<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 14, 1999
------------------------------------------------
Date of Report (date of earliest event reported)
U. S. Trucking, Inc.
-----------------------------------------------------
Exact Name of Registrant as Specified in its Charter
Colorado 33-16417-LA 68-0133692
- --------------------------- --------------- ----------------------
State or Other Jurisdiction Commission File IRS Employer Identifi-
of Incorporation Number cation Number
3125 Ashley Phosphate Road, Suite 128, North Charleston, South Carolina 29418
- -----------------------------------------------------------------------------
Address of Principal Executive Office, Including Zip Code
(843) 767-9197
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The following
financial statements for Med-Cal Express, Inc. and its subsidiary are filed
herewith:
INDEX PAGE
Independent Auditors' Report .................................. F-2
Consolidated Balance Sheet - December 31, 1998 ................ F-3
Consolidated Statements of Operations - For the
Years Ended December 31, 1998 and 1997 ....................... F-4
Consolidated Statement of Stockholders' Equity (Deficit) -
For the Years Ended December 31, 1998 and 1997 ............... F-5
Consolidated Statements of Cash Flows - For the
Years Ended December 31, 1998 and 1997 ....................... F-6
Notes to the Consolidated Financial Statements ................ F-7
(b) PRO FORMA FINANCIAL INFORMATION. The pro forma financial
information required by Article 11 of Regulation S-X is included in Footnote 3
of the Company's audited financial statements for the year ended December 31,
1998 which were included in the Company's Form 10-KSB for the year ended
December 31, 1998.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
U.S. TRUCKING, INC.
Dated: October 8, 1999 By: /s/ W. Anthony Huff
W. Anthony Huff, Executive Vice
President
3
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Independent Auditors' Report F-2
Consolidated Balance Sheet - December 31, 1998 F-3
Consolidated Statements of Operations - For the Years
Ended December 31, 1998 and 1997 F-4
Consolidated Statement of Stockholders' Equity (Deficit) -
For the Years Ended December 31, 1998 and 1997 F-5
Consolidated Statements of Cash Flows - For the Years
Ended December 31, 1998, and 1997 F-6
Notes to Consolidated Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders,
Mid-Cal Express, Inc.,
(A Wholly Owned Subsidiary of Prime Companies, Inc.)
San Francisco, California
We have audited the accompanying consolidated balance sheet of Mid-Cal
Express, Inc. (a California corporation) and subsidiary as of December 31,
1998, and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the years ended December 31, 1998 and
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Mid-Cal
Express, Inc. and subsidiary at December 31, 1998, and the results of their
operations and their cash flows for the years ended December 31, 1998 and 1997
in conformity with generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements, the Company
ceased operations in 1998. The accompanying financial statements reflect
adjustment of certain assets and accrual of certain liabilities to reflect the
planned liquidation of the Company.
As described in Note 4 to the consolidated financial statements, the Company
has restated its financial statements for the year ended December 31, 1997 to
record a valuation allowance on deferred tax assets.
/s/HEIN + ASSOCIATES LLP
HEIN + ASSOCIATES LLP
Certified Public Accountants
Orange, California
May 11, 1999
F-2
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
------
CURRENT ASSETS:
Cash $ 3,876
Accounts receivable, net of allowance
for doubtful accounts of $194,000 929,529
Investments held in escrow 1,800,000
Prepaid expenses 115,204
Deposits 123,888
Equipment held for sale 112,000
Other current assets 91,842
-----------
TOTAL ASSETS $ 3,176,339
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES:
Notes payable $ 290,269
Payable to parent 1,253,969
Accounts payable 1,019,034
Accrued liabilities 1,058,248
-----------
TOTAL LIABILITIES 3,621,520
-----------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 12) -
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no stated value, 1,000,000
shares authorized, none issued or outstanding -
Common stock, no stated value, 10,000,000
shares authorized, 3,136,364 issued and
outstanding 2,751,364
Contributed capital 385,000
Accumulated deficit (3,581,545)
-----------
Total stockholders' equity (deficit) (445,181)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 3,176,339
===========
See accompanying notes to these consolidated financial statements.
F-3
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------
1998 1997
------------ ------------
TRANSPORTATION REVENUES $ 18,632,632 $ 15,958,230
------------ ------------
OPERATING COSTS AND EXPENSES:
Purchased transportation 7,189,829 6,166,598
Salaries and related expenses 5,970,383 4,442,038
Operating expenses and maintenance 3,276,507 2,813,112
Operating taxes and licenses 493,095 428,081
Insurance 727,982 614,330
Revenue equipment rentals 1,696,831 909,017
General supplies and expenses 1,209,132 721,192
Depreciation and amortization 864,397 667,580
------------ ------------
Total operating costs and expenses 21,428,156 16,761,948
------------ ------------
OPERATING LOSS (2,795,524) (803,718)
------------ ------------
OTHER INCOME (EXPENSE):
Gain on sale of assets 1,135,536 -
Interest expense (736,908) (423,601)
Rental income 115,200 63,900
Other income (expense) (13,148) 8,718
------------ ------------
Total other income (expense) 500,680 (350,983)
------------ ------------
LOSS BEFORE PROVISION FOR INCOME TAX (2,294,844) (1,154,701)
PROVISION FOR INCOME TAX 6,900 4,100
------------ ------------
NET LOSS $ (2,301,744) $ (1,158,801)
============ ============
See accompanying notes to these consolidated financial statements.
F-4
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Total
Preferred Stock-
Preferred Stock Common Stock Contri- (Accumu- Stock Sub- holders'
--------------------- ------------------ buted lated scription Equity
Shares Value Shares Value Capital Deficit) Receivable (Deficit)
-------- ----------- --------- ---------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1997 116,000 $ 580,000 1,000 $ 1,000 $ - $ (121,000) $(400,000) $ 60,000
Cash received on
stock subscription 400,000 400,000
Receivable - - - - - -
Sale of preferred
stock 84,000 420,000 - - - - - 420,000
Sale of common stock - - 1,035,364 1,035,364 - - - 1,035,364
Stock issued to
acquire property - - 1,100,000 715,000 - - - 715,000
Prefered stock
converted to common (200,000) (1,000,000) 1,000,000 1,000,000 - - - -
Net loss - - - - - (1,158,801) - $(1,158,801)
-------- ----------- --------- ---------- --------- ----------- --------- -----------
Balance,
December 31, 1997 - - 3,136,364 2,751,364 - (1,279,801) - 1,471,563
Cash contribution
from parent - - - - 385,000 - - 385,000
Net loss - - - - - (2,301,744) $ - $(2,301,744)
-------- ----------- --------- ---------- --------- ----------- --------- -----------
Balance,
December 31, 1998 - $ - 3,136,364 $2,751,364 $ 385,000 $(3,581,545) $ - $ (445,181)
======== =========== ========= ========== ========= =========== ========= ===========
</TABLE>
See accompanying notes to these consolidated financial statements.
F-5
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1998 1997
----------- ------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $(2,301,744) $ (1,158,801)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 864,397 667,580
Provision for bad debts 171,000 23,000
Gain on sale of certain net assets (1,135,536) -
Changes in operating assets and liabilities:
Accounts receivable 15,012 (1,138,541)
Prepaid expenses 486,094 (601,298)
Deposits 26,999 (255,887)
Other assets 317,088 (348,930)
Accounts payable 589,527 429,507
Accrued liabilities (43,088) 1,051,336
----------- ------------
Net cash used in operating activities (1,010,251) (1,332,034)
----------- ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment (126,783) (638,455)
Sale of property and equipment 152,941 -
----------- ------------
Net cash provided by (used in) investing activities 26,158 (638,455)
----------- ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock - 1,035,364
Proceeds from the sale of preferred stock - 420,000
Proceeds from stock subscription receivable - 400,000
Advances from parent 1,648,288 831,000
Proceeds from notes payable and long term debt 82,409 150,000
Principal payments on notes payable and long-term debt (901,043) (707,560)
----------- ------------
Net cash provided by financing activities 829,654 2,128,804
----------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (154,439) 158,315
CASH AND CASH EQUIVALENTS, beginning of year 158,315 -
----------- ------------
CASH AND CASH EQUIVALENTS, end of year $ 3,876 $ 158,315
=========== ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments for:
Interest $ 577,768 $ 401,083
=========== ============
Income taxes $ 9,500 $ -
=========== ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Notes payable issued to acquire property and equipment $ 740,629 $ 4,277,223
=========== ============
Common stock issued to acquire property $ - $ 715,000
=========== ============
Property transferred to parent for reduction of
advances payable $ 840,319 $ -
=========== ============
Conversion of preferred stock to common stock - $ 1,000,000
=========== ============
</TABLE>
See accompanying notes to these consolidated financial statements.
F-6
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF OPERATIONS:
Mid-Cal Express, Inc. was incorporated under the laws of the State of
California in August 1994. The Company is a wholly-owned subsidiary of Prime
Companies, Inc. (Prime). The Company's core business consists of truck
transportation of temperature-controlled products throughout the United States
and Canada. See Note 3.
The Company's wholly owned subsidiary, Mid-Cal Express Logistics, Inc.
(Logistics) was incorporated under the laws of the State of California in July
1997. Logistics is a transportation logistics provider, providing
full-service logistics capabilities in less-than-truckload and full-truckload
services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation - The consolidated financial statements include
the accounts of Mid-Cal Express, Inc. and its wholly owned subsidiary
(collectively, "the Company"). All significant intercompany balances and
transactions have been eliminated in consolidation.
Cash and Cash Equivalents - For purposes of the statements of cash flows, the
Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
Impairment of Long-Lived Assets - In the event that facts and circumstances
indicate that the cost of long-lived assets may be impaired, an evaluation of
recoverability would be performed. If an evaluation is required, the estimated
future undiscounted cash flows associated with the asset would be compared to
the asset's carrying amount to determine if a write-down to market value or
discounted cash flow value is required.
Revenue Recognition - The Company recognizes transportation revenues and
related expenses using a method which approximates recognition on the date
freight is delivered.
Income Taxes - The Company accounts for income taxes under the liability
method which requires recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax assets
and liabilities are determined, based on the difference between the financial
statements and tax basis of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. The
Company files its tax returns as part of a consolidated group with Prime
Companies, Inc.
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and the accompanying notes. The actual results could differ from
those estimates.
F-7
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company's financial statements are based upon a number of significant
estimates including the allowance for doubtful accounts, realizable value of
equipment held for sale, realizability of deferred tax assets, and cargo
claims reserves. Due to the uncertainties inherent in the estimation process,
it is at least reasonably possible that these estimates will be further
revised in the near term and such revisions could be material.
Concentrations of Credit Risk - Credit risk represents the accounting loss
that would be recognized at the reporting date if counterparties failed to
perform as contracted. Concentrations of credit risk (whether on or off
balance sheet) that arise from financial instruments (primarily accounts
receivable) exist for groups of customers or groups of counterparties when
they have similar economic characteristics that would cause their ability to
meet contractual obligations to be similarly effected by changes in economic
or other conditions. In accordance with FASB Statement No. 105, "Disclosure of
Information about Financial Instruments with Off-Balance-Sheet Risk and
Financial Instruments Concentrations of Credit Risk," the credit risk amounts
shown do not take into account the value of any collateral or security.
The Company's customers are located throughout the United States. At December
31, 1998, three customers accounted for 30%, 22%, and 14%, respectively, of
trade receivables. No other customers accounted for more than 10% of the
Company's trade receivables at December 31, 1998.
Fair Value of Financial Instruments - The estimated fair values for financial
instruments under FASB Statement No. 107, "Disclosures about Fair Value of
Financial Instruments," are determined at discrete points in time based on
relevant market information. These estimates involve uncertainties and cannot
be determined with precision.
The following methods and assumptions were used in estimating the indicated
fair values of the Company's financial instruments:
Cash and cash equivalents: The carrying amount approximates fair value
because of the short maturity of those instruments.
Investments: Investments held in escrow are considered
available-for-sale. Investments are carried at market value based on
quoted market prices.
Long-term and other debt: The fair value of the Company's debt is
estimated based on current rates offered to the Company for similar debt
and approximates carrying value.
Reclassifications - Certain reclassifications have been made to prior year's
financial statements to conform with the current presentation.
F-8
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. DISPOSITIONS AND BASIS OF PRESENTATION:
In response to continued losses from operations, management made a strategic
decision to discontinue operations through an orderly liquidation. The
Company ceased operations effective December 30, 1998. In connection with the
discontinuance, the Company sold its operating assets to U.S. Trucking, Inc.
(UST) in exchange for 400,000 shares of UST common stock, UST's assumption of
$3,351,359 of underlying debt, and UST's assumption of certain operating
leases. All other leases were terminated effective December 31, 1998. All
assumed debt, and operating lease payments aggregating approximately
$2,547,000 are guaranteed by the Company and Prime. These obligations expire
in varying amounts through June 2003. UST's stock received as consideration
in the sale was valued at $4.50 per share based on the average quoted market
price of the stock for a period of three days prior and after the transaction
was agreed to. Operating assets not acquired by UST have been reduced to
their estimated realizable value. The sale resulted in a gain of $1,135,536
calculated as follows:
Consideration Received:
UST common stock $ 1,800,000
Liabilities assumed by UST 3,351,389
-------------
Total consideration received 5,151,389
Net book value of assets sold (3,860,853)
Other disposal costs (155,000)
-------------
Gain on sale of assets $ 1,135,536
=============
The Company has entered into an agreement with Credit Managers Association
(CMA) whereby CMA will arrange for the orderly liquidation of the Company's
assets and assist the Company in the settlement of its outstanding
obligations.
The UST common stock is held in escrow by CMA. Proceeds from the sale of
stock are to be used to pay trade payables of the discontinued operations.
Remaining proceeds, if any, will be released to the Company upon final
settlement of the payables. As of May 11, 1999, the market value of UST's
common stock had decreased to $3.125 per share.
4. PRIOR PERIOD ADJUSTMENT:
The Company has restated its prior year financial statements to record a
valuation allowance against deferred tax assets. The effect on results of
operations for the year ended December 31, 1997 was to increase the provision
for taxes and net loss by $401,000.
F-9
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. EQUIPMENT HELD FOR SALE:
At December 31, 1998, equipment held for sale consists a tractor and service
vehicles. These assets have been written down to their estimated net
realizable value, resulting in an impairment loss of approximately $15,000.
6. ACCRUED LIABILITIES:
Accrued liabilities consisted of the following at December 31, 1998:
Accrued compensation related liabilities $ 257,468
Accrued purchased transportation 274,083
Accrued interest 181,658
Accrued insurance 120,856
Claims loss reserves 68,402
Other accrued expenses 155,781
-------------
Total $ 1,058,248
=============
7. NOTES PAYABLE:
At December 31, 1998, the Company had outstanding borrowings of $181,338 from
a finance company. These borrowings accrue interest at prime plus 2% (9.75%
at December 31, 1998) and are collateralized by accounts receivable. These
borrowings were paid in full subsequent to December 31, 1998.
Also, at December 31, 1998, the Company had $108,931 outstanding on various
notes payable to leasing companies. These notes bear interest at rates ranging
up to 9.1%, and are collateralized by equipment held for sale. These notes
were extinguished subsequent to December 31, 1998 with proceeds from disposal
of equipment held for sale.
8. STOCKHOLDERS' EQUITY:
In 1996, the Company issued 116,000 shares of preferred stock to Prime for
$180,000 in cash and settlement of a note payable in the amount of $400,000.
In 1997, the Company issued 84,000 shares of preferred stock to Prime for
$420,000 in cash. In 1997, the Company converted all shares of preferred
stock to 1,000,000 shares of common stock.
In 1997, the Company sold 1,035,364 shares of common stock to Prime at $1.00
per share.
In 1997, the Company issued 1,100,000 shares of common stock to Prime in
exchange for rental property. The transaction was recorded at Prime's cost
for the property. In 1998, the property was returned to Prime. Advances from
parent were reduced by the recorded value of the property.
F-10
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. INCOME TAXES:
Income tax expense is comprised of the following:
YEAR ENDED DECEMBER 31,
-------------------------
1998 1997
--------- ---------
Current:
Federal $ - -
State 6,900 $ 4,100
--------- ---------
6,900 4,100
Deferred:
Federal - -
State - -
--------- ---------
$ 6,900 $ 4,100
========= =========
The components of the net deferred tax assets are as follows at December 31,
1998:
Current deferred tax assets:
Vacation accrual $ 16,000
Allowance for bad debts 94,200
Accrued expenses 90,600
-----------
$ 200,800
Valuation allowance (200,800)
-----------
Net current deferred tax assets $ -
===========
Noncurrent deferred tax assets:
Depreciation $ 34,800
Net operating loss carryforward 1,221,200
-----------
1,256,000
Valuation allowance (1,256,000)
-----------
Net noncurrent deferred tax assets $ -
===========
As of December 31, 1998, the Company has available net operating loss
carryforwards for federal income tax purposes of $3,195,000 which expire
through 2018. The Company has state net operating loss carryforwards of
$1,527,000 which expire through 2003. The benefit of the operating loss
available to offset future taxable income may be subject to reduction or
limitation of use as a result of certain return filing regulations and
limitations relating to a 50% change in ownership.
F-11
<PAGE>
<PAGE>
MID-CAL EXPRESS, INC. AND SUBSIDIARY
(WHOLLY OWNED SUBSIDIARIES OF PRIME COMPANIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. RELATED PARTY TRANSACTIONS:
In 1998, Prime issued 28,400 shares of its common stock to employees of the
Company as compensation for services provided. Compensation expense of
approximately $154,000 was recognized upon issuance of these shares and was
recorded as an advance from parent.
At December 31, 1998, the Company had advances from Prime in the aggregate of
$1,253,969. Accrued interest on these advances was $93,804 at December 31,
1998. Interest expense incurred on these advances was $96,699 and $54,727 in
1998 and 1997, respectively.
11. EMPLOYEE DEFINED CONTRIBUTION PLAN:
Effective February 1, 1997, the Company adopted a Deferred Compensation Simple
IRA Plan (the "Plan") covering all full-time employees. To be eligible to
participate in the Plan, employees must be expected to earn at least $5,000
annually. Employees involved in the Plan may contribute up to $6,000 of their
compensation, on a pre-tax basis, subject to statutory and Internal Revenue
Service guidelines. Contributions to the Plan are invested at the direction of
the participant. The Company made matching contributions of $12,000 and
$11,000 to the Plan during the years ended December 31, 1998 and 1997,
respectively).
12. COMMITMENTS AND CONTINGENCIES:
Leases
During 1998 and 1997, the Company had operating leases for facilities and
equipment. Rental expense for all operating leases was $1,778,000 and
$1,044,000 for 1998 and 1997, respectively. As discussed in Note 3, certain
of these leases were assumed by UST, all others were terminated as of December
31, 1998.
Litigation and other claims
The Company is a defendant in a wrongful death suit relating to an accident
involving one of its drivers. The claim has been turned over to the Company's
insurance carriers and management expects the claim to be settled within
coverage limits.
The Company is obligated under its liability and property damage insurance
policies for losses up to the specific policy deductibles as a result of
accidents and claims incurred. Accrued loss reserves of $68,402 as of
December 31, 1998 were recorded to cover these potential claims.
F-12
