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, 2000
[ ] 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
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(State or Other Jurisdiction (IRS Incorporation or Employer
of Organization) Identification Number)
2 Fenwick Road
Suite 100
Fort Monroe, Virginia 23651
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(Address of Principal Executive Office)
(757) 224-5234
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(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 October 31, 2000 was 5,975,851.
Transitional Small Business Disclosure Format: Yes [ ] No [ X ]
<PAGE>
PELICAN PROPERTIES INTERNATIONAL CORP.
and SUBSIDIARIES
Table of Contents
PART I. FINANCIAL INFORMATION
------------------------------
ITEM. 1 Financial Statements
Condensed Consolidated Balance Sheets Pages 3 - 4
September 30, 2000 and December 31, 1999
Condensed Consolidated Statements of Operations-- Page 5
Three Months and Nine Months Ended September 30, 2000
and September 30, 1999
Condensed Consolidated Statements of Cash Flows Pages 6 - 7
Nine Months Ended September 30, 2000 and
September 30, 1999
Condensed Notes to Consolidated Financial Statements Page 7 - 8
ITEM 2 - Management Discussion and Analysis of Financial Condition
And Results of Operations Pages 9 - 10
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
2
<PAGE>
PELICAN PROPERTIES INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31
2000 1999
ASSETS Unaudited
----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 238,390 $ 69,037
Accounts receivable, net 160,923 87,290
Supplies 47,937 82,974
Prepaid expenses 42,216 25,380
Note receivable -- 500,000
Income tax refundable -- 228,000
Other current assets 2,997 1,734
----------- -----------
TOTAL CURRENT ASSETS 492,463 994,415
PROPERTY AND EQUIPMENT, net of accumulated 16,395,341 16,653,021
depreciation and amortization of $1,634,572 and $921,770
OTHER ASSETS
Deferred loan costs, net of accumulated amortization of $6,667 and $14,804 153,333 70,473
Deferred franchise costs, net of accumulated amortization of $794 and $106 18,100 18,894
Deposits and other 309,333 58,648
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480,766 148,015
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TOTAL ASSETS $17,368,570 $17,795,451
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,757,381 $ 1,638,750
Accounts payable and accrued liabilities 1,240,716 1,125,305
Obligation for renovations 150,000 150,000
Income taxes payable -- 150,000
Other current liabilities -- 41,660
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TOTAL CURRENT LIABILITIES 3,148,097 3,105,715
OBLIGATION FOR RENOVATIONS 504,558 496,495
LONG-TERM DEBT, less current maturities 7,509,946 7,347,563
DEFERRED INCOME TAXES 3,435,000 3,512,000
STOCKHOLDER'S EQUITY
Preferred Stock, 1,000,000 shares authorized; none issued or
outstanding - -
Common Stock, par value $.001; 100,000,000 shares authorized;
5,975,851 shares issued and outstanding 5,975 5,975
Additional paid-in capital 3,393,216 3,393,216
Accumulated deficit (628,222) (65,513)
TOTAL STOCKHOLDERS' EQUITY 2,770,969 3,333,678
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,368,570 $17,795,451
=========== ===========
</TABLE>
3
<PAGE>
PELICAN PROPERTIES INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDE NINE MONTHS ENDED
---------------------------- -----------------
September 30 September 30 September 30 September 30
2000 1999 2000 1999
Unaudited Unaudited Unaudited Unaudited
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Rooms $1,719,959 $1,668,723 $4,330,781 $4,027,279
Food and beverage 527,112 417,656 1,207,042 1,188,117
Rental income 105,012 51,011 309,408 153,486
Other 78,977 217,520 306,255 442,028
---------- ---------- ---------- ----------
TOTAL REVENUES 2,431,060 2,354,910 6,153,486 5,810,910
---------- ---------- ---------- ----------
COST AND EXPENSES
Rooms 381,973 382,726 1,059,710 1,067,897
Food and beverage 492,526 329,417 1,143,482 1,040,012
Other operating expenses 827,674 739,907 2,158,263 1,127,796
Corporate office expenses 274,094 226,302 868,031 1,877,297
Sales and marketing expenses 121,667 158,477 391,739 428,871
Interest expense 208,380 330,850 609,168 672,185
Depreciation and amortization 246,545 217,354 712,802 642,341
---------- ---------- ---------- ----------
TOTAL COSTS AND EXPENSES 2,552,859 2,385,033 6,943,195 6,856,399
---------- ---------- ---------- ----------
LOSS BEFORE INCOME TAXES (121,799) (30,123) (789,709) (1,045,489)
INCOME TAX BENEFIT -- (11,336) (227,000) (393,418)
---------- ---------- ---------- ----------
LOSS BEFORE EXTRAORDINARY ITEM (121,799) (18,787) (562,709) (652,071)
EXTRAORDINARY ITEM, net of taxes -- -- -- 311,850
NET LOSS $(121,799) $ (18,787) $(562,709) $(340,221)
========= ========= ========= =========
BASIC AND DILUTED LOSS
PER COMMON SHARE:
Loss before extraordinary item $ (0.02) $(0.003) $(0.09) $ (0.12)
---------- ---------- ---------- ----------
Extraordinary item -- -- -- 0.06
---------- ---------- ---------- ----------
Net Loss $ (0.02) $ (0.003) $ (0.09) $ (0.06)
========= ========= ========= =========
</TABLE>
5
<PAGE>
PELICAN PROPERTIES INTERNATIONAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
---------
For the Nine Months Ended September 30, 2000 and September 30, 1999
<TABLE>
<CAPTION>
September 30, September 30,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (562,709) $ (340,211)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 712,802 642,341
Extraordinary gain on forgiveness of debt -- (500,000)
Changes in:
Investments -- 1,082,488
Accounts receivable (73,633) 100,984
Inventory 35,037
18,142
Prepaid expenses (16,836) --
Tax refund receivable 228,000
--
Note receivable 500,000
--
Other receivables -- 224,047
Other current assets (1,263)
--
Other assets, net (332,751) (186,365)
Accounts payable and accrued expenses 234,841 438,892
Other current liabilities (41,660) (62,587)
Deferred tax liabilities (77,000) (166,676)
Income taxes payable (150,000) (38,592)
Other liabilities 8,063
--
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NET CASH PROVIDED BY OPERATING ACTIVITIES 462,891 1,212,463
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets (455,122) (830,517)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 5,101,584 --
Repayment of borrowings (4,940,000) (344,024)
Proceeds from issuance of common stock -- 136,667
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NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 161,584 (207,357)
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NET INCREASE IN CASH 169,353 174,589
CASH AT BEGINNING OF PERIOD 69,037 121,623
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CASH AT END OF PERIOD $ 238,390 $ 296,212
=========== ============
</TABLE>
6
<PAGE>
PELICAN PROPERTIES INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying 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, considered
necessary for a fair presentation have been included. Operating results for the
nine months ended September 30, 2000, are not necessarily indicative of the
results that may be expected for the year ending December 31, 2000. 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, 1999. The accompanying condensed consolidated financial statements
should be read in conjuction with the 1999 financial statements which can be
found in the Company's annual report on form 10-KSB for 1999.
The September 30, 2000 condensed consolidated financial statements include the
accounts of Pelican Properties International Corp. and its wholly owned
subsidiaries Ohio Key I, Inc., Ohio Key II, Inc., Old Point Comfort Hotel, LLC.,
Palmer Inn, Princeton, LLC., McLure House Hotel & Conference Center, LLC,
Purchasing Concepts, Inc., and Vintage Hotels Corporation (the "Company"). All
significant inter-company transactions have been eliminated in consolidation.
NOTE 2 - LOSS PER SHARE
Basic and diluted loss 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 - LONG TERM DEBT
Current maturities of the Long Term debt include the obligation to the former
owner of the Chamberlin Hotel pursuant to a mediated settlement agreement dated
February 8, 2000, and revised on July 6, 2000. This debt has been retired as of
October 13, 2000. Activity related to this obligation will be reflected in the
fourth quarter (See Part II, Item 1).
The mortgage note for Palmer Inn was refinanced on July 21, 2000. A new mortgage
note ("Note"), payable to a financial institution, requires monthly payments of
principal, interest and taxes beginning August 20, 2000. The Note charges
interest at a rate of 9.75%, amortized over 25 years, with any unpaid principal
and interest payable in full on July 21, 2005. The Note is collateralized by the
property and equipment of the Palmer Inn.
7
<PAGE>
NOTE 4 - SUBSIQUENT EVENT
The Chamberlin Hotel was refinanced on October 13, 2000. A new Mortgage note
("Note"), payable to a financial institution, requires monthly payments of
interest and taxes beginning in the fourth quarter of 2000. The Note charges a
market rate of interest and matures during 2001. The Note is collateralized by
the property and equipment of the Chamberlin Hotel.
NOTE 5 - OPERATIONS
The accompanying condensed consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As shown in the
accompanying condensed consolidated financial statements, the Company reported a
net loss of $562,709 for the nine months ended September 30, 2000, and had a
working capital deficiency and accumulated deficit of approximately $2,655,634
and $628,222, respectively, as of September 30, 2000. The continuation as a
going concern is dependent upon management's ability to generate additional
revenues from the 22-room addition to the Palmer Inn scheduled to begin early
2001, and to increase overall bookings from sales and marketing initiatives. No
assurance can be given that the Company will be able to obtain additional equity
or debt financing to meet its maturing obligations, expansion and renovation
needs, or that the terms of such financing or equity infusion would be on terms
favorable to the Company. If the Company is unable to obtain favorable financing
terms, it may have an adverse impact on the Company.
8
<PAGE>
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
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. This objective was
realized in 1999 with the sale of Sunshine Key and the purchase of three hotels
in the mid-Atlantic region. The Company took advantage of tax deferral
strategies through a 1031 Exchange Account. Details of such transactions have
been disclosed in prior 10-QSB reports filed in 1999, and the 10-KSB for 1999.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 2000 compared to Nine Months Ended September 30,
1999 for Operations
For the nine month period ended September 30, 2000, total revenues were
$6,153,486 as compared to $5,810,910 in 1999. Total costs and expenses were
$6,943,195 for the nine month period ended September 30, 2000 as compared to
$6,855,166 in 1999. The Gross Profit in the nine month period ended September
30, 2000 was $3,950,294 as compared to $3,703,011 in 1999.
Total operating expenses increased to $2,203,192 in the nine month period ended
September 30, 2000 from $2,107,909 in 1999. Corporate Office expenses decreased
in the nine month period ended September 30, 2000 to $868,031 from $1,877,297 in
1999. Sales and Marketing expenses decreased in the nine month period ended
September 30, 2000 to $391,739 from $428,871 in 1999. Interest expense decreased
in the nine month period ended September 30, 2000 to $609,168 from $672,185 in
1999. Depreciation and amortization expense increased for the nine month period
ended September 30, 2000 to $712,802 from $642,341 in 1999. The decrease in
interest is attributable to the accrual of the Chamberlin hotel's debt. In 1999
an estimated accrual was being expensed until the settlement negotiations were
finalized with the former owner. The decrease in Corporate Office expenses is
attributable to the decrease in auditing and legal fees incurred from the
ongoing lawsuit with the former owner of the Chamberlin Hotel. The decrease in
the Sales and Marketing expenses would be attributable to several staff
positions being open at two hotel locations as well as continued efforts for
cost control. The increase in depreciation and amortization expense would result
from additional capital expenditures during the current fiscal year.
Loss before Income Taxes was $789,709 in the nine month period ended September
30, 2000 as compared to $1,045,489 in 1999. Net Loss was $562,709 in the nine
month period ended September 30, 2000 as compared to $340,221 in 1999. The
increase in Net Loss results primarily from an Extraordinary Item of $311,850
that was applied in 1999.
9
<PAGE>
Liquidity and Capital Resources
The Company's working capital deficiency increased from December 31, 1999 by
$544,334. This increase is due to the financing of several capital improvement
projects through operations.
At September 30, 2000 the Company had net accounts receivable of $160,923 as
compared to $87,290 at September 30, 1999. At September 30, 2000 the Company had
accounts payable and accrued expenses of $1,240,716 as compared to $1,125,305 at
September 30, 1999.
ADDITIONAL FACTS TO CONSIDER
Outlook
Management continues to anticipate an increase in revenue at all three
properties through the end of 2000 (as evidenced in the first, second and third
quarters). Several key accounts have booked with the Ramada Plaza City Center
Hotel for the fall quarter, as well as anticipated revenues for the Christmas
Bus Tour season for that location.
Palmer Inn remains within the average rate of comparable hotels in its current
market. The Palmer Inn is in negotiations with its current primary lender for
additional financing for the 22 room suite wing.
The Ramada Plaza City Center Hotel will complete the second phase of renovations
in the fourth quarter which will involve all common areas such as the lobby,
exterior and other public areas, corridors, meeting and ballroom space. The
restaurant lease is in the final stage of agreement and is expected to open on
December 1, 2000. Overtures with the City of Wheeling regarding the building of
a Convention/Expo Center across the street from the Ramada Plaza will continue
throughout the current year and into the year 2001.
The Chamberlin Hotel is in the process of securing financing for anticipated
renovations to qualify for a franchise with a national chain.
New Subsidiary
Vintage Hotels Corporation was formed in June of 2000 with the intention of
acting as the management company for all of the Company's hotel locations.
Beginning in July all management functions for the Company were handled under
the new entity. Nathan A. Roesing, current Chief Operating Officer of the
Company, acts as its President, and oversees its daily operations. It has the
potential of handling additional hotel locations not owned by the Company, which
would come under management contracts with those respective owners. Marketing
efforts on behalf of Vintage Hotels have been made aggressively, and the Company
has had several promising presentations. The potential for additional contracts
is good and continued marketing efforts will be made throughout the fourth
quarter of 2000.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In June, 1999, the Company's subsidiaries Ohio Key I, Inc. and Ohio Key II, Inc.
(collectively, "Ohio Key") filed suit against JCB Financial Corporation, James
C. Barggren, Chamberlin Hotel, L.L.C. , and The Chamberlin Hotel Company in the
Circuit Court for the City of Hampton, State of Virginia. When Ohio Key
purchased The Chamberlin Hotel, Ohio Key assumed two notes in the aggregate
principal amount of $3,000,000 payable to The Chamberlin Hotel Company, which
were secured by two deeds of trust. Said notes were paid, in full, on or about
February 4, 1999. Despite such payment, The Chamberlin Hotel Company assigned
the two deeds of trust to JCB Financial Corporation. Subsequent to such
assignment, JCB Financial Corporation refused to satisfy said deeds of trusts in
the public records. Ohio Key filed the subject litigation (i) to have the two
deeds of trust judicially determined to be satisfied and discharged, and (ii) to
obtain a determination as to what amounts of money, if any, are owed by Ohio Key
to James C Barggren and his affiliates (collectively, "Barggren"). On or about
December 1999, the Court appointed an auditor to prepare a report ("Report")
regarding the indebtedness and claims by and between the litigants. Thereafter,
the Report was prepared and same states that Barggren owes Company and Ohio Key
the sum of $265,678.88. On July 6, 2000, the Court entered a Consent Order which
provided, among other things, that Ohio Key execute a deed of trust (the "JCB
Deed of Trust") and a promissory note in the original principal amount of
$1,550,000, with interest at the rate of ten per cent (10%) per annum.
On October 6, 2000, the parties agreed to settle this proceeding. Pursuant to
such settlement, the parties agreed that (i) as of October 6, 2000, the
principal balance due Barggren was $1,536,276, together with interest in the
amount of $15,151, for a total of $1,551,427, (ii) upon receipt of the principal
sum of $1,400,000 plus accrued interest, Barggren would satisfy the JCB Deed of
Trust, and (iii) the Report shall be sent to arbitration, which shall arbitrate
the appropriateness of the findings in the Report, and if the arbitrator
determines that Barggren owes money to Ohio Key then Barggren shall immediately
pay same and likewise, if the arbitrator determines that Ohio Key owes money to
Barggren then Ohio Key shall immediately pay same.
On or about October 13, 2000, the JCB Deed of Trust was satisfied and
the Court entered an Order dismissing this proceeding, with prejudice.
11
<PAGE>
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
Not applicable
Item 6. Exhibits and Reports on Form 8-K
Financial Data Schedule (for SEC use only)
Reports on Form 8-K
Change of Auditor's filed on February 4, 2000. Anticipated Filing date for
10-KSB filed on April 19, 2000.
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: ,2000 By:
------------------ ---------------------------------
C. John Knorr, Chairman
13
