-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BXA0dZREXDrKu7HI2TQ0UaBbk0m1pIXx7g3Oj5IqEG8/TsHsXKweuvbMSDH0QYqn w911Y7oBjOdFdn/tScQfAg== 0000950134-02-012763.txt : 20021021 0000950134-02-012763.hdr.sgml : 20021021 20021021172846 ACCESSION NUMBER: 0000950134-02-012763 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020831 FILED AS OF DATE: 20021021 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELITE LOGISTICS INC CENTRAL INDEX KEY: 0000095284 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600] IRS NUMBER: 910843203 STATE OF INCORPORATION: ID FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-29825 FILM NUMBER: 02794309 BUSINESS ADDRESS: STREET 1: 1201 NORTH AVENUE H CITY: FREEPORT STATE: TX ZIP: 77541 BUSINESS PHONE: 4092300222 FORMER COMPANY: FORMER CONFORMED NAME: SUMMIT SILVER INC DATE OF NAME CHANGE: 20000131 10QSB 1 d00453e10qsb.txt FORM 10QSB FOR QUARTER ENDING AUGUST 31, 2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended AUGUST 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 000-29825 ELITE LOGISTICS, INC. (Exact Name of Registrant as Specified in its Charter) Idaho 91-0843203 (State of Incorporation) (I.R.S. Employer Identification No.) 1201 North Avenue H, Freeport, Texas 77541 (Address of Principal Executive Offices) (Zip Code) (979) 230-0222 (Registrant's Telephone Number) Check whether the (issuer) (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or such shorter period that registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of October 18, 2002, the number of shares outstanding of the registrant's class of common stock was 19,567,942. Transitional Small Business Disclosure Format (Check one): Yes[ ] No: [X] ELITE LOGISTICS, INC. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION
Page ---- Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets as of August 31, 2002 and May 31, 2002 1 Consolidated Statements of Operations for the Three Months ended August 31, 2002 and 2001 2 Consolidated Statement of Stockholders' Equity (Deficit) for the Three Months ended August 31, 2002 3 Consolidated Statements of Cash Flows for the Three Months ended August 31, 2002 and 2001 4 Notes to the Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Operations 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 2. Changes in Securities 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 17
PART I ITEM 1. FINANCIAL STATEMENTS. ELITE LOGISTICS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
August 31, May 31, 2002 2002 ------------ ------------ ASSETS CURRENT ASSETS Cash $ 67,160 $ 739 Accounts receivable, net of allowance for doubtful accounts of $37,112 and $33,141 at August 31, 2002 and May 31, 2002, respectively 55,652 62,809 Inventory 178,874 204,302 Other current assets 41,617 2,482 ------------ ------------ TOTAL CURRENT ASSETS 343,303 270,332 ------------ ------------ PROPERTY AND EQUIPMENT Computer equipment 142,811 142,811 Software 118,788 118,788 Furniture and equipment 63,978 63,978 Less: accumulated depreciation and amortization (235,352) (226,581) ------------ ------------ TOTAL PROPERTY AND EQUIPMENT, NET 90,225 98,996 ------------ ------------ PATENTS, NET 147,281 145,696 ------------ ------------ TOTAL ASSETS $ 580,809 $ 515,024 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 458,590 $ 890,383 Accrued expenses 118,168 150,728 Leases payable 19,347 25,110 Accrued salaries 151,789 163,002 Accrued preferred stock dividends -- 61,873 Convertible promissory notes payable, net of discount 292,806 -- Shareholder loans payable 365,115 359,743 Notes payable 846 7,024 ------------ ------------ TOTAL CURRENT LIABILITIES 1,406,661 1,657,863 ------------ ------------ LONG-TERM LIABILITIES - Leases payable, net of current portion -- 2,190 ------------ ------------ TOTAL LIABILITIES 1,406,661 1,660,053 ------------ ------------ COMMITMENTS AND CONTINGENCIES -- -- REDEEMABLE PREFERRED STOCK -- 244,500 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Common stock - $0.01 par value: 50,000,000 shares authorized, 19,567,942 and 15,575,429 issued and outstanding at August 31, 2002 and May 31, 2002, respectively 195,681 155,755 Warrants 1,119,725 937,581 Additional paid in capital 4,423,874 3,659,883 Accumulated deficit (6,528,007) (6,105,623) Treasury stock, 18,000 shares, at cost (37,125) (37,125) ------------ ------------ TOTAL STOCKHOLDERS' DEFICIT (825,852) (1,389,529) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 580,809 $ 515,024 ------------ ------------
See Accompanying Notes to the consolidated financial statements 1 ELITE LOGISTICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended August 31, ----------------------------- 2002 2001 ------------- ------------- Revenues $ 124,400 $ 296,969 Cost of revenues 122,893 243,232 ------------- ------------- Gross profit 1,507 53,737 ------------- ------------- Expenses Marketing 52,885 101,840 Administrative expenses 264,314 318,939 Research and development 89,983 113,956 ------------- ------------- Total expenses 407,182 534,735 ------------- ------------- Operating loss (405,675) (480,998) ------------- ------------- Other income (expense) Interest income -- 46 Interest expense (16,749) (22,945) Other income 40 7,555 ------------- ------------- Total other income (expense) (16,709) (15,344) ------------- ------------- Loss before income taxes (422,384) (496,342) Income taxes -- -- ------------- ------------- Net loss $ (422,384) $ (496,342) ------------- ------------- Basic and diluted loss per common share $ (0.03) $ (0.04) ------------- ------------- Basic and diluted weighted average number of common shares outstanding 15,941,782 13,117,225 ------------- -------------
2 ELITE LOGISTICS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
Common Stock Total ------------------------ Additional Stockholders' Number of Paid in Accumulated Treasury Equity Shares Amounts Warrants Capital Deficit Stock (Deficit) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance at May 31, 2002 15,575,429 $ 155,755 $ 937,581 $ 3,659,883 $(6,105,623) $ (37,125) $(1,389,529) Issuance of 1,368,747 shares of common stock for payment of $166,742 of shareholder loans and $8,272 of accrued interest 1,368,747 13,688 -- 161,326 -- -- 175,014 Issuance of 1,358,274 shares of common stock for payment of accounts payable 1,358,274 13,583 -- 298,947 -- -- 312,530 Issuance of 985,492 shares of common stock upon redemption of 1,845 shares of preferred stock and $61,873 of accrued dividends 985,492 9,855 -- 236,518 -- -- 246,373 Issuance of 280,000 shares of common stock for repayment of a loan 280,000 2,800 -- 67,200 -- -- 70,000 Issuance of 615,000 warrants in conjunction with the issuance of convertible promissory notes -- -- 20,909 -- -- -- 20,909 Issuance of 511,500 warrants for consulting services -- -- 45,865 -- -- -- 45,865 Issuance of 480,709 warrants for payment of accrued salaries -- -- 115,370 -- -- -- 115,370 Net loss -- -- -- -- (422,384) -- (422,384) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance at August 31, 2002 19,567,942 $ 195,681 $ 1,119,725 $ 4,423,874 $(6,528,007) $ (37,125) $ (825,852) ----------- ----------- ----------- ----------- ----------- ----------- -----------
See Accompanying Notes to the consolidated financial statements. 3 ELITE LOGISTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended August 31, ------------------------ 2002 2001 --------- --------- Cash flows from operating activities: Net loss $(422,384) $(496,342) Adjustments to reconcile net loss to net cash used by operating activities Depreciation 10,495 12,712 Amortization of convertible note discount 6,216 12,831 Allowance for doubtful account (37,112) (60,894) Common stock issued for services -- 43,836 Warrants issued for services 2,754 42,100 Changes in operating assets and liabilities Accounts receivable 44,269 149,632 Inventory 25,428 114,891 Other current assets (7,428) -- Accounts payable (49,264) (26,455) Accrued expenses (24,288) 93,772 Accrued salaries 115,560 -- --------- --------- Net cash used in operating activities (335,754) (113,917) --------- --------- Cash flows from investing activities: Patent costs (3,309) (15,428) --------- --------- Net cash used in provided by investing activities (3,309) (15,428) --------- --------- Cash flows from financing activities: Proceeds from convertible notes payable 307,500 235,000 Proceeds from notes payable -- 9,037 Payments on notes payable (6,178) (91,772) Proceeds from shareholder notes payable 112,115 7,000 Payments on shareholder notes payable -- (994) Payments on capital leases (7,953) (7,870) Purchase of treasury stock -- (7,125) --------- --------- Net cash provided by financing activities 405,484 143,276 --------- --------- Net increase (decrease) in cash 66,421 13,931 Cash, beginning of period 739 34,591 --------- --------- Cash, end of period $ 67,160 $ 48,522 --------- ---------
See Accompanying Notes to the consolidated financial statements. 4 ELITE LOGISTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1 - BUSINESS ORGANIZATION The financial statements included herein, which have not been audited pursuant to the rules and regulations of the Securities and Exchange Commission, reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of financial position, the results of operations and cash flows for the interim periods on a basis consistent with the annual audited consolidated financial statements. All such adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for a full year. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-KSB for the year ended May 31, 2002 filed with the Securities and Exchange Commission on September 13, 2002, subsequently amended on October 1, 2002. Nature of Operations Elite Logistics, Inc. (hereinafter "ELI" or the "Company"), an Idaho corporation, through its wholly owned subsidiary, Elite Logistics Services, Inc. ("Elite"), is in the telematics business. Telematics is the broad term used to describe products and services enabled by the convergence of communications (including wireless and the Internet) and Information Technology in the automotive industry. Elite is a telematics services provider (TSP) providing hosted Internet-based telematics services including asset tracking, access to roadside assistance, automatic collision notification, stolen vehicle recovery and a variety of remote vehicle management solutions. Elite designs and sells the PageTrack(R) range of intelligent vehicle management hardware. PageTrack(R), which includes a Global Positioning Systems (GPS) receiver, links a vehicle, or other asset, to Elite's Internet servers via ReFLEX(TM) two-way wireless telemetry networks. The Company's products and services are marketed nationally and in certain international markets through a dealer/distributor channel. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiary. All significant inter-company balances and transactions have been eliminated upon consolidation. Reclassifications Certain prior period amounts have been reclassified to conform to current period presentation. Such reclassifications had no affect on net loss or equity (deficit). Basic and Diluted Loss Per Share In accordance with Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings Per Share" basic earnings (loss) per share is computed using the weighted average number of common shares outstanding. Due to the Company having a net loss during the three month periods ended August 31, 2002 and 2001, diluted net loss per share is the same as basic net loss per share as the inclusion of common stock equivalents would be antidilutive. New Accounting Standards In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated or completed after June 30, 2001. SFAS No. 141 also specifies criteria that intangible assets acquired in a purchase method business 5 ELITE LOGISTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED combination must meet to be recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". The provisions of SFAS No. 141 are effective immediately. The provisions of SFAS No. 142 are effective for fiscal years beginning after December 15, 2001. Earlier adoption is permitted for entities with fiscal years beginning after March 15, 2001 but not required. SFAS No. 141 requires that upon adoption of SFAS No. 142, the Company evaluate its existing intangible assets and make any necessary reclassifications in order to conform to the new criteria in SFAS No. 141. Effective June 1, 2002 the Company adopted the provisions of SFAS No. 142 and reassessed the useful lives and residual values of all recorded intangible assets. In addition, to the extent an intangible asset was identified as having an indefinite useful life, the Company was required to test the intangible asset for impairment in accordance with the provisions of SFAS No. 142 and to record, if necessary, any impairment loss as a cumulative effect of a change in accounting principle. As of August 31, 2002, an impairment loss was not considered necessary and the provisions of SFAS No. 141 and SFAS No. 142 had no significant effect on our financial position or operating results. In October 2001, the FASB also issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," applicable to financial statements issued for fiscal years beginning after December 15, 2001. The FASB's new rules on asset impairment supersede SFAS No. 121 and portions of Accounting Principles Bulletin Opinion 30, "Reporting the Results of Operations." SFAS No. 144 provides a single accounting model for long-lived assets to be disposed of and significantly changes the criteria that would have to be met to classify an asset as held-for-sale. Classification as held-for-sale is an important distinction since such assets are not depreciated and are stated at the lower of fair value and carrying amount. SFAS No. 144 also requires expected future operating losses from discontinued operations to be displayed in the period(s) in which the losses are incurred, rather than as of the measurement date, as presently required. As of August 31, 2002, the Company had no such assets to which the provisions of SFAS No. 144 would apply thus this standard had no significant effect on our financial position or operating results. NOTE 3 - PATENTS We currently have one issued domestic patent and two foreign patent applications pending. Our patent applications relate to internet-enabled, global positioning system technology for the commanding, controlling, identification and routing of items in transit. The costs of patent applications and any cost incurred defending patents are capitalized as incurred. The costs of patents are expected to be amortized over their statutory lives of 10 years upon receipt of patent approvals. As of August 31, 2002, we have recorded accumulated amortization of $8,373. NOTE 4 - DEBT Capital leases Elite has capital leases with various leasing companies payable monthly at $3,013, including interest at rates ranging from 14% to 24%. Capital leases outstanding as of August 31, 2002 were $19,347. 6 ELITE LOGISTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 4 - DEBT (CONTINUED) Shareholder loans payable The Company has cash loans from its shareholders in the amount of $365,115 at August 31, 2002. The notes bear interest at an annual rate ranging from 5% to 8.25%, are unsecured and mature during the first quarter of 2004. Notes payable Elite has unsecured notes payable with American Express in the amount of $846 at August 31, 2002 payable monthly, including interest at a rate of 15.9%. Subsequent to August 31, 2002 this note payable was paid in full. Factoring agreement On June 21, 2000, the Company entered into a factoring agreement with a national banking organization. Under the agreement, the bank advances the Company 80% of each receivable purchased up to a maximum of $750,000, subject to full recourse to the Company and renewal on an annual basis. Finance charges equal 1.25% per month of the average daily account balance outstanding and an administrative fee of 0.25% of each purchased receivable. At August 31, 2002, there is no outstanding balance owed under the factoring agreement. Convertible promissory notes During July, 2001, the Company entered into an agreement with an investment capital group to assist with the placement of an offering of 10% convertible promissory notes (the "Convertible Notes") including warrants. This offering expired on December 31, 2001. Each $10,000 investment provided for the issuance of 10,000 warrants to purchase common stock of the Company with an exercise price of $0.625 per share, expiring five years from the date of issuance. During the three months ended August 31, 2001 the Company issued $235,000 of Convertible Notes with unpaid principal and interest due on December 31, 2001. In conjunction with the issuance of these Convertible Notes the Company issued 235,000 warrants or total proceeds to the Company of $146,875 ($0.625 per share) in cash if all of the warrants are exercised. A debt discount of $49,327 was recorded in conjunction with the issuance of these warrants, of which $12,831 has been amortized to interest expense during the three months ended August 31, 2001. At the offering's expiration (December 31, 2001), the Company generated proceeds of $1,169,500 through the issue of the Convertible Notes. In conjunction with the issuance of these Convertible Notes the Company issued 1,169,500 warrants which would provide total cash proceeds to the Company of $730,938 ($0.625 per share) if all of the warrants are exercised. A debt discount of $231,536 was recorded in conjunction with the issuance of these warrants, which was amortized to interest expense during the six months ended December 31, 2001. On December 31, 2001, 100% of the holders of these notes converted the amounts outstanding plus accrued interest of $20,235 into 2,371,381 shares of common stock of the Company using a conversion price of $0.50 per share for principal and $0.625 per share for accrued interest. During the three months ended August 31, 2002, Elite received proceeds of $307,500 through the issue of Convertible Notes bearing interest at a rate of 12% per annum and maturing on September 30, 2002. In conjunction with the issuance of these Convertible Notes the Company issued 615,000 warrants which would provide total cash proceeds of $92,250 ($0.15 per share) if all of the warrants are exercised. A debt discount of $20,909 was recorded in conjunction with the issuance of these warrants, of which $6,216 has been amortized to interest expense during the three months ended August 31, 2002. 7 ELITE LOGISTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 5 - EQUITY Common Stock From time to time, in order to fund operating activities of the Company, common stock is issued for cash or in exchange for goods or services. Generally, offerings of the Company's common stock often include warrants to acquire common stock of the Company at fixed exercise prices. Occasionally, depending on the nature of the offering and restrictions imposed on the shares being acquired, the exercise price of the warrant may be below the fair market value of the underlying common stock on the date of issuance. During the three month period ending August 31, 2001, the Company issued 53,000 shares of common stock in exchange for services valued at $43,836. During the three months ended August 31, 2002, the Company issued 1,368,747 shares of common stock (at $0.13 per share) for payment of shareholder loans and accrued interest of $175,014. Additionally, the Company issued (i) 1,358,274 shares of common stock (at $0.23 per share) for the payment of accounts payable valued of $312,530, (ii) 985,492 shares of common stock (at $0.25 per share) to redeem 1,845 shares of preferred stock valued at $184,500 and to settle accrued dividends valued at $61,873, and (iii) 280,000 shares of common stock (at $0.25 per share) for repayment of a note payable. Warrants During the three months ended August 31, 2001, the Company issued 485,000 warrants in conjunction with the 10% Convertible Note offering referred to above. Included were 235,000 warrants issued to holders of the notes were recorded as a debt discount. An additional 250,000 warrants were issued to the investment capital group and a consultant for assisting in promoting the Convertible Note offering. Accordingly, $42,100 was recorded as general and administrative expenses in conjunction with the issuance of these warrants. During the three months ended August 31, 2002, the Company issued 615,000 warrants to purchase common stock of the Company with an exercise price of $0.15 per share in conjunction with the issuance of Convertible Notes. The fair value of these warrants was $20,909 and was recorded as a discount to the value of the Convertible Notes. Additionally, the Company issued 511,500 warrants to purchase common stock of the Company (61,500 warrants have an exercise price of $0.10 per share and 450,000 warrants have an exercise price of $0.01 per share) for consulting services valued at $45,865 and issued 480,709 warrants to purchase common stock of the Company with an exercise price of $0.01 per share in payment of accrued salaries valued at $115,370. The fair value of each warrant granted is estimated on the grant date using the Black-Scholes Option Price Calculation. The following assumptions were made in estimating fair value. The risk-free interest rate range was 1.74%, volatility was 30% and the expected life of the warrants was three to five years. The fair value of warrants issued in conjunction with Convertible Notes and for consulting services during the three months ended August 31, 2002 was $66,774. The fair value of the warrants issued for accrued salaries was determined based on the value of the liabilities extinguished, which totaled $115,370, and approximated the fair value of these warrants using the Black-Scholes Option Price Calculation thus no additional compensation expense was required to be recorded. Preferred Stock Total authorized shares of Series A Redeemable Preferred Stock ("Preferred Stock") is 10,000,000 which have preferences as to dividends and upon liquidation. The cumulative dividends are payable at prime plus 2% (prime was 4.75% at August 31, 2002). The Company had outstanding 2,445 shares of Preferred Stock at $0.01 par value with a $100 redemption price per share. As referred to above within "Common Stock", during the three months ended August 31, 2002, the Company redeemed 1,845 shares of Preferred Stock and settled the accrued dividends outstanding of $61,873 by the issuance of 985,492 shares of common stock. The remaining 600 shares of Preferred Stock were redeemed by the issuance of a $60,000 note payable to the shareholder. 8 ELITE LOGISTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 6 - SUPPLEMENTAL CASH FLOW DISCLOSURES For cash flow purposes, various, non-cash transactions have been entered into by the Company during the three month periods ended August 31, 2002 and 2001. These items are as follows:
Three Months Ended August 31, ----------------------- 2002 2001 --------- -------- Supplemental cash flow disclosures: Cash paid for interest $ 1,814 $ 6,741 Non cash transactions: Common stock issued in payment of shareholder loans and accrued interest $ 175,014 $ - Common stock issued for services $ - $ 43,836 Common stock issued in payment of accounts payable $ 312,530 $ - Common stock issued in payment of a loan $ 70,000 $ - Common stock issued to redeem preferred stock and accrued dividends $ 246,373 $ - Warrants issued for convertible note discount $ 20,909 $ - Warrants issued for services $ 45,865 $ 42,100 Warrants issued for accrued salaries $ 115,370 $ - Notes payable issued to redeem preferred stock $ 60,000 $ -
NOTE 7 - GOING CONCERN The Company has a history of net losses and continues to experience negative cash flows from operations. Management will continue to attempt to raise capital resources and may do so through a registered offering of securities or through additional private offerings of debt or common stock of the Company. The Company is dependent on raising capital resources from outside sources and will continue to do so until such time as the Company generates revenues and cash flows sufficient to maintain itself as a viable entity. Management believes that these actions will assist the Company in reaching the point of profitability from operations and enable the Company to raise further capital from private placements or public offerings. If successful, these actions will serve to mitigate the factors which have raised substantial doubt about the Company's ability to continue as a going concern and increase the availability of resources for funding of the Company's current operations and future market development. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The "Management's Discussion and Analysis of Financial Condition and Results of Operations" included herein should be read in conjunction with the unaudited consolidated financial statements and notes to the consolidated financial statements of Elite Logistics, Inc. and subsidiary included in Item 1 above and the Company's Audited Consolidated Financial Statements included in the Company's Annual Report on Form 10K-SB/A for the year ended May 31, 2002. All significant inter-company balances and transactions have been eliminated in consolidation. The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The financial information in "Management's Discussion and Analysis of Financial Condition and Results of Operations" refers to the continuing operations of the Company. Since inception, the Company has incurred significant losses and as of August 31, 2002 has an accumulated deficit of $(6,528,007). The Company's auditors issued a going concern opinion in connection with their audit of the Company's consolidated financial statements as of May 31, 2002, due to substantial doubt that the Company can continue as an on-going business for the next twelve (12) months, unless the Company obtains additional capital to cover its operating expenses. In order to meet its capital needs, the Company will have to continue to raise capital from sources other than the sale of its products and services. The Company has historically raised its capital through private placements. There is no assurance that the Company will be able to raise the additional funds it needs to continue in business. The Company will cease operations if it is unable to raise additional funds until it becomes a viable entity. RESULTS OF OPERATIONS Net revenues for the three months ended August 31, 2002 were $124,400, compared to $296,969 for the three months ended August 31, 2001, a decrease of 58.1%. Revenues include sales of the Company's PageTrack(R) products to distributors, monitoring and control service contracts and miscellaneous third party hardware sales. The Company continues to be adversely affected by a lack of working capital to fund sales and marketing activities and inventory purchases. This and the condition of the economy have constrained the Company's ability to generate revenues. Cost of revenues for the quarter ended August 31, 2002 were $122,893 compared to $243,232 for the quarter ended August 31, 2001, a decrease of 49.5%. Cost of revenues includes the manufactured cost of our PageTrack(R) products, wireless telemetry network services provided by SkyTel, an MCI Worldcom Company, and Weblink Wireless, Inc., internet connectivity and the costs of operating Elite's 24-hour Control Center. The decrease in cost of revenues for the three month period ending August 31, 2002 is attributable to the corresponding decrease in revenues. Gross profit margin for the three months ended August 31, 2002 decreased by $52,230 to $1,507 as compared to $53,737 for the same quarter ended August 31, 2001. Gross profit margin for the quarter ended August 31, 2002 consists of margins on our PageTrack(R) products, activations and resale of wireless telemetry network services provided by SkyTel and Weblink offset by the costs of Internet connectivity and operating Elite's 24-hour Control Center. The significant decline in gross profit margin for the quarter was directly attributable to lower sales volume of PageTrack(R) products which have a higher overall margin and the rising cost of services provided by SkyTel and Weblink. Sales and marketing expenses for the three months ended August 31, 2002 were $52,885 compared to $101,840 during the three month period ended August 31, 2001, a decrease of 48.1%. Sales expenses consist primarily of compensation for our sales and marketing personnel, advertising, marketing literature, trade show and other promotional costs, design and creation expenses for marketing literature and our website. The decrease in expense for the quarter compared to the same period last year is due primarily to reductions in the number of sales and marketing personnel and voluntary reductions in the salaries of senior marketing personnel. We expect that sales and marketing expenses will increase in 10 absolute dollars and as a percentage of total net revenues in future periods due to expanded efforts to market and promote its products and services both domestically and internationally. General and administrative ("G&A") expenses for the three month period ended August 31, 2002 were $264,314 compared to $318,939 for the three month period ended August 31, 2001, a decrease of 17.1%. G&A expenses consist primarily of compensation for personnel and payments to outside contractors for general corporate functions, including finance, legal fees, information systems, human resources, facilities, general management, bad debt expense and our occupancy costs and other overhead. Despite an overall decrease in costs for the three months ended August 31, 2002 compared to the same period a year ago, wage expenses increased 114% for the three months ended August 31, 2002. The wage increase resulted from the replacement of two executive with new executives with higher compensation. The wage increase was offset by a 48.5% decrease in professional fees, primarily consulting fees, and a 39.7% decrease in insurance expense due in part to staff reductions. Research and development expenses for the three month period ended August 31, 2002 were $89,983 compared to $113,956 for the three month period ended August 31, 2001, a decrease of 21%. The decrease consists primarily of staff reductions as well as reductions in compensation for the Company's research and development personnel. The Company expects, subject to future capital funding, that research and development expenses will increase in absolute dollars in future periods as the Company develops new and enhanced telematics products and services to meet a variety of market opportunities. Other income (expense) for the three month period ended August 31, 2002 were $(16,709) compared to $(15,344) for the three month period ended August 31, 2001. The largest component of the other income and (expense) is interest expense. Interest expense consists of costs related to the Company's financing obligations, which include borrowings under equipment loans, short-term loans from American Express, capital lease obligations, shareholder loans, convertible promissory notes and the amortization of debt discount. CASH FLOW FOR THREE MONTHS ENDING AUGUST 31, 2002 Net cash used in operating activities was $335,754 for the three months ended August 31, 2002. Net cash used for operating activities was primarily the result of the net loss of $(422,384), which was further offset by $10,495 of depreciation expense and $6,216 from the amortization of debt discount. The loss from operations was further offset by $104,277 of working capital assets and liabilities which was comprised of a decrease in accounts payable of $49,269, a net increase in accrued expenses and salaries of $91,272 and reductions in accounts receivable and inventory of $69,697. The reduction in accounts receivable and inventory reflects the lower levels of operations as well as tighter credit control and inventory management to conserve cash flow. The decrease in accounts payable and accrued liabilities was due to payment of certain obligations of the Company from proceeds generated from the issuance of Convertible Notes. The increase in accrued salaries was due to insufficient cash flows to cover payroll thus certain of the officers and employees of the Company agreed to defer payment of their salaries until cash resources become available. Net cash used in investing activities of $3,309 consists of patent application and acquisition costs. Net cash provided by financing activities during the three month period ended August 31, 2002 was $405,484, which comprised of net proceeds from the issuance of Convertible Notes of $307,500 and the issuance of shareholder loans of $112,115 offset by repayments of notes payable and capital leases of $14,131. The Company currently depends on cash from financing activities to sustain its business operations subject to significant constraints as described below within "Liquidity and Capital Resources". LIQUIDITY AND CAPITAL RESOURCES As shown in the accompanying consolidated financial statements, we incurred a net loss of $(422,384) for the quarter ended August 31, 2002 and continue to experience negative cash flows from operations. We will be required to raise additional capital through offerings of securities in order to fund our operating requirements, and will attempt to continue raising capital resources until such time as we generate 11 revenues sufficient to maintain ourselves as a viable entity. Management believes that these actions will assist us in reaching the point of profitability from operations and enable us to raise further capital from private placements or public offerings. If successful, these actions will serve to mitigate the factors which have raised substantial doubt about our ability to continue as a going concern and increase the availability of resources for funding of our current operations and future market development. We have retained a financial advisor to assist in evaluating funding options available. There is no assurance, however, that we will be able to raise the additional funds we needs to continue in business. If we are unable to raise sufficient capital resources we may have to cease operations. Since inception, we have financed our operations primarily through the private placement of our common stock, loans from shareholders, equipment financing, lines of credit, short-term loans and deferral of employee compensation. We do not anticipate positive cash flow from operations until we achieve an installed base of around 25,000 units (current installed base is approximately 5,000 units) or monthly sales of 1,000 units. We believe that if we can obtain the capital required to fund our business plan that we will achieve positive cash flow within the 2003 fiscal year, but there can be no assurance that we will achieve this target. Our business plan is based on building a nationwide and international distribution channel of PageTrack(R) dealers and distributors. The plan requires hiring additional personnel for sales, marketing, customer support and technical support. We estimate that a minimum of $1,200,000 of additional capital will be required to fund our current business plan to the point of positive cash flow from operations. There can be no assurance that we will be successful in obtaining any such funds on terms acceptable to us, if at all. In the event that we are unable to secure such additional funding, management would attempt to downsize the business so as to enable us to survive and grow at a slower pace. Failure to capitalize on current market opportunities could allow competitors to overtake us and significantly impair our long-term growth and value. It is possible that we may register our common stock or preferred stock for sale to the public; however, turmoil in the equity markets has greatly impaired our access to such funding opportunities. If we were to register our common stock or preferred stock for sale, there can be no assurance that market conditions would facilitate a successful sale. Management is also exploring avenues to increase sales in order to fund operations from cash flow sooner than projected. Until such time as we have successfully completed additional funding arrangements and are cash flow positive from operations, we remain at significant risk of closing our operations from our lack of capitalization. It is highly likely that our shareholders will incur additional dilution as a result of future capital fundings involving issuance of common stock or common stock derivatives. CREDIT FACILITIES During June 2000, we entered into a factoring agreement with a national banking organization. The bank will advance us 80% of each receivable purchased up to a maximum of $750,000, subject to full recourse to us. Finance charges equal 1.25% per month of the average daily account balance outstanding and an administrative fee of 0.25% of each purchased receivable. At August 31, 2002, we had no contingent amounts owed under this agreement. From time to time, we have obtained short-term loans from our primary shareholders, who are or were officers and management of the Company. As of August 31, 2002, shareholder loans totaled $365,115. The loans bear interest at an annual fixed interest rate ranging from 5% to 8.25%, are unsecured and mature during the fourth quarter of 2002. During the three months ended August 31, 2002, $166,742 of shareholder loans and $8,272 of accrued interest were converted to 1,368,747 shares of our common 12 stock. We may continue to borrow funds from these shareholders in the future but there is no assurance that funds will be made available or under similar terms. RELATED PARTY DISCLOSURE As referred to above, we have loans with certain of our shareholders, directors, and officers. During the three months ended August 31, 2002 we borrowed $112,115 under these loan agreements and repaid principal and accrued interest of $175,014 by the issuance of 1,368,747 of common stock, as referred to above, which approximated t he fair market value of common stock on the date of issuance. Total interest expense incurred during the three months ended August 31, 2002 under these loan arrangements was $10,533. At August 31, 2002, accrued but unpaid interest on these shareholder notes was $26,514. The total of shareholder loans outstanding at August 31, 2002 was $365,115. During the three months ended August 31, 2002, the Company issued 511,500 warrants to purchase common stock of the Company (61,500 warrants to a third party consultant having an exercise price of $0.10 per share and 450,000 warrants to a former employee having an exercise price of $0.01 per share) for consulting services valued at $45,865 and issued 480,709 warrants to purchase common stock of the Company with an exercise price of $0.01 per share in payment of accrued salaries valued at $115,370. The accrued salaries settled were for officers of the Company. The fair value of each warrant granted is estimated on the grant date using the Black-Scholes Option Price Calculation. The following assumptions were made in estimating fair value. The risk-free interest rate range was 1.74%, volatility was 30% and the expected life of the warrants was three to five years. The fair value of warrants issued in conjunction with the consulting services during the three months ended August 31, 2002 was $45,865. The fair value of the warrants issued for accrued salaries was determined based on the value of the liabilities extinguished, which totaled $115,370, and approximated the fair value of these warrants using the Black-Scholes Option Price Calculation thus no additional compensation expense was required to be recorded. From time to time, when cash flow is not sufficient to cover payroll, certain officers and employees of the company forego receipt of payment of certain salaries earned. As of August 31, 2002, $151,789 of salaries has been accrued and will be paid as cash resources become available. During the year ended May 31, 2000, we entered into agreements with certain officers that provided for those officers to convert debt amounts owing to them for deferred compensation into equity in the form of 2,445 shares of Series A Preferred Redeemable Preferred Stock. The preferred stock has a par value of $0.01 per share, is redeemable at $100 per share, carries an annual dividend of prime plus 2% per share, and was redeemable on or before May 15, 2002, with Board of Directors approval. During the three month period ended August 31, 2002, the Company redeemed all 2,445 shares of the Series A Preferred Stock plus accrued dividends, which in the aggregate amounted to $306,373, in exchange for 985,492 shares of common stock and a note payable of $60,000 bearing interest at rate of 8.00% per annum. GOING CONCERN The Company has a history of net losses and continues to experience negative cash flows from operations. Management will continue to attempt to raise capital resources and may do so through a registered offering of securities or through additional private offerings of debt or common stock of the Company. The Company is dependent on raising capital resources from outside sources and will continue to do so until such time as the Company generates revenues and cash flows sufficient to maintain itself as a viable entity. Management believes that these actions will assist the Company in reaching the point of profitability from operations and enable the Company to raise further capital from private placements or public offerings. If successful, these actions will serve to mitigate the factors which have raised substantial doubt about the Company's ability to continue as a going concern and increase the availability of resources for funding of the Company's current operations and future market development. 13 FORWARD-LOOKING STATEMENTS Except for historical information contained herein, certain other matters discussed herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, that address future activities, events or developments, including such things as future revenues, projected break-even points, ability to raise capital through private or public offerings, product development, market acceptance, responses from competitors, capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of Elite Logistics, Inc., and its subsidiarie's business and operations, plans, references to future success and other such matters, are forward-looking statements. The words "anticipates," "believes," "estimates," "expects," "plans," "intends," "should," "seek," "will," and similar expressions are intended to identify these forward-looking statements, but are not the exclusive means of identifying them. These statements are based on certain historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. However, whether actual results will conform to our expectations and predictions is subject to a number of risks and uncertainties that may cause actual results to differ materially, our success or failure to implement our business strategy, our ability to successfully market our on-line location, tracking and logistics management concept, changes in consumer demand, changes in general economic conditions, the opportunities (or lack thereof) that may be presented to and pursued by us, changes in laws or regulations, changes in technology, the rate of acceptance of the Internet as a commercial vehicle, competition in the online logistics management business and other factors, many of which are beyond our control. Consequently, all of the forward-looking statements made in this Report are qualified by these cautionary statements and there can be no assurance that the actual results we anticipate will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. 14 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are presently involved in two legal proceedings: VIP Finance vs. Elite Logistics, Inc. - On November 21, 2001, VIP Finance, one of our customers, filed a petition in the 141st Judicial District Court of Tarrant County, Texas in which VIP alleged breach of contract, fraud, and deceptive trade practices based on plaintiff's purchase of 1,000 PageTrack 2(TM) units claiming that the units were defective. The plaintiff is seeking actual and punitive damages, post judgment interest and reimbursement of court costs. We believe that the claims are without merit and we intend to vigorously defend this case. This lawsuit remains in the discovery phase. Richard Andros vs. Elite Logistics Services, Inc. - On July 2, 2002, Mr. Andros, an independent contractor, filed a petition in County Civil Court at Law #4 in Harris County, Texas alleging that he is owed $32,017. We are reviewing these claims with our legal counsel. Other than those referred to above, we are not a party to any material legal proceedings nor are we aware of any which are pending or are known to be contemplated. Furthermore, we know of no legal proceedings pending or threatened, or judgments entered against, any of our directors or officers in their capacity as such. From time to time we are involved in lawsuits that occur in the normal conduct of our business and are not material to us. ITEM 2. CHANGES IN SECURITIES The following shares were sold pursuant to Section 4(6) of the Securities Act of 1933 (the "Act"). All purchasers were accredited investors as that term is defined in Rule 501 of the Securities Act of 1933. Shares of Debt discount Date Common Stock $ Price Conversion Warrants $ Price and Services Expiration - ------- ------------ ------- ---------- -------- ------- ------------- ----------- 5/20/02 215,474 $0.25 $ 53,869 $ - - $ - - 7/12/02 280,000 0.25 70,000 - - - - 8/30/02 197,800 0.25 49,450 - - - - 8/31/02 180,000 0.10 18,000 - - - - 8/31/02 765,000 0.25 191,250 - - - - 8/31/02 985,492 0.25 246,373 - - - - 8/31/02 254,262 0.25 63,566 - - - - 8/31/02 1,114,485 0.10 111,449 - - - - 8/07/02 - - - 50,000 0.15 1,700 9/30/05 8/19/02 - - - 350,000 0.15 11,900 9/30/05 8/20/02 - - - 50,000 0.15 1,700 9/30/05 8/22/02 - - - 100,000 0.15 3,400 9/30/05 8/23/02 - - - 65,000 0.15 2,210 9/30/05 8/31/02 - - - 61,500 0.10 2,755 8/31/07 8/31/02 - - - 930,709 0.01 158,480 8/31/07
ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS See the Index to Exhibits on page 18. (B) REPORTS ON FROM 8-K: July 18, 2002 - Form 8-K filled to announce the resignation of Russell Naisbitt as a member of the Board of Directors and to announce the appointing of Matthew Hutchins, Sr. as the Chairman of the Board of Directors. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons, in the capacities and on the dates indicated below, have signed this report. ELITE LOGISTICS SERVICES, INC.
Name Title Date - ------------------------ ----------------------------------- ---------------- /s/ Stephen M. Harris President, October 21, 2002 - ------------------------ Chief Executive Officer Stephen M. Harris And Interim Chief Financial Officer
17 CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Steve M. Harris, being the President, Chief Executive Officer (performing similar functions as a Chief Financial Officer) of Elite Logistics, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-QSB for the period ended August 31, 2002 of Elite Logistics, Inc.; 2. Based on my knowledge, this quarterly 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 quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report. 4. Intentionally deleted 5. Intentionally deleted 6. Intentionally deleted Dated: October 21, 2002 /s/ Steve M. Harris - -------------------------- Steve M. Harris President and Chief Executive Officer (Interim Chief Financial Officer) 18 INDEX TO EXHIBITS
EXHIBIT DESCRIPTION 3.1* Articles of Incorporation (incorporated by reference to Exhibit 3.1 of Registrant's Form 10SB as filed on March 7, 2000). 3.2* Amended (No. 1) Articles of Incorporation (incorporated by reference to Exhibit 3.2 of Registrant's Form 10SB as filed on March 7, 2000). 3.3* Amended (No. 2) Articles of Incorporation (incorporated by reference to Exhibit 3.3 of Registrant's Form 10SB as filed on March 7, 2000). 3.4* Amended (No. 3) Articles of Incorporation (incorporated by reference to Exhibit 3.4 of Registrant's Form 10SB as filed on March 7, 2000). 3.5* Amended (No. 4) Articles of Incorporation (incorporated by reference to Exhibit 3.5 of Registrant's Form 10SB as filed on March 7, 2000). 3.6* Bylaws (incorporated by reference to Exhibit 3.6 of Registrant's Form 10SB as filed on March 7, 2000). 4.1* Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 of Registrant's Form 10SB as filed on March 7, 2000). 4.2* Management Services Agreement dated September 1, 2000 by and between Elite Logistics, Inc. and Joseph D. Smith (incorporated by reference to Exhibit 4.2 of Registrant's Form 10QSB as filed on October 16, 2000). 4.3* Management Services Agreement dated September 1, 2000 by and between Elite Logistics, Inc. and Diana M. Smith. (incorporated by reference to Exhibit 4.3 of Registrant's Form 10QSB as filed on October 16, 2000). 4.4* Management Services Agreement dated September 1, 2000 by and between Elite Logistics, Inc. and Richard L. Hansen (incorporated by reference to Exhibit 4.4 of Registrant's Form 10QSB as filed on October 16, 2000). 4.5* Management Services Agreement dated September 1, 2000 by and between Elite Logistics, Inc. and Thien K. Nguyen (incorporated by reference to Exhibit 4.5 of Registrant's Form 10QSB as filed on October 16, 2000). 4.6* Elite Logistics 2001 Equity Incentive Plan dated March 2, 2000 (incorporated by reference to Exhibit 4.6 of Registrant's Form 10QSB as filed on October 16, 2000). 4.7* Elite Logistics Services, Inc. 401K Plan dated May 24, 2000 (incorporated by reference to Exhibit 4.7 of Registrant's Form 10QSB as filed on October 16, 2000). 4.8* Common Stock Purchase Agreement - Koyah. (incorporated by reference to Exhibit 4.8 of Registrant's Form 10QSB as filed on January 5, 2001).
19 4.9* Investor Rights Agreement - Koyah. (incorporated by reference to Exhibit 4.9 of Registrant's Form 10QSB as filed on January 5, 2001). 4.10* Warrant Agreement - Koyah. (incorporated by reference to Exhibit 4.10 of Registrant's Form 10QSB as filed on January 5, 2001). 4.11* Investment Banking Agreement - Schneider Securities. (incorporated by reference to Exhibit 4.11 of Registrant's Form 10QSB as filed on April 11, 2001). 4.12* Termination of Investment Banking Agreement - Schneider Securities. (incorporated by reference to Exhibit 4.12 of Registrant's Form 10KSB as filed on August 29, 2001). 4.13* Promissory Note (incorporated by reference to Exhibit 4.13 of Registrant's Form 10QSB as filed on January 14, 2002). 4.14* Class A Warrant Agreement (incorporated by reference to Exhibit 4.14 of Registrant's Form 10QSB as filed on January 14, 2002). 4.15* Management Services Agreement dated March 4, 2002 by and between Elite Logistics, Inc. and Stephen M. Harris (incorporated by reference to Exhibit 4.15 of Registrant's Form 10KSB as filed on September 13, 2002). 4.16* Management Services Agreement dated July 11, 2002 by and between Elite Logistics, Inc. and Matthew Hutchins, Sr. (incorporated by reference to Exhibit 4.16 of Registrant's Form 10KSB as filed on September 13, 2002). 10.1* Acquisition Agreement (incorporated by reference to Exhibit 10.1 of Registrant's Form 10SB as filed on March 7, 2000). 10.2* Agreement between the Company and Motorola, Inc. (incorporated by reference to Exhibit 10.2 of Registrant's Form 10SB12G/A as filed on June 15, 2000). 10.3* Agreement between the Company and Motorola, Inc. (incorporated by reference to Exhibit 10.3 of Registrant's Form 10SB12G/A as filed on June 15, 2000). 10.4* Distribution Agreement (incorporated by reference to Exhibit 10.4 of Registrant's Form 10SB12G/A as filed on July 11, 2000). 99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes - Oxley Act of 2002. 99.2* Office Lease (incorporated by reference to Exhibit 99.1 of Registrant's Form 10SB as filed on March 7, 2000). 99.3* Agreement between the Company and Vollmer Public Relations (incorporated by reference to Registrant's Form 10SB12G/A as filed on June 15, 2000).
*Incorporated by reference as indicated. 20 EX-99.1 3 d00453exv99w1.txt CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Elite Logistics, Inc. (the "Company") on Form 10-QSB as of August 31, 2002 and for the three months ended August 31, 2002 and 2001 (the "Quarterly Report"), as filed with the Securities and Exchange Commission on the date hereof, I, Stephen M. Harris, President and Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of 2002, that: 1. The Quarterly Report on Form 10-QSB fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Quarterly Report on Form 10QSB fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ Stephen M. Harris October 21, 2002 -------------------------------------- Stephen M. Harris President, Chief Executive Officer and Interim Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----