SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2002
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO _______________
Commission File Number: 0-29459
PACEL CORP.
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(Exact name of registrant as specified in its charter)
VIRGINIA 54-1712558
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
8870 RIXLEW LANE, SUITE 201
MANASSAS, VIRGINIA 20109-3795
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (703) 257-4759
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 for 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 day:
Yes [X] No [_]
Transitional Small Business Disclosure Format (check one)
Yes [_] No [X]
State the number of Shares outstanding of each of the issuer's classes of common
equity, as of the latest date:
As of November 14, 2002, there were 353,037,735 shares of the Registrant's
common stock outstanding.
PACEL CORP. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION (unaudited)
Item 1. Index to Consolidated Financial Statements F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Income of Operations F-3
Consolidated Statements of Cash Flows F-4
Notes to Consolidated Financial Statements F-5
F-1
Pacel Corp.
Consolidated Balance Sheet
Septmeber 30, December 31,
2002 2001
Unaudited Audited
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 14,110 $ 65,761
Accounts receivable, net of allowance for doubtful accounts of $0 and
$1,311 respectively 626 324,134
Inventory 61,306
Other receivables 105 36,684
----------------- -----------------
Total current assets 14,841 487,885
----------------- -----------------
Property and equipment, net of accumulated depreciation
of $85,172 and $73,946 respectively 63,963 81,123
----------------- -----------------
Non-current assets:
Note receivable - 71,000
Goodwill - 407,049
Security deposits 25,359 10,122
----------------- -----------------
Total non-current assets 25,359 488,171
----------------- -----------------
Total assets $ 104,164 $ 1,057,179
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ ,458,165 $ 1,423,979
Accrued expense 184,262 175,511
Loans payable officers-Stockholders 896,211 143,853
Notes payable 864,750 1,182,343
Notes payable bank 50,000 50,000
Net liabilities of discontinued operations - 236,731
----------------- -----------------
Total current liabilities 3,453,388 3,212,417
----------------- -----------------
Long Term liabilities:
Convertible debentures 647,279 700,636
----------------- -----------------
Total long term liabilities 647,279 700,636
----------------- -----------------
Total liabilities 4,100,667 3,913,053
----------------- -----------------
Minority interest
Commitments:
Stockholders' equity (deficit)
Preferred stock, no par value,
no liquidation value, 5,000,000 shares
authorized, issued 1,000,000 shares
1997 class A convertible preferred stock 11,320 11,320
Common stock - no par value,
650,000,000 and 650,000,000 shares authorized in 2002 and
2001, respectively. 270,537,735 and 2,470,644 shares outstanding
in 2002 and 2001, respectively 8,369,822 6,729,122
Cumulative currency translation adjustment
(18,720) (11,000)
Deficit (12,358,925) (9,585,316)
----------------- -----------------
Total stockholders' equity (deficit) (3,996,503) (2,855,874)
----------------- -----------------
Total liabilities and stockholders' equity $ 104,164 $ 1,057,179
================= =================
The accompanying notes are an integral part of the financial statements
F-2
Pacel Corp.
Consolidated Statements of Income of Operations
Nine Months Nine months Three Months Three Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
--------------- -------------- --------------- ----------------
Sales $ 435,218 $ 874,091 $ 118,261 $ 630,397
Direct Cost of Goods Sold 403,702 665,275 90,890 424,460
--------------- -------------- --------------- ----------------
Gross Profit 31,516 208,816 27,371 205,937
--------------- -------------- --------------- ----------------
Operating costs and expenses:
Research and development 254,657 306,806 21,831 87,521
Depreciation & Amortization 11,246 9,133 3,769 1,323
Interest expense 122,808 52,581 52,500 29,563
Sales and Marketing 218,133 76,227 11,889 27,939
Financing Expenses 50,397 276,273 14,897 195,173
General and Administrative 2,053,535 868,833 383,345 239,239
--------------- -------------- --------------- ----------------
Total operating costs and expenses 2,710,775 1,589,853 488,230 580,758
--------------- -------------- --------------- ----------------
Other Income - 2,796 2,796 2,796
Loss before extraordinary items
( including discontinued operations and the effect
of an accounting change) (2,679,259) (1,378,241) (458,063) (372,025)
Write-off of loan receibable (71,000) (71,000)
Gain on wirte-off of extinguishment of debt 426,150 426,150
Discontinued operations (Note 3)
Loss from operations of discontinued
E-Bstore business (220,268) (404,357) - (153,999)
Gain on disposal of E-Bstore business 177,817 - -
Cumulative effect of accounting change (407,049) - - -
--------------- -------------- --------------- ----------------
Net (loss) $ (2,773,609) $ (1,782,598) $ (102,913) $ (526,024)
=============== ============== =============== ================
Net (loss) per common share
Basic (0.04) (2.56) - (0.50)
Diluted (0.04) (2.56) - (0.50)
Weighted Average shares outstanding
Basic 68,243,593 696,065 148,155,127 1,051,719
Diluted 68,243,593 696,065 148,155,127 1,051,719
The accompanying notes are an integral part of the financial statements
F-3
Pacel Corp.
Consolidated Statements of Cash Flows
2002 2001
------------------- ------------------
Cash flows from operating activities:
Net (loss) $ (2,773,609) $ (1,782,598)
Adjustments to reconcile net (loss) to net cash
(used in) provided by operating activities:
Cumulative effect of accounting change 407,049 -
Depreciation 11,246 14,364
Provision for Bad Debts (1,311) 2,492
Other non cash items 1,309,112 210,395
Gain on sale of EB-Store (177,817)
Increase (Decrease) in Cash from changes in:
Accounts receivable 324,819 (348,664)
Other receivables 36,579 9,511
Inventory 61,306 (47,134)
Other assets 0 0
Security deposits (15,237) (2,791)
Prepaid expenses 0 (16,569)
Accounts payable 34,186 705,637
Accrued expense 8,751 16,287
Loans Payable Officers-Stockholders 752,358 143,584
Net cash (used in) operating activities (22,569) (1,095,486)
------------------- ------------------
Cash flows from investing activities:
Purchase of property and equipment (13,856)
Notes Receivable (71,000) 0
Net cash used in investing activities (71,000) (13,856)
------------------- ------------------
Cash flows from financing activities:
Repayment of loans payable (125,362) 746,718
Notes payable convertible debenture 25,000 98,582
Proceeds from sale of common stock 150,000 407,838
------------------- ------------------
Net cash provided by financing activities 49,638 1,253,138
Effect of exchange rates on cash (7,720) (4,905)
------------------- ------------------
Net increase (Decrease) in cash and cash equivalents (51,651) 138,891
Cash and cash equivalents at beginning of year 65,761 36,356
------------------- ------------------
Cash and cash equivalents at end of period $ 14,110 $ 175,247
=================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest 6,298 2,380
------------------- ------------------
The accompanying notes are an integral part of the financial statements
F-4
PACEL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
SEPTEMBER 30, 2002
1. Basis of Presentation
The unaudited financial statements included in the Form 10-QSB have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation SB. The financial information furnished herein reflects all
adjustments, which in the opinion of management are necessary for a fair
presentation of the Company's financial position, the results of operations and
cash flows for the periods presented.
Certain information and footnote disclosures normally contained in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted, pursuant to such rules and regulations.
These interim statements should be read in conjunction with the audited December
31, 2001 consolidated financial statements and related notes included in the
Company's year ended certified financial statements. The results of operations
for the periods ended September 30, 2002 are not necessarily indicative of the
operating results for the year. The Company presumes that users of the interim
financial information herein have read or have access to the audited financial
statements for the preceding fiscal year and that the adequacy of additional
disclosure needed for a fair presentation may be determined in that context. The
results of operations for any interim period are not necessarily indicative of
the results for the full year.
2. Accounting for Business Combinations
In July 2001, the FASB issued Statements of Financial Accounting Standards
("Statement") No. 141, "Business Combinations" and No. 142, "Goodwill and Other
Intangible Assets" ("FAS 142"). These standards change the accounting for
business combinations by, among other things, prohibiting the prospective use of
pooling-of-interests accounting and requiring companies to stop amortizing
goodwill and certain intangible assets with an indefinite useful life. Instead,
goodwill and intangible assets deemed to have an indefinite useful life will be
subject to an annual review for impairment. The new standards generally were
effective for Pacel in the first quarter of 2002 and for purchase business
combinations consummated after September 30, 2001. Upon adoption of FAS 142 in
the first quarter of 2002, Pacel recorded a one-time, non-cash charge of
$407,049 to reduce the carrying value of its goodwill. Such charge is
non-operational in nature and is reflected as a cumulative effect of an
accounting change in the accompanying consolidated statement of operations.
3. Discontinued Operations
On May 31, 2002, the Company completed an agreement to sell E-BStor an 80% owned
subsidiary to F. Kay Calkins a director. The Company recorded a gain on the sale
of $177,817. Ms. Calkins assumed all of the assets and liabilities on the books
as of May 31, 2002. There is an inter-company receivable of $1,568,815 which we
have taken a 100% reserve against, due to our inability to determine when they
will have cash flow to start repayment of this loan. The Consolidated Financial
Statements have been restated, where applicable, to reflect the E-BStor
discontinued operations. .
4. Subsequent events
a. In April 2002, David Calkins president, director and F. Kay Calkins director
of Pacel were granted a noncash option to purchase 100,000,000 shares of the
company's common stock in exchange for the a loan made to the company in 1999
amounting to $124,000 and securing and loaning to the Company, a personal line
of credit of up to $3,000,000 using the stock as collateral. Our ability to draw
on this line is based on the volume of the Common Stock multiplied by the VWAP
(volume weighted average price) for the thirty days preceding funding which must
be a minimum of $75,000. The maximum amount of collateral at any closing may not
exceed 4.9% of the issued and outstanding shares of the Company. Loan to value
is 35%. The interest rate is prime+2% payable quarterly in cash plus financing
expense of 9% of the draws. The Company will pay these expenses directly. The
terms and conditions set forth in the agreement we may not be able to meet.
F-5
4. Subsequent events (continued)
b. On April 5, 2002 the Company affected a one-for-one hundred reverse split
restating the number of common shares as of March 31, 2002 from 648,462,600 to
6,484,626 and December 31, 2001 from 247,064,400 to 2,470,644. All references to
average number of shares outstanding and prices per share have been restated
retroactively to reflect the split.
c. In September, 2002 FCL a wholly owned subsidiary was discharged from
bankruptcy. We have recorded a gain of $426,150 on the write off of the deficit
capital account.
d. In October, 2002 the Company wrote off a long term receivable of $71,000 from
CTM. The note was due October 15,2002. We have begun foreclosure of the
collateral, 100% of outstanding stock of CTM.
e. In October 2002, we acquired 100% of the assets of Bene Corp. Business
Services Inc. a human resource support company, for $720,000 to be paid over the
next six months in equal monthly payments of $180,000. We have an agreement with
High Desert Capital for funding of this acquisition. In connection with the
acquisition we signed two, two year employment agreements with the officers of
Bene Corp. for $75,000 per year.
FORWARD-LOOKING STATEMENTS
When used in this document and in our filings with the Securities and Exchange
Commission, in our press releases or other public or shareholder communications,
and in oral statements made with the approval of an authorized executive
officer, the words or phrases "will likely result," "are expected to," "will
continue," "is anticipated," "estimate," "project" or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to certain risks and uncertainties, which could cause our actual results to
differ materially from our historical results and those we presently anticipate
or project. You should not place undue reliance on any forward-looking
statements, which speak only as of the date made. Various factors could affect
our financial performance and could cause our actual results for future periods
to differ materially from any opinions or statements we express with respect to
future periods in any current statement. These factors include, but are not
limited to, the following: increases in our operating expenses outpacing our
revenues; our inability to expand our sales and distribution channels; the
failure of strategic relationships to implement and promote our software
products; the failure of third parties to develop software components necessary
for the integration of applications using our software; and the use of our
intellectual property by others.
We do not undertake--and we specifically decline any obligation--to publicly
release the result of any revisions which may be made to any forward-looking
statements to reflect events or circumstances after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events.
F-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL BUSINESS
Management's discussion and analysis of results of operations and financial
condition, include a discussion of liquidity and capital resources. The
following discussion (presented in hundreds, except per share amounts) should be
read in conjunction with the consolidated financial statements and notes
thereto.
Overview
PACEL's mission is in the process of being revised; to reflect the change to a
business to business marketing and sales methodology and away from the retail
sales arena. The company has entered the PEO human resources business, which is
one of the fastest growing markets, while still intending to provide businesses
with a full suite of products and services for software and hardware. To that
end PACEL has consolidated its subsidiaries into the pacel software division and
has established a new wholly owned subsidiary in Nevada that will be the PEO
branch of the company. The existing software products will be modified to meet
the needs of businesses and the existing software products for consumer sales
will be handled exclusively through the internet.
"Data Protector" our latest technology advancement (patent pending) software
product will provide complete file and data security. This new software is
designed to guard both the Inner Door (full protection on your PC from existing
and new viruses), i.e., the Love Bug, and someone trying to penetrate your PC
and by-pass your password, and the Outer Door (full Intruder protection from
Internet data collection devices and programs or hackers). Our current goal is
to utilize and extend these technologies in the production of derivative
products to provide secure Internet connectivity and enhanced desktop security
for customers in the small business market places like those established in the
PEO marketplace.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30,
2001
Revenues decreased to $435,218 in 2002 compared to $874,091 in 2001. The
decrease in revenues is directly attributed to sales generated from Advantage
Systems hardware sales. Hardware sales is a very competitive market with very
little profit. Advantage's sales were concentrated in one customer which is now
using a new supplier. With the loss of this customer we have shut down the
California manufacturing site and shifted all manufacturing to the Virginia
offices. In addition the sales from Nato contracts fell sharply in the nine
months ended September 30, 2002 compared to 2001. We have not received any new
8
RFP's from Nato for the last quarter of 2002. We had sales for human resource
services of $125,500 for the period. The Company is refocusing it's efforts on
expanding into the Human resource service markets. We believe that these
companies will provide us with distribution channels for our hardware and
software packages. The Company continues to believe that the Child Watch
software, Data Protector has sales potential if we can obtain adequate financing
for the marketing.
Cost of Goods Sold decreased to $403,702 in 2002 compared to $665,275 in 2001.
The decrease is directly attributed to the decrease in sales.
Research and Development expenses consist principally of salaries for software
developers, outside consulting, related facilities costs, and expenses
associated with computer equipment used in software development. Research and
development expenses decrease to $254,657 in 2002 compared to $306,806 in 2001.
The decrease is attributed the lack of funds available for the development of
new and enhanced products. Without adequate financing we may not be able to stay
on the cutting edge of technology.
Sales and marketing expenses include salaries and benefits, sales commissions,
travel expenses, and related facilities costs for our sales, marketing, customer
support, and distribution consultants. Sales and marketing expenses also include
the costs of programs aimed at increasing revenue, such as advertising, trade
shows, public relations, and other market development programs. Sales and
marketing expenses increased to $218,133 in 2002 compared to $76,227 in 2001.
The increase is attributed to focusing more efforts on developing markets for
our products and the increase in salaries, and commission expenses related to
the sales in Advantage as well as the hiring of additional sales personal.
General and administrative expenses consist principally of salaries and
benefits, travel expenses, and related facilities costs for finance and
administration, human resources, legal, information services, and executive
personnel of PACEL. General and administrative expenses also include outside
legal and accounting fees, and expenses associated with computer equipment and
software used in the administration of the business. General and administrative
expenses increased to $2,053,535 in 2002 compared to $868,833 in 2001. Is
attributable to the increase in services and legal fees..
Interest expense and financing cost increased to $122,808 in 2002 Compared to
$52,581 in 2001. The increase in interest expense is due the convertible notes
not being converted into common stock because of the low price of our common
stock. In addition we continue to borrow short term money at high interest
rates, instead of obtaining financing from equity.
Net (Loss) from continuing operations
Pacel's net loss before the cumulative effect of an accounting change increased
to $2,679,259 in 2002, compared to $1,378,241 in 2001. Pacel's net loss before
the cumulative effect of an accounting change increase is due to the decrease in
sales, the cost of legal and consulting services being paid in stock, instead of
cash, increased interest and financing costs
9
Three Months Ended September 30, 2002 Compared to Three Months Ended September
30, 2001
Revenues decreased to $118,261 in 2002 compared to $630,397 in 2001. The
decrease in revenues is directly attributed to the loss of sales from Advantage
Systems and Nato contracts..
Cost of Goods Sold decreased to $90,890 in 2002 compared to $424,460 in 2001.
The decrease is directly attributed to the decrease in sales.
Research and Development expenses consist principally of salaries for software
developers, outside consulting, related facilities costs, and expenses
associated with computer equipment used in software development. Research and
development expenses decrease to $21,831 in 2002 compared to $87,521 in 2001.
The decrease is attributed to the decrease in staff.
Sales and marketing expenses increased to $11,889 in 2002 compared to $27,939 in
2001. The decrease is attributed to cut backs due to limited cash flow.
General and administrative expenses increased to $383,345 to in 2002 compared to
$239,239, in 2001. The increase in administrative expenses is directly related
to the increase in services and legal fees.
Interest expense and financing cost increased to $52,500 in 2002 Compared to
$29,563 in 2001. The increase in interest expense is due the convertible notes
not being converted into common stock because of the low price of our common
stock and additional borrowing of short term money at high interest rates.
Net (Loss) from continuing operations
Net loss before the cumulative effect of an accounting change increased to
$458,063 in 2002, compared to $372,025 in 2001. Pacel's net loss before the
cumulative effect of an accounting change increase is due to the cost of legal
and consulting services being paid in stock, instead of cash, increased interest
and financing costs.
Liquidity
Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30,
2001
Net cash used from operating activities for the nine months ended September 30,
2002 and 2001 was $93,569 and $1,095,486 respectively. The use of cash in
operating activities for the nine months ended September 30, 2002 resulted
primarily from the short fall in sales off set by the reduction in of accounts
receivable and the increase in accounts payable and loans from stockholders.
Net cash used in investing activities for the nine months ended September 30,
2002 and 2001 was $0 and $13,856 respectively.
Net cash provided by financing activities for the six months ended September 30,
2002 and 2001 was $49,638 and $1,253,138, respectively. The decrease in
financing activities was attributable to repayment of notes payable of $125,362
and our inability to file an Sb-2.
10
At September 30, 2002, we had $14,110 in cash and cash equivalents compared to
$175,247 at September 30, 2001. We will continue to have significant capital
requirements due to limited sales projections as well as expected increases in
expenditures for sales and marketing. In July 2002 we laid off all non essential
administrative staff to reduce our cash requirements until significant sales are
projected and we can secure adequate financing.
In April 2002, David Calkins president, director and F. Kay Calkins director of
Pacel were granted a noncash option to purchase 100,000,000 shares of the
company's common stock in exchange for the a loan made to the company in 1999
amounting to $124,000 and securing and loaning to the Company, a personal line
of credit of up to $3,000,000 using the stock as collateral. Our ability to draw
on this line is based on the volume of the Common Stock multiplied by the VWAP
(volume weighted average price) for the thirty days preceding funding must be a
minimum of $75,000. The maximum amount of collateral at any closing may not
exceed 4.9% of the issued and outstanding shares of the Company. Loan to value
is 35%. The interest rate is prime+2 payable in cash quarterly and financing
expense of 9% of the draws. The Company will pay these expenses directly. The
terms and conditions set fourth in the agreement we may not be able to meet. To
date we have drawn approximately $850,000. Due to the low price of the stock
additional proceeds from this line of credit maybe limited. We intend to repay
this loan over the next six months.
In September 2002, we entered in an Equity line of credit for $5,000,000 from
High Desert Capital at a discount rate of 12% . We can borrow up to $500,000 per
month. The line will be used for the acquisition of BeneCorp. , Staff Leasing
and working capital. . Restricted stock of 45,000,000 for $180,000 as been until
a filing is complete.
Our cash requirements for funding our operations have greatly exceeded cash
flows from operations. We continually satisfy our capital needs through equity
financing which has become difficult due to the current investment environment.
Our liabilities consist of over extended accounts payable, payroll taxes, loans
from officers and officer's compensation.
We continually look for strategic relationships that will enhance our products
and services. Due to the present economic conditions in technology and our lack
of available cash flow it is becoming harder to develop these relationships. If
we do not develop these relationships and find additional sources of financing
it will hinder our ability to continue as a going concern.
We expect to continue our investing activities, including expenditures for
computer systems for research and development, sales and marketing, product
support, and administrative staff, as funds become available.
On August 1, 2002 , we formed a wholly owned subsidiary, Entremetrix. The
company has started a human resource support company, out of our California
offices. The company has been granted various contracts. We believe that
development of this business will provide us with a direct marketing channel for
our IT consulting, System Security, hardware and Web based technologies.
11
In October 2002, Pacel, Corp. and NeoTactix have come to an agreement to sever
their relationship. Neotactix has was instrumental in bringing Bene Corp. and
several other acquisitions to Pacel. To restore each party back to hole Pacel
Corp. has released the corporate name and any clients brought by NeoTactix to
the organization. In turn NeoTactix has agreed to waive any fees for the
BeneCorp or future acquisitions introduced to Pacel, Corp.
In October 2002, we acquired 100% of the assets of Bene Corp. Business Services
Inc. a human resource support company, for $720,000 to be paid over the next six
months in equal monthly payments of $180,000. We believe that this acquisition
will expand the Entremetrix business. We have an agreement with High Desert
Capital for funding of this acquisition. In connection with the acquisition we
signed two, two year employment agreements with the officers of Bene Corp. for
$75,000 per year.
In October 2002, we signed definitive agreement to acquire Staff Leasing Inc.
for $2,000,000 paid over the next two years depending upon the retention of
clients as well as profitability. We have an agreement with High Desert Capital
for the funding of this acquisition.
In September, 2002 FCL a wholly owned subsidiary was discharged from bankruptcy.
We have recorded a gain of $426,150 on the write off of the deficit capital
account.
In May 31, 2002, we sold our 80% ownership in EB-Store to F Kay Calkins. F. Kay
Calkins assumed all of the assets and all of the liabilities of record on May
31, 2002. There is an inter-company receivable of $1,568,815. We have taken a
100% percent reserve against the receivable due to our inability to determine
when EB-Store will be able to start repayment if at all. The Company recorded a
gain on the sale of $177,817. or $0.0064 per share-diluted and reflected this
business as a discontinued operation in September 2002.
Part II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to which any
of its property is the subject which are pending, threatened or contemplated or
any unsatisfied judgments against the Company. However, the Company has
responded to subpoenas addressed to the Company from the Securities and Exchange
Commission and the United States Attorney's Office requesting documents
involving transactions between the Company and Suburban Capital Corporation,
North Coast Investments, Inc., Frank Custable and certain other individuals. The
Company has been advised that it has not been identified as a target of the
investigation by the U.S. Attorney's Office.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults in Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
During the quarter, the following directors resigned due to personal reasons:
Keith P. Hicks and Corey M. LaCross. Neither furnished the Registrant with a
letter requesting that any matter be disclosed.
12
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Pacel Corporation
---------------
(Registrant)
Date: November 14, 2002
/s/ David F. Calkins
-----------------------------------
David F. Calkins, CEO & Chairman
CERTIFICATIONS
I, David F. Calkins, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pacel Corp. ;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
Date: November 14, 2002
/s/ David F. Calkins
-----------------------------------
David F. Calkins
Chief Executive Officer (or equivalent thereof)
I, David F. Calkins, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pacel Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
Date: November 14, 2002
/s/ David F. Calkins
-----------------------------------
David F. Calkins
Chief Financial Officer (or equivalent thereof)