<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-Q
------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------------- ------------
COMMISSION FILE NUMBER 333-2820
FLORDECO, LTD.
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 65-0671467
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
3591 FOWLER STREET 33901
FT. MYERS, FLORIDA (Zip Code)
(Address of Principal Executive Offices)
(941) 936-8888
(Registrant's Telephone Number, Including Area Code)
Indicate by check whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 ninety (90) days. Yes X No
--- ---
<PAGE> 2
FLORDECO, LTD.
FORM 10-Q
For the Quarter Ended September 30, 1997
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements............................................................................1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................................5
Item 3. Quantitative and Qualitative Disclosures About Market Risk......................................6
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ..............................................................................7
Item 2. Changes In Securities...........................................................................7
Item 3. Defaults Upon Senior Securities.................................................................7
Item 4. Submission of Matters to a Vote of Security-Holders.............................................7
Item 5. Other Information...............................................................................7
Item 6. Exhibits and Reports on Form 8-K................................................................7
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FLORDECO, LTD.
(Unaudited)
BALANCE SHEET
September 30, 1997
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 168,613
----------
$ 168,613
----------
PROPERTY
Land - Evans Avenue 182,241
Land - 15 Acres I-75 62,262
Land - N Ft Myers Industrial Campus 140,000
N Ft Myers Industrial Campus 659,844
Furniture and Fixtures 1,602
----------
1,045,949
Less accumulated depreciation 9,356
----------
1,036,593
----------
OTHER ASSETS
Prepaid loan costs,
less accumulated amortization of $1,192 4,936
Deposits 4,683
----------
9,619
----------
Total assets $1,214,825
==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 100,000
Real estate taxes payable 5,642
----------
105,642
LONG-TERM DEBT, less current portion 400,000
PARTNERS' EQUITY 709,183
----------
Total liabilities and partners' equity $1,214,825
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-1-
<PAGE> 4
FLORDECO, LTD.
(Unaudited)
INCOME STATEMENT
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ ------------------
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Expenses
Advertising $ 4,684 $ 10,543
Accounting and legal fees 17,959 25,119
Bank service charges 22 276
Depreciation 4,300 9,356
Telephone 118 298
Electric 1,798 3,214
Water 47 108
Interest 12,139 23,917
Licenses -- 2,428
Amortization of loan costs 511 1,192
Repair and maintenance 6,823 15,451
Office supplies -- 40
Outside services -- 1,711
Rubbish removal 2,974 4,782
Miscellaneous -- 21
-------- --------
51,375 98,456
-------- --------
Income (loss) from operations (51,375) (98,456)
Interest Income 1,744 6,695
-------- --------
Net Income $(49,631) $(91,761)
======== ========
</TABLE>
-2-
<PAGE> 5
FLORDECO, LTD.
(Unaudited)
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business:
Flordeco, Ltd. (Flordeco), a Florida limited partnership, was formed to
make equity investments in a diversified portfolio of income producing
residential and commercial properties. Profits, losses, and
distributions of cash or property by the Partnership generally will be
made to the Unitholders (including the general partner) in proportion
to the units held by each of them.
2. Property:
On March 5, 1997, Flordeco purchased commercial rental property for
approximately $755,000. The property is located in North Ft. Myers,
Florida. Currently the property, a warehouse, is unoccupied.
3. Depreciation:
Property and equipment are recorded at cost. Depreciation is recorded
using the straight-line method of depreciation over the estimated
useful lives of the respective assets.
4. Amortization:
Loan costs associated with the Partnership's debt are being amortized
over the term of the loan using the straight-line method.
5. Long-term debt:
On March 3, 1997, Flordeco obtained a three-year revolving line of
credit in the amount of $500,000. The line is collateralized by the
partners' promissory notes receivable. The rate of interest on the
credit line is prime plus one percent. Under terms of the credit line,
the maximum outstanding principal balance shall be reduced to $400,000
in the second year and $300,00 in the third year. The loan matures
March 1, 2000.
-3-
<PAGE> 6
6. Partners' Equity:
In 1996, Flordeco filed a registration statement (Form S-11) with the
Securities and Exchange Commission in order to sell partnership units
to the public. The offering called for a maximum of 1,000 units and a
minimum of 100 units at $12,000 per unit, payable $2,000 in cash and a
$10,000 full-recourse promissory note. Each promissory note is payable
over ten years at $1,000 per year without interest. The offering
terminated on April 30, 1997.
Flordeco sold 336 units, receiving cash of $632,000, undeveloped land
valued at $240,000 and notes totaling $3,160,000. Of the 336 units
sold, 5 units were purchased by the general partner (Investors Trust,
Inc.), 72 units were purchased, directly or indirectly, by shareholders
of the general partner, 45 units were purchased by Flordeco, Inc. and 1
unit was purchased by Flordeco, Realty, Inc. Flordeco, Inc. and
Flordeco Realty, Inc. are Florida corporations and affiliates of the
general partner.
Partners' capital at September 30, 1997 consisted of the following:
<TABLE>
<S> <C>
Sale of Units $ 4,032,000
Less: Notes receivable (3,160,000)
Offering costs (71,055)
YTD Net loss (91,762)
------------
Balance, September 30, 1997 $ 709,183
============
</TABLE>
7. Related Parties:
The Management Company will provide certain management services to the
partnership and its real property investments. Mr. Thomas R. Cronin and
Dr. Gerald Laboda, shareholders of the general partner, together own a
controlling interest in the Management Company. Flordeco Realty, Inc.
is a Florida corporation and a wholly-owned subsidiary of the
Management Company.
Partnership transactions involving the purchase, lease, and sale of the
partnership's properties may result in the immediate realization by the
general partner and its affiliates, including the Management Company
and Flordeco Realty, Inc. of substantial commissions, fees,
compensation and income. These fees will generally be based upon a
percentage of the amount paid to or by the partnership. None of the
agreements for such services were the result of arm's-length
negotiations.
8. Risks and Uncertainties:
The partnership will be subject to all of the risks inherent in owning
real property investments. Such risks include, but are not limited to,
changes in the investment climate for real estate, unanticipated
operating expenses, occupancy levels, and rental rates. It is
anticipated that most of the proposed investments will be located in
the limited geographical area of Southwest Florida.
-4-
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Flordeco, Ltd., a Florida limited partnership (the "Partnership"), was
organized on March 19, 1996 primarily for the purposes of making equity
investments in a diversified portfolio of income producing properties located
primarily in Southwest Florida.
The Partnership was initially capitalized in 1996 with total cash
contributions of $5,000 from Investors Trust, Inc., corporate general partner of
the Partnership ("General Partner"), and $900 from the initial limited partner.
In order to obtain the necessary capitalization to commence its
business activities, the Partnership filed a Form S-11 registration statement
with the Securities and Exchange Commission to register 1,000 units of limited
partnership interests in the Partnership ("Units") for sale at a purchase price
of $12,000 per Unit. The purchase price per Unit is payable $2,000 in cash and
$10,000 in a five year fully secured promissory note ("Promissory Note"). The
Promissory Note is noninterest bearing and it is payable in ten equal annual
installments. The registration statement was declared effective on August 12,
1996, and the sale of Units was commenced. The Units were offered for sale on a
self underwritten best efforts basis. A minimum of 100 Units ("Minimum
Offering") was required to be sold prior to December 31, 1996, unless extended
to January 31, 1997. On January 22, 1997, the Minimum Offering was sold and the
proceeds were released from escrow and the General Partner extended the offering
through April 30, 1997. As of April 30, 1997, the Partnership sold 336 Units.
Approximately 123 of the Units were purchased by the General Partner and its
affiliates.
RESULTS OF OPERATIONS
The following discussion regarding the results of operations should be
read in conjunction with the historical financial statements of the Partnership.
During the three and nine month period ending September 30, 1997, the
Partnership was engaged primarily in start-up activities. As a result, the
Partnership did not engage in any significant operations for the three quarters
of 1997 and incurred a loss of $49,631 for the three month period and a loss of
$91,762 for the nine month period. Total revenues for the three month and nine
month periods ending September 30, 1997 consisted entirely of interest earned in
the amount of $1,744 and $6,694, respectively, on the offering proceeds held in
the bank deposits pending their investment.
Total expenses for the three and nine month period ending September 30,
1997 were $51,375 and $98,456, respectively. Expenses incurred in the three and
nine month periods were associated with offering and startup related activities,
including general repair, maintenance, administration, and other outside
services. The expenses for the nine month period were comprised of approximately
$30,369 of offering related activities and $68,087 related to startup
activities.
Revenues and expenses in future periods will be highly dependent upon
the type of real property investments acquired by the Partnership and the timing
of their acquisition. As discussed below, the Partnership recently acquired real
property which includes warehouse facilities. These facilities are currently
unoccupied and will not begin generating revenues until tenants are secured. In
the interim, the Partnership will continue to incur costs for the promotion and
maintenance of the property, including the payment of debt service. Until the
Partnership can find sufficient tenants to operate the facility at a profit, the
Partnership is expected to continue to generate losses. Further, since the
facilities have never been operated as a warehouse facility for lease to third
party tenants, there can be no assurance that the Partnership will be able to
secure sufficient tenants, if any, for the facilities.
-5-
<PAGE> 8
LIQUIDITY AND CAPITAL RESOURCES
The following discussion regarding liquidity and capital resources
should be read in conjunction with the financial statements as of September 30,
1997.
The Partnership's principal source of liquidity through the date hereof
has been the proceeds received from the public offering of its Units and a line
of credit from a banking institution. As a result of the public offering of its
Units completed on April 30, 1997, the Partnership raised $4,032,000 in gross
proceeds consisting of $632,000 in cash, $240,000 in undeveloped land, and
$3,160,000 in investor's Promissory Notes. After taking into account the prior
year's offering expenses of $71,055 and the loss year to date of $91,762, total
cash capital of the Partnership was approximately $168,613 as of September 30,
1997.
On March 3, 1997, the Partnership pledged the Promissory Notes as
collateral for a three-year revolving line of credit from a banking institution
in the amount of $500,000 ("Line of Credit"). The interest rate payable on the
credit facility is 1% plus prime and the principal thereon matures on March 1,
2000. Under the terms of the Line of Credit, the outstanding principal balance
shall be reduced to $400,000 in the second year of the credit and to $300,000 in
the third year. Through September 30, 1997, the Partnership has drawn
approximately $500,000 under the Line of Credit.
On March 5, 1997, the Partnership purchased a parcel of commercial
rental property and improvements thereon for a total purchase price of
approximately $755,000. The property, which was purchased by the Partnership in
fee simple, includes eight warehouse facilities. This property is located in
North Ft. Myers, Florida and currently is unoccupied. Prior to the Partnership's
acquisition of this real property investment, the warehouse facilities had been
owned by a non-affiliated business entity which used the warehouse facilities
for its operations. Accordingly, such facilities have not been previously leased
to third parties. The Partnership intends to commence leasing activities in the
near future. This acquisition was financed by the $500,000 Line of Credit and
proceeds from the offering. Approximately $21,000 of the closing costs were paid
to Flordeco Realty, Inc., an affiliate of the General Partner, for a portion of
the real estate commissions paid in connection with the property acquisition.
The Partnership believes that the cash generated from its public
offering, together with the available credit facilities and the amounts owed to
it under the Promissory Notes, will be sufficient for the Partnership to meet
its capital requirements until the Partnership operations begin to generate the
cash necessary to support its operations.
The Partnership will continue to seek additional investment
opportunities consistent with its investment objectives as described in its
August 12, 1996 prospectus. The Partnership may seek additional financing to
fund any such acquisitions. There can be no assurance that such financing will
be available in amounts or on terms acceptable to the Partnership.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
-6-
<PAGE> 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
27.1 -- Financial Data Schedule (for SEC use only).
(B) REPORTS ON FORM 8-K
None.
-7-
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FLORDECO, LTD.
Date: November 12, 1997 By: INVESTORS TRUST, INC.,
a Florida corporation,
as general partner
/s/ Allan E. Fox
-----------------------------------
Allan E. Fox
President
/s/ Eileen W. Murphy
-----------------------------------
Eileen W. Murphy,
Treasurer and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FLORDECO, LTD. AS OF SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 168,613
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 168,613
<PP&E> 1,045,949
<DEPRECIATION> 9,356
<TOTAL-ASSETS> 1,214,825
<CURRENT-LIABILITIES> 105,642
<BONDS> 400,000
0
0
<COMMON> 0
<OTHER-SE> 709,183
<TOTAL-LIABILITY-AND-EQUITY> 1,214,825
<SALES> 0
<TOTAL-REVENUES> 6,695
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 98,456
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (91,761)
<INCOME-TAX> 0
<INCOME-CONTINUING> (91,761)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (91,761)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
