10KSB 1 d54601_10ksb.txt ANNUAL REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB -------------------------------- (Mark One) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from . . . . . . . . . . to . . . . . . . . . . Commission File Number 0-14786 AUTOINFO, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-2867481 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6401 Congress Avenue - Suite 230 Boca Raton, FL 33487 (Address of principal executive offices) Registrant's telephone number, including area code: (561) 988-9456 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par value $.001 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not 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| As of March 21, 2003, 27,347,923 shares of the Registrant's common stock were outstanding. The aggregate market value of the common stock of the Registrant held by non-affiliates of the Registrant as of March 10, 2003 (based upon the closing price on the OTC Bulletin Board of the National Association of Securities Dealers of $0.17 on that date) was approximately $1,997,000. Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes |X| No |_| DOCUMENTS INCORPORATED BY REFERENCE NONE AUTOINFO, INC. Form 10-KSB Annual Report TABLE OF CONTENTS
Page ---- PART I ........................................................................ 3 Item 1. Business ...................................................... 3 Risk Factors .................................................. 6 Item 2. Properties .................................................... 9 Item 3. Legal Proceedings ............................................. 9 Item 4. Submission of Matters to a Vote of Security Holders ........... 9 PART II ....................................................................... 10 Item 5. Market for our Common Equity and Related Stockholder Matters .. 10 Selected Consolidated Financial Data .......................... 11 Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations ......................................... 12 Item 7. Financial Statements and Supplementary Data ................... 16 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures ......................................... 16 PART III ...................................................................... 17 Item 9. Directors and Executive Officers .............................. 17 Item 10. Executive Compensation ........................................ 18 Item 11. Security Ownership of Certain Beneficial Owners and Management 20 Item 12. Certain Relationships and Related Transactions ................ 20 Item 13. Exhibits and Reports On Form 8-K .............................. 21 Item 14. Controls and Procedures ....................................... 22
FORWARD LOOKING STATEMENT INFORMATION Certain statements made in this Annual Report on Form 10-KSB are "forward-looking statements"(within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth herein under the headings "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." 2 PART I BUSINESS Overview We are a full service third party transportation logistics provider through our wholly-owned subsidiary Sunteck Transport Co., Inc. (Sunteck). Our services include ground transportation coast to coast, local pick up and delivery, warehousing, air freight and ocean freight. We have strategic alliances with less than truckload, truckload, air, rail and ocean common carriers to service our customers' needs. We have five regional operating centers and representatives in 12 states and Canada. As of March 5, 2003 we had 42 sales agents. Our services include arranging for the transport of customers' freight from the shippers location to the designated destination. We do not own any trucking equipment and rely on independent carriers for the movement of customers' freight. We seek to establish long-term relationships with our customers and provide a variety of logistics services and solutions to eliminate inefficiencies in our customers' supply chain management. The industry Prior to the mid 1980's, the trucking industry was regulated by the Interstate Commerce Commission. Deregulation brought new breath and life to the industry. This also brought with it the problem of how to navigate the transportation highway. Shippers found it difficult to locate carriers and carriers found that it was expensive to find freight. Enter the third party transportation providers-intermediaries (freight brokers, freight forwarders and logistics providers). The third party intermediary connects the shipper and the carrier and helps manage the flow of goods. The present market for freight moved by truck is estimated by management to exceed $350 billion per year. This is a highly fragmented industry comprised of common carriers - contract carriers - freight forwarders and freight brokers. The actual movement of goods is accomplished by trucking (consisting of local, over the road, truckload, and less than truckload shipments) - air freight (time sensitive in nature) - rail freight (non time sensitive in nature and usually less expensive than truck) - ocean freight (generally in containerized ships). Other services provided include warehousing and distribution. There are several trends which are relevant to the continued dependency upon and growth of the trucking industry: o Just in time service With new technology and a premium on cost savings, businesses are able to maintain smaller inventories, thereby reducing carrying costs and warehouse space requirements. The impact on the freight industry is more shipments of smaller quantities that are more time sensitive and, therefore, more costly. o Outsourcing Companies have found it to be more cost effective and efficient to eliminate company owned truck fleets and rely upon others to handle their trucking / shipping needs. o Logistics Small to medium size businesses, with less frequent shipping requirements, utilize logistics providers (freight brokers, etc.) to manage all aspects of the transportation, warehousing and delivery needs. 3 The market for third party logistics providers, estimated by management to exceed $100 billion per year, is highly fragmented. It is comprised primarily of full service logistics providers, freight brokers, independent sales agents and sales representatives. Sales agents often work out of home based offices or small regional sales offices and affiliate themselves with full service brokers to provide back office services including load dispatching, bonding and licensing, billing, collection and other administrative services. Sales representatives vary from experienced people with years of freight industry experience and established client relationships to telemarketing personnel cold calling shippers and dispatchers. Operations and systems We presently process in excess of 2,000 freight orders per month. Our sales agents in our five regional operating centers and representatives in twelve states and Canada receive customers freight requirements daily. All agents make appropriate carrier arrangements for the pick-up and timely delivery of customers' freight. We utilize a state-of-the-art order entry system. All agents are integrated live via Internet access to our database and client server-based system in our Florida corporate headquarters. Orders are entered into a customized freight order and tracking system, which enables us to monitor the status of all orders, generate customer billing and provide detailed transactional reports. We use these reports to monitor customer logistics and transportation usage, track customer and carrier historical data, generate detailed financial and accounting data and provide our customers with details of their supply chain activity. Customers We strive to establish long-term customer relationships and, by providing a full range of logistics and supply chain services, we seek to increase our level of business with each customer. We service customers ranging from Fortune 100 companies to small businesses in a variety of industries. During 2002, no customer accounted for more than 10% of our revenues. We receive credit applications from all customers, review credit references and perform credit checks to ensure credit worthiness. Sunteck has achieved revenue growth through the addition of sales agents and independent sales agent / representatives, the opening of new operations offices in New Jersey, Missouri and North Carolina, an increase in the number of customers serviced and the expansion of logistics and supply chain services provided. Each operations office markets our full range of supply chain services to existing customers and pursues new customers within their local markets. We build new customer relationships by exploiting our range of logistics and supply chain services, the traffic lanes we commonly service, carrier relationships and capabilities, our industry specific expertise and our sales agents individual knowledge and experience. Agents and representatives move their client affiliation to other service providers as a result of financial considerations, location and benefits. We will provide significant advantages and opportunities over traditional small regional third party logistics providers and build a network of operating offices and sales agents. Our growth model is focused on adding sales agents in strategic markets. As this agent network is further established and expanded, we believe that significant other opportunities will emerge. Larger sales agents offices often have their own equipment (truck space), which presents the opportunity to maximize available freight and load capacity thereby increasing gross margins above historical levels. In addition, sales representatives will be added to regional operating office sales agent locations to increase market penetration. Since representatives work on a commission basis, this expansion essentially comes at no additional overhead outlay. 4 Significant opportunities for expansion and growth also includes strategic alliances with other service freight broker groups. This strategy will enable us to achieve strong regional penetration into new geographical markets and increase back office capabilities to service the agent network. Competition The transportation industry is highly competitive and highly fragmented. Our primary competitors are other non-asset based as well as asset based third party logistics companies, freight brokers, carriers offering logistics services and freight forwarders. We also compete with customers' and shippers' internal traffic and transportation departments as well as carriers internal sales and marketing departments directly seeking shippers' freight. We generally compete on the basis of price and the range of logistics and supply chain services offered. Government regulation Our industry has long been subject to government legislation and regulation. Over the years, many changes in these laws and regulations have affected the industry and caused changes in the operating practices and the cost of providing transportation services. We cannot predict what effect, if any, legislative and regulatory changes may have on the industry in the future. We are licensed by the United States Department of Transportation (DOT) as a broker arranging the movement of materials by motor carrier. In this capacity, we are required to meet certain qualifications to enable us to conduct business, which includes the compliance with certain surety bond requirements and the maintenance of a $100,000 contingent cargo insurance policy. Risk and liability We do not assume liability for loss or damage to freight. As a third party logistics provider, we act as the shipper's agent and arrange for a carrier to handle the freight. Therefore, we do not take possession of the shipper's freight and, accordingly, we are not liable for the carrier's negligence or failure to perform. We do assist our customers in the processing and collection of any claim. The Federal Highway Administration requires us to maintain a surety bond of $10,000, which is intended to show our financial responsibility and provide surety for the arrangements with shippers and carriers. Executive officers We currently have two executive officers. Harry M. Wachtel serves as president and chief executive officer and has served in these capacities since December 7, 2000. William Wunderlich serves as executive vice president and chief financial officer and has served as executive vice president since December 2000 and as chief financial officer since October 1992. In addition, Mr. Wunderlich served as our president from January 1999 through December 7, 2000. For information regarding Mr. Wachtel and Mr. Wunderlich's prior business experience, see Item 10 of this report. Company background AutoInfo was organized under the laws of the State of Delaware in 1987. During 1998, we ceased to operate as an automobile finance company. On February 2, 2000, we filed a disclosure statement and reorganization plan pursuant to Chapter 11 of Title 11 of the United States Bankruptcy Code. 5 On June 22, 2000, we entered into a Merger Agreement with Sunteck, a full service third party transportation logistics provider, in exchange for, upon closing, ten million shares of our common stock, which constituted approximately 37% of the proposed outstanding common stock of reorganized AutoInfo under our Chapter 11 reorganization plan. Sunteck, which was formed in 1997, is a full service third party transportation logistics provider. Its supply chain services include ground transportation coast-to-coast, local pick up and delivery, warehousing, air freight and ocean freight. Sunteck has developed strategic alliances with less than truckload, truckload, air, rail and ocean common carriers to service its customers' needs. On June 27, 2000, our Amended Disclosure Statement and Amended Plan of Reorganization were approved by the Bankruptcy Court. On August 1, 2000, we announced that the Reorganization Plan had been confirmed and would become effective, without further action by the Court, upon the closing of the Sunteck merger, which occurred in December 2000. RISK FACTORS A purchase of our common stock is speculative and involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included or incorporated by reference in this report before making an investment decision. The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occur, our business, financial condition or operating results could be harmed. In such case, the trading price of our common stock could decline and you could lose all or part of your investment. We have experienced operating losses in prior years. For the year ended December 31, 2002, we increased gross revenues from $8.0 million to $18.9 million and had net income of $340,000 as compared with a net loss of $15,000 in the prior year. However, in prior years we experienced operating losses. Factors that could adversely affect our operating results include: o the success of Sunteck in expanding its business operations; and o changes in general economic conditions. There is no assurance that we will operate profitably in future periods. Control of customer accounts. A substantial portion of our business is originated by our network of independent sales representatives. Most of these sales representatives work with us on a non-exclusive basis. We do not have non-compete or non-solicitation agreements with these representatives. As a result, if sales representatives terminate their affiliation with us or direct their freight business to other logistics providers, our revenue and results of operations could be adversely affected. We may require additional financing in the future, which may not be available on acceptable terms. Depending on our ability to generate revenues, we may require additional funds to expand Sunteck's business operations and for working capital and general corporate purposes. Any additional equity financing 6 may be dilutive to stockholders, and debt financings, if available, may involve restrictive covenants that further limit our ability to make decisions that we believe will be in our best interests. In the event we cannot obtain additional financing on terms acceptable to us when required, our ability to expand Sunteck's operations may be materially adversely affected. We have limited marketing and sales capabilities and must make sales in fragmented markets. Our future success depends, to a great extent, on our ability to successfully market our services. We currently have limited sales and marketing capabilities. Our ability to successfully market our services is further complicated by the fact that our primary markets are highly fragmented. Consequently, we will need to identify and successfully target particular market segments in which we believe we will have the most success. These efforts will require a substantial, but unknown, amount of effort and resources. We cannot assure you that any marketing and sales efforts undertaken by us will be successful or will result in any significant sales. Our industry is intensely competitive, which may adversely affect our operations and financial results. All our markets are intensely competitive and numerous companies offer services that compete with our services. We anticipate that competition for our services will continue to increase. Many of our competitors have substantially greater capital resources, sales and marketing resources and experience. We cannot assure you that we will be able to effectively compete with our competitors in effecting our business expansion plans. We depend on the continued services of our president. Our future success depends, in large part, on the continuing efforts of our president, Harry Wachtel, who conceived our strategic plan and who is responsible for executing that plan. The loss of Mr. Wachtel would adversely affect our business. At this time we do not have any term "key man" insurance on Mr. Wachtel. If we lose the services of Mr. Wachtel, our business, operations and financial condition would be materially adversely affected. We may have difficulties in managing our growth. Our future growth depends, in part, on our ability to implement and expand our financial control systems and to expand, train and manage our employee base and provide support to an expanded customer base. If we cannot manage growth effectively, it could have a material adverse effect on our results of operations, business and financial condition. Acquisitions and expansion involve substantial infrastructure and working capital costs. We cannot assure you that we will be able to integrate our acquisitions and expansions efficiently. Similarly, we cannot assure you that we will continue to expand or that any expansion will enhance our profitability. If we do not achieve sufficient revenue growth to offset increased expenses associated with our expansion, our results will be adversely affected. We must attract and retain qualified personnel. As we implement our business growth strategy, significant demands will be placed on our managerial, financial and other resources. One of the keys to our future success will be our ability to attract and retain highly qualified marketing, sales and administrative personnel. Competition for qualified personnel in these areas is intense and we will be competing for their services with companies that have substantially greater resources than we do. We cannot assure you that we will be able to identify, attract and retain personnel with skills and experience necessary and relevant to the future operations of our business. Our inability to retain or attract qualified personnel in these areas could have a material adverse effect on our business and results of operations. 7 Our stock price is volatile and could be further affected by events not within our control. The trading price of our common stock has been volatile and will continue to be subject to: o volatility in the trading markets generally; o significant fluctuations in our quarterly operating results; and o announcements regarding our business or the business of our competitors. Statements or changes in opinions, ratings or earnings estimates made by brokerage firms or industry analysts relating to the markets in which we operate or expect to operate could also have an adverse effect on the market price of our common stock. In addition, the stock market as a whole has from time to time experienced extreme price and volume fluctuations which have particularly affected the market price for the securities of many small cap companies and which often have been unrelated to the operating performance of these companies. The price of our common stock may be adversely affected by the possible issuance of shares of our common stock as a result of the conversion of outstanding debentures or the exercise of outstanding options. We have granted options covering approximately 2.6 million shares of our common stock. In addition, we have $575,000 of outstanding debentures convertible at the option of the holders into 2.3 million shares of our common stock. We have agreed to register the shares underlying the debentures. As a result of the actual or potential sale of these shares into the market, our common stock price may decrease. Concentration of ownership As of March 18, 2003, our president, Harry Wachtel was our largest stockholder, owning approximately 35% of the issued and outstanding shares of our common stock. Further, James T. Martin owns approximately 24% of the issued and outstanding shares of our common stock. As a result, either Mr. Wachtel or Mr. Martin could assert control over our affairs, including the election of directors and any proposals regarding a sale of the Company or its assets or a merger. Some provisions in our charter documents and bylaws may have anti-takeover effects. Our certificate of incorporation and bylaws contain provisions that may make it more difficult for a third party to acquire us, with the result that it may deter potential suitors. For example, our board of directors is authorized, without action of the stockholders, to issue authorized but unissued common stock. The existence of authorized but unissued common stock enables us to discourage or to make it more difficult to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. We have agreed to limitations on the potential liability of our directors. Our certificate of incorporation provides that, in general, directors will not be personally liable for monetary damages to the company or our stockholders for a breach of fiduciary duty. Although this limitation of liability does not affect the availability of equitable remedies such as injunctive relief or rescission, the presence of these provisions in the certificate of incorporation could prevent us from recovering monetary damages. 8 The liquidity of our stock is severely reduced because we are classified as a "penny stock". The Securities and Exchange Commission (SEC) has adopted regulations which generally define a "penny stock" to be any non-Nasdaq equity security that has a market price (as therein defined) of less than $5.00 per share or with an exercise price of less than $5.00 per share. Our securities are subject to the existing rules on penny stocks and, accordingly, the market liquidity for our securities could be severely adversely affected. For any transaction involving a penny stock, unless exempt, the rules require substantial additional disclosure obligations and sales practice obligations on broker-dealers where the sale is to persons other than established customers and accredited investors (generally, those persons with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of the common stock and have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our common stock and accordingly the market for our common stock. Patents, trademarks and copyrights "AUTOINFO" is our registered trademark and service mark. Employees We currently have 56 full-time employees and independent sales agents. None of our employees are represented by a labor union and we believe that our relationship with our employees is good. PROPERTIES We lease approximately 1,400 square feet of space for our executive offices and the headquarters of Sunteck at 6401 Congress Avenue, Boca Raton, Florida. This lease runs through February 2004 and provides for an annual rental of $21,000. We lease 1,100 square feet for our operating office at 315 Main Street, Pineville, North Carolina. The lease runs through February 2005 and provides for an annual rental of $12,000. We lease 700 square feet for our operating office at 1040 North Halsted Street, Chicago, Illinois. The lease runs through September 2004 and provides for an annual rental of $9,600. LEGAL PROCEEDINGS We are not a party to any material legal proceedings. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None 9 PART II MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock is traded on the OTC Bulletin Board of the National Association of Securities Dealers, Inc. under the symbol AUTO. The following table sets forth, for the periods indicated, the high and low closing bid quotations per share for our common stock. Quotations represent interdealer prices without an adjustment for retail markups, markdowns or commissions and may not represent actual transactions: Year Ended December 31, 2002 High Low -------------------------------------------- ----- ----- First quarter $0.19 $0.06 Second quarter 0.17 0.12 Third quarter 0.22 0.10 Fourth quarter 0.22 0.12 Year Ended December 31, 2001 High Low -------------------------------------------- ----- ----- First quarter $0.06 $0.03 Second quarter 0.05 0.03 Third quarter 0.06 0.02 Fourth quarter 0.12 0.04 As of March 18, 2003, the closing bid price per share for our common stock, as reported on the OTC Bulletin Board of the National Association of Securities Dealers, Inc. was $0.16. As of March 18, 2003, we had approximately 1,750 beneficial stockholders. Dividend policy We have never declared or paid a cash dividend on our common stock. It has been the policy of our board of directors to retain all available funds to finance the development and growth of our business. The payment of cash dividends in the future will be dependent upon our earnings and financial requirements and other factors deemed relevant by our board of directors. 10 SELECTED CONSOLIDATED FINANCIAL DATA The following is a summary of our selected consolidated financial data for the years ended December 31, 2002, 2001, 2000, 1999 and 1998. The financial data has been derived from our audited consolidated financial statements and accompanying notes. This financial data reflects our acquisition of Sunteck in December 2000, which was accounted for as a pooling of interest. Accordingly, all periods presented below have been restated to include the accounts and operations of Sunteck under continuing operations. The selected financial data set forth below should be read together with, and are qualified by reference to, the "Management's Discussion and Analysis of Financial condition and Results of Operations" section of this report and our audited consolidated financial statements and accompanying notes included elsewhere in this report.
000's omitted, except for per share data Year ended December 31, -------------------------------------------------------------- 2002 2001 2000 1999 1998 ---------- --------- --------- --------- --------- Statement of Operations Data: ------------------------------------------ Gross revenues $ 18,863 $ 8,029 $ 3,389 $ 3,457 $ 2,388 Net revenues (1) 3,368 1,567 835 841 698 Income (loss) from continuing operations 340 (15) (81) 76 (2) Income (loss) from discontinued operations -- -- 9,471 (1,109) (9,935) Net income (loss) $ 340 $ (15) $ 9,390 $ (1,033) $ (9,937) Basic net income (loss) per share (2) (3) From continuing operations $ .01 $ (.00) $ .00 $ .00 $ .00 From discontinued operations -- -- .51 (.06) (.56) ---------- --------- --------- --------- --------- Net (loss) income per share, basic $ .01 $ (.00) $ .51 $ (.06) $ (.56) ---------- --------- --------- --------- --------- Diluted net income (loss) per share (2) (3) From continuing operations $ .01 $ (.00) $ .00 .00 $ .00 From discontinued operations -- -- .48 (.06) (.56) ---------- --------- --------- --------- --------- Net (loss) income per share, diluted $ .01 $ (.00) $ .48 $ (.06) $ (.56) ---------- --------- --------- --------- ---------
(1) Net revenues are determined by deducting cost of transportation from gross revenues. See Management's Discussion and Analysis of Financial Condition and Results of Operations. (2) The common stock equivalents for the year ended December 31, 2002 were 635,000 and for the year ended December 31, 2000 were 1,304,000. (3) The common stock equivalents for the years ended December 31, 1999, and 1998, were 745,000 and 214,000. The common stock equivalents for these shares were not included in the calculation of diluted income (loss) per common share because the effect would have been antidilutive.
000's omitted As at December 31, ------------------------------------------------------- 2002 2001 1999 1998 1997 -------- -------- -------- -------- -------- Balance Sheet Data: ------------------------------------------ Cash and short term investments $ 684 $ 898 $ 941 $ 1,072 $ 2,441 Accounts receivable 2,996 1,358 720 428 376 Total assets 3,944 2,458 1,740 1,530 3,180 Total liabilities of continuing operations 3,356 2,215 1,481 500 11,756 Liabilities of discontinued operations subject to compromise -- -- -- 10,624 -- Deficit (17,458) (17,798) (17,784) (27,173) (26,141) Stockholders' equity (deficiency) 588 243 258 (9,594) (8,576)
---------- 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary statement identifying important factors that could cause our actual results to differ from those projected in forward looking statements. Pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, readers of this report are advised that this document contains both statements of historical facts and forward looking statements. Forward looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those indicated by the forward looking statements. Examples of forward looking statements include, but are not limited to (i) projections of revenues, income or loss, earnings per share, capital expenditures, dividends, capital structure and other financial items, (ii) statements of our plans and objectives with respect to business transactions and enhancement of shareholder value, (iii) statements of future economic performance, and (iv) statements of assumptions underlying other statements and statements about our business prospects. This report also identifies important factors, which could cause actual results to differ materially from those indicated by the forward looking statements. These risks and uncertainties include the factors discussed under the heading "Risk Factors" beginning at page 6 of this report. The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our financial statements and the notes thereto appearing elsewhere in this report. Overview As a result of our acquisition of Sunteck Transport Co., Inc. (Sunteck) in December 2000, we are a full service third party transportation logistics provider. Our services include ground transportation coast to coast, local pick up and delivery, warehousing, air freight and ocean freight. We have strategic alliances with less than truckload, truckload, air, rail and ocean common carriers to service our customers' needs. We have five regional operating centers and representatives in 12 states and Canada. As of March 5, 2003 we had 42 sales agents. Our services include arranging for the transport of customers' freight from the shippers location to the designated destination. We do not own any trucking equipment and rely on independent carriers for the movement of customers' freight. We seek to establish long-term relationships with our customers and provide a variety of logistics services and solutions to eliminate inefficiencies in our customers' supply chain management. Results of operations For the year ended December 31, 2002 During the year ended December 31, 2002, we continued to implement our strategic growth business plan consisting primarily of the expansion of client services, the opening of regional operations centers in key geographical markets and the addition of independent sales agents. Our net revenues (gross revenues less cost of transportation) are the primary indicator of our ability to source, add value and resell service that are provided by third parties and are considered to be the primary measurement of growth. Therefore, the discussion of the results of operations below focuses on the changes in our net revenues. The increases in net revenues and all related cost and expense categories are the direct result of our business expansion. The cost of transportation related to a significant portion of the growth generated by this business expansion has been at a higher rate than our historical business resulting in reduced net revenues as a percentage of gross revenues. 12 The following table represents certain statement of operation data as a percentage of net revenues: 2002 2001 ----- ----- Net revenues 100.0% 100.0% Commissions 54.2% 46.1% Operating expenses 31.4% 50.9% Other charges 3.8% 4.0% Net income (loss) 10.1% (1.0%) Revenues Gross revenues, consisting of freight fees and other related services revenue, totaled $18,863,000 for the year ended December 31, 2002, as compared with $8,029,000 in the prior year. Net revenues were $3,368,000 for the year ended December 31, 2002, as compared with $1,567,000 in the prior year. Costs and expenses Commissions totaled $1,827,000 for the year ended December 31, 2002, as compared with $722,000 in the prior year. As a percentage of net revenues, commissions were 54.2% for the year ended December 31, 2002 as compared with 46.1% in the prior year. This increase is the direct result of higher commission rates related to our business expansion. Operating expenses totaled $1,057,000 for the year ended December 31, 2002, as compared with $798,000 in the prior year. As a percentage of net revenues, operating expenses were 31.9% for the year ended December 31, 2002 as compared with 50.9% in the prior year. This decrease is the direct result of management's ability to leverage selling, general and administrative expenses in connection with business expansion. Investment income, primarily consisting of the gain on the sale of marketable securities and dividend and interest income, yielded a gain of $26,000 for the year ended December 31, 2002, as compared to $45,000 in the prior year. This decrease is the direct result of the sale of substantially all marketable securities during the year ended December 31, 2001. Interest expense was $154,000 for the year ended December 31, 2002 as compared with $107,000 in the prior year. This increase is primarily the result of an increase in borrowings consisting of the loan payable of $500,000, originated in August 2001, outstanding for a full year offset by the repayment of a note payable, originated in September 2000, which was repaid in April 2001. Income tax Income taxes of $16,000 for the year ended December 31, 2002 related to the operating results net of the benefit of the utilization of net operating loss carryforwards. Net income (loss) Net income totaled $340,000 for the year ended December 31, 2002, as compared with a loss of $15,000 in the prior year. 13 Trends and uncertainties The transportation industry is highly competitive and highly fragmented. Our primary competitors are other non-asset based as well as asset based third party logistics companies, freight brokers, carriers offering logistics services and freight forwarders. We also compete with customers' and shippers' internal traffic and transportation departments as well as carriers internal sales and marketing departments directly seeking shippers' freight. We anticipate that competition for our services will continue to increase. Many of our competitors have substantially greater capital resources, sales and marketing resources and experience. We cannot assure you that we will be able to effectively compete with our competitors in effecting our business expansion plans. For the year ended December 31, 2002, we increased gross revenues from $8.0 million to $18.9 million and had net income of $340,000 as compared with a net loss of $15,000 in the prior year. As of December 31, 2002, we had an accumulated deficit of $17.5 million. Other factors that could adversely affect our operating results include: o the success of Sunteck in expanding its business operations; and o changes in general economic conditions. Depending on our ability to generate revenues, we may require additional funds to expand Sunteck's business operations and for working capital and general corporate purposes. Any additional equity financing may be dilutive to stockholders, and debt financings, if available, may involve restrictive covenants that further limit our ability to make decisions that we believe will be in our best interests. In the event we cannot obtain additional financing on terms acceptable to us when required, our ability to expand Sunteck's operations may be materially adversely affected. Liquidity and capital resources At December 31, 2002, we had outstanding $575,000 of convertible subordinated debentures and $500,000 pursuant to a line of credit. The debentures are convertible into common stock at the option of the debenture holder at a conversion price of $0.25 per share and are redeemable, at the option of the holder, on or after December 31, 2003. The line of credit, obtained from a related party in August 2001, is secured by accounts receivable and matures in August 2003. We believe that we have sufficient working capital to meet our short-term operating needs and that we will be able to extend or replace the line of credit on terms acceptable to us. At December 31, 2002, we had liquid assets of approximately $684,000. The total amount of debt outstanding as of December 31, 2002 and 2001 was $1,075,000. The following table presents our debt instruments and their weighted average interest rates as of December 31, 2002 and 2001, respectively: Weighted Average Balance Rate -------- ---- Subordinated Debt $575,000 12.0% Line of Credit $500,000 17.0 14 Inflation and changing prices had no material impact on our revenues or the results of operations for the year ended December 31, 2002. Critical Accounting Policies Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 of the Notes to Financial Statements includes a summary of the significant accounting policies and methods used in the preparation of the Company's financial statements. The most significant areas involving management estimates and assumptions are described below. Actual results could differ materially from management's estimates under different assumptions or conditions. Revenue Recognition As a third party transportation logistics provider, we act as the shippers' agent and arrange for a carrier to handle the freight. Gross revenues consist of the total dollar value of services purchased by shippers. Revenue is recognized upon the delivery of freight, at which time the related transportation cost, including commission, is also recognized. At that time, our obligations are completed and collection of receivables is reasonably assured. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB 101). SAB 101, as amended, summarizes some of the SEC's views in applying accounting principles generally accepted in the United States of America (GAAP) to revenue recognition in the financial statements. We believe our revenue recognition policy is appropriate and in accordance with GAAP and SAB 101. Provision For Doubtful Accounts We continuously monitor the creditworthiness of our customers and have established an allowance for amounts that may become uncollectible in the future based on current economic trends, our historical payment and bad debt write-off experience, and any specific customer related collection issues. Recently Issued Accounting Pronouncements In April 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB No. 13, and Technical Corrections" (SFAS 145), which rescinds the indicated statements and amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. In June 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities," which requires that a liability for a cost associated with an exit or disposal activity be recognized and measured at fair value when the liability is incurred. In October 2002, the FASB issued SFAS 147, "Acquisitions of Certain Financial Institutions," which requires that transactions involving the acquisition of financial institutions, except for transactions between two or more mutual enterprises, be accounted for in accordance with SFAS 141, "Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets." In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," which amends SFAS 123, "Accounting for Stock-Based Compensation," by 15 providing alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure requirements of SFAS 123 by requiring prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Adoption of these statements did not have a material impact on our financial position or results of operations. FINANCIAL STATEMENTS The response to this item is submitted as a separate section of this report beginning on page F-1. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None. 16 PART III DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the names, ages and positions of our directors, executive officers and key employees: Name Age Position ---- --- -------- Peter C. Einselen 63 Director Thomas C. Robertson 57 Director Harry Wachtel 44 President, chief executive officer and director Mark Weiss 43 National account executive and director William Wunderlich 55 Chief financial officer PETER C. EINSELEN has been a director since January 1999. Mr. Einselen has served as senior vice president of Andersen & Strudwick, a brokerage firm, since 1990. From 1983 to 1990, Mr. Einselen was employed by Scott and Stringfellow, Incorporated, a brokerage firm. THOMAS C. ROBERTSON has been a director since January 1999. Mr. Robertson has been president, chief financial officer and a director of Andersen & Strudwick, a brokerage firm since 1988. Mr. Robertson has been president of Gardner & Robertson, a money management firm, since 1997. HARRY WACHTEL joined us in conjunction with the acquisition of Sunteck and has been a director, and our president and chief executive officer since December 7, 2001. Since 1997, he has been president of Sunteck. From 1992 to 1997, he served as vice president of sales and marketing for Pioneer Services, Inc., a third party, non-asset based transportation logistics provider. From 1990 to 1991 he served as president of Guaranteed Federal Financial, a mortgage origination company. MARK WEISS joined us in conjunction with the acquisition of Sunteck and has been a director since December 7, 2001. Since 1997, he has been employed by Sunteck as a national account executive. From 1994 to 1997 he served as a national account executive for Pioneer Services, Inc., a third party, non-asset based transportation logistics provider. From 1982 to 1994 he was president of The Picture Place Ltd. Inc., a retailer and wholesaler of photographic, video and art equipment and supplies. Mr. Weiss is the brother-in-law of Mr. Wunderlich, our executive vice president and chief financial officer of the Company. WILLIAM WUNDERLICH joined us in October 1992 as our vice president - finance, became chief financial officer in January 1993, president in January 1999 and, in conjunction with the acquisition of Sunteck, became executive vice president in December 2001. From 1990 to 1992, he served as vice president of Goldstein Affiliates, Inc., a public adjusting company. From 1981 to 1990, he served as executive vice president, chief financial officer and a director of Novo Corporation, a manufacturer of consumer products. Mr. Wunderlich is a Certified Public Accountant with a B.A. degree in Accounting and Economics from the City University of New York at Queens College. Mr. Wunderlich is the brother-in-law of Mr. Weiss, one of our directors. Committees of the Board of Directors Our board of directors has an audit committee and a compensation committee. The audit committee reviews the scope and results of the audit and other services provided by our independent accountants and our internal controls. The compensation committee is responsible for the approval of compensation arrangements 17 for our officers and the review of our compensation plans and policies. Each committee is comprised of Messrs. Einselen and Robertson, our non-employee independent outside directors. Option grants during the year ended December 31, 2002 Our compensation committee did not grant any options to the named executives during the year ended December 31, 2002. During 2001, non-employee directors were granted options to purchase a total of 30,000 shares of our common stock at $0.05 per share, the fair market value on the date of grant. These shares vest ratably over a three-year period. Option exercises and year-end option values. The following table provides information with respect to options exercised by the Named Executive Officers during 2002 and the number and value of unexercised options held by the Named Executive Officers as of December 31, 2002. Aggregated Option Exercise in Last Fiscal Year and Year-End Option Values
Number of Shares Underlying Value of Unexercised In-the- Unexercised Options at Fiscal Money Options At Fiscal Year-End Year-End (2) ------------------------------ ---------------------------- Shares Acquired Name on Exercise (#) Value Realized (1) Exercisable Unexercisable Exercisable Unexercisable ---- --------------- ------------------ ------------- ------------- ----------- ------------- Harry Wachtel -- -- -- -- -- -- Mark Weiss -- -- -- -- -- -- William Wunderlich 50,000 $3,500 845,000 0 $42,250 $0
--------------- (1) For the purposes of this calculation, value is based upon the difference between the exercise price of the options and the stock price at date of exercise. (2) For the purposes of this calculation, value is based upon the difference between the exercise price of the exercisable and unexercisable options and the stock price at December 31, 2002 of $0.15 per share. Director Compensation We do not pay any directors' fees. Directors are reimbursed for the costs relating to attending board and committee meetings. During 2001, each non-employee Director was granted options to purchase a total of 15,000 shares of our common stock at $.05 per share, the fair market value on the date of grant. These shares vest ratably over a three-year period. EXECUTIVE COMPENSATION Summary compensation. The following table sets forth certain information concerning compensation paid for services in all capacities awarded to, earned by or paid to our chief executive officer and the other most highly compensated executive officers during 2002, 2001 and 2000 whose aggregate compensation exceeded $100,000. 18
All other Name and principal position Salary Bonus compensation (1) --------------------------- ------ ----- ---------------- Harry Wachtel President and chief executive officer 2002 ................................... $175,000 $13,035 -- 2001 ................................... $ 75,000(2) -- -- 2000 ................................... $231,325 -- -- William Wunderlich Executive vice president and chief financial officer (3) 2002 ................................... $ 75,000 $28,035 -- 2001 ................................... $ 75,000 -- -- 2000 ................................... $144,960 -- $4,575 Mark Weiss National account executive 2002 ................................... $127,836 -- -- 2001 ................................... $131,663 -- -- 2000 ................................... $137,771 -- --
-------------------- (1) Represents amount contributed to the Company's 401(k) deferred compensation plan. (2) For the year ended December 31, 2001, Mr. Wachtel waived $100,000 of his minimum salary. (3) From January 1, 2000 to November 2001, Mr. Wunderlich was our president. Employment Agreements In December 2000, we entered into employment agreements with Messrs. Wachtel and Wunderlich providing for their employment, as our chief executive officer and chief financial officer, respectively, for terms expiring on December 31,2003 subject to automatic one-year renewals unless either party gives written notice ninety days prior to the end of the then current term of the agreement. The agreement provides for annual base salaries of $175,000 and $75,000, respectively, and for participation in all executive benefit plans. Mr. Wachtel's agreement provides that he will be entitled to a bonus equal to 10% of our consolidated pre-tax profit from $250,000 to $1,250,000. Mr. Wunderlich's agreement provides that he will be entitled to a bonus equal to 10% of our consolidated pre-tax profit from $100,000 to $1,250,000. Further, the Mr. Wachtel's agreement provides, among other things, that, if employment is terminated without cause (as defined) or if he terminates his employment for good reason (as defined) or within six months after a change of control (as defined), we will pay him an amount equal to his respective current base salary plus the average incentive compensation due to him during the remaining term of the agreement. 19 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table, together with the accompanying footnotes, sets forth information, as of March 21, 2003, regarding stock ownership of all persons known by us to own beneficially 5% or more of our outstanding common stock, all directors, and all directors and executive officers as a group. Name of Shares of Common Stock Percentage Beneficial Owner (1) Beneficially Owned Of Ownership -------------------- ------------------ ------------ (i) Directors and Executive Officers Harry Wachtel ......................... 9,770,000(2) 34.7% Thomas C. Robertson ................... 175,000(3) * Peter C. Einselen ..................... 345,000(3) 1.3% Mark Weiss ............................ 1,000,000(6) 3.7% William I. Wunderlich ................. 1,765,000(4)(7) 6.2% All executive officers and directors as a group (5 persons) ................... 11,305,000(8) 38.6% (ii) 5% Stockholders James T. Martin ....................... 6,622,000(5) 24.3% -------------- * Less than 1% (1) Unless otherwise indicated below, each director, executive officer and each 5% stockholder has sole voting and investment power with respect to all shares beneficially owned. The address for Mr. Wachtel and Mr. Wunderlich is c/o AutoInfo, Inc., 6401 Congress Avenue, Suite 230, Boca Raton, FL 33487. The address for Mr. Martin is c/o Bermuda Trust Company, Compass Point Road, 9 Bermudian Road, Hamilton HM11, Bermuda. (2) Includes 800,000 shares issuable upon the conversion of a convertible subordinated debenture; and 1,750,000 shares with respect to which Mr. Wachtel has been granted voting rights pursuant to voting proxy agreements. (3) Includes 15,000 shares issuable upon the exercise of stock options and 100,000 shares issuable upon the conversion of a convertible subordinated debenture. (4) Includes 845,000 shares issuable upon the exercise of stock options and 100,000 shares issuable upon conversion of a convertible subordinated debenture. (5) Includes 352,000 shares issuable upon the conversion of a convertible subordinated debenture. (6) Includes 1,000,000 with respect to which Mr. Weiss has granted voting rights to Mr. Wachtel pursuant to a voting proxy agreement. Mr. Weiss retains full control over the disposition of these shares. (7) Includes 750,000 with respect to which Mr. Wunderlich has granted voting rights to Mr. Wachtel pursuant to a voting proxy agreement. Mr. Wunderlich retains full control over the disposition of these shares. (8) Assumes that all currently exercisable options or warrants owned by members of this group have been exercised and all convertible subordinated debentures owned by this group have been converted. Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (SEC). Officers, directors and greater than ten-percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on review of the copies of such forms furnished to us, or written representations that no Forms 5 were required, we believe that all Section 16(a) filing requirements applicable to our officers and directors were complied with. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In August 2001, we entered into a $500,000 line of credit agreement with James T. Martin, a significant stockholder, secured by our accounts receivable, which expires in August 2003. Interest on the outstanding borrowings is 17% per annum, payable quarterly in arrears. As of December 31, 2002, outstanding borrowings under this line of credit totaled $500,000 and interest of $85,000 and $32,000 was charged to operations in 2002 and 2001, respectively. 20 During the year ended December 31, 2001, Harry Wachtel, our president, waived $100,000 of compensation due pursuant to his employment agreement dated December 6, 2000. In December 2001, we lent $100,000 to the father-in-law of Harry Wachtel, our president. This loan bears interest at 4% per annum and is due in December 2003. In December 2000, the Company obtained financing totaling $575,000 from certain related parties in the form of ten year 12% subordinated convertible debentures. The debentures are convertible into common stock at the option of the debenture holder at a conversion price of $0.25 per share and are redeemable, at the option of the holder, on or after December 31, 2003. Interest of $69,000 was charged to operations in each of 2002 and 2001. EXHIBITS AND REPORTS ON FORM 8-K Exhibits -------- No. 3A Certificate of Incorporation of the Company, as amended.(9) No. 3B Amended and Restated By-Laws of the Company. (5) No. 4A Specimen Stock Certificate. (2) No. 10A 1986 Stock Option Plan. (1) No. 10B 1989 Stock Option Plan. (3) No. 10C 1992 Stock Option Plan. (4) No. 10D 1997 Stock Option Plan. (6) No. 10E 1997 Non-Employee Stock Option Plan. (6) No. 10F 1999 Stock Option Plan. (8) No. 10G Form of Agreement and Plan of Reorganization among AutoInfo, Inc. on the one hand, and Sunteck Transport Co., Inc., et al., on the other hand, dated June 22, 2000. (7) No. 10H Form of Debenture dated December 6, 2000. (7) No. 10I Employment Agreement between AutoInfo, Inc. and Harry M. Wachtel dated as of December 7, 2000. (9) No. 10J Employment Agreement between AutoInfo, Inc. and William Wunderlich dated December 7, 2000. (9) No. 21A Subsidiaries of the Registrant. (9) No. 23A Consent of Dworken, Hillman, LaMorte & Sterczala, P.C., independent public accountants.* No. 99.1 Certification of Chief Executive Officer.* 21 No. 99.2 Certification of Chief Financial Officer.* ----------------------- *Filed as an exhibit hereto. (1) This Exhibit was filed as an Exhibit to our definitive proxy statement dated October 20, 1986 and is incorporated herein by reference. (2) This Exhibit was filed as Exhibit to our Registration Statement on Form S-1 (File No. 33-15465) and is incorporated herein by reference. (3) This Exhibit was filed as an Exhibit to our definitive proxy statement dated September 25, 1989 and is incorporated herein by reference. (4) This Exhibit was filed as an Exhibit our definitive proxy statement dated October 2, 1992 and is incorporated herein by reference. (5) This Exhibit was filed as an Exhibit to our Current Report on Form 8-K dated March 30, 1995 and is incorporated herein by reference. (6) This Exhibit was filed as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 1997 and is incorporated herein by reference. (7) This Exhibit was filed as an Exhibit to our Current Report on Form 8-K dated December 6, 2000 and is incorporated herein by reference. (8) This Exhibit was filed as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 1999 and is incorporated herein by reference. (9) This Exhibit was filed as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2000 and is incorporated herein by reference. Reports on Form 8-K None. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Within the past 90 days, our management, including our chief executive officer and chief financial officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective in ensuring that all material information required to be filed in this annual report has been made known to them in a timely fashion. Changes in Internal Controls There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date our chief executive officer and chief financial officer completed their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d), the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on March 24, 2003 on its behalf by the undersigned, thereunto duly authorized. AutoInfo, Inc. By: /s/ Harry M. Wachtel ------------------------------ Harry M. Wachtel, President Pursuant to the requirements of the Securities Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated. /s/ Harry M. Wachtel ------------------------- Harry M. Wachtel President and Chairman of the Board March 24, 2003 /s/ William I. Wunderlich ------------------------- William I. Wunderlich Chief Financial Officer March 24, 2003 /s/ Mark Weiss ------------------------- Mark Weiss Director March 24, 2003 /s/ Peter C. Einselen ------------------------- Peter C. Einselen Director March 24, 2003 /s/ Thomas C. Robertson ------------------------- Thomas C. Robertson Director March 24, 2003 23 AUTOINFO, INC. CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION I, Harry Wachtel, certify that: 1. I have reviewed this annual report on Form 10-KSB of AutoInfo, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Harry Wachtel -------------------------- Harry Wachtel Chief Executive Officer Date: March 24, 2003 24 AUTOINFO, INC. CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION I, William Wunderlich, certify that: 1. I have reviewed this annual report on Form 10-KSB of AutoInfo, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ William Wunderlich ---------------------------- William Wunderlich Chief Financial Officer Date: March 24, 2003 25 AUTOINFO, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Public Accountants F-2 Consolidated Balance Sheets as of December 31, 2002 and 2001 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2002 and 2001 F-4 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2002 and 2001 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2002 and 2001 F-6 Notes to Consolidated Financial Statements F-7 Information required by schedules called for under Regulation S-X is either not applicable or is included in the Consolidated Financial Statements or Notes thereto. F-1 Independent Auditors' Report To the Board of Directors and Stockholders of AutoInfo, Inc. We have audited the accompanying consolidated balance sheets of AutoInfo, Inc. and Subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended. 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 auditing standards generally accepted in the United States of America. 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 AutoInfo, Inc. and Subsidiaries as of December 31, 2002 and 2001 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. February 13, 2003 Shelton, Connecticut Dworken, Hillman, LaMorte & Sterczala, P.C. F-2 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
ASSETS December 31 ---------------------------- 2002 2001 ------------ ------------ Current assets: Cash and cash equivalents $ 684,000 $ 885,000 Short-term investments (Note 2) -- 13,000 Accounts receivable, net of allowance for doubtful accounts (2002 - $60,000; 2001 - $20,000) (Note 3) 2,996,000 1,358,000 Loan receivable (Note 4) 100,000 -- Other current assets 97,000 65,000 ------------ ------------ Total current assets 3,877,000 2,321,000 Fixed assets, net of depreciation 67,000 37,000 Loan receivable (Note 4) -- 100,000 ------------ ------------ $ 3,944,000 $ 2,458,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Loan payable (Note 3) $ 500,000 $ 500,000 Convertible subordinated debentures (Note 3) 575,000 -- Accounts payable and accrued liabilities 2,281,000 1,140,000 ------------ ------------ Total current liabilities 3,356,000 1,640,000 ------------ ------------ Convertible subordinated debentures (Note 3) -- 575,000 ------------ ------------ Stockholders' equity : (Note 7) Common Stock - authorized 100,000,000 shares, $.001 par value; issue and outstanding 27,347,923 and 27,297,923 as of December 31, 2002 and 2001, respectively 27,000 27,000 Additional paid-in capital 18,019,000 18,014,000 Deficit (17,458,000) (17,798,000) ------------ ------------ Total stockholders' equity 588,000 243,000 ------------ ------------ $ 3,944,000 $ 2,458,000 ============ ============
The accompanying notes are an integral part of these consolidated financial statements. F-3 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For The Years Ended December 31, -------------------------------- 2002 2001 ------------ ------------ Gross revenues $ 18,863,000 $ 8,029,000 Cost of transportation 15,495,000 6,462,000 ------------ ------------ Net revenues 3,368,000 1,567,000 ------------ ------------ Commissions 1,827,000 722,000 Operating expenses 1,057,000 798,000 ------------ ------------ 2,884,000 1,520,000 ------------ ------------ Income from operations 484,000 47,000 ------------ ------------ Other charges (credits): Investment income (Note 2) (26,000) (45,000) Interest expense 154,000 107,000 ------------ ------------ 128,000 62,000 ------------ ------------ Income (loss) before income taxes 356,000 (15,000) Income taxes (Note 5) 16,000 -- ------------ ------------ Net income (loss) 340,000 (15,000) ============ ============ Basic and diluted net income per share $ .01 -- ============ ============ Weighted average number of common and common equivalent shares 27,940,000 27,328,000 ============ ============ The accompanying notes are an integral part of these consolidated financial statements. F-4 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Shares of Common Additional Stock Common Paid - In Outstanding Stock Capital Deficit ----------- ----- ------- ------- Balance, January 1, 2001 27,298,000 $27,000 $18,014,000 $(17,783,000) Net loss -- -- -- (15,000) ---------- ------- ----------- ------------ Balance, December 31, 2001 27,298,000 27,000 18,014,000 (17,798,000) Exercise of stock options 50,000 -- 5,000 Net income 340,000 ---------- ------- ----------- ------------ Balance, December 31, 2002 27,348,000 $27,000 $18,019,000 $(17,458,000) ========== ======= =========== ============ The accompanying notes are an integral part of these consolidated financial statements. F-5 AUTOINFO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Years Ended December 31, ------------------------- 2002 2001 ----------- --------- Cash flows from operating activities: Net income (loss) $ 340,000 $ (15,000) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization expenses 18,000 11,000 Gains on sales of securities -- (15,000) Net unrealized holding loss -- 1,000 Changes in assets and liabilities: Accounts receivable, net (1,638,000) (638,000) Other current assets (32,000) 2,000 Accounts payable and accrued liabilities 1,141,000 334,000 ----------- --------- Net cash used in operating activities (171,000) (320,000) ----------- --------- Cash flows from investing activities: Increase in loan receivable -- (100,000) Capital expenditures (48,000) (35,000) Redemption of short-term investments 13,000 216,000 ----------- --------- Net cash provided by (used in) investing activities (35,000) 81,000 ----------- --------- Cash flows from financing activities: Exercise of stock options 5,000 -- Increase in borrowings, net -- 399,000 ----------- --------- Net cash provided by financing activities 5,000 399,000 ----------- --------- Net change in cash and cash equivalents (201,000) 160,000 Cash and cash equivalents, beginning of year 885,000 725,000 ----------- --------- Cash and cash equivalents, end of year $ 684,000 $ 885,000 =========== ========= The accompanying notes are an integral part of these consolidated financial statements. F-6 AUTOINFO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 and 2001 Note 1 - Business and Summary of Significant Accounting Policies Business As a result of the Company's acquisition of Sunteck Transport Co., Inc. (Sunteck) in December 2000, the Company is a full service third party transportation logistics provider. The Company services include ground transportation coast to coast, local pick up and delivery, warehousing, air freight and ocean freight. We have strategic alliances with less than truckload, truckload, air, rail and ocean common carriers to service our customers' needs. The Company has five regional operating centers and representatives in 12 states and Canada. As of March 5, 2003 we had 42 sales agents. The Company's services include arranging for the transport of customers' freight from the shippers location to the designated destination. The Company does not own any trucking equipment and rely on independent carriers for the movement of customers' freight. It seeks to establish long-term relationships with its customers and provide a variety of logistics services and solutions to eliminate inefficiencies in customers' supply chain management. Summary of Significant Accounting Policies Basis of Presentation The financial statements of the Company have been prepared using the accrual basis of accounting under accounting principles generally accepted in the United States of America (GAAP). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Sunteck Transport Co., Inc. All significant intercompany balances and transactions have been eliminated in consolidation. Revenue Recognition As a third party transportation logistics provider, the Company acts as the shippers' agent and arranges for a carrier to handle the freight. Gross revenues consist of the total dollar value of services purchased by shippers. Revenue is recognized upon the delivery of freight, at which time the related transportation cost, including commission, is also recognized. At that time, the Company's obligations are completed and collection of receivables is reasonably assured. Provision For Doubtful Accounts The Company continuously monitors the creditworthiness of its customers and has established an allowance for amounts that may become uncollectible in the future based on current economic trends, its historical payment and bad debt write-off experience, and any specific customer related collection issues. F-7 Cash and Cash Equivalents Cash and cash equivalents consist of cash in banks and investments in short-term, highly liquid securities having original maturities of three months or less. From time to time, the Company has on deposit at financial institutions cash balances which exceed federal deposit insurance limitations. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Short-Term Investments Short-term investments are classified as trading securities and are reported at fair market value. Gains and losses on disposition of trading securities are recognized based on specific identification in the period in which they occur. Unrealized holding gains and losses on trading securities, based upon the fair market value as of the balance sheet date, are included in earnings in the period in which they occur. Fixed Assets Fixed assets as of December 31, 2002 and 2001, consisting predominantly of furniture, fixtures and equipment, were carried at cost net of accumulated depreciation. Depreciation of fixed assets was provided on the straight-line method over the estimated useful lives of the related assets which range from three to five years. Income (Loss) Per Share Basic income (loss) per share is based on net income (loss) divided by the weighted average number of common shares outstanding. Common stock equivalents outstanding were 633,000 for the year ended December 31, 2002 and were antidilutive for the year ended December 31, 2001. Use of Estimates The preparation of these financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. The Company believes that all such assumptions are reasonable and that all estimates are adequate, however, actual results could differ from those estimates. Income Taxes The Company utilizes the asset and liability method for accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and future benefits to be recognized upon the utilization of certain operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. F-8 Stock-Based Compensation The Company has adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" (SFAS 123). As permitted by SFAS 123, the Company has chosen to continue to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and, accordingly, no compensation cost has been recognized for stock options in the financial statements. New Accounting Pronouncements In April 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB No. 13, and Technical Corrections" (SFAS 145), which rescinds the indicated statements and amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. In June 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities," which requires that a liability for a cost associated with an exit or disposal activity be recognized and measured at fair value when the liability is incurred. In October 2002, the FASB issued SFAS 147, "Acquisitions of Certain Financial Institutions," which requires that transactions involving the acquisition of financial institutions, except for transactions between two or more mutual enterprises, be accounted for in accordance with SFAS 141, "Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets." In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," which amends SFAS 123, "Accounting for Stock-Based Compensation," by providing alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure requirements of SFAS 123 by requiring prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Adoption of these statements did not have a material impact on the Company's financial position or results of operations. Note 2- Short-Term Investments Short-term investments at December 31, 2001 consisted of marketable securities. Investment return is summarized as follows: Years Ended December 31, ------------------------ 2002 2001 ------- -------- Unrealized loss $ -- $ (1,000) Gain on sale of securities 1,000 15,000 Dividends and interest 25,000 31,000 ------- -------- Investment income $26,000 $ 45,000 ======= ======== F-9 Note 3 - Debt Loan Payable In August 2001, the Company entered into a $500,000 Line of Credit Agreement with James T. Martin, a 24% stockholder of the Company, secured by the Company's accounts receivable, which expires in August 2003. Interest on the outstanding borrowings is 17% per annum, payable quarterly in arrears. As of December 31, 2002, outstanding borrowings under this Line of Credit totaled $500,000 and interest of $85,000 and $32,000 was charged to operations in 2002 and 2001, respectively. Convertible Subordinated Debentures In December 2000, the Company obtained financing totaling $575,000 from certain related parties in the form of ten year 12% Subordinated Convertible Debentures (Debentures). The Debentures are convertible into the common stock of the Company at the option of the debenture holder at a conversion price of $0.25 per share and are redeemable, at the option of the holder, on or after December 31, 2003. Interest of $69,000 was charged to operations in each of 2002 and 2001. Note 4 - Loan Receivable In December 2001, the Company made a loan of $100,000 to the father-in-law of Harry Wachtel, the president of the Company. This loan bears interest at 4% per annum and is due in December 2003. Note 5- Income Taxes For the years ended December 31, 2002 and 2001, the provision for income taxes consisted of the following: 2002 2001 ------- ------- Federal $ -- $ -- State 16,000 -- ------- ------- Income tax $16,000 $ -- ======= ======= The following table reconciles the Company's effective income tax rate on (loss) income from continuing operations to the Federal Statutory Rate for the years ended December 31, 2002 and 2001. 2002 2001 -------- -------- Federal Statutory Rate (34.0)% (34.0)% Effect of: Valuation allowance against deferred tax assets 34.0 34.0 -------- -------- 0 % 0 % ======== ======== Deferred taxes are recorded based upon differences between the financial statement and tax bases of assets and liabilities and future benefits to be recognized upon the utilization of certain operating F-10 loss carryforwards. Temporary differences and carryforwards which give rise to a significant portion of deferred tax assets and liabilities were as follows: December 31, December 31, 2002 2001 ----------- ----------- Deferred tax assets: Net operating loss carryforward $ 6,101,000 $ 6,216,000 ----------- ----------- Gross deferred tax assets 6,101,000 6,216,000 Less: valuation allowance (6,101,000) (6,216,000) ----------- ----------- Deferred tax asset $ -- $ -- =========== =========== The deferred tax asset is fully reserved for as the Company's management does not expect such amounts to be realized. As of December 31, 2002, the Company has a net operating loss carryforward of approximately $18.1 million for federal income tax purposes which expire through 2014. The requirements of the Internal Revenue Code and related regulations, rulings, judicial authority and practice are subject to different interpretations. The utilization of the net operating loss carryforward may be limited by, among other things, shareholder changes including the possible issuance by the Company of additional shares in one or more financing or acquisition transactions. Note 6 - Commitments and Contingencies Leases The Company is obligated under non-cancelable operating leases for premises expiring at various dates through January 2005. Future minimum lease payments are $43,000, $22,000 and $2,000 for the years ended December 31, 2003, 2004 and 2005, respectively. Rent expense for the years ended December 31, 2002 and 2001 for continuing operations was $77,000 and $61,000, respectively. Other Agreements The Company has employment agreements with Messrs. Wachtel, the president, and Wunderlich, the executive vice president and chief financial officer of the Company, who are also stockholders. The agreements expire in 2003 and provide for minimum annual compensation of $175,000 and $75,000, respectively. Mr. Wachtel's agreement provides that he will be entitled to a bonus equal to 10% of the Company's consolidated pre-tax profit from $250,000 to $1,250,000. Mr. Wunderlich's agreement provides that he will be entitled to a bonus equal to 10% of the Company's consolidated pre-tax profit from $100,000 to $1,250,000. Bonus payments to Messrs. Wachtel and Wunderlich for the year ended December 31, 2003 were $13,035 and $28,035, respectively. For the year ended December 31, 2001, Mr. Wachtel waived $100,000 of his minimum salary. Litigation The Company is involved in certain litigation arising in the ordinary course of its business. In the opinion of management, these matters will not have a material adverse effect on the Company's financial position or liquidity. F-11 Note 7 - Stockholders' Equity Stock Option Plans The Company has six stock option plans, its 1985 Plan, 1986 Plan, 1989 Plan, 1992 Plan, 1997 Plan and 1999 Plan (collectively, the Plans). Pursuant to the Plans, a total of 2,842,500 shares of Common Stock were made available for grant of stock options. Under the Plans, options have been granted to key personnel for terms of up to ten years at not less than fair value of the shares at the dates of grant and are exercisable in whole or in part at stated times commencing one year after the date of grant. No further grants will be made under the 1985, 1986, 1989 or 2002 Plans. At December 31, 2002, options to purchase 2,583,000 shares of common stock were outstanding under the Plans. The pro-forma effect of these options on net income and earnings per share, utilizing the Black-Scholes option-pricing model, consistent with the method stipulated by SFAS 123, was not material to the Company's results of operations. Option activity for the years ended December 31, 2002 and 2001 was as follows:
Granted Exercisable ------------------------------ -------------------------- Weighted Weighted Number of Average Number of Average Shares Exercise Price Shares Exercise Price ------ -------------- ------ -------------- Outstanding at January 1, 2001 995,000 $.10 Forfeited during the year (100,000) .10 Granted during the year 566,000 .06 --------- ---- Outstanding at December 31, 2001 1,461,000 .10 895,000 $.10 --------- ---- Forfeited during the year (86,000) .08 Exercised during the year (50,000) .10 Granted during the year 1,258,000 .13 --------- ---- Outstanding December 31, 2002 2,583,000 $.11 1,005,000 $.09 --------- ---- --------- ----
Weighted average fair value of options granted: 2002 $ .13 2001 $ .06 Note 8 - Fair Value of Financial Instruments The following disclosures of fair value were determined by management using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. F-12 Cash, accounts receivable, loans receivable, accounts payable and accrued liabilities, loans payable and convertible subordinated debentures are carried at amounts which reasonably approximate fair value. Note 9 - Quarterly Results of Operations (Unaudited)
Year Ended December 31, 2002 Quarter Ended (1) ----------------------------------------------------- Mar 31 June 30 Sep 30 Dec 31 ----------- ---------- ----------- ---------- Gross revenues $ 3,560,000 $4,743,000 $ 5,412,000 $5,148,000 ----------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- Net income $ 65,000 $ 83,000 $ 107,000 $ 85,000 =========== ========== =========== ========== Basic and diluted per share data: ----------- ---------- ----------- ---------- Net income $ .002 $ .003 $ .004 $ .003 =========== ========== =========== ========== Year Ended December 31, 2001 Quarter Ended ----------------------------------------------------- Mar 31 June 30 Sep 30 Dec 31 ----------- ---------- ----------- ---------- Gross revenues $ 1,487,000 $1,789,000 $ 2,041,000 $2,712,000 ----------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- Net (loss) income $ (63,000) $ 19,000 $ (4,000) $ 33,000 =========== ========== =========== ========== Basic and diluted per share data: Net (loss) income $ (.00) $ .00 $ (.00) $ .00 =========== ========== =========== ==========
Note 10 - Supplemental Disclosure of Cash Flow Information Cash paid for interest in 2002 and 2001 was $147,000 and $96,000, respectively. The Company paid no income taxes in 2002 and 2001. F-13