U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1998
[ ] Transition Report Under Section 13 or 15(d) of
the Exchange Act
For the transition period from ___________ to___________.
Commission file number 0-23075
PELICAN PROPERTIES, INTERNATIONAL CORP.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-0616879
----------------------- -----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
12520 SW 195 Terrace
Mimai, Florida 33043
--------------------
(Address of Principal Executive Office)
(305) 251-4060
--------------
(Issuer's Telephone Number, Including Area Code)
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.
Yes [ X ] No [ ]
The number of shares outstanding of the issuer's common stock, par value $.001
per share as of August 3, 1998 was 5,094,185.
Traditional Small Business Disclosure Format: Yes [ ] No [ X ]
<PAGE>
PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Table of Contents
PART I. FINANCIAL INFORMATION Page
- ------------------------------ ----
ITEM. 1 Financial Statements 1
Condensed consolidated Balance Sheets
March 31, 1998 and December 31, 1997 2
Condensed Consolidated Statements of Operations--
Three Months Ended March 31, 1998 and March 31, 1997 3
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and March 31, 1997 4
Condensed Notes to Consolidated Financial Statements 5-9
ITEM 2 Management's Discussion and Analysis or Plan of Operation 10-13
PART II. OTHER INFORMATION
- ---------------------------
Items 1 - 6 14
27. Financial Data Schedule (for SEC use only) 15
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
PELICAN PROPERTIES, INTERNATIONAL CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
1998 1997
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 134,072 $ 63,335
Accounts receivable 29,382 54,535
Inventories 45,560 52,992
Other current assets 12,493 27,303
----------- -----------
Total current assets $ 221,507 $ 198,165
PROPERTY, PLANT AND EQUIPMENT, net 6,143,237 6,171,103
OTHER ASSETS 89,369 123,870
----------- -----------
TOTAL ASSETS $ 6,454,113 $ 6,493,138
=========== ===========
LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 255,457 $ 252,824
Deferred revenues 148,476 222,764
Current portion of pre-petition debt 30,476 32,260
Other current liabilities 516,950 620,045
Current maturities of long-term debt 1,073,169 1,065,018
Loan Payable to Stockholders 241,153 241,153
----------- -----------
Total current liabilities 2,265,681 2,434,064
----------- -----------
LONG TERM LIABILITIES
Long term debt, less current maturities 4,922,734 4,946,649
Long term portion of pre-petition debt 107,829 120,546
Deferred income taxes 2,196 --
----------- -----------
Total long term liabilities 5,032,759 5,067,195
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIENCY)
6% Preferred Stock, par value $.001; 1,000,000 shares authorized and 195,907
Series A shares
issued as of March 31, 1998 196 196
Common stock, par value $.001; 100,000,000 shares
authorized; 4,954,185 shares issued as of December 31, 1997
and 5,024,185 shares issued as of March 31, 1998
5,074 4,954
Additional paid in capital 3,546,024 3,536,894
Accumulated deficit (4,395,621) (4,550,165)
----------- -----------
Total stockholders'equity (deficiency) ( 844,327) (1,008,121)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY
(DEFICIENCY) $ 6,454,113 $ 6,493,138
=========== ===========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PELICAN PROPERTIES, INTERNATIONAL CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations For
the three months ended March 31, 1998 and March 31, 1997
(Unaudited)
March 31, March 31,
1998 1997
<S> <C> <C>
REVENUES $1,307,387 $1,545,138
COST OF REVENUES 258,843 378,726
---------- ----------
GROSS PROFIT 1,048,544 1,166,412
EXPENSES
Operating 372,615 365,657
General and administrative 134,752 182,846
Interest 114,816 109,876
Depreciation and Amortization 84,453 82,303
---------- ----------
Total Expenses 706,636 740,682
---------- ----------
INCOME (LOSS) FROM OPERATIONS 341,908 425,730
OTHER EXPENSES, net (73,815) (102,535)
---------- ----------
INCOME (LOSS)BEFORE
INCOME TAXES 268,093 323,195
PROVISION FOR INCOME TAXES 113,549 113,280
---------- ----------
NET INCOME (LOSS) $ 154,544 $ 209,915
========== ==========
BASIC EARNINGS (LOSS) PER SHARE
FROM CONTINUING OPERATIONS $ .031 $ .046
========== ==========
DILUTED EARNINGS (LOSS) PER SHARE $ .028 $ .041
========== ==========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows For
the three months ended March 31, 1998 and March 31, 1997
(Unaudited)
March 31, March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income(loss): $ 154,544 $ 209,915
Adjustments to reconcile net income
(loss) to net cash (used) provided
by operating activities:
Depreciation and amortization 84,453 82,303
Non-cash compensation 2,500 3,125
Impaired assets written-off and disposed of 28,593 14,933
Change in operating assets and liabilities:
Accounts receivable 25,153 33,058
Inventories 7,432 887
Other current assets 14,810 852
Other assets 5,639 236,229
Accounts payable and accrued expenses 2,633 (7,882)
Deferred revenues (74,288) (72,115)
Other current liabilities (103,095) (101,323)
Due to affiliate -- (50,281)
Deferred tax liability 2,196 1,245
Pre-Petition debt (14,501) (43,424)
--------- ---------
Net adjustments (12,225) 97,607
--------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 142,319 307,522
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (56,319) (25,816)
--------- ---------
NET CASH (USED) BY INVESTING ACTIVITIES (56,319) (25,816)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (15,763) (100,000)
Repayment of loan -- (30,000)
Proceeds from issuance of common stock 500 --
--------- ---------
NET CASH (USED) BY
FINANCING ACTIVITIES (15,263) (130,000)
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 70,737 151,706
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 63,335 105,342
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 134,072 $ 257,048
========= =========
</TABLE>
5
<PAGE>
PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 1998
Note 1 - Basis of presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The quarterly financial information included herein is
unaudited. However, in the opinion of management, all adjustments, consisting of
normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1998, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. A description of the Company's accounting policies and
other financial information is included in its audited consolidated financial
statements for the year ended December 31, 1997.
The March 31, 1998 and March 31, 1997 condensed consolidated financial
statements include the accounts of Pelican Properties, International Corp. and
its wholly owned subsidiaries Ohio Key I, Inc. and Ohio Key II, Inc. and its
98.54% owned subsidiary, Sunshine Key Associates Limited Partnership, an
inactive Partnership after December 31, 1996. As stated in Note 6 to the
December 31, 1997 audited financial statements, as a result of the bankruptcy
plan and related debt restructuring, substantially all assets and liabilities of
Sunshine Key were merged into Ohio Key I, Inc. and Ohio Key II, Inc. on January
1, 1997. Ohio Key I, Inc. and Ohio Key II, Inc. are newly formed, wholly owned
subsidiaries of Pelican Properties, International Corp. incorporated in January
of 1997. No pro forma information has been presented because Ohio Key I, Inc.
and Ohio Key, II, Inc. were formed exclusively to succeed the business of
Sunshine Key and thus the merger has no material impact on the consolidated
financial statements of the Company.
The March 31, 1997 condensed consolidated financial statements have been
adjusted retroactively to reflect significant 1997 fourth quarter adjustments.
Note 2 - Amortization
- ---------------------
Beginning in January of 1997, loan origination costs approximating $222,000 are
being amortized over 23 months.
Note 3 - Stock transactions
- ---------------------------
On January 1, 1998 the Company issued 50,000 shares of common stock as payment
of legal fees resulting in a $50 increase to "Common Stock" and a $6,200
increase to "Additional paid in capital."
On February 28, 1998 the Company issued 20,000 shares of common stock as
compensation resulting in a $20 increase to "Common stock" and a $2,480 increase
to "Additional paid in capital." During 1996, the Company adopted SFAS No. 123,
"Accounting for Stock-Based Compensation," which establishes financial
accounting and reporting standards for stock-based employee compensation plans,
including stock options, stock purchase plans, restricted stock and stock
appreciation rights. SFAS No. 123 defines and encourages the use of the fair
value method of accounting for employee stock-based compensation.
6
<PAGE>
PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 3 - Stock transactions (cont'd)
- ------------------------------------
On February 26, 1998 the Company granted to the Chief Financial Officer ("CFO"),
the option to purchase up to 50,000 shares of Common Stock at an exercise
price of $.01 per share that is vested and exercisable on March 1, 1998. On
March 6, 1998, the CFO exercised the option and was issued 50,000 shares of
Common Stock of the company as restricted shares under Rule 144 of the
Securities Act of 1933.
Note 4 - Seasonal fluctuations
- ------------------------------
The Company generally derives 35% to 40% of its revenue during the three months
ended March 31 of each year. The current financial statements for the three
months ended March 31, 1998 and March 31, 1997, therefore, reflect results of
operations during the Company's peak season.
Note 5 - Net income (loss) per share
- ------------------------------------
The net income (loss) per share is computed by dividing the net income or (loss)
for the period by the weighted average number of shares outstanding (as adjusted
retroactively for the dilutive effect of prior years common stock options) for
the period plus the dilutive effect of outstanding common stock options and
warrants considered common stock equivalents.
The weighted average number of shares used to compute basic EPS was 4,973,815
and 4,569,096 for 1998 and 1997, respectively. The weighted average number of
shares used to compute diluted EPS was 5,533,885 and 5,129,096 for 1998 and
1997, respectively.
Note 6 - Revenues
- -----------------
<TABLE>
<CAPTION>
Revenues consisted of the following:
1998 1997
<S> <C> <C>
Site Rentals $ 790,020 $ 834,639
Merchandise Sales 392,314 518,380
Other (community fees and rental management) 125,053 192,119
---------- ----------
$1,307,387 $1,545,138
========== ==========
</TABLE>
Note 7 - Subsequent Events
- --------------------------
On May 29, 1998, the Company, through its wholly owned subsidiaries Ohio Key I,
and Ohio Key II, sold its only revenue producing asset known as Sunshine Key RV
Resort and Marina, which resulted in a gain of $ 5,477,012, which is net of $
3,307,290 in taxes. The proceeds were used to pay outstanding indebtedness of
$5,589,908 existing at date of sale. The sale is intended to qualify as a
like-kind exchange as promulgated by Internal Revenue Code Section 1031. In
order to ensure this type of income tax treatment, certain qualifying criteria
must be met, including, but without limitation, the proceeds are to be held by a
third party and such proceeds must be used to acquire like-kind property or
properties. It is the intention of management to continue the Company's primary
business and to reinvest such proceeds in resort type real estate.
7
<PAGE>
PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 7 - Subsequent Events (cont'd)
- -----------------------------------
The Company's net liabilities have been segregated from continuing operations in
the proforma financial statements included below, and its operating results are
segregated and reported as discontinued operations in the accompanying condensed
consolidated statements of operations. The results of operations of Ohio Key I,
and Ohio Key II, are being accounted for as discontinued operations. Also, the
condensed consolidated balance sheet as of March 31, 1997 has been reclassified
and shown proforma to reflect the Company's net liabilities of discontinued
operations.
<TABLE>
<CAPTION>
PROFORMA BALANCE SHEETS
March 31, December 31,
ASSETS 1998 1997
(Proforma) (Proforma)
CURRENT ASSETS
<S> <C> <C>
Cash $ 134,072 $ 63,335
PROPERTY, PLANT AND EQUIPMENT, net 14,105 14,105
OTHER ASSETS 4,003 4,003
---------- ----------
Total assets $ 152,180 $ 81,443
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 10,625 $ --
Current portion of pre-petition debt 30,476 32,260
Other current liabilities 88,820 89,956
Income taxes payable - discontinued operations 111,353 --
Net current liabilities of discontinued operations 404,056 605,648
Loan payable to stockholders 241,153 241,153
---------- ----------
Total current liabilities 886,483 969,017
---------- ----------
LONG TERM LIABILITIES
Long term portion of pre-petition debt 107,829 120,547
Deferred income taxes 2,196 --
---------- ----------
Total long term liabilities 110,025 120,547
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock (6%), par value $.001; 1,000,000 shares
authorized and 195,907 issued as of December 31, 1997 196 196
Common stock, par value $.001; 100,000,000 shares
authorized; 4,954,185 shares issued as of December 31,
1997 and 5,094,185 shares issued as of June 30, 1998 5,074 4,954
Additional paid in capital 3,546,026 3,536,894
Retained earnings (accumulated deficit) (4,395,624) (4,550,165)
---------- ----------
Total stockholders' equity (deficit) ( 844,328) (1,008,121)
---------- ----------
Total liabilities and stockholders' equity $ 152,180 $ 81,443
========== ==========
</TABLE>
8
<PAGE>
PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 7 - Subsequent Events (continued)
<TABLE>
<CAPTION>
PROFORMA STATEMENTS OF OPERATIONS
Three Months Ended
March 31, March 31,
1998 1997
(Proforma) (Proforma)
<S> <C> <C>
REVENUES $ -- $ --
COST OF REVENUES -- --
--------- ---------
GROSS PROFIT -- --
--------- ---------
EXPENSES
General and administrative 50,891 23,161
Interest -- --
Depreciation and amortization -- --
--------- ---------
Total expenses 50,891 23,161
--------- ---------
Loss from continuing operations
before other income (expenses) (50,891) (23,161)
OTHER INCOME (EXPENSE) (46,119) (87,769)
--------- ---------
Loss from continuing operations
before income taxes (97,010) (110,930)
TAX BENEFIT (36,524) (41,765)
--------- ---------
Loss from continuing operations (60,486) (69,165)
Income from discontinued
operations (net of income taxes) 215,030 279,080
--------- ---------
NET INCOME $ 154,544 $ 209,915
========= =========
</TABLE>
9
<PAGE>
PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 7 - Subsequent Events (continued)
Net current liabilities of discontinued operations at March 31, 1998 and
December 31, 1997 are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Accounts receivable $ 29,382 $ 54,535
Inventories 45,560 52,992
Other current assets 12,493 27,303
Property and equipment, net 6,129,132 6,171,103
Other assets 85,367 105,826
Accounts payable & accrued expenses (244,835) (251,690)
Deferred revenues (148,476) (222,764)
Other current liabilities (123,385) (313,875)
Accrued interest (193,391) (217,348)
Current maturities of long-term debt (1,073,169) (65,018)
Long-term debt (4,922,734) (5,946,712)
----------- -----------
Total $ (404,056) $ (605,648)
=========== ===========
</TABLE>
Information relating to the discontinued operations for the three months ended
March 31, 1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenues $ 1,307,387 $ 1,545,138
Costs of revenues (258,843) (378,726)
Operating expenses (372,615) (365,657)
General & administrative expenses ( 83,861) (159,685)
Interest expense (114,816) (109,876)
Depreciation and amortization ( 84,453) ( 82,303)
Other expenses ( 27,696) ( 14,766)
Income taxes (150,073) (155,045)
------------ ----------
Income from discontinuing operations $ 215,030 $ 279,080
============ ===========
</TABLE>
10
<PAGE>
Item 2 - Management's Discussion and Analysis or Plan of Operation
GENERAL
Management's Discussion and Analysis or Plan of Operation contains
various "forward looking statements" within the meaning of the Securities Act of
1933 and the Securities And Exchange Act of 1934, which represents the Company's
expectations or beliefs concerning future events including without limitation
the following; fluctuations in the economy; ability of the Company to obtain
financing on terms and conditions that are favorable; ability of the Company to
improve levels of profitability and sufficiency of cash provided by operations.
The Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those contained in the forward looking statements, including without
limitations, general economic conditions,, changes in the level of operating
expense and the present and future level of competition. Results actually
achieved may differ materially from expected results included in these
statements.
Until May 29, 1998, Pelican Properties, International Corp., through
its wholly owned subsidiaries, Ohio Key I, Inc. and Ohio Key II, Inc.,
"Subsidiaries" owned and operated a resort known as the Sunshine Key RV Resort
and Marina, "Property". The resort encompasses all of Ohio Key, Florida located
in the Florida Keys. The Company's primary objective is the management of its
existing property and the acquisition and management of additional properties in
the recreational and leisure industry's resort destination segment. The
references to operations generally refer to this subsidiary unless otherwise
noted. Prior to the December 31, 1996 acquisition by Ohio Key I, Inc., the asset
was owned by Sunshine Key Associates, Limited Partnership.
On May 29, 1998 the Company's Subsidiaries sold the Property for a sale
price of $15,750,000 paid in cash. As a result of this sale, the Company no
longer owns directly or through subsidiaries any operating assets. The sales
price was determined by National Home Communities, L.L.C. "Buyer" as the value
it placed on the assets bought. The Buyer has no material relationship with the
Company or any of its affiliates, directors or officers, or any associate of any
such director or officer. The net proceeds of the sale have been placed in an
IRS rule 1031 Exchange account with the intention of taking advantage of tax
deferral strategies if reinvested in real estate properties within specified
time frames and meeting certain criteria. The Company fully intends to reinvest
in properties that meet its primary objective and will make every effort to take
advantage of the 1031 Exchange account benefits.
The Commission has issued Staff Legal bulletin No. 5 (CF/IM) stating
that public operating companies should consider whether there will be any
anticipated costs, problems and uncertainties associated with the year 2000
issue, which affects many existing computer programs that use only two digits to
identify a year in the date field. The company anticipates that its business
operations will electronically interact with third parties very minimally, if at
all, and the issues raised by Staff Legal Bulletin No. 5 are not applicable in
any material way to the Company's business or operations. Additionally, the
Company intends that any computer systems that the Company may purchase or lease
that are incident to the Company's business will have already addressed the
"Year 2000" issue.
On September 12, 1997, Pelican Properties International Corp.
filed the Form 10SB registration statement. The Company received thirty-three
comments, thirteen specifically relating to financial statements, from the SEC
regarding the Form 10SB registration statement. Although an amended Form 10SB
has not been submitted to the SEC, the accompanying unaudited condensed
consolidated financial statements include most of the SEC comments made to the
company's Form 10SB as reported in its Form 10-K filing and related financial
statements. The remaining comments are not directly related to issues incurred
and disclosed in the first quarter of 1998 and 1997. Management believes that
11
<PAGE>
those remaining comments that could affect the Company's financial statements
can be resolved to the satisfaction of the SEC without changes to the financial
statements. There can be no assurances that these issues will be resolved to the
satisfaction of the Company or the SEC and changes to the financial statements
could occur that materially affect the information stated. Prior year financials
were also restated to incorporate the write off of certain expenses that will be
addressed in this filing. The following is a summary of the relevant remaining
comments not incorporated into this filing that relate to the 1996 financials:
a) An explanation is required as to the basis for attributing 1996 compensation
expense of $6,150 and $20,500 related to the issuance of 100,000 and 333,333
common shares to Jane Bergman, President, and Carl J. Knorr, Chairman. It is
questioned as to the validity of attributing a $.06 value to these shares with
respect to the market value of the 1996 stock prices; b) A request for
consideration was given to the conversion of $801,045 of debt to 534,045 shares
common stock at a $1.50 conversion rate on December 6, 1996 and the issuance of
the above referenced 100,000 and 333,333 shares on December 31, 1996.
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1998
Revenues for the three-month period ended March 31, 1998 was $1,307,387
compared to $1,545,138 for the three months ended March 31, 1997. The $237,751
or 15.39% decrease was due primarily to the unfavorable weather conditions
caused by the "El Nino" phenomenon. This weather pattern created an unseasonably
wet and windy winter in the Florida Keys causing revenue decreases in all
operations of the resort. Site rental operations decreased $83,559 or 9.21% and
convenience store and marina sales decreased $52,020 or 21.65%. The phenomenon
also created unseasonably warm winter in the Northeast United States which is
where a large number of the Company's winter guests originate from thus
negatively affecting there travel plans escape the typical cold winter weather.
Revenues also decreased due to the decrease in fuel costs that resulted in a
decrease in fuel revenue of $73,066. The period ended March 31, 1997 also
includes a $45,000 insurance settlement that attributed to the decrease in the
period ended March 31, 1998 revenue decrease.
Cost of Revenues decreased $119,883 or 31.65% from $378,726 in the
three months ended March 31, 1997 to $258,843 in three months ended March 31,
1998. The decrease is primarily attributable to the 19.47% decrease in
merchandise sales. The Cost of Revenues percentage decrease exceeds the revenue
decrease primarily due to a higher markup on fuel sold in the first quarter of
1998 as compared to the same quarter in 1997 as well as an overall markup
increase in both the convenience store and marina.
Gross profit decreased $117,868 or 10.11% to $1,048,544 for the three
months ended March 31, 1998 from $1,166,412 in the three months ended March 31,
1997. The gross profit decrease was proportionately lower than the decrease in
revenue due to better management of the costs of revenues.
Operating, general and administrative expenses ("OG&A") were $507,367
for the three month period ended March 31, 1998 compared to $548,656 for the
three month period ended March 31, 1997. The $41,289 decrease was primarily due
to decreases in legal fees and maintenance as well as a combination of several
other line items that individually amount to insignificant amounts.
Interest expense increased $4,940 for the three-month period ended
March 31, 1998 from $114,816 to $109,876 for the three month ended March 31,
1997. Depreciation and amortization increased $2,150 to $84,453 for the three
months ended March 31, 1998 from $82,303 in the three months ended March 31,
1997.
Liquidity and Capital Resources
The Company's working capital decreased $191,725 from the December 31,
1997 deficit of $2,235,899 to a deficit of $2,044,174 as of March 31, 1998. This
12
<PAGE>
decrease in attributable to decreases in both deferred revenues reservation
deposits as well as an increase in cash. The working capital deficit amount is
primarily due to the December 1998 maturing of the $1,000,000 second mortgage.
Management has worked with several lenders in an attempt to consolidate the
first and second mortgages. Management believes that they will secure financing
acceptable to the company and does consider this note as a going concern. The
increase was also comprised of $241,153 described as Loans payable to
Stockholders previously booked as a long-term liability. Management does not
believe the holders of these loans, which are all current stockholders of the
company, will demand payment and therefore does not consider them a going
concern.
At March 31, 1998 the Company had accounts receivable of $29,382 as
compared to $54,535 at December 31, 1997. This decrease is due to an increased
collection effort by management. Accounts payable and accrued expense increased
$2,631 to $255,788 as of March 31, 1998 as compared $252,824 as of December 31,
1997.
Cash outlays for capital expenditures of property and equipment totaled
$56,319 for the three-month period ending March 31, 1998 compared to $25,816 for
the three-month period ending March 31, 1997. Most of the cash outlays for
capital improvements was for the continuing project of the replacement and
upgrade of the park's electrical system. At March 31, 1998 management estimates
that the replacement and upgrade to the park's electrical system is
approximately eighty percent complete and anticipates full completion and
conversion in 1998.
In January 1997 the mortgage note payable to WAMCO XXII, Ltd. was
restructured and restated to December 31, 1996. The new agreement provides for
interest payments of $5,000 to be paid monthly through August 30, 1997.
Commencing on August 30, 1997, the Note will bear interest at the rate of 9% per
annum. Beginning on September 30, 1997, principal and interest payments will
begin on the outstanding principal balance of $4,700,000. Considering paragraph
15 of APB 21, the Company re-amortized this loan in its interest calculations in
the financial statements based on the recording of imputed interest using a
constant effective interest rate method. The note will mature on October 30,
1999 at which time the outstanding principal balance and all accrued interest
will become due and payable in full. At maturity, the Company has a one-time
option to extend the maturity of the restated note until October 30, 2002 if
certain conditions are met. The Company also has provisions in the agreement for
an early payment discount equal to 8% of the outstanding principal balance of
the restated note if it was repaid before November 30, 1997 and a 5% discount if
the note is repaid in full after November 30, 1997 and before November 30, 1998.
The Company also entered into a promissory note for $1,000,000 at 12% per annum.
This note is payable in 23 consecutive monthly installments of interest only
commencing February 1997 and ending December 1998, at which time the outstanding
principal balance and accrued interest will become due and payable in full. As
part of the bankruptcy settlement, the Company also restructured an existing
note payable to the Small Business Administration. This $326,401 note is now
payable over ten years at a 4% per annum with the first 24 months principal and
interest payments fixed at $2,000. Thereafter, the outstanding principal balance
will be amortized over a period of eight years at 4% per annum.
Outlook
On May 29, 1998 the Company's Subsidiaries sold the Property for a sale
price of $15,750,000 paid in cash. The net proceeds of the sale have been placed
in an IRS rule 1031 Exchange account with the intention of taking advantage of
tax deferral strategies if reinvested in real estate properties within specified
time frames and meeting certain criteria. The Company fully intends to reinvest
in properties that meet its primary objective and will make every effort to take
advantage of the 1031 Exchange account benefits. There can be no assurances that
the Company will be able to fully take advantage of all benefits of the Section
1031 exchange.
13
<PAGE>
With the proceeds received in the sale of the assets, the Company will
continue to seek to take advantage of the growing resort destination industry
through its strategy of expanding through acquisitions. The Company intends to
further take advantage of this growing industry by targeting locations where
nature and the environment are the primary appeal of the location. Management
believes that the resort destination is expected to grow substantially because
of expectations of the baby boom population to increase 34% between 1995 and
2005.
14
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security-Holders
On May 18, 1998 the Company received the written consent of the
majority of shareholders to authorize its wholly owned subsidiaries, Ohio Key I,
Inc. and Ohio Key II, Inc., "Subsidiaries" to enter into an agreement to sell
the collectively owned assets known as Sunshine Key RV Resort and Marina,
"Property". The terms and conditions of the sale outlined in the consent are
described in the "Item 5. Other Information" section of this filing.
Item 5. Other Information
On May 29, 1998 the Company's wholly owned subsidiaries, Ohio Key I,
Inc. and Ohio Key II, Inc., "Subsidiaries" sold the collectively owned assets
known as Sunshine Key RV Resort and Marina, "Property" for a sale price of
$15,750,000 paid in cash. The sales price was determined by National Home
Communities, L.L.C. "Buyer" as the value it placed on the assets bought. The
Buyer has no material relationship with the Company or any of its affiliates,
directors or officers, or any associate of any such director or officer.
Item 6. Exhibits and Reports on Form 8-K
Form 8-K dated April 8, 1998 regarding a change in auditors. Form 8-K/A
dated April 14, 1998 regarding a change in auditors.
27. Financial Data Schedule (for SEC use only)
3.10 Agreement of Purchase and Sale and Escrow Instructions. (1)
(1) Filed previously in Form 10-QSB/A dated June 11, 1998.
15
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, Pelican Properties International, Corp. has caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
PELICAN PROPERTIES INTERNATIONAL, CORP.
DATE: September 2, 1998 By: /S/ C. John Knorr
----------------------
C. John Knorr, Chairman
DATE: September 2, 1998 By: /S/ Timothy M. Benjamin
----------------------------
Timothy M. Benjamin, CFO/Treasurer
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