PELICAN PROPERTIES INTERNATIONAL CORP
TICKER SYMBOL: PELP
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 September 30, 1999
[ ] 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.)
2 Fenwick Road
Suite 100
Fort Monroe, Virginia 23651
---------------------------
(Address of Principal Executive Office)
(757) 224-5324
--------------
(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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the issuer's common stock, par value $.001
per share as of September 30, 1999 was 5,975,851.
Transitional Small Business Disclosure Format: Yes [ ] No [ X ]
1
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PELICAN PROPERTIES, INTERNATIONAL CORP.
and SUBSIDIARIES
Table of Contents
PART I. FINANCIAL INFORMATION
- ------------------------------
<TABLE>
<CAPTION>
ITEM. 1 Financial Statements
<S> <C>
Condensed consolidated Balance Sheets Page 3
September 30, 1999 and December 31, 1998
Condensed Consolidated Statements of Operations-- Pages 4-5
Three Months Ended September 30, 1999 and September 30, 1998
Nine Months Ended September 30, 1999 and September 30, 1998
Condensed Consolidated Statements of Cash Flows Page 6
Nine Months Ended September 30, 1999 and September 30, 1998
Condensed Notes to Consolidated Financial Statements Page 7 - 9
ITEM 2 - Management Discussion and Analysis or Plan of Operation Pages 9 - 11
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1 - Legal Proceedings Page 11
ITEM 2 - Changes in Securities Page 12
ITEM 3 - Defaults upon Senior Securities Page 12
ITEM 4 - Submission of Matter to Vote of Security Holders Page 12
ITEM 5 - Other Information Page 12
ITEM 6 - Exhibits and Reports on Form 8-K Page 12
</TABLE>
2
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PELICAN PROPERTIES INTERNATIONAL CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30 December 31
1999 1998
-------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $296,212 $121,623
Investments 0 1,082,488
Accounts Receivable 189,814 290,798
Other Receivable 0 224,047
Inventories 54,409 72,551
Other Current Assets 11,445 35,690
-------------------------------
Total Current Assets 551,880 1,827,197
Property & Equipment (Net) 16,247,399 16,059,223
Note Receivable 500,000 500,000
Other Assets 291,263 80,651
-------------------------------
TOTAL ASSETS $17,590,542 $18,467,071
===============================
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts Payable & Accrued Expenses $912,020 $473,128
Other Current Liabilities 38,877 101,464
Current Maturities of Long-term Debt 7,127,626 1,035,423
Income Taxes Payable 123,092 161,684
-------------------------------
Total Current Liabilities 8,201,615 1,771,699
LONG-TERM LIABILITIES
Deferred Income Taxes 2,526,056 2,692,732
Long Term Debt, Less Current Maturities 2,400,000 9,336,205
-------------------------------
Total Long Term Liabilities 4,926,056 12,028,937
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock (6%0, par value $.001; 1,000,000
shares
authorized of Series A, convertible cumulative 6%
none issued or outstanding
Common Stock, par value $.001; 100,000,000 shares
authorized 5,975,851 shares issued and 5,967 5,094
outstanding
Additional Paid-in-Capital 3,414,373 3,278,588
Retained Earnings 1,042,531 1,382,753
-------------------------------
Total Stockholders' Equity 4,462,871 4,666,435
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,590,542 $18,467,071
===============================
</TABLE>
3
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PELICAN PROPERTIES INTERNATIONAL CORPORATION
Condensed Statements of Operations
(Unaudited)
September 30, 1999
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30 September 30 September 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues 2,354,910 0 5,809,667 0
Direct Cost of Revenues 906,742 - 2,275,039 -
-----------------------------------------------------------------------
GROSS PROFIT 1,448,168 - 3,534,628 -
EXPENSES
General & Administrative 238,760 177,833 1,710,167 320,398
Operating 501,147 - 1,127,796 -
Selling 158,447 - 428,871 -
Interest Expense 330,850 114 672,185 51,882
Depreciation & Amortization 217,354 194 642,341 388
-----------------------------------------------------------------------
Total Expenses 1,446,558 178,141 4,581,360 372,668
-----------------------------------------------------------------------
Income (Loss) from Continuing Operations
before Other Income (expense) 1,610 (178,141) (1,046,732) (372,668)
Other Income (Expense) (31,733) 111,188 1,243 65,656
-----------------------------------------------------------------------
Income (Loss) from Continuing Operations (30,123) (66,953) (1,045,489) (307,012)
(before Income Taxes)
Provision for Taxes (Tax Benefit) (11,336) (25,449) (393,418) (115,831)
-----------------------------------------------------------------------
Loss from Continuing Operations (18,787) (41,504) (652,071) (191,181)
Gain on Sale of Discontinued Operations - - - 5,477,012
(net of taxes)
Income (loss) from Discontinued Operations - (9,584) - 71,045
-----------------------------------------------------------------------
(net of taxes)
Income (loss) before extraordinary Gain (18,787) (51,088) (652,071) 5,356,876
Extraordinary Gain (Net of taxes) - - 311,850 361,570
-----------------------------------------------------------------------
NET INCOME (LOSS) (18,787) (51,088) (340,221) 5,718,446
=======================================================================
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Basic and diluted earnings (loss) per share:
<S> <C> <C> <C> <C>
Continued Operations (.003) (0.02) (0.12) (0.04)
Sale of Discontinued Operations - - - 1.08
Discontinued Operations - - - 0.01
Extraordinary Gain - - 0.06 0.07
-----------------------------------------------------------------------
Net Income
(Loss) (.003) (0.02) (0.06) 1.12
=======================================================================
Weighted average 5,975,851 5,100,852 5,535,018 5,068,443
number of shares
basic and diluted
=======================================================================
</TABLE>
5
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PELICAN PROPERTIES INTERNATIONAL CORPORATION
Condensed Statements of Cash Flows
For the Nine Months Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
Unaudited
1999 1998
---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
- ------------------------------------
<S> <C> <C>
Net Income (Loss) from Continuing operations (340,211) (191,181)
Adjustments to reconcile income from continuing operations
to net cash used from continuing operations:
Depreciation and Amortization 642,341 389
Non-Cash Compensation 0 24,980
Extraordianary Item: Forgiveness of Debt (500,000) 0
Changes in Operating Assets and Liabilities:
Decrease (Increase) in Investments 1,082,488 0
Decrease (Increase) in Accounts Receivable 100,984 0
Decrease (Increase) in Inventories 18,142 0
Decrease (Increase) Other Receivables 224,047 0
Decrease (Increase) Other Assets (186,365) (6,004)
(Decrease) Increase in Accounts Payable/Accrued Expenses 438,892 46,385
(Decrease) Increase in Other Current (62,587) (8,568)
Liabilities
(Decrease) Increase in Deferred Tax Liabilities (166,676) 0
(Decrease) Increase in Income Taxes Payable (38,592) (32,951)
----------------------------
Net Cash used by continuing operations 1,212,463 (166,950)
Net Cash used by discontinued operations 0 (636,963)
----------------------------
Net Cash Used by Operating Activities 1,212,463 (803,913)
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Capital Expenditures: Discontinued Operations 0 (3,873)
Capital Expenditures: Continued Operations (830,517) 0
Proceeds from sale of discontinued operations 0 14,983,262
----------------------------
Net Cash Used by Investing Activities (830,517) 14,979,389
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Principal Payments on Long-Term Debt; Discontinued Operations 0 (5,622,704)
Principal Payments on Long-Term Debt; Continued Operations (344,024) 0
Repayment of Loan 0 (241,153)
Cash Redemption of Preferrred Stock 0 (293,860)
Proceeds from Issuance of Common Stock 136,667 500
----------------------------
Net Cash Used by Financing Activities (207,357) (6,157,217)
----------------------------
NET INCREASE IN CASH 174,589 8,018,259
CASH, BEGINNING OF PERIOD 121,623 63,335
----------------------------
CASH, END OF PERIOD 296,212 8,081,594
============================
</TABLE>
6
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PELICAN PROPERTIES, INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
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-QSB 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 and nine months ended September
30, 1999, are not necessarily indicative of the results that may be expected for
the year ending December 31, 1999. 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, 1998.
The September 30, 1999 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.
NOTE 2 - EARNINGS (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,
warrants, and preferred shares considered common stock equivalents. Stock
options and other common stock equivalents are excluded from the 1999 and 1998
net income (loss) per share calculation as their effect would be antidilutive.
Basic and diluted earnings per share amounts are equal because the company has a
loss from continuing operations and consideration of the redeemable preferred
stock, options, warrants and their equivalents would result in anti-dilutive
effects to earnings per share.
NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION
- -------------------------------------------
Included in the Company's September 30, 1999 Statement of Operations is a
non-cash gain in the amount of $500,000, reported net of $188,150 in taxes as an
$311,850 Extraordianary Gain. This resulted from an early extinguishment of debt
as a result of a discount granted from the early pay-off of mortgage notes
payable secured by the Chamberlin Hotel.
NOTE 4 - YEAR 2000
- ------------------
The Securities and Exchange 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 minimally
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 to purchase or lease future computer systems that will have already
addressed the year 2000 issue.
7
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NOTE 5- EXTRAORDINARY GAIN - FORGIVENESS OF INDEBTEDNESS
- --------------------------------------------------------
During February 1999, the Company was offered a $500,000 discount by a creditor
for the early payoff of pay-off of mortgage notes payable secured by the
Chamberlin Hotel. The Company satisfied the debt with the creditor and recorded
a net of tax gain in the amount of $311,850.
NOTE 6 - CURRENT DEBT MATURITY
- ------------------------------
During the third quarter of 1999 $4,000,000 in debt representing mortgage notes
payable secured by substantially all the property and equipment at the Palmer
Inn became current.
The Company is currently in the process of refinancing the debt and expects to
have a commitment from a lender for the re-finance of the mortgage before the
end of the fourth quarter. Failure to refinance the debt could adversely impact
the Company's financial position, results of operations and cash flows.
NOTE 7- SUBSEQUENT EVENTS AND CONTINGENCIES
- -------------------------------------------
REFINANCE OF MORTGAGE NOTE
- --------------------------
On October 4, 1999 the Company refinanced a mortgage note payable with a balance
of $851,126 with a $940,000 mortgage secured by the Best Western Palmer Inn. The
short-term bridge loan is payable at prime plus 1%per annum, interest only
payable in monthly installments. The Company is currently in the process of
refinancing the debt and expects to have a commitment from a lender for the
re-finance of this mortgage as well the $4 Million Palmer Inn mortgage (see
discussion at Note 6 above) outstanding before the end of the fourth quarter.
Failure to refinance the debt could adversely impact the Company's financial
position, results of operations and cash flows.
NEW SUBSIDIARIES
- ----------------
The Company has formed four wholly owned subsidiaries in the form of limited
liability companies (LLC). All assets and liabilities of the The Palmer Inn have
been transferred to The Palmer Inn Princeton, LLC as have all assets and
liabilities of the McLure House been transferred to the McLure House Hotel and
Conference Center, LLC. The assets of The Chamberlin Hotel have not yet been
transferred to the corresponding LLC, however, management expects the transfer
to be completed in the fourth quarter, 1999. The fourth subsidiary, Ohio Key
LLC, holds a three-quarter acre unimproved island in the Florida Keys, which was
not included in the Company's sale of the Sunshine Key RV Resort and Marina in
May 1998.
No pro-forma information has been presented because the newly formed limited
liability companies were formed exclusively to succeed the business of Ohio Key
I and II, and thus, the merger has no material impact on the consolidated
financial statements of the Company.
CONTINGINCIES
- -------------
On June 11, 1999, Ohio Key I, Inc. and Ohio Key II, Inc. (collectively, "Ohio
Key") filed suit against JCB Financial Corporation, James C. Barggren,
Chamberlin Hotel, LLC in the Circuit
8
<PAGE>
Court for the City of Hampton, State of Virginia. In connection with the
purchase of the Chamberlin Hotel from The Chamberlin Hotel LLC, Ohio Key assumed
two secured notes in the amount of $3,000,000.00 payable to The Chamberlin Hotel
Company, an underlying mortgage holder, which notes were secured by two deeds of
trust filed of record against The Chamberlin Hotel. The two notes were paid in
full on or about February 4, 1999 by Ohio Key with an unsecured advance of
$2,265,000.00 from Chamberlin Hotel, LLC, the seller of the hotel. The deeds of
trust have not been released and Chamberlin Hotel, LLC has claimed an interest
in the deeds of trust. Ohio Key has filed a proceeding to have the deeds of
trust judicially declared satisfied in full and to obtain a judicial
determination of what amounts of money, if any, are owed by Ohio Key to
Chamberlin Hotel, LLC, since Ohio Key believes that it may have certain offsets
against the funds advanced by Chamberlin Hotel, LLC. Ohio Key is vigorously
pursuing its claims. The proceeding is currently nearing completion of the
discovery process. Ohio Key's potential liability is $2,265,000, currently
accounted for in the "Current Maturities of Long Term Debt" caption of the
Company's balance sheet at September 30, 1999.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ------------------------------------------------------------------
The following discussions should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report:
Certain matters discussed in this Quarterly Report on Form 10-QSB are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes",
"anticipates", "expects" or words of similar import. Similarly, statements that
describe the Company's future plans, objectives or goals are also
forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties which are described in close proximity to such
statements and which could cause actual results to differ materially from those
currently anticipated. Shareholders, potential investors and other readers are
urged to consider these factors in evaluating the forward-looking statements and
are cautioned not to place undue reliance on such forward-looking statements.
The forward-looking statements included herein are made as of the date of this
report, and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
The Company's primary objective is the management of held assets and
the acquisition and management of additional hotel properties. Until June 4,
1998, the Company, through Ohio Key I, Inc. and Ohio Key II, Inc.
("Subsidiaries"), engaged in the ownership and management of Sunshine Key Resort
("Property"). On June 4, 1998 the Subsidiaries, sold the Property for a sale
price of $15,750,000 (the "Sale"). A portion of the proceeds from the Sale, or
$5,589,908, was used to pay all of the Company's long term debt (including all
debt associated with the Property). Proceeds were also used to redeem all of the
Company's outstanding Series A preferred stock and satisfy all other loans
associated with the Property. After provisions for closing costs and the
resolution of certain issues with respect to the Property, the Company placed
the remaining proceeds of the Sale, $8,149,727.15 (the "Remaining Proceeds"), in
an IRS 1031 Exchange Account with the intention of taking advantage of tax
deferral strategies if reinvested in real estate properties within specified
time frames and if certain criteria met.
On October 15, 1998, the Company, through the Subsidiaries, purchased
the McLure House Hotel and Conference Center located in Wheeling, West Virginia
for $3,200,000 paid in cash. The purchase funds were drawn from the proceeds
held in the Company's 1031 Exchange Account. On October 16, 1999 the Company
secured a note and mortgage on the property for $2,400,000.
9
<PAGE>
On November 25, 1998, the Company through the Subsidiaries purchased
the Palmer Inn Hotel located in Princeton, New Jersey for $7,500,000. $2,500,000
was paid in cash and the remaining balance was financed. The cash was drawn from
the proceeds held in the Company's 1031 Exchange Account.
On November 30, 1998, the Company, through the Subsidiaries, purchased
the Chamberlain Hotel located in Hampton Roads, Virginia for $5,350,000.
$2,350,000 was paid in cash. The cash was drawn from the proceeds held in the
Company's 1031 Exchange Account.
As of November 30, 1998 all requirements of the IRS Section 1031
Exchange requirements had been satisfied and the Company does not anticipate any
material tax consequences due to the sale of the Property.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
1998 FOR CONTINUING OPERATIONS
- ------------------------------
For the period ended September 30, 1999, revenues of continuing
operations were $5,809,667 as compared to $0 in 1998. Cost of Revenues was
$2,275,039 in the period ended September 30, 1999 as compared to $0 in 1998. The
Gross Profit in the period September 30, 1999 was $3,534,628 as compared to
$0.00 in 1998. All changes in revenues, cost of revenues and gross profit were
attributable to the disposition of the Sunshine Key Resort in June 1998 and the
acquisition of three hotels in the fourth quarter of 1998. Since the Sunshine
Key Resort was the Company's only source of operations for 1998, the Company has
treated the sale as discontinued operations for all periods presented.
Total Operating and General and Administrative expenses were $2,837,963
in the period ended September 30, 1999 compared to $320,398 in 1998. Interest
expense was $672,185 in the period ended September 30, 1999 as compared to
$51,882 in 1998. The increase was attributable to the disposition of Sunshine
Key Resort in September 1998 and the acquisition of three hotels in the fourth
quarter of 1998. The acquisition of three hotels essentially changed the
operation of the company and necessitated certain non-recurring expenses as the
Company re-organized for its new operation. Because the Sunshine Key Resort was
the Company's only source of operations for 1998, the Company has treated the
sale as discontinued operations for all periods presented. Also, of the increase
in the nine months ended September 30, 1999 the Company estimates that
approximately $200,000 were non-recurring expenses relating to a failed merger
and the legal proceedings outlined on Note 6 of the financials and Part II of
this filing.
Income from continuing operations was $ 652,071 loss in the period
ended September 30, 1999 as compared to a loss of $191,181 in 1998. Net income
was $(340,221) in the period ended September 30, 1999 as compared to $5,718,446
in 1998. The decrease in Net Income results primarily from the gain recognized
in 1998 from the disposition of the Sunshine Key Resort and secondarily because
of the increase in expenses as discussed in the paragraph above.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's working capital decreased $7,594,237 to a deficit of
$7,649,735 at September 30, 1999 from $55,498 at December 31, 1998. This
decrease is due almost entirely to $7.25 Million debt, now being reported on a
current basis and previously reported as long-term debt. Of this $7.25 Million
current debt, $4 Million (due June, 2000 secured by the Palmer Inn) is being
refinanced with a commitment expected from a lender before the end of the fourth
quarter. $980,000, also secured by the Palmer Inn, was refinanced in the fourth
quarter as noted in Note 7 to the Financial Statements above. $2.7 Million is
unsecured debt related to the
10
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purchase of the Chamberlin Hotel and is discussed in the Contingency section of
Note 7 to the Financial Statements above. If for any reason the refinancing of
the Palmer Inn does not occur, and/or the Company is unable to refinance the
Chamberlin Hotel, the Company's business and operations would be materially
adversely affected. There can be no assurance that any other financing will be
available to the Company on acceptable terms, or at all. Further, there can be
no assurance that existing stockholders will provide any portion of the
Company's financing requirements. Additional equity financing may involve
substantial dilution to the interest of the Company's existing stockholders.
At September 30, 1999 the Company had accounts receivable of $189,814
as compared to $290,798 at December 31, 1998. At September 30, 1999 the Company
had accounts payable and accrued expenses of $912,020 as compared to $473,128 at
December 31, 1998.
Cash outlays for capital expenditures of property and equipment totaled
$830,517 the period ended September 30, 1999 as compared to $0 for the 1998
fiscal year for continued operations.
In the first quarter the Company satisfied the $3 Million loan payable
related to the November 1998 purchase of the Chamberlin Hotel. The mortgage was
satisfied for $2.5 Million and the company recorded a net of tax gain in the
amount of $311,850 related to the discount granted for the early pay-off of the
debt.
ADDITIONAL FACTS TO CONSIDER
- ----------------------------
Outlook
- -------
The McLure House Hotel is the final year of a four-year capital
improvement plan in fiscal 1999. The Company has completed the upgrades to the
last floor of guestrooms and corridors and as well as the completion of the
lounge renovation in the fourth quarter. The Company has funded these projects
through operations. The Company has completed negotiating an agreement with a
national company to franchise the McLure House Hotel. Completion of this
franchise compliance will be completed by the first quarter of 2000.
The Company is in the final process of reviewing plans for the addition
of 24 suites to the Palmer Inn. As of the date of this filing, the Company
expects to receive a commitment for the refinancing of the existing debt plus
the funds necessary for the construction of the new suites in the fourth
quarter.
Management is currently developing a capital improvement plan for the
Chamberlin Hotel. It will initially focus on improvements to guestrooms and
public areas. Management plans on funding these projects through operations.
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
On June 11, 1999, the company's subsidiaries Ohio Key I, Inc. and Ohio
Key II, Inc., as plaintiffs, filed a lawsuit against JCB Financial Corporation,
James C. Barggren and Chamberlin Hotel, L.L.C., The Chamberlin Hotel Company; in
the Circuit Court for the City of Hampton, State of Virginia. In connection with
the purchase of the Chamberlin Hotel from The Chamberlin Hotel LLC, Ohio Key
assumed two notes in the amount of $3,000,000.00 payable to The Chamberlin Hotel
Company, an underlying mortgage holder, which notes were secured by two
11
<PAGE>
deeds of trust filed of record against The Chamberlin Hotel. The two notes were
paid in full on or about February 4, 1999 by Ohio Key with an unsecured advance
of $2,265,000.00 from Chamberlin Hotel, LLC, the seller of the hotel. The deeds
of trust have not been released and Chamberlin Hotel, LLC has claimed an
interest in the deeds of trust. Ohio Key has filed a proceeding to have the
deeds of trust judicially declared satisfied in full and to obtain a judicial
determination of what amounts of money, if any, are owed by Ohio Key to
Chamberlin Hotel, LLC, since Ohio Key believes that it may have certain offsets
against the funds advanced by Chamberlin Hotel, LLC. Ohio Key is vigorously
pursuing its claims. The proceeding is currently nearing completion of the
discovery process. Ohio Key's potential liability is $2,265,000, currently
accounted for in the "Current maturities of long term debt" caption of the
Company's balance sheet at September 30, 1999. Ohio Key's expects offsets and/or
credits against the potential liability which are not presently accounted for in
the Company's financial statements.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matter to a Vote of Security Holders
Not applicable
Item 5. Other Information
Change of Company Officer
The resignation of the Chief Financial Officer/Treasurer was to take effect at
the beginning of the fourth quarter. All duties associated with this position
have been assigned to the Director of Finance located in the Hampton, Virginia
office.
Item 6. Exhibits and Reports on Form 8-K
Financial Data Schedule (for SEC use only)
Exhibit 27
Reports on Form 8-K
No reports on Form 8-K were filed in the third quarter of 1999.
12
<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: November 16, 1999 By: /s/ C. John Knorr
------------------------
C. John Knorr, Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 296,212
<SECURITIES> 0
<RECEIVABLES> 189,814
<ALLOWANCES> 0
<INVENTORY> 54,409
<CURRENT-ASSETS> 551,880
<PP&E> 16,952,977
<DEPRECIATION> (705,578)
<TOTAL-ASSETS> 17,590,542
<CURRENT-LIABILITIES> 8,201,615
<BONDS> 0
0
0
<COMMON> 5,967
<OTHER-SE> 4,462,871
<TOTAL-LIABILITY-AND-EQUITY> 17,590,542
<SALES> 5,809,667
<TOTAL-REVENUES> 5,821,910
<CGS> 2,275,039
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,939,019
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 672,181
<INCOME-PRETAX> (1,045,489)
<INCOME-TAX> (393,418)
<INCOME-CONTINUING> (652,071)
<DISCONTINUED> 0
<EXTRAORDINARY> 311,850
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<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
