10QSB 1 doc1.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2003 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 333-58246 ALASKA FREIGHTWAYS, INC. (Exact name of small business issuer as specified in its charter) NEVADA 88-0464853 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 300 EAST 54TH AVE., SUITE 200 ANCHORAGE, AK 99518 (Address of principal executive offices) (907) 227-7319 (Issuer's telephone number) Not Applicable (Former name, address and fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ x ] No [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of each of the issuer's classes of common equity, as of a recent date: As of July 30, 2003 there were 3,568,033 shares of common stock, $0.001 par value issued and outstanding. Transitional Small Business Format: Yes [ ] No [ x ]
FORM 10-QSB ALASKA FREIGHTWAYS, INC. INDEX PART I. Financial Information Page Item 1. Unaudited Financial Statements 3 Independent Accountant's Report 4 Unaudited Balance Sheet, June 30, 2003, 2002 and 2001 5 Unaudited Statement of Operations for the six months ended June 30, 2003, 2002 and 2001 6-7 Unaudited Statement of Shareholders' Equity for the six months ended June 30, 2003, 2002 and 2001 8 Unaudited Statement of Cash Flows, for the six months ending June 30, 2003, 2002 and 2001 9 Unaudited Statement of Cash Flows, for the three months ending June 30, 2003, 2002 and 2001 10 Footnotes to Financial Statements 11 Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operation 14 Item 3. Controls and Procedures 15 PART II. Other Information Item 2. Changes in Securities 16 Item 5. Related Party Transactions 16 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 17
(Inapplicable items have been omitted) 2 PART I. FINANCIAL INFORMATION Item 1. Unaudited Financial Statements In the opinion of management, the accompanying unaudited financial statements included in this Form 10-QSB reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. 3 TO THE BOARD OF DIRECTORS Alaska Freightways, Incorporated. Anchorage, Alaska Independent Accountant's Report ------------------------------- I have reviewed the accompanying balance sheet of Alaska Freightways, Incorporated as of June 30, 2003, 2002 and 2001 and the related statement of operations stockholders' equity and the statement of cash flows for the three months then ended. All information included in these financial statements is the representation of the management of Alaska Freightways, Incorporated. I conducted my review in accordance with standards established by the American Institute of Public Accountants. A review of interim financial information consists principally of applying analytical procedures applied to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such as opinion. Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements and the cumulative results of operations and cash flows in order for them to be in conformity with generally accepted accounting principles. /s/Hawkins Accounting ----------------------- August 8, 2003 4
ALASKA FREIGHTWAYS, INC BALANCE SHEET JUNE 30, 2003, 2002 AND 2001 2003 2002 2001 --------- --------- --------- ASSETS Current assets Cash . . . . . . . . . . . . . . . . . . $278,307 $ 42,587 $ 5,354 Accounts receivable-trade. . . . . . . . 300,233 290,308 251,403 Receivable from affiliate. . . . . . . . 122,916 130,050 42,600 --------- --------- --------- Total current assets . . . . . . . . . 701,456 462,945 299,357 Fixed assets Office equipment . . . . . . . . . . . . 1,790 1,790 1,134 Accumulated depreciation . . . . . . . . (682) (523) (75) --------- --------- --------- 1,108 1,267 1,059 Investments. . . . . . . . . . . . . . . . 23,002 22,924 17,991 --------- --------- --------- Total assets . . . . . . . . . . . . . . . $725,566 $487,136 $318,407 ========= ========= ========= LIABILITIES Current liabilities Accounts payable . . . . . . . . . . . . $263,062 $ 32,594 31,919 Loans payable to shareholder . . . . . . 271,582 10,689 1,274 Short term note. . . . . . . . . . . . . 4,037 6,500 0 Income taxes payable . . . . . . . . . . 43,847 17,967 --------- --------- --------- Total liabilities. . . . . . . . . . . . . 582,528 67,750 33,193 --------- --------- --------- SHAREHOLDERS' EQUITY Common stock 50,000,000 shares authorized $.001 par value 3,568,033 outstanding. . . . . . . . . 3,568 3,430 3,430 Paid in capital. . . . . . . . . . . . . 238,115 134,730 134,880 Retained earnings. . . . . . . . . . . . (98,645) 281,226 146,904 --------- --------- --------- 143,038 419,386 285,214 --------- --------- --------- Total liabilities and shareholders' equity $725,566 $487,136 $318,407 ========= ========= =========
The accompanying footnotes are an integral part of the financial statements 5
ALASKA FREIGHTWAYS, INC. STATEMENT OF OPERATIONS For the six months ending June 30, 2003, 2002 and 2001 2003 2002 2001 ---------- -------- -------- Revenue . . . . . . . . . . $1,227,113 $543,487 $473,942 Cost of revenue . . . . . . 732,476 151,108 136,676 ---------- -------- -------- Gross margin. . . . . . . . 494,637 392,379 337,267 Operating expenses Accounting fees . . . . . 905 1,700 1,500 Advertising . . . . . . . 478 179 270 Bad debts . . . . . . . . 0 4,068 Bank charges. . . . . . . 609 300 106 Consulting fees . . . . . 22,163 0 38,632 Depreciation. . . . . . . 26 150 75 Equipment rental. . . . . 109,696 33,804 45,954 Insurance . . . . . . . . 15,509 11,595 22,932 Licenses and taxes. . . . 1,852 1,027 11,177 Miscellaneous . . . . . . 21,395 18,541 13,714 Office supplies . . . . . 1,691 467 542 Postage . . . . . . . . . 44 234 166 Printing and reproduction 41 0 21 Professional services . . 906 604 2,167 Rent. . . . . . . . . . . 9,400 4,710 5,400 Repairs . . . . . . . . . 18,130 22,449 24,918 Telephone . . . . . . . . 4,588 1,268 1,565 Training. . . . . . . . . 0 0 3,000 Travel and entertainment. 437 147 11,447 Utilities . . . . . . . . 1,658 4,293 707 ---------- -------- --------
6
ALASKA FREIGHTWAYS, INC. STATEMENT OF OPERATIONS continued For the six months ending June 30, 2003, 2002 and 2001 Total expenses 209,528 105,536 184,293 ----------- ----------- ---------- Income (Loss) from operations. . 285,109 286,842 152,974 Other income and (expense) Interest income. . . . . . . . . 7,206 5,211 0 Interest expense . . . . . . . . 0 0 (507) ----------- ----------- ---------- Total other income and (expense) 7,206 5,211 (507) ----------- ----------- ---------- Income (Loss) before tax provision . . 292,315 292,053 152,467 Provision for income tax . . . . . . . (43,847) (17,966) 0 ----------- ----------- ---------- Total net income (loss). . . . . 248,468 $ 274,087 $ 152,467 =========== =========== ========== (Loss) per share . . . . . . . . . . . $ 0.08 $ 0.04 Weighted average per share . . . . . . 3,430,000 3,406,969
The accompanying footnotes are an integral part of the financial statements 7
ALASKA FREIGHTWAYS, INC STATEMENT OF SHAREHOLDERS' EQUITY For the six months ending June 30, 2003, 2002 and 2001 2001 ---- Paid in Retained Date Shares Amount Capital Deficit Total ------------------------ ---------- ---------- -------- ---------- ---------- December 31, 2000. . . . 3,160,000 $ 3,160 $ 0 $ (5,563) $ (2,403) January, 2001. . . . . . 200,300 200 99,950 100,150 February, 2001 . . . . . 70,000 70 34,930 35,000 March, 2001. . . . . . . 0 0 0 Net (loss) . . . . . . . 152,467 152,467 ---------- ---------- -------- ---------- ---------- 3,430,300 $ 3,430 $134,880 $ 146,904 $ 285,214 ======================================================== 2002 ---- Paid in Retained Date . . . . . . . . . . Shares Amount Capital Earnings Total ------------------------ ---------- ---------- -------- ---------- ---------- December 31, 2001. . . . 3,430,000 $ 3,430 $134,730 $ 7,139 $ 145,299 Net income . . . . . . . 274,087 274,087 ---------- ---------- -------- ---------- ---------- 3,430,000 $ 3,430 $134,730 $ 281,226 $ 419,386 ================================ ========== ========== 2003 ---- December 31, 2002. . . . 3,568,033 $ 3,568 $238,115 $(347,113) (105,430) Net income . . . . . . . 248,468 248,468 ---------- ---------- -------- ---------- 3,568,033 $ 3,568 $238,115 $ (98,645) $ 143,038 ========== ========== ======== ========== ==========
The accompanying notes are an integral part of the financial statements 8
ALASKA FREIGHTWAYS, INC. STATEMENT OF CASH FLOWS For the six months ending June 30, 2003, 2002 and 2001 2003 2002 2001 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss). . . . . . . . . . . . . . . . . . . $ 248,468 $ 274,087 $ 152,467 Adjustments to reconcile net income to net cash provided by operating activities Depreciation . . . . . . . . . . . . . . . . . . . . 26 150 75 Increase in accounts receivable. . . . . . . . . . . (11,721) (290,308) (251,403) Increase in receivable from affiliate. . . . . . . . 7,746 (9,228) (42,600) Increase in Investment . . . . . . . . . . . . . . . 0 (24) (17,991) Increase (Decrease) in accounts payable. . . . . . . (123,899) 27,503 28,919 (Decrease) in note payable . . . . . . . . . . . . . (2,372) 0 (100) Increase in federal taxes payable. . . . . . . . . . 43,847 15,731 0 ---------- ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . . . . 162,095 17,911 (130,633) INVESTING ACTIVITIES Purchase of equipment. . . . . . . . . . . . . . . . 0 0 1,134 FINANCING ACTIVITIES Loan from shareholder. . . . . . . . . . . . . . . . . 102,000 8,200 Short term borrowings. . . . . . . . . . . . . . . . . 6,500 1,277 Sale of common stock . . . . . . . . . . . . . . . . . 135,150 ---------- ---------- ---------- NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . 102,000 14,700 136,427 ---------- ---------- INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . . . . . . . . . 264,095 32,611 4,660 Cash and cash equivalents at beginning of year . . . . . 14,212 9,976 694 ---------- ---------- ---------- Cash and cash equivalents at end of period . . . . . . . $ 278,307 $ 42,587 $ 5,354 ========== ========== ========== Supplemental disclosures to the statement of cash flows -------------------------------------------------------- Income taxes paid. . . . . . . . . . . . . . . . . . . . $ 0 $ 2,236 0 ========== ========== ==========
The accompanying notes are an integral part of the financial statements 9
ALASKA FREIGHTWAYS, INC. STATEMENT OF CASH FLOWS For the three months ending June 30, 2003, 2002 and 2001 2003 2002 2001 ---------- --------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) . . . . . . . . . . . . . . . $ (33,096) $(17,267) $ (69,883) Adjustments to reconcile net income to net cash provided by operating activities Depreciation. . . . . . . . . . . . . . . . . . 13 75 (Increase) in accounts receivable . . . . . . . 166,412 (Increase) in receivable from affiliate . . . . (6,765) (8,602) (42,600) (Increase) in deferred taxes. . . . . . . . . . 0 (2,652) Increase in investment. . . . . . . . . . . . . 0 9 (17,900) Increase (Decrease) in accounts payable . . . . (178,439) 358 (899) (Decrease) in note payable. . . . . . . . . . . 0 0 (100) Increase in federal taxes payable . . . . . . . 0 0 0 ---------- --------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES. . . . . . . . . . . . . . (51,875) (28,079) (131,382) INVESTING ACTIVITIES Purchase of equipment . . . . . . . . . . . . . 0 1,134 FINANCING ACTIVITIES Loan from shareholder . . . . . . . . . . . . . 51,000 10,500 Short term borrowings . . . . . . . . . . . . . 5,000 Sale of common stock. . . . . . . . . . . . . . 135,150 ---------- --------- ---------- NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . . . . . . 51,000 15,500 135,150 --------- ---------- INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . (875) (12,579) 2,634 Cash and cash equivalents at beginning of year. 14,212 9,976 694 ---------- --------- ---------- Cash and cash equivalents at end of period. . . $ 13,337 $ (2,603) $ 3,328 ========== ========= ==========
The accompanying notes are an integral part of the financial statements 10 ALASKA FREIGHTWAYS, INC. FOOTNOTES TO UNAUDITED FINANCIAL STATEMENTS June 30, 2003 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ---------------------------------------------- Nature of the business - Alaska Freightways, Inc (the "Company) ------------------------- operates as a trucking company hauling over the road goods. Pervasiveness of estimates - The preparation of financial statements --------------------------- in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, 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 these estimates. Cash and cash equivalents - For financial statement presentation ---------------------------- purposes, the Company considers all short-term investments with a maturity date of three months or less to be cash equivalents. Property and equipment - Property and equipment will be recorded at ------------------------ cost. Maintenance and repairs are expensed as incurred; major renewals and betterments are capitalized. When items of property or equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation will be provided using the straight-line method, over the useful lives of the assets. Since the company has yet to commence operations, no depreciation has been taken. Equipment consists of moldings being developed. Income taxes - Income taxes are provided for the tax effects of ------------- transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for Financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Earnings per share - Basic earnings per share amounts are computed by ------------------- dividing the net income by the weighted average number of common shares outstanding. Material Adjustments - Management is not aware of any material --------------------- adjustments that need to be to the financial statements in order for them to be in compliance with generally accepted accounting principles. 11 ALASKA FREIGHTWAYS, INC. FOOTNOTES TO UNAUDITED FINANCIAL STATEMENTS June 30, 2003 NOTE 2: BACKGROUND The Company was incorporated under the laws of the State of Nevada on June 1, 2000. The Company commenced operations during the first quarter of 2001. Prior to that it was in the development stage. NOTE 3 NOTE RECEIVABLE FROM AFFILIATE The Company has advanced funds to an affiliated corporation that is controlled by the majority shareholder of the Company. The note is unsecured and is due on December 31, 2002. The interest rate is 8%. The note is in default and the Company paid $7,746 of the amount due during the period ending June 30, 2003. NOTE 4: INVESTMENTS During the year ending December 31, 2001 the Company purchased shares of common stock in two separate companies. Neither company is a publicly traded company and the shares have no ready market value at the date of the balance sheet. The Company believes that these companies will eventually go public and have a market value and should be held for the long-term investment opportunities. The investments are held at cost. NOTE 5: NOTES PAYABLE The notes payable is to a company that is providing consulting services to the Company. The terms of the note are 12% interest payable on December 31, 2003. NOTE 6: COMMON STOCK Founder's stock- at the initial organizational meeting of the Company, --------------- the board of directors voted to issue stock to the founders of the corporation. These shares, which total 3,160,000 shares, are to be issued for consideration of $.001 per share. As of December 31, 2000 3,160,000 shares have been paid for and issued. For the year ending December 31, 2001 the Company sold to three accredited investors 270,000 shares of its common stock raising $135,000 in proceeds. The Company sold 270,300 shares of its common stock at $.50 a share raising $135,150 in capital. These shares were sold to four different investors. These transactions occurred during the three months ending June 30, 2001. No equity transactions occurred during the period ending June 30, 2003 and 2002 respectively. 12 ALASKA FREIGHTWAYS, INC. FOOTNOTES TO UNAUDITED FINANCIAL STATEMENTS June 30, 2003 NOTE 7: RELATED PARTY TRANSACTIONS The Company has entered into an agreement with the majority shareholder to lease the necessary equipment in order to commence operations. The Company further agrees that these leases are operating leases and will lease only the needed equipment until such time as the Company is able to purchase the equipment itself. For the six months ending June 30, 2002 and 2001 that amount was $33,804 and $28,483 respectively. During the six months ending June 30, 2002 the shareholder advanced the Company $10,500 for working capital purposes. No payments were made for the equipment leases. For the six months ending June 30, 2003 the shareholder paid $102,000 for equipment payments. The Company paid two of its major shareholders $16,000 and $7,605 in compensation for services for the period ending June 30, 2001. For the six-month period ending June 30, 2002 the amounts were $6,000 for one of the shareholders only. For the six months period ending June 30, 2003 the Company paid the major shareholder $22,051. NOTE 8: INCOME TAXES The provision of income tax consists for the interim period ending June 30: Current tax provision 2003 2002 2001 ----------------------- ---- ------ ---- Interim estimated liability $0 $2,652 $ 0 The Company is incorporated in the state of Nevada where there is no state corporate tax so no provision is made for state corporate tax. The federal corporate tax rate is 15%. Because of the nature of the weather, there are fluctuations in the income of the Company. The estimated interim liability is computed at the rate of 15% on the estimated yearly taxable income. The net operating loss that occurred in the year 2001 was used in 2002. NOTE 9: THREE MONTHS INTERIM FINANCIAL INFORMATION
Three Months Ended June 30 -------------------------------------------- 2003 2002 2001 ----------------- ----------------- --------------- Revenue. . . . . . . . . $ 941,155 $ 514,115 $ 433,542 Cost of Revenue. . . . . 554,155 117,980 105,844 Gross Profit . . . . . . 387,000 396,135 327,698 Operating expenses . . . 165,193 86,913 104,842 Income from operations . 221,807 309,222 222,856 Other income and expense 3,603 2,75 0 Income tax provision . . (43,847) (17,966) 0 Net income . . . . . . . $ 181,563 $ $294,007 $ 222,856 EPS. . . . . . . . . . . $ 0.05 $ 0.09 $ 0.07
13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF PLAN OF OPERATION FORWARD-LOOKING STATEMENT NOTICE When used in this report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Company's future plans of operations, business strategy, operating results, and financial position. Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed under the "Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operations," and also include general economic factors and conditions that may directly or indirectly impact the Company's financial condition or results of operations. OUR HISTORY AND BUSINESS GENERAL We were incorporated in the state of Nevada on June 1, 2000 under the name Alaska Freightways, Inc. We currently operate in Anchorage, Alaska under the name RL Trucking. We provide transportation and freight brokerage services. OUR BUSINESS We provide trucking, freight hauling and brokerage services in and around Anchorage, Alaska. Freight hauling includes identifying loads that need to be hauled and using our own trucks and trailers to perform the service. Freight brokerage services involve identifying loads that need to be hauled and contracting with other transportation services or independent contractors to perform the service for which we receive a commission. Anchorage is a fast developing city, and we are working toward establishing a steady clientele and orders for our services. We are also actively seeking other companies that are interested in outsourcing their transportation needs. Our primary focus is on freight brokerage operations and short to medium haul trucking up to fifty miles from town. Current operations include local hauling of gravel products for several ongoing projects. We also haul asphalt, concrete material and ballast rock in the short to medium haul range. We compete with several national freight service providers as well as smaller regional trucking companies. We believe our relatively low capital requirements and variable cost structure should enable us to remain competitive. We currently lease trucking equipment from one of our officers and directors, Mr. Richard Strahl. Along with our leased equipment, a significant portion of our trucking and freight brokerage services is provided through a network of independent contractors. These relationships allow us to control a larger fleet of equipment and provide our customers with a broad range of transportation services without committing significant capital to the acquisition and maintenance of an extensive asset base. We currently have relationships with over 20 independent contractors who provide their services when needed. Independent contractors and fleet owners are compensated on the basis of mileage rates and a fixed percentage of the revenue generated from the shipments they haul. Under the terms of our typical contracts, independent contractors must pay all the expenses of operating their equipment, including driver wages and benefits, fuel, physical damage insurance, maintenance and debt service. We have not entered into any formal contracts with independent contractors at the present time. 14 THREE MONTH AND SIX MONTH PERIODS ENDED JUNE 30, 2003 AND 2002 We generated $941,955 in revenue from continuing operations for the three month period ended June 30, 2003. Cost of revenue during the first three months of 2003 was $554,155 resulting in a gross profit of $387,000. Operating expenses during this period were $165,193 resulting in gross income of $221,807. Operating expenses consisted primarily of $109,696 in equipment rental. After adjusting for income tax of $43,847 and interest income of $3,603, net income for the three months ended June 30, 2003 was $181,563. Revenue for the three months ended June 30, 2002 was $514,115 with cost of revenue of $117,980 resulting in gross profit of $396,135. Operating expenses during this period were $86,913. Equipment rentals, repairs and overhead were the most substantial expenses. Net revenue after income tax and interest income at June 30, 2002 was $294,007. Revenue for the six months ended June 30, 2003 was $1,227,113 with cost of revenue of $732,476 resulting in gross income of $494,637. Total operating expenses during this period were $209,528. Significant expenses during this period included $109,696 in equipment rental, $22,163 in consulting fees $21,395 in miscellaneous overhead expenses, $18,130 in repairs and maintenance costs and $15,509 in insurance. After adjusting for income tax and interest income, net income for the six months ended June 30, 2002 was $248,468. Revenue for the six months ended June 30, 2002 was $543,487 with cost of revenue of $151,108 resulting in gross income of $392,379. Total operating expenses during this period were $105,536. The most substantial expenses during this period were $33,804 in equipment rental, $22,449 in repairs, $18,541 in miscellaneous overhead expenses and $11,595 in insurance. After adjusting for income tax and interest income, net income for the six months ended June 30, 2002 was $274,087. Increased operating expenses during the first six months of 2003 were largely the result of reducing our accounts payable related to equipment rentals. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2003 we had total assets of $725,566. Current assets were $701,456 consisting of $278,307 in cash, $300,233 in accounts receivable and $122,976 in a note receivable and accrued interest from an affiliate. Fixed assets consisted of $1,108 in office equipment after depreciation. We also had $23,002 in investments. Total liabilities at June 30, 2003 were $582,528 consisting of $263,062 in accounts payable, $271,582, $43,847 in income taxes payable and $4,037 in a short term notes. Total assets at June 30, 2002 were $487,136 consisting primarily of $290,398 receivable from an affiliate and $22,924 in investments. Total liabilities at June 30, 2002 were $67,750. We anticipate that our operating expenses for the rest of the year will be approximately $200,000 based on our income and expenses for the previous six months. We do not have any long term capital commitments and we believe that our current cash needs can be met with cash on hand, continued operations and expected payment of accounts receivable. If we require additional capital we may sell common stock, seek additional loans from officers, directors or shareholders, or explore other debt financing agreements. ITEM 3. CONTROLS AND PROCEDURES Within the 90-day period prior to the date of this report, we evaluated the effectiveness and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934. Based on that 15 evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective. There have been no significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation. PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES At our initial organizational meeting on June 30, 2000 our founders purchased the following shares at the par value of $.001: Brady Strahl purchased 10,000 shares for $10 cash. Donald Nelson purchased 500,000 shares for $500 cash. Richard Strahl purchased 2,500,000 shares for $2,500 cash. Nina Kravchenko purchased 150,000 shares for $150 cash. In January and February of 2001 Alaska Freightways sold 270,000 shares of its common stock to three accredited investors for $135,000. The securities were sold in private transactions, without registration in reliance on the exemption provided by Section 4(2) of the Securities Act. The investors had access to all material information pertaining to the Company and its financial condition. Each investor completed and signed a subscription agreement attesting to his sophistication or accredited investor status and investment intent. No broker was involved and no commissions were paid on the transactions. ITEM 5. RELATED PARTY TRANSACTIONS During the first three months of 2003 we paid a total of $22,051 to Richard Strahl and APC Export, Inc. for consulting and management services. APC Export is controlled by Richard Strahl, who is an officer and director of Alaska Freightways. From June 2000 through December 2001 we advanced a total of $120,822 to APC Export, Inc., a company owned and controlled by Richard Strahl. The advances were due on or before December 31, 2002 and carry an interest rate of 8% per annum. During the three months ended June 30, 2003, we paid $7,746 on the loan. At June 30, 2003 the remaining principal and accrued interest on the note was $122,916. The note is considered delinquent as of December 31, 2002. We have entered into a lease agreement with Richard Strahl to lease the trucks and trailers we use in our business. Mr. Strahl is to be paid the principal and interest amount due on each loan against the equipment as well as a reasonable amount of monies for insurance and maintenance for each truck and trailer leased by us. The aggregate annual lease amount is $123,000. Mr. Strahl has advanced operating expenses to the company against expected receipts from the lease agreement. As of June 30, 2003 we owed a cumulative total of $271,582 to Mr. Strahl under the lease agreement. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Reports on Form 8-K: We did not file reports on Form 8-K during the quarter ended June 30, 2003.
EXHIBIT NUMBER TITLE LOCATION 31.1 Certification of Chief Executive Officer and Chief Financial. . . Attached Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer and Chief Financial. . . Attached Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002
16 SIGNATURES In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALASKA FREIGHTWAYS, INC. Date: August 13, 2003 By: /s/ Richard Strahl ------------------------- Richard Strahl Chief Executive Officer Chief Financial Officer 17