SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 5, 2003
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Stonepath Group, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 001-16105 65-0867684
---------------------------- ----------------------- ------------------
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1600 Market Street, Suite 1515
Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 979-8370
Item 5. Other Events and Required FD Disclosure
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On September 8, 2003, Stonepath Group, Inc.(the "Company") issued a
press release announcing that its credit facility has been increased by $5
million to $20 million, providing additional flexibility for the Company's
acquisition strategy and on-going working capital requirements. The secured
credit facility was obtained from LaSalle Business Credit, LLC, a subsidiary of
ABN AMRO.
Item 7. Financial Statements and Exhibits.
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Exhibit Number Description
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10.10 Second Amendment to Loan and Security Agreement
dated September 5, 2003 by and among
LaSalle Business Credit, LLC, Stonepath Group,
Inc., Contract Air, Inc., Distribution
Services, Inc., Global Container Line, Inc.,
M.G.R., Inc., Net Value, Inc., Stonepath
Logistics Domestic Services, Inc., Stonepath
Logistics Government Services, Inc., Stonepath
Logistics International Services, Inc.,
Stonepath Logistics International Services,
Inc., Stonepath Operations Inc., and United
American Acquisitions and Management, Inc.
99.1 Press Release dated September 8, 2003
Item 9. Regulation FD Disclosure.
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The following information is furnished pursuant to Item 9, "Regulation
FD Disclosure."
Commencing on September 9, 2003, the Company will participate in a
series of meetings with private investors relative to the possibility of raising
capital through a sale of securities in a private placement transaction. At
these meetings the Company intends to present the information contained in the
following slides, some of which may constitute material non-public information.
Certain of the slides include information on the Company's historic and
projected EBITDA. The Company's management believes that information on its
EBITDA is useful to investors because its GAAP-based net income includes a
charge for the amortization of acquired customer relationship intangible assets.
This amortization creates a discrepancy with the economic reality of the growth
in customer relationships experienced by the Company. A reconciliation of the
EBITDA information to the Company's historic and projected EBITDA is included at
the end of this Item 9.
2
Company Presentation Materials
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[Graphic Omitted] STONEPATH GROUP
Global Logistics for a New World
Overview | September 2003
[Graphic Omitted]
AMERICAN
STOCK EXCHANGE(R)
LISTED
STG(TM)
Safe Harbor Statement
---------------------
This presentation may include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 as amended, and
Section 21E of the Securities Exchange Act of 1934. We have based these
forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to known
and unknown risks, uncertainties and assumptions about us and our
affiliate companies, that may cause our actual results, levels of
activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed
or implied by such forward-looking statements. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those
identified in our other Securities and Exchange Commission filings and
other public documents, including our 2002 Annual Report on Form 10-K/A,
our Quarterly Report on Form 10-Q/A for the period ending June 30, 2003,
which can be found on our corporate Web site, www.stonepath.com.
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[Graphic Omitted] STONEPATH GROUP p. 2
Our Mission
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o To become a leading provider of global integrated logistics services by
combining experienced logistics companies with innovative technologies.
[Graphic Omitted]
[Graphic Omitted] STONEPATH GROUP p. 3
Building Shareholder Value
--------------------------
STG vs. Nasdaq Transportation Index
(1 Year Comparison)
STG:
[Graphic Omitted] +101%
Nasdaq
Trans
Index:
+56%
[Graphic Omitted] STONEPATH GROUP p. 4
Key Facts
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Symbol STG (AMEX)
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Corporate Headquarters Philadelphia, PA
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Amex Listing Sept. 2000
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Stock Price (9/04/03) and 52-Week Range $2.27 || $1.01 to $3.29
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Primary and Fully Diluted Shares Outstanding 29mm || 45mm
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Float 27mm
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Market Cap $65.8mm
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Volume (daily 90-day average) 161,500
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Debt (9/04/03) $11.5mm
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Insider Ownership 15% of fully diluted shares
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Institutional Ownership 11% of fully diluted shares
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Employees 650
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[Graphic Omitted] STONEPATH GROUP p. 5
Management
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o Dennis Pelino - Chairman & Chief Executive Officer
o Bohn Crain - Chief Financial Officer & Treasurer
o Neil O'Connell - Chief Technology Officer
o Gary Koch - CEO, Domestic Operations
o Jason Totah - CEO, International Operations
[Graphic Omitted] STONEPATH GROUP p. 6
A Global Logistics Organization
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---------------------------
[Graphic Omitted]
STONEPATH
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| |
----------------- ----------------------
Domestic Services International Services
Division Division
----------------- ----------------------
Complete U.S. Network Worldwide Network
Time-Definite Transportation Air & Ocean Freight
& Distribution Services for Services
Retail Industry
Serve Multi-Market Needs
Time-Definite Transportation for Global Client Base
for Automotive Industry
International Freight
Providing Logistics Services Forwarding, Customs and
for DOD Contractors Logistics Services
Serve Multi-Market Needs
for Global Client Base
[Graphic Omitted] STONEPATH GROUP p. 7
Aggressive Expansion & Profitable Results
-----------------------------------------
($millions except per share figures)
[Graphic Omitted]
Gross Revenue EBITDA
2001A 2002A 2003E 2001A 2002A 2003E
----- ----- ----- ----- ----- -----
15.6 139.7 210.0 (2.8) 4.6 8.9
Net Income Diluted EPS
2001A 2002A 2003E 2001A 2002A 2003E
----- ----- ----- ----- ----- -----
(3.3) 2.4 5.4 (0.16) 0.08 0.13
Note: EBITDA, Net Income and Diluted EPS information presented here excludes
amounts attributed to Discontinued Operations and Preferred Dividend.
[Graphic Omitted] STONEPATH GROUP p. 8
Logistics Market
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Domestic Global %
-------- ------ ---
o Non-Outsourced Logistics $659 B 2,760 B 92%
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o 3PL Providers $61 B 240 B 8%
----- ------- -----
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Total 2001 Estimates $720 B $3,000 B 100%
Source: Armstrong & Associates, SalomonSmithBarney and USbancorp Piper Jaffray
[Graphic Omitted] STONEPATH GROUP p. 9
Market Characteristics
----------------------
o Highly Fragmented
Over 5,000 regional logistics companies between $5-$50 million in
revenues, in the U.S. alone
o Growth Drivers:
o Globalization
o Technology
o Outsourcing
o Supply Chain Efficiency
o 3 to 5-year projected CAGR is 15 - 20%
[Graphic Omitted] STONEPATH GROUP p. 10
Serving Customers throughout the U.S.
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Philadelphia, Corp. HQ
Minneapolis
Milwaukee
Chicago
Indianapolis
Detroit
St. Louis
Miami
Atlanta
Norfolk [Graphic Omitted]
Washington, D.C.
New York, NY
Boston
Portland, ME
Seattle
Portland, OR
San Francisco
Los Angeles
Phoenix
Salt Lake City
El Paso
Dallas/Fort Worth
[Graphic Omitted] STONEPATH GROUP p. 11
And throughout our Worldwide Network
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[Graphics omitted: Maps]
Europe Asia Latin
------ ---- America
o AUSTRIA o CHINA -------
o BELGIUM o JAPAN o BRAZIL
o CYPRUS o HONG KONG o ARGENTINA
o CZECH REPUBLIC o TAIWAN o VENEZUELA
o DENMARK o PAKISTAN o PANAMA
o FINLAND o INDIA o BELIZE
o FRANCE o NEPAL o PERU
o GERMANY o BURMA o COLUMBIA
o GREECE o THAILAND o BOLIVIA
o HUNGARY o CAMBODIA o PARAGUAY
o IRELAND o MALAYSIA o URUGUAY
o ITALY o SINGAPORE o CHILI
o MALTA o INDONESIA o GUYANA
o NETHERLANDS o SRI LANKA o HONDURAS
o NORWAY o COSTA RICA
o POLAND
o PORTUGAL
o ROMANIA
o RUSSIA
o SPAIN
o SWEDEN
o SWITZERLAND
o UKRAINE
o UNITED KINGDOM
[Graphic Omitted] STONEPATH GROUP p. 12
Deep Client Relationships
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[GRAPHIC OMITTED: TARGET LOGO] [GRAPHIC OMITTED: LOCKHEED MARTIN LOGO]
[GRAPHIC OMITTED: BEST BUY LOGO]
[GRAPHIC OMITTED: WILSONS LEATHER LOGO]
[GRAPHIC OMITTED: FORD LOGO]
[GRAPHIC OMITTED: DAIMLER CHRYSLER LOGO] [GRAPHIC OMITTED: CARPET ONE LOGO]
[GRAPHIC OMITTED: GM LOGO] [GRAPHIC OMITTED: BUFFALO WILD WINGS LOGO]
[GRAPHIC OMITTED: AT&T Wireless LOGO]
o Target Corp. "Transportation Carrier of the Year" Award (2002)
o Best Buy "Excellence in Supply Chain" Award (2003 and 2002)
o Best Buy "Best of the Best" Vendor Award (2001)
[Graphic Omitted] STONEPATH GROUP p. 13
Stonepath's Acquisition Trail
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G-Link Group $15MM August 11, 2003
Customs Services Int'l. $15MM July 17, 2003
Regroup Express $18MM June 23, 2003
[LOGO OMITTED] UNITED AMERICAN $24MM May 28, 2002
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FREIGHT SERVICES, INC.
A STONEPATH LOGISTICS COMPANY
GLOBAL(SM) $75MM April 4, 2002
TRANSPORTATION SERVICES, INC.
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A STONEPATH LOGISTICS COMPANY
AIR PLUS
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L I M I T E D $66MM October 5, 2001
=============================
A STONEPATH LOGISTICS COMPANY
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2002 Pro Forma Revenues $213MM
[Graphic Omitted] STONEPATH GROUP p. 14
Acquisition History
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Air Plus Global UAFS
-------- ------ ----
Cash on Close A $17.50 $5.00 $5.10
Base Earn-Out $17.00 $5.00 $5.00
Base Purchase Price B $34.50 $10.00 $10.10
Additional Earn-Out - $2.00 (1) $6.00 (2)
------ ----- -----
Total Purchase Price $34.50 $12.00 $16.10
Annual Earnings Target C $6.00 $2.00 $2.20
Valuation Multiple - Earn-Out Targets
---------------------------------------------
Based on Cash at Close A/C 2.9x 2.5x 2.3x
Including Base Earn-Out B/C 5.8x 5.0x 4.6x
---------------------------------------------
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(1) 40% of earnings in excess of $10M over the 5 year earn-out period up to a
maximum of $2M.
(2) 50% of earnings in excess of $2.2M annual earnings target for each of the 4
years of the earn-out period, subject to a maximum of $6M.
*In millions except for multiples
[Graphic Omitted] STONEPATH GROUP p. 15
Acquisition Considerations
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o Candidate Attributes
Profitable
Strong customer relations
Integratable
Management must stay
Accept earn-out methodology
o Transaction Mechanics
Purchase Price: $0.5mm to $50mm
Valuations: 3x-6x Pre-Tax Earnings
Cash Up-Front: 30%-50% of Total Consideration
Contingent Purchase Price 50%-70% of Total Consideration
[Graphic Omitted] STONEPATH GROUP p. 16
Integration & Organic Growth
----------------------------
o "Strategic Integration Committee" producing results
o Maximizing best practices between companies
o Fostering organic growth
o Investing in businesses through specific performance initiatives:
Technology
Shared services
Expanded sales force
Opening additional logistics centers to meet client needs
[Graphic Omitted] STONEPATH GROUP p. 17
3PL Competitive Landscape
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($millions except per share figures)
Financial Data (LTM) Market Data Valuation
-------------------------------------- -------------------- -------------------
Gross Net Diluted Recent Trailing 2003E
Company Revenue EBITDA Income EPS Mkt Cap Price (a) PE PE
----------------------------------------------------------------------------------------------------------------------
CH Robinson Worldwide $ 3,362.5 $ 183.7 $106.1 $ 1.24 $3,307.1 $ 39.06 31.4x 29.4x
Expeditors Int'l of Washington $ 2,493.6 $ 222.0 $119.6 $ 1.11 $3,981.5 $ 38.00 34.1x 32.2x
EGL, Inc. $ 1,916.6 $ 72.0 $ 21.7 $ 0.47 $ 856.8 $ 18.15 38.7x 26.3x
UTi Worldwide (b) $ 459.2 $ 61.3 $ 32.5 $ 1.06 $1,120.1 $ 36.42 34.5x 27.8x
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Median $ 2,205.1 $ 127.8 $ 69.3 $2,213.6 $ 37.21 34.3x 28.6x
Average $ 2,058.0 $ 134.7 $ 70.0 $2,316.4 $ 32.91 34.7x 28.9x
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Stonepath Group $ 193.7 $ 6.3 $ 3.8 $ 0.10 $ 65.8 $ 2.27 22.6x 15.1x
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Premium/(Discount) to Median -34% -47%
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(a) As of market close September 4, 2003.
(b) Based on LTM April 2003 financial statements. Others based on LTM
June 2003 financial statements.
Source: Multex and Stonepath Management
[Graphic Omitted] STONEPATH GROUP p. 18
Stonepath Milestone Review
--------------------------
2002 Acquired Global Transportation Services, international platform
Opened logistics centers in Miami and New York
Acquired United American, adding automotive niche
$15M credit facility in place
Transport Specialists (TSI) acquired, government sector
Opened logistics center in Hong Kong
2003 Tech-Logis(TM) system announced
Opened Norfolk, Va., logistics center
$6M private placement completed
Full year of profitability reported for 2002
Opened Indianapolis logistics center
Acquired business of Regroup Express
Acquired business of Customs Services International
Acquired 70% interest in G-Link Group's Singapore and
Cambodian operation
Increased credit facility to $20M
[Graphic Omitted] STONEPATH GROUP p. 19
Summary
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o Building blocks and platform are in place
o Significant opportunities to acquire profitable companies
o Solid revenue and earnings growth
o FY03 earning estimates at $5 million ($0.13 per fully diluted share)
o STG trading at significant discount compared to peer group
o Each additional $10 million deployed in acquisitions could equate to at
least $4 million in incremental ebitda
o Goal is to generate $500 million in run-rate revenues by the end of 2006
[Graphic Omitted] STONEPATH GROUP p. 20
A reconciliation of the EBITDA information contained in the foregoing slides
to the most directly comparable GAAP measure in accordance with SEC Regulation
G follows:
Calendar Year LTM
------------- ---
(amounts in millions)
2001 2002 2003
Net income(1) (3.3) 2.4 5.4 3.8
Income taxes - .1 .3 .2
Interest expense - - .2 -
Depreciation and amortization .5 2.1 3.0 2.3
---- ---- ---- ----
Earnings before interest,
taxes, depreciation
and amortization (EBITDA) (2.8) 4.6 8.9 6.3
==== ==== ==== ====
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(1) Net Income and EBITDA information presented excludes amounts attributable
to discontinued operations and preferred dividens.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STONEPATH GROUP, INC.
Date: September 9, 2003 By: Dennis L. Pelino
-----------------------------------------
Name: Dennis L. Pelino
Title: Chairman and Chief Executive Officer
4
Exhibit Index
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Exhibit Number Description
-------------- -----------
10.10 Second Amendment to Loan and Security Agreement
dated September 5, 2003 by and among LaSalle
Business Credit, LLC, Stonepath Group, Inc.,
Contract Air, Inc., Distribution Services, Inc.,
Global Container Line, Inc., M.G.R., Inc., Net
Value, Inc., Stonepath Logistics Domestic
Services, Inc., Stonepath Logistics Government
Services, Inc., Stonepath Logistics
International Services, Inc., Stonepath
Logistics International Services, Inc.,
Stonepath Operations Inc., and United American
Acquisitions and Management, Inc.
99.1 Press Release dated July 15, 2003
5