<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ___________.
COMMISSION FILE NUMBER: 0-29205
-------
LIGHTHOUSE LANDINGS, INC.
-------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New Jersey 22-3241823
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
195 Fairfield Avenue, Suite 3C, West Caldwell, New Jersey 07006
----------------------------------------------------------------
(Address of principal executive offices)
(973) 228-2901
---------------------------
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
------- -------
The number of shares outstanding of the issuer's classes of common equity, as of
May 19, 2000 is 6,139,795 shares of Common Stock.
Transitional Small Business Disclosure Format (check one):
YES NO X
------- -------
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
LIGHTHOUSE LANDINGS, INC.
Interim Consolidated Financial Statements
March 31, 2000
(Unaudited)
2
<PAGE>
LIGHTHOUSE LANDINGS, INC. AND SUBSIDIARIES
MARCH 31, 2000
(Unaudited)
I N D E X
---------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information:
Item 1. Consolidated Condensed Financial Statements (Unaudited):
Balance Sheets
At March 31, 2000 and December 31, 1999................. 3
Statements of Operations
For the Three Months Ended
March 31, 2000 and 1999................................. 4
Statement of Changes in Stockholders'
Equity for the Three Months Ended
March 31, 2000.......................................... 5
Statements of Cash Flows
For the Three Months Ended
March 31, 2000 and 1999................................. 6-7
Notes to Consolidated Condensed
Financial Statements.................................... 8-16
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........
Part II - Other Information:
Item 3 Through Item 9 - Not Applicable..................
Signatures..............................................
</TABLE>
3
<PAGE>
LIGHTHOUSE LANDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
A S S E T S
-----------
March 31, December 31,
2000 1999
------------ ------------
Current assets:
Cash $ 575,704 $ 97,957
Inventories 40,575 40,948
Net assets of discontinued operations 72,100 32,582
Prepaid expenses and other current assets 88,100 127,994
------------ ------------
Total current assets 776,479 299,481
Property and equipment - at cost,
less accumulated depreciation 12,078,363 2,288,880
Goodwill net of accumulated amortization 1,092,699 1,112,935
Other assets 261,985 51,764
------------ ------------
$ 14,209,526 $ 3,753,060
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Bridge loan payable $ 1,000,000 $ -
Current maturities of long-term debt 1,946,323 1,879,764
Notes payable - stockholders 125,000 125,000
Accounts payable and accrued expenses 885,674 948,606
Deferred revenues 110,266 68,765
Due to officers/stockholders 218,776 449,540
------------ ------------
Total current liabilities 4,286,039 3,471,675
Long-term debt - net of current maturities 9,769,891 10,064,110
------------ ------------
Total liabilities 14,055,930 13,535,785
------------ ------------
Stockholders' equity:
Common stock - $.01 par value
Authorized - 10,000,000 shares
Issued and outstanding - 6,049,795 shares
March 31, 2000 and 4,905,795 in
December 31, 1999 60,678 49,058
Additional paid-in capital 6,041,593 5,312,588
Accumulated deficit ( 5,948,675) ( 5,144,371)
------------ ------------
Total stockholders' equity 153,596 217,275
------------ ------------
$ 14,209,526 $ 13,753,060
============ ============
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
LIGHTHOUSE LANDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three
Months Ended
March 31,
---------------------
2000 1999
---------- ----------
Revenue $ 682,325 $ 721,408
---------- ----------
Operating costs:
Ferry operations 620,613 353,256
Depreciation 229,416 223,108
---------- ----------
Total operating costs 850,029 576,364
---------- ----------
( 167,704) 145,044
---------- ----------
Marketing and administrative expenses 283,238 248,359
Amortization of goodwill 20,236 20,236
---------- ----------
303,474 268,595
---------- ----------
Loss from operations ( 471,178) ( 123,551)
---------- ----------
Other expenses:
Interest (net) 333,126 319,707
Provision for state income taxes - 464
---------- ----------
Total other expenses 333,126 320,171
---------- ----------
Loss from continuing operations before
minority share in loss of subsidiary ( 804,304) ( 443,722)
Minority share in loss of subsidiary - 11,071
---------- ----------
Loss from continuing operations ( 804,304) ( 432,651)
Loss from discontinued operations - ( 22,967)
---------- ----------
Net loss ($804,304) ($455,618)
========== ==========
Per share data:
Basic and diluted:
Loss from continuing operations ($ .15) ($ .13)
Loss from discontinuing operations - ( .01)
---------- ----------
Net loss ($ .15) ($ .14)
========== ==========
Weighted average number of shares outstanding"
Basic and diluted 5,359,075 3,230,684
========== ==========
See accompanying notes to consolidated condensed financial statements.
5
<PAGE>
LIGHTHOUSE LANDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------------- Paid-In (Accumulated Stockholders'
Number Amount Capital Deficit) Equity
------------ ---------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 2000 4,905,795 $49,058 $5,312,588 ($5,144,371) $ 217,275
Increase of shares for cash 634,500 6,345 382,155 - 388,500
Shares issued for -
services rendered 257,000 2,750 134,750 - 137,500
Shares issued for
satisfaction of liabilities 252,500 2,525 212,100 - 214,625
Net loss for the period - - - ( 804,304) ( 804,304)
------------ ---------- ------------- ------------- ----------
6,049,795 $60,678 $6,041,593 ($5,948,675) $ 153,596
============ ========== ============= ============= ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
<PAGE>
LIGHTHOUSE LANDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
----------------------------
2000 1999
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss continuing operations ($ 804,304) ($432,651)
---------- --------
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Minority interests - ( 11,071)
Depreciation 229,969 225,646
Amortization of goodwill 20,236 20,236
Amortization of deferred finance cost 18,593 1,000
Imputed interest 28,790 44,940
Deferred revenues 41,501 16,873
Increase (decrease) in cash flows as
a result of changes in assets and
liability account balances:
Inventories 373 ( 3,192)
Prepaid expenses and other current assets 39,894 13,860
Accounts payable ( 43,621) 76,767
Accrued officers compensation ( 26,764) 20,578
---------- --------
308,971 405,637
---------- --------
Net cash used in operating activities
of continuing operations ( 495,333) ( 27,014)
---------- --------
Cash flows used in investing activities:
Acquisition of property and equipment ( 19,452) ( 4,668)
---------- --------
Cash flows from financing activities:
Proceeds from loans - net 1,000,000 400,000
Repayments of long-term debt ( 356,450) ( 240,281)
Proceeds from issuance of common stock 388,500 -
---------- --------
Net cash provided by financing activities
of continuing operations 1,032,050 159,719
---------- --------
Net cash provided by (used in)
discontinued operations ( 39,518) 9,113
---------- --------
Net increase in cash 477,747 137,150
Cash at beginning of year 97,957 62,606
---------- --------
Cash at end of year $ 575,704 199,756
========== =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
7
<PAGE>
LIGHTHOUSE LANDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
------------------------
2000 1999
-------- ---------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year:
Interest $320,205 $313,708
======== =========
Income taxes $ - $ -
======== =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
8
<PAGE>
LIGHTHOUSE LANDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENCED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - REALIZATION OF ASSETS - GOING CONCERN.
The accompanying consolidated financial statements have been
prepared in conformity with generally accepted accounting principles,
which contemplate continuation of the Company as a going concern.
Lighthouse Landings, Inc. (the "Company") has sustained substantial
losses for the years ended December 31, 1999 and the three months ended
March 31, 2000. In addition, the accompanying consolidated balance
sheet as at March 31, 2000 reflects negative working capital of
$2,673,209 net tangible capital deficiency of $1,173,101.
Future viability of the Company is dependent upon the Company's
obtaining additional funding. During 1999, the Company arranged private
placements of its common stock for net cash proceeds of $1,530,000 and
obtained short term loans in the amount of $700,000 for both its
continuing and discontinued segments. The funds were used to provide
funds for certain obligations and ongoing operations. Commencing in
January 2000 through March 17, 2000, the Company received $1,385,000
before offering costs from the sale of its securities and bridge loans.
The Company currently operates a commuter ferry service from
Highlands, NJ to and from Manhattan, and is pursuing the establishment
of other routes in the Greater New York City area. In November 1999,
the Company completed negotiations and executed a lease for a property
in Stamford, CT as a base for fast ferry service to and from Manhattan
and LaGuardia Airport. The site requires improvements and governmental
approvals. The Company is proceeding with preparations for establishing
ferry service, and expects to be able to commence service in the spring
of 2001. Initially, it is expected that service on these new routes
will be provided by a vessel on a short-term charter. The Company is
proceeding with plans for construction and financing of two vessels
specifically to meet the needs of the new service.
During 1998 and 1999, the Company assessed its strategic
direction and concluded that focusing on the commuter ferry business
would provide the greatest return on assets and discontinued the
marina\restaurant property and the retail cigar operations in 1999.
Accordingly, the Company is pursuing the divestiture of the
discontinued segments assets. The carrying value of the related net
assets have been reclassified as "Net assets of discontinued
operations" in the accompanying consolidated balance sheet.
It is management's opinion that the funds to be raised by the
sales of its securities and borrowings plus the funds anticipated to be
raised through the sale of net assets of the discontinued segments will
be sufficient to meet the Company's obligations as they become due.
The conditions previously mentioned raise substantial doubt about
the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
9
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
(a) Description of Business:
The Company was incorporated in New Jersey in 1993 and is in the
commuter ferry business. The Company currently operates a commuter
ferry service from Highlands, New Jersey to and from Manhattan, and is
pursuing the establishment of other routes in the Greater New York
City metropolitan area.
(b) Basis of Presentation:
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions for Form
10-Q and Article 10 of Regulations S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, the statements contain all adjustments
(consisting only of normal recurring accruals) necessary to present
fairly the financial position as of March 31, 2000 and the results of
operations and cash flows for the three months ended March 31, 2000 and
1999. The results of operations for the three months ended March 31,
2000 and 1999 are not necessarily indicative of the results to be
expected for the full year.
The December 31, 1999 balance sheet has been derived from the
audited financial statements at the date included in the Company's
annual report contained in Form 10SB. These unaudited financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's annual report contained in
Form 10SB.
(c) Principles of Consolidation:
The consolidated condensed financial statements include the
accounts of Lighthouse Landings, Inc. and its subsidiaries. Inclusion
of the results of subsidiary companies' operations is on the "Purchase"
method, from the dates of their respective acquisition. All significant
intercompany balances and transactions have been eliminated in
consolidation. Recognition of the interest of minority stockholders is
provided for in the accounts. As discussed more thoroughly in Note 3,
the retail and marina segments are presented as discontinued
operations.
(d) Change of Accounting Period:
The Company has changed its April 30 fiscal year end to December
31st. Accordingly, the accompanying consolidated financial statements
reflect balance sheets as of March 31, 2000 and December 31, 1999 and
the results of operations cash flows and stockholders equity for the
three months ended March 31, 2000 and 1999 then ended.
10
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)
(e) Inventories:
Inventories which consist entirely of supplies and cafeteria
products are stated at the lower of cost or market on the first-in,
first-out method.
(f) Property and Equipment:
Property and equipment is recorded at cost. The cost of the
ferries obtained through the Fast Ferries Holding Corp. acquisition in
December 1998 has been determined as an allocation of the purchase
price of the business acquired based upon an appraisal. Depreciation is
computed using the straight-line method. Depreciation on equipment,
including the ferries, is calculated principally over their estimated
useful lives of fifteen years.
Expenditures which substantially increase estimated useful lives
are capitalized. Maintenance, repairs and minor renewals are expensed
as incurred. When assets are sold or otherwise disposed of, their costs
and accumulated depreciation are removed from the accounts and any
resulting gain or loss is recorded in operations.
(g) Goodwill:
Goodwill arising from acquisitions initially represents the
excess of the purchase cost over the fair value of identifiable assets
less identifiable liabilities. Goodwill is reviewed on an ongoing basis
to determine that the value has not been impaired; in 1999 it was
determined that the value of the goodwill arising from the purchase of
The Cigar Box, Inc. has been impaired and accordingly the remaining
unamortized goodwill of $198,654 has been written off to discontinued
operations during 1999. The goodwill arising from the acquisition of
Fast Ferry Holding Corp. and its wholly owned subsidiaries aggregating
$1,214,174 is being amortized over 15 years. Amortization of goodwill
charged to operations was $20,236 for the three months ended March 31,
2000 and 1999.
(h) Revenue Recognition:
Revenue is recognized when earned. The Company's ferry business
sells the majority of commuter tickets in advance of use. Accordingly,
the Company determines the unused portion of ticket sales and defers
that value to future periods. Deferred income aggregated $110,266 and
$68,765 at March 31, 2000 and December 31, 1999, respectively.
11
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)
(i) Income Taxes:
The Company complies with Statement of Financial Accounting
Standards No. ("SFAS 109"), "Accounting for Income Taxes", which
requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets are computed for
differences between financial statement and tax basis of assets and
liabilities that will result in future taxable or deductible amounts,
based on the enacted tax laws and rates in the periods in which
differences are expected to affect taxable income. The principal asset
and liability differences are deferred revenues, valuation allowances
for long-term assets, the estimated loss on the disposal of
discontinued operations, and utilization of the Company's tax loss
carryforwards. Management has fully reserved the net deferred tax
assets as it is not more likely than not that the deferred tax asset
will be utilized in the future.
(j) Impairment of Long-lived Asset:
The Company accounts for impairment of long-lived assets
accordance with Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairments of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" SFAS No. 121 requires that long-lived
assets be reviewed for impairment whenever events or changes in
circumstances indicate that the book value of the asset may not be
recoverable. Due to significant loss incurred during 1999, the Company
evaluated its long-term assets of its continuing operations which as at
December 31, 1999 were comprised of property and equipment (principally
two (2) ferries) with an undepreciated cost of $12,288,880 and goodwill
on the acquisition of the Fast Ferry Holding Corp. with a unamortized
cost of $1,112,935. Based upon an estimate of the future undiscounted
net cash flows of the related asset or asset grouping over the
remaining life, it was determined that there was no impairment in
either the net book value of the ferries or the goodwill.
(k) Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
(l) Concentrations of Credit Risk:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash. The Company
places its cash with high credit quality financial institutions which
at times may be in excess of the FDIC insurance limit.
12
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. (Continued)
(m) Loss Per Common Share:
Loss per common share is based on the weighted average number of
common shares outstanding. In March 1997, the Financial Accounting
Standards Broad issued Statement No. 128 ("SFAS 128"), "Earnings Per
Share," which requires dual presentation of basic and diluted earnings
per share on the face of the statements of operations which the Company
has adopted. Basic loss per share excludes dilution and is computed by
dividing income available to common stockholders by the weighted-
average common shares outstanding for the period. Diluted loss per
share reflects the potential dilution that could occur if convertible
debentures, options and warrants were to be exercised or converted or
otherwise resulted in the issuance of common stock that then shared in
the earnings of the +entity.
Since the effect of outstanding options, warrant and converitible
debenture conversions are antidilutive in all periods presented, it has
been excluded from the computation of loss per common share.
NOTE 3 - DISCONTINUED OPERATIONS.
On October 28, 1999, the Company adopted a plan to sell its real
estate and retail/wholesale segments. Accordingly both segments have
been accounted for as discontinued operations in the accompanying
consolidated financial statements for both March 31, 2000 and December
31, 1999. The net assets to be disposed of as of March 31, 2000
aggregating $72,100 consists principally of real estate and are
recorded as current assets in the accompanying consolidated balance
sheet under the caption "Assets held for resale". Management expects
the real estate to be sold in late 2000.
The net assets of discontinued operations, which have been
segregated in the accompanying balance sheets are summarized as
follows:
March 31,
--------------
2000
--------------
Assets:
Inventory $ 2,000
Property assets, net (See Note 4) 931,181
--------
933,181
--------
Liabilities:
Accounts payable 89,436
Secured mortgage payable 414,057
Accrued real estate taxes 357,588
--------
861,081
--------
Net assets of discontinued operations $ 72,100
========
13
<PAGE>
NOTE 3 - DISCONTINUED OPERATIONS. (Continued)
(a) The mortgage notes payable are summarized as follows:
March 31,
-----------
2000
-----------
20% demand mortgage on real property
subject to the tax lien referred to below $ 58,267
Second mortgage on real property payable in monthly
installments (applied firstly to interest) of
$15,000 from January 10, 2000 through
May 10, 2000, and three equal monthly
payments equal to one-third of the balance
outstanding on June 10, 2000, commencing
June 10, 2000. The loan carries interest at
18%plus as added inducement to enter into the
loan, the lender received 50,000 shares of
common stock valued at $100,000. 150,595
6% second demand mortgage on real property 205,195
--------
$414,057
========
(b) Real estate taxes liens have been recorded by local governmental
authorities because of non-payment of said property taxes arising from a
dispute over property tax valuations. The Company is currently attempting
to resolve the dispute .
NOTE 4 - PROPERTY AND EQUIPMENT.
Property and equipment is summarized as follows:
March 31,
-----------
2000
-----------
Continuing operations:
Ferries $13,300,000
Computers and office equipment 54,130
Furniture and fixtures 110,453
-----------
13,464,583
Less: Accumulated depreciation 1,386,220
===========
$12,078,363
===========
Discontinued operations:
Land and buildings $ 931,181
===========
14
<PAGE>
NOTE 5 - LONG-TERM DEBT.
Long-term debt is as follows:
March 31,
---------------
2000
---------------
Mortgage note payable, secured by the
vessel "Finest" due in monthly installments
of $61,875 through March 10, 1999,
and $56,719 through September 10, 2005,
including interest at 9.25% per annum, with a
final payment of $3,626,691 due October 10,
2005. (a) $ 5,110,238
Mortgage note payable, secured by the vessel
"Bravest" due in monthly installments of
$59,063 through March 10, 1999 and
$56,719 through September 10, 2005, including
interest at 9.25% per annum, with a final payment
of $3,572,971 due October 10, 2005. (a) 5,077,876
Note payable, secured by the vessel "Finest"
and "Bravest", payable in fifteen monthly
installments of $15,000 commencing in
February 1999, payment of $343,333 on
March 31, 2000 and a final payment of
$934,319 on December 10, 2000
including imputed interest of 9.25%. (a) 1,123,684
10% interest bearing obligation payable in two
installments of $100,000 each on March 15,
2000 and July 15, 2000 and as final payment of
$200,000 January 15, 2001. 300,000
10% interest bearing obligation payable
December 11, 2000 100,000
Other 4,416
------------
11,716,214
Portion due within one year 1,946,323
------------
Long-term debt - less current maturities $ 9,769,891
============
(a) The two first mortgages on the ships and note payable are secured through
(i) cross collateralization agreements; (ii) assignments of charter agreements
and other personal property, (iii) a pledge of a potential receivable arising
from a lawsuit against the City of New York and (iv) cross corporate guarantees.
Reference is made to Note 9(c)(i) regarding warrants issued to the
noteholder. The secured debt obligations mature as follows:
2001 $ 1,946,323
2002 498,120
2003 525,526
2004 576,254
2005 631,875
Thereafter 7,538,116
-----------
$11,716,214
===========
15
<PAGE>
NOTE 6 - BRIDGE LOAN.
The Company received proceeds of a bridge loan in the amount of
$1,000,000. The loan bears interest at 10% per annum payable quarterly
and is payable nine months from issuance. To obtain the loan, the
Company paid a finders fee consisting of 250,000 shares of unregistered
common stock with on-demand registration and unlimited piggyback
rights. The fair value of the shares at issuance aggregated $125,000
which will be charged to operations over the life of the loan.
The loan may be repaid anytime within nine months of issuance,
however, the loan must be repaid out of the proceeds of a financing
greater than $2,000,000. Initially the loan is convertible into common
stock at $1.50 per share. In the event the loan is not redeemed in full
within nine months from issuance, the loan is in default, and becomes
convertible at $1.00 per share for the first 90 days of the default
period and is further reduced to $.50 thereafter. In addition, in the
event of default, the Company must issue 50,000 warrants exercisable at
$.25 per share for each 30 days period until repaid.
The Company employed the services of a financial consultant to
arrange for the above financing. The consultant received as payment for
this service (i) a 10% interest bearing note payable on December 10,
2000 in the amount of $100,000 (ii) 25,000 shares of the Company's
common stock whose fair market value at date of issuance was $12,500
and (iii) consultant enjoys the same default remedies as the bridge
loan holder.
NOTE 7 - CAPITAL STOCK.
(a) Capital stock for consideration other than cash:
During 2000, the Company issued 252,500 shares having a fair
market value on the date of issuance was $214,625 to an employee/
stockholder and a director for satisfaction for accrual liabilities.
During 2000, a financial consultant was issued 25,000 shares
having a fair market value on the date of issuance was $12,500 for
service rendered in arranging the bridge loan.
During 2000, the Company paid finders fees consisting of 250,000
shares having a fair market value on the date of issuance was $125,000
(b) Stock Issued for Cash:
During 2000, the Company sold 634,500 shares of its common stock
for $388,500.
16
<PAGE>
NOTE 8 - STOCK OPTIONS AND WARRANTS.
A summary of activity related to non-qualifying stock options and
warrants granted by the Company is as follows:
<TABLE>
<CAPTION>
Exercise Price
Options Warrants Per Share
----------- -------------- ----------------
<S> <C> <C> <C>
Outstanding at January 1, 1999 $ 10,000 $ 200,000 $1.88 to $2.60
Granted during 1999 410,000 1,380,000 $1.00 to $1.75
-------- ----------
Outstanding at December 31, 1999 420,000 1,580,000 $1.88 to $2.60
Granted during 2000 150,000 634,500 $1.25 to $1.38
-------- ----------
Outstanding at March 31, 2000 $570,000 $2,214,500
======== ==========
</TABLE>
(a) Stock Options Granted in 2000:
The Company granted an option to an employee/director to purchase
150,000 shares at a price of $1.00 per share which was the fair market
value at the date of grant such option is exercisable through January 2,
2003.
Assuming the fair market value of the stock at the date of grant
to be equal to option exercise price, the life of the options to be from
1.3 years to 2 years the expected volatility at 200%, expected dividends
are none, and the risk-free interest rate of 10%, the Company would have
recorded compensation expense of $19,677 and $8,052 for the three months
ended March 31, 2000 and 1999, respectively, as calculated by the Black-
Scholes option pricing model. As such, proforma net loss and loss per
share would be as follows:
For the Years Ended
March 31,
-----------------------------
2000 1999
------------ -----------
Net loss as reported ($804,304) ($455,618)
Additional compensation 19,677 8,052
--------- ---------
Adjusted net loss ($823,981) ($463,670)
========= =========
Loss per share as reported ($.15) ($.14)
========= =========
Adjusted loss per share ($.15) ($.14)
========= =========
(b) Warrants Granted in 2000:
As an inducement to purchase shares of the Company's common
stock, warrants to purchase 634,500 shares were granted to individuals
who purchased stock in 2000. The warrants are exercisable at various
times through March 15, 2002 at prices ranging from $125 to $137.
17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The following information should be read in conjunction with the unaudited
consolidated financial statements included herein, which are prepared in
accordance with generally accepted accounting principles ("GAAP") in the United
States for interim financial information.
Comparison of the three month period ended March 31, 2000 vs. March 31, 1999
Consolidated revenues for the three month period ended March 31, 2000
totaled $682,325 and were comprised of $639,525, or 94%, from passenger tickets
from the NY Fast Ferry service operating from the Highlands, and about $42,800,
or 6%, from galley sales. During the three months ended March 31, 2000 and 1999,
respectively, the Company ran a total of 370 and 285 revenue trips from its
Highlands site at a 45% load factor. The increase in total revenue trips was the
result of additional scheduled runs. Consolidated revenues for the comparable
period in 1999 totaled $721,408 and were comprised of $498,181, or 69%, from
passenger revenues, $181,727, or 25%, from charter income and about $41,500, or
6%, from galley sales. The charter of the M/V Finest to the Massachusetts
Steamship Authority terminated in October 1999 and therefore there was no such
income in the quarter ended March 31, 2000. There were no net costs of the
discontinued businesses for the three-month period ended March 31, 2000 as the
businesses terminated operations in the fourth quarter of 1999. Net costs of the
discontinued businesses totaled $22,967 for the three-month period ended March
31, 1999.
Consolidated operating costs of $850,029 for the three months ended March
31, 2000 are directly attributable to the ferry operations as compared to
$576,364 for the same period in the prior year. Of the current amount, 73%, or
$620,613, are direct operating costs and $229,416, or 27%, represent
depreciation of the ferry vessels and other boat equipment. For the quarter
ended March 31, 1999, 61%, or $353,256, was attributable to direct operating
costs and 39%, or approximately $223,108, represented depreciation of the ferry
vessels and other boat equipment. The increase in operating costs from 1999 to
2000 is attributable to an increase in the price of fuel; the operating costs
related to the operation of the M/V Finest that was under charter through
October 1999 and was incorporated into the Highlands schedule in the first
quarter of 2000; and to an increase in the number of scheduled runs made by the
M/V Bravest.
Payroll and related costs for the ferry vessel crew represented 17% of the
total direct operating costs for the period or $141,940 during the current
period as compared to $107,400, or 19%, for the prior period. The increase
represents the additional crew for the operation of the M/V Finest. Fuel and oil
costs accounted for 17% of the category or $140,940 in the current period and 9%
or $50,444 for the same period in the 1999. The increase is attributable to an
increase in the cost of fuel, the increase in the scheduled runs and the
operation of the M/V Finest. Fuel costs in the current quarter under review
ranged from $1.25 to $1.80 per gallon as compared to an average of $.50 per
gallon during the prior year. Docking fees and fees to the owner of the parking
facility totaled $100,153 and $74,300, or 12% and 13% of the direct operating
costs for the quarter under review in 2000 and 1999, respectively. Boat
maintenance and supplies, which included a scheduled engine overhaul and other
unscheduled maintenance, accounted for about $149,000, or 18% and
18
<PAGE>
$71,625, or 12%, of the category for the three month period in 2000 and 1999,
respectively. Insurance costs totaled $36,183, or 4%, of the total direct
operating costs in 2000 as compared to $22,180, or 5%, of the total direct
operating costs in 1999. Costs of sales related to galley revenues totaled
$27,367 and $27,289 in 2000 and 1999, respectively, or 3% and 5% of the
category. Other direct operating costs amounted to $24,988 or 3% of the category
for the current quarter.
Marketing and administrative expenses for the three months ended March 31,
2000 totaled $283,238 compared to $248,359 for the same period in the prior
year. Of the 2000 total marketing and administrative expenses $95,856, or 33%,
is attributable to administration of the ferry service and $187,382 or 67%, is
attributable to corporate administration, compared to $105,013, or 42%, and
$143,346, or 58%, respectively for 1999. Marketing expenses totaled $3,760 and
$6,221 for the quarters under review in 2000 and 1999, respectively.
Salaries and related benefits account for 55% or $143,468 of the total
marketing and administrative expenses, compared to $152,465 or 61% in 1999. The
reduction in expense in 2000 is due to changes in the employment agreements with
certain current and former officers. Office facility expense for the current
period amounted to $7,120, or 3% of the category, and $14,715, or 6%, for the
same period in 1999.
Other marketing and administrative expenses for the three-month periods
ended March 31, 2000 and 1999 total approximately $106,140 and $74,950. In the
current period, professional services amount to approximately $70,300, and
includes legal and auditing services primarily attributable to the audit of the
Company's financial statements and its securities filings and certain
engineering and related services. Legal and audit expenses for the same period
in 1999 totaled $41,940. Of the remaining $35,800, approximately $5,000 is
attributable to travel expense and $30,800 is attributable to telephone expense,
office supplies and other expenses related to corporate activity. By comparison,
for the same period in 1999 travel expense amounted to $12,131, and
approximately $20,880 was attributable to telephone expense, office supplies and
other expenses related to increased corporate activity.
In each of the quarters ended March 31, 2000 and 1999, the Company recorded
amortization of goodwill expense of $20,236, which was related to its
acquisition of NY Fast Ferry.
Interest expense for the three months ended March 31, 2000 was $333,126,
primarily attributable to meeting the current obligations of the NY Fast Ferry,
including the mortgages on the vessels and debt financing of the Company's
current operations and business development. Of the total interest expense, the
amount paid in connection with the vessel mortgages and line of credit totaled
$286,657. For the same period in 1999, interest expense totaled $319,707, of
which $292,360 was attributable to the vessel mortgages and line of credit.
Liquidity and Capital Resources.
- -------------------------------
Since inception, the Company has funded its operations primarily through
cash generated from private placements of debt and equity securities and
institutional financing. In October 1998, the Company acquired 80% of the stock
of New York Fast Ferry and commenced operating fast ferry
19
<PAGE>
service from Highlands, New Jersey. As part of the transaction, the Company
guaranteed payment and satisfaction of NY Fast Ferry's outstanding liabilities,
which included mortgages on its two ferry vessels and a line of credit. The NY
Fast Ferry operation generates sufficient cash-flow to cover its direct
operating costs. However, the NY Fast Ferry operation does not yet generate
enough cash to make principal and interest payments for both boat mortgages,
carry its other debt, to fund the capital improvements and capital expenditures
necessary for the Company to expand its operations and to implement its
strategic business objectives.
As of March 31, 2000, two outstanding notes payable and preferred ship
mortgages held by debis Financial Services, Inc., one on the ferry M/V Finest
and one on the ferry M/V Bravest, were $5,110,238 and 5,077,876, respectively,
which bear interest at 9.25% per annum. Both ship mortgages each require monthly
payments of principle and interest in the amount of $56,719 through September
10, 2005, with final payments of $3,626,691 and $3,572,971, respectively, due on
October 10, 2005.
The line of credit assumed by the Company had an outstanding balance at
March 31, 2000 of $1,123,684 with the same financial institution that holds the
preferred ship mortgages. The line of credit, secured by the M/V Finest and the
M/V Bravest, requires monthly payments of $15,000 through April 10, 2000, and
final principal payment of $934,319 on December 10, 2000. As of this filing the
line of credit is current. The note carries no interest, but has been discounted
to a net present value using a discount rate of 9.25% per annum. These two
preferred ship mortgages and the line of credit are further secured by cross
collateralization agreements, assignment of personal property, a pledge of a
potential receivable arising out of a lawsuit against the City of New York, and
a Company guarantee. Moreover, the financial institution was granted warrants to
purchase 200,000 shares of Company stock at $2.60 per share exercisable through
March 16, 2004.
On March 1, 2000 the company received $1,000,000 as a convertible bridge
loan due December 11, 2000, with interest at 10% per annum and is payable
quarterly. The loan may be prepaid at any time, but must be repaid out of the
proceeds of any financing in excess of $2,000,000. The loan is convertible to
common shares of the company at the rate of one share for each $1.50 of
indebtedness. In addition, to the 10% interest, the company issued 250,000
common shares, which the company valued at $0.50 per share, as additional
consideration. Further shares are issuable in the event of a default.
In June 1999, the Company obtained financing in the net amount of $300,000
from an unrelated third party that is secured by a second mortgage on the
property of the Shrewsbury River, subject to a real estate tax lien, and by a
personal guarantee of a major shareholder. The note carries an annual interest
rate of 18% and is payable in monthly installments, applied first to interest,
as follows: from July 10, 1999 through December 10, 1999, $10,000 per month;
from January 10, 2000 through May 10, 2000, $15,000 per month; and commencing
June 10, 2000, three monthly installments each equal to one-third of the
outstanding balance on June 10, 2000. As of March 31, 2000 the Company was
current in these obligations. As an inducement to enter into the loan, the
Company issued the lender 25,000 shares of common stock in June 1999 and an
additional 25,000 shares in December 1999.
20
<PAGE>
In the three months ended March 31, 2000, the Company had raised proceeds
of $388,500 through the private placement of 634,500 shares of restricted common
stock to qualified investors. The Company also issued 252,500 shares of
restricted common stock to three directors and officers in satisfaction of
unpaid compensation amounting to $214,625.
The Company, as of March 31, 2000, had a working capital deficiency of
$3,339,167. Furthermore, in the planned development of its commercial
operations, the Company's combined losses are expected to continue as the
Company divests its non-core assets and commences ferry service until each of
its sites become fully operational. The Company's ability to meet its
obligations in the ordinary course of business is dependent upon its ability to
continue to obtain adequate financing and/or to successfully expand its ferry
operations. Furthermore, capital expenditures to acquire additional fast ferry
vessels and improve and expand its landside ferry facilities will require
significant funding.
The Company has been successful to date in its efforts to raise funds and
believes that proceeds from anticipated interim financing together with
available funds and cash flows expected to be generated by operations will be
sufficient to meet its anticipated cash needs for working capital and capital
expenditures for at least the next twelve months. Furthermore, the Company has
begun to negotiate more favorable payment terms with certain creditors that
require significant principal payments in the next twelve months. In the event
the Company's plans change, its assumptions change or prove to be inaccurate or
if the proceeds of the interim financing or cash flows prove to be insufficient
to fund operations, the Company may find it necessary or desirable to reallocate
funds within the above described business strategies, seek additional financing
or curtail its activities. There can be no assurance that additional financing
will be available on terms favorable to the Company, or at all, or that the
Company will be able to negotiate more favorable payment terms with its existing
creditors. If adequate funds are not available or are not available on
acceptable terms, the Company may not be able to meet its current obligations,
take advantage of unanticipated opportunities, develop new services or otherwise
respond to unanticipated competitive pressures. Such inability could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Subsequent Events.
- -----------------
Ray Wright tendered his resignation as Treasurer, effective March 15, 2000,
but has continued to serve as a consultant to the Company. John Ferreira
accepted the position of Chief Financial Officer of the Company, effective May
1, 2000.
Forward-Looking Statements.
- --------------------------
Discussions and information in this document, which are not historical facts,
should be considered forward-looking statements. With regard to forward-looking
statements, including those regarding the potential interim financing, the
sufficiency of the cash flow, and the business prospects or any other aspect of
the Company, actual results and business performance may differ materially from
that projected or estimated in such forward-looking statements. The Company has
attempted to identify
21
<PAGE>
in this document certain of the factors that it currently believes may cause
actual future experience and results to differ from its current expectations.
Differences may be caused by a variety of factors, including adverse economic
conditions, entry of new and stronger competitors in the ferry business,
insufficient parking space for potential ferry customers, inadequate capital and
the inability to obtain funding from third parties, unexpected costs, and the
inability to obtain or keep qualified personnel.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
(c) In January 2000, the Company sold 97,500 shares of common stock at $1.00
per share, less a finder's fee of $5,000, and an equal number of warrants
good for purchasing shares of common stock for $1.25 per share, exercisable
for one year, to five investors who were all accredited investors. The
offering was conducted in reliance on Section 4(2) of the Act.
In February 2000, the Company sold 50,000 shares of common stock at $1.00
per share, and an equal number of warrants good for purchasing shares of
common stock at $1.25 per share, exercisable for one year, to four
investors who were all accredited investors. The offering was conducted in
reliance on Section 4(2) of the Act.
In March 2000, the Company sold 450,000 shares of common stock at $0.50 per
share, and an equal number of warrants good for purchasing shares of common
stock at $1.00 per share, exercisable for two years, to three investors who
were all accredited investors. The offering was conducted in reliance on
Section 4(2) of the Act.
In March 2000, the Company sold 25,000 shares of common stock at $0.50 per
share, and an equal number of warrants good for purchasing common stock at
$1.25 per share, exercisable for one year, to an accredited investor. The
offering was conducted in reliance on Section 4(2) of the Act.
In March 2000, the Company issued 10,000 shares of its common stock to one
investor and 2,000 shares to another investor, both of whom were accredited
investors, at $1.00 per share, with an equal number of warrants at $1.00
per share, exercisable for one year. The offering was conducted in reliance
on Section 4(2) of the Act.
In March 2000, the Company issued 125,000 shares of its common stock each
to two accredited investors (250,000 shares total), in consideration of a
$1,000,000 bridge loan to the Company. The finder in the transaction
received 27,500 shares. The transaction was conducted in reliance on
Section 4(2) of the Act.
ITEM 5. OTHER INFORMATION
-----------------
The registration statement of the Company was effective on March 27, 2000.
The Commission file number is 0-29205.
22
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibit 3.1 - Certificate of Incorporation, as amended. (1)
Exhibit 3.2 - Bylaws. (1)
Exhibit 10.4 - Letter of Intent for vessel construction. (2)
Exhibit 27.1 - Financial Data Schedule.
- ---------------
(1) Incorporated by reference from the Company's Registration Statement on Form
10-SB, File No. 0-29205.
(2) Incorporated by reference from the Company's Form 10-KSB/A No. 1, for the
fiscal year ended December 31, 1999, File No. 0-29205.
(b) Reports on Form 8-K: During the quarter ended March 31, 2000, the Company
filed no reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Form 10-QSB to be signed on its behalf by the
undersigned thereunto duly authorized.
LIGHTHOUSE LANDINGS, INC.
Date: May 19, 2000 By: /s/ Anthony Cappaze
--------------------------------------
Anthony Cappaze, President Chief
Executive Officer and Director
Date: May 19, 2000 By: /s/ Anthony Colasanti
--------------------------------------
Anthony Colasanti, Secretary and
Director
23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Lighthouse Landings, Inc. and Subsidiaries as and for
the three months ended March 31, 2000 is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 575,704 199,756
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 40,575 4,259
<CURRENT-ASSETS> 776,479 957,880
<PP&E> 13,464,583 14,264,644
<DEPRECIATION> 1,386,220 1,381,897
<TOTAL-ASSETS> 14,209,526 15,032,162
<CURRENT-LIABILITIES> 4,286,039 1,678,878
<BONDS> 0 0
0 0
0 0
<COMMON> 60,678 32,508
<OTHER-SE> 92,918 482,061
<TOTAL-LIABILITY-AND-EQUITY> 14,209,526 15,032,162
<SALES> 682,325 721,408
<TOTAL-REVENUES> 682,325 721,408
<CGS> 850,029 576,364
<TOTAL-COSTS> 303,474 268,595
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 333,126 319,707
<INCOME-PRETAX> (804,304) (443,258)
<INCOME-TAX> 0 464
<INCOME-CONTINUING> (804,304) (443,722)
<DISCONTINUED> 0 (22,967)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (804,304) (455,618)
<EPS-BASIC> (.15) (.14)
<EPS-DILUTED> (.15) (.14)
</TABLE>
