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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest reported) JANUARY 10, 2001
GASEL TRANSPORTATION LINES, INC.
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(Exact name of registrant as specified in its chapter)
OHIO 0-30185 31-1239328
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(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
County Road 10, Route 4, Box 181A, Marietta, Ohio 45750
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 740-373-6479
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective Jan. 1, 2001, Gasel Transportation Lines, Inc.(sometimes hereinafter
referred to as "Company") acquired the freight transport and freight brokerage
business of Eagle Transportation Services, Inc. and Eagle Transport, Inc.,
together with the transportation equipment owned by them. Eagle Transportation
Services, Inc. and Eagle Transport, Inc. are Ohio corporations with their
principal offices located at 8400 Industrial Parkway, Plain City, Ohio, and are
owned by Ron Flowers and Cynthia Flowers, husband and wife. Prior to this
transaction, there was no relationship of any kind between the parties or any of
their affiliates.
Eagle Transportation Services, Inc. will continue to operate its warehousing and
logistics business from its Plain City, Ohio terminal with Gasel Transportation
Lines, Inc. providing the freight services.
The purchase price of the acquisition was a total of $1,454,724.97. Of that
amount, $892,224.97 was the amount of debt that encumbered the tractors and
trailers and which Gasel Transportation Lines, Inc. is to refinance and remove
the primary obligor's from liability thereon. While the refinancing is awaiting
taking place, the Company is to make the payments on the debt and indemnify the
sellers. The balance of the purchase price ($562,500) was paid by delivering at
closing $150,000 in cash, a promissory note payable to the sellers in the amount
of $150,000 and bearing interest at 10% per annum, a warrant to purchase 100,000
common shares, without par value, of Gasel Transportation Lines Inc. at an
exercise price of $2.50 per share, a warrant to purchase 75,000 common shares,
without par value, of Gasel Transportation Lines Inc. at an exercise price of
$3.00 per share, and a certificate for 175,000 common shares, without par value,
of Gasel Transportation Lines, Inc. valued at $1.50 per share.
The principle followed by the Company in valuing the purchase was that the
transportation equipment had a fair market value equal to or greater than the
debt encumbering it, and the value of the intangible assets associated with
the acquisition of the freight transport and brokerage business had an
estimated fair market value of five times the estimated after tax earnings of
the operations for the calendar year 2000 if incorporated into the Company's
financial statements. The funds for the acquisition were generated by the
Company internally from working capital, as will be the payments due on the
promissory note.
The acquisition includes ten (10) 1999 and 2000 model year tractors and
forty-six (46) dry van and refrigerated trailers which will be incorporated into
the existing transportation business of the Company. Additionally, Gasel
Transportation Lines Inc. entered into a five-year lease of the Plain City, Ohio
office formerly operated by Eagle Transportation Services, Inc., which includes
the office furniture and equipment, from another company owned by Ron and
Cynthia Flowers, the owners of the selling companies. The lease terms are
believed by the Company to be at fair market rates.
Gasel Transportation Lines, Inc. retained Ron Flowers, one of the owners of
Eagle Transport, Inc. and Eagle Transportation Services, Inc. to act as
President of the operations being acquired at an annual salary of $105,000 and
agreed to elect him to the Board of Directors upon the Company acquiring
liability insurance for the directors. Glen Widner, former manager of the
sellers' operations, has been retained by Gasel Transportation Lines, Inc. as
the Operations Manager of the acquired operations.
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In addition to acquiring the Plain City, Ohio office, the Company acquired an
office in Altavista, Virginia that it intends to continue to operate.
With the acquisition, Gasel Transportation Lines Inc. obtained several
owners/operators and a freight brokerage business that should allow it to better
utilize its existing equipment, add additional freight lanes and provide a sales
force in the Columbus, Ohio area.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
Financial statements for the acquired business are not included in
this report. Gasel Transportation Lines, Inc. expects to file the
financial statements for the acquired business by March 15, 2001.
(b) Pro forma financial information.
Pro forma financial information for the combination of the acquired
business and Gasel Transportation Lines, Inc. have not been included
in this report. Gasel Transportation Lines, Inc. expects to file the
pro forma financial information by March 15, 2001.
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.
GASEL TRANSPORTATION LINES, INC.
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(Registrant)
Date: January 10, 2001 /s/ Michael J. Post
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(Signature)*Michael J. Post, President
