10-K 1 mk6decfs.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Year Ended December 31, 2000. McCLENDON TRANSPORTATION GROUP, INC. ----------------------------------------------------- (Exact name of Registrant as specified in its charter) Nevada 0-3880 22 - 3714235 -------------------------------------------------------------------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 121 South LaFayette Street, Lafayette, Alabama 36362 ----------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (334) 864-9311 ----------------------------------------------------------------- Not Applicable ---------------------------------------------------------------- (Former name or former address, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes____________________ No _________X________ Indicate by check mark if disclosure of delinguent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing price of the Common Stock on July 2, 2001, as reported on The Nasdaq Stock Market(Nasdaq), was approximately $ . Shares of common stock held by each executive officer and director have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status for this purpose is not necessarily a conclusive determination for other purposes. The number of shares of the Registrant's Common Stock, par value $.001 outstanding as of December 31, 2000 was 16,228,000. PART I Item 1. DESCRIPTION OF BUSINESS GENERAL McClendon Transportation Group, Inc. (the "Company") was incorporated in the State of Delaware on February 20, 1996 as RDA Services, Inc. ("RDA"). In November, 1999, RDA acquired 100% of the assets of Glenn McClendon Trucking Company, Inc., an Alabama corporation ("McClendon Trucking") in a reverse merger transaction and RDA changed its name to McClendon Transportation Group, Inc. In March, 2000 Transportation merged into its wholly owned subsidiary, a Nevada corporation with the same name. The merger was effected solely for the purpose of changing the Company's state of domicile to Nevada. Transportation has no operations and acts a holding company. Operations are conducted through Transportation's subsidiary, McClendon Trucking. Unless otherwise indicated herein, all references to the "Company" or "McClendon" include both Transportation and McClendon Trucking. The Company operates a medium-haul, irregular route, truckload carrying business of general commodities. The McClendon Trucking fleet transports freight primarily throughout the eastern United States. PROPERTIES The Corporate offices for the "Company" are located at 121 South Lafayette St., Lafayette, Alabama 36362. The offices are leased for a five-year term from January 1, 2000 through December 31, 2005 at a monthly rental of $11,000. Our operations center, located at 810 South LaFayette Street, Lafayette, Alabama is our main maintenance terminal and training facility and is owned by us. We own 2 additional maintenance facilities at 1516 Alduc Crt., Montgomery, Al., and 33 Market Street, Charleston, Tennessee. These facilities are pledged to Navistar Financial Corporation as collateral security for a loan. Additionally, the Company owns 7 other minor facilities that are up for sale and are collateral security for lines of credit. They were operated as terminals for trucks when alternate parking accommodations were not available. However, there is no need for such facilities at the present time. Item 3. Legal Proceedings The following matters represent contingent liabilities which might exceed $25,000: 1. Navistar Financial Corporation vs. Glenn McClendon Trucking Company, Inc., et al. This action is in the Circuit Court for Montgomery County, Alabama. It has been on the administrative docket since August, 1998, subject to terms of a forbearance and settlement agreement between the parties. 2. State of Alabama Department of Revenue vs. Glenn McClendon Trucking Co., is a 1999 administrative proceeding assessing approximately $54,000 in state use taxes is pending departmental conference(s). 3. McClendon operates a self-insured workers' compensation program under the supervision of the Alabama Department of Industrial Relations. Open claims include 18 cases in the Circuit Courts of Chambers and Montgomery counties in Alabama and 2 litigated cases in Georgia. This matter is ongoing and standard within the industry. The Company believes that its maximum liability on the aggregate 20 pending claims is approximately $ 700,000 which has been provided for as a liability under accrued expenses. 4. Under our current liability Mutual insurance coverage for vehicle liability claims we continue a self-insurance retention level of $100,000 per incident. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no matters submitted to a vote of security holders. PART II ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS To be submitted under separate cover. ITEM 6: SELECTED FINANCIAL DATA The following selected financial data is for the three fiscal years ended December 31, 2000

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION. To be submitted under separate cover. ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK To be submitted under separate cover. ITEM 8: FINANCIAL STATEMENTS TABLE OF CONTENTS ----------------- INDEPENDENT AUDITORS' REPORT ...........................Page 1 FINANCIAL STATEMENTS Balance Sheet...................................................2 Statement of Stockholder's Equity(Deficiency)...................3 Statement of Operations.........................................4 Statement of Cash Flows.........................................5 Notes to Financial Statements.............................6 to 19 INDEPENDENT'S AUDITORS' REPORT ------------------------------ The Directors and Stockholders McClendon Transportation Group, Inc. Lafayette, Alabama We have audited the accompanying balance sheet of McClendon Transportation Group, Inc. as of December 31, 2000, and the related statements of stockholders' equity (deficiency), operations and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe 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 McClendon Transportation Group, Inc. as of December 31, 2000 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. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 16 to the financial statements, the Company has experienced recurring operating losses resulting in significant negative stockholders' equity. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Notes 16 and 17. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ ROBINSON, GRIMES & COMPANY, P.C. Certified Public Accountants Columbus, Georgia April 24, 2001 -1- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA BALANCE SHEET AS AT DECEMBER 31, 2000 2000 1999 ASSETS ------ CURRENT ASSETS Cash and cash equivalents $ 124,501 $ 76,020 Restricted investments 101,548 201,548 Accounts receivable - trade 4,096,769 4,353,589 Accounts receivable - other 347,552 338,617 Inventories 167,882 210,597 Prepaid expenses 2,000,533 3,021,736 --------- --------- 6,866,785 8,202,107 FIXED ASSETS(Net of accumulated depreciation and amortization) 6,877,762 9,198,743 OTHER ASSETS 181,850 231,740 --------- ---------- $13,926,397 $17,632,590 ========== ========== 2000 1999 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES ----------- CURRENT LIABILITIES Bank overdraft $ 2,609,261 $ 1,262,885 Short-term borrowings 5,052,875 5,801,862 Accounts payable 1,632,263 2,142,442 Accrued taxes 142,877 154,077 Other accrued charges 2,264,321 2,106,011 Income taxes payable -estimated 0 113,000 Current portion of long-term debt 3,110,074 9,597,818 ---------- ---------- 14,811,671 21,178,095 LONG TERM DEBT(less: current portion) 8,983,667 3,980,612 DEFERRED INCOME TAXES 1,918,000 2,406,000 ---------- ---------- 25,713,338 27,564,707 ---------- ---------- STOCKHOLDERS' EQUITY(DEFICIENCY) Common stock, par value $.001 each, authorized 100,000,000, issued and outstanding - 16,228,000(1999-16,100,000) 16,228 16,100 Additional paid-in capital 254,155 88,783 Deficit (12,057,324) (10,037,000) ----------- ---------- (11,786,941) (9,932,117) ----------- ---------- $13,926,397 $17,632,590 =========== ==========

See Notes to Financial Statements -2- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA STATEMENT OF STOCKHOLDERS' EQUITY(DEFICIENCY) FOR THE YEARS ENDED DECEMBER 31, 2000

See Notes to Financial Statements -3- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 (UNAUDITED) 2000 1999 REVENUE Freight $39,774,961 $48,267,343 Other freight related 549,435 404,222 ---------- ---------- 40,324,396 48,671,565 ---------- ---------- OPERATING EXPENSES Purchased transportation(owner-operators) 18,291,833 19,399,640 Salaries, wages and benefits 11,022,155 13,168,293 Operations and maintenance 6,361,252 7,099,219 Insurance and claims 2,480,961 2,537,758 Other rent expense 1,918,654 1,745,839 Taxes and licences 697,903 885,851 Communications and utilities 575,787 607,015 Depreciation and amortization 2,013,164 3,535,823 Sale of fixed assets and other expenses 266,239 (225,802) ---------- ---------- 43,627,948 48,753,636 ---------- ---------- OPERATING LOSS (3,303,552) (82,071) ---------- ---------- OTHER ITEMS Interest income 47,386 57,795 Interest expense (1,640,997) (1,786,010) Miscellaneous expenses (233,177) (70,676) ---------- ---------- (1,826,788) (1,798,891) ---------- ---------- LOSS BEFORE PROVISION FOR INCOME TAX BENEFIT AND EXTRAORDINARY ITEM (5,130,340) (1,880,962) PROVISION FOR INCOME TAX BENEFIT (1,397,171) (587,645) ---------- ---------- LOSS BEFORE EXTRAORDINARY ITEM (3,733,169) (1,293,317) EXTRAORDINARY ITEM(NET OF TAX EFFECT) 1,712,845 700,618 ---------- ---------- NET LOSS $(2,020,324) $ (592,699) ========== ========= BASIC AND DILUTED LOSS PER SHARE Loss before extraordinary item $ (0.23) $ (.08) Extraordinary item 0.11 .04 ---------- --------- $ (0.12) $ .04 ========== ========= WEIGHTED AVERAGE NUMBER OF SHARES 16,171,111 15,652,000 ========== ==========

See Notes to Financial Statements -4- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2000 2000 1999 CASH FLOW FROM OPERATING ACTIVITIES Net loss $(2,020,324) $ (592,699) ---------- ---------- Adjustments to reconcile net loss to net cash provided from operating activities: Depreciation and amortization 2,013,164 3,535,283 Deferred income taxes-net (488,000) (385,700) Gain on sale of fixed assets (675,521) (683,857) Foregiveness of debt (2,635,095) (1,106,951) Changes in current assets and liabilities Accounts receivable 220,863 436,393 Inventories 42,715 82,285 Refundable income taxes (28,000) - Prepaid expenses 1,021,203 118,348 Accounts payable (510,179) (283,594) Other current liabilities 752,110 (621,165) ---------- ---------- (286,740) 1,091,582 ---------- ---------- NET CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES (2,307,064) 498,883 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of fixed assets (2,016,731) (1,103,916) Proceeds from sale of fixed assets 2,007,570 1,198,844 Decrease in other assets 49,890 170,719 ---------- ---------- NET CASH PROVIDED BY INVESTING ACTIVITIES 40,729 265,647 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Bank overdraft - net 1,346,376 592,949 Restricted investments - net 100,000 (101,335) Short-term borrowings - net (287,318) (745,042) Proceeds of long-term debt 2,739,498 4,361,304 Principal payments on long-term debt (1,749,240) (5,121,155) Issuance of common stock 165,500 - Dividends paid - (187,529) --------- --------- NET CASH USED IN FINANCING ACTIVITIES (2,314,816) (1,200,808) --------- --------- NET CHANGE IN CASH 48,481 (436,278) CASH - January 1, 76,020 512,298 --------- --------- CASH - December 31, $ 124,501 $ 76,020 ========= =========

See Notes to Financial Statements. -5- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 1: Nature of Operations The Company is a medium-haul, irregular route, truckload carrier of general commodities which transports freight primarily throughout the Southeastern and Eastern United States. The Company's top five customers accounted for more than 40% of revenue for 2000. The top two customers accounted for more than 23% of revenue for 2000. On November 11, 1999, Glenn McClendon Trucking Company, Inc. (GMTC) merged into "RDA Services, Inc. (RDA). GMTC was treated as the acquirer and RDA as the acquiree. The resulting merged entity was them renamed McClendon Transportation Group, Inc. for accounting purposes, the acquisition has been treated as an acquisition with all costs in excess of any cash received charged to expense. NOTE 2: Summary of Significant Accounting Policies Accounts Receivable - Trade Trade receivables represent amounts due from various companies for shipment services. Bad debts are normally accounted for using the allowance method, based on the credit worthiness of its customers, as well as general economic conditions. Inventories Inventories consist of fuel, tires, and repair parts and are valued at the lower of cost or market, with cost being determined using the first- in, first-out method. Fixed Assets, Depreciation and Amortization All fixed assets are stated at cost and are depreciated on the straight- line method for financial statement purposes. For income tax reporting, the Company uses accelerated methods. The cost of revenue equipment includes items such as tires, air deflectors, and and communication equipment used in or on the tractors and trailers. Maintenance, repairs and minor renewals are expensed as incurred, while additions and major renewals are capitalized. Revenue equipment is depreciated to a 20% salvage value for trailers and a 15% salvage value for tractors. The useful lives employed for computing depreciation on principal classes of fixed assets for financial statement purposes are as follows: Buildings and land improvements 10 - 40 years Revenue equipment Tractors 6 years Trailers 8 years Furniture and fixtures 5 - 10 years Other fixed assets 5 - 20 years -6- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 2: Summary of Significant Accounting Policies(continued) Revenue Recognition Revenue is recognized when the shipment is completed and bills of lading received. Income Taxes Deferred income taxes are provided for differences in the timing of reporting income for financial statement and tax purposes, and results primarily from differences in depreciation methods. Statement of Cash Flows For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Reclassifications Certain items in the 1999 financial statements have been reclassifed in order to be in conformity with the 2000 statement presentation. Fair Value of Financial Instruments The carrying amounts reflected in the balance sheet for cash, receivables and short-term borrowings approximate their values due to the short maturities. Management is unable to estimate the fair value of its other financial instruments. Use 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 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. Loss per Share Basic loss per common share is calculated by dividing the net loss by the average number of common shares outstanding during the period. Diluted loss per common share is calculated by adjusting outstanding shares, assuming conversion of all potentially dilutive securities. The Company has a simple capital structure with no potentially dilutive securities. -7- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 3: Accounts Receivable Trade accounts receivable are summarized as follows: 2000 1999 --------- -------- Trade accounts receivable $4,273,375 $4,466,470 Allowance for doubtful accounts (176,606) (112,881) --------- --------- $4,096,769 $4,353,589 ========= ========= Accounts receivable other than trade are summarized as follows: Officers and employees(Note 11) $ 158,089 $ 122,486 Insurance premium refunds 32,509 35,361 Miscellaneous 156,954 180,770 --------- --------- $ 347,552 $ 338,617 ========= ========= NOTE 4: Prepaid Expenses Prepaid expenses are summarized as follows: 2000 1999 --------- --------- Insurance, including deposits $1,568,316 $2,545,943 Taxes, licences and permits 390,434 418,491 Other 41,783 57,302 --------- --------- $2,000,533 $3,021,736 ========= ========= -8- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 5: Fixed Assets and Depreciation Major classes of fixed assets and accumulated depreciation are summarized as follows: 2000 1999 ----------- ----------- Land $ 295,944 $ 338,944 Building and land improvements 1,596,967 1,696,967 Revenue equipment 18,595,878 27,704,954 Furniture, fixtures and other 3,355,518 3,336,609 ---------- ---------- 23,844,307 33,077,474 Accumulated depreciation (16,966,545) (23,878,731) ---------- ---------- $ 6,877,762 $ 9,198,743 ========== ========== NOTE 6: Short-Term Borrowings Short-term borrowings consists of the following: 2000 1999 ----------- ---------- $5,000,000 line of credit from Systran Financial Services Corporation, with interest at prime plus 2%, accounts receivable as collateral. Borrowings on the line of credit are limited by various restrictions on the above collateral. $ 3,230,358 $ 3,802,323 Demand note from Columbus Bank & Trust with interest at prime plus 3%, accounts receivable, contract rights as collateral. 1,513,049 1,513,049 Unsecured note from stockholders, interest at 8.5%, due January 18, 2001. 250,000 250,000 Other notes payable - stockholders 22,968 49,990 Other 36,500 186,500 ---------- ----------- $ 5,052,875 $ 5,801,862 ========== =========== -9- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 (UNAUDITED) NOTE 7: Other Accrued Expenses Other accrued expenses are summarized as follows: 2000 1999 ---------- ------------ Accrued self-insured liability claims (see below) $ 351,843 $ 542,880 Accrued workers' compensation 1,077,000 1,028,049 Accrued interest 415,212 12,511 Other accrued expenses 420,626 522,571 ---------- ---------- $ 2,264,321 $ 2,106,011 ========== ========== During 1998, the Company negotiated with its previous liability insurance carrier for forgiveness of $ 1,106,951 of outstanding claims under its policy. The forgiveness was accepted, subject to certain contingencies which were not resolved until 1999. Accordingly, this debt foregiveness income is recognized in the 1999 statement of operations as an extraordinary item. -10- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 8: Long-Term Debt Long-term debt consists of the following: 2000 1999 ------------ ------------ Notes payable - Columbus Bank & Trust Co., interest only through June 2001, thereafter monthly payments of approximately $ 180,000, including interest at prime, final payment due August 2005; equipment other assets and endorsements as collateral; $ 7,117,111 $ - Note payable - equipment: Navistar Financial Corporation (see below); 2,100,000 7,599,038 Note payable - equipment: Navistar Financial Corporation weekly payments total $ 9,205 as of December 31, 1999, including interest at 9.50% - 1,328,921 Note payable - equipment: Associates Commercial Corporation, monthly payments total $33,098 as of December 31, 1999, including interest at 9.25% - 527,319 Note payable -equipment: TBCC Funding Trust I, monthly payments total $75,034 as of December 31, 1999 including interest at 10.4%; - 1,740,315 Note payable -equipment: Financial Federal Credit, Inc. monthly principal payments of $27,679 plus interest at prime plus 2%, due October 2005; 1,605,380 1,118,546 Note payable - real estate: Columbus Bank & Trust Co., interest only to June 2001,thereafter, monthly blended payments of $12,174 at prime plus 2%, due July 2005 480,000 480,000 Note payable - vehicles: Ford Credit, monthly payments total $ 2,134, including interest at 2.90%, due September 2003 73,250 99,291 Accrued workers' compensation(Note 14) 718,000 685,000 ---------- ---------- 12,093,741 13,578,430 Less: Current maturities (3,110,074) (9,597,818) ---------- ---------- $ 8,983,667 $ 3,980,612 ========== ========== -11- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 8: Long-Term Debt(continued) During the year, the Company refinanced $ 3,500,000 of its debt with Navistar Financial Corporation. Terms of the refinancing allowed for debt foregiveness of $ 2,635,095 which will be recognized in subsequent reports in the statement of operations as an extraordinary item. Also, as part of the refinancing agreement, the Company executed a new note in the amount of $ 2,100,000 with interest at 10%. This amount will be reflected in the balance sheet in current maturities of long-term debt. Subsequent to December 31, 2000, the Company also refinanced certain debt with Columbus Bank & Trust. The above descriptions reflect the refinanced terms and rates. Equipment notes are collateralized by substantially all revenue equipment with a total book value of approximately $5,314,108. Personal guarantees by the Company's principal stockholders are also used as collateral on certain notes. Aggregate maturities under these arrangements for years subsequent to December 31, 2000 are as follows: 2001 $ 3,110,074 2002 2,502,172 2003 2,682,131 2004 2,516,153 2005 1,283,211 ---------- $12,093,741 ========== NOTE 9: Operating Leases The Company has acquired trailers through operating leases with various leasing companies with options to purchase at fair market value at the end of such leases. The leases are for periods of 6 to 7 years; however, after 3 years the lease may be canceled by the Company upon meeting specified conditions in the contracts. Under a terminal rental adjustment clause, the Company guarantees a 15% residual value at the end of each lease. During the year the Company also acquired tractors through operating leases with options to purchase the equipment at their fair market value at the end of the leases. The leases are for periods of 18 months to 36 months. -12- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBERR 31, 2000 NOTE 9: Operating Leases(continued) The Company also leases certain real estate properties from McClendon Enterprises (a related party). Below is a schedule of future minimum payments under the above operating leases: McClendon Total Tractor Trailer Enterprises Operating Leases Leases Leases Leases Amounts due during: 2001 $1,002,240 $760,357 $132,000 $1,894,597 2002 751,680 48,627 132,000 932,307 2003 288,144 0 132,000 420,144 2004 0 0 132,000 132,000 2005 0 0 132,000 132,000 --------- ------- ------- --------- $2,042,064 $808,984 $660,000 $3,511,048 ========= ======= ======= ========= During 1997, the Company started a program whereby the Company leases tractors with qualified drivers from independent operators, ("owner- operators"). Owner-operator expense amounted to $18,291,833 in 2000 and $19,399,640 in 1999 respectively, and is reflected in the Statements of Operations as Purchased Transportation. Other rent expense is summarized as follows: 2000 1999 ---------- ---------- Tractor leases $ 449,616 $ 0 Trailer leases 834,696 888,966 McClendon Enterprises lease 132,000 229,500 Spotting service 289,791 388,192 Other rents 212,551 239,181 --------- --------- $1,918,654 $1,745,839 ========= ========= -13- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 10: Income Taxes The Company's net carry basis of long-term assets exceeded its tax basis for such assets by approximately $6,878,000 at December 31, 2000. See Note 2. Net deferred tax liabilities in the accompanying balance sheet reflect the liabilities associated with temporary differences, principally depreciation of fixed assets. Provison for income tax benefit is summarized as follows: 2000 1999 ---------- ----------- Current tax expense Federal $ 0 $ 161,716 State 0 42,672 Deferred tax benefit (1,397,171) (792,033) ---------- ---------- $(1,397,171) $ (587,645) ========== ========== The income tax benefit differs from the income tax benefit that would result from applying statutory rates to pretax income. This is due primarily to the payment of per diems to drivers, which are only partly tax deductible. As a result of the non- deductible per diems and other permanent differences, the Company has no net operating loss carryforward available at December 31, 2000. Reconciliation of the provision for income tax benefit to statutory rates are is as follows: 2000 1999 % % Federal provision for income taxes at statutory rates (34.0) (34.0) State provision for income taxes at statutory rates (5.0) (5.0) Federal tax benefit from state income tax deduction - 0.79 Per diems and other permanent differences 2.74 16.24 Other 9.03 7.69 ------ ------ Total (27.23) (31.24) ====== ====== -14- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 11: Related Party Transactions McClendon Enterprises The Company leases under operating leases, its present operating facility and other real estate from McClendon Enterprises, a partnership comprised of two Company stockholders. Total rent expenses on these leases was $132,000 for 2000, $229,500 for 1999. Other The Company's two stockholders are obligated to a previously redeemed stockholder on notes executed to acquire the previous stockholder's stock. The balance of these notes as of December 31, 2000 was approximately $ 110,000 with quarterly principal and interest payments due through 2001. The Company has a note payable outstanding from two stockholders in the amount of $ 250,000. The Company also has a loan payable outstanding from a stockholder in the amount of $ 22,968 and $ 49,990 at December 31, 2000 and 1999 respectively. These amounts are included in short- term borrowings, as discussed in Note 6. The Company also has various loans and other receivables from certain officers and stockholders, summarized as follows: 2000 1999 ----------- ---------- Stockholder notes receivable, interest at 7% $ 126,440 $ 91,000 Other stockholder receivables 9,778 9,677 Other officer and employee receivables 21,911 21,809 --------- --------- $ 158,089 $ 122,486 ========= ========= -15- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 12: Profit Sharing Plan The Company maintains a qualified defined contribution profit sharing plan with 401(k) provisions covering substantially all employees with over one year of service. Contributions based on a percentage of compensation are determined annually by the board of directors. The Company made contributions totaling $ 36,940 and $ 37,991 to the Plan for the years ended December 31, 2000 and 1999 respectively. NOTE 13: Supplemental Disclosures of Cash Flow Information Cash paid during the period for: 2000 1999 ---------- ---------- Interest $1,238,297 $1,786,010 Taxes $ 151,548 $ 302,179 Non-Cash Financing Activity The Company refinanced parts of certain loans with Navistar Financial Corporation as disclosed in Note 8. As part of this refinancing, certain equipment with agreed values was turned in to Navistar as payment on the debt in the amount of $ 992,500 and $ 634,000 for the years ended December 31, 2000 and 1999 respectively. NOTE 14: Contingencies Self-Insurance Plans The Company is partially self-insured with respect to various risk areas as follows: Liability, Cargo and Physical Damage For automobile liability, the Company is responsible for any claims less than $100,000 and for claims in excess of the $ 1,000,000 policy limit. The Company also has a $4,000,000 umbrella policy per occurrence. -16- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 14: Contingencies(continued) For general liability, the Company is responsible for any claims less than $10,000 and for claims in excess of $1,000,000 per occurrence. The policy has a $2,000,000 annual aggregate limit. The Company also has a $ 4,000,000 annual aggregate umbrella policy. For cargo damage, the Company is responsible for any claims less than $100,000 and for any claims in excess of the $300,000 policy limit. For physical damage to the revenue equipment, the Company is responsible for any claims less than $1,000. Workers' Compensation The Company is also self-insured with respect to workers' compensation. Claims in excess of $300,000 are covered by an insurance policy. The Company is responsible for any claims less than $300,000. As a result of state requirements, an actuarial valuation was obtained during the year which estimated the expected future claims. Accordingly, the Company accrued the estimated present value of claims outstanding and those incurred but not reported. Group Health The Company has elected to self-insure for its group health insurance coverage. Blue Cross-Blue Shield acts as administrator for the plan whereby the Company is responsible for all health claims, not to exceed $50,000 annually, per insured individual. The claims under this plan are accounted for on a cash basis. Credit Risks The Company extends credit across different industries and geographic areas and requires no collateral from its customers. -17- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 15: Extraordinary Items As discussed in Notes 7 and 8, the Company negotiated two separate debt forgiveness arrangements. One subsequently in 2000 and one in 1999. The amount for 1999 and the related deferred tax effects are summarized as follows: 2000 1999 ---------- ---------- Debt forgiveness income Notes payable $2,635,095 0 Liability insurance 0 $1,106,951 --------- --------- 2,635,095 1,106,951 Less: Deferred tax expense (922,250) (406,333) --------- --------- $1,712,845 $ 700,618 ========= ========= NOTE 16: Going Concern As shown in the accompanying financial statements, the Company has experienced significant operating losses and has deficits in working capital and net worth. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management is working with its primary lenders to monitor the status of its indebtedness and is currently evaluating methods to reduce costs and improve operating results. In addition, as reflected in Note 8, the Company has renegotiated certain debt obligations with Navistar Financial Corporation and "Columbus Bank & Trust Company, that are expected to further reduce its outstanding indebtedness through a combination of foregiveness and equity conversion. During 1999, the Company signed certain agreements to effect a reorganization plan as more fully described in Note 17. If the Company is unsuccessful in its efforts, it may be necessary to undertake such other actions as may be appropriate to preserve asset value. The financial statements do not include any adjustments, other than the classification of long-term debt as disclosed in Note 8, that might result from the outcome of this uncertainty. -18- McCLENDON TRANSPORTATION GROUP, INC. LAFAYETTE, ALABAMA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000 NOTE 17: Reorganization During June, 1999, the Company initiated a plan of reorganization. As a result the Company entered into a reverse merger transaction with RDA Services, Inc. in November, 1999 whereby RDA Services, Inc. purchased Glenn McClendon Trucking Company, Inc. ("GMTC") through issuance of its stock. RDA Services, Inc. then changed its name to McClendon Transportation Group, Inc. The principal shareholders of GMTC retained 90% of the stock of the newly merged Company. The transaction also included refinancing certain portions of the line-of-credit agreement, as well as other long-term debt obligations as discussed in Note 8. -19- ITEM 9: CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE PART III ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The McClendon Transportation directors and executive officers and their ages as of the date of this document are as follows:

Biographical Information Hugh F. McClendon Hugh F. McClendon has been Chairman of the Board and Chief Executive Officer of the McClendon Group for the past 6 years. He formerly served as Executive Vice President. He began his career with the Company in 1979. Mr. McClendon has served on the Board of Directors of the Alabama Trucking Association and the Truckload Carriers Conference of the American Trucking Association. Mr. McClendon received his B.A. from Auburn University in 1979. James W. McClendon James W. McClendon has been President and Chief Operating Officer of the McClendon Trucking Group since 1995, and Vice Chairman of the Board since 1993. He has been with the Company since 1980. He formerly served as Secretary- Treasurer and Vice President of Administration from 1983 to 1988. Mr. McClendon received his B.A. from Auburn University in 1980. H. Glenn Scarborough H. Glenn Scarborough has been Vice President of Finance of the Company since 1998. Mr. Scarborough is a CPA who began his career in public accounting. He also worked in the hospitality, manufacturing and telecommunications industries before joining McClendon in December, 1998. Mr. Scarborough received his B.A. from the University of Georgia in 1986. ITEM 11: EXECUTIVE COMPENSATION To be submitted under separate cover. ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT The following table sets forth, as of December 31, 2000, certain information regarding beneficial ownership of the common stock by (i) those persons beneficially holding more than 5% of the Company's stock; (ii) directors who beneficially own shares of the common stock; and (iii) all of directors and officers as a group.

PART IV ITEM 14: Exhibits and Reports on Form 8-K Exhibit 11 - Computation of earnings per common share - See Statement of Operations Reports on Form 8-K - None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. McCLENDON TRANSPORTATION GROUP, INC. By: /s/ JAMES McCLENDON ---------------------- James McClendon President Dated: July 9, 2001

MCCLENDON TRANSPORTATION GROUP INC 10-K