UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) October 16, 2002
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STONEPATH GROUP, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-26929 65-0867684
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(State or Other Jurisdic- (Commission File Number) (IRS Employer
tion of Incorporation) Identification No.)
Two Penn Center Plaza, Suite 605, Philadelphia, PA 19102
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 215-564-9193
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
Commencing on October 16, 2002, Stonepath Group, Inc. (the "Company") will
participate in a series of meetings with private investors during which it will
present the following information about the Company, some of which may
constitute material non-public information.
Certain of the information contained herein should be considered 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 that reflect the
Company's current views with respect to future events and financial performance.
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. While it is impossible to identify all of the
factors that may cause our actual results, levels of activity, performance, or
achievements to differ materially from those set forth in such forward-looking
statements, such factors include: (i) our limited operating history, (ii) our
ability to identify, acquire, integrate and profitably manage additional
businesses; (iii) our ability to obtain the additional capital necessary to make
additional cash acquisitions, (iv) the scarcity and competition for the
operating companies we need to acquire to implement our business strategy, (v)
competition in the freight forwarding, logistics and supply chain management
industry, (vi) our historic losses and our ability to achieve operating
profitability, (vii) the impact of current and future laws effecting the
Company's operations, (viii) general economic conditions, (ix) regional
disruptions in transportation, such as those recently experienced on the West
Coast of the United States, and (x) other factors which are or may be identified
from time to time in our Securities and Exchange Commission filings and other
public announcements, including our Annual Report on Form 10-K filed on March
29, 2002. There can be no assurance that these and other factors will not affect
the accuracy of such forward-looking statements.
Slide One
GLOBAL LOGISTICS
[GRAPHIC OMITTED] STONEPATH GROUP
Overview
October, 2002
[GRAPHIC OMITTED] STG
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AMEX
L I S T E D
Slide Two
Safe Harbor Statement
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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
filing and other public documents, including our Annual Report on Form 10-K
filed on March 29, 2002, and our Form 10-Q for the second quarter ended June 30,
2002, which can be found on our corporate Web site, www.stonepath.com.
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Slide Three
Our Mission
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o To become a leading provider of global logistics services by integrating
experienced logistics companies with innovative technologies.
Slide Four
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 (10/14/02) and 52-Week Range $1.12 || $0.81 to $2.95
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Primary and Fully Diluted Shares Outstanding 23.4mm || 39.7mm
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Float 21.9mm
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Market Cap $26.2mm
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Volume (daily 90-day average) 38,100
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Cash & S/T Investments (6/30/02) $1.6mm
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Debt (6/30/02) None
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Insider Ownership 12% of fully diluted shares
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Institutional Ownership 3% of fully diluted shares
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Employees 430
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Slide Five
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 - COO, International Operations
Slide Six
Logistics Market - 2001
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o Non-Outsourced Logistics $659 B 92%
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o Third Party Logistics Providers $61 B 8%
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Industry Total in 2001 $720 B 100%
Source: Armstrong & Associates
Slide Seven
Market Characteristics
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o Highly Fragmented
o Growth Drivers:
o Globalization
o Technology
o Outsourcing
o Supply Chain Efficiency
o 3 to 5-year projected CAGR is 15 - 20%
Slide Eight
Stonepath's Acquisition Trail
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TRANSPORT SPECIALISTS, INC. $3MM October 1, 2002
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UNITED AMERICAN
--------------------- $22MM May 28, 2002
FREIGHT SERVICES, INC.
A STONEPATH LOGISTICS COMPANY
GLOBAL
TRANSPORTATION SERVICES INC. $45MM April 4, 2002
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A STONEPATH LOGISTICS COMPANY
AIR PLUS
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L I M I T E D
============================= $58MM October 5, 2001
A STONEPATH LOGISTICS COMPANY
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2001 Pro Forma Revenues $128MM
Slide Nine
A Global Logistics Organization
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[LOGO]
STONEPATH LOGISTICS
--------------------------- ------------------------- ---------------------
Stonepath Logistics Stonepath Logistics Stonepath Logistics
Domestic Services International Services Technologies
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Air Plus Limited Global Transportation
Services, Inc. TECH-LOGIS(TM)System
Retail Focus State-of-the-art operating
Air & Ocean Freight systems
United American Freight Services
Services, Inc. End-to-end Solutions
Automotive Focus Serve Multi-Market Needs Technology Assets
for Global Client Base
Transport Specialists, Inc.
US Government Focus
Slide Ten
Deep Client Relationships
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[BEST BUY LOGO] [TARGET LOGO]
[LOCKHEED MARTIN LOGO]
[WILSONS LEATHER LOGO] [FORD LOGO]
[DAMILER CHRYSLER LOGO] [GM LOGO]
o Best Buy "Excellence in Supply Chain" Award (2002)
o Target Corp. Transportation Non-Retail Carrier of the Year Award (2000)
o Best Buy "Best of the Best" Vendor Award (2001)
Slide Eleven
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 $10mm
-Valuations: 3x-6x Pre-Tax Earnings
-Cash Up-Front: 30%-50% of Total Consideration
-Contingent Purchase Price 50%-70% of Total Consideration
Slide Twelve
Acquisition History
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Air Plus Global UAFS
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Total Purchase Price $34.50 $12.00 $16.10
Cash on Close A $17.50 $5.00 $5.10
Base Earn-Out $17.00 $5.00 $5.00
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Base Purchase Price B $34.50 $10.00 $10.10
Additional Earn-out - $2.00(1) $6.00(2)
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$34.50 $22.00 $26.20
Earnings Target C $6.00 $2.00 $2.20
Multiple
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Based on Cash at Close A/C 2.9x 2.5x 2.3x
Including Contingent Purchase Price 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 $6M.
*In millions except for multiples
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Slide Thirteen
Integration & Organic Growth
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o Integration process has begun
o "Strategic Integration Committee"
o Maximizing best practices between companies
o Fostering Organic Growth
o Investing in businesses through specific performance initiatives:
-Technology
-Shared Services
-Expanded Sales Force
-Opening Additional Logistics Centers to Meet Clients Needs
o Planned expansion into Far East through acquisition of strategic international
logistics companies based in Asia
Slide Fourteen
3PL Competitive Landscape
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C.H. Forward
Company Robinson EGL, Inc. Expeditors Air UTIW STG
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Ticker CHRW EAGL EXPD FWRD UTIW STIG
Price($) $26.76 $11.50 $29.76 $17.69 $18.27 $1.12
Market Cap $2.3B $536M $3.1B $391M $465M $26M
Net Income '02(E) $92.4 $8.1 $108.6 $21.4 $19.2 $3.0
Fully Diluted EPS $1.07 $0.17 $1.00 $0.95 $0.75 $0.08
P/E-2002(E) 24.9x 68.1x 29.9x 18.7x 24.3x 14.1x
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Net Income '03(E) $99.1 $23.9 $129.0 $27.5 $26.1 TBD
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Fully Diluted EPS $1.15 $0.50 $1.18 $1.20 $1.02 TBD
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P/E - 2003(E) 23.2x 23.1x 25.1x 14.7x 17.9x TBD
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Source: JP Morgan Logistics Conference, Sept. 5-6th; and Stonepath Management
Slide Fifteen
Summary
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o Building blocks and platform are in place
o Significant opportunities to acquire profitable companies
o Current run-rate $125 - $150 million in revenues
o Current run-rate $4 - $5 million operating income ($0.11 - $0.13 eps)
o 3Q and 4Q will demonstrate this run-rate
o Each additional $10 million deployed in acquisitions could equate to at least
$4 in incremental pre-tax income
o Goal is to be a $500 million company in the next several years
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: October 16, 2002 By: /s/ Dennis L. Pelino
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Name: Dennis L. Pelino
Title: Chairman and Chief Executive Officer