Precision Aerospace Components, Inc. – ‘10KSB40’ for 12/31/00

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Annual Report — Small Business — [x] Reg. S-B Item 405   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB40     Form 10-Ksb405                                        46    170K 
 2: EX-21       Subsidiaries                                           1      4K 
 3: EX-23       Consent of Van Krevel & Company                        1      5K 

10KSB40   —   Form 10-Ksb405
Document Table of Contents

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                                        OMB APPROVAL

                                                 OMB Number: 3235-0420

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-KSB

[X]            ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE                 
SECURITIES EXCHANGE ACT OF 1934                 

For the fiscal year ended December 31, 2000.

[ ]             TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF                  
THE SECURITIES EXCHANGE ACT OF 1934             

 For the transition period from _______________________ to _____________

Commission file number :0-30185                               

GASEL TRANSPORTATION LINES, INC.
 -------------------------------------------------------------------------------
(Name of small business issuer in its charter)

OHIO                                           31-1239328 
-------------------------------            ------------------------------------ 
(State or other jurisdiction of            (I.R.S. Employer Identification No.) 
incorporation or organization)                                                  

COUNTY ROAD 10, ROUTE 4, BOX 181A, MARIETTA, OH                 45750           
-----------------------------------------------          ---------------------- 
(Address of principal executive offices)                 (Zip Code)             

Issuer's telephone number (740) 373-6479                                        
                         -----------------------------------------------------

Securities registered under Section 12(b) of the Exchange Act:                  

                                                                [Download Table]


Title of each class                       Name of each exchange on which 
                                          registered                     
                                                                         

------------------------------------      -------------------------------

------------------------------------      -------------------------------

Securities registered under Section 12(g) of the Exchange Act:                  

COMMON SHARES, NO PAR VALUE                                                     
--------------------------                                                    
(Title of class)                                                                

--------------------------------------------------------------------------------
(Title of class)                                                                

Check whether the issuer (1) filed all reports required to be filed by Section  
13 or 15(d) of the Exchange Act during the past 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 days. [X] Yes [ ] No        

Check if there is no disclosure of delinquent filers in response to Item 405 of 
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB.[X]                                        

The issuer's revenues for its most recent fiscal year were $13,022,429.         

The aggregate market value of voting stock held by non-affiliates of the        
registrant as of March 28, 2001, was $762,931.75 based upon $.875 per share     
being the closing sale price on that date as reported by the National           
Association of Securities Dealers Automated Quotation System-Over The Counter   
Bulletin Board. In making this calculation, the issuer has assumed, without     
admitting for any purpose, that all executive officers and directors of the     
company, and no other persons, are affiliates.                                  

On March 31, 2001, Gasel Transportation Lines, Inc. had outstanding 2,412,966   
common shares, without par value, which is the issuer's only class of common    
equity.                                                                         

 DOCUMENTS INCORPORATED BY REFERENCE

No documents are incorporated by reference.                                     

Transitional Small Business Disclosure Format (Check one): Yes   ; No X         
                                                      ---    ---

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PART I

ITEM 1. DESCRIPTION OF BUSINESS.                                                

GENERAL                                                                         

The Company operates primarily as a truckload contract carrier with various     
customers which ship truckload quantities of both refrigerated and              
non-refrigerated commodities over various distances on a nationwide basis. As a 
contract carrier, the freight rates are negotiated with the shipper and are     
dependent upon competition, place of origin and destination, and the type of    
commodity being hauled. The Company also operates a brokerage division out of   
its offices in the Columbus, Ohio area where it takes shipping orders and       
selects carriers other than the Company owned equipment or leased               
owner/operators to transport the freight for a negotiated fee.                  

In addition to its primary business, the Company operates three driver training 
schools, located in Marietta, Nelsonville, and Lima Ohio through its wholly     
owned subsidiary, Gasel Driver Training Schools, Inc. Operation of these schools
is licensed by the Ohio Department of Highway Patrol.                           

The Company intends to continue to expand its business and operations through   
internal growth and acquisitions. We are primarily interested in medium to long 
haul truckload carriers with compatible freight lanes and existing business that
can be integrated into the Company's methods of operation.                      

HISTORY                                                                         

Gasel Transportation Lines, Inc. (the "Company") is a corporation that was      
organized under the laws of the State of Ohio on January 27, 1988. The Company  
was initially formed for the purpose of becoming a transportation freight broker
hauling freight under the authority of other motor carriers on a commission     
basis with its sole offices located in Marietta, Ohio. Shortly after its        
inception, the Company evolved its business to obtain licensing with the        
Interstate Commerce Commission ("ICC") as a common and contract general         
commodities motor freight carrier in the 48 contiguous United States and Canada 
and to operate its own tractors and trailers. In September 1988, the Company    
received licensing from the ICC authorizing it to transport in interstate       
commerce both as a                                                              

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common and contract carrier, and the Company obtained licenses in the 48        
contiguous United States to operate under such licenses. Shortly thereafter, the
Company sought approval to operate in Canada, and it was licensed to operate    
there, too. The Company also obtained its authority to broker freight. In       
December, 1995, the ICC ceased operations and its regulatory functions and      
jurisdiction over motor carriers was transferred to the United States Department
of Transportation.                                                              

In July, 1995, the Company acquired a trucking terminal and offices on County   
Road 10, Rt. 4, Box 181A, Marietta, Ohio. This facility is now the principal    
office and main terminal for the Company. The actual mailing address is P.O. Box
1199, Marietta, Ohio 45750, and the telephone is (740) 373-6479.                

In July, 1996, the Company acquired the assets of a Florida based trucking      
company, Earl W. Kersey Trucking, Inc. that included a terminal and offices     
located on Highway 301 N, Dade City, Florida. During 1999, the Company purchased
5 acres of land adjoining the Dade City, Florida terminal.                      

At year end of 2000, the Company concluded its search for an acquisition when it
entered into an agreement to purchase certain assets of Eagle Transport, Inc.   
and Eagle Transportation Services, Inc., affiliated companies with offices in   
Plain City, Ohio (which is in the greater Columbus, Ohio area.) Effective with  
the first day of 2001, the Company purchased the transportation equipment owned 
by Eagle Transport, Inc. and the freight transportation business of Eagle       
Transportation Services, Inc., which historically had approximately $9,000,000  
in freight transportation revenues from both the equipment owned by Eagle       
Transport, Inc. and through owner/operators and brokered freight. The purchase  
included the leasing of an office at the former Eagle offices and the hiring of 
some of Eagle's former employees, primarily those involved in freight           
dispatching.                                                                    

The Company has had a steady growth in revenues and owned equipment over the    
past several years. During that time it has increased the number of owned,      
either directly or by capital lease, tractors from 23 to its current number     
as of March 31, 2001, of 112, its dry van box trailers from 31 to 162, and      
its refrigerated climate control trailers from 11 to 102. In addition, there    
are 11 tractors and 11 dry van box trailers that are owned and used in the      
driver training schools. Annual freight revenues went from $3,325,606 for       
calendar year 1994 to $12,516,997 for calendar year 2000.                       

The Company has received ISO 9002 certification by American Systems Registrar.  
This certification means that the Company has been audited and verified to have 
written policies and procedures for everything that the Company does, plus a    
backup procedure in the event of a failure.                                     

OPERATING STRATEGY                                                              

The Company is in direct competition with other motor freight carriers,         
including many companies that are significantly larger than the Company.        
Therefore, the Company focuses on providing a high level of transportation      
services to its customer base with commensurate rates, rather than competing    
primarily on the basis of price. Further, the Company has been able to compete  
with these other carriers by having its terminals,                              

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together with the equipment that was based out of them, located in areas where  
there were fewer competitors domiciled, by attempting to provide better and more
timely service, by operating new and specialized equipment, and by catering to  
certain major shippers. With the acquisition of the Eagle Transportation        
Services terminal location, the Company began competing in the Columbus, Ohio   
market where there are many carriers located, which helps to re-enforce the need
for the Company to concentrate on providing excellence in its services. Our     
company continues to upgrade its equipment so that it now operates late model   
equipment utilizing fully integrated computer systems with onboard              
communications systems.                                                         

OPERATIONS                                                                      

As a licensed carrier with the U. S. Department of Transportation and the       
various states and Canada, the Company business is dependent upon maintaining   
such operating authority. One condition of retaining such authority is that the 
Company must maintain liability insurance for protection of the public. Another 
is that the Company meet the safety fitness regulations as evidenced by a       
"satisfactory" by the U. S. Department of Transportation.                       

Each of the owned terminals are required to comply with various state and       
federal environmental regulations with regard to the storage of fuel and oil and
the disposal of waste oil and tires. There is no significant cost associated    
with operating under these regulations; however, in the event of a major fuel or
oil spillage, the cost of clean up could be significant.                        

DRIVERS                                                                         

The Company does not have any employees that work for it directly because it    
leases all of them from PeopLease Corporation. This includes the drivers. All of
the drivers must meet specific guidelines relating primarily to safety record,  
driving experience and personal evaluation, including DOT mandated drug testing 
and personal background checks. We recruit and retain drivers by offering       
competitive compensation packages, purchasing quality tractors and equipping    
them with optimal comfort and safety features, and emphasizing training and     
retention programs. Drivers can earn bonuses on a per mile basis for safety,    
paperwork, compliance and number of miles driven. All employees, including      
drivers, are eligible to participate in the 401(k) plan and health and life     
insurance plans provided by PeopLease Corporation.                              

Although we currently have an adequate number of drivers, there can be no       
assurance that we will not be affected by a shortage of qualified drivers in the
future. Significant driver turnover is a problem within the industry as a whole.
In addition, the trucking industry is experiencing a diminished workforce of    
qualified drivers. As a result, we must compete with other transportation       
service companies for the available drivers. We anticipate that the intense     
competition for qualified drivers in the trucking industry will continue. The   
Company is able to acquire new, inexperienced drivers through its driver        
training schools and utilize them in conjunction with experienced drivers as    
teams.                                                                          

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In addition to our driver employees, we contract with a limited select group of 
independent contractors who own and operate their own tractors and trailers. Our
experience with these has been limited to owner/operators who formerly worked   
with Eagle Transportation Services, Inc. Each owner-operator is required to     
enter into an owner-operator lease agreement which is cancelable by either party
upon thirty days notice. The owner-operators provide us with an additional      
source of drivers. As of March 31, 2001, there were 8 owner-operators working   
under this arrangement.                                                         

INSURANCE AND SAFETY                                                            

Our safety department is responsible for training and supervising personnel to  
keep safety awareness at its highest level. We have implemented an active safety
and loss prevention program at our corporate headquarters. The emphasis on      
safety begins in the hiring and continues in orientation, safety training, and  
drug testing. Newly hired drivers, regardless of experience level, must         
participate in a training program.                                              

Our safety and loss prevention program is comprised of the ongoing education,   
training and retraining of drivers regarding safe vehicle operation, loading and
unloading procedures, and accident reporting. It also includes random drug      
testing. There are incentives for driver compliance.                            

There is also a disciplinary system for our drivers. Pursuant to this system,   
disciplinary action ranges from written warnings to immediate termination       
depending on the frequency and severity of the offense. Our Assistant Vice      
President of Safety continuously monitors driver performance and makes          
recommendations to our executive officers regarding employment and retention of 
drivers.                                                                        

We are committed to securing appropriate insurance coverage at cost-effective   
rates. The primary risks that arise in the trucking industry consist of cargo   
loss and damage, personal injury, property damage and workers' compensation     
claims. We maintain insurance that we believe is adequate to cover our potential
liabilities and risks. Workers' compensation claims are through PeopLease       
Corporation, and we are able to get a better group rate because of our          
arrangement with them.                                                          

FUEL MANAGEMENT                                                                 

As are all trucking companies, we are dependent upon the availability of diesel 
fuel. We manage fuel purchases by directing our drivers to certain truck stops  
along designated routes that give us certain discounts in return for volume     
purchases on a recurring basis. Through the use of computerized monitoring      
devices imbedded in the engines of our tractors, we monitor fuel usage, miles   
per gallon, cost per mile, and cost per gallon. We have not experienced any     
difficulty in maintaining fuel supplies sufficient to support our operations.   
Nevertheless, shortages of fuel, increases in fuel prices or fuel tax rates or  
rationing of petroleum products could have a material adverse effect on our     
operations and profitability.                                                   

COMPETITION                                                                     

The trucking industry is highly competitive and fragmented. We compete primarily
with other medium to long-haul, temperature-controlled and dry van truckload    
carriers. Although there has been substantial downward pressure on the trucking 
industry's rate                                                                 

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structure, we believe that competition for the freight transported by us is     
based primarily on quality of service, such as just-in-time performance, and, to
a lesser degree, on freight rates. There are a number of other trucking         
companies which have substantially greater financial resources, operate more    
equipment or carry a larger volume of freight than we do. We also compete with  
other motor carriers in hiring qualified drivers. Our primary emphasis is       
service, especially to our core carrier customers, rather than price alone.     
However, due to substantial increases in operating costs, we have had to adjust 
our rates to enable us to make an operating profit. This has been an industry   
trend and has not caused a loss of customers.                                   

EMPLOYEES                                                                       

Through the leasing arrangement with PeopLease Corporation, we employ 171       
persons, of whom 125 are drivers, 9 are shop personnel, 16 are in operations,   
dispatch or brokerage, 17 administrative responsible for safety, billing,       
accounting and collections, and 4 are in executive management positions.        

ITEM 2. DESCRIPTION OF PROPERTY.                                                

The principal offices and terminal for the Company are Company owned and located
on 12.5 acres adjacent to State Route 4, approximately 4 miles southwest of     
Marietta, Ohio. The property has four buildings on it, the major one of which is
constructed of cement block and steel, is in good condition, and has the        
corporate offices, a drivers lounge, and three maintenance bays located therein.
Other buildings include a freight transfer building made out of steel that is in
fair to good condition, a wood building for the drivers school and lounge that  
was recently remodeled and is in good condition, and a cement block supply      
storage building that is in good condition. The lot is used for parking the     
Company transportation equipment and for operating a driving school practice    
area.                                                                           

The other major terminal operated by the Company is at the Company owned        
facility in Dade City, Florida. There is a pre-engineered steel terminal and    
office building located thereon that has three maintenance bays as well as      
offices and supply storage. The building is in good condition. The total area   
for this facility is 8.5 acres.                                                 

The Marietta, Ohio terminal has above ground fuel storage that is regulated by  
the EPA. Additionally, both terminals have waste oil storage facilities that are
also regulated.                                                                 

Both properties are subject to mortgages with the usual conditions that the     
Company is entitled to use of the properties for its business needs so long as  
they are operated in a lawful manner and the mortgage notes are paid and not in 
default. There are no other operating or use restrictions.                      

The Company also leases offices and parking facilities at Paulsboro, New Jersey,
Alta Vista, Virginia and Plain City, Ohio. The leases in New Jersey and Virginia
are month to month while the lease in Plain City, Ohio is for a term of five (5)
years with options to renew for two additional five year periods and includes   
office furniture and equipment.                                                 

ITEM 3. LEGAL PROCEEDINGS.                                                      

The Company from time to time has been a party to litigation incidental to its  
business, primarily involving claims for personal injury and property damage    
incurred in the transportation of freight. We are not party to any litigation   
which, individually or in the aggregate, management believes will have a        
material adverse effect on our financial condition or operations. We maintain   
insurance that we believe is adequate to cover our liability risks.             

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                    

No matters were submitted to a vote of security holders during the fourth       
quarter of fiscal 2000.                                                         

 PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.               

(a) During the past two years, the common shares of the Company have been traded
in the over-the-counter market and been included on the OTC Bulletin Board under
the trading symbol GSEL The following table sets forth the range of the high and
low bid prices for the common shares of the Company for each quarter during the 
past two years, as reported by the The Nasdaq Stock Market, Inc. These prices   
reflect inter-dealer prices, without retail mark-up, mark-down, or commission   
and may not represent actual transactions.                                      

                                                                [Download Table]


                                                           Bid Prices          
                                                           ----------          
                                                      High              Low    
                                                      ----              ---    
                                                                               
Calendar Year 2000                                                             

         First Quarter (1)                             --                 --   
         Second Quarter (1)                            --                 --   
         Third Quarter                               $2.5625            $1.625 
         Fourth Quarter                               $2.5              $1.125 

Calendar Year 1999                                                             

         First Quarter                                $4.25                $3  
         Second Quarter                               $3.75               $2.5 
         Third Quarter                                 $5                  $3  
         Fourth Quarter                                $5                 $2.75

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(1) There was no bid on the common shares during the first and second 
quarter of 2000 because the OTC Bulletin Board suspended allowing     
   quotations pending the filing of a registration statement by the Company.
Trading resumed in the third quarter.                                 

(b) On March 31, 2001, there were 78 shareholders of record of the common       
shares. There are also an estimated 125 beneficial shareholders who hold their  
shares in street name.                                                          

(c) The Company has never declared a cash dividend on its common shares and no  
assurance can be given that the Company will declare any cash dividend on its   
common shares in the future. Payments of dividends are within the discretion of 
the Company's Board of Directors and depend upon the earnings, capital          
requirements, and operating and financial condition of the Company, among other 
factors. The Company currently expects to retain its earnings to finance the    
growth of the Company and does not expect to pay cash dividends in the          
foreseeable future.                                                             

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.              

OVERVIEW.                                                                       

The following discussion should be read in conjunction with the Financial       
Statements, including footnotes, contained herein. The discussion is qualified  
in its entirety by the foregoing. Historical results of operations and the      
percentage relationships among any amounts in the Financial Statements, and any 
trends that may appear to be inferable therefrom, should not be taken as        
necessarily indicative of trends of operations or results of operations for any 
future periods.                                                                 

Except for certain historical information contained herein, the following       
discussion contains forward-looking statements that involve risks, assumptions  
and uncertainties which are difficult to predict. All statements, other than    
statements of historical fact, are statements that could be deemed              
forward-looking statements, including any projections of earnings, revenues, or 
other financial items, any statement of plans, strategies, and objectives of    
management for future operations; any statements concerning proposed new        
services or developments; any statements regarding future economic conditions or
performance; and any statements of belief and any statement of assumptions      
underlying any of the foregoing. Words such as "believe," "may," "could,"       
"expects," "hopes," "anticipates," and "likely," and variations of these words, 
or similar expressions, are intended to identify such forward-looking           
statements. The Company's actual results could differ materially from those     
discussed here. Factors that could cause or contribute to such differences      
include, but are not limited to, adverse changes in general economic conditions,
including adverse conditions to the companies that are the Company's core of    
shippers, fuel prices, driver costs, the ability to finance equipment, interest 
rates, the ability to borrow working capital, and other factors. The Company    
does not assume, and specifically disclaims, any obligation to update any       
forward-looking statement contained in this annual report.                      

RESULTS OF OPERATIONS                                                           

Freight revenues for the twelve months ended December 31, 2000, increased $     
1,319,128 (11.7%) to $12,516,997 from $11,197,869 for the year ended 1999.      
Training school revenues for the twelve months ended December 31, 2000,         
increased $217,829 to $505,432 (75.7%) from $287,603 for the twelve months      
period ended December 31, 1999. The increase in freight revenues was basically  
because the Company had more revenue equipment in service and fuel surcharges   
escalated with the increased prices of diesel fuel during the year 2000.        
Training school revenue increases were due to increased tuition cost to the     
students, increased number of schools in operation, and increased average       
enrollment per facility.                                                        

Operating income for the twelve months ended December 31, 2000 was a loss of    
($681,548), a decrease of $1,440,023 (189.9%) from $758,475 for the same period 
in                                                                              

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1999. The gross profit margin declined from 19.4% in 1999 to 7.6% in 2000.      
Primary factors for the gross margin decrease were the increased cost of diesel 
fuel, increased driver wages, increased insurance costs, and reduced equipment  
productivity, which resulted in less than expected revenues per unit.           

The net results were that the Company incurred a net loss after provision for   
income taxes for the twelve months period ended December 31, 2000 of            
($1,045,402) compared to a net profit of $100,697 for the same period in 1999, a
decrease of $1,146,099 (1,138.2%) from the prior year.                          

CAPITAL AND LIQUIDITY                                                           

The deficit earnings for the year 2000 have resulted in the Company being in a  
severe need of working capital. Cash at the end of the year was $7,736, but     
there was also an overdraft of $742,871.                                        

The Company has increased its short-term borrowings and is working with its     
long-term lenders to reach solutions to its capital needs. By year end 2000, the
Company had completed an extension or rewrite of most of its equipment notes.   
The extensions and rewrites were done to reduce the total payments for the      
months of October, November, and December of 2000, and improve cash flow. In    
most cases, the principal payments for the months of October through December   
2000 were deferred to the end of the notes, keeping its older, favorable        
interest rates unchanged and paying the applicable interest. In a few cases,    
principal and interest payments were waived for fees and placed on the end of   
the notes.                                                                      

The Company plans to raise sufficient equity and debt capital to offset its cash
deficit, and hopes that its anticipated net profits for the year 2001 will      
provide the additional necessary working capital.                               

As part of its 3-year business plan, the Company intends to raise approximately 
$500,000 in working capital during the first half of year 2001. Toward this     
goal, the Company is working with Strategica Financial Services, a merchant     
banking firm of Miami, Florida, and other industry specific lenders.            

The balance of the cash deficit and maintenance of a positive working capital   
position is planned to be provided by the Company's future earnings. To generate
positive earnings, the Company initiated an aggressive profit improvement       
program during the second quarter of 2000. The earnings improvements were       
primarily aimed at offsetting the rising fuel costs, reducing mileage without   
freight (deadhead miles), increasing equipment productivity, and generally      
reducing major operating costs.                                                 

A major step in decreasing fuel costs was to reduce the maximum speed of the    
tractors. Decreasing the tractor road speed improved the fleet average fuel     
consumption from 5.3 to 6.0 gallons per mile during the second quarter of 2000. 
The Company expects to                                                          

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achieve and sustain a fleet average of 6.2 miles per gallon with better         
driver/equipment monitoring and education.                                      

The price the Company pays for its on-the-road fuel was significantly lowered   
with the implementation of a designated fuel stop program. The Company completed
its negotiations with several major national fuel providers during the second   
quarter of 2000 resulting in the reduction of its preferred fuel providers from 
four to two and greatly improved the price per gallon, taking advantage of      
volume discounts and identifying the clear price leaders. Through this action,  
the Company has sustained an average of $.05 to $.08 per gallon favorable       
purchase price to the national average since the second quarter of 2000.        

Another major change in the Company's operations to reduce costs included       
installing a new driver wage scale designed to attract and maintain a higher mix
of experienced drivers to ultimately improve equipment revenue and operating    
costs. The Company also adopted a centralized dispatch method of organization   
aimed at improving the equipment productivity, and developed a                  
recruiting/retention program to reduce driver turnover and improve driver       
quality.                                                                        

While these corrective actions produced positive earnings in the second quarter 
of 2000, the succeeding third and fourth quarters were affected by several other
internal problems and external industry influences. Internally, the Company     
suffered the loss of a major customer with higher than average outbound and     
inbound rates, and length of haul. Replacement freight was not secured until the
end of the third quarter, causing a significant fall off in load activity and   
revenue.                                                                        

Simultaneously, the truckload industry was hit with a serious downturn in       
business, resulting in freight volume being down for most of the year 2000. In  
addition, fuel prices continued to escalate during the second half of the year, 
peaking at approximately $.30 per gallon over the prices at the beginning of the
year.                                                                           

Furthermore, there was an industry wide trend of significantly rising           
equipment-related insurance costs. Upon the renewal of its insurance coverage in
October 2000, the Company sustained an increase in its insurance costs by       
approximately 15%. This compares favorably, however, with more dramatic         
increases for some fleet owners reporting 30% to 60% increases in insurance.    

The Company is working with its insurance agent and underwriters to engineer    
ways to reduce and minimize its insurance costs, including the use of higher    
deductibles, more stringent hiring criteria, stronger safety practices, and     
company participating insurance programs.                                       

Although fuel surcharges are in place for most major customers, the Company     
estimates it recovers only approximately 60% of fuel price increases. This      
less-than-full fuel recovery is due to the majority of the Company's inbound    
freight being provided by third                                                 

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parties ("brokered freight") without the benefit of any fuel surcharges accruing
to the Company. The Company is working on replacing brokered freight with direct
business to secure higher rates and incur less deadhead, particularly in the    
Northeast and Florida.                                                          

Other corrective actions to improve earnings completed or in progress by the end
of 2000 include:                                                                

(1)  Increasing freight rates across the board by approximately 10%. Increases  
were implemented to be effective January 10, 2001. The Company did not
expect any adverse fall off in freight activity resulting from this   
    proposed increase as it had not raised the rates in over six years, and in
 fact, there was none. Additionally, there are signs of a trend by other
   carriers in the industry to increase rates as fuel, driver, and insurance
costs continue to rise.                                               

(2)  Continuing to improve the fuel costs reduction program. The Company        
believes it can further improve its fuel costs by stepping up its     
   equipment-monitoring program and implementing fuel performance incentives
to the drivers. The Company's trucks are equipped with an electronic  
monitoring device that is being utilized to cut down fuel consumption.
 Although the Company has consistently enjoyed a high rate of compliance
    with its designated fuel providers at approximately 90%, a level of 95% is
expected to ultimately be achieved.                                   

(3)  Installing a wireless equipment to dispatch communications system. At year 
end approximately fifty percent of the fleet was equipped with mobile 
communications gear ("Terion") providing satellite tracking of the    
    equipment and real time digital communications between dispatch and driver
for better load management, coordination with shippers, and improved  
equipment productivity. The balance of the units were expected to be  
installed by mid-January 2001, and in fact they were. Specific cost   
decreases are expected to occur in phone costs, and deadhead and      
out-of-route mileage.                                                 

(4)  Adding new driver training schools in Lima and Sandusky, Ohio. These new   
   locations not only contributed to additional gross revenues, but the Lima
 school is expected to supply the Company with a new driver base for the
    greater Columbus, Ohio metro area where the Company established a presence
    in January 2001 with its acquisition of the Eagle Transportation Services,
Inc.'s transportation business.                                       

(5)  Adding 21 new state-of-the-art tractors replacing 18 older models. Eleven  
    of the new tractor lot was put into service in late December 2000 with the
    balance installed by mid-January 2001. The Company expects to benefit from
the new equipment's lower operating costs and deferred note payments  
   resulting from paying off loans on the old equipment and financing of the
new equipment.                                                        

(6)  Adding 34 new and late model refrigerated trailers in late December 2000.  
     This equipment addition is expected to improve the Company's opportunity to
haul more                                                             

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   temperature controlled freight at higher rates and improve its efficiency
by eliminating costly freight transfers.                              

(7)  Developing a turnaround plan for the Company's Florida traffic lane. An    
    analysis of the Florida traffic lane, where the Company has a major driver
  base and equipment maintenance facility, was completed in December 2000.
The analysis revealed it was operating at a large deficit.            

The loss was a result of inadequate rates for both inbound freight to 
     Florida and outbound freight from the state. The Florida inbound rates were
    particularly low for the mid to southern regions of the state. The Company
     planned to increase its rates from its primary Florida inbound customers by
     $.10 to $.20 per mile for North Florida and $.20 to $.30 per mile for South
Florida by early January 2001, and it did so as planned.              

Additionally, the Company is working with a major Florida-based citrus
     customer that will potentially provide year-round freight out of Florida at
 significantly higher rates and eliminate excessive deadhead experienced
    during 2000. Meanwhile, in early 2001 it has placed additional power units
     with an existing profitable plant distributor and with the largest retailer
in the U.S. so that it has better utilization of its Florida based    
equipment.                                                            

Interim unaudited financial statements for the first two months of 2001 indicate
that these changes are beginning to have a positive effect on the results of    
operations.                                                                     

The Company aggressively pursued acquisitions of other truckload companies      
during the year 2000, primarily to secure complimentary traffic lanes and expand
its customer base.                                                              

The Company made one such acquisition at the year end which took effect as of   
January 1, 2001, by acquiring the equipment and transportation business of Eagle
Transport, Inc. and Eagle Transportation Services, Inc.(collectively "Eagle").  
By making such acquisition, the Company obtained a Columbus, Ohio area based    
motor freight brokerage operation and a company owned equipment truckload       
operation. Eagle Transportation Services, Inc. retained its warehousing         
business, which is expected to compliment the Company's motor freight business. 

Eagle's unaudited gross revenue for the year 2000 was approximately $9 million  
and it had been moderately profitable the past three years with net profits of  
approximately 3% of sales. Although no assurances can be given, management      
expects the Eagle acquisition to add at least $9 million in annual revenues to  
the Company and be a major factor in generating and improving its profits.      

Profit improvements for the Company are expected immediately from Eagle's higher
rates, better margins from brokerage (20+%), and greater equipment efficiencies 
from a larger, more geographically dispersed customer base.                     

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The Company also acquired several industry experienced executives and managers  
from Eagle who are expected to strengthen the Company's management team and its 
sales and marketing functions.                                                  

Although the Eagle acquisition is expected to replace a large portion of the    
existing lower margin brokered freight, the Company plans to continue           
acquisition pursuits to further assist in acquiring better outbound freight     
rates from the Northeast and Florida. During a period of what is popularly      
characterized as a "flushing out" of the trucking segment of the transportation 
industry, the Company expects to find additional acquisition candidates at      
extremely advantageous prices and terms.                                        

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ITEM 7. FINANCIAL STATEMENTS.                                                   

GASEL TRANSPORTATION LINES, INC.

AND ITS SUBSIDIARY

AUDITED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2000 AND 1999

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 TABLE OF CONTENTS

CONSOLIDATED FINANCIAL STATEMENTS                                               

                                                                [Download Table]
                                                      
Independent Auditor's Report                     1    

Consolidated Balance Sheet At December 31, 2000  2-3  

Statements of Consolidated Income (Loss) for          
the Years Ended December 31, 2000 and 1999       4    

Statements of Consolidated Stockholders' Equity       
for the Years Ended December 31, 2000 and 1999   5-6  

Statements of Consolidated Cash Flows for             
the Years Ended December 31, 2000 and 1999       7-9  

Notes to Consolidated Financial Statements       10-25

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VAN KREVEL & COMPANY
Certified Public Accountants
P. O. Box 1432
 Dublin, Ohio 43017-6432
614/761-3743

To the Board of Directors and Stockholders                                      
Gasel Transportation Lines, Inc.                                                
Marietta, Ohio                                                                  

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying consolidated balance sheet of Gasel            
Transportation Lines, Inc., and its subsidiary, as of December 31, 2000, and the
related statements of consolidated income (loss), stockholders' equity and cash 
flows for the years ended December 31, 2000 and 1999. 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 audits.           

We conducted our audits in accordance with generally accepted auditing          
standards. 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 that our audits provide 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 Gasel Transportation Lines,    
Inc., and its subsidiary, as of December 31, 2000, and the results of their     
operations and their cash flows for the years ended December 31, 2000 and 1999, 
in conformity with generally accepted accounting principles.                    

/s/ VAN KREVEL & COMPANY                                                        

Dublin, Ohio                                                                    

February 27, 2001                                                               

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEET
 December 31, 2000

                                                                [Download Table]

                                                                                
ASSETS                                                                          

Current Assets                                                                  
--------------                                                                  
Cash                                                                 $     7,736
Accounts Receivable-Trade                                              1,480,640
Inventory                                                                169,762
Prepaid Expenses and Other Current Assets                                183,976
                                                                     -----------

  Total Current Assets                                                 1,842,114

Property and Equipment                                                          
----------------------                                                          
Land and Buildings                                                     1,003,484
Tractors                                                              11,543,217
Trailers                                                               5,186,436
Shop Equipment                                                           381,484
Office Equipment                                                         193,603
                                                                     -----------
                                                                      18,308,224
Less Accumulated Depreciation                                          5,788,450
                                                                     -----------

  Net Property and Equipment                                          12,519,774

Deferred Income Taxes                                                        844
---------------------                                                           

Other Assets                                                                    
------------                                                                    
Goodwill                                                                 362,500
Other                                                                     46,613
                                                                     -----------

  Total Other Assets                                                     409,113
                                                                     -----------

TOTAL ASSETS                                                         $14,771,845
                                                                     ===========

 -2-

See accompanying notes to consolidated financial statements.

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEET
 December 31, 2000

                                                                [Download Table]

                                                                                
LIABILITIES AND STOCKHOLDERS' EQUITY                                            

Current Liabilities                                                             
-------------------                                                             
Cash Overdraft                                                     $    742,871 
Notes Payable                                                         1,342,293 
Accounts Payable-Trade                                                  284,249 
Accrued Contract Labor, Interest and Other Expenses                     135,249 
Current Portion of Long Term Debt                                     3,361,004 
                                                                   ------------ 

  Total Current Liabilities                                           5,865,666 

Long Term Debt                                                        7,542,764 
--------------                                                     ------------ 

  Total Liabilities                                                  13,408,430 

Stockholders' Equity                                                            
--------------------                                                            
Common Stock, no par value, 3,000,000                                           
  shares authorized, 2,412,966 issued                                           
  and 2,405,066 outstanding                                           1,539,640 
Additional Paid in Capital                                              223,229 
Retained Earnings (Deficit)                                            (316,702)
Less: Treasury Stock, at cost, 7,900 shares                             (17,833)
Less: Notes Receivable                                                  (64,919)
                                                                   ------------ 

  Total Stockholders' Equity                                          1,363,415 
                                                                   ------------ 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 14,771,845 
                                                                   ============ 

 -3-

See accompanying notes to consolidated financial statements.

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
Years Ended December 31, 2000 and 1999

                                                                [Download Table]


                                                     2000             1999      
                                                     ----             ----      
                                                                                
Revenues                                                                        
--------                                                                        
Freight Income                                   $ 12,516,997      $ 11,197,869 
Training School Revenue                               505,432           287,603 
                                                 ------------      ------------ 
                                                   13,022,429        11,485,472 

Cost of Revenue                                    12,037,856         9,255,161 
                                                 ------------      ------------ 

Gross Profit                                          984,573         2,230,311 

Operating Expenses                                                              
------------------                                                              
Garage Expenses                                       272,316           364,485 
General and Administrative                                                      
 Expenses                                           1,393,805         1,107,351 
                                                 ------------      ------------ 
                                                    1,666,121         1,471,836 

Operating Income (Loss)                              (681,548)          758,475 

Other Income (Expense)                                                          
----------------------                                                          
Other Income                                           13,274            54,934 
Interest Income                                        19,087            11,136 
Interest Expense                                     (898,500)         (708,684)
Gain(Loss)on Equipment Disposal                       (30,715)           34,836 
                                                 ------------      ------------ 
                                                     (896,854)         (607,778)
Income (Loss) Before                                                            
Tax Provision                                      (1,578,402)          150,697 

Provision for Income Taxes                           (533,000)           50,000 
                                                 ------------      ------------ 

Net Income (Loss)                                $ (1,045,402)     $    100,697 
                                                 ============      ============ 

Basic Earnings Per Share                         $      (.468)     $       .046 
                                                 ============      ============ 

Diluted Earnings Per Share                       $      (.434)     $       .042 
                                                 ============      ============ 

Weighted Average Common Shares Outstanding:                                     

Basic                                               2,232,443         2,190,879 
                                                 ============      ============ 

Diluted                                             2,407,955         2,389,768 
                                                 ============      ============ 

 -4-

See accompanying notes to consolidated financial statements.

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
 STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
Years Ended December 31, 2000 and 1999

                                                        [Enlarge/Download Table]


                                    Common Stock       Additional   Retained                        
                                    ------------          Paid in   Earnings  Treasury      Notes   
                                 Shares      Amount      Capital   (Deficit)   Stock      Receivable
                                 ------      ------      -------    -------    -----      ----------
                                                                                                    
Balances, December 31, 1998     2,127,096  $1,128,640   $216,394    $628,003  $(28,289)  $          

  Net Income                                                         100,697                        

  Exercise of Nov 1996 Warrant     30,870      38,500                                      (38,500) 

  Exercise of Oct 1998 Warrant     80,000     110,000                                      (27,500) 

  Purchase of 22,914 Shares                                                                         
   of Treasury Stock                                                           (46,526)             

  Sale of 34,082 Shares of                                                                          
   Treasury Stock                                         10,620                56,932              
                                ---------  ----------   --------    --------  --------   ---------- 

Balances, December 31, 1999     2,237,966  $1,277,140   $227,014    $728,700  $(17,833)  $ (66,000) 
                                =========  ==========   ========    ========  ========   ========== 

 -5-
See accompanying notes to consolidated financial statements.

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
 STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
Years Ended December 31, 2000 and 1999

                                                        [Enlarge/Download Table]


                                 Common Stock       Additional   Retained                              
                                 ------------          Paid in   Earnings     Treasury         Notes   
                              Shares      Amount      Capital   (Deficit)      Stock         Receivable
                              ------      ------      -------    -------       -----         ----------
                                                                                                       
Balances, December 31, 1999  2,237,966  $1,277,140   $227,014   $   728,700    $(17,833)     $(66,000) 

  Net Income (Loss)                                              (1,045,402)                           

  Issuance of Common                                                                                   
  Stock Shares                 175,000     262,500                                                     

  Cost of increase in                                                                                  
  authorized shares                                    (3,785)                                         

  Payment received                                                                              1,081  
                             ---------  ----------   --------   ----------        --------    -------- 

Balances, December 31, 2000  2,412,966  $1,539,640   $223,229   $ (316,702)       $(17,833)  $(64,919) 
                             =========  ==========   ========   ==========        ========   ========  

 -6-

See accompanying notes to consolidated financial statements.

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
 STATEMENTS OF CONSOLIDATED CASH FLOWS
Years Ended December 31, 2000 and 1999

                                                                [Download Table]


                                                      2000              1999    
                                                      ----              ----    
                                                                                
Cash Flows From Operating Activities                                            
------------------------------------                                            
Net Income (Loss)                                  $(1,045,402)     $   100,697 
Adjustments to reconcile net income(loss)                                       
to cash provided by operating activities:                                       
  Deferred Taxes                                      (533,000)          50,000 
  Depreciation                                       1,838,483        1,615,219 
  (Gain)Loss on Sale of Equipment                       30,715          (34,836)
  Provision for Doubtful Accounts                       40,000                  
  (Increase) Decrease in:                                                       
    Accounts Receivable-Trade                         (136,799)        (228,984)
    Inventory                                           53,490          (85,037)
    Prepaid Expenses and Other                                                  
       Current Assets                                  (30,050)          10,187 
  Increase (Decrease) in:                                                       
    Accounts Payable and                                                        
    Accrued Expenses                                   153,757          181,415 
                                                   -----------      ----------- 
      Net Cash Provided by                                                      
      Operating Activities                             371,194        1,608,661 

Cash Flows From Investing Activities                                            
------------------------------------                                            
Purchases of Property and Equipment                   (559,601)        (259,479)
Repayment of Accounts Receivable-Affiliate              61,356            3,500 
Purchase of Business                                  (150,000)            --   
Proceeds from Sale of Equipment                        272,000          118,132 
                                                   -----------      ----------- 
      Net Cash Used                                                             
          by Investing Activities                     (376,245)        (137,847)

Cash Flows From Financing Activities                                            
------------------------------------                                            
Increase in Cash Overdraft                             742,871             --   
Line of Credit, Net                                    375,246          268,291 
Proceeds from Long Term Borrowing                      513,499             --   
Decrease in Additional Paid in Capital                  (3,785)            --   
Proceeds from Warrant Exercise                                                  
 and Sale of Treasury Stock                               --            185,052 

-7- 

See accompanying notes to consolidated financial statements.

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
STATEMENTS OF CONSOLIDATED CASH FLOWS (continued) 
Years Ended December 31, 2000 and 1999

                                                                [Download Table]


                                                     2000              1999     
                                                     ----              ----     
                                                                                
Repayment of Note Receivable                           1,081               --   
Purchase of Treasury Shares                                             (46,526)
Principal Payments on Long                                                      
  Term Borrowing                                  (1,491,631)        (1,446,120)
Principal Payments Under                                                        
  Capital Lease Agreements                          (145,106)          (572,435)
                                                 -----------        ----------- 
    Net Cash Used                                                               
          by Financing Activities                     (7,825)        (1,611,738)
                                                 -----------        ----------- 

Net Decrease in Cash                                 (12,876)          (140,924)

Cash & Cash Equivalents-January 1                     20,612            161,536 
                                                 -----------        ----------- 

Cash & Cash Equivalents-December 31              $     7,736        $    20,612 
                                                 ===========        =========== 

Supplemental Disclosures:                                                       

  Interest Paid                                  $   858,604        $   708,684 
                                                 ===========        =========== 

  Non-Cash Investing                                                            
  and Financing Activities                                                      

    Purchases of Property                                                       
    and Equipment with                                                          
    Direct Financing                             $ 4,024,433        $ 2,211,898 
                                                 ===========        =========== 

    Issuance of Stock Warrants                                                  
    and Common Stock with                                                       
    Proceeds of Notes Receivable                 $      --          $   148,500 
                                                 ===========        =========== 

 -8-

See accompanying notes to consolidated financial statements.

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
 STATEMENTS OF CONSOLIDATED CASH FLOWS (continued)
Years Ended December 31, 2000 and 1999

                                                                [Download Table]


                                                      2000             1999     
                                                      ----             ----     
                                                                                
Supplemental Disclosures (continued):                                           

   Direct Refinancing of Notes Payable              $1,102,760       $      --  
                                                    ==========       ===========

   Acquisition of Freight Transport                                             
   And Freight Brokerage Business of                                            
   Eagle Transportation Services, Inc.                                          
   and Eagle Transport, Inc. (Eagle)                                            

     Assets Acquired in 2000:                                                   
       Property and Equipment                       $1,092,225                  
       Goodwill                                        362,500                  
                                                    ----------                  
                                                    $1,454,725                  
                                                    ==========                  
     Payment for Assets Acquired:                                               
       Cash Paid at Closing                         $  150,000                  
       Note Issued to Seller                           150,000                  
       Obligation Under Agreement to                                            
         Indemnify Seller's Debt                       892,225                  
       Issuance of 175,000 shares of                                            
         Common Stock to Seller                        262,500                  
                                                   -----------                  
                                                   $ 1,454,725                  
                                                   ===========                  

 -9-

See accompanying notes to consolidated financial statements.

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

This summary of significant accounting policies of Gasel Transportation Lines,  
Inc., and its subsidiary, Gasel Driver Training Schools, Inc., is presented to  
assist in understanding the Company's financial statements. The financial       
statements and notes are representations of the Company's management who is     
responsible for their integrity and objectivity. These accounting policies      
conform to generally accepted accounting principles and have been consistently  
applied in the preparation of the financial statements.                         

NATURE OF OPERATIONS                                                            

The Company is engaged in the interstate trucking industry. Gasel holds federal 
authority as a motor freight common carrier, contract carrier, and freight      
broker. Its authority includes the continental United States and Canada.        
Principal offices of the Company are located in Marietta, Ohio. In addition, the
Company has motor terminal and maintenance facilities in Marietta, Ohio,        
Columbus, Ohio, and Dade City, Florida. Other operating locations include motor 
terminals in Paulsboro, New Jersey, and Alta Vista, Virginia. Gasel's subsidiary
is a state-licensed Class A truck driver training school.                       

CAPITAL AND LIQUIDITY                                                           

The accompanying financial statements have been prepared in conformity with     
generally accepted accounting principles, which contemplate continuation of the 
Company as a going concern. Although the Company's historical earnings have been
consistently positive, it sustained a substantial operating loss in 2000, which 
consumed a significant amount of working capital.                               

At December 31, 2000, although the Company's current liabilities exceeded its   
current assets by $4,023,552, a large part of the deficit ($3,361,004) relates  
to the current portion of long term debt, which management expects to pay from  
its normal operations cash flow.                                                

Management believes it has the capability to obtain additional capitalization in
the form of debt and equity to appropriately capitalize the Company.            
Additionally, to offset certain external conditions that could adversely effect 
the Company's financial performance and condition, such as diesel fuel prices,  
insurance and the general economy, management believes the Company has adequate 
contingencies in place.                                                         

-10-

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)                 

CAPITAL AND LIQUIDITY (continued)                                               

Strong corrective actions have been installed in 2000 and in early 2001 to      
generate positive cash flows. These actions are mainly designed to increase     
revenues through rate increases and reduce costs through equipment productivity 
improvements and operating cost reductions.                                     

In addition, the Company completed the acquisition of certain assets and book of
business on December 27, 2000, of Eagle Transportation, Inc., and related       
companies, a historically profitable, approximately $9 million per year gross   
revenues (unaudited) motor freight operation based in Columbus, Ohio.           

Management expects this acquisition to provide a significant increase in the    
Company's freight volume, equipment efficiencies and contribute strongly to its 
plans to generate future positive cash flows.                                   

Interim unaudited financial statements for the first two months of 2001 indicate
that these changes are beginning to take effect,  as the Company earned a modest
profit.                                                                         

PRINCIPLES OF CONSOLIDATION                                                     

The consolidated financial statements include the accounts and operations of the
Company and its wholly owned subsidiary. All significant inter company accounts 
and transactions have been eliminated.                                          

REVENUE RECOGNITION                                                             

The Company recognizes revenue and direct shipment costs upon delivery of the   
related freight. Direct shipment costs generally include the leased driver      
costs. These costs are recorded as an expense and as accrued contract labor upon
delivery of the related freight. Driver training school revenues and rental     
income are recognized when earned.                                              

FAIR VALUE OF FINANCIAL INSTRUMENTS                                             

The Company's financial instruments include cash, cash equivalents, and long    
term debt. The carrying amounts of these financial instruments have been        
estimated by the Company to approximate fair value.                             

-11-

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)                 

CASH AND CASH EQUIVALENTS                                                       

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.                                                               

USE OF ESTIMATES IN THE FINANCIAL STATEMENTS                                    

The preparation of financial statements in conformity with generally accepted   
accounting principles requires management to make estimates and assumptions that
effect certain reported amounts and disclosures. Accordingly, actual results    
could differ from those estimates.                                              

CREDIT RISK                                                                     

The Company maintains cash in demand deposit accounts with federally insured    
banks. At times, the balances in the accounts may be in excess of federally     
insured limits.                                                                 

Financial instruments that potentially subject the Company to concentrations of 
credit risk consist principally of trade receivables. Credit risk is generally  
diversified due to the large number of entities comprising the Company's        
customer base and their dispersion across many different industries and         
geographic regions.                                                             

ACCOUNTS RECEIVABLE                                                             

Accounts receivable are shown net of an allowance for doubtful accounts of      
$40,000.                                                                        

INVENTORY                                                                       

Inventories consist primarily of maintenance supplies and fuel and are stated at
the lower of cost (first-in, first-out) or market value.                        

-12-

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)                 

PROPERTY AND EQUIPMENT                                                          

Property and equipment is recorded at cost. For financial reporting purposes,   
the cost of such property is depreciated principally by the straight-line method
over the estimated useful lives of 3-10 years for tractors and trailers, 40     
years for buildings and 3-10 years for shop and office equipment. Amortization  
of equipment purchased under capitalized lease obligations is included in       
depreciation expense. For tax reporting purposes, accelerated depreciation or   
applicable cost recovery methods are used. Gains and losses are recognized in   
the year of disposal. Tires purchased with tractors and trailers are capitalized
as a part of the cost of such equipment, with replacement tires being           
inventoried and expensed when placed in service.                                

GOODWILL                                                                        

Goodwill purchased as part of the acquisition of the freight transport and      
freight brokerage business of Eagle, as further described in Note 17, is being  
amortized on a straight-line basis over an estimated beneficial life of fifteen 
years.                                                                          

The carrying value of goodwill is evaluated if circumstances indicate a possible
impairment in value. If undiscounted cash flows over the remaining amortization 
period indicate that goodwill may not be recoverable, the carrying value of     
goodwill will be reduced to the estimated fair market value.                    

ADVERTISING                                                                     

All advertising costs are expensed as incurred. Advertising expense was $36,243 
and $20,580 for the years ended December 31, 2000 and 1999, respectively.       

-13-

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)                 

STOCK OPTIONS                                                                   

The Company has elected to account for the stock option plan under Accounting   
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25) and related Interpretations in accounting. The alternative fair value       
accounting provided under FASB Statement No. 123, "Accounting for Stock-Based   
Compensation," (SFAS No. 123) requires use of option valuation models that were 
not developed for use in valuing employee stock options. Under APB 25, when the 
exercise price of the Company's stock options equals the market price of the    
underlying stock on the date of grant, no compensation expense is recognized.   

STOCK SPLIT                                                                     

In December 1999, outstanding shares of common stock were split two-for-one. All
share and per share amounts have been restated.                                 

INCOME TAXES                                                                    

Deferred income taxes are reported using the liability method. Deferred tax     
assets are recognized for deductible temporary differences and deferred tax     
liabilities are recognized for taxable temporary differences. Temporary         
differences are the changes between the reported amounts of assets and          
liabilities and their tax bases. Deferred tax assets are reduced by a valuation 
allowance, when in the opinion of management, it is more likely than not that   
some portion or all of the deferred tax assets will not be realized. Deferred   
tax assets and liabilities are adjusted for the effects of changes in tax laws  
and rates on the date of enactment.                                             

NOTE 2 - NOTES RECEIVABLE                                                       

                                                                [Download Table]


Notes receivable consists of:                            2000           1999    
                                                         ----           ----    
                                                                                
Unsecured note receivable, dated                                                
June, 1999, Merchants Financial,                                                
10% due on demand                                       $26,419          $27,500

Unsecured note receivable, dated                                                
August, 1999, Corna Securities,                                                 
10% due on demand                                        38,500           38,500
                                                        -------          -------

                                                        $64,919          $66,000
                                                        =======          =======

(See Note 10.)                                                                  

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 3 - LONG TERM DEBT                                                         

Long-term debt consists of the following:                                       

                                                                [Download Table]


                                                   2000                1999     
                                                   ----                ----     
                                                                                
Mortgages Payable                                $   718,044         $   737,418
Notes Payable                                      9,032,327           5,180,986
Capital Lease Obligations                          1,153,397           1,041,944
                                                 -----------         -----------

                                                  10,903,768           6,960,348
Less Current Maturities                            3,361,004           2,217,776
                                                 -----------         -----------

                                                 $ 7,542,764         $ 4,742,572
                                                 ===========         ===========

Notes payable and capitalized lease obligations are collateralized by property  
and equipment with a net book value of $9,502,778 at December 31, 2000 and      
$7,237,886 at December 31, 1999. The mortgages payable are collateralized by    
land and building with a net book value of $926,512 at December 31, 2000, and   
$924,126 at December 31, 1999, as well as a first security interest in all shop 
and office equipment. One of the mortgages is personally guaranteed by Michael  
J. Post, President, CEO, and majority stockholder, and by his wife. Certain     
other notes are personally guaranteed by Mr. Post (see Note 12). Interest rates 
range from 3.9% to 10.75% during 2000 and 7.25% to 10.6% during 1999 for the    
notes. Rates for the mortgages ranged from 8.25% to 9.0% for 2000 and 1999.     

Annual maturities on long term debt, excluding capital lease obligations, for   
the five years ending after December 31, 2000, are as follows:                  

                                                                [Download Table]
                                           
       2001                      $2,799,339
       2002                       2,533,002
       2003                       2,156,179
       2004                       1,419,871
       2005                         421,542
 Thereafter                         420,438
                                 ----------
                                 $9,750,371
                                 ==========

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 4 - NOTES PAYABLE                                                          

The Company has available a $2,000,000 line of credit with Associates           
TransCapital Services of Irving, Texas at December 31, 2000 and 1999. At        
December 31, 2000, $1,258,827 was outstanding on this line, with an interest    
rate of 10.5%. At December 31, 1999, $967,047 was outstanding on this line, with
an interest rate of 9.5%. Interest is charged at 1% over prime and is due       
monthly. This line of credit agreement matures in May 2002, with a one year     
renewal. This line of credit is collateralized by accounts receivable and       
deposit accounts and is personally guaranteed by the Company's majority         
stockholder (see Note 12).                                                      

No dividends may be paid, either in cash or in kind, on the Company's common    
stock without the prior written consent of Associates TransCapital Services. No 
dividends were paid in 2000 or 1999.                                            

The Company has a short term note with a bank, due February, 2001 totaling      
$83,466 at December 31, 2000, with an interest rate of 11%, secured by          
equipment.                                                                      

NOTE 5 - LEASES                                                                 

The Company leases tractors and trailers under leases that expire from 2001     
through 2005. These assets are included in property and equipment as follows:   

                                                                [Download Table]


                                                      2000             1999     
                                                      ----             ----     
                                                                                
Tractors                                            $   739,203     $ 2,072,268 
Trailers                                                939,817         530,756 
                                                    -----------     ----------- 

                                                      1,679,020       2,603,024 
Less Accumulated Depreciation                       (   451,990)     (1,211,145)
                                                    -----------     ----------- 

                                                    $ 1,227,030     $ 1,391,879 
                                                    ===========     =========== 

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 5 - LEASES (continued)                                                     

Future minimum annual lease payments as of December 31, 2000, are as follows:   

                                                                [Download Table]


                                                                Capital   
                                                                 Leases   
                                                                 ------   
                                                                          
                           2001                                $  658,968 
                           2002                                   289,715 
                           2003                                   221,849 
                           2004                                   150,019 
                           2005                                    31,097 
                                                               ---------- 
                                                                1,351,648 
Less amount representing interest                                         
  at rates ranging from 3.6% to 12.2%                            (198,251)
                                                               ---------- 

Present value of net minimum                                              
  lease payments                                                1,153,397 
Less current portion                                             (561,665)
                                                               ---------- 
     Total                                                     $  591,732 
                                                               ========== 

During 2000, the Company leased terminals located in Peru, Illinois and         
Paulsboro, New Jersey on a month to month basis. Rent expense paid in 2000 was  
$35,289 and $42,251 in 1999.                                                    

In August 1998, the Company entered into a one year employee leasing agreement  
with Employee Solutions, Inc., (ESI), an Arizona corporation. ESI provided the  
Company with all of its drivers, mechanics and office workers. In 1999, the     
Company paid ESI $4,212,736 for its leased employees.                           

In December 1999, the Company entered into a one year employee leasing agreement
with PeopLease Corporation, a South Carolina Corporation. PeopLease provides the
Company with all of its drivers,  mechanics  and office  workers.  In 1999,  the
Company  made no payments to  PeopLease.  In 2000,  the Company  paid  PeopLease
$4,764,868 for its leased employees.                                            

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 6 - INCOME TAXES                                                           

Income tax expense (benefit) consists of:                                       

                                                                [Download Table]


                           December 31,            
                    2000             1999          
                    ----             ----          
                                                   
Current:                                           
         Federal  $  --            $   --          
         State       --                --          
                  ---------        --------  ------
                  $  --            $   --          
                  =========        ========        

Deferred:                                          
         Federal  $(533,000)       $ 50,000        
         State       --                --          
                  ---------        --------        
                  $(533,000)       $ 50,000        
                  =========        ========        

A reconciliation of the total provision for income taxes with amounts determined
by applying the statutory U.S. Federal income tax rates to income tax provisions
is as follows:                                                                  

                                                                [Download Table]


                                                    December 31,      
                                              2000             1999   
                                              ----             ----   
                                                                      
Income tax at statutory rates               $ (536,200)       $ 43,900
Add:  Tax effect of                                                   
  permanent differences                          3,200           6,100
                                             ---------        --------
Total income tax provision                   $(533,000)       $ 50,000
                                             =========        ========

The effects of temporary differences that give rise to significant portions of  
the deferred tax assets and deferred tax liabilities are presented below:       

                                                                [Download Table]


                                                     December 31
                                                         2000   
                                                         ----   
                                                                
Deferred tax assets:                                            
  Net operating loss carryforward                    $1,471,959 
  Contribution carryover                                  4,235 
                                                     ---------- 
         Total deferred tax assets                   $1,476,194 
                                                     ========== 

Deferred tax liabilities:                                       
  Property and equipment, principally                           
  due to differences in depreciation                 $1,475,350 
                                                     ---------- 

         Total deferred tax liabilities              $1,475,350 
                                                     ========== 

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 6 - INCOME TAXES (continued)                                               

These amounts are presented in the  accompanying  consolidated  balance sheet as
follows:                                                                        

                                                                [Download Table]
                                                                
Noncurrent deferred tax assets                       $1,476,194 
Noncurrent deferred tax liability                    (1,475,350)
                                                     ---------- 
Net deferred tax asset                               $      844 
                                                     ===========

At December 31, 2000, the Company has net operating loss carryforwards of $4.2  
million for income tax purposes that expire in years 2009 through 2020.         

NOTE 7 - EARNINGS PER COMMON SHARE AND COMMON EQUIVALENT SHARE                  

Earnings per common and common equivalent share were computed by dividing net   
income (loss) by the weighted average number of shares of common stock          
outstanding during the year. At December 31, 2000 and 1999, the number of common
shares was increased by the number of shares issuable on the exercise of        
outstanding stock options and warrants when the market price of the common stock
exceeds the exercise price of the options and warrants. This increase in the    
number of common shares was reduced by the number of common shares that are     
assumed to have been purchased with the proceeds from the exercise of the       
options; those purchases were assumed to have been made at the average price of 
the common stock during that part of the year when the market price of the      
common stock exceeded the exercise price of the options.                        

The following data shows the amounts used in computing earnings per share (EPS) 
and the effect on income and the weighted average number of shares of dilutive  
potential common stock.                                                         

                                                                [Download Table]


                                                              December 31,      
                                                        2000             1999   
                                                        ----             ----   
                                                                                
Income (loss) available to                                                      
common stockholders used                                                        
in basic EPS and diluted EPS                         $(1,045,402)       $100,697
                                                     ===========        ========

Weighted average number of                                                      
common shares used in basic EPS                        2,232,443       2,190,879
                                                       =========       =========

Effect of dilutive securities:                                                  
  Stock options and warrants                             175,512         198,889
                                                         =======         =======

Weighted average number of common                                               
shares and dilutive potential common                                            
stock used in diluted EPS                              2,407,955       2,389,768
                                                       =========       =========

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 8 - STOCKHOLDERS' EQUITY                                                   

On November 26, 1999, the Company authorized a 2 for 1 stock split for          
stockholders of record at December 10, 1999 and delivered the split shares on   
December 20, 1999. (See Note 1.)                                                

NOTE 9 - STOCK OPTIONS                                                          

The Company has adopted a stock option plan which provides for the granting of  
options to certain officers, directors and key employees of the Company.        
Currently, options for 310,000 shares of common stock have been issued under    
this plan. The option price, number of shares and grant date are determined at  
the discretion of the Company's board of directors. Grantees vest in the options
at the date of the grant. The exercise price of each option that has been       
granted under the plan equals 100% of the market price of the Company's stock on
the date of the grant. Options under this plan vest on the grant date and are   
exercisable for a period not to exceed 10 years from the option grant date.     
Options are non-transferable.                                                   

A summary of the status of the Company's stock option plan as of December 31,   
2000 and 1999, and changes during the years then ended is presented below:      

                                                                [Download Table]


                                  2000                        1999            
                                  ----                        ----            

                                        Weighted                      Weighted
                                         Average                       Average
                                        Exercise                      Exercise
                              Options    Price         Options          Price 
                              -------    -----         -------          ----- 
                                                                              
Outstanding at beginning                                                      
  of year                     310,000   $  .81        310,000        $  .81   
Granted                          --                     --                    
Exercised                        --                     --                    
Forfeited                        --                     --                    
                              --------                -------                 

Outstanding at                                                                
  end of year                 310,000   $  .81        310,000        $  .81   
                              ========  ======        ========       ======   

Exercisable at                                                                
  end of year                 310,000                 310,000                 
                              =======                 =======                 

Weighted average fair                                                         
value of options                                                              
granted during the year       $   --                  $  --                   
                              =======                 =======                 

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 9 - STOCK OPTIONS (continued)                                              

The following table summarizes information about stock options outstanding at   
December 31, 2000.                                                              

                                                                [Download Table]


                              Weighted                          
 Range           Number       Average    Weighted       Number  
  of          Outstanding    Remaining    Average    Exercisable
Exercise          at        Contractual   Exercise       at     
 Prices        12/31/00        Life        Price       12/31/00 
 ------        --------        ----        -----       -------- 
                                                                
   $.95          210,000        6.42       $.95         210,000 
   $.50          100,000        7.75       $.50         100,000 

The Black Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully   
transferable. In addition, option valuation models require the input of highly  
subjective assumptions including the expected stock price volatility. Because   
the Company's stock options have characteristics significantly different from   
those of traded options, and because changes in the subjective input assumptions
may materially affect the fair value estimate, in management's opinion, the     
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.                                                     

For purposes of pro forma disclosures, the estimated fair value of the options  
is amortized to expense over the options' vesting period. There were no options 
granted during the years ended December 31, 2000 and 1999; therefore, no pro    
forma presentations are required.                                               

NOTE 10 - WARRANTS                                                              

As part of the July,  1996  securities  offering,  the underwriter was granted a
warrant to purchase  30,870 shares of common stock at a purchase  price of $1.25
per share.  This  warrant was  exercised  in August,  1999,  by  executing a 10%
cognovit  note in the amount of $38,500,  of which  $26,419 was  outstanding  at
December 31, 2000.                                                              

As part of a consulting agreement dated October, 1998, Merchants Financial      
acquired 80,000 shares of the Company's common stock at a purchase price of     
$1.38 per share by executing 10% cognovit demand notes totaling $110,000. At    
December 31, 2000, $27,500 of these cognovit notes were outstanding.            

There were no outstanding warrants at December 31, 1999.                        

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 10 - WARRANTS (continued)                                                  

As part of the December 2000 acquisition of the freight transport and freight   
brokerage business of Eagle Transportation Services, Inc. and Eagle Transport,  
Inc., the Sellers were granted warrants to purchase 100,000 shares of common    
stock at $2.50 per share and 75,000 shares of common stock at $3.00 per share,  
exercisable after one year and expiring in 10 years.                            

A summary of the status of the Company's warrants as of December 31, 2000 and   
1999, and changes during the years then ended is presented below:               

                                                                [Download Table]


                                          2000                1999         
                                          ----                ----         

                                              Weighted             Weighted
                                               Average              Average
                                              Exercise             Exercise
                                     Shares    Price     Shares      Price 
                                     ------    -----     ------      ----- 
                                                                           
Outstanding at                                                             
beginning of year                       --               110,870     $1.34 

Granted                              175,000    $2.71                      
Exercised                               --              (110,870)    $1.34 
Expired                                 --                 --              
                                     -------             -------           

Outstanding at                                                             
end of year                          175,000    $2.71      --        $ --  
                                     =======    =====    =======     ===== 

Warrants Exercisable                                                       
At Year End                            --                  --              
                                     =======             =======     ====  

NOTE 11 - RECLASSIFICATIONS                                                     

Certain prior year amounts have been reclassified to conform with the current   
presentation.                                                                   

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 12 - RELATED PARTY TRANSACTIONS                                            

Michael J. Post, President and majority stockholder of the Company, is the sole 
stockholder of Zip Services, Inc., a West Virginia Corporation. At December 31, 
1999, the Company had an account receivable due from Zip Services in the amount 
of $61,356, which was repaid in 2000.                                           

During 2000, the Company collateralized two loans from local banks with 985,408 
shares of Gasel's common stock owned by Michael J. Post. Debt associated with   
these loans at December 31, 2000 was $597,693. Certain loans made by the Company
are personally guaranteed by Mr. Post.                                          

NOTE 13 - MAJOR CUSTOMERS                                                       

During 2000, the Company had one major customer, sales to which exceeded 10% of 
the Company's total sales. Sales to this customer totaled $1,573,238 for the    
year ended December 31, 2000.                                                   

During 1999, the Company had one major customer, sales to which exceeded 10% of 
the Company's total sales. Sales to this customer totaled $1,639,082 for the    
year ended December 31, 1999.                                                   

NOTE 14 - FUEL AVAILABILITY AND COST                                            

The Company is dependent upon the availability of diesel fuel. Increases in the 
cost of fuel may, in the future, adversely affect the profitability of the      
Company. There can be no assurance that diesel fuel prices will not increase.   
There also can be no assurance that the Company will be able to recover any     
future increase in fuel costs and fuel taxes through increased freight rates.   

NOTE 15 - DRIVERS                                                               

The Company offers a driver training program through its subsidiary's operations
which offers incentives to attract and retain qualified drivers. Although the   
Company has experienced no significant downtime due to inability to secure      
qualified drivers, no assurance can be given that a shortage will not adversely 
affect the Company in the future.                                               

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 16 - CONTINGENCIES                                                         

The Company is subject to various other claims, legal proceedings and           
investigations covering a wide range of matters that may arise in the ordinary  
course of business. Management believes the resolutions of claims and pending   
litigation will not have a material effect, individually or in the aggregate, to
the financial position, results of operations and cash flows prior to           
contemplating potential insurance recoveries or accruals.                       

NOTE 17 - ACQUISITIONS AND COMMITMENTS                                          

Effective January 1, 2001, Gasel acquired the freight transport and freight     
brokerage business of Eagle Transportation Services, Inc. and Eagle Transport,  
Inc., together with certain transportation equipment owned by them. Eagle       
Transportation Services, Inc. and Eagle Transport, Inc. are Ohio corporations   
with their principal offices located in Plain City, Ohio.                       

The purchase price of the acquisition was a total of $1,454,725. Of that amount 
$892,225 was the amount of debt that encumbered the tractors and trailers and   
which Gasel Transportation Lines, Inc. is to refinance and remove the primary   
obligor's from liability thereon. While awaiting financing, the Company is      
required to make the payments on the debt and indemnify the Sellers. On December
27, 2000 the balance of the purchase price ($562,500) was paid by delivering at 
closing $150,000 in cash, a promissory note payable to the Sellers in the amount
of $150,000 and bearing interest at 10% per annum, a warrant to purchase 100,000
common shares of Gasel Transportation Lines, Inc. at an exercise price of $2.50 
per share, a warrant to purchase 75,000 common shares of Gasel Transportation   
Lines, Inc. at an exercise price of $3.00 per share, and a certificate for      
175,000 common shares of Gasel Transportation Lines, Inc. valued at $1.50 per   
share.                                                                          

The purchase of Eagle's business was accounted for by the purchase method,      
whereby the underlying assets acquired and liabilities assumed or to be assumed 
from the purchased corporation are recorded by the Company at their fair value. 
The excess of the amount paid over the fair value of Eagle's identifiable net   
assets was $362,500,which has been reflected in the balance sheet as goodwill.  
The Company expects to benefit from the goodwill acquired in this transaction   
over a period of fifteen years, and is amortizing the amount recorded using the 
straight-line method over that period. The supplemental disclosures reported in 
the cash flow statement present additional information about the assets acquired
and liabilities recorded in 2000 as a result of the acquisition of Eagle        
Transportation Services, Inc. and Eagle Transport, Inc.                         

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GASEL TRANSPORTATION LINES, INC.
AND ITS SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2000 and 1999

NOTE 18 - SUBSEQUENT EVENTS                                                     

The Company had commitments outstanding to acquire (11) 2001 Volvo tractors for 
approximately $1 million at December 31, 2000. These purchases were financed by 
acquiring debt in the amount of $1,074,700 from Volvo Commercial Finance LLC The
Americas, Greensboro, North Carolina on January 12, 2001 at a rate of 9.45%.    
Annual maturities on this debt for the five years are as follows:               

                                                                [Download Table]
                                    
2001                      $  174,131
2002                         207,907
2003                         228,427
2004                         250,974
2005                         213,261
                          ----------

                          $1,074,700
                          ==========

The Company had commitments outstanding to purchase (10) refrigerated trailers  
for approximately $.5 million at December 31, 2000. These purchases were        
financed by incurring a capital lease obligation at a net present value of      
$497,792 from Dayton Leasing LTD LLC, Obetz, Ohio on January 16, 2001. Future   
minimum annual lease payments are as follows:                                   

                                                                [Download Table]
                                                        
                    2001                      $  117,590
                    2002                         128,280
                    2003                         128,280
                    2004                         128,280
                    2005                         128,280
               Thereafter                         21,380
                                              ----------
                                              $  652,090
Less amount representing                                
  interest at 11%                                154,298
                                              ----------
Present value of net                                    
  minimum lease payments                      $  497,792
                                              ==========

See Note 17.                                                                    

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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE.                                                           

There have been no changes in Accountants during the past two years, nor have   
there been any disagreements with the Accountants in their accounting and       
financial presentations regarding the Company.                                  

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.                                         

The Officers and Directors of the Company are as follows:                       

                                                                [Download Table]


Name                           Age             Position with Company           
----                           ---             ---------------------           
                                                                               
Michael J. Post                54       Chief Executive Officer, President     
                                        Treasurer and Director                 

John Jackson                   55       Executive Vice President, Secretary    
                                        and General Manager                    

Sherman E. Crum                33       Assistant Vice President-Administration

Fred E. Malone                 34       Assistant Vice President-Fleet         
                                        Maintenance                            

David R. Pierce                50       Assistant Vice President-Safety        

Allan M. Blue                  59       Director and Assistant Secretary       

Ronald K. Bishop               48       Director                               

Ronald E. Flowers              52       President-Eagle Division               

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Michael J. Post has been in all of such capacities from the formation of the    
Company in January 1988 to date. He also serves as a board member of Selby      
General Hospital, Marietta, Ohio.                                               

John Jackson has been involved in such capacities since the formation of the    
Company in 1988.                                                                

Sherman E. Crum has been with the Company in charge of office administration    
since August 8, 1994. In July, 1999 he was promoted to his current executive    
position.                                                                       

Fred E. Malone has been with the Company in charge of the fleet maintenance     
since July, 1995. In July, 1999, he was promoted to his position as an assistant
vice president.                                                                 

David R. Pierce has been with the Company in various capacities since September 
1988, including being in charge of driver safety and compliance. In July, 1999, 
he was elected to his position as Assistant Vice President of Safety.           

Allan M. Blue has been a director since 1995 and Assistant Secretary since 1997.
Mr. Blue is a practicing attorney in the Columbus Ohio area where he has been   
engaged in private law practice since 1971. In addition to practicing law, Mr.  
Blue is actively engaged in several businesses as owner, officer, and director. 
These businesses include The Oak Furniture Showroom, Inc., Held Team            
Partnership, d/b/a Hold More Self Storage, Capitol Stock Transfer Company and   
Team Investors, Ltd.                                                            

Ronald K. Bishop, Director since 1994. Since 1987, he has worked for Bennco     
Incorporated as General Manager of 3 radio stations, WDMX, WNUS, and WLTP, in   
Parkersburg, West Virginia; recently he also became General Manager of 2        
additional stations, WRVB, and WRZZ. He also serves as a board member of Selby  
General Hospital, Marietta, Ohio, Ohio Valley Chamber of Commerce, and for the  
Marietta Community Foundation, Easter Seals and the American Heart Association  
in the Marietta area.                                                           

Ronald E. Flowers, President of Eagle Division, commencing January 1, 2001. Mr. 
Flowers, together with his wife Cynthia K. Flowers, are the owners of Eagle     
Transport, Inc. and Eagle Transportation Services, Inc., and as such he was the 
CEO for the Business Operations that the Company acquired from those companies. 
In order to maintain continuity in the relationships and as part of the terms of
the acquisition, Mr. Flowers has been retained as President of those operations 
and they have been designated by the Company as the Eagle Division. Mr. Flowers 
continues to own the warehousing operation where the Eagle Division rents office
and terminal space. For the past eleven years, he has been the President of     
Eagle Transport, Inc. and Eagle Transportation Services, Inc. engaged in the    
transportation and warehousing business.                                        

The position of director is for a one year term and until a successor is        
elected.                                                                        

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ITEM 10. EXECUTIVE COMPENSATION.                                                

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]


                                                                                    LONG TERM COMPENSATION         

                           ANNUAL COMPENSATION                                  AWARDS                             
-------------------------------------------------------------------------------------------------------------------
Name and Principal                Year               Salary            Securities Underlying Options/SAR           
Position                                                                                                           
-------------------------------------------------------------------------------------------------------------------
                                                                                                                   
Michael J. Post, President        1998              $49,742                        60,000(1)                       
                                  1999              $63,750                                                        
                                  2000              $64,995(2)                                                     
-------------------------------------------------------------------------------------------------------------------

(1) Adjusted for two 2 for 1 stock splits.                                      

(2) In addition, the Company provides a 2001 Ford Expedition sport utility      
vehicle for use by Michael J. Post; because he uses the vehicle primarily for   
Company business, no value is assigned as compensation for use of the vehicle.  

     The Company pays its Directors' a fee of $250.00 for each meeting
attended. The Company's Code of Regulations authorizes the Board of Directors to
fix Directors' compensation without shareholder approval.                       

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.        

(a). The following is a table of all persons known to the Company to be the     
beneficial owner of more than 5% of the Company's voting securities.            

                                                        [Enlarge/Download Table]


----------------------------------------------------------------------------------------------------------
TITLE OF CLASS               NAME AND ADDRESS OF BENEFICIAL    AMOUNT AND NATURE OF    PERCENT OF CLASS   
                             OWNER                             BENEFICIAL OWNER                           
----------------------------------------------------------------------------------------------------------
                                                                                                          
Common shares                Michael J. Post                         1,450,544(1)              50.1       
                             118 Merryhill Street                                                         
                             Marietta, Ohio 43750                                                         

Common shares                Ronald E. Flowers and Cynthia            350,000(2)               12.1       
                             K. Flowers, husband and wife                                                 
                             5703 Southby Ct.                                                             
                             Dublin, Ohio 43017                                                           
----------------------------------------------------------------------------------------------------------

(1) Includes 4,100 shares held by Mrs. Lee Post, the mother of Michael J.       
Post, 7,900 shares held by the Company and options to acquire 186,000.          

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(2) Includes 175,000 shares held by Eagle Transportation Services, Inc. and     
options to acquire 175,000 shares held by Eagle Transportation Services, Inc.   

(b). The following is a table setting forth for management the beneficial       
ownership of the voting securities of the Company as of December 31, 2000.      

                                                        [Enlarge/Download Table]


---------------------------- -------------------------- -------------------------- --------------------------
TITLE OF CLASS               NAME AND ADDRESS OF        AMOUNT AND NATURE OF       PERCENT OF CLASS          
                             BENEFICIAL OWNER           BENEFICIAL OWNER                                     
---------------------------- -------------------------- -------------------------- --------------------------
                                                                                                             
Common shares                Michael J. Post                   1,450,544(1)                  50.1            
                             118 Merryhill Street                                                            
                             Marietta, Ohio 43750                                                            
---------------------------- -------------------------- -------------------------- --------------------------
Common shares                Allan M. Blue                      110,448(2)                    3.8            
                             1130 Berlin Station Rd.                                                         
                             Delaware, Ohio 43015                                                            
---------------------------- -------------------------- -------------------------- --------------------------
Common shares                Ronald K. Bishop                    69,272(3)                    2.4            
                             305 Ohio Street                                                                 
                             Marietta, Ohio 45750                                                            
---------------------------- -------------------------- -------------------------- --------------------------
Common shares                John Jackson                        45,780                       1.6            
                             Route 2, Box 344                                                                
                             Belpre, Ohio 45714                                                              
---------------------------- -------------------------- -------------------------- --------------------------
Common shares                Ronald E. Flowers                  350,000(4)                   12.1            
                             5703 Southby Ct.                                                                
                             Dublin, Ohio 43017                                                              
---------------------------- -------------------------- -------------------------- --------------------------
Common shares                Directors and officers            2,026,044(6)                  69.9            
                             as a group(5)                                                                   
---------------------------- -------------------------- -------------------------- --------------------------

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(1) Includes 4,100 shares held by Mrs. Lee Post, the mother of Michael J.       
Post, 7,900 shares held by the Company and options to acquire 186,000.          

(2) Includes 26,420 shares held by Joyce M. Blue, wife of Allan M. Blue, and    
options to acquire 62,000 shares.                                               

(3) Includes options to acquire 62,000 shares.                                  

(4) Includes 175,000 shares held by Eagle Transportation Services, Inc. and     
options to acquire 175,000 shares held by Eagle Transportation Services, Inc.   

(5) Include Ronald Flowers as an officer.                                       

(6) Includes options to acquire 485,000 shares.                                 

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                        

Michael J. Post, Director, CEO, President, Treasurer, and majority shareholder  
of the Company, is the sole shareholder of Zip Services, Inc., a corporation    
from which the Company formerly leased its employees and had other business     
relationships in the past. At year end 1999, Zip Services, Inc. owed the Company
$61,356 which was repaid in 2000.                                               

Allan M. Blue, Director, also acts as legal counsel for the Company. Payment for
his services is at a rate that he represents is a standard hourly rate for his  
services to his clients.                                                        

The Company leases from ETS Leasing, Ltd. an approximately 3,000 square foot    
office, including furniture and equipment, in Plain City, Ohio for its Eagle    
Division. The lease term is five years, with two options to renew for five      
year terms, with a monthly rental of $3,000 during the initial term. Ronald     
E. Flowers and Cynthia K. Flowers are the owner of ETS Leasing, Ltd. The        
lease terms were negotiated as part of the acquisition of the equipment and     
transportation business from Eagle Transport, Inc. and Eagle Transportation     
Services, Inc.                                                                  

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.                                      

(a) Index to Exhibits.                                      

21.      List of Subsidiary Corporations.       
23.      Independent Accountants Consent Letter 

        (b) The Company did not file any reports on Form 8-K during the last
quarter of the year 2000.                                                       

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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.                                                                     

Gasel Transportation Lines, Inc.                                                
(Registrant)                                                                    

By /s/ Michael J. Post                                                          
--------------------                                                        
(Signature and Title)President, Treasurer, and Director*                        

Date April 10, 2001                                                             

In accordance with the Exchange Act, this report has been signed below by the   
following persons on behalf of the registrant and in the capacities and on the  
dates indicated.                                                                

By /s/ Michael J. Post                                                          
-------------------                                                       
(Signature and Title) Michael J. Post, President, Treasurer, and Director       

Date April 10, 2001                                                             

By /s/ Allan M. Blue                                                            
------------------                                                          
(Signature and Title)Allan M. Blue, Director and Assistant Secretary*           

Date April 10, 2001                                                             

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB40’ Filing		Date		First		Last			Other Filings
Filed as of:		4/12/01
Filed on:		4/11/01
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		3/31/01		1		8			10QSB,  4
		3/28/01		1
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For Period End:		12/31/00		1		44			NT 10-K
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		12/31/99		8		40
		12/20/99		35
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