U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended 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.)
38801 Overseas Highway
Big Pine Key, Florida 33043
---------------------------
(Address of Principal Executive Office)
(305) 872-2217
--------------
(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 [ ] No [ X ]
The number of shares outstanding of the issuer's common stock, par value $.001
per share as of May 7, 1998 was 5,004,185.
Traditional Small Business Disclosure Format: Yes [ X ] No [ ]
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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 5-7
ITEM 2 Management's Discussion and Analysis or Plan of Operation 8-12
PART II. OTHER INFORMATION
Items 1 - 6 12
27. Financial Data Schedule (for SEC use only)
SIGNATURES
2
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PELICAN PROPERTIES, INTERNATIONAL CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
1998 1997
ASSETS
CURRENT ASSETS
<S> <C> <C>
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 519,596 620,045
Current maturities of long-term debt 1,073,169 1,065,018
Loan Payable to Stockholders 241,153 241,153
------------- --------------
Total current liabilities 2,268,327 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
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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.
5,024 4,954
Additional paid in capital 3,539,824 3,536,894
Accumulated deficit ( 4,392,017) ( 4,550,165)
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Total stockholders' equity (deficiency) ( 846,973) ( 1,008,121)
------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIENCY) $ 6,454,113 $ 6,493,138
============= =============
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3
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<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
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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
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INCOME (LOSS) FROM OPERATIONS 341,908 425,730
OTHER EXPENSES, net ( 67,565) ( 102,535)
---------- ----------
INCOME (LOSS)BEFORE
INCOME TAXES 274,343 323,195
PROVISION FOR INCOME TAXES 116,195 113,280
---------- ----------
NET INCOME (LOSS) $ 158,148 $ 209,915
========== ==========
BASIC EARNINGS (LOSS) PER SHARE
FROM CONTINUING OPERATIONS $ .032 $ .046
========== ==========
DILUTED EARNINGS (LOSS) PER SHARE $ .028 $ .041
========== ==========
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4
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<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): $ 158,148 $ 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 (100,449) (101,323)
Due to affiliate -- (50,281)
Deferred tax liability 2,196 1,245
Pre-Petition debt (14,501) (43,424)
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Net adjustments (15,829) 97,607
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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 --
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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
========= =========
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5
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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 - SEC Comments on Form 10SB
- ----------------------------------
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 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
6
PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2 - SEC Comments on Form 10SB (continued)
- ----------------------------------------------
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.
Note 3 - Amortization
- ---------------------
Beginning in January of 1997, loan origination costs approximating $222,000 are
being amortized over 23 months.
Note 4 - Stock transactions
- ---------------------------
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.
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.
7
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PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5 - 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 6 - 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 7 - 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
========== ==========
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8
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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.
Pelican Properties, International Corp., through its wholly owned
subsidiaries, Ohio Key I, Inc. and Ohio Key II, Inc., owns and operates a resort
known as the Sunshine Key RV Resort and Marina. 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.
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 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:
9
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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 to 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.
10
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Liquidity and Capital Resources
The Company's working capital decreased $165,609 from the December 31,
1997 deficit of $2,434,064 to a deficit of $2,268,455 as of March 31, 1998. This
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
Management believes that the resort destination industry and more
specifically the recreation vehicle (RV) industry are expected to grow
substantially because of: (i) a shift in recreation vehicle ownership patterns
11
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toward the enormous baby boom population; (ii) expectations of the baby boom
population to increase 34% between 1995 and 2005 and the over 65 population
increasing an estimated 24% to 40 million by 2010; (iii) in 1996, over 466,000
new RV's were shipped with a total value of $10 billion, constituting the
highest annual dollar value to date; and (iv) according to the University of
Michigan Survey Research Group, RV ownership rates are highest in the 50-65 age
group and are expected to grow by 40% over the next ten years. =
The Company will 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. This will take advantage of the above stated industry outlook as well
as the growing eco-tourism sector. The Company will emphasize, as initial
targets, acquisitions that complement its existing operation with alternate
seasonality. This will provide the Company with a consistent cash flow from
operations and ensure that an operation is in season at all times throughout the
year.
Ohio Key I, Inc. Subsidiary
Management anticipates increases in revenue for remainder of 1998.
Several factors will influence this increase. A rate increase was implemented in
October of 1997 that represented the first increase in two years. Management
expects a normalization in the weather patterns affected by the "El Nino"
phenomenon. Also, since the majority of the peak-season falls within the first
quarter, which represents approximately 40% of the yearly revenues, management
feels there is a tremendous potential for increased sales in the off-peak
season. A more focused marketing effort targeted to improve operations in the
off-peak season had been implemented in 1997. The many capital improvements
undertaken in the last several years along with present projects is believed to
improve the overall appeal of the park and thus increase sales.
Significant efforts have been made in 1997 to expand the number and
quality of amenities offered at the resort. The Company entered into agreements
with two separate entities that have significantly upgraded our recreational
water amenities. The first was the rental use boats owned and maintained by an
outside source. This replaced the two existing boats with modern boats and
eliminated the costly maintenance operation. The second was the opening of a
state of the art scuba diving facility on the property offering retail
merchandise, instruction and a wide variety of aquatic recreation. The business
is owned and operated by an outside individual with an industry wide reputation
and existing client base. The rental boats and dive facilities are anticipated
to increase the overall appeal of the park, as well as increase revenues through
our profit sharing and space leasing arrangements. As part of the profit sharing
arrangements, the Company receives 25% of the base rental boat rate of each
rental. The Company also receives 5% of the dive shop sales revenue that
increases to 12% over the next several years. The Company also receives a
monthly payment from the dive shop owners that represents the lease of the dive
shop space location on the Resort property.
Management does not anticipate any significant fluctuations in
Operating and General & Administrative expenses for 1998. The Company expects
interest expense to decrease in 1998 due to management's expectation of a
refinancing of the first and second mortgages at a more favorable effective
interest rate. The alternative debt financing will also enable the Company to
take advantage of the discounted payoff amount of $4,465,000 by November 1998 of
the $4,700,000 note held by Allied Capital Corp. (formerly held by WAMCO XXII,
Ltd.) This would result in a principal reduction of $234,000 or 5%. Management
is confident that financing will be available to take advantage of this
reduction.
12
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The Company also has a pending claim with the local electric utility
company regarding the non payment of prior year's billing credits, the refund of
prior year's late fees, and associated accrued interest that amounts to
approximately $65,000. Management feels strongly that this claim can be settled
in 1998, but does feel that legal steps may be needed to collect.
The Company will continue to reinvest in ongoing capital improvements
to the property in 1998. The electrical upgrade project is due for completion in
1998. Other capital improvement projects intended to significantly upgrade the
park's appeal and reputation include but are not limited to; the complete
modernization of the marina floating docks, repaving of the park's roads, an
additional pool (inclusive of a new restaurant and game room) facility and the
renovation of the roadside gas station and grocery store facility. Management
intends to begin working on these projects in 1998, but there can be no
assurances that the Company will have sufficient cash flows to start these
projects in 1998.
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
The subsidiaries entered into an agreement to sell the property to a
large national RV park and mobile home operator "Buyer" pursuant to the terms of
an Agreement of Purchase and Sale and Escrow Instructions for a sale price of
$15,750,000 to be paid in cash or other immediately available funds to the
Corporation. The Buyer has deposited $150,000 into an escrow account that is
forfeited if the sale is not completed by fault of the Buyer. The closing date
is scheduled for May 29, 1998 subject only to adjustment in the event that
certain documentation needed to consumate the transaction is unable to be
completed as of that date. The Company estimates the net proceeds from the sale
will result in a positive stockholders equity of over $9,000,000. The Company
will not change the nature of its business strategy and will continue to seek
the acquisition of other resort destination properties.
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.
3.10 Agreement of Purchase and Sale and Escrow Instructions
27 Financial Data Schedule (for SEC use only)
13
<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: May 19, 1998 By: /S/ Jane Bergman
------------------------------
Jane Bergman, President
DATE: May 19, 1998 By: /S/ Timothy M. Benjamin
-------------------------------
Timothy M. Benjamin, CFO/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 134,072
<SECURITIES> 0
<RECEIVABLES> 29,382
<ALLOWANCES> 0
<INVENTORY> 45,560
<CURRENT-ASSETS> 221,507
<PP&E> 8,826,672
<DEPRECIATION> (2,683,435)
<TOTAL-ASSETS> 6,454,113
<CURRENT-LIABILITIES> 2,268,327
<BONDS> 0
0
196
<COMMON> 5,024
<OTHER-SE> (852,193)
<TOTAL-LIABILITY-AND-EQUITY> 6,454,113
<SALES> 1,307,387
<TOTAL-REVENUES> 1,307,387
<CGS> 258,843
<TOTAL-COSTS> 258,843
<OTHER-EXPENSES> 591,820
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114,816
<INCOME-PRETAX> 274,343
<INCOME-TAX> 116,195
<INCOME-CONTINUING> 158,148
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158,148
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
