US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark one)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to ____
Commission File Number 0-25254
HARBOUR INTERMODAL, LTD.
(Name of Small Business Issuer in its charter)
Delaware 22-3388920
(State or other Jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1177 McCarter Highway, Newark, New Jersey 07104-3791
(Address of principal executive offices) (Zip code)
(201) 481-6474
(Issuer's telephone number)
Securities registered under section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
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 ___
Check if there is no disclosure of delinquent fliers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
State Issuer's Revenues for its most recent fiscal year. -0-
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The aggregate market value of the voting common stock held by non-affiliates of
the registrant based on the average of the ask ($0.15) and bid ($0.100) prices
of the Company's common stock, for the week ended December 31, 1999, is
approximately $118,696 based upon the 949,574 shares of the Registrant's
common stock held by non-affiliates. (1)
The number of shares outstanding is 8,504,513 shares, of the one class of
common stock, of par value $0.01, as of December 31, 1999.
(1) "Affiliates" solely for purpose of this item refers to those persons who,
during the three months preceding the filing of this Form 10-KSB were officers
or directors of the Company and/or beneficial owners of 5% or more of the
Company's outstanding stock.
Documents Incorporated By Reference None.
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TABLE OF CONTENTS
Page
ITEM 1: DESCRIPTION OF BUSINESS:...............................................4
ITEM 2: PROPERTIES:...........................................................11
ITEM 3. LEGAL PROCEEDINGS.....................................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................12
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...12
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION:............13
ITEM 7. FINANCIAL STATEMENTS..................................................15
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE..............................................15
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS..........16
ITEM 10. EXECUTIVE COMPENSATION...............................................18
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......19
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:......................20
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.....................................21
SIGNATURES:.............................................................22
REPORT ON AUDITS OF FINANCIAL STATEMENTS................................24
INDEPENDENT AUDITORS' REPORT (F-1)......................................25
BALANCE SHEET (F-2).....................................................26
STATEMENTS OF OPERATIONS (F3)...........................................27
STATEMENT OF STOCKHOLDERS' EQUITY (F4)..................................28
STATEMENTS OF CASH FLOWS (F5)...........................................29
NOTES TO FINANCIAL STATEMENTS (F-7).....................................31
INDEX TO FINANCIAL STATEMENTS...........................................33
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ITEM 1: DESCRIPTION OF BUSINESS:
Harbour Intermodal, Ltd. ("Harbour", "Harbour Intermodal", "HILX" or the
"Company"), was incorporated under the laws of the State of Delaware on October
29, 1973 as Controlled Energy Systems, Inc. to continue the business of Amega
Corporation, a California Corporation incorporated on March 13, 1964. The name
of the corporation was changed to Circadian Systems, Inc., on June 6, 1986.
This business was discontinued and the corporate name was changed on March 31,
1993 to Harbour Intermodal, Ltd. to explore two principal areas of planned
business operations. The company is presently in the development stage.
The first principal area is to provide local Intermodal transportation
services in the greater New York harbor area. These services are being designed
to meet present and future needs for movement of freight to and from shippers
in the area and to expedite the transfer of shipments among rail, truck and
water transportation companies serving the area. There can be no assurance that
the Company will be able to raise sufficient capital to be able to commence
principal operations providing local Intermodal transportation services in the
New York harbor area, or, if such operations are commenced, that they will be
successful.
The second area of interest grew out of the needs of the first and
includes the potential development and sales of equipment for Intermodal
services including waterborne vessels, and mobile and fixed heavy materials
handling equipment for transporting and sorting containers, trailers and
general cargo. This activity is anticipated to cover the North, Central and
South American market. There can be no assurance that the company will be
able to commence planned principal operations in this area of business or if
such operations are commenced that they will be successful.
The Company will also make available the results of this research and
development, and the expertise of its officers in the field of transportation
management on a contractual consulting basis. There can be no assurance that
this consulting will be in demand by private or public entities.
Harbour Intermodal is thus devoting substantially all of its efforts to
establishing a new business and related services.
Services in the Greater New York Harbor area will be provided by Harbour
Intermodal through wholly owed subsidiaries, joint ventures or leases of
existing transportation operations. Harbour plans to acquire, and then to
expand and augment, existing terminal facilities and add new facilities for
Intermodal ferry operations to establish a waterborne rail freight network with
Intermodal terminals connecting with Norfolk Southern,CSX, New York Susquehanna
and Western, Canadian Pacific, Canadian National and the New York & Atlantic
Rail Roads. These and other facilities would be also be designed and used to
carry tractor-trailers and containers. However, there can be no assurance that
Harbour will be able to pursue such a plan to expand existing or add new
terminal facilities in the future. In addition, the Company presently conducts
no business in waterborne rail freight service, and it is presently unknown
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whether such waterborne rail freight network can be established or if such
operations are commenced that they will be successful.
Harbour Intermodal plans to provide overall management and will also be
responsible for securing the necessary financing, facilities and equipment. A
minimum of a one to three-year period will be required to complete contractual
arrangements, construct facilities and secure equipment and develop projected
traffic volumes. Harbour Intermodal anticipates beginning limited operations
during the coming year.
Harbour Intermodal also plans to provide overall management and required
support services for the development and sales of equipment. Development and
sales of equipment will be handled through wholly- or partially owned
subsidiaries, joint ventures, licensing agreements or sales agreements as
appropriate for the product being handled. None of these presently exist.
On October 3, 1995, a subsidiary, HILX Transport, Inc., was incorporated
in New Jersey. In November 1995, HILX Transport, Inc. filed with the Interstate
Commerce Commission for Motor Carrier Certification and to date no further
action has been taken.
Market for Intermodal Transportation Services
Intermodal transportation technology for handling both international and
domestic general cargo in containers and trailers on rail cars has developed
rapidly over the last twenty years. One of the major overall stimuli was the
need to move large numbers of containers already being used for ocean shipping
long distances across the United States. These containers were either
delivered to a domestic consignee or transferred to another oceangoing vessel.
It was found that the service using the rail "land bridge" (transcontinental
movement of containers across the United States by railroad) was superior to
all-ship routing through the Panama Canal and costs were competitive. Special
space saving "double stack" equipment (loading one container on top of the
other) used to transport these containers by rail was also useful for
handling domestic traffic. As a result there is a growing need for rail and
terminal facilities to handle the container traffic.
At the same time, the market for shipping truck trailers on rail cars
(trailer on flat car or TOFC service} was exploited for longer trips as driver
costs increased and congestion became a significant problem in major
metropolitan areas.
Initially, the volume of TOFC traffic was larger than the container volume
(container on flat car of COFC service). More recently, the container volume
has taken the lead. In addition, major trucking companies have shifted from
conventional trailers to the use of containers on bogies (skeleton trailers)
which further increases the demand for Intermodal handling facilities for
shipments. Because of these significant shifts in the handling of general
cargo, new terminal transportation facilities in areas like New York Harbor
have to be designed to accept both rail and rubber-tired vehicles. It is also
necessary to provide facilities to transfer the containers and trailers among
the rail, highway and ocean going transportation terminals.
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In the future, conventional rail or truck equipment will be utilized
primarily for bulk or specialized commodities or for general cargo where special
handling facilities are required.
Terminology
Since the passage of the Intermodal Surface Transportation Efficiency Act
("ISTEA") in 1991, the term "Intermodal transportation" has become an umbrella
phrase that includes all transportation services, passenger or freight where
more than one mode of transportation is used. Insofar as freight is concerned,
the Intermodal terminology carries with it the constraint that the cargo being
shipped is packed in a container or trailer and remains there for the entire
trip from shipper to consignee. The container or trailer is moved intact from
one mode of transportation to another. Bulk cargoes like grain, coal or
petroleum products which fill a ship's hold or an entire ship and are loaded
from or discharged into railcars, trailers or barges are not classified as
Intermodal shipments.
Terms used in describing the characteristics of the Intermodal
transportation of freight are listed below:
Backhaul: Return transportation movement, usually at less revenue than the
original move. To move a shipment back over part of a route already
traveled.
Bogie: A set of highway wheels built specifically to be used as rear wheels
under the container. Also an overseas term for a railroad car "truck" or
wheel assembly.
Boxcar: An enclosed railcar, typically 40 to 50 feet long, used for
packaged freight and some bulk commodities.
Breakbulk: To reduce a large shipment of a single commodity to many small
shipments, which are then dispersed to various buyers.
Bulk Transfer Facility: A facility for transferring liquid or solid bulk
commodities, such as petroleum or gravel, between transport modes, typically
between rail and truck. (See also "Transloading").
Carfloat: A barge with a railtrack fixed to the deck for carrying rail cars
across a body of water. Typically, the carfloat is towed by a tugboat.
Chassis: A special trailer or undercarriage on which containers are moved
over-the-road by truck.
Classification Yard: A railroad terminal area where train units are
assembled (as opposed to an intermodal yard).
C.O.F.C. (Container-on-Flatcar): The transport of containers on railroad
flatcars, either single-stack or double-stack.
Container: A box for transporting cargo, constructed with varying dimensions
to with stand shipment conditions in transportation. (See TEU).
Drayage: Transporting freight by truck, typically within short distances.
Float Bridge: A transfer bridge for rolling rail cars on and off carfloats
to a railyard.
Freight Forwarder: Individual/company that accepts shipments and
consolidates them into truckloads. An agent who helps expedite shipments
by preparing necessary documents and making other arrangements for moving
freight.
Intelligent Transportation Systems (ITS): A generic term for advanced
technology applications that provide real-time monitoring and information
to enable the more efficient and safer use of transportation systems,
such as highways.
Intermodal: As broadly defined within the commercial transportation
industry, the transfer of freight between and among all modes involved
in general cargo transportation (e.g., ship, rail, and truck). This
term is also commonly used to mean the movement of passengers between
transportation modes (e.g.., from train to bus).
Intermodal Yard: A rail facility designed to accommodate intermodal
transfers with trucks and containers.
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA):
The landmark federal transportation legislation that implemented broad
changes in the way transportation planning and funding decision are made.
ISTEA and its successor, TEA-21, emphasize use of a diversity and
balanced of modes and the preservation of existing systems over the
construction of new facilities, especially roadways.
Level of Service: A measure of the quality of operation of a
transportation facility, with Level of Service "A" being very good
operation with little traffic delays, and Level of Service "F"
being severely congested operation with large traffic delays.
MIS: A Major Investment Study is a federal process for identifying,
evaluating and selecting transportation alternatives that address
specific problems.
Modal Split: The relative use of the modes of transportation;
the statistics used include ton-miles, passenger-miles, and revenue.
Multimodal: Using more than one transportation mode to move a load
of goods.
Pallet: A platform on which cargo is loaded, which can be stacked
and be handled by forklift or sling, usually constructed of wood.
Piggyback: The hauling of road vehicles and containers on wheels or
railroad flatcars.
Railhead: End of the railroad line or point in the area of operations
at which cargo is loaded and unloaded.
Reefer (Refrigerated container): A specialized container that holds
perishable goods at controlled temperatures.
Road Railer: A specialized truck chassis that either has retractable
rail wheels or is lifted onto bogies which allows it to operate
directly on rail.
Roll-on/Roll-off (ro/ro): A specially constructed ship that allows
cargo to be rolled in and out doors on wheeled loading devices or under
the cargo's own propulsion, such as motor vehicles.
TEU: Twenty-foot equivalent unit. A standard unit for counting
containers of various lengths. One standard 40-foot container equals
two TEU's.
T.O.F.C. (Trailer-on-Flatcar): A transportation arrangement in which
a truck trailer is moved by train to a destination. Also called
"Piggybacking".
Trailer: The truck unit which carries freight in a tractor-trailer
combination. Trailers are commonly seen as the cargo unit of an
"18-wheeler" or five-axle "truck".
Transportation System Management (TSM): A term for methods to improve
the operation of a transportation system without expanding capacity.
Transloading: The practice of breaking (transferring) bulk shipments
from the vehicle/container of one mode to that of another at one or a
series of terminal interchange points.
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Market for Intermodal Services in the Greater New York Harbor Area
The Greater New York Harbor area is a particularly attractive area for
developing local intermodal transportation services. The area, itself, is
divided into two halves by the Hudson River and Upper New York Bay. All of the
major rail and highway routes from the west and south approach the area from the
westerly side. The four principal railroads, Norfolk Southern, CSX, New York
Susquehanna & Western and Canadian Pacific/D&H also have their major terminals
on the westerly side. CSX does have a route from the midwest and far west
which connects at Selkirk, just south of Albany, with a route into the
New York area via the east side of the Hudson River, but scheduling conflicts
with AMTRAK and Metro-North passenger services, limited clearances and
inadequate terminal facilities reduce its usefulness. The Surface
Transportation Board (STB), as part of the approval of the Norfolk Southern and
CSX buyout of Conrail, has required CSX to grant access to Canadian Pacific via
the east side of the Hudson. To date, no agreement has been reached between the
railroads and the matter is pending future STB directives.
Currently, container and trailer traffic arriving by rail and destined for
New York City and Long Island, and also for many points in New Jersey, is
transferred to truck for delivery, a time consuming and costly procedure. A
limited number of rail cars were interchanged between CONRAIL and the Long
Island Railroad (now the New York & Atlantic for freight services) on car floats
of the New York Cross Harbor Railroad Terminal Company. CSX could interchange
cars directly with the New York & Atlantic via the Hell Gate Bridge and the CSX
route on the east side of the Hudson.
Lack of adequate river facilities for handling containers between port
facilities in Brooklyn and those in New Jersey has caused the Port Authority of
New York and New Jersey to provide some relief in the form of a pilot program
for a container barge shuttle between Red Hook, in Brooklyn, and Port Newark.
The configuration of the roadway network is similar to the rail system in
that all of the major routes from the west and south approach the area from the
west. All shipments destined for New York City or Long Island must use one of
the three bridges or two tunnels between the Tappan Zee and the Verrazano
Narrows Bridge. Trailers and containers transferred from rail cars use these
same crossings and compete for space with the usual heavy volume of private cars
and buses. In addition, many of the truck routes have clearance restrictions or
restrictions on the type of cargo carried. The Holland and Lincoln Tunnels
which provide the most convenient connection into Manhattan and Brooklyn will
not accommodate the large trailers which are currently legal on the Interstate
Highway System and the New Jersey Turnpike.
Waterborne transportation of freight has been all but ignored in recent
years despite the fact that all of the shipping lines and many other
transportation users have waterfront facilities. In the past, there was more
flexibility in moving shipments into and out of the harbor area. All of the
waterways were utilized by eight major railroads, several small terminal
railroads and a number of lighterage companies all of which moved shipments to
and from shippers terminals or connected directly with ocean going vessels.
Most of these marine operations were discontinued by the time CONRAIL was formed
to take over and consolidate six major railroads in 1976. Today, only one
common carrier operation remains, the New York Cross Harbor Railroad Terminal
Company, which uses obsolete rail carfloat equipment to handle a very limited
portion of the traffic crossing the harbor.
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Harbour Intermodal has identified the waterborne mode of transportation as
an area where substantial growth can be supported now and in the near future,
provided modern intermodal facilities can be supplied which can accommodate
rail, highway and container equipment at an affordable cost. This position was
discussed by Norfolk Southern during meetings in Washington DC regarding freight
service to the east side of the Hudson River.
The Port Authority, working with CONRAIL, which served the Port
Newark/Port Elizabeth area, has developed on-dock "ExpressRail" facilities to
provide improved transfer connections between the ocean-going ships and the
railroads. These facilities are complimentary and not competitive to the
operating plan for Harbour Intermodal since the improvements do not involve the
movements across the Hudson River or Upper New York Bay which Harbour views as
its primary source of traffic. In fact, the cooperative development of the on-
dock services sets a pattern for other intermodal improvements including those
proposed by Harbour Intermodal.
Harbour's work to date in analyzing existing traffic data, locations
within the harbor suitable for intermodal ferry facilities and intermodal ferry
design places it in a position to compete for the implementation of intermodal
freight ferry services. Although there are no assurances that any relationship
will develop, Harbour's proposed routes duplicate or are very close to those
developed by The Port Authority's concepts for waterborne transportation routes
as a part of the overall network of intermodal rail and truck services being
developed. Extensive computer modeling by Harbour has shown the viability of
high speed cross harbor freight movement incorporating the freight studies of
the NYEDC and the Port Authority of NY & NJ. The model demonstrates an
excellent potential business opportunity.
Market for Intermodal Equipment
The equipment and operating methodology for handling intermodal shipments
is a developing field, worldwide. The shift from handling individual units,
palletized packages and bulk shipments to containerized shipments has
revolutionized the shipping industry. New ships being built can accommodate
over 6,000 twenty foot equivalents (TEU'S) or 3,000 forty foot equivalents
(FEU'S). New vessels are being designed to accommodate 8,000 TEU's. Ports
and land transportation facilities have had to adapt to the change. Currently,
there are still major areas in the larger ports where new equipment and
techniques are needed to handle the large number of containers which must be
ready for loading aboard the container ships and a similar number to be
unloaded and distributed with a minimum of delay.
Port distribution services and feeder services between ports, including
those ports on rivers where land and rail transportation is inadequate can
utilize the same self-propelled barge concept being proposed for New York.
Moving and stacking equipment for landside support and for improving intermodal
handling of containers and trailers is also needed.
Proposed role for Harbour Intermodal
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The role planned for Harbour Intermodal in the Greater New York harbor
area is to offer services to meet current and future requirements for intermodal
transportation, particularly those intermodal movements which can use waterborne
connections. The landside facilities and vessels will also provide for
conventional rail cars, grounded containers and rubber-tired vehicles which can
utilize the network.
Harbour Intermodal has already defined the requirements and developed a
schematic design for a new self-propelled Intermodal Ferry for rail cars,
rubber-tired trailers, grounded containers or a mix of these three types of
equipment. The vessel is identified as HILX 404 Class Intermodal Ferry and is
being designed to accommodate four to seven rows of railroad cars or rows of
highway equipment or forty-foot containers stacked two high or a combination of
the three types of equipment. The overall length of the HILX 404 Class
Intermodal Ferry will be 350-400 feet in length to accommodate five-well
articulated container cars that must be handled as a unit.
Development of the new self-propelled ferry is only the initial step in
establishing Harbour Intermodal as a developer and supplier of Intermodal
equipment of various types for its own operations in the New York area and for
other customers in North, Central and South America.
Loading and unloading and movement of containers in marshaling and storage
areas require specialized equipment. Containers that were initially twenty
feet in length have increased in size to fifty-three feet. This increase in
container size, coupled with the increased size of the latest container vessels,
has resulted in the need for more sophisticated heavy materials handling
equipment designed to handle containerized shipments. Harbour Intermodal
intends to develop a sales and service organization within Harbour Intermodal to
cover the North, Central and South American market.
This endeavor to develop the network of new waterborne intermodal
services in the New York Harbor and sales, service and manufacturing of heavy
materials handling equipment involves all of the risks associated with
developing a new business (technical, operational and financial) and is not
expected to provide earnings for distribution to investors in the early years.
Harbour Intermodal, Ltd., will act as a holding company to formulate and
implement plans to improve and expand railroad terminal and intermodal services
in the New York Harbor area. The company will utilize the results of over six
years of research performed by its senior officers covering the type and
capabilities of existing transportation services and the changing needs of the
marketplace as more intermodal services are developed. The company will also
make available this and other information and expertise in the field of
transportation planning, operations and management on a consulting basis.
Competitive Business Conditions
In general the Company's intermodal services will be sold in competitive
markets to customers who are sophisticated and demanding concerning price,
performance and quality. These intermodal services are sold in competition
with other independent rail freight, barge and trucking operators. These
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operators may have substantial financial resources and technological
capabilities, greater than the resources than the Company. Currently up to
98% of the freight traffic into or crossing New York City is on trucks.
There can be no assurance that the Company will be able to compete
successfully against such operators.
Similarly, the Company's vessels and materials handling equipment will
be sold in competitive markets to customers who are sophisticated concerning
price, performance and quality. This equipment will be sold in competition
with domestic and foreign suppliers who have greater resources and
capabilities than the Company and there can be no assurance that the Company
will be able to successfully compete.
Likewise there can be no assurance that the Company's consulting
services available to outside parties will be in demand or can be profitably
marketed.
Patents Trademarks, Licenses and Franchises
The Company believes that there are no proprietary design features or
techniques required in the design and construction of the HILX Class 404
vessels.
The Company has no patents, trademarks, franchises, concessions, royalty
agreements or labor contracts. The Company has a license agreement with Fast
Spot, Inc. to use certain patented and proprietary equipment to load, unload &
handle railcars in the most efficient manner.
Need for Governmental Approval
The company will fall under a variety of regulatory agencies in the
normal course of business including: zoning, environmental, construction
permits, Coast Guard and Corps of Engineers oversight, shipping bureau review
of vessel designs and other similar regulations. The Company believes that
there will be no extraordinary regulatory problems related either to its
proposed operations or in the design, construction and sale of vessels and
heavy materials handling equipment.
Governmental Regulations
All of the Company's transportation operations within the port of New
York area and to and from locations beyond the port, formerly subject to
regulation by the Interstate Commerce Commission ("ICC"), are now regulated
by the United States Department of Transportation, Federal Highway
Administration's Office of Motor Carriers and the U.S. Coast Guard. These
agencies retain the right to regulate entry and also sales of existing
transportation entities to new owners.
The Company, through its subsidiary, HILX Transport, Inc., has
filed with the ICC (now USDOT-FHA/OMC) for common carrier operating
certification. This filing currently is inactive.
Research and Development
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Research is planned to quantify the impact of shifts to intermodal
equipment for handling grounded containers, rail and rubber-tired freight
shipments and to develop requirements for improved handling. Because
the first vessels are expected to operate in US Coastal waters and be
financed using Maritime Administration (MARAD) guarantees, Harbour will
use a U.S. based naval architect. Harbour has solicited several competent
naval architect ands engineering firms to assist in securing a vessel
which will meet Harbour's needs, qualify under the design and safety
requirements of the Coast Guard and the Shipping Bureaus and be eligible
for MARAD financing guarantees. Harbour is reviewing proposals from
several firms at this time and anticipates the selection will be made
and design and construction will begin this during this fiscal year.
Other potential research includes identification of existing and
potential locations for interchanges of intermodal traffic with railroads,
over-the-road truckers and local delivery draymen.
Development activities currently underway include discussions and
negotiations with other transportation companies, major shippers and public
agencies directly involved with intermodal transportation in the New York
Harbor area.
Employees
Harbour Intermodal currently employs four persons part time, all of whom
are officers and/or directors of the company. Harbour plans to hire an
additional seven persons, one as a Chief Financial Officer, one as a director
of New York Harbour operations, one as marketing/sales manager, and four
clerical personnel provided that additional financing is obtained by that
time. In the absence of such financing no additional personnel will be added.
Harbour does utilize consultants and has had detailed discussions with
other entities involved in Intermodal transportation, some of which have a
cadre of management, technical or operating employees. Harbour Intermodal
plans to utilize these resources.
Harbour Intermodal also has identified and maintains a roster of personnel
experienced in management, operations, sales and finance who would be available
on short notice for salaried positions or consulting assignments to assist in
expanding the intermodal ferry operations.
ITEM 2: PROPERTIES:
Harbour Intermodal currently has no employees. Officers and/or directors
of the company serve on a voluntary basis until sufficient capitalization is
realized. Additional personnel will be added as needed.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not engaged in any pending or threatened legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the last fiscal year.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Market Information - The principal US market in which the Company's Common
Shares (all of which are of one class, $.O1 par value Common Stock) are traded
is the Over-The-Counter Bulletin Board (OTC-BB) market. During the 1998 and
1999 calendar year period, the aforesaid securities were traded or quoted on
the automated quotation system on the OTC Bulletin Board. The symbol for the
Company's Common Stock is "HICC". The following table sets forth the quarterly
range of high and low bid quotes of the Company's Common Stock per calendar
quarter as provided by the National Quotation Bureau, Inc. (which reflect inter-
dealer prices, without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions).
Common Stock (1)
Period:
1999 ($.01 par value, stock symbol HICC)
High Bid Low Bid
First Quarter $0.5100 $0.2500
Second Quarter $0.4375 $0.0500
Third Quarter $0.3125 $0.0600
Forth Quarter $0.2100 $0.0400
1998 ($.01 par value, stock symbol HICC)
High Bid Low Bid
First Quarter $0.312 $0.125
Second Quarter $0.250 $0.010
Third Quarter $0.687 $0.020
Fourth Quarter $1.625 $0.375
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(1) The Company reverse split its common stock on March 5, 1996 on a 1 ($.01
par value common share) for 10 ($.001 par value common share) and increased the
par value of its common shares from $.001 par value to $.01 par value.
(b) Holders - Harbour Intermodal currently has 8,504,513 shares of stock
outstanding as of December 31, 1999. The above shares are held by approximately
100 owners of record, inclusive of those brokerage firms and/or clearing houses
holding the Company's common shares for their clientele (which each such
brokerage house and/or clearing house being considered as one holder).
(c) Dividends - The Company does not presently pay cash or any other dividends
on its Common Stock and anticipates that, for the foreseeable future, no cash
dividends will be paid on its Common Stock.
Payment of future cash dividends will be determined by the Company's Board of
Directors based upon conditions then existing, including the Company's
financial condition, capital requirements, cash flow, profitability, business
outlook and other factors. In addition, Delaware corporate law prohibits the
payment of dividends if after making the payment the Company would not be able
to pay its debts as they became due in the usual course of business or if the
Company's total assets would be less than its total liabilities.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION:
(a) Plan of Operation
Overview
The statements contained in this 10-KSB that are not historical facts are
forward-looking statements. The Company cautions readers of this document that
a number of important factors could cause the Company's actual results for 2000
and beyond to differ materially from those expressed in any such forward-
looking statements.
(i) Discussion of how long the Company can satisfy cash requirements and
whether it will have to raise additional funds.
To date, the Company has recognized no revenues, and there can be no
assurance at this time that revenues from sales of Company services or products
will be established to determine a trend of product or service sales. The
Company has incurred losses and has negative cash flows but expects to show an
operational profit for the next fiscal year. The Company has minimal cash on
hand to satisfy its cash requirements and is in the process of raising
additional funds for the next fiscal period of 2000. At December 31, 1999
the company had an accumulated deficit of $346,782. The Company plan of
operation for the next twelve months is to continue to finance its operations
with a combination of cash loans from Ka-Bar Medical, Inc. (Ka-Bar),
potential equity placements, and in the long term, revenues from service and
product sales. The Company's ability to continue as a going concern is
- 13 -
<PAGE>
dependent upon its successfully raising equity capital and, ultimately, upon
achieving profitable operations.
As of December 31, 1999, the Company had unrestricted cash on hand of
$49,697. The Company has no credit facility with any lending institution. The
Company has, from time to time, borrowed money from Ka-Bar but has no formal
financial arrangement, agreement or understanding with Ka-Bar or any related
party to do so in the future.
The Company's cash requirements are met through cash advances from Ka-Bar
Medical, Inc. ("Ka-Bar"). Ka-Bar is controlled by Michael T. Gasparik, who is
the majority shareholder, Chairman and a Director of the Company. Ka-Bar's
advances to the Company are sufficient to cover the Company's cash requirements
for its present limited level of operations. At present, there is less than
one month's cash requirements in the Company's accounts. At such time as
negotiations succeed, and only if such negotiations succeed, the Company will
need to raise additional funds by sales or exchanges of currently authorized
common stock, corporate borrowings and, as applicable, subsidies from public
agencies involved in developing Intermodal transportation facilities. There
are also several governmental programs which can provide loans, grants or
guarantees of Harbour Intermodal's borrowings for capital to help develop
Intermodal facilities and for financing the Intermodal Ferry and other capital
equipment. These sources will be explored and utilized if available. There
can be no assurance that such financing will be available, and if available,
on terms acceptable to the Company, and if the Company fails to obtain
additional financing, the Company will be materially and adversely affected.
(ii) Summary of product research and Development that the Company will perform
for the term of the plan.
Continuing research is planned to quantify the impact of shifts to
intermodal equipment for handling rail and rubber-tired freight shipments and
to develop requirements for improved handling. Because the first vessels are
expected to operate in US Coastal waters and be financed using Maritime
Administration (MARAD) guarantees, Harbour will use a U.S. based naval
architect. Harbour has solicited several competent naval architect ands
engineering firms to assist in securing a vessel which will meet Harbour's
needs, qualify under the design and safety requirements of the Coast Guard
and the Shipping Bureaus and be eligible for MARAD financing guarantees.
Harbour is reviewing proposals from several firms at this time and
anticipates the selection will be made and design and construction will
begin this during this fiscal year.
In addition, Harbour Intermodal is discussing a licensing agreement for
the propulsion system for this class of vessel. It is planned that Harbour
Intermodal would be responsible for contracting for construction of the vessels,
as well.
Other research includes identification of existing and potential locations
for interchanges of intermodal traffic with railroads, over-the-road truckers
and local delivery draymen.
- 14 -
<PAGE>
Development activities currently underway include discussions and
negotiations with other transportation companies, shippers and public agencies
directly involved with intermodal transportation in the New York Harbor area.
(iii) Expected purchase or sale of plant and significant equipment.
If, and only if, the Company's negotiations described above succeed, then
the Company plans to acquire plant and equipment. In addition to the agreement
for completion of design and construction of the first self-propelled
Intermodal Ferry, specifications are being developed for the home port facility
and equipment. Discussions are proceeding to secure property rights by
purchase or lease at both existing and new locations for the Intermodal System
in the greater New York harbor area. This includes design and start of
construction for new ferry docking facilities and landside support yards for
railroad and rubber-tired equipment. The acquisition cost of the ship ranges
from $8 million to $15 million and the cost of the onshore improvements could
exceed $10 million.
(iv) Expected significant changes in the number of employees
Harbour Intermodal currently has no employees. Officers and/or directors
of the company serve on a voluntary basis until sufficient capitalization is
realized. Additional personnel will be added as needed.
Harbour does utilize consultants and has had detailed discussions with
other entities involved in Intermodal transportation, some of which have a cadre
of management, technical or operating employees. Harbour Intermodal plans to
utilize these resources.
Harbour Intermodal also has identified and maintains a roster of personnel
experienced in management, operations, sales and finance who would be available
on short notice for salaried positions or consulting assignments to assist in
expanding the Intermodal Ferry operations or in selling the Intermodal Ferries
and materials handling equipment.
ITEM 7. FINANCIAL STATEMENTS
See pages F-1 through F-8.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
During the Company's last five fiscal years and the subsequent interim
period, no independent accountant who was previously engaged as the principal
accountant to audit the Company's financial statements, resigned or was
dismissed.
- 15 -
<PAGE>
Philip Kinzel, Certified Public Accountant, has been the Company's auditor
for the last six years.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
Name Age Positions Held with the Company
Michael T. Gasparik 75 Director /Chief Executive, Chairman of the
Board and Chief Accounting Officer
Victor E. Holmkvist 58 Director /President
Antonio Mellone 57 Director/Vice-President of Terminal
Operations
Martin C. Rewoldt 57 Director/Vice-President of Marketing
and Sales
Marcial E. Robiou 48 Director /Chief Financial Officer
James E. Scharf, Sr 51 Director/Chief Information Officer
Richard G. Schoon 66 Director/Vice Chair of Board/Sr. VP and Corporate
Secretary
David S. Steiner 49 Director / Sr. Vice-President Marine
Operations
Michael T. Gasparik: Mr. Gasparik is CEO and Chairman of the Board of
the Company. His terms of office expire May 1997, or such later date that his
successor is elected. He has served as Chairman of the Board since the date of
its incorporation on March 11, 1974. He also served as Chief Executive Officer
from the date of incorporation to March 31, 1993 and from March 5, 1996 to date.
Mr. Gasparik is an industrialist who currently, and for the last five years, is
Chairman, President, Director and major stockholder of Digital Diagnostic Corp.
and Northeast Surgical Corp. These companies are engaged in Research and
Development and / or distribution of electronic or surgical supplies for
medical or industrial use. None of these companies are reporting companies.
Mr. Gasparik was a member of the Board of Directors of the Metro Newark Chamber
of Commerce for ten years. During this tenure, Mr. Gasparik served as Chairman
of their Metro Newark Technology Council. Mr. Gasparik also served as founding
Vice Chairman / Director of the Essex County Development Corporation (a
nonprofit quasi-public corporation).
Mr. Gasparik holds an Engineering Degree from Columbia University and a Law
Degree from St. Johns University School of Law. Mr. Gasparik is a member of the
Bar of the State of New York.
Victor E. Holmkvist PE: Mr. Holmkvist is the President and has served
as a Director and Senior Vice President of Strategic Planning since 1997.
Mr. Holmkvist is currently, and since 1993 President of Svenski Engineering
Service a consulting engineering firm providing services in Civil,
Structural and Environmental Engineering and Engineering & Construction
Management. Mr. Holmkvist is also the Chief Operating Officer for Innovative
Track Fastener Corp., a start-up company developing a new design for a rail
astening system for concrete cross ties & Secretary / Treasurer of Fast
Spot, Inc., a start-up company providing new and patented railcar handling
equipment.
Prior to 1993 Mr. Holmkvist served as an engineer, project engineer and
engineering manager for several corporations, including Foster Wheeler
and GAF Chemicals. During this time Mr. Holmkvist was responsible for
the design and construction of projects with multi million dollar budgets.
In addition Mr. Holmkvist served, on a consulting basis, as municipal engineer
for several New York communities.
Mr. Holmkvist holds a BS in Civil Engineering from the New Jersey Institute
of Technology and additional graduate and continuing education credits in
engineering management and accounting procedures. Mr. Holmkvist is a
Registered Professional Engineer in New York & New Jersey and a member
of the American Society of Civil Engineers.
Antonio Mellone: Mr. Mellone is the Vice-President of Terminal Operations.
Since 1994, Mr. Mellone has been the Administrative Partner and Controller
of A. G. Container Repair. In this capacity, he was responsible for the
accounting function, insurance, sales and customer relations, and audits.
His expertise includes Waterfront Commissions, NY and NJ Harbour rules and
regulations, audits and legal matters, licensing, MNMCA and NY Ship
Association's yearly review and audit. Also, he is skilled in container and
chassis repair and trucking operations.
From 1967-1994, Mr. Mellone served Portwide Cargo Securing Company/A.G. Ship
Maintenance Corporation. As president (1978-1994), his responsibilities
included accounting functions, human resources, insurance, customer relations
and sales, and litigation. In the position of Secretary of the Corporation
(1972-1978), he was responsible for general administration. Also, Mr. Mellone
was deeply involved in litigation for revocation of A.G. license by the
Waterfront Commission and became a chief strategist with attorneys on defending
A.G and reaching a favorable settlement. Prior experience includes
(1967-1972), that of a laborer and foreman.
Accomplishments of Mr. Mellone include: international trade, instrumental in
the formation of a self-insurance program for compensation for the employees
working on ships in the Port of NY, represented a managing partner of Hug
Holdings, a company owning real estate in Newark Ironbound, co-founder Palmer
Industry, Newark, NJ, co-founded A.G. Ship Maintenance, a joint venture doing
container repair on the terminal for the Puerto Rican line PRIMI, and
negotiator between Metropolitan Marine and I.L.A. He has worked under the
jurisdiction of NY Ship Association and is licensed by the Waterfront
Commission of New York and New Jersey Harbor.
Martin C. Rewoldt: Mr. Rewoldt holds the position of Vice-President of
Marketing and Sales.
His career includes that of President (1987-present) of MVP Terminal
Corporation. The responsibilities of this position include third party
intermodal handling services. Prior positions include the presidency of LACNY,
Inc., a contract motor carrier (1982-1987), presidency of Marine Customer
Services, an international third party company (1977-1982). VP-Sales at East
Coast Shippers, sales and operations for third party intermodal companies
(1973-1977), sales manager at Soo Line (1970-1973), sales at Missouri,
Kansas & Texas RailRoad (1963-1970).
Marcial E. Robiou: Mr. Robiou is the Chief Financial Office and has
served as a Director since 1996 and was elected Treasurer in 1997.
Mr. Robiou is currently, and since 1996, has been President of the
Business Consortium Fund. A Manhattan based national finance company
B.C.F. provides contract financing for ethnic minorities and since its
1987 startup has lent out over $150 million. Mr. Robiou is also President
of Triad Capital, a start-up company providing venture capital to ethnic
minority businesses.
Prior to joining B.C.F. Mr. Robiou served an eight-year term as Senior
Vice President of the Metro Newark Chamber of Commerce. During his term
Mr. Robiou developed the Greater Newark Business Development Consortium,
which became the model for B.C.F. Additional achievements and
responsibilities during this period included the management of the James
Street Commons Urban Renewal Corporation and programs and activities in
the Caribbean and Latin America under the Reagan Administration's Caribbean
Basin Initiative.
Mr. Robiou holds a Masters Degree in Public Administration from Rutgers
University and additional continuing education credits in economic development
from the Universities of Houston and Oklahoma.
James E. Scharf, Sr.: Mr. Scharf is the Chief Information Officer.
Mr. Scharf has many years experience leading teams to set bench marks in
application engineering and project management on large governmental software
R&D projects. In addition, Mr. Scharf was part of the management that
developed a client-server based legacy-code wrappering system with graphical
interface enabling the growth of a start-up service company. Mr. Scharf was
also a key leader for the re-engineering of major relational database schema
for improved efficiency and reliability administration of TCP/IP network with
multiple UNIX servers and over 50 clients, and the development of document
auto-generating programming software and system methodology that cut overall
test program generation and quality control time 50% and more than doubled
overall quality and customer satisfaction.
Mr. Scharf is a member of IEEE and has served with the International Test
Conference (1982-1987) on the Steering Committee, and Arrangements Chair.
Her served on the Technical Paper Reviewer for Design Automation Conference
(1988-1994). He worked with DATPG WAVES technical committee defining data
transport specification (1989-1990) and he was Racal-Redec's representative to
Design and Test Alliance, steering Committee (1992-1993). Mr. Scharf's
article, Boundary Scan and JTAG Testing: Challenges to ATPG Evaluation was
published in the "Engineering Magazine" of May 1992.
Mr. Scharf received a Bachelor of Electrical Engineering, Cum Laude, from the
University of Detroit. Additionally, he as formal training in Schlumberger
GACTOR ATE and VHDL simulation. He attended Management Effectiveness and Team
Building (AMA), and Confident Communicators-Speechcraft.
Richard G. Schoon: Mr. Schoon has served as a Director, Vice Chairman of
the Board, Senior Vice President and Secretary and is also the Chairman of the
Compensation Committee since February 1994.
Mr. Schoon is currently Senior Vice President and Practice Leader for the
Partnership Group, management consultants, a position he assumed on July 1,
1994. From 1981 to 1994 he was President and Chief Executive Officer of the
Newark Chamber of Commerce and was responsible for the total operation of
the Chamber.
Mr. Schoon is currently, and has been for the past ten years, a Commissioner
and Chairman of the Finance Committee of the New Jersey Water Supply Authority
and a member of the Executive Committee of the Newark Economic Redevelopment
Corporation. He is past Chairman of the World Trade Week Committee of the
Port Authority of New York and New Jersey and a Consultant to the Regional
Business Partnership of the Chamber of Commerce of the Metro Newark Region.
Mr. Schoon is a graduate of Buena Vista College and the Academy for
Organization Management at the University of Notre Dame.
Captain David S. Steiner: Captain Steiner holds the position of Senior
Vice-President of Marine Operations.
Captain Steiner is licensed as a Master and a First Class Pilot of steam and
motor vessels. In Hawaii, he is licensed as a Radar Observer (Unlimited).
Captain's experience includes: Director of Training at Sandy Hook Pilots'
Association (1994-1995); as an American Maritime Officer as foreign and
coastwise (as master since 1985, including: USNS Altair, M/V Buffalo
Soldier; OIC USNS Maury). (1973-1994); Military Sealift Command, Atlantic
(MSCLANT) Force Rediness Officer (1989-1990); Atlantic Jetstream, Director
of Marine Operations: Jetfoil Ferry (1984-1985); Insurance Company of
North American (INA), Marine Surveyor (1972-1973).
Captain Steiner holds a BS in Marine Transporation from SUNY Maritime College.
He has served as an instructor in the US Navy: basic/advanced shipboard
fire fighting, air capable ship, small arms, shipboard/workcenter. He also
was a member of the Helo Fire Fighting Team-Foam Generation and he has
experience in the operation and care of helicopters. He was responsible
for control of bulk petroleum, hazardous material and shipboard hazardous
waste.
Captain Steiner is a member of The Council of American Master Mariner,
Fort Schuyler Alumni Association, Society of Naval Architects and Marine
Engineers, Society of Marine Consultants, Nautical Institute, NY/NJ Dredging
Forum, Containment Workgroup, USS NJ Battleship Society, NAVSAC, MERPAC,
American Pilots Association, NY and NJ State Board of Pilot Commissioners,
United NY/NJ Sandy Hook Pilots Association.
ITEM 10. EXECUTIVE COMPENSATION
Compensation of Officers and Directors
No cash compensation has been paid by the Company to any of its officers
and/or directors. It is not anticipated that officers and/or directors will
receive direct cash compensation until such time as there is adequate funding
to pay such compensation. There are no bonus plans, stock option plans or
any other form of incentive compensation plans in effect at this time.
It is planned to establish a comprehensive plan for executive compensation
that will become effective with the execution of agreements for the start of
Intermodal operations and/or the sales of equipment.
- 18 -
<PAGE>
Compensation of President and Chief Executive Officer
Victor E. Holmkvist, President and Michael T. Gasparik, Chief Executive
Officer, presently serve without either direct compensation or any
form of incentive compensation.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Year Salary Bonus Other Annual Stock SARs(#) LTIP Other
Principal Compensation Award Payouts Comp
Position
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $0 $0 $0 None None None None
1998 $0 $0 $0 None None None None
Michael T. 1997 $0 $0 $0 None None None None
Gasparik
Chairman 1996 $0 $0 $0 None None None None
of the
Board
President 1995 $0 $0 $0 None None None None
& CEO
Treasurer
& CFO
AGGREGATED 1998 OPTION GRANT TABLE
The Company does not have any option programs for executives at this time.
AGGREGATED OPTIONS EXERCISED TABLE
There are no outstanding options which could be exercised at this time.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the share
ownership as of the date of this filing of the Company's common stock by its
officers and directors., both individually and as a group, and by the present
record and/or beneficial owners of more than 5% of the outstanding amount of
such stock:
- 19 -
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
NAME Number of shares Percentage of shares
Owned Owned
<S> <C> <C>
Michael T. Gasparik 7,405,609 87.08%
37 Bryden Place
Ridgewood, NJ 07450
Director
Chairman of the Board,
Chief Executive Officer
Richard Schoon 25,000 0.29%
73 Hull Street
Wakefield, RI 02879
Director
Vice Chairman of the Board,
Senior Vice President and
Secretary
Marcial E. Robiou 10,000 0.12%
498 Fairview Ave.
Ceder Grove, NJ 07009
Director
Chief Financial Officer
Victor E. Holmkvist 20,000 0.24%
97 Svenski Road
Montgomery, NY 12549
Director
President
Antonio Mellone 0
26 Pulaski Street
Bayonne, NJ 07002
Martin C. Rewoldt 0
289 Mount Hope Road
Apt J13
Dover, NJ 07801
James E. Scharf, SR. 0
16 Carlton Road
Flanders, NJ 07836
Captain David S. Steiner 0
305 Riveredge Road
Tinton Falls, NJ 07724
7,450,609 87.61%
(1) 7,500,000 shares of Harbour Intermodal,Ltd. controlled by Michael T.
Gasparik,were registered in the name of Ka-bar Medical, Inc. on Oct. 22,1996
of which Michael T. Gasparik is beneficial owner. Ka-bar Medical,Inc. is
controlled by Michael T. Gasparik, who is the majority shareholder,
Chairman, Chief Executive Officer and a Director of Ka-Bar Medical, Inc. On
July 22, 1997 these 7,500,000 shares were transferred to Michael T. Gasparik.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Company is indebted to Ka-bar Medical, Inc. which is solely owned by Michael
T. Gasparik who is also the majority shareholder and Chairman of the Board of
Directors, Chief Executive Officer, President, Treasurer and Director of the
Company. At December 31, 1998 & 19998 the Company owed Ka-Bar $127,023 &
$229,268 for advances for rent and operating expenses.
- 20 -
<PAGE>
There are no other debts or contractual obligations of the Company. The
transactions are on terms as favorable as would be obtained with unrelated third
parties.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Index to Exhibits Description
(3) Articles of Incorporation and By-Laws:
(3) (i) (a) Articles of Incorporation*
(3) (i) (b) Amendment to Articles of Incorporation **
(3) (ii) By-Laws*
(4) Instruments defining the rights of security
holders, including indentures:
(4) (i) (a) Specimen Form of $.001 par value common stock*
(4) (i) (b) Specimen Form of $.O1 par value common stock**
*Incorporated by reference from Form 10-SB, dated November 21, 1994,
file no. 0-25254.
** Incorporated by reference from Form 10-KSB, dated December 31, 1995,
SEC File No. 0-25254
(b) Reports on Form 8K
No Form 8-K was filed during the last quarter of the fiscal year covered by
this report.
- 21 -
<PAGE>
SIGNATURES:
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
HARBOUR INTERMODAL, LTD.
a Delaware Corporation
Date: March 31, 2000 BY: /s/ Michael T. Gasparik
Michael T. Gasparik
Chief Executive Officer
Director, Chief Accounting Officer
and Chairman, Board of Directors
- 22 -
<PAGE>
HARBOUR INTERMODAL, LTD.
(A Development Stage Company)
REPORT ON AUDITS OF FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
- 23 -
<PAGE>
(F-1)
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Harbour Intermodal, Ltd.
We have audited the accompanying balance sheet of Harbour Intermodal, Ltd. (A
Development Stage Company) as of December 31, 1999. We have also audited the
statements of operations, stockholders' equity and cash flows for the two years
ended December 31, 1999 and the statement of operations and cash flows for the
period March 1, 1993 (inception of development stage) to December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the 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 financial statements referred to above present fairly, in
all material respects, the financial position of Harbour Intermodal, Ltd. (A
Development Stage Company) at December 31, 1999 and the results of its
operations, changes in stockholders' equity and its cash flows for the two years
ended December 31, 1999 and the statements of operations and cash flows for the
period March 1, 1993 (inception of development stage) to December 31, 1999 in
conformity with generally accepted accounting principles.
Kenzel & Co.
Certified Public Accountants
March 29, 2000
- 24 -
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
(F-2)
HARBOUR INTERMODAL, LTD.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999
<S> <C>
ASSETS
Current Assets:
Cash $49,697
Total current assets $49,697
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable $ 28,211
Due to affiliate-current (Note 3) $ 54,268
Total current liabilities $ 82,479
Note payable-affiliate (Note 3) $ 175,000
Stockholders' Equity: (Deficiency in Assets)
Common stock (Notes 2 and 4)
$.01 par value, 20,000,000 shares
authorized, 8,504,513 issued and
outstanding 85,045
Capital in excess of par value 53,955
Accumulated deficit to
December 31, 1982 (Note 1) (62,000)
Deficit accumulated
during development stage (284,782)
Total accumulated deficit (346,782)
Total stockholders' equity
(deficiency) (207,782)
$ 49,697
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
- 25 -
<PAGE>
<TABLE>
<CAPTION>
(F-3)
HARBOUR INTERMODAL, LTD.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Period from
March 1, 1993
For the Years Ended (inception of
December 31, development stage)
1999 1998 to December 31, 1999
<S> <C> <C> <C>
Income $ -0- $ -0- $ -0-
Operating expenses:
General and administrative 25,050 25,473 162,522
Professional fees 19,706 9,740 87,297
Rent 7,370 7,611 34,981
Net loss during
development stage $ 54,126 $ 42,824 $ 284,782
Net loss per share $ (.006) $ (.005)
Weighted average common
shares outstanding 8,504,513 8,504,513
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
- 26 -
<PAGE>
(F-4)
HARBOUR INTERMODAL, LTD.
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDERS' EQUITY
Common Stock Capital
Number in excess
of of par Accumulated
Shares Amount value Deficit Total
<S> <C> <C> <C> <C> <C>
Balance at Dec 31, 1997 8,504,513 $85,045 $53,955 $ (249,822) $(110,832)
Net loss during development
stage - - - (42,824) (42,824)
Balance at Dec 31, 1998 8,504,513 $85,045 $53,955 $(292,656) $(153,656)
Net loss during development
stage - - - (54,126) (54,126)
Balance at Dec 31, 1999 8,504,513 $85,045 $53,955 $(346,782) $(207,782)
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
- 27 -
<PAGE>
(F-5)
<TABLE>
<CAPTION>
HARBOUR INTERMODAL, LTD.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Period from
March 1, 1993
For the Years Ended (inception of
December 31 development stage)
1999 1998 to December 31, 1999
Cash flows from operating
activities:
<S> <C> <C> <C>
Net loss during development
stage $ (54,126) $ (42,824) $ (284,782)
Non-cash items included in
net loss:
Increase (decrease) in
accounts payable 917 6,219 28,211
Cash used in operating
activities (53,209) (36,605) (256,571)
Cash flows from financing
activities:
Advances from related party 102,245 32,750 304,268
Repayments to related party -0- -0- (75,000)
Issuance of capital stock
for indebtedness to related
party -0- -0- 75,000
Proceeds from issuance of
common stock -0- -0- 2,000
Cash provided by financing
activities 102,750 32,750 306,268
Increase (decrease) in cash 49,036 3,855 49,697
Cash, beginning of period 661 4,516 -0-
Cash, end of period $ 49,697 $ 661 $ 49,697
</TABLE>
- 28 -
<PAGE>
(F-6)
<TABLE>
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW:
<S> <C> <C> <C>
Cash paid for interest $ -0- $ -0- $ -0-
Cash paid for income taxes$ -0- $ -0- $ -0-
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW:
In 1995 the Company issued 7,500,000 shares of common stock in exchange for
advances from a related party for rent and other services.
See Accompanying Notes to Financial Statements
- 29 -
<PAGE>
(F-7)
HARBOUR INTERMODAL, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (F-7)
DECEMBER 31, 1999 AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Harbour Intermodal, Ltd. is a holding company whose goal is to establish a
comprehensive regional railroad and railroad car float service throughout New
York Harbor. The Company plans to be both an operator of intermodal services
in harbor areas and a supplier of major equipment designed for this purpose.
The Company proposes to expand and augment existing terminal facilities for New
York harbor carfloat operations to establish a waterborne rail freight network
with intermodal terminals connecting with CONRAIL, New York Susquehanna and
Western, Canadian Pacific, Canadian National and the Long Island Rail Road.
The financial statements have been prepared in accordance with the
provision of Statement of Financial Accounting Standards No. 7 - "Accounting
and Reporting by Development Stage Enterprise" - which requires development
stage companies to employ the same accounting principles as operating companies.
The Company will continue as a development stage company until its planned
principal operations have commenced and there are significant revenue therefrom.
Operations to date have primarily been meetings and negotiations with
parties who currently own and operate portions of the system, potential users
of present and expanded services and public agencies concerned with the
improvement of rail transportation services and the development of a business
plan.
In 1993, the Company began its development stage activities. From 1982
through 1992, the Company was dormant and no transactions were recorded on the
books. Prior to 1982, the Company operated as Controlled Energy Systems, Inc.
When operations were terminated, the net assets were written off resulting in a
charge to the accumulated deficit. The accumulated deficit, prior to the new
development stage activities, has been reported as a separate item in the
Stockholders' Equity section of the Balance Sheet.
On October 3, 1995, a subsidiary, HILX Transport, Inc. (HILX) was
incorporated in New Jersey. There were no transactions for HILX during 1998 or
1999.
The preparation of financial statements requires management to make
estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
- 30 -
<PAGE>
(F-8)
HARBOUR INTERMODAL, LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(continued)
2. HISTORY AND BACKGROUND INFORMATION
The Company was incorporated as Amega Corporation, a California
Corporation on March 13, 1964.
On March 30, 1973, the Stockholders amended the Articles of Incorporation
to change the name of the Corporation from Amega Corporation to Controlled
Energy Systems, Inc. - A California Corporation.
On October 11, 1974, Controlled Energy Systems, Inc. - A California
Corporation merged with and into Controlled Energy Systems, Inc. - A Delaware
Corporation
On June 9, 1986, the Stockholders amended the Articles of Incorporation to
change the name of the Corporation from Controlled Energy System, Inc., to
Circadian Systems, Inc., and changed the authorized number of shares first,
from 10,000,000 shares ($0.01 par value) to 1,000,000 shares ($0.10 par value)
and second, from 1,000,000 shares ($0.10 par value) to 300,000,000 shares
($0.0001 par value).
On March 31, 1993, the Stockholders amended the Articles of Incorporation
to change the name of the Corporation from Circadian Systems, Inc. to Harbour
Intermodal, Ltd. and decreased the number of authorized shares from 300,000,000
($0.0001 par value) to 30,000,000 ($0.001 par value).
Effective December 31, 1995, the Company's Board of Directors with the
consent of the majority shareholder decreased the authorized number of shares
of the Company's common stock from 30,000,000 share to 20,000,000 shares and
increased the par value from .001 per share to .01 per share.
3. RELATED PARTY TRANSACTIONS
The Company occupies premises owned by Ka-Bar Medical, Inc. (Ka-Bar) and
incurred annual rent expense of $4,000 for those premises in 1999 and 1998. Ka-
Bar is controlled by Michael T. Gasparik, who is the majority shareholder,
Chairman, Chief Executive Officer and a Director of the Company. At December
31, 1999, the Company owed Ka-Bar $229,268 for advances for operating expenses
and unpaid rent. In December 1999 Ka-Bar advanced the Company $50,000 that was
repaid in January 2000.
On December 31,1999 the Company also executed a promissory note to Ka-Bar which
requires the accrual of interest on a quarterly bases at the prime rate at the
end of each quarter (8.5% at December 31, 1999). The note and accrued interest
become due on December 31, 2004.
In 1998, the Company also rented office space on a month to month basis
at the New Jersey Institute of Technology Business Incubator Facility for
$3,611.
4. EARNINGS PER SHARE INFORMATION
Per share information is based on the weighted average number of shares
outstanding for the period.
- 31 -
<PAGE>
HARBOUR INTERMODAL, LTD.
(A Development Stage Company)
DECEMBER 31, 1999 AND 1998
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditor's Report........................................ F-1
Balance Sheet....................................................... F-2
Statement of Operations............................................. F-3
Statement of Stockholders' Equity................................... F-4
Statement of Cash Flows.......................................... F-5 to F-6
Notes to Financial Statements.................................... F-7 to F-8
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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