UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

-----------------------------

Amendment No. 2 to

FORM 10-SB

GENERAL FORM FOR REGISTRATION OF SECURITIES OF

SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR (g) OF

THE SECURITIES EXCHANGE ACT OF 1934

SEGMENTZ, INC.

(Name of Small Business Issuer in Its Charter)

                         Delaware                         (I.R.S. Employer Identification No.)

                  (State or other jurisdiction of                         75-2928175

                   incorporation or organization)

              18302 Highwoods Preserve Parkway, Suite 210

                        Tampa, Florida                                        33647

                 (Address of Principal Executive Offices)                   (Zip Code)

(813) 989-2232

(Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12 (b) of the Exchange Act:

                          Title of each class               Name of each exchange on which

                          to be so registered               each class is to be registered

                     -----------------------------        --------------------------------

                                  None                                     None

Securities registered under Section 12 (g) of the Exchange Act:

Common Stock, $0.001 par value

(Title of Class)

The registrant has 6,502,913 shares of its common stock issued

and outstanding as of March 31, 2002.

Convertible Preferred Stock $.001 par value

The registrant has 1,200,794 shares of Convertible preferred stock issued and outstanding as of March 31, 2002.

TABLE OF CONTENTS

PART I.........................................................................4

 

ITEM 1.  DESCRIPTION OF BUSINESS......................................4

              Current Business.....................................4

              Results of Operations................................4

  History of Segmentz..................................8

              History of Trans-Logistics..........................10

              Industry Overview...................................11

              Growth Strategy.....................................14

 

         RISK FACTORS................................................18

 

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...22

 

              Overview:........................................................34

              Operating Strategy.................................35

              Agent Program......................................35

 

         RESULTS OF OPERATIONS.......................................36

              Operating Revenues.................................37

              Salaries, Wages and Benefits.......................37

              Depreciation and Amortization......................38

              General and Administrative.........................38

              Discontinued Operations............................38

              Interest...........................................38

              Liquidity and Capital Resources....................39

 

ITEM 3.  DESCRIPTION OF PROPERTY.....................................41

 

ITEM 4.  SECURITY OWNERSHIP OF CERTAIN

              BENEFICIAL OWNERS AND MANAGEMENT.......................43

 

ITEM 5.  DIRECTORS, EXECUTIVE OFFICERS,

              PROMOTERS AND CONTROL PERSONS..........................45

 

ITEM 6.  EXECUTIVE COMPENSATION.........................................................47

              Executive Officers.................................43

              Employment Agreements..............................43

              Key Man Insurance..................................43

              Stock Option Plan..................................44

              Compensation Table.................................44

 

ITEM 7.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............45

 

ITEM 8.  DESCRIPTION OF SECURITIES...................................45

              Capital Stock......................................45

              Provisions Having A Possible Anti-Takeover Effect..47

              Additional Information.............................47

              Special Note Regarding Forward-Looking Statements; Market                          Data...............................................48

 

PART II  .............................................................48

 

ITEM 1.  MARKET PRICE OF AND DIVIDENDS

              ON THE REGISTRANT'S COMMON EQUITY

              AND RELATED STOCKHOLDER MATTERS........................48

 

ITEM 2.  LEGAL PROCEEDINGS...........................................49

 

ITEM 3.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS...............49

 

ITEM 4.  RECENT SALES OF UNREGISTERED SECURITIES.....................49

 

ITEM 5.  INDEMNIFICATION OF OFFICERS AND DIRECTORS...................50

 

SIGNATURES...........................................................52

 

PART F/S.FINANCIAL STATEMENTS........................................53

 

PART III.................................................................

 

ITEM 1.  INDEX TO EXHIBITS....................................................

ITEM 1.  DESCRIPTION OF BUSINESS

CURRENT BUSINESS

 

         Segmentz, Inc. (the "Company"), a Delaware corporation, is a Tampa, Florida based

company that provides transportation logistics management services and support for mid-sized and

national corporate clients. The Company serves direct users of transport, storage, staging, warehouse

services and other logistics services.

 

            The Company and its subsidiary Trans-Logistics, Inc., a Florida corporation ("Trans-Logistics"),

have principal executive offices located at 18302 Highwoods Preserve Parkway, Suite 210, Tampa,

Florida 33467. The telephone number is (813) 989-2232. The internet web site addresses are

http://www.trans-logistics.com and http://www.segmentz.com or http://www.segmentz.net.  The Company provides

several niche services within the industry more broadly known as the supply chain management industry,

including transportation logistics, management and delivery. (See "Description of Business - Products and Services").

 

         The Company serves direct users of transport, storage, staging, warehouse service and other

logistics services, as well as larger companies that include Bax Global, Quebecor World Logistics, Inc.

(“Quebecor”), and CH Robinson, Inc. The Company offers warehouse locations in two facilities covering the

east coast and is attempting to expand to offer smaller satellite facilities to enable conduit and direct

route trucking solutions on a contracted, dedicated route basis to larger clients.

 

Results of Operations

For the year ended December 31, 2001 compared to the period ended December 31, 2000.

 

Revenues increased approximately $8,096,598, or 2,184%, to approximately $8,467,230 for the year ended

December 31, 2001 as compared to approximately $370,632 for the period ended December 31, 2000.

This increase was primarily due to (i) twelve complete months to realize revenues in 2001 (ii) growth

resulting from new client acquisition, (iii) growth resulting from the acquisition of the assets of

Q Logistics, inc. (“Q Logistics”) from Bankruptcy (and clients that elected to utilize the

Company’s services as a consequent) and various expansion into related business lines.

 

Costs of services provided, which consist primarily of payment for trucking services, fuel, insurance,

sales, marketing and general and administrative support increased by approximately $ 8,473,481,

or 2,389%, to approximately $8,828,104 for the year ended December 31, 2001, as compared to approximately

$354,623 for the period ended December 31, 2000. As a percentage of revenues Trucking and transport

related services of fuel, insurance, sales and marketing are aggregated as cost of goods sold

and amounted to 88% of related revenues for the year ended December 31, 2001, as compared to 92%

for the period ended December 31, 2000, and general and administrative expenses increased from 5%

for the period ended December 31, 2000 to 16% for the year ended December 31, 2001.

 

Gross margin increased by approximately $922,092, or 2,602%, to approximately $957,518 for the

year ended December 31, 2001, as compared to approximately $35,426 for the period ended December

31, 2000. This increase is primarily attributable to having a full year of operations, increased

sales and client base and efficiencies resulting from increased size that reduces costs as a percentage

of gross sales.

 

Selling, general and administrative expenses increased by approximately $1,298,975 or 6,689%, to

approximately $1,318,392 for the year ended December 31, 2001, up from approximately $19,417 for the

period ended December 31, 2000.  This increase was in large part due to: (i) increased facilities

cost to manage the acquisition of the assets of Q logistics;(ii) increased overhead costs resulting

from the period in which the company expanded personnel and facilities to support growth that was

to have resulted from the merger with LMRI, (iii) expansion of sales and business to facilitate

national transportation operations and support and (iv) due to the $225,000 reserve against potential loss

booked against LMRI's current obligations to the Company.

 

The Company experienced a loss in investment value of $78,999, booked consequential to its settlement

for expenses caused at the time of the recission with Logistics Management Resources, Inc. (“LMRI”

or “LMR”), resulting primarily from the value realized by the Company at the time of sale of the

securities tendered in connection with a settlement of claims between LMRI and the Company,

and the value of those securities at the time the Company received them, as compared with no

such losses in the prior fiscal period ended December 31, 2000. (see “Financial Statements-Notes 2, 5 and 14”)

 

For the period January 1, 2001 through July 1, 2001, the Company extended credit to Huff Trucking

Company (“Huff”), in connection with services rendered, and to be rendered by Huff in connection

with ongoing operations. Huff Trucking Company is related to LMRI, a party to a failed merger transaction

with the Company in the 2001 calendar year. At the time of the Rescission Agreement with LMRI,

there remained a balance due and owing to the Company of approximately $265,000, such amounts not

having been paid as of the fiscal year ended December 31, 2001. The Company continues to collect

balances due under this agreement and realized approximately $7,000 from clients who had been back

billed for services provided by the Company in which Huff had been advanced funds, expenses or

had billed the Client directly without the consent or authority of Trans-Logistics. The Company

booked a reserve of $200,000 in connection with losses it believes it may occur. The Company intends

to vigorously pursue its remedies and collection efforts against Huff Trucking Company

 

The Company experienced losses from continuing operations before provisions for income taxes

that approximated $656,421 for the fiscal year ended December 31, 2001, compared with income

from continuing operations before provisions for income taxes of approximately $16,009

for the fiscal period ended December 31, 2000.    

 

The Company operates tractors and trailers, which are owned by the Company or provided by

independent owner-operators, for clients that ship products throughout North America. The

Company has insurance and requisite authorities, licenses and permits that enable it to haul

various types of freight for third parties on an as-needed basis. The Company recognizes

revenues in this line of its business that are directly tied to the relationship between the

Company, its customers and third parties who, from time to time, may fulfill transportation

requirements. When the Company has a client and a load to ship and a third party trucking

company provides fulfillment for that load, the Company bills the client directly for

the gross value of trucking services. In cases where the Company refers a client to a

third party company who provides trucking services, the Company would act as a broker in

such transactions and would be paid by the fulfillment firm a commission.  The Company

only reports “income” as such definitions apply and has provided trucking service and

brokered services throughout the past fiscal year.

 

For the period ended March 31, 2002 compared with the period ended March 31, 2001.

 

Revenues increased approximately $444,691, or 26%, to approximately $2,150,380 for the

period ended March 31, 2002 as compared to approximately $1,705,689 for the period ended

March 31, 2001. This increase was primarily due to (i)addition of the warehouse segment

of our business and;(ii) expansion of the business client base and services offered.

 

Costs of services provided, which consist primarily of payment for trucking services,

fuel, insurance, sales, marketing and general and administrative support increased by

approximately $ 217,813, or 15%, to approximately $1,665,177 for the period ended

March 31, 2002, as compared to approximately $1,447,364 for the period ended March 31, 2001.

As a percentage of revenues Trucking and transport related services of fuel, insurance,

sales and marketing are aggregated as cost of goods sold and amounted to 77.44% of

related revenues for the period ended March 31, 2002, as compared to 85% for the

period ended March 31, 2001, and general and administrative expenses increased from 7%

for the period ended March 31, 2001 to 16% for the period ended March 31, 2002.

 

Gross margin increased by approximately $226,878, or 88%, to approximately $485,203

for the period ended March 31, 2002, as compared to approximately $258,325 for the

period ended March 31, 2001. This increase is primarily attributable to offering various

services and building value added propositions that were more profitable, as well as

to cost management and budgeting by management that resulted in enhanced trends in gross

profit margins.

 

Selling, general and administrative expenses increased by approximately $247,741

or 217%, to approximately $361,843 for the period ended March 31, 2002, up from

approximately $114,102 for the period ended March 31, 2001.  This increase was in

large part due to: (i) costs incurred as a result of being a public company;

(ii) increased size of administration associated with two segments of business and;

(iii) additional costs resulting from size increases.

 

The Company realized income from continuing operations before provisions for income

taxes of approximately $123,360 for the period ended March 31, 2002, compared with

income from continuing operations before provisions for income taxes of approximately

$144,223 for the period ended March 31, 2001.

 

Although the Company has tax loss carry forward from earlier periods, GAAP accounting

requires a provision for taxes of $25,000 for the period ended March 31, 2002, leaving

net profits of $98,360 compared with net profits after provisions for income taxes of

$99,423 from the period ended March 31, 2001, while diluted income per share from

continuing operations for the period ended March 31, 2002 decreased by one cent per

share to $.01 per share, as compared to $.02 per share for the same period in 2001.

 

Liquidity and Capital Resources

        Cash and cash equivalents were approximately 248,310 at March 31, 2002,

compared with $39,489 at December 31, 2001. This increase of approximately

$208,821 was primarily a result of the Company’s enhanced cash management and

examination of payment and collection cycles to increase free cash flow and

quick term availability of cash.

        During the fiscal year ended December 31, 2001, the Company entered into 
a $1,000,000 factoring facility with Yankton Factors Inc. that provides for 
97.5% advance rate against eligible receivables defined as those receivables 
which are likely to be paid to the Company within ninety days from the invoicing 
for services. This facility bears interest of 2.5% for up to 75 days of credit 
and is estimated to have an annual cost of approximately prime rate plus eighteen 
percent (18%) to the Company. The facility is currently unsecured and has outstanding 
balances due of $639,461 at December 31, 2001.

The Company has subsequently entered into a factoring relationship with 
Riviera Finance, LLC (“Riviera”) that provides for 80% advance against eligible 
receivables at a rate of one percent (1%) per ten (10) days, which is intended to 
be utilized as a cash flow enhancement for large credit clients of the Company 
that have historically paid within twenty days to enable expansion within these 
clients, and to provide significant revenue increases with minimal capital 
requirements. This facility provides for the non-recourse sale of approved trade 
receivables to Riviera and has no outstanding balances due at December 31, 2001.

The Company has embarked upon an aggressive campaign to manage cash that has 
resulted in greater anticipated levels of cash available for operations which 
it believes will be adequate to fund operations and financial requirements in 
the next fiscal year. The Company arranged for the conversion of debt due to 
related parties to preferred stock (See “ITEM 12. CERTAIN RELATIONSHIPS AND 
RELATED TRANSACTIONS”). 

 

Our strategy is to continue to expand through acquisitions and internal

development. We intend to seek, on a selective basis, acquisition of businesses

that have product lines or services which complement and expand our existing

services and product lines, and provide us with strategic distribution locations

or attractive customer bases. Our ability to implement our growth strategy will

be dependent on our ability to identify, consummate and assimilate such

acquisitions on desirable economic terms. There can be no assurance that we

will be successful in implementing our growth strategy. Our ability to

implement our growth strategy will also be dependent upon obtaining adequate

financing. We may not be able to obtain financing on favorable terms

HISTORY OF SEGMENTZ

         The Company's predecessor, WBNI, originally known as Rose

Auto Stores-Florida, Inc. ("Rose"), was organized for the purpose

of operating a specialty automotive aftermarket parts and accessory

retail store in South Florida. Rose began experiencing financial

difficulties in 1990 following its acquisition by WSR Corporation. By 1997

an involuntary petition of bankruptcy was filed against Rose. Subsequent

thereto, Rose and the committee of unsecured creditors worked together to develop

a plan in bankruptcy.

 

         Rose emerged from the involuntary bankruptcy proceedings by filing a  

Plan under Chapter 11 of the United States Bankruptcy Code on February 10, 1999.

The case was administered by the United States Bankruptcy Court, Southern

District of Florida (Miami Division) (the "court"). The court entered an order

approving the Plan on April 22, 1999.

 

         The Plan provided for the liquidation of Rose's assets and distribution

of the proceeds to secured, priority and unsecured creditors. The Plan

further provided that Rose would remain in existence, although all capital

stock outstanding as of the date of the bankruptcy petition was canceled.

Under the Plan, Rose secured post-petition financing in the amount of $ 10,000

from Halter Financial Group, Inc. ("HFG") to meet the cost and expense of the

reorganization effort. In satisfaction of HFG's administrative claim for such

amount and for the services rendered and expenses incurred in connection

with the anticipated acquisition or merger transaction between Rose and a

privately held operating company, HFG received 60% of the newly-issued shares

of common stock of the reorganized Company. Creditors with allowed unsecured

claims received a PRO RATA distribution of 40% of such common stock.

 

      The following is a schematic diagram of the history of Segmentz and its merger with Trans-Logistics:

 

            --------------------------------------------------------

            Rose Auto Stores --  Florida

            Inc., ("Rose"} incorporated in

            1952

            ---------------------------------------------------------

            Rose filed Petition of Bankruptcy Pursuant

            to Chapter 11 on February 10, 1999

            ---------------------------------------------------------

            -- April 22, 1999 --  Bankruptcy Plan Confirmed

            -- May 17, 2000 -- Rose reincorporated in Delaware

            as RAS Acquisition Corp.

            -- RAS Acquisition Corp. issues and aggregate

            of 500,233 unrestricted shares to unsecured

            creditors listed in the Plan of Bankruptcy

            pursuant to Section 1145 of the U.S.

            Bankruptcy Code

            ----------------------------------------------------------

            -- January 31,  2001 -- RAS Acquisition Corp.

            completes merger transaction with WBNI and

            issues to the stockholders of WBNI 20,000

            shares of its common stock pursuant to the

            exemption afforded by Section 4(2) of the Act and

            changes its name to WBNI

            -------------------------------------------------------

            -- February 5, 2001 -- RAS Acquisition Corp. files a

            Certificate of Compliance with Reverse Acquisition

            Requirements with the Bankruptcy Court. WBNI,

            a Delaware corporation has approximately 462

            stockholders who own 520,233 shares of common stock

            ---------------------------------------------------------

            On October 29, 2001, WBNI exchanged

            5,982,680 shares for 100 shares of

            TRANSL Holdings, Inc., which wholly owns

            Trans-Logistics, Inc.

            -----------------------------------------------------------

            On November 1, 2001, WBNI changed

            its name to Segmentz, Inc.

            -----------------------------------------------------------

 

For accounting purposes, the merger is reflected as a reverse acquisition

and recapitulation of WBNI and WBNI'S historical financial statements

presented elsewhere herein are those of Segmentz and its predecessor WBNI.

 

MERGER WITH WBNI On January 31, 2001, Rose completed a merger with WBNI,

a privately held Texas corporation pursuant to which Rose issued an

aggregate of 20,000 shares of its common stock in exchange for all of

the issued and outstanding shares of the private company's capital stock.

As a result of the transaction, Rose changed its name to WBNI, Inc

("WBNI"). Timothy P. Halter resigned as the sole officer and director

of Rose and the private company was dissolved. The merger was entered

into as the private company had an option to acquire the business

operation of WorldByNet.com, Inc., a Delaware corporation that

provided business-to-consumer and business-to-business solutions

for the purpose of connecting affinity groups. On February 22, 2001,

it was determined by management of WBNI that it would be in WBNI's

best interest to terminate the option to acquire WorldByNet as a result

of its due diligence inquiry into said entity.

 

On October 29, 2001, WBNI exchanged 5,982,680 shares of its common

stock for 100 shares of the common stock of TRANSL Holdings, Inc.,

a Delaware corporation ("TRANSL"). WBNI now wholly owns TRANSL,

which wholly owns Trans-Logistics, Inc., a Florida Corporation

(Trans-Logistics). Trans-Logistics agreed to pay Turner Capital

Partners, LLC a fee of $75,000 for consulting services related

to the WBNI transaction, which has been paid.

 

HISTORY OF TRANS-LOGISTICS

 

Trans-Logistics is a logistics and brokerage organization serving

irregular route, long haul, and common motor carriers of general

commodities. The Company is a Florida corporation and was formed

on April 28, 2000.

 

Pursuant to a Stock Purchase Agreement, dated as of January 1, 2001

(the “Stock Purchase Agreement”), by and between Logistics Management

Resources, Inc.(“LMRI”), Trans-Logistics, Inc., Christine Otten (the

then sole stockholder of Trans-Logistics) and Allan Marshall, the

Chief Executive Officer of Trans-Logistics, Ms. Otten agreed to sell

her shares of common stock in Trans-Logistics to LMRI for:

i)    $80,000 (payable $40,000 immediately following the execution

of the Stock Purchase Agreement and 18,000,000 shares of Common Stock

of LMRI);

ii) The value of all Trans-Logistics accounts receivable at the

closing date (with a provision that provided minimum realized value

of $230,000);

iii)        Four times (4X) the gross profits of Trans-Logistics, Inc.

(labeled as gross brokerage commissions but defined as trucking sales

minus cost of sales  for the period October 1, 2001-December 31, 2001, and:

iv)Guaranteed sale value on 18,000,000 shares of common stock of

the Company.

 

     Subsequent to January 1, 2001, LMRI failed to pay the purchase

price for Ms. Otten's Trans-Logistics shares and Trans-Logistics experienced

losses consequential to its partnership during the time under which

Christine Otten believed the Company was in the process of combining its

purpose and business operation with LMRI.  Direct cost of the merger

including legal expenses, accounting expenses, opportunities lost,

cost to finance expansion and client acquisition and cost  to examine the

Q logistics transaction in bankruptcy, which were significant.

 

   On August 10, 2001, Trans-Logistics and LMRI agreed to

rescind and cancel the terms and conditions of the Stock Purchase Agreement

(the “Rescission Agreement”). Under the terms of the Rescission Agreement,

the Company agreed to a reimbursement of 1,500,000 shares of LMRI’s

common stock and a note receivable in the amount of $450,000, which

the Company has an allowance of $225,000 recorded for estimated,

uncollectible amounts as of December 31, 2001. LMRI tendered

a certificate for 1.5 million shares pursuant to the Rescission

Agreement, which was received by Trans-Logistics on August 10, 2001. 

The shares closed at $.99, which resulted in a reduction of

general and administrative expenses of $148,500 and extinguishment

of the first part of rescission obligation due to Trans-Logistics

under the terms of that agreement.  The shares were sold to the market

as soon as conditions permitted with the intention of maximizing cash

value received while ensuring that shares were sold as quickly as was

practical.  There are no current liabilities to LMRI pursuant to the

Rescission Agreement. The Company incurred a loss of approximately

$79,000 on the sale of these shares, based upon the accounting for the

potential share value that was booked upon receipt of the shares and

the subsequent realization of a lesser amount when the shares were

sold. This Rescission Agreement was effective as of July 1, 2001.

As part of the above noted Rescission Agreement, the Company has

recognized a demand note receivable in the amount of $450,000 due

from LMRI, booked as a reduction to general and administrative expenses. The

terms of this note do not include interest until demand is made for payment.

The balance due under the terms of this note is $425,000 as of March 31, 2002.

Further payments on this note have been promised to be made during the

second quarter of 2002. The Company intends to vigorously pursue

collection of the LMRI note.

     For the period January 1, 2001 through July 1, 2001, the

Company extended credit to Huff Trucking Company (“Huff”), in

connection with services rendered, and to be rendered by Huff in

connection with ongoing operations. At the time of the Rescission Agreement,

there remained a balance due and owing to the Company of approximately $265,000,

such amounts not having been paid as of the fiscal year ended December 31, 2001.

The Company continues to collect balances due under this agreement and realized

approximately $7,000 from clients who had been back billed for services provided

by the Company in which Huff had been advanced funds, expenses or had billed the

Client directly without the consent or authority of the Trans-Logistics. The

Company booked a reserve of $200,000 in connection with losses it believes it may

occur. The Company intends to vigorously pursue its remedies and collection efforts.

 

     On November 1, 2001, WBNI, changed its name to Segmentz, Inc. During May 2001,

the Company acquired the assets of Q Logistics for $367,385. Q Logistics

operated warehouse facilities in Atlanta, Georgia; Edison, New Jersey;

Orlando, Florida and Chicago, Illinois. Operations in Orlando and Chicago were

subsequently discontinued. (See “ITEM 2. DESCRIPTION OF PROPERTIES”).

 

INDUSTRY OVERVIEW

         Third Party logistics companies provide customized domestic and international

freight transportation of customers' goods and packages, via truck, rail, airplane and

ship, and provide warehousing and storage of those goods. Many companies utilize

information systems and expertise to reduce inventories, cut transportation costs, speed

delivery and improve customer service. The third-party logistics services business has

been bolstered in recent years by the competitiveness of the global economy, which causes

shippers to focus on reducing handling costs, operating with lower inventories and shortening

inventory transit times. The third-party logistics services sector of the domestic logistics

market was approximately $53.4 billion in 2000. Using a network of transportation, handling

and storage providers in multiple transportation modes, third-party logistics services

companies seek to improve their customers' operating efficiency by reducing their inventory

levels and related handling costs. Many third-party logistics service providers are

non-asset-based, primarily utilizing physical assets owned by others in multiple transport

modes. The third-party logistics services business increasingly relies upon advanced

information technology to link the shipper with its inventory and as an analytical tool

to optimize transportation solutions. This trend favors the larger, more professionally

managed companies that have the resources to support a sophisticated information technology

infrastructure.

 

     By outsourcing all non-core business services to third party providers, companies

can help to control costs, eliminate staff and focus on internal business. Furthermore,

this kind of outsourcing is often done in lockstep with “unit pricing” models that provide

for a variable price that is less than the current pricing available to a company that is

calculated on a unit basis, enabling a company to price logistics, storage, shipping,

staging and related services into their wholesale pricing matrix and providing a scalable

solution that scales downwards in an off economy, as well as upwards as the market demands.

Such models are popular as “risk sharing,” a outsourcing concept that has been adopted in

many support and third party service arenas, enabling outsourced companies to build critical

mass, method and pricing efficiencies, and to pass these to clients in pricing schedules

that help these clients build competitive market positions that are measurably more

predictable.

 

PRODUCTS AND SERVICES

 

NATIONWIDE TRUCKLOAD AND LESS-THAN-TRUCKLOAD SERVICE

         The Company arranges truckload transportation with dedicated Company equipment,

owner operator fleet and extensive agent partners throughout 48 states. The Company provides

trailers that are either 48 or 53 feet in length.

 

     By utilizing volume discounts, the Company can cost effectively arrange less-than-truckload (

LTL) shipments for their customers from distribution centers or vendor locations. Tracking

capabilities are available via the web site through carrier links.

 

DEDICATED OR TIME-DEFINITE TRANSPORTATION

         The Company offers its customers time-definite ground transportation of cargo as

a cost effective, reliable alternative to air transportation. By utilizing team drivers

the Company provides expedited delivery and shorter transit times, and efficient pricing.

 

THIRD-PARTY LOGISTICS SERVICE

         The Company's strategic carrier alliances with national pricing agreements enable

them to provide specialized or heavy haul services. Shipment tracking is available for

customers via a custom designed web site and carrier links. On-time percentage tracking

and service failure reports are also available. Third-party logistics billing is fully

electronic and automated. The Company’s warehouse services currently provide on-board

barcode scanning devices and wireless link to legacy inventory and database systems to

provide real-time informational access to clients regarding status of inventory,

transportation and delivery of raw materials and finished goods.

 

FORWARDING

         The Company provides enhanced freight forwarding services designed to deliver

products on time to any location worldwide by whatever means necessary.

 

REVERSE LOGISTICS

         Many logistics solutions providers only offer their services from the warehouse

to the end customer (for example, after the product has been purchased and received from

the vendor). The Company can offer to handle the customer's product from the vendor all

the way to the end customer and even handle any needs after the product reaches its final

destination or dispose of the product.

 

IN-TRANSIT MERGE

         The Company provides In-transit Merge by strategically managing logistics

information in an effort to minimize the handling of product with complex routing that

includes multiple product origins/destinations and/or multiple vendors. The Company

positions itself as a member of the customer's distribution team, sharing data and

interacting virtually with vendors and the customer.

 

ASSEMBLY, PACKING AND DISTRIBUTION

         The Company customizes its "pick-and-pack" or packaging, labeling and inventorying

services to meet each customer's specific needs. Customers can utilize the Company's

warehouse and distribution facilities that are fully automated (barcode and UCC compliant)

or operate at their own site. The Company utilizes over 300,000 square feet of floor space

with additional multi-tier rack capacity which is secure and bonded. The Company currently

provides commercial caliber staging, repalletizing and shipping services for commercial

print, carpet and hotel clients. These services include receipt of commercial finished goods,

inventory services and legacy data stream information services, as well as storage,

repalletizing and transport distribution services that can be provided on a case-by-case

basis or turn-key. Additionally, packaging sanitization and custom branding services are

available. This comprehensive outsourcing service includes trucking as well as tracking

services.

 

SUPPLY CHAIN MANAGEMENT

         The Company provides infrastructure and equipment, integrated with its customers'

existing systems, to handle distribution planning, just-in-time delivery and automated ordering

throughout their operations, and additionally will provide and manage warehouses, distribution

centers and other facilities for them. The Company also consults on identifying bottlenecks and

inefficiencies and eliminating them by analyzing freight patterns and costs, optimizing

distribution centers and warehouse locations, and analyzing/developing internal policies and

procedures for its customers. The Company has enterprise-wide technology solutions that enable

real-time tracking and monitoring of various products and offers these and other related solutions

under long term contracts to a host of customers. The third-party service platform provides

guaranteed service level agreements (SLAs) to ensure stable, predictable delivery and tracking

of many products through the supply chain. The industry should grow in all segments, especially

during difficult and unpredictable economic climates due to the capital-intensive nature of

warehousing, transportation and technology equipment needed to track and monitor products as

they are shipped, staged and delivered.

 

CONVERSION OF DEBT TO EQUITY

         The Company’s credit facility, of which $773,896 was outstanding as of December 30, 2001,

has been converted into 773,896 shares of Series A Preferred Stock, par value $.001 per share

(“Series A Preferred Stock”) which bears interest at six percent (6%) as of period ending

December 31, 2001. The Series A Preferred Stock is convertible into shares of Common Stock

of the Company at market or the last placement price of the Company’s securities at which

equity was placed with investors, whichever is less (but under no circumstances less than

$.50 per share). Any interest payable under the terms of the Series A Preferred Stock may

be tendered in shares of Common Stock at the market price of the Company, at the Company’s

sole discretion.

 

      The Company had as of December 30, 2001, $426,898 in demand and term notes payable to

the Company’s largest shareholder, (See “ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”)

and to a customer of the Company. These notes were converted into 426,898 shares of

Series B Preferred Stock par value $.001 per share (“ Series B Preferred Stock”) as of

the period ending December 31, 2001. Series B Preferred Stock is convertible into shares

of Common Stock of the Company at market price or at the last placement price of the

Company’s securities with investors, whichever is less (but under no circumstances less

than $.50 per share).

 

FACTORING

         The Company factors substantially all of its accounts receivable. During the year

ended December 31, 2001, the Company utilized the services of two factoring companies.

Accounts receivable are sold to the factoring companies with recourse for unpaid invoices

in excess of ninety (90) days old. The most recent agreement provides for the payment of

factoring fees at two and one-half (2.5%) of each invoice factored.

 

         Accounts receivable transferred to the factoring companies were as follows:

 

Factored accounts                    $6,056,953

Customer payments (charge backs)     (5,417,492)

                                      ---------

Amount due to factoring companies    $  639,461

                                        =======

            During the period ended December 31, 2001, the Company entered into a $1,000,000

factoring facility with Yankton Factors Inc. that provides for 97.5% advance rate against

eligible receivables defined as those receivables which are likely to be paid to the Company  

within ninety days from the invoicing for services, this facility bears interest of 2.5% for

up to 75 days of credit and is estimated to have an annual cost of approximately prime rate

plus eighteen percent to the Company. The facility is currently unsecured and has outstanding

balances due of $639,461 at December 31, 2001.

 

            The Company has subsequently entered into a Factoring relationship with Riviera

Finance that provides for 80% advance against eligible receivables at a rate of 1% per 10 days,

which is intended to be utilized as a cash flow enhancement for large credit clients of the

Company that have historically paid within twenty days to enable expansion within these clients,

to provide significant revenue increases with minimal capital requirements. This facility

provides for the non-recourse sale of approved Trade receivables to Riviera and has no

outstanding balances due at December 31, 2001.

 

         The Company will need to continue to obtain financing, of which there can be no assurance

 

GROWTH STRATEGY

 

         The Company acquired certain unencumbered assets of Q Logistics, for a purchase

price of $367,385, out of bankruptcy reorganization in May 2001. In connection with the

acquisition of Q-Logistics, the Company entered into a demand note for $245,000. The note

was subsequently converted to Series B Preferred Equity, which provides for conversion into

Common Shares of Stock in the Company at a conversion price of market or at the last

placement price for securities, whichever is lesser. (See Note 8 to the Financial Statements).

The rationale behind the transaction was that warehouse management, inventory staging,

shipping management, electronic inventory tracking and management and other related services

would be accretive to the transport brokerage business, adding levels of captive clients

that the Company could offer various support services to over long-term relationships..

 

         The growth market for third-party logistics support and supply chain management

services continues to expand significantly and the Company intends to combine its

disparate product offerings to customers to create an integrated suite of management

tools, decisioning tools, reporting tools and support services that will enable sole

source and limited source contract opportunities for existing and new clients. The Company

has significant experience, acquired in its Quebecor relationship, which will provide

evidence, to existing and new clients, of its ability to deliver a managed

turnkey solution for staging, transportation, inventory and distribution of products

across the supply chain.

 

      We have acquired businesses in the past and may consider acquiring businesses

in the future that provide complementary services to those we currently provide or

expand our geographic presence. There can be no assurance that the businesses that we

have acquired in the past or any businesses that we may acquire in the future can be

successfully integrated. While we believe that we have sufficient financial and management

resources to successfully conduct our acquisition activities, there can be no assurance in

this regard or that we will not experience difficulties with customers, personnel

or others. Our acquisition activities involve more difficult integration issues than

those of many other companies because the value of the companies we acquire comes

mostly from their business relationships, rather than their assets.

 

The integration of business relationships poses more of a risk than the integration

of tangible assets because relationships may suddenly weaken or terminate. Further,

logistics businesses we have acquired and may acquire in the future compete with

many customers of our wholesale operations and these customers may shift their business

elsewhere if they believe our retail operations receive favorable treatment from

our wholesale operations. In addition, although we believe that our acquisitions

will enhance our competitive position, business and financial prospects, there can be no

assurances that such benefits will be realized or that any combination will be successful.

 

SALES AND MARKETING

    The Company plans to increase market share by implementing sophisticated state-of-the-art

technology to optimize efficiency, profitability and improve corporate image. The Company

also plans to increase brand awareness through marketing initiatives such as a newly

designed web site, direct mail, advertising, collateral, trade shows, etc.

 

The Company plans to increase non-asset based agent development program in strategic

locations and cross train sales staff to expand new services to existing customers.

COMPETITION

         The transportation services industry is highly competitive. Its retail

businesses compete primarily against other domestic non-asset based transportation

and logistics companies, asset-based transportation and logistics companies,

third-party freight brokers, internal shipping departments and other freight

forwarders. Its wholesale business competes primarily with over-the-road

full truckload carriers, conventional intermodal movement of trailers on flat

cars, and containerized intermodal rail services offered directly by railroads.

 

We also face competition from Internet-based freight exchanges, which attempt

to provide an online marketplace for buying and selling supply chain services.

 

Historically, competition has created downward pressure on freight rates, and

continuation of this rate pressure may materially adversely affect the

Company's net revenues and income from operations. In addition, some of the

Company's competitors have substantially greater financial and other resources

than we do.

 

The Company has identified several direct competitors. These companies offer

each of the individual services that the Company offers. However, the Company

believes these identified competitors offer many of these individual services

merely as ancillary services and tend to focus on one main service offering

(for example, truck leasing, freight forwarding, etc.). These direct competitors

include:

 

RYDER INTEGRATED LOGISTICS, INC. is a subsidiary of the $4.9 billion transportation

and logistics provider Ryder Systems, Inc. Ryder's primary business is providing truck

leasing services.

 

MENLO LOGISTICS, INC. is a subsidiary of $5.5 billion transportation and logistics

services provider CNF. Menlo's primary business is less-than-truckload (LTL) transportation

services.

 

C.H. ROBINSON WORLDWIDE ("CHR") is one of the largest third-party logistics providers in

North America. CHR's primary business is international freight forwarding brokerage.

 

EXEL LOGISTICS, a British logistics company with $5.3 billion in 1999 revenues, provides

global freight management, integrated transportation and warehousing. Exel's primary business

is warehousing services.

 

SUPPLIERS

The Company utilizes the services of various third party transportation companies. No significant

third party provider results in over 10% of the Company's revenue.

 

CUSTOMERS

The Company's largest customer constitutes approximately twenty six (26%) of the

Company's revenue. The top six (6) debtor balances comprised forty percent (40%)

of outstanding accounts receivable balances, and include clients like Quebecor,

Cantex, Inc., Air Ride, Beaulieu, Murphy and Ricoh.

 

EMPLOYEES

As of April 1, 2002, the Company had seventy three (73) full time employees. We consider

our employee relations to be good, and we have never experienced a work stoppage.

REGULATORY MATTERS

The Company, its suppliers and its customers are subject to changes in government regulation,

which could result in additional costs and thereby affect the Company's results of operations.

 

         The transportation industry is subject to legislative or regulatory changes that

can affect its economics. Although the Company operates in the intermodal segment of

the transportation industry, which has been essentially deregulated, changes in the levels

of regulatory activity in the intermodal segment could potentially affect the Company and

its suppliers and customers. Future laws and regulations may be more stringent and

require changes in operating practices, influence the demand for transportation services

or require the outlay of significant additional costs. Additional expenditures incurred

by the Company, or by its suppliers, who would pass the costs onto the Company through

higher prices, would adversely affect the Company's results of operation.

         If the Company expands its services internationally, the Company may become subject

to international economic and political risks. Doing business outside the United States

subjects the Company to various risks, including changing economic and political conditions,

major work stoppages, exchange controls, currency fluctuations, armed conflicts and

unexpected changes in United States and foreign laws relating to tariffs, trade

restrictions, transportation regulations, foreign investments and taxation. Significant

expansion in foreign countries will expose the Company to increased risk of loss from

foreign currency fluctuations and exchange controls as well as longer accounts receivable

payment cycles. The Company has no control over most of these risks and may be unable

to anticipate changes in international economic and political conditions and, therefore,

unable to alter business practices in time to avoid the adverse effect of any of these changes.

 

         If the Company fails to comply with or lose any required licenses, governmental

regulators could assess penalties or issue a cease and desist order against the Company's

operations that are not in compliance.

 

         There are newly adopted and pending laws regarding transportation, whether by air,

sea, freight or rail, which may have an effect on the Company. At this time, the Company

cannot ascertain the full effects of such laws. Internet Regulation - Few laws or regulations

are currently directly applicable to the Company's access to the Internet or conducting

business on the Internet. However, because of the Internet's popularity and increasing use,

new laws and regulations may be adopted. Such laws and regulations may cover issues such

as: user privacy, pricing, content, copyrights, distribution, and characteristics and

quality of products and services.

 

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

         The Company has developed Broker/Agent and internal Company software that

enables the management, analysis and deployment of transportation and logistics solutions

over Internet connections or via secure dial in access. The Company maintains all rights

to the code, concepts and visual appearance of this software and is in the process of

cataloguing the unique features of these software products, with the intention of

filing for patent or copyright protection. However, the Company has not filed for

any patents, copyrights or trademarks. The Company name has not been federally

trademarked.

REPORTS TO SECURITY HOLDERS

      The Company does not currently intend to voluntarily send an annual report to its

security holders of record.

 

ADDITIONAL INFORMATION

Statements contained in this Annual Report regarding the contents of any contract

or any other document are not necessarily complete and, in each instance, reference is

hereby made to the copy of such contract or other document filed as an exhibit to

the registration statement or herewith. The Company is subject to the informational

requirements of the Securities Exchange Act of 1934 and, consequently, will be required

to file annual and quarterly reports, proxy statements and other information with the SEC.

This information, including exhibits, may be inspected without charge at the SEC's

principal office in Washington, D.C., and copies of all or any part thereof may be obtained

from the Public Reference Section, Securities and Exchange Commission, 450 Fifth Street,

NW, Washington, D.C. 20549 upon payment of the prescribed fees. You may obtain information

on the operation of the Public Reference Room by calling the SEC at 1.800.SEC.0330. The SEC

maintains a Website that contains reports, proxy and information statements and other

information regarding registrants that file electronically with it. The address of

the SEC's Website is http://www.sec.gov.

 

RISK FACTORS

         Purchase of the Company's Shares involves significant risk. An

investment should be made only after careful consideration of the significant

risk factors set forth below as well as information set forth elsewhere in this

Form 10-SB and should be undertaken only for long-term investment purposes by

persons who can afford to sustain a loss of their entire investment. In addition

to considerations bearing on their individual financial positions and the

factors set forth elsewhere herein, prospective purchasers should consider the

following:

 

RISKS ASSOCIATED WITH THE BUSINESS

         The Company's business is dependent upon a number of factors beyond its

control that may have a material adverse effect on the business. These factors

include excess capacity in the trucking industry and significant increases or

rapid fluctuations in fuel prices, interest rates, fuel taxes, government

regulations, governmental and law enforcement anti-terrorism actions, tolls,

license and registration fees and insurance premiums. It is difficult at times

to attract and retain qualified drivers and owner-operators. Operations also are

affected by recessionary economic cycles and downturns in the Company's

customers' business cycles, particularly in market segments and industries (such

as retail and paper products) in which the Company has a significant

concentration of customers. Seasonal factors could also adversely affect the

Company. Customers tend to reduce shipments after the winter holiday season and

operating expenses tend to be higher in the winter months primarily due to

increased operating costs in colder weather and higher fuel consumption due to

increased idle time. Regional or nationwide fuel shortages could also have

adverse affects.

 

         The trucking industry is dependent upon transportation equipment such

as chassis and containers and rail, truck and ocean services provided by

independent third parties. Periods of equipment shortages have occurred

historically in the transportation industry, particularly in a strong economy.

If the Company cannot secure sufficient transportation equipment or

transportation services from these third parties to meet the customers' needs,

the business, results of operations and financial position could be materially

adversely affected and customers could seek to have their transportation and

logistics needs met by other third parties on a temporary or permanent basis.

The reliance on agents and independent contractors could reduce operating

control and the strength of relationships with customers, and the Company may

have trouble attracting and retaining agents and independent contractors.

 

         Historically, sectors of the transportation industry have been cyclical

as a result of economic recession, customers' business cycles, increases in

prices charged by third-party carriers, interest rate fluctuations and other

economic factors over which the Company has no control. Increased operating

expenses incurred by third-party carriers can be expected to result in higher

costs, and net revenues and income from operations could be materially adversely

affected if the Company was unable to pass through to the customers the full

amount of increased transportation costs. The Company has a large number of

customers in the automotive and consumer goods industries. If these customers

experience cyclical movements in their business activity, due to an economic

downturn, work stoppages or other factors over which the Company has no control,

the volume of freight shipped by those customers may decrease and operating

results could be adversely affected. Any unexpected reduction in revenues for a

particular quarter could cause the Company's quarterly operating results to be

below the expectations of public market analysts or investors. In this event,

the trading price of the Company's common stock may fall significantly. The

Company's significant debt levels may limit its flexibility in obtaining

additional financing and in pursuing other business opportunities.

 

         If, for any reason, the Company's business of providing warehousing and

logistic services ceases to be a preferred method of outsourcing these

functions, or if new technological methods become available and widely utilized,

the Company's business could be adversely affected.

 

         Moreover, increasing consolidation among customers and the resulting

ability of such customers to utilize their size to negotiate lower outsourcing

costs has and may continue in the future to have a depressing effect on the

pricing of third-party logistic services.

 

THE COMPANY MAY FACE INTERRUPTION OF BUSINESS DUE TO INCREASED SECURITY MEASURES

IN RESPONSE TO TERRORISM

 

         Terrorist attacks in New York and Washington, D.C. on September 11,

2001 have disrupted commerce throughout the United States. The continued threat

of terrorism within the United States and the ongoing military action and

heightened security measures in response to such threat may cause significant

disruption to commerce. The Company's business depends on the free flow of

products and services through these channels of commerce. Recently, in response

to terrorists' activities and threats aimed at the United States, transportation

and other services have been slowed or stopped altogether. Further delays or

stoppages in transportation or other services could have a material adverse

effect on the Company's business, results of operations and financial condition.

Furthermore, the Company may experience an increase in operating costs, such as

costs for transportation, insurance and security as a result of the activities

and potential activities. The Company may also face interruption of services due

to increased security measures in response to terrorism. The Company may also

experience delays in receiving payments from payers that have been affected by

the terrorist activities and potential activities. The U.S. economy in general

is being adversely affected by the terrorist activities and potential activities

and any economic downturn could adversely impact our results of operations,

impair our ability to raise capital or otherwise adversely affect our ability to

grow our business.

 

         It is impossible to predict how this may affect our business or the

economy in the U.S. and in the world, generally. In the event of further threats

or acts of terrorism, the Company's business and operations may be severely

adversely affected or destroyed.

 

THE COMPANY MAY SUBSTANTIALLY ALTER ITS CURRENT BUSINESS AND REVENUE MODEL

 

         The Company's current business and revenue model represents the current

view of the optimal business and revenue structure, i.e., to derive revenues and

achieve profitability in the shortest period of time. There can be no assurance

that current models will not be altered significantly or replaced with an

alternative model that is driven by motivations other than near-term revenues

and/or profitability (i.e. building market share before the Company's

competitors). Any such alteration or replacement of the business and revenue

model may ultimately result in the deferring of certain revenues in favor of

potentially establishing larger market share. The Company cannot assure that any

adjustment or change in the business and revenue model will prove to be

successful.

 

NEED FOR SUBSTANTIAL ADDITIONAL FINANCING

        The Company relies on factors to expedite cash flow. There is no assurance

that the Company will continue to be able to factor its receivable or to obtain,

either replacement or additional financing on acceptable terms.

 

         The Company's continued viability depends on its ability to raise

capital. Changes in economic, regulatory or competitive conditions may lead to

cost increases. Management may also determine that it is in the best interest of

the Company to expand more rapidly than currently intended, to expand marketing

activities, to develop new or enhance existing services or products, to respond

to competitive pressures or to acquire complementary services, businesses or

technologies. In any such case or other change of circumstance, additional

financing will be necessary. If any additional financing is required, there can

be no assurances that the Company will be able to obtain such additional

financing on terms acceptable to the Company and at times required by the

Company, if at all. In such event, the Company may be required to materially

alter its business plan or curtail all or a part of its expansion plans. Any

such additional financing may result in significant dilution to existing

stockholders or the issuance of securities with rights superior to those of the

existing Common Stock. In the event that the Company is unable to raise or

borrow additional funds, the Company may be required to curtail significantly

one or more of its marketing and/or development programs or seek additional

third-party funds by relinquishing the marketing, distribution, development or

other rights to the Company's products and services.

 

RISKS ASSOCIATED WITH MANAGEMENT

         There are several risks associated with the management of the Company.

If the Company loses key personnel and qualified technical staff, the ability to

manage the day-to-day aspects of the business will be weakened.

 

         The Company believes that the attraction and retention of qualified

personnel is critical to success. If the Company loses key personnel or is

unable to recruit qualified personnel, the ability to manage the day-to-day

aspects of the business will be weakened. The Company's operations and prospects

depend in large part on the performance of the senior management team. The loss

of the services of one or more members of the senior management team, could have

a material adverse effect on the business, financial condition and results of

operation. You should be aware that the Company faces significant competition in

the attraction and retention of personnel who possess the skill sets that are

needed. Because the senior management team has unique experience with the

Company and within the transportation industry, it would be difficult to replace

them without adversely affecting the business operations. In addition to their

unique experience, the management team has fostered key relationships with the

Company's suppliers. Such relationships are especially important in an

increasingly non-asset based company such as Segmentz. Loss of these

relationships could have a material adverse effect on the Company's

profitability.

 

         The Company's business is highly dependent upon the services of

Management, particularly Allan Marshall, Chief Executive Officer and Dennis

McCaffrey, Chief Operating Officer. The loss of the services of these members

of management could have a material adverse effect on the Company's operations

and future profitability.

 

RISK FACTORS RELATING TO THE COMMON STOCK

     Allan Marshal and Christine Otten collectively own approximately 92% of the

outstanding common stock. As a result, they are able to control all matters

requiring stockholder approval, including the election of directors and the

approval of significant corporate transactions, such as acquisitions, and to

block an unsolicited tender offer. This concentration of ownership could delay,

defer or prevent a change in control of the Company or impede a merger,

consolidation, takeover or other business combination which a stockholder, may

otherwise view favorably.

 

         Provisions of the certificate of incorporation and bylaws may

discourage, delay or prevent a change in control of the Company that a

stockholder may consider favorable. These provisions could also discourage proxy

contests and make it more difficult for you and other shareholders to elect

directors and take other corporate actions.

 

 

 

 

         The market price of the Company's common stock may be volatile, which

could cause the value of your investment to decline. Any of the following

factors could affect the market price of the Company's common stock:

     o    changes in earnings estimates and outlook by financial analysts;

     o    the Company's failure to meet financial analysts' and investors'

          performance expectations;

     o    changes in market valuations of other transportation and logistics

          companies; and

     o    general market and economic conditions.

 

         In addition, many of the risks described elsewhere in this "Risk

Factors" section could materially and adversely affect the stock price. The

stock markets have experienced price and volume volatility that has affected

many companies' stock prices. Stock prices for many companies have experienced

wide fluctuations that have often been unrelated to the operating performance of

those companies. Fluctuations such as these may affect the market price of the

Company's common stock.

 

VOLATILITY OF STOCK PRICES

         The Company's common stock is a new issue of securities for which there

is currently no trading market. Although the Company expects its common stock to

be quoted on the NASDAQ Over the Counter Market ("NASDAQ OTC"), an active

trading market for the Company's common stock may not develop or be sustained.

 

         In the event that an established public market does develop for the

Company's shares, market prices will be influenced by many factors, and will be

subject to significant fluctuation in response to variations in operating

results of the Company and other factors such as investor perceptions of the

Company, supply and demand, interest rates, general economic conditions and

those specific to the industry, international political conditions, development

with regard to the Company's activities, future financial condition and

management.

 

FUTURE SALES OF THE COMMON STOCK IN THE PUBLIC MARKET MAY DEPRESS THE

STOCK PRICE

 

         The market price of the common stock could decline as a result of sales

by the Company's existing stockholders of a large number of shares of the common

stock. These sales might also make it more difficult for the Company to sell

additional equity securities at a time and price that the Company deems

appropriate.

 

APPLICABILITY OF LOW PRICED STOCK RISK DISCLOSURE REQUIREMENTS

         The common stock of the Company may be considered a low priced security

under rules promulgated under the Exchange Act. Under these rules,

broker-dealers participating in transactions in low priced securities must first

deliver a risk disclosure document which describes that risks associated with

such stock, the broker-dealer's duties, the customer's rights and remedies, and

certain market and other information, and make a suitability determination

approving the customer for low priced stock transactions based on customer's

financial situation, investment experience and objectives. Broker-dealers must

also disclose these restrictions in writing and provide monthly account

statements to the customer, and obtain specific written consent of the customer.

With these restrictions, the likely effect of designation as a low prices stock,

would be to decrease the willingness of broker-dealers to make a market for the

stock, to decrease the liquidity of the stock and increase the transaction cost

of sales and purchase of such stocks compared to other securities.

CONTROL BY PRESENT STOCKHOLDERS

         The present stockholders own a majority of the outstanding common stock

of the Company. Since there are no cumulative voting rights under the Company's

Certificate of Incorporation, the present stockholders will remain in control of

the Company and will be able to elect all Directors of the Company and the

purchasers of the shares will not be able to elect any Directors of the Company

and they will have no input or decision making authority with respect to the

business decisions and policies of the Company.

 

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following analysis of the financial condition of Trans-Logistics as

of March 31, 2002, and the results of operation for the fiscal year ended

December 31 2001, should be read in conjunction with the Financial

Statements of Trans-Logistics, Inc., including footnote disclosures, and it

should be understood that this discussion is qualified in its entirety by the

foregoing and other, more detailed financial information appearing elsewhere

herein. The Company acquired all outstanding capital stock of TRANSL Holdings on

October 29, 2001, which owns Trans-Logistics, Inc.

 

         Historical results of operations and the percentage relationships among

any amounts included in the Statement of Operations of Trans-Logistics and any

trends which may appear to be inferable there from, should not be taken as being

necessarily indicative of trends of operations or results of operations for any

future periods.

 

         These and other statements, which are not historical facts, are based

largely on current expectations and assumptions of management and are subject to

a number of risks and uncertainties that could cause actual results to differ

materially from those contemplated by such forward-looking statements.

 

         Assumptions and risks related to forward-looking statements, include

that we are pursuing a growth strategy that relies in part on the completion of

acquisitions of companies in the non-asset based logistics segment of the

transportation industry, as well as the integration of third party brokers and

agents into our back office, contact and support resources.

 

         Assumptions relating to forward-looking statements involve 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. When

used in this Report, the words "estimates", "projects", and "expect"

and similar expressions are intended to identify forward-looking statements.

 

         Although we believe that assumptions underlying the forward-looking

statements are reasonable, any of the assumptions could prove inaccurate and,

therefore, there can be no assurance that the results contemplated in the

forward-looking information will be realized.

 

         Management decisions are subjective in many respects and susceptible to

interpretations and periodic revisions based on actual experience and business

developments, the impacts of which may cause us to alter our business strategy,

which may in turn, affect our results of operations. In light of the significant

uncertainties inherent in the forward-looking information included herein, the

inclusion of such information should not be regarded as our representation that

statements contained in this Report speak only as of the date of this

Report, and we do not have any obligation to publicly update or revise

any of these forward-looking statements.

         Such statements may include, but are not limited to, projections of

revenues, income, or loss, capital expenditures, plans for future operations,

financing needs or plans, the impact of inflation and plans relating to the

foregoing. Statements in the Company's Form 10-SB, including Notes to the

Financial Results of Operations, describe factors, among others, that could

contribute to or cause such differences.

 

DESCRIPTION OF BUSINESS

CURRENT BUSINESS

 

         Segmentz, Inc. (the "Company"), a Delaware corporation, is a

Tampa, Florida based company that provides transportation logistics management

services and support for mid-sized and national corporate clients. The

Company serves direct users of transport, storage, staging, warehouse services

and other logistics services.

 

            The Company and its subsidiary Trans-Logistics, Inc., a

Florida corporation ("Trans-Logistics"), have principal executive offices

located at 18302 Highwoods Preserve Parkway, Suite 210, Tampa, Florida 33467.

The telephone number is (813) 989-2232. The internet web site addresses

are http://www.trans-logistics.com and http://www.segmentz.com

(http://www.segmentz.net  The Company provides several niche services within

the industry more broadly known as the supply chain management industry,

including transportation logistics, management and delivery. (See "Description

of Business - Products and Services").

 

         The Company serves direct users of transport, storage, staging,

warehouse service and other logistics services, as well as larger companies

that include Bax Global, Quebecor World Logistics, Inc. (“Quebecor”), and CH

Robinson, Inc. The Company offers warehouse locations in two facilities

covering the east coast and is attempting to expand to offer smaller

satellite facilities to enable conduit and direct route trucking solutions

on a contracted, dedicated route basis to larger clients.

 

Results of Operations

For the year ended December 31, 2001 compared to the period ended December 31, 2000.

 

Revenues increased approximately $8,096,598, or 2,184%, to approximately

$8,467,230 for the year ended December 31, 2001 as compared to

approximately $370,632 for the period ended December 31, 2000. This

increase was primarily due to (i) twelve complete months to realize

revenues in 2001, (ii) growth resulting from new client acquisition,

(iii) growth resulting from the acquisition of the assets of

Q Logistics, inc. (“Q Logistics”) from Bankruptcy (and clients

that elected to utilize the Company’s services as a consequent) and

various expansion into related business lines.

 

Costs of services provided, which consist primarily of payment for

trucking services, fuel, insurance, sales, marketing and general

and administrative support increased by approximately $ 8,473,481,

or 2,389%, to approximately $8,828,104 for the year ended December 31, 2001,

as compared to approximately $354,623 for the period ended December 31, 2000.

As a percentage of revenues Trucking and transport related services of fuel,

insurance, sales and marketing are aggregated as cost of goods sold and

amounted to 88% of related revenues for the year ended December 31, 2001,

as compared to 92% for the period ended December 31, 2000, and general and

administrative expenses increased from 5% for the period ended

December 31, 2000 to 16% for the year ended December 31, 2001.

 

Gross margin increased by approximately $922,092, or 2,602%, to

approximately $957,518 for the year ended December 31, 2001, as compared

to approximately $35,426 for the period ended December 31, 2000. This

increase is primarily attributable to having a full year of operations,

increased sales and client base and efficiencies resulting from increased

size that reduces costs as a percentage of gross sales.

 

Selling, general and administrative expenses increased by approximately $1,298,975 or 6,689%, to

approximately $1,318,392 for the year ended December 31, 2001, up from approximately $19,417 for the

period ended December 31, 2000.  This increase was in large part due to: (i) increased facilities

cost to manage the acquisition of the assets of Q logistics;(ii) increased overhead costs resulting

from the period in which the company expanded personnel and facilities to support growth that was

to have resulted from the merger with LMRI, (iii) expansion of sales and business to facilitate

national transportation operations and support and (iv) due to the $225,000 reserve against potential loss

booked against LMRI's current obligations to the Company.

 

 

The Company experienced a loss in investment value of $78,999, booked

consequential to its settlement for expenses caused at the time of the

recission with Logistics Management Resources, Inc. (“LMRI” or “LMR”),

resulting primarily from the value realized by the Company at the

time of sale of the securities tendered in that settlement and the

value of those securities at the time the Company received them,

as compared with no such losses in the prior fiscal period ended

December 31, 2000. (see “Financial Statements Notes 2, 5 and 14”)

 

For the period January 1, 2001 through July 1, 2001, the Company extended

credit to Huff Trucking Company (“Huff”), in connection with services rendered,

and to be rendered by Huff in connection with ongoing operations. Huff

Trucking Company is related to LMRI, a party to a failed merger transaction

with the Company in the 2001 calendar year. At the time of the rescission

agreement with LMRI, there remained a balance due and owing to the Company

of approximately $265,000, such amounts not having been paid as of the fiscal

year ended December 31, 2001. The Company continues to collect balances due

under this agreement and realized approximately $7,000 from clients who had

been back billed for services provided by the Company in which Huff had been

advanced funds, expenses or had billed the Client directly without the consent

or authority of the Trans-Logistics. The Company booked a reserve of $200,000

in connection with losses it believes it may occur. The Company intends to

vigorously pursue its remedies and collection efforts against Huff Trucking

Company

 

The Company experienced losses from continuing operations before provisions for

income taxes that approximated $656,421 for the fiscal year ended December 31, 2001,

compared with income from continuing operations before provisions for income taxes

of approximately $16,009 for the fiscal period ended December 31, 2000.     

 

The Company operates tractors and trailers, which are owned by the Company or

provided by independent owner-operators, for clients that ship products throughout

North America. The Company has insurance and requisite authorities, licenses and

permits that enable it to haul various types of freight for third parties on an

as-needed basis. The Company recognizes revenues in this line of its business that

are directly tied to the relationship between the Company, its customers and third

parties who, from time to time, may fulfill transportation requirements. When the

Company has a client and a load to ship and a third party trucking company provides

fulfillment for that load, the Company bills the client directly for the gross value

of trucking services. In cases where the Company refers a client to a third party

company who provides trucking services, the Company would act as a broker in such

transactions and would be paid by the fulfillment firm a commission.  The Company

only reports “income” as such definitions apply and has provided trucking service

and brokered services throughout the past fiscal year.

 

For the period ended March 31, 2002 compared with the period ended March 31, 2001.

 

Revenues increased approximately $444,691, or 26%, to approximately $2,150,380

for the period ended March 31, 2002 as compared to approximately $1,705,689 for the

period ended March 31, 2001. This increase was primarily due to (i)addition of the

warehouse segment of our business and;(ii) expansion of the business client base and

services offered.

 

Costs of services provided, which consist primarily of payment for trucking services,

fuel, insurance, sales, marketing and general and administrative support increased by

approximately $ 217,813, or 15%, to approximately $1,665,177 for the period ended

March 31, 2002, as compared to approximately $1,447,364 for the period ended March 31, 2001.

As a percentage of revenues Trucking and transport related services of fuel, insurance,

sales and marketing are aggregated as cost of goods sold and amounted to 77.44% of related

revenues for the period ended March 31, 2002, as compared to 85% for the period ended

March 31, 2001, and general and administrative expenses increased from 7% for the period

ended March 31, 2001 to 16% for the period ended March 31, 2002.

 

Gross margin increased by approximately $227,218, or 88%, to approximately

$485,203 for the period ended March 31, 2002, as compared to approximately $258,325

for the period ended March 31, 2001. This increase is primarily attributable to

offering various services and building value added propositions that were more

profitable, as well as to cost management and budgeting by management that resulted

in enhanced trends in gross profit margins.

 

Selling, general and administrative expenses increased by approximately $247,741

or 217%, to approximately $361,843 for the period ended March 31, 2002, up from

approximately $114,102 for the period ended March 31, 2001.  This increase was in

large part due to: (i) costs incurred as a result of being a public company;

2. increased size of administration associated with two segments of business and;

3. (iii) additional costs resulting from size increases.

 

Liquidity and Capital Resources

        Cash and cash equivalents were approximately $39,489 at December 31, 2001,

compared with $1,709 at December 31, 2000. This increase of approximately $37,780

was primarily a result of the Company increasing in size and having greater average

cash balances as a consequent of such growth. Cash and cash equivalents were

approximately 248,310 at March 31, 2002, compared with $46,425 at March 31, 2001.

This increase of approximately $201,885 was primarily a result of the Company’s

enhanced cash management and examination of payment and collection cycles to increase

free cash flow and quick term availability of cash.

During the fiscal year ended December 31, 2001, the Company entered into a $1,000,000 
factoring facility with Yankton Factors Inc. that provides for 97.5% advance rate against 
eligible receivables defined as those receivables which are likely to be paid to the 
Company within ninety days from the invoicing for services. This facility bears interest 
of 2.5% for up to 75 days of credit and is estimated to have an annual cost of 
approximately prime rate plus eighteen percent (18%) to the Company. The facility 
is currently unsecured and has outstanding balances due of $639,461 at December 31, 2001.

The Company has subsequently entered into a factoring relationship with Riviera Finance, LLC 
(“Riviera”) that provides for 80% advance against eligible receivables at a rate of 
one percent (1%) per ten (10) days, which is intended to be utilized as a cash flow 
enhancement for large credit clients of the Company that have historically paid within twenty 
days to enable expansion within these clients, and to provide significant revenue 
increases with minimal capital requirements. This facility provides for the non-recourse 
sale of approved trade receivables to Riviera and has no outstanding balances due at 
December 31, 2001.

The Company has embarked upon an aggressive campaign to manage cash that has resulted 
in greater anticipated levels of cash available for operations which it believes 
will be adequate to fund operations and financial requirements in the next fiscal 
year. The Company arranged for the conversion of debt due to related parties to preferred 
stock (See “ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”). 

 

 

Our strategy is to continue to expand through acquisitions and internal development.

We intend to seek, on a selective basis, acquisition of businesses that have product

lines or services which complement and expand our existing services and product lines,

and provide us with strategic distribution locations or attractive customer bases. Our

ability to implement our growth strategy will be dependent on our ability to identify,

consummate and assimilate such acquisitions on desirable economic terms. There can be

no assurance that we will be successful in implementing our growth strategy. Our ability

to implement our growth strategy will also be dependent upon obtaining adequate financing.

We may not be able to obtain financing on favorable terms.

RESULTS OF OPERATIONS

         Trans-Logistics began operations in the fourth quarter of 2000, therefore full

year end information does not necessarily compare like periods. In the financial statements

for the year ended December 31, 2001, the following table illustrates comparable operations

results for the partial year ending December 31, 2000 and for the full year ended

December 31, 2001:

 

 

                                                                                                                  Three Months Ended         

                                                                                                             March 31,             March 31, 

                                                                                                                 2002                     2001     

Revenues:

     Operating revenue                                                                           $  2,146,631        $  1,705,349

     Consulting and other revenue                                                                      3,749                       340

                                                                                                               2,150,380             1,705,689

 

Expenses:

     Operating expenses                                                                             1,665,177             1,447,364

     General and administrative expenses                                                       361,843                114,102

                                                                                                               2,027,020             1,561,466

 

Income before taxes                                                                                    123,360                144,223                       

 

Income tax expense                                                                                      25,000                  44,800

 

Net income                                                                                          $       98,360        $       99,423

 

Basic earnings per common share                                                                       $.02                      $.02

 

Basic weighted average common shares outstanding                                 6,502,913             6,502,913

 

Diluted earnings per common share                                                                    $.01                      $.02

 

Diluted weighted average common shares outstanding                               8,904,501             6,502,913

 

 

Continuing Operations:

 

OPERATING REVENUES

         Total operating revenues increased approximately $444,691, or 26.7%,

to approximately $2,150,380 for the period ended March 31, 2002, as compared

to approximately $1,705,689 for the period ended March 21, 2001. This increase

was primarily due to increase in revenues achieved consequential to the acquisition

of Q Logistics from bankruptcy and increase of revenues in the business lines of

the Company.

DEPRECIATION AND AMORTIZATION

         Depreciation and amortization increased from $ 24,934 for the three

month period ended March 31, 2002 compared with $ 6,467 for the three month period

ended March 31, 2001. The reason for this increase was the placing of service those

assets acquired in the purchase of Q logistics out of bankruptcy.

 

GENERAL AND ADMINISTRATIVE

         General and administrative expenses increased slightly from $ 114,102 for

the period ended March 31, 2001 to $ 361,843 for the three months ended March 31, 2002.

The reason for this was primarily due to increased size of management and administrative

staff coincidental with becoming a reporting public company, and with the Company’s

efforts to increase the size of its business.

 

LIQUIDITY AND CAPITAL RESOURCES

 

         Cash and cash equivalents were approximately $248,310 at March 31, 2002,

compared with $39,489 at December 31, 2001. This increase of approximately $208,821

was primarily a result of the Company’s enhanced cash management and examination

of payment and collection cycles to increase free cash flow and quick term availability

of cash.

 

         The Company will require significant capital to continue to meet its

expansion goals over the next twelve months. There can be no assurance that the

Company will be able to obtain the capital necessary to continue operations.

(See "Risk factors-Need for substantial Additional financing")

 

ITEM 3.  DESCRIPTION OF PROPERTY

         The Company leases its Corporate Headquarters, located at 18302

Highwood's Preserve Parkway, Suite 210, Tampa, FL 33467, which is 2,073 square

feet. The Company pays $3,411 per month and the lease expires May 2006.

 

         A lease period begins in May 2001 and expires in April 2006. The

initial lease term is for a period of 5 years and the lease agreement includes

an optional lease period of an additional three (3) years.

 

Minimum future rent commitments under this agreement are:

 

YEAR ENDING DECEMBER 31                          AMOUNT

                                              

2002                                             50,979

2003                                             52,658

2004                                             49,195

2005                                             47,292

Thereafter                                       15,969

                                                 ------

   Total                                        $216,093

                                                 =======

 

 

         As part of the lease agreement the Company is liable for an unused

letter of credit in the amount of $40,000. This amount is reduced by $8,000 per

year and may be drawn upon if certain lease commitments have not been met or

have been violated.

 

         On December 15, 2001, the Company moved the location of its northeast

regional support and logistics center from 40 Brunswick Avenue in Edison New

Jersey to 39 Mill Road in Edison New Jersey. This facility was moved in concert

with expansion needs of the Company's largest logistics support client,

increasing the space from 120,000 square feet to 140,000, the number of trailer

bays for loading and unloading products by over fifty percent and a location

that offers enhanced accessibility for ground transportation carriers. The

Company continues to provide comparable services for this client and others from

its new facility.

          The Company has been party to a lease in its Atlanta facility that it

believed to be month-to-month pursuant to data provided by LMR. In cooperation

with LMR, the Company purchased the assets of QLS from bankruptcy and began

utilizing the space in Forest Park, Georgia pursuant to providing logistic services

for clients. The Company notified the landlord, IDI Services, Inc. (“IDI”), of its

intentions to find smaller space and offered IDI an opportunity to provide a lesser

facility size within the facility currently occupied by the Company. IDI informed

the Company at that time that the Company was party to a lease arrangement that had

previously not been disclosed or evidenced. IDI and the Company are engaged in

discussions to resolve this misunderstanding in which the Company asserts that IDI

accepted a letter of credit provided by LMRI as inducement to enter into the lease

with LMR with whom the Company had an arrangement to vacate the premises of its

month-to-month sublease on 30 days written notice. IDI’s assertion included a variety

of material issues, including a representation that the Company was a prime lease

holder with an obligation through May 2006. The Company has secured legal counsel

and continues to assert that any lease documents that exist suggesting the Company’s

prime tenancy are not authorized by the Company, its board, or officers as provided

for in the Company’s bylaws. The Company continues to defend its position in this

matter and will endeavor to reach an amicable settlement pursuant to this issue.

         As the result of its purchase of Q Logistic Solutions, Inc., the

Company utilizes facilities located in Atlanta, Georgia and Edison, New Jersey

on an "at-will" basis; monthly rents for these facilities are approximately

$51,000 and $43,000 respectively.

 

         The Company also has six Sales Agent offices across the United States.

These offices are located at:

 

     -    RR 1 Box 385, Clinton, ME 04927

     -    11448 Rene Drive, Jacksonville, FL 32218

     -    7240 Indiana Avenue, Fort Worth, TX 76137

     -    9 Beacon Hill, East Brunswick, NJ 08816

     -    2059 S. Hamilton, Dalton, GA 30720

 

         The Company believes that the condition of its facilities is excellent

and that the provided space is sufficient for its use and operation at the

present time. In the opinion of the Company's management, these properties are

adequately insured, in good condition and suitable for the Company's anticipated

future use.

 

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The table below sets forth, as of April 1, 2002, certain information with respect to the beneficial ownership of the Common Stock of the Company by each person who the Company knows to be a beneficial

owner of more than 5% of any class or series of the Company's capital stock, each of the directors and executive officers individually, and all directors and executive officers as a group.

 

(1) Allan Marshall and Christine Often are husband and wife.

 

Name                         Shares Beneficially                          Percentage of

                                 Owned                                       Shares

Allan Marshall(1)            4,187,876                                        64.4

Christine Otten (1)          1,794,804                                        27.6

                             ---------                                        -----

                             5,982,680                                        92.0%

 

 

Ownership of Preferred Stock if Converted*

 

 

Name                                 Shares Beneficially                         Percentage of

                                             Owned                                              Shares

Allan Marshall(1)            4,187,876                                        54.4%

Christine Otten (1)          1,794,804                                        23.3%

                             ---------                          

                             5,982,680

                

Bryant Plastics                773,896                                        10.0%

(Series B)

 

 

Bryant Plastics                 245,000                                         3.2%

(Series A)

 

 

Allan J. Marshall               181,898                                         2.4%

(Series A)    Total:          7,703,707                                        93.3%       

 

 

As of April 1, 2002, there were a total of 6,502,913 shares of the Company's common stock outstanding, of which 520,233 shares are held by approximately 464 shareholders of record, 5,982,680 shares are held by the principal shareholder, 773,896 shares of the Company’s Series B Preferred Stock outstanding, held by one shareholder of record as disclosed in the above table, and 426,898 shares of the Company’s Series A Preferred Stock outstanding, held by two shareholders of record as disclosed in the above table.

ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

Directors and Executive Officers

The following sets forth information concerning the officers and directors, including their ages, present principal occupations, other business experience during the last five years, membership on committees of the board of directors and directorships in other publicly held companies.

 

NAME                       AGE       POSITION WITH SEGMENTZ

 

Allan Marshall             34        Chairman & Chief Executive Officer

John S. Flynn              37        President & Chief Financial Officer

Dennis M. McCaffrey        33        Chief Operating Officer

 

Allan Marshall was a director of Trans-Logistics from November 2000 to November 2001, when Trans-Logistics changed its name to Segmentz. He has served as Director and the Chief Executive Officer of Segmentz since its acquisition on November 1, 2001. Prior to Trans-Logistics and Segmentz, Mr. Marshall founded U.S. Transportation Services, Inc. (“UST”) in 1995, whose main focus was third party logistics. UST was sold to Professional Transportation Group, Inc. in January of 2000 and Professional Transportation Group ceased business in November of 2000. Prior to 1995, Mr. Marshall served as Vice President of U.S. Traffic Ltd, where he founded their USA Logistics division.

 

John S. Flynn, is a Senior Managing Member of Aspen Rhodes Capital Corporation, LLC (“Aspen Rhodes”). Prior to co-founding Aspen Rhodes, Mr. Flynn was an entrepreneur, developing a nationwide computer service company, a regional environmental service firm and a management consulting firm. Mr. Flynn has completed over $500 million of funding in his career, including asset based capital market products, below investment grade bonds and private equities. He has completed numerous merger transactions and consulting related to acquisitions for Small and Micro cap public companies, including Westbury Metals Group, US Automotive and RT Industries during his career.

 

Dennis McCaffrey served as the Chief Operations Officer of UST since 1996, before joining the Company in November 2000. He was responsible for creating and implementing strategic business plans; supervising operations staff; designing and managing all sales and marketing programs; assisting in the design and implementation of their internal software program; and forming strategic alliances with contract carriers including U.S. Express, MS Carriers, Heartland Express, and Swift Transportation. When UST was sold to Professional Transportation Group in 2000, Mr. McCaffrey served as an Operations Manager for the Florida division. Mr. McCaffrey also worked as the Operations Manager for U.S. Traffic Ltd's U.S. operations from 1992 to 1996. Previously, Mr. McCaffrey served in the United States Marine Corps from 1988 to 1992. Mr. McCaffrey, as Chief Operating Officer, is directly responsible for the management, growth and success of Trans-Logistics transportation, brokerage, and logistics operations.

 

ITEM 6. EXECUTIVE COMPENSATION

 

Executive Officers

The Company's Board appoints the executive officers to serve at the discretion of the Board. Directors who are also employees receive no compensation for serving on the Board. The Company's non-employee directors receive no compensation for serving on the Board. The Company intends to reimburse non-employee directors for travel and other expenses incurred in connection with attending the Board meetings. Allan Marshall, the Company's Chief Executive Officer, received approximately $75,000 in compensation for the year ended December 31, 2001.

 

EMPLOYMENT AGREEMENTS

 

The Company has entered into an Employment Agreements with Allan Marshall, the Company's Chief Executive Officer, which terminates on November 15, 2006. The agreement shall be automatically extended for an additional one-year period after the initial term unless at least 30 days prior to the termination date either the Company or Mr. Marshall give written notice to the other that the Employment Agreement will not be renewed. Mr. Marshall will receive an annual base salary of $150,000 plus a non-accountable expenses allowance of $35,000 per year, which may be increased at the discretion of the Board. Additionally, Mr. Marshall may be eligible to receive an annual bonus based on the Company's financial performance in the form of stock options and cash not to exceed 15% of his base salary.

 

The Company has offered an Employment Agreement to John S. Flynn, the Company’s President which terminates December 31, 2005. This Agreement provides for an annual base salary of $120,000.00, a non-accountable expense allowances of $1,000 per month, auto, health and cellular phone reimbursement and bonus of $30,000.00 payable in warrant value or cash, at the discretion of the Board of Directors. As of March 31, 2002, the Employment Agreement has not been executed.

 

KEY MAN INSURANCE

The Company intends to obtain a life insurance policy in the amount of $1,000,000 on the life of Allan Marshall, the Company's Chief Executive Officer. The proceeds of the policy would be payable to the Company.

 

STOCK OPTION PLAN

On November 1, 2001, the majority stockholders of the Company approved the 2001 Stock Compensation Plan. The number of shares of common stock which may be issued under the 2001 Plan shall initially be 600,000 shares which amount may, at the discretion of the Board, be increased from time to time to a number of shares of common stock equal to 5% of the total outstanding shares of common stock, provided that the aggregate number of shares of common stock which may be granted under the 2001 Plan shall not exceed 600,000 shares. The Company may also utilize the granting of options under the 2001 Plan to attract qualified individuals to become its employees and non-employee directors, as well as to ensure the retention of management of any acquired business operations. Under the 2001 Plan the Company may also grant restricted stock awards. Restricted stock represents shares of common stock issued to eligible participants under the 2001 Plan subject to the satisfaction by the recipient of certain conditions and enumerated in the specific restricted stock grant. Conditions which may be imposed include, but are not limited to, specified periods of employment, attainment of personal performance standards or the Company's overall financial performance. The granting of restricted stock represents an additional incentive for eligible participants under the 2001 Plan to promote the Company's development and growth, and may be used by the management as another means of attracting and retaining qualified individuals to serve as the Company's employees and directors. Currently, no options have been granted to employees, consultants, officers or directors.

 

COMPENSATION TABLE

The information set forth below concerns the cash and non-cash compensation to certain of the Company's executive officers for each of the past two fiscal years ended December 31, 2001 and 2000. In each case, the compensation listed was paid by Trans-Logistics.

 

 

 

Summary Compensation Table

Name          Year    Annual Compensation    Long-term Compensation

Position                                            Other                     

                      Salary       Bonus   Annual   Compensation    Awards      Other

                                                                Restricted  Compensation

                                                                Stock 

Allan         2001       $75,000        $0               $0                 $0                       $0

Marshall       

 

 

                     2000     $0                $0               $0                $0                         $0

 

 

 

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has as of December 31, 2001, no outstanding balances due to Allan Marshall or to ATECH, a company owned solely by Mr. Marshall, both having numerous transactions completed with the Company during the fiscal year ending December 31, 2001. In December 2001, Allan Marshall converted $181,898 of debt due from the Company to him, to 181,898 shares of Series B Preferred Stock.

The Company utilized facilities, equipment, and employees of this related company in return for a commission paid equal to 85% of operating revenues less direct expenses. As of January 1, 2002, the Company does not intend to conduct any business with ATECH, without obtaining approval of the Board of Directors. Expenses incurred during the periods ended December 31, 2001 and 2000 amounted to approximately $206,000 and $174,000, respectively. The expenses incurred for these services are not necessarily indicative of the amounts that may have been incurred had these services been provided by independent third parties

ITEM 8.  DESCRIPTION OF SECURITIES

 

Capital Stock

 

         The Company's authorized capital stock consists of 40,000,000 shares of

common stock, par value $.001 and 10,000,000 shares of preferred stock, par

value $.001. Each share of common stock entitles a shareholder to one vote on

all matters upon which shareholders are permitted to vote. No shareholder has

any preemptive right or other similar right to purchase or subscribe for any

additional securities issued by the Company, and no shareholder has any right to

convert the common stock into other securities. No shares of common stock are

subject to redemption or any sinking fund provisions. All the outstanding shares

of the Company's common stock are fully paid and non-assessable. Subject to the

rights of the holders of the preferred stock, if any, the Company's shareholders

of common stock are entitled to dividends when, as and if declared by the Board

from funds legally available therefore and, upon liquidation, to a pro-rata

share in any distribution to shareholders. The Company does not anticipate

declaring or paying any cash dividends on the common stock in the year 2001 or

in the foreseeable future.

 

         Pursuant to the Company's Articles of Incorporation, the Board has the

authority, without further shareholder approval, to provide for the issuance of

up to 10,000,000 shares of the Company's preferred stock in one or more series

and to determine the dividend rights, conversion rights, voting rights, rights

in terms of redemption, liquidation preferences, the number of shares

constituting any such series and the designation of such series. The Company's

Board has the power to afford preferences, powers and rights (including voting

rights) to the holders of any preferred stock preferences, such rights and

preferences being senior to the rights of holders of common stock. No shares of

the Company's preferred stock are currently outstanding. Although the Company

has no present intention to issue any shares of preferred stock, the issuance of

shares of preferred stock, or the issuance of rights to purchase such shares,

may have the effect of delaying, deferring or preventing a change in control of

the Company.

 

     As a WBNI successor, the Company is prohibited from issuing non-equity

voting securities under Section 1123(a)(6) of the United States Bankruptcy Code.

If there are to be any classes of securities issued in the future, all shall

possess voting power, an appropriate distribution of such voting power among

such classes, including, in the case of any class of equity securities having a

preference over another class of equity securities with respect to dividends,

and adequate provision for the election of directors representing such preferred

class in the event of default in the payment of such dividends.

 

PROVISIONS HAVING A POSSIBLE ANTI-TAKEOVER EFFECT

      The Company's Articles of Incorporation and Bylaws contain certain

provisions, that are intended to enhance the likelihood of continuity and

stability in the composition of the Company's Board and in the policies

formulated by the Board and to discourage certain types of transactions which

may involve an actual or threatened change of control of the Company. In

addition, the Board has the authority, without further action by the Company's

shareholders, to issue up to 10,000,000 shares of its preferred stock in one or

more series and to fix the rights, preferences, privileges and restrictions

thereof. The issuance of the Company's preferred stock or additional shares of

common stock could adversely affect the voting power of the holders of common

stock and could have the effect of delaying, deferring or preventing a change in

the Company's control.

 

                          ADDITIONAL INFORMATION

         Statements contained in this registration statement regarding the

contents of any contract or any other document are not necessarily complete and,

in each instance, reference is hereby made to the copy of such contract or other

document filed as an exhibit to the registration statement. As a result of this

registration statement, the Company will be subject to the informational

requirements of the Securities Exchange Act of 1934 and, consequently, will be

required to file annual and quarterly reports, proxy statements and other

information with the SEC. The registration statement, including exhibits, may be

inspected without charge at the SEC's principal office in Washington, D.C., and

copies of all or any part thereof may be obtained from the Public Reference

Section, Securities and Exchange Commission, 450 Fifth Street, NW, Washington,

D.C. 20549 upon payment of the prescribed fees. You may obtain information on

the operation of the Public Reference Room by calling the SEC at 1.800.SEC.0330.

The SEC maintains a Website that contains reports, proxy and information

statements and other information regarding registrants that file electronically

with it. The address of the SEC's Website is http://www.sec.gov.

 

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS;

                               MARKET DATA

 

         This registration statement contains forward-looking statements. These

statements relate to future events or the Company's future financial

performance. In some cases, you can identify forward-looking statements by

terminology such as "may," "will," "should," "expects," "plans," "anticipates,"

"believes," "estimates," "predicts," "potential" or "continue" or the negative

of such terms or other comparable terminology. Forward-looking statements are

speculative and uncertain and not based on historical facts. Because

forward-looking statements involve risks and uncertainties, there are important

factors that could cause actual results to differ materially from those

expressed or implied by these forward-looking statements, including those

discussed under "Management's Discussion and Analysis of Financial Condition and

Results of Operations" and "Description of Business."

 

         Although the Company believes that the expectations reflected in the

forward-looking statements are reasonable, the Company cannot guarantee future

results, levels of activity, performance, or achievements. Moreover, neither the

Company nor any other person assumes responsibility for the accuracy and

completeness of such statements. The reader is advised to consult any further

disclosures made on related subjects in the Company's future SEC filings.

 

 

PART II

ITEM 1.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY

         AND RELATED STOCKHOLDER MATTERS

 

Market Information

         The Company's common stock is listed on the Over-the-Counter Pink

Sheets. Since the Company's common stock has not begun trading, there is not an

established active public market for its common stock. No assurance can be given

that an active market will exist for the Company's common stock and the Company

does not expect to declare dividends in the foreseeable future since the Company

intends to utilize its earnings, if any, to finance its future growth, including

possible acquisitions.

 

         The Company is filing this Registration Statement on Form 10- SB for

the purpose of enabling its common stock to commence trading on the NASD OTC

Bulletin Board.

 

         The Company's Registration Statement on Form 10 must be declared

effective by the SEC prior to it being approved for trading on the NASD OTC

Bulletin Board, and until such time as this Form 10- SB is declared effective,

the Company's common stock will continue to be quoted on the "Pink Sheets." The

Company's market makers must make an application to the National Association of

Securities Dealers, Inc., or NASD, following the effective date of this Form

10-SB in order to have the common stock quoted on the NASD OTC Bulletin Board.

 

         Holders. As of May 31, 2002, there were a total of 6,502,913

shares of the Company's common stock outstanding, held by approximately 464

shareholders of record.

 

         Dividends. The Company has not declared any dividends on its common

stock during the last two fiscal years.

 

ITEM 2.  LEGAL PROCEEDINGS

On June 17, 2002, the Company received a summons from Industrial Property Fund I, LP that named the Company as a co-defendant in a civil action pursuant to the Company’s tenancy in Forest Park, GA., which the Company continues to assert and claim is a month-to-month tenancy under which the Company has no obligation other than payment of rent when due. No remedy is being sought against the Company at this time relating to this civil action. 

ITEM 3.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

Not Applicable

 

ITEM 4.  RECENT SALES OF UNREGISTERED SECURITIES

         Pursuant to the Reorganization Plan of WBNI, all of its outstanding

capital stock as of February 10, 1999, the date of its bankruptcy petition, was

canceled. Subsequently, WBNI issued an aggregate of 520,233 shares of common

stock to certain of its creditors. The 520,233 shares were issued in accordance

with Section 1145 under the United States Bankruptcy Code and the transaction

was thus exempt from the registration requirements of Section 5 of the

Securities Act of 1933.

 

      On October 29, 2001, WBNI's majority stockholders approved a merger with

TRANSL Holdings and issued 5,982,680 shares of common stock. Minority

stockholders were mailed notices of such action as well as other actions taken

by the majority stockholders pursuant to the Delaware General Corporation law.

WBNI was the surviving entity and changed its name to Segmentz, Inc. The Company

relied on Section 4(2) of the Securities Act of 1933 for the issuance of the

5,982,680 shares because the transaction did not involve a public offering and

was therefore exempt from the registration requirements of Section 5 of the

Securities Act. No underwriters were used in connection with this transaction.

ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS

         Segmentz is a Delaware corporation. The Company certificate of

incorporation provides that the Company will indemnify and hold harmless its

officers, directors and others serving the corporation in various capacities to

the fullest extent permitted by the DGCL. Section 145 of the DGCL provides that

a Delaware corporation has the power to indemnify officers and directors in

specified circumstances.

 

         Under Section 145 of the DGCL, a corporation may indemnify its

directors and officers as well as other employees and individuals against

expenses (including attorneys' fees), judgments, fines and amounts paid in

settlement in connection with specified actions, suits or proceedings, whether

civil, criminal, administrative or investigative (other than an action by or in

the right of the corporation, referred to as a derivative action) if they acted

in good faith and in a manner they reasonably believed to be in or not opposed

to the best interests of the corporation, and with respect to any criminal

action or proceeding, had no reasonable cause to believe their conduct was

unlawful. A similar standard of conduct is applicable in the case of derivative

actions, except that indemnification only extends to expenses (including

attorneys' fees) incurred in connection with defense or settlement of that

action, and Section 145 requires court approval before there can be any

indemnification where the person seeking indemnification has been found liable

to the corporation.

 

         Section 145 of the DGCL further provides that to the extent that a

director or officer has been successful on the merits or otherwise in the

defense of any action, suit or proceeding referred to above or in the defense of

any claim, issue or matter within that action, suit or proceeding, that person

shall be indemnified against expenses (including attorneys' fees) actually and

reasonably incurred by that person in connection with that defense. The

Company's certificate of incorporation provides that the indemnification rights

described above shall be contract rights and shall include the right to be paid

expenses incurred in defending any proceeding in advance of its final

disposition subject to any undertakings required under the DGCL. Section 145

requires an undertaking to repay any amount advanced if the director or officer

receiving that amount is ultimately determined not to be entitled to

indemnification.

 

    Indemnification provided for by Section 145 of the DGCL and the Company's

certificate of incorporation is not to be deemed exclusive of any other rights

to which the indemnified party may be entitled. Both Section 145 and the

Company's certificate of incorporation permit the Company to maintain insurance

on behalf of a director, officer or others against any liability asserted

against that person and incurred by that person, whether or not the Company

would have the power to indemnify that person against those liabilities under

Section 145. Anyone claiming rights to indemnification under the Company's

certificate of incorporation may bring suit if that indemnification is not paid

within thirty days.

 

 

SIGNATURES

        In accordance with Section 12 of the Exchange Act, the Company caused

this Registration Statement to be signed on its behalf by the undersigned,

thereunto duly authorized.

 

                                               SEGMENTZ, INC.

 

DATE:  June 17 , 2002                      By:  /s/ Allan Marshall

                                                --------------------

                                                Allan Marshall, President

 

 

 

 

PART F/S

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Statements

 

Segmentz, Inc.

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

Independent Auditors’ Report

 

 

 

 

Segmentz, Inc.

 

Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

 

 

 

 

 

 

 

 

 

Contents

 

 

 

 

Independent Auditors’ Reports on Financial Statements.................................................................. 1-2

 

Financial Statements:

 

     Balance Sheet............................................................................................................................... 3

     Statements of Operations.............................................................................................................. 4

     Statements of Changes in Stockholders’ Equity.............................................................................. 5

     Statements of Cash Flows......................................................................................................... 6-7

     Notes to Financial Statements.................................................................................................. 8-18

 

 

 

 

 

 

 

 

 

Independent Auditors' Report

 

 

 

 

Board of Directors

Segmentz, Inc.

Tampa, Florida

 

 

We have audited the accompanying balance sheet of Segmentz, Inc. as of December 31, 2001 and the related statements of operations, changes in stockholders’ equity, and cash flows for the year then ended.  These financial statements are the responsibility of the management of Segmentz, Inc.  Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  These 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 audit provides 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 Segmentz, Inc. as of December 31, 2001 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

 

 

 

Pender Newkirk & Company

Certified Public Accountants

Tampa, Florida 

June 14, 2002

{except for the second paragraph of Note 14, as to which the date is June 17, 2002}

 

 

 

 

 

 

 

 

 

 

 

Independent Auditors' Report

 

 

 

 

Board of Directors

Segmentz, Inc.

Tampa, Florida

 

 

We have audited the accompanying statements of operations, changes in stockholders’ equity, and cash flows of Segmentz, Inc. (f/k/a Trans-Logistics, Inc.) for the period April 28, 2000 (date of inception) through December 31, 2000.  These financial statements are the responsibility of the management of Segmentz, Inc. (f/k/a Trans-Logistics, Inc.).  Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  These 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 audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Segmentz, Inc. (f/k/a Trans-Logistics, Inc.) for the period April 28, 2000 (date of inception) through December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

 

 

 

 

Valiente Hernandez, P.A.

Certified Public Accountants

Tampa, Florida 

May 8, 2001

 

 

Segmentz, Inc.

 

Balance Sheet

 

December 31, 2001

 

Assets

Current assets:

     Cash and cash equivalents                                                                                              $     39,489

     Accounts receivable, net of allowance of $45,000                                                            1,008,576

     Other receivables                                                                                                                108,421

     Prepaid expenses and other current assets                                                                           167,840

Total current assets                                                                                                               1,324,326

 

Equipment, net of accumulated depreciation                                                                             321,808

 

Other assets:

     Note receivable, net of allowance of $225,000                                                                    225,000

     Other receivables, net of allowance of $200,000                                                                   64,833

     Loans and advances                                                                                                             31,850

Total other assets                                                                                                                    321,683

 

                                                                                                                                          $ 1,967,817

 

 

Liabilities and Stockholders’ Equity

Current liabilities:

     Accounts payable                                                                                                          $   623,677

     Accrued salaries and wages                                                                                                  66,962

     Accrued expenses, other                                                                                                       80,152

     Obligation due under factoring arrangement                                                                         639,461

Total current liabilities                                                                                                           1,410,252

 

Stockholders’ equity:

     Convertible preferred stock; 10,000,000 shares authorized;

          1,200,794 shares issued and outstanding                                                                     1,200,794

     Common stock; $.001 par value; 40,000,000 shares authorized;

          6,502,913 shares issued and outstanding                                                                            6,503

     Additional paid-in capital                                                                                                       (6,403)

     Accumulated deficit                                                                                                           (643,329)

Total stockholders’ equity                                                                                                        557,565

 

                                                                                                                                          $ 1,967,817

 

 

The accompanying notes are an integral part of the financial statements.                                     3

Segmentz, Inc.

 

Statements of Operations

 

 

 

 

 

                                                                                                                                 Period April 28,  

                                                                                                                                  2000 (Date of

                                                                                                   Year Ended              Inception) to

                                                                                                  December 31,            December 31,  

                                                                                                        2001                           2000         

Revenues:

     Operating revenue                                                                   $ 8,455,766                 $   364,898

     Consulting and other revenue                                                           11,464                          5,734  

                                                                                                       8,467,230                      370,632  

 

Expenses:

     Operating expenses                                                                    7,509,712                      335,206

     General and administrative expenses                                           1,318,392                        19,417

     Loss in investment                                                                           78,999                                  

     Interest expense                                                                            216,548                                     

                                                                                                       9,123,651                      354,623  

 

(Loss) income before taxes                                                               (656,421)                      16,009

 

Income tax expense                                                                                                                   2,917  

 

Net (loss) income                                                                         $   (656,421)               $     13,092  

 

Net (loss) income per common share                                                       $(.10)                         $.00   

 

Weighted average common shares outstanding                                 6,502,913                   6,502,913  

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.                                     4

Segmentz, Inc.

 

Statements of Changes in Stockholders’ Equity

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

 

 

 

 

                                                                                                                          Preferred Stock         

                                                                                                                   Shares                Amount  

 

Inception, April 28, 2000                                                                                                                     

 

Net income for the year                                                                                                                       

 

Balance, December 31, 2000                                                                                                              

 

Acquisition of company                                                                                                                        

 

Recapitalization of company                                                                                                                 

 

Issuance of Series B redeemable convertible preferred stock                         426,898         $   426,898

 

Issuance of Series A convertible preferred stock                                           773,896              773,896

 

Net loss for the year                                                                                                                            

 

Balance, December 31, 2001                                                                    1,200,794         $ 1,200,794

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.

 

 

 

 

 

 

 

 

 

                                                                              Retained

                                                 Additional              Earnings

         Common Stock                   Paid-In            (Accumulated  

    Shares             Amount             Capital                 Deficit)                    Total    

 

            500         $      50            $        50                                          $         100

 

                                                                              $     13,092                13,092

 

            500                 50                     50                     13,092                13,192

 

  6,502,913            6,503                4,480                     (4,153)                 6,830

 

           (500)               (50)            (10,933)                     4,153                 (6,830)

 

                                                                                                              426,898

 

                                                                                                              773,896

 

                                                                                  (656,421)            (656,421)

 

  6,502,913         $ 6,503            $ (6,403)            $  (643,329)         $  557,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                                          5

Segmentz, Inc.

Statements of Cash Flows

 

                                                                                                                                    Period April 28,

                                                                                                                                     2000 (Date of

                                                                                                          Year Ended          Inception) to

                                                                                                         December 31,         December 31,

                                                                                                               2001                       2000       

Operating activities

     Net (loss) income                                                                             $   (656,421)          $    13,092    

     Adjustments to reconcile net (loss) income to net cash

          and cash equivalents (used) provided by operating

          activities:

               Securities received as payment for services                                  (148,500)                        

               Loss on sale of securities                                                                78,999                          

               Provision for doubtful accounts and other receivables                      483,365

               Note receivable received to offset General & Administrative

                   expenses                                                                                 (450,000)

               Depreciation                                                                                  53,335

               Increase in:

                   Accounts and other trade receivables                                       (905,404)             (269,958)

                   Prepaid expenses and other assets                                             (92,840)                        

               Increase (decrease) in:
                   Accounts payable                                                                    427,464               121,213

                   Accounts payable to related party                                            (126,845)              126,845

                   Accrued expenses                                                                   139,614                   7,500

                   Income taxes payable                                                                 (2,917)                  2,917    

     Total adjustments                                                                                   (543,729)               (11,483)  

     Net cash and cash equivalents (used) provided by

          operating activities                                                                         (1,200,150)                  1,609    

 

Investing activities

     Purchase of equipment                                                                          (375,143)

     Proceeds from sale of securities                                                                69,501

     Loans, advances, and other receivables                                                   (296,683)                             

     Net cash and cash equivalents used by investing activities                        (602,325)                             

 

Financing activities

     Issuance of common stock                                                                                                      100

     Net obligations incurred under factoring arrangements                              639,461                          

     Proceeds from issuance of debt                                                            1,200,794                              

     Net cash and cash equivalents provided by financing activities                1,840,255                     100    

 

Net increase in cash and cash equivalents                                                37,780                   1,709

 

Cash and cash equivalents, beginning of year/period                                 1,709                              

 

Cash and cash equivalents, end of year/period                                  $      39,489            $      1,709    

 

The accompanying notes are an integral part of the financial statements.                                     6

Segmentz, Inc.

 

Statements of Cash Flows

 

 

 

 

                                                                                                                                    Period April 28,

                                                                                                                                     2000 (Date of

                                                                                                          Year Ended          Inception) to

                                                                                                         December 31,         December 31,

                                                                                                               2001                       2000       

Supplemental disclosures of cash flow information

     and noncash financing activities:

          Cash paid during the year for interest                                            $    201,469            $            0    

 

During the year ended December 31, 2001, the holders of debt amounting to $1,200,794 received 1,200,794 shares of preferred stock in satisfaction of this liability.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.                                     7

Segmentz, Inc.

 

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

 

 

1.       Acquisition

 

In October 2001, Segmentz, Inc., formerly known as WBNI, Inc., merged with TransL Holdings, Inc., the sole stockholder of Trans-Logistics, Inc.  This consolidated entity is hereinafter referred to as the “Company.”  Prior to acquisition, Segmentz, Inc. was an inactive public shell with approximately 460 stockholders who owned 520,233 shares of common stock.

 

Pursuant to the agreement, the stockholders of TransL Holdings, Inc. (“TransL”) received in return for all of their shares in TransL, 5,982,680 unregistered shares of Segmentz, Inc., which represented approximately 92 percent of its total shares outstanding.

 

The acquisition has been accounted for as a reverse acquisition in which TransL is treated as the acquirer and Segmentz, Inc. as the acquiree.  All references in the accompanying financial statements to the number of common shares and the per share amounts have been restated to reflect the subsequent change in the common stock as if the acquisition had occurred on April 28, 2000.

 

 

2.       Background Information

 

WBNI, Inc., a Texas corporation incorporated in 2000, is the surviving corporation of a sequence of mergers and reverse mergers of inactive companies.  In November 2001, WBNI, Inc. changed its name to Segmentz, Inc.

 

TransL Holdings, Inc., a Delaware corporation incorporated in October 2001, is the 100 percent stockholder of Trans-Logistics, Inc., a Florida corporation incorporated in April 2000.  This parent and subsidiary are hereinafter referred to as “Trans-Logistics.”  Trans-Logistics is a logistics and brokerage organization serving irregular route, long haul, and common motor carriers of general commodities throughout the southeastern United States.  It was incorporated on April 28, 2000; however, it began its operations during September 2000.  Trans-Logistics’ corporate headquarters is located in Tampa, Florida.

 

During May 2001, Trans-Logistics acquired the assets of Q Logistic Solutions, Inc. (“QLS”) for approximately $367,000.  QLS operated warehouse facilities in Atlanta, Georgia; Edison, New Jersey; Orlando, Florida; and Chicago, Illinois.  Operations in Orlando and Chicago were subsequently discontinued.  This acquisition was accounted for using the purchase method of accounting.

                                                                                                                                                          8

Segmentz, Inc.

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

2.       Background Information (continued)

 

Effective January 1, 2001, Trans-Logistics was acquired by Logistics Management Resources, Inc. (“LMR”) in August 2001.  This acquisition was rescinded and cancelled.  It is the Company’s assertion that this transaction was never consummated and, therefore, never occurred.  No consideration was ever tendered and control was never transferred.  The purchase price was to be determined based on results of future revenues plus $80,000, less certain liabilities assumed.  A portion of the consideration was to be paid at closing with the balance to be paid in installments.  The delivery of shares by either party to the other never occurred and, therefore, the Company has not recorded this acquisition under applicable pushdown accounting rules.  Under the terms of the Rescission Agreement, the Company agreed to a reimbursement of 1,500,000 shares of LMR’s common stock and a note receivable in the amount of $450,000, which the Company has an allowance of $225,000 recorded for estimated, uncollectible amounts as of December 31, 2001.  LMR tendered a certificate for 1.5 million shares pursuant to the Rescission Agreement, which was received by Trans-Logistics on August 10, 2001.  The shares closed at $.99, which resulted in a reduction of general and administrative expenses of $148,500 and extinguishment of the first part of rescission obligation due to Trans-Logistics under the terms of that agreement.  The shares were sold to the market as soon as conditions permitted with the intention of maximizing cash value received while ensuring that shares were sold as quickly as was practical.  There are no current liabilities to LMR pursuant to the Rescission Agreement.  Any liabilities to Trans-Logistics that might have existed were extinguished pursuant to mutual conditional general releases executed simultaneously with the Rescission Agreement.  The Company incurred a loss of approximately $79,000 on the sale of these shares.

 

 

3.       Significant Accounting Policies

 

The significant accounting policies are as follows:

 

          The financial statements reflect the accounts of Segmentz, Inc., Trans-Logistics, Inc., and TransL, Inc.  Prior to October 2001, the date of the merger, the financial statements are those of Trans-Logistics, the only operating company at that time.

 

          The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.  Actual results could differ from those estimates.  

                                                                                                                                                          9

Segmentz, Inc.

 

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

3.       Significant Accounting Policies (continued)

 

          Operating revenues for truck brokerage services are recognized on the date the freight is delivered.  Related costs of delivery of shipments in transit are accrued as incurred.  Revenues from warehousing services are recognized as the services are performed.

 

          Cash equivalents consist of all highly liquid debt instruments purchased with an original maturity of three months or less.

 

          The Company extends credit to its various customers based on the customer’s ability to pay.  The Company provides for estimated losses on accounts receivable based on bad debt experience and a review of existing receivables.  Based on management’s review of accounts receivable and other receivables, an allowance for doubtful accounts of $245,000 is considered necessary as of December 31, 2001.

 

          Equipment is recorded at cost.  Depreciation is calculated by the straightline method over the estimated useful lives of the assets, ranging generally from two to seven years.  Maintenance and repairs are charged to operations when incurred.  Betterments and renewals are capitalized.  When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations.

 

          Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective income tax bases.  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 as income in the period that included the enactment date.

 

          Basic loss per share has been computed using the weighted average number of shares of common stock outstanding for the period.  The Company’s diluted loss per share includes the effect, if any, of unissued shares under options, warrants, and stock award computed using the treasury method.  In all periods presented, there were no differences between basic and diluted loss per common share because the assumed exercise of common share equivalents, if any, was anti-dilutive.  The assumed exercise of warrants, as well as conversion of preferred stock, could potentially dilute basic earnings per share.

                                                                                                                                                        10

Segmentz, Inc.

 

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

3.       Significant Accounting Policies (continued)

 

          Financial instruments, which potentially subject the Company to concentrations of credit risk, include trade receivables.  Concentration of credit risk with respect to trade receivables is limited due to the Company’s large number of customers and wide range of industries and locations served.  One customer comprised approximately 21 percent of the December 31, 2001 customer accounts receivable balance.  Sales to this customer comprised approximately 26 percent of the Company’s sales for the year ended December 31, 2001. 

 

          The Company maintains its cash accounts with substantially one financial institution located in Tampa, Florida.  The balances are insured by the Federal Deposit Insurance Corporation’s insured limit of $100,000. 

 

          The Company believes the carrying amount of cash, cash equivalents, accounts receivable (net of allowance), notes receivable, accounts payable, and accrued expenses approximates fair value due to their short maturity.

 

          The Company follows Statement of Financial Accounting Standards Board No. 121 (SFAS No. 121), “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.”  SFAS No. 121 requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable.  In performing the review of recoverability, the Company estimates the future undiscounted cash flows that are expected to result from the use of the assets and their eventual disposition.  Because events and circumstances frequently do not occur as expected, there will usually be differences between the estimated and actual future undiscounted cash flows, and these differences may be material.  If an asset is determined to be impaired, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset.  The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, fair value is based on an estimate of discounted cash flow analysis.  During the periods presented, the Company determined that its long-lived assets were not impaired.

 

          Certain minor reclassifications have been made in the 2000 financial statements to conform to the classifications used in 2001.  These reclassifications had no effect on total assets, stockholders’ equity, total cash flows, or net income.

 

                                                                                                                                                        11

Segmentz, Inc.

 

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

 

 

4.       Equipment

 

Equipment as of December 31, 2001 consists of :

 

          Leasehold improvements                                                                                  $    3,685

          Office equipment                                                                                                  56,621

          Warehouse equipment                                                                                        148,760

          Warehouse shelving                                                                                              67,000

          Computer equipment                                                                                            61,000

          Computer software                                                                                              38,077

                                                                                                                                   375,143

          Less accumulated depreciation                                                                             53,335

                                                                                                                                 $ 321,808

 

 

5.       Note Receivable

 

As disclosed in Note 2, during the year ended December 31, 2001, the Company and LMR mutually rescinded an acquisition agreement.  This agreement did not rescind an amount that was due to the Company as part of the purchase price.  As a result, the Company has recognized a reduction of general and administrative expenses and a demand note receivable of an equal amount of $450,000 due from LMR, less an allowance of $225,000 as an estimate of uncollectible amounts as of December 31, 2001.  The terms of this note exclude interest until demand is made for payment.  As of the date of these financial statements, no demand has been made.  Subsequent to year-end, $25,000 has been received on this note. 

 

 

6.       Obligation Due Under Factoring Arrangement

 

The Company factors substantially all of its accounts receivable.  During the year ended December 31, 2001, the Company utilized the services of two factoring companies.  Accounts receivable are factored to companies with full recourse for unpaid invoices in excess of 75 days old.  The most recent agreement provides for the payment of factoring fees at 2.5 percent of each invoice factored.

 

 

 

                                                                                                                                                        12

Segmentz, Inc.

 

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

 

 

7.       Income Taxes

 

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income (loss) before income taxes.  The items causing this difference are as follows:

 

                                                                                                              2001               2000  

          Tax expense at U.S. statutory rate                                             $ 223,100         $   5,400

          State income taxes, net of federal benefit                                        23,900                600

          Effect of non-deductible expenses                                                   (1,700)                    

          Change in valuation allowance                                                     (245,300)                    

          Effect of using surtax exemption                                                                            (3,083)

                                                                                                          $            0         $   2,917

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2001 are as follows:

 

          Deferred tax assets:

               Accounts and loan receivables due to bad debts                                          $ 176,900

               Capital loss carry forward                                                                               29,700

               Net operating loss carry forward                                                                     38,700

               Total gross deferred tax assets                                                                       245,300

               Less valuation allowance                                                                               245,300

               Net deferred tax assets                                                                                $           0

 

Based on an assessment of all available evidence, including 2001 and 2000 operating results, management does not consider realization of the deferred tax assets generated from operations to be more likely than not, and has established a valuation allowance against the gross deferred tax asset.

 

As of December 31, 2001, the Company had federal and state net operating loss carry forwards totaling approximately $103,000, which expire in 2022.

 

 

 

 

 

                                                                                                                                                        13

Segmentz, Inc.

 

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

 

 

8.       Equity

 

Common Stock Each share of common stock is entitled to one vote.  The holders of common stock are also entitled to receive dividends

whenever funds are legally available and when declared by the Board of Directors (the “Board”), subject to the prior rights of the holders

of all classes of stock outstanding. Convertible Preferred Stock The authorized preferred stock of the Company consists of 10,000,000

shares at $.001 par value, of which 773,896 shares of Series A convertible preferred stock (“Series A Preferred Stock”) and 426,898

shares of Series B convertible preferred stock (“Series B Preferred Stock”) were outstanding as of December 31, 2001.  

 

Series A Convertible Preferred Stock

 

In December 2001, the Company issued 773,896 shares of Series A Preferred Stock for the conversion of a $773,896 note payable.  Interest on the shares of the Series A Preferred Stock is cumulative at an interest of six percent per annum.

 

Each share of the Series A Preferred Stock is convertible, at the option of the holder, at any time into shares of common stock of the Company at a conversion price equal to the trading price of the shares or at the price of the last placement of shares by the Company, whichever is less.  

 

The Series A Preferred Stock is redeemable at the option of the Company for cash at a rate of $1.00 per share and shares of common stock as payment for any accrued interest pursuant to the fixed interest rate of six percent through the date of the retirement, in the event that a notice to convert such shares of Series A Preferred Stock into common stock has not been made prior to such election to retire said shares.

 

The holders of the preferred stock are entitled to vote, together with the holders of common stock, on all matters submitted to stockholders for a vote.  Each preferred stockholder is entitled to the number of votes equal to the number of shares of preferred stock convertible at the time of such vote.

 

                                                                                                                                                        14

Segmentz, Inc.

 

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

 

 

8.       Equity (continued)

 

In the event of any distribution or liquidation event, the holders of the then outstanding Series A Preferred Stock shall receive a pro-rata distribution to be determined by performing a fictional conversion into common stock, and determining the pro-rata distribution of such proceeds on the basis “as-if converted,” which is subordinate in classification to any debt classes and preferred stock, Series B, which may be outstanding at the time of such events.

 

Series B Redeemable Convertible Preferred Stock

 

In December 2001, the Company issued 426,898 shares of Series B Preferred Stock for the conversion of two notes payable totaling $426,898.

 

Each share of the Series B Preferred Stock is convertible, at the option of the holder, at any time into shares of common stock of the Company at a conversion price equal to the trading price of the shares or at the price of the last placement of shares by the Company, whichever is less.

 

The holders of the preferred stock are entitled to vote, together with the holders of common stock, on all matters submitted to stockholders for a vote.  Each preferred stockholder is entitled to the number of votes equal to the number of shares of preferred stock convertible at the time of such vote.

 

In the event of any distribution or liquidation event, the holders of the then outstanding Series B Preferred Stock shall receive a pro-rata distribution to be determined by performing a fictional conversion into common stock, and determining the pro-rata distribution of such proceeds on the basis “as-if converted” which is subordinate in classification to any debt classes which may be outstanding at the time of such events.

 

 

9.       Warrants

 

In connection with the merger of Segmentz, Inc. and Trans-Logistics, Inc., the Company is required to issue 78,035 warrants to purchase common stock in the Company at a per share price of $.01, exercisable immediately, and expiring three years from the date of grant.  The warrants are to be issued five days after the release of this report.

 

                                                                                                                                                        15

Segmentz, Inc.

 

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

 

 

10.     Stock Option Plan

 

In October 2001, the Company adopted the 2001 Stock Option Plan (the “Plan”), under which it authorizes options to be granted to purchase 600,000 shares of common stock.  The Plan entitles the holder to receive options to purchase common stock of the Company at a specified price in the future.  The Board may grant options at its discretion and is responsible for determining the price to be paid for the shares upon exercise of each option, the period within which each option may be exercised, and any additional terms and conditions of each option.  The Company granted no options under the Plan during the year ended December 31, 2001.

 

 

11.     Related Party Transactions

 

The Company utilizes the trucking services of an entity related through common ownership.  Expenses incurred during the periods ended December 31, 2001 and 2000 amounted to approximately $206,000 and $174,000, respectively.  The expenses incurred for these services are not necessarily indicative of the amounts that may have been incurred had these services been provided by independent third parties.

 

In December 2001, the majority stockholder of the Company converted $181,898 of debt to 181,898 shares of Series B Preferred Stock.

 

 

12.     Lease Commitments

 

The Company leases office space for its headquarters under a lease that expires in April 2006.  The initial lease term is for a period of five years and the lease agreement includes an optional lease period of an additional three years.  The Company also leases certain equipment under non-cancelable operating leases.

 

As part of the lease agreement, the Company has issued an unused letter of credit in the amount of $40,000.  The amount required of the letter of credit is reduced by $8,000 per year and may be drawn if certain lease commitments have not been met or have been violated.

 

 

                                                                                                                                                        16

Segmentz, Inc.

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

12.     Lease Commitments (continued)

 

The following is a schedule by year of future minimum rental payments required under operating leases that have an initial or remaining non-cancelable lease term in excess of one year as of December 31, 2001:

 

           Year Ending

          December 31,

                 2002                                                                                                         $  50,979

                 2003                                                                                                             52,658

                 2004                                                                                                             49,195

                 2005                                                                                                             47,292

                 2006                                                                                                             15,969

                                                                                                                                 $ 216,093

The Company leases facilities located in Atlanta, Georgia and Edison, New Jersey on an “at will” basis.  Monthly rental payments for these facilities total approximately $94,000.

 

Rent expense amounted to $722,361 for the year ended December 31, 2001.  There was no rent expense during the period ended December 31, 2000.

 

 

13.     Other Commitments

 

The Company has an employment agreement with an officer of the Company that entitles the officer to receive a severance payment equal to the remaining salary owed under the employment agreement, plus the base salary for the next five years after the term of the employment agreement, including certain other benefits to be paid for following termination.

 

As previously disclosed, the Company has a stand by letter of credit amounting to $40,000.

 

 

14.     Contingent Liabilities

 

The Company has been party to a lease in its Atlanta facility that it believed to be month-to-month pursuant to data provided by LMR, which was in operational control of the Company at the time the Company purchased the assets of QLS from bankruptcy and began utilizing the space in Forest Park, Georgia pursuant to providing logistic services for clients.  The Company notified the landlord, IDI Services, Inc. (“IDI”), of its intentions to find smaller space and offered IDI an opportunity to provide a lesser facility size within the facility currently occupied. On June 17, 2002, the Company received a summons from Industrial Property Fund I, LP that named the Company as a co-defendant in a civil action pursuant to the Company’s tenancy in Forest Park, GA., which the Company continues to assert and claim is a month-to-month tenancy under which the Company has no obligation other than payment of rent when due. No remedy is being sought against the Company at this time relating to this civil action.
                                                                                                                                                                    17

Segmentz, Inc.

Notes to Financial Statements

 

Year Ended December 31, 2001 and the Period

April 28, 2000 (Date of Inception) through December 31, 2000

 

14.     Contingent Liabilities (continued)

 

by the Company.  IDI informed the Company at that time that the Company was party to a lease arrangement that had previously not been disclosed or evidenced.  As of February 28, 2002, IDI and the Company were engaged in discussions to resolve this misunderstanding in which the Company asserts that IDI accepted a letter of credit provided by LMR as inducement to enter into the lease with LMR with whom the Company had an arrangement to vacate the premises of its month-to-month sublease on 30 days written notice.  IDI’s assertion included a variety of material issues, including a representation that the Company was a prime lease holder with an obligation through May 2006.  The Company has subsequently secured legal counsel and continues to assert that any lease documents that exist suggesting the Company’s prime tenancy are not authorized by the Company, its board, or officers as provided for in the Company’s bylaws.  The Company continues to defend its position in this matter and believes that it will reach an amicable settlement pursuant to this issue.

 

 

15.     Segment Information

 

Segment information has been prepared in accordance with SFAS No. 131, “Disclosure About Segments of an Enterprise and Related Information.”  The Company has two reportable segments:  truck hauling brokering and warehouse operations.  The segments were determined based on the types of services provided by each segment.  The Company had only one reportable segment until the purchase of QLS in 2001.

 

The brokering operations arrange truckload transportation with dedicated Company equipment, owner operator fleet, and extensive agent partners throughout 48 states.

 

The warehousing operation, acquired in 2001, offers warehouse locations in two facilities covering the east coast.  The Company is attempting to expand to offer smaller satellite facilities to enable conduit and direct route trucking solutions on a contracted, dedicated route basis to larger clients.

 

                                                                           Trucking            Warehouse                    Total           

          Revenue                                                 $   5,596,318         $   2,859,448         $   8,455,766

          Other                                                                                 $     609,964         $     609,964

          Interest expense                                      $      216,548                                    $     216,548

          Depreciation                                           $         9,759         $       43,576         $       53,335

          Net loss                                                  $  (1,111,667)        $     680,246         $    (431,421)

          Equipment, net of accumulated

               depreciation                                       $        40,338         $     281,470         $     321,808

          Segment assets                                       $   1,296,197         $     671,620         $   1,967,817

          18

 

 

 

 

 

 

 

 

Financial Statements 

Segmentz, Inc.

 

Three Months Ended March 31, 2002 and 2001 (Unaudited)

 

 

 

 

Segmentz, Inc.

 

Financial Statements

 

Three Months Ended March 31, 2002 and 2001 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Contents

 

 

 

Financial Statements:

 

     Balance Sheet............................................................................................................................... 1

     Statements of Operations.............................................................................................................. 2

     Statements of Changes in Stockholders’ Equity.............................................................................. 3

     Statements of Cash Flows............................................................................................................. 4

     Notes to Financial Statements.................................................................................................... 5-7

 

Segmentz, Inc.

Balance Sheet

March 31, 2002 (Unaudited)

Assets

Current assets:

     Cash and cash equivalents                                                                                            $     248,310

     Accounts receivable, net of allowance of $45,000                                                               657,932

     Other receivables                                                                                                                  57,728

     Prepaid expenses and other current assets                                                                            191,626

Total current assets                                                                                                               1,155,596

 

Equipment, net of accumulated depreciation                                                                              302,601

 

Other assets:

     Note receivable, net of allowance of $225,000                                                                    200,000

     Other receivables, net of allowance of $200,000                                                                   64,833

     Loans and advances                                                                                                              57,051

Total other assets                                                                                                                     321,884

 

                                                                                                                                         $  1,780,081

 

 

Liabilities and Stockholders’ Equity

Current liabilities:

     Accounts payable                                                                                                         $     427,069

     Line of credit                                                                                                                      238,902

     Accrued salaries and wages                                                                                                  15,305

     Accrued expenses, other                                                                                                       26,750

     Income tax payable                                                                                                               25,000

     Obligation due under factoring arrangement                                                                          391,130

Total current liabilities                                                                                                            1,124,156

 

Stockholders’ equity:

     Convertible preferred stock; 10,000,000 shares

          authorized; 1,200,794 shares issued and

          outstanding                                                                                                                  1,200,794

     Common stock; $.001 par value; 40,000,000 shares

          authorized; 6,502,913 shares issued and

          outstanding                                                                                                                         6,503

     Additional paid-in capital                                                                                                       (6,403)

     Accumulated deficit                                                                                                           (544,969)

Total stockholders’ equity                                                                                                        655,925

 

                                                                                                                                         $  1,780,081

 

The accompanying notes are an integral part of the financial statements.                                     1

Segmentz, Inc.

 

Statements of Operations (Unaudited)

 

 

 

 

 

                                                                                                                  Three Months Ended         

                                                                                                             March 31,             March 31, 

                                                                                                                 2002                     2001     

Revenues:

     Operating revenue                                                                           $  2,146,631        $  1,705,349

     Consulting and other revenue                                                                      3,749                       340

                                                                                                               2,150,380             1,705,689

 

Expenses:

     Operating expenses                                                                             1,665,177             1,447,364

     General and administrative expenses                                                       361,843                114,102

                                                                                                               2,027,020             1,561,466

 

Income before taxes                                                                                    123,360                144,223                       

 

Income tax expense                                                                                      25,000                  44,800

 

Net income                                                                                          $       98,360        $       99,423

 

Basic earnings per common share                                                                       $.02                      $.02

 

Basic weighted average common shares outstanding                                 6,502,913             6,502,913

 

Diluted earnings per common share                                                                    $.01                      $.02

 

Diluted weighted average common shares outstanding                               8,904,501             6,502,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.                                     2

Segmentz, Inc.

 

Statements of Changes in Stockholders’ Equity

 

Three Months Ended March 31, 2002 (Unaudited)

 

 

 

 

 

                                                                                                                          Preferred Stock         

                                                                                                                   Shares                Amount  

 

 

Balance, December 31, 2001                                                                    1,200,794         $ 1,200,794

 

 

Net income for the period                                                                                                                    

 

 

Balance, March 31, 2002                                                                          1,200,794         $ 1,200,794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.

 

 

 

 

 

 

 

 

 

                                                 Additional             

       Common Stock                     Paid-In            Accumulated   

   Shares              Amount             Capital                  Deficit                     Total    

 

 

  6,502,913         $ 6,503            $ (6,403)              $  (643,329)         $  557,565

 

 

                                                                                     98,360                98,360

 

 

  6,502,913         $ 6,503            $ (6,403)              $  (544,969)         $  655,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                                          3

Segmentz, Inc.

 

Statements of Cash Flows (Unaudited)

 

 

 

 

 

                                   

                                                                                                                        Three Months Ended

                                                                                                                                  March 31,           

                                                                                                                         2002                 2001    

Operating activities

     Net income                                                                                              $     98,360        $     99,423

     Adjustments to reconcile net income to net cash provided

          (used) by operating activities:

               Bad debt expense                                                                                  23,928

               Depreciation and amortization                                                                24,934                6,467

               (Increase) decrease in:

                   Accounts and other trade receivables                                               326,716            (682,314)

                   Prepaid expenses and other assets                                                     51,907             (67,092)

               Increase (decrease) in:
                   Accounts payable                                                                          (196,608)            (49,753)

                   Accounts payable to related party                                                                              (5,028)

                   Accrued expenses                                                                         (105,059)            220,107

                   Income taxes payable                                                                       25,000               44,800

     Total adjustments                                                                                          150,818            (532,813)

     Net cash provided (used) by operating activities                                              249,178            (433,390)

 

Investing activities

     Purchases of equipment                                                                                   (5,727)              (3,096)

     Loans, advances, and other receivables                                                           (25,201)                      

     Net cash used by investing activities                                                                (30,928)              (3,096)

 

Financing activities

     Net obligations incurred under factoring arrangements                                    (248,331)            481,202

     Proceeds from issuance of debt                                                                     238,902                       

     Net cash (used) provided by financing activities                                                 (9,429)            481,202

 

Net increase in cash                                                                                        208,821               44,716

 

Cash, beginning of period                                                                                 39,489                1,709

 

Cash, end of period                                                                                    $    248,310        $     46,425

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the financial statements.                                     4

Segmentz, Inc.

 

Notes to Financial Statements

 

Three Months Ended March 31, 2002 and 2001 (Unaudited)

 

 

 

 

1.       Basis of Presentation

 

In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three-month periods ended March 31, 2002 and 2001, (b) the financial position at March 31, 2002, and (c) cash flows for the three-month periods ended March 31, 2002 and 2001, have been made.

 

The unaudited financial statements and notes are presented as permitted by Form 10-QSB.  Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted.  The accompanying financial statements and notes should be read in conjunction with the audited financial statements and notes of the Company for the fiscal year ended December 31, 2001.  The results of operations for the three-month period ended March 31, 2002 are not necessarily indicative of those to be expected for the entire year.

 

 

2.       Contingent Liabilities

 

The Company has been party to a lease in its Atlanta facility that it believed to be month-to-month pursuant to data provided by LMR.  In cooperation with LMR, the Company purchased the assets of QLS from bankruptcy and began utilizing the space in Forest Park, Georgia pursuant to providing logistic services for clients.  The Company notified the landlord, IDI Services, Inc. (“IDI”), of its intentions to find smaller space and offered IDI an opportunity to provide a lesser facility size within the facility currently occupied by the Company.  IDI informed the Company at that time that the Company was party to a lease arrangement that had previously not been disclosed or evidenced.  IDI and the Company are engaged in discussions to resolve this misunderstanding in which the Company asserts that IDI accepted a letter of credit provided by LMR as inducement to enter into the lease with LMR with whom the Company had an arrangement to vacate the premises of its month-to-month sublease on 30 days written notice.  IDI’s assertion included a variety of material issues, including a representation that the Company was a prime lease holder with an obligation through May 2006.  The Company has secured legal counsel and continues to assert that any lease documents that exist suggesting the Company’s prime tenancy are not authorized by the Company, its board, or officers as provided for in the Company’s bylaws.  The Company continues to defend its position in this matter and believes that it will reach an amicable settlement pursuant to this issue. On June 17, 2002, the Company received a summons from Industrial Property Fund I, LP that named the Company as a co-defendant in a civil action pursuant to the Company’s tenancy in Forest Park, GA., which the Company continues to assert and claim is a month-to-month tenancy under which the Company has no obligation other than payment of rent when due. No remedy is being sought against the Company at this time relating to this civil action.

 

 

 

 

 

 

 

                                                                                                                                                          5

Segmentz, Inc.

 

Notes to Financial Statements

 

Three Months Ended March 31, 2002 and 2001 (Unaudited)

 

 

 

 

3.       Sale of Accounts Receivable

 

During the first quarter of 2002, the Company entered into an agreement with a financing company to purchase certain receivables of the Company without recourse at a rate estimated to be one percent per ten days outstanding.  The Company is treating this as a sales transaction in accordance with Statement of Financial Accounting Standards No. 140, the receivable is removed from the assets of the Company on the date of sale of the receivable in exchange for cash received, and the reserve is held until the receivable is paid to the purchaser (at which time, the remaining balance due to the Company, if any, is paid).

 

 

4.       Line of Credit

 

As of December 31, 2001, the Company had entered into an agreement with a related party to provide a line of credit up to $1.0 million.  At December 31, 2001, that party agreed to convert its outstanding balance of $773,896 to Series A preferred stock of the Company.  The Company currently has up to $250,000 available under the facility, of which $238,902 is outstanding as of March 31, 2002.

 

 

5.       Income Taxes

 

Income tax expense for the three months ended March 31, 2002 is based on the Company’s estimate of the effective tax rate expected to be applicable for the full year.  The effective tax rate of 37.5 percent for the three months ended March 31, 2002 differs from the statutory rate because of the effects of utilizing a net operating loss carryover.

 

 

6.       Earnings Per Share

 

Common stock equivalents in the three-month period ended March 31, 2001 for basic and diluted earnings per share are the same as there were no dilutive securities outstanding at
March 31, 2001.

 

                                                                                                                                                          6

Segmentz, Inc.

 

Notes to Financial Statements

 

Three Months Ended March 31, 2002 and 2001 (Unaudited)

7.       Segment Information

 

Segment information has been prepared in accordance with Statements of Financial Accounting Standards No. 131, “Disclosure About Segments of an Enterprise and Related Information.”  The Company has two reportable segments:  truck hauling brokering and warehouse operations.  The segments were determined based on the types of services provided by each segment.  The Company had only one reportable segment until the purchase of QLS in April 2001.

 

The brokering operations arrange truckload transportation with dedicated Company equipment, owner operator fleet, and extensive agent partners throughout 48 states.

 

The warehousing operation, acquired in 2001, offers warehouse locations in two facilities covering the east coast.  The Company is attempting to expand to offer smaller satellite facilities to enable conduit and direct route trucking solutions on a contracted, dedicated route basis to larger clients.

 

                                                                                 Three Months Ended March 31, 2002        

                                                                           Trucking            Warehouse                    Total           

          Revenue                                                 $   1,176,633         $     969,997         $   2,146,631

          Other                                                      $         3,749         $               0         $         3,749

          Depreciation                                           $         3,885         $       21,049         $       24,934

          Net (loss) income                                    $      (90,891)        $     214,251         $     123,360

          Equipment, net of accumulated

              depreciation                                        $        35,676         $     266,925         $     302,601

          Segment assets                                       $   1,575,729         $     429,352         $   2,005,081

                                                                          

                                                                                  Three Months Ended March 31, 2001       

                                                                           Trucking            Warehouse                    Total           

          Revenue                                                 $   1,705,394         $               0         $   1,705,349

          Other                                                      $            340         $               0         $           340

          Net income                                             $        99,423         $               0         $       99,423

          Equipment                                               $         3,060         $               0         $         3,060

          Segment assets                                       $   1,322,553         $               0         $   1,322,553

 

 

 

 

 

PART III
ITEM 1. INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- -------------------------------------
2.0 Amended Joint Plan of Reorganization Dated February 10, 1999, as filed with the United States Bankruptcy Court for the Southern District of Florida, Miami Division.*
2.1 Order (I) Confirming Amended Joint Plan of Reorganization Dated February 10, 1999, as Modified, and (II) Limiting Notice with Respect to Post-Confirmation Matters.*
2.2 Certificate of Compliance with Reverse Acquisition Requirements, as filed with the United States Bankruptcy Court for the Southern District of Florida, Miami Division, on February 5, 2001.*
2.3 Stock Exchange Agreement by and among WBNI, Inc., TRANSL Holdings, Inc., the Stockholders of TRANSL Holdings, Inc. and Halter Financial Group, Inc., dated October 29, 2001.*
3.0 Agreement and Plan of Merger dated February 10, 2000, by and between Rose Auto Stores - Florida, Inc., a Florida corporation and RAS Acquisition Corp., a Delaware corporation.*
3.1 Articles of Merger filed on May 15, 2000 with the Florida Department of State, by and between Rose Auto Stores - Florida, Inc. and RAS Acquisition Corp. *
3.2 Certificate of Merger filed on May 17, 2000 with the Delaware Secretary of State, by and between RAS Liquidating, Inc. and RAS Acquisition Corp. *
3.3 Certificate of Merger filed on February 1, 2001 with the Texas Secretary of State, by and between WBNI, Inc. and RAS Acquisition Corp.*
3.4 Certificate of Merger filed on February 1, 2001 with the Delaware Secretary of State, by and between WBNI, Inc. and RAS Acquisition Corp. *
3.5 Certificate of Incorporation of RAS Acquisition Corp, as filed on May 8, 2000 with the Delaware Secretary of State *
3.6 Certificate of Amendment of Certificate of Incorporation of WBNI, Inc. as filed with the Secretary of State of Delaware on November 1, 2001. *
3.7 Bylaws of RAS Acquisition Corp.*
10.0 Employment Agreement, by and between Segmentz, Inc and Allan Marshall.*
10.1 Segmentz, Inc. 2001 Stock Option Plan. *
21.0 Subsidiaries of the Registrant: Trans-Logistics, Inc., a Florida corporation.*

* Previously filed in the Form 10-SB on January 31, 2002.