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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
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<S><C>
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
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[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
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Commission file number 0-25352
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Ampace Corporation
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(Exact name of Small Business Issuer as specified in its charter)
Delaware 36-3988574
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
130 Mabry Hood Road, Suite 220, Knoxville, TN 37922
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(Address of principal executive offices)
423-691-5799
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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State the number of shares outstanding of each of the Issuer's classes
of common equity, as of the last practicable date: 2,800,000
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Traditional Small Business Disclosure Format (check one)
Yes No X
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
See Financial Statements attached hereto
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
RESULTS OF OPERATIONS
Ampace Corporation (the Company) was incorporated in November 1994 to create a
national non-union full truckload transportation company. On February 24, 1995
the Company completed its first acquisition thereby commencing its transport
operations. The Company's operations for the three months ended March 31, 1995
reflect general and administrative activity of the Company for the full period
and the operations of the acquired company (Merchants Dutch Express, Inc. or
MDX) from the acquisition date forward. Consequently, the significant
increases in the Company's revenues and expenses for the quarter ending March
31, 1996 compared to the quarter ending March 31, 1995 are due to the first
three months of 1995 including only one month's operating activity of MDX,
compared with three months in 1996.
In management's opinion, a detailed discussion of the Company's operation
results for the three months ending March 31, 1996 compared to those of the
same period in 1995 is not meaningful because of the abbreviated operating
results during 1995. Consequently, discussion of the Company's operations is
based upon the general comparative differences between the three months ended
March 31, 1996 and March 31, 1995 and the following proforma information
prepared assuming (i) the initial capitalization of the Company's 1,450,000
shares (ii) the offering of 1,350,000 shares of common stock, and (iii) MDX had
been acquired on January 1, 1995 and therefore contributed three months
operations.
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<CAPTION>
Proforma Three Months Ended
March 31, 1995 March 31, 1996
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<S> <C> <C>
Revenues (000) $5,662 $6,641
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Net Income (000) $18 $(57)
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Income (loss) per share $.01 $(.02)
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Comparing the Company's proforma results of operations for first three months
of 1996 versus the same period in 1995, revenues increased approximately 17%
from $5.7 million to $6.6 million. This increase resulted primarily from
additional tractors and trailers in service during 1996 and a slight increase
in the revenue per total mile driven. The Company operated 234 tractors as of
March 31, 1996 compared to 203 in operation as of March 31, 1995.
Net income decreased from $18,000 for quarter ending March 31, 1995 to $57,000
loss for the same period during 1996. This decrease resulted primarily from
additional expenses associated with the ongoing acquisition efforts of the
Company.
Operationally, most expenses were comparable for the quarters ending March 31,
1995 and 1996 except those relating to equipment ownership and fuel. During
1994 MDX started the conversion from mostly rental equipment to company owned
equipment. This process continued during 1995 and into 1996. This resulted in
lower rent expense and higher depreciation, maintenance and operating expenses
in 1996 compared to 1995. During January and February of 1995 and 1996, MDX
experienced lower equipment
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utilization due to the in-processing of approximately 100 tractors in 1995 and
to the slow freight demand in 1996. This lower utilization effectively
increased fixed costs during the periods. Fuel prices started to increase late
in the quarter ending March 31, 1996 resulting in higher fuel costs as compared
to the same period during 1995. Partially offsetting these increases was a
decrease in insurance costs which resulted from lower rates and better claims
experience.
LIQUIDITY AND CAPITAL RESOURCES
On February 16, 1995 (the Effective Date), the Company completed an initial
public offering for the sale of 1,200,000 shares of common stock (the
Offering). The net proceeds from the Offering received by the Company on
February 24, 1995 was approximately $6,680,000, net of Offering expenses of
approximately $1,720,000. On March 15, 1995, the underwriters exercised an
option to purchase an additional 150,000 shares of common stock under the same
terms as the Offering to cover over-allotments. The net proceeds from this
sale, received by the Company on March 15, 1995, was approximately $950,000 net
of Offering expenses of approximately $105,000. The Company has utilized
$3,500,000 of the net proceeds to acquire all outstanding stock of MDX.
Additional proceeds from the Company's offering in 1995 have been used for
operational needs at MDX and to support on-going acquisition efforts.
After the close of business on March 31, 1996 the Company through a newly
formed subsidiary, purchased all of the stock of Amanday Express, Inc.
("Amanday") for cash of $1,000,000, 275,000 shares of Ampace common stock and a
note payable to the seller in the amount of $100,000. This acquisition will be
recorded effective April 1, 1996.
The Company obtained a $3 million line of credit late in 1995 which is secured
by its accounts receivable. The line of credit may be used for general
corporate purposes including acquisitions and is subject to certain financial
covenants. Management believes that existing cash, operational cash flow and
current credit facilities are sufficient to meet its need for working capital
and expansion plans for 1996. The Company is currently in discussion with
various financial institutions to secure additional credit facilities for
future acquisitions.
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ATTACHMENT - ITEM 1. FINANCIAL STATEMENTS
AMPACE CORPORATION & SUBSIDIARY
Condensed Consolidated Balance Sheets
December 31, 1995 and March 31, 1996
(Unaudited)
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<CAPTION>
($000) December 31, March 31, 1996
ASSETS 1995
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,395 1,478
Accounts receivable, net 3,226 3,566
Other current assets 1,027 430
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Total current assets 5,648 5,474
Property and equipment, net 11,423 10,662
Other assets 1,330 1,319
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Total assets $ 18,401 17,455
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Current installments of long-term debt and
capital lease obligations 4,018 4,018
Other current liabilities 1,149 1,427
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Total current liabilities 5,167 5,445
Long-term debt and capital lease obligations
excluding current installments 6,518 5,351
Other liabilities 378 378
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Total liabilities 12,063 11,174
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Stockholders' equity:
Common stock, $.0001 par value. Authorized
10,000,000 shares; issued and outstanding
2,800,000 shares at December 31, 1995 and
March 31, 1996 - -
Additional paid-in capital 6,576 6,576
Accumulated deficit (238) (295)
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Total stockholders' equity 6,338 6,281
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Commitments and contingencies
Total liabilities and stockholders' equity $ 18,401 17,455
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</TABLE>
See accompanying notes to condensed consolidated financial statement.
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AMPACE CORPORATION & SUBSIDIARY
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1995 and 1996
(Unaudited)
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<CAPTION>
1995 1996
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<S> <C> <C>
Operating revenues $ 2,019 6,641
Salaries, wages and employee benefits 761 2,725
Other operating expenses including general
and administrative 1,073 3,817
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Total operating expenses 1,834 6,542
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Operating income 185 99
Other income (deductions):
Interest expense, net (76) (172)
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Income (loss) before taxes 109 (73)
Income taxes 36 (16)
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Net income $ 73 (57)
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Weighted average common shares outstanding 1,901,064 2,800,000
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Income (loss) per share $ 0.04 $ (0.02)
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See accompanying notes to consolidated financial statements
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AMPACE CORPORATION & SUBSIDIARY
Condensed Statements of Cash Flow
Three Months Ended March 31, 1995 and 1996
(Unaudited)
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<CAPTION>
1995 1996
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<S> <C> <C>
Operating activities:
Net income (loss) $ 73 (57)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 282 837
Changes in operating assets and liabilities:
Accounts receivable, net (106) (340)
Other current assets (26) 597
Other current liabilities (501) 278
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Net cash provided (used) by operating activities (278) 1,315
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Investing activities:
Purchases of property and equipment (6) (65)
Acquisition of net assets of subsidiary, net of
cash acquired (3,031) -
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Net cash used by financing activities (3,037) (65)
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Financing activities:
Proceeds from sale of common stock, net of offering costs 7,763
Principal payments on long-term debt and capital leases (301) (1,167)
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Net cash provided by financing activities 7,462 (1,167)
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Net increase in cash and cash equivalents 4,147 83
Cash and cash equivalents at beginning of period 69 1,395
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Cash and cash equivalents at end of period $ 4,216 1,478
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Supplementary disclosure of cash flow information:
Interest paid $ 89 191
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Income taxes paid $ 453 17
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See accompanying notes to consolidated financial statements
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AMPACE CORPORATION & SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in annual consolidated financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, all adjustments necessary for fair presentation of
the periods presented have been reflected and are of a normal recurring
nature. These condensed consolidated financial statements should be read
in conjunction with the financial statements and the notes, as filed with
the Securities and Exchange Commission as part of the Company's
Registration Statement on Form SB-2, dated December 22, 1994 and as
amended on February 16, 1995, and the Company's 1995 Form 10-KSB.
Results of operations for the interim periods are not necessarily
indicative of the results to be expected for the year.
(2) Initial Public Offering and Acquisition
On February 16, 1995 (the Effective Date), the Company completed an
initial public offering for the sale of 1,200,000 shares of common stock
(the Offering). The net proceeds from the Offering, received by the
Company on February 24, 1995, was approximately $6,680,000 net of
Offering expenses of approximately $1,720,000. On March 15, 1995, the
underwriters exercised an option to purchase an additional 150,000 shares
of common stock under the same terms as the Offering to cover
over-allotments. The net proceeds from this sale, received by the
Company on March 15, 1995, was approximately $950,000 net of Offering
expenses of approximately $105,000.
Concurrent with the closing of the Offering, the Company purchased for
$3,500,000 all of the capital stock of Merchant's Dutch Express, Inc.
("MDX"). The transaction was accounted for under the purchase method of
accounting for business combinations. MDX's results of operations have
been consolidated into Ampace's results of operations from the
acquisition date forward.
(3) Acquisition of Amanday Express, Inc.
After close of business on March 31, 1996, the Company through a newly
formed subsidiary, purchased all the common stock of Amanday Express,
Inc. ("Amanday") for cash of $1,000,000, 275,000 shares of Ampace common
stock and a note payable to the seller for $100,000. Amanday is a
truckload carrier based in Asheboro, North Carolina. Separate financial
statements along with proforma information for Amanday will be filed in a
Form 8-K by May 30, 1996. The acquisition will be accounted for under
the purchase method of accounting for business combinations. Effective
with the second quarter of 1996, Amanday's operations will be included
with those of Ampace.
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(4) Proforma Information
The following proforma information gives effect to the (i) the initial
capitalization of the Company's 1,450,000 shares (ii) the offering of
1,350,000 shares of common stock, and (iii) the acquisition referred to
in Footnote (2), as if the transaction had occurred on January 1, 1995.
The proforma adjustments reflect the interest earned on the Offering
proceeds not applied to the acquisition, the increase in depreciation
charges from a step-up in the fair market value of net assets acquired,
and a decrease in interest charges from a revaluation of capital leases
acquired.
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Proforma Three Months Ended
March 31, 1995 March 31, 1996
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<S> <C> <C>
Revenues (000) $5,662 $6,641
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Net Income (000) $18 $(57)
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Income (loss) per share $.01 $(.02)
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Ampace Corporation
Date May 10, 1996 BY: /s/ Jay N. Taylor
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Jay N. Taylor, Chief Executive Officer
Date May 10, 1996 BY: /s/ Bruce W. Jones
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Bruce W. Jones, Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 3,566
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,474
<PP&E> 10,662
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,455
<CURRENT-LIABILITIES> 5,445
<BONDS> 5,351
0
0
<COMMON> 0
<OTHER-SE> 6,251
<TOTAL-LIABILITY-AND-EQUITY> 17,455
<SALES> 0
<TOTAL-REVENUES> 6,641
<CGS> 0
<TOTAL-COSTS> 6,542
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 172
<INCOME-PRETAX> (73)
<INCOME-TAX> (16)
<INCOME-CONTINUING> (57)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0
</TABLE>
