.
Plan of Operation.
The Company, singly and/or through its subsidiaries, holds an air
carrier certificate, an interstate contract motor carrier certificate;
owns a refrigerated warehouse; and leases several airport properties in
Montana and Washington. The objective of the Company is to develop and
successfully operate
international air cargo and trade operations from its principal logistics
facilities in Montana, where all operations, accounting, training, maintenance
and communication functions are also to be located.
The Company expects to benefit from increases in exports from
Asian and Latin American countries, requiring air transportation services,
that are projected to result from the economic instability in those regions.
The Company has plans to raise additional capital through one or
more private placements of debt and equity securities and a secondary offering
of newly issued common stock.
The anticipated future operations of the Company are highly
dependent on the ability of the Company to raise substantial additional
capital, as to which no assurance can be given.
Results of Operations.
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At September 30, 1998, the Company had $2,679,501 in current assets and
$1,141,908 in current liabilities. The Company had revenues for the three
months ended September 30, 1998, of $889,506, with $949,196 in expenses for a
net loss of ($59,690).
Liquidity
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At September 30, 1998, the Company had $2,679,501 current assets, with
total current liabilities of $1,141,908. Total stockholder's equity was
$536,427.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the Company's security holders
during the first quarter of the calendar year covered by this Report or
during the two previous calendar years.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
Page
(a) Exhibits.* Number
None.
(b) Reports on Form 8-K.
None.
* A summary of any Exhibit is modified in its entirety by reference
to the actual Exhibit.
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.
U S JET, INC.
Date: 11/20/98 By/s/Kenneth R. DeBree
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Kenneth R. DeBree
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
U S JET, INC.
Date: 11/20/98 By/s/Kenneth R. DeBree
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Kenneth R. DeBree
President and
Director
Date: 11/20/98 By/s/L. William Hegland
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L. William Hegland
Executive Vice President, CFO,
Director of Safety, Treasurer
and Director
Date: 11/20/98 By/s/Bill Markovich, Jr.
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Bill Markovich, Jr.
Director
<TABLE> <S> <C>
<PAGE>
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<CIK> 0000799194
<NAME> U S JET, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 223137
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<INCOME-PRETAX> (59690)
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