UNITED STATES
SECURITIES 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 September 30, 1999
- -----------------------------------------------------------------
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-3479186
-------- ------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3560 Cypress Gardens Road
Winter Haven, Florida 33884
- ---------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (941) 326-1006
--------------
Check here whether the issuer (1) has filed all reports required
to be filed by Sections 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
90 days.
Yes X No
As of September 30, 1999, the following shares of the
Registrant's common stock were issued and outstanding:
25,000,000 shares authorized, $0.01 par value
7,657,000 issued and outstanding
<PAGE>
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . .3
CONDENSED CONSOLIDATED BALANCE SHEET . . . . . . . . .3
CONDENSED CONSOLIDATED INCOME STATEMENT. . . . . . . .4
STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . .5
Note 1. NATURE OF BUSINESS AND SIGNIFICANT
ACCOUNTING POLICIES. . . . . . . . . . . . .7
Note 2. USE OF OFFICE SPACE. . . . . . . . . . . . .8
Note 3. Liquidity. . . . . . . . . . . . . . . . . .8
Item 2. Management's Discussion And Analysis or Plan of
Operations. . . . . . . . . . . . . . . . . . . . . .10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 13
Item 2. Changes in Securities. . . . . . . . . . . . . . . . 13
Item 3. Defaults upon Senior Securities. . . . . . . . . . . 13
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 13
Item 5. Other information. . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 13
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . .14
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The Shareholders,
Floridino's International Holdings, Inc.
We have compiled the accompanying balance sheet and changes
in owners' equity of Floridino's International Holdings,
Inc. as of September 30, 1999. In addition, we have
prepared the related statements of operations and cash flows
for the nine months ending September 30, 1999 and September
30, 1998. We have prepared these financial statements in
accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form of
financial statement information that is the representation
of management. We have not audited or reviewed the
accompanying financial statements and, accordingly, do not
express an opinion or any form of assurance on them.
Donohue Associates, Inc.
Chatham, New Jersey
November 8, 1999
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
ASSETS
Current Assets
Cash $187,480 $15,502
Investment in marketable securities 259,429 0
Royalties receivable 16,304 11,826
Inventory 12,535 15,083
Other Assets 64,813 69,906
---------- ----------
Total Current Assets $112,317 $112,317
Property and Equipment (net of
accumulated depreciation: $348,691
at 9/30/99 and $213,246 at 12/31/98 1,790,173 512,022
Land 320,000 0
Organization costs (net of
amortization) 3,215 6,859
---------- ----------
TOTAL ASSETS $2,653,950 $ 631,198
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank overdrafts $ 0 $ 19,903
Accounts payable and accrued expenses 496,435 310,555
Accrued Payroll and related expenses 105,931 93,989
Loans payable - stockholder 142,304 152,799
Convertible Debentures payable 500,000 0
Current portion of lease obligations 7,687 6,490
Current portion of long term debt 301,676 313,728
---------- ----------
Total Current Liabilities $1,554,033 $ 897,464
Long term debt:
Lease Obligations 142,581 42,710
Long term notes and mortgages 540,444 71,584
STOCKHOLDERS' EQUITY
Common stock, par value $.001;
25,000,000 shares authorized,
7,657,000 shares issued and outstanding
at September 30, 1999 and 4,259,000 at
December 31, 1998 $ 7,657 $4,959
Preferred stock, 50,000 shares issued
and outstanding, convertible to 50,000
shares of common stock at $5 per share,
no par, no dividend, non-cumulative 123,481 0
Additional Paid in Capital 2,226,513 792,711
Accumulated Deficit (1,519,800) (1,178,230)
------------ ----------
Total Stockholders' Equity 416,893 (380,560)
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $2,653,950 $ 631,198
The accompanying notes are an integral part of these financial
statements. The financial statements and the notes should be
read in conjunction with the auditor's report.
</TABLE>
<PAGE>
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
NINE MONTHS ENDING SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30
1999 1998
------ ------
<S> <C> <C>
REVENUES
Food and Beverage Sales $ 415,907 $1,277,397
Franchise Fees 24,121 59,500
Royalty Fees 28,943 27,154
---------- ----------
Total Revenues 468,971 1,364,051
Costs of goods sold (287,845) (469,128)
---------- ----------
Gross Profits 181,126 894,923
OPERATING EXPENSES:
Selling, general and administrative (583,039) (364,720)
Payroll and related expenses (355,831) (520,206)
Depreciation and amortization (139,089) ( 72,203)
OTHER INCOME(EXPENSE):
Unrealized gain on short term invest. 160,929 0
Interest Expense (16,833) ( 11,926)
---------- ----------
NET INCOME(LOSS) FROM CONTINUING
OPERATIONS (752,737) ( 74,132)
EXTRAORDINARY ITEM:
Gain or early extinguishment of debt 63,634 0
LOSS FROM OPERATIONS BEFORE
PROVISION FOR INCOME TAXES (689,103) ( 74,132)
Provision for Income taxes 0 0
---------- ----------
NET INCOME(LOSS) BEFORE
DISCONTINUED OPERATIONS (689,103) ( 74,132)
DISCONTINUED OPERATIONS:
Loss from operations disposed during
the period (73,425) 0
---------- ----------
NET LOSS $(762,528) $(74,132)
========== ==========
NET LOSS PER SHARE:
Basic:
Loss from continuing operations $ (0.13) $ (0.03)
Gain from extraordinary items 0.01 0.00
Loss from discontinued operations (0.01) 0.00
Net loss per share (0.13) (0.03)
Weighted average shares
outstanding 5,799,974 2,618,000
=========== ===========
The accompanying notes are an integral part of these financial
statements. The financial statements and the notes should be read in
conjunction with the auditor's report.
</TABLE>
<PAGE>
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
CONDENSED STATEMENT OF CASH FLOWS
NINE MONTHS ENDING SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
September 30
1999 1998
--------------------------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Loss $ (762,528) $ (256,342)
Adjustments to Reconcile Net
Income Items not requiring the
Use of Cash:
Depreciation and amortization 139,089 72,203
Changes in Other Assets and
Liabilities:
Royalties Receivable (4,478) 7,595
Inventory 2,548 18,536
Short Term Investments (259,429) 0
Other Assets 5,093 (7,409)
Bank Overdrafts (19,903) (1,144)
Deferred franchise fee revenue 0 (59,500)
Accounts payable and accrued exp. 185,880 5,850
Accrued payroll and related exp. 11,941 38,033
Current portion of lease obligations 1,197 (24,280)
------------ ------------
Net cash provided by (used by)
Operations (712,643) (114,120)
CASH FLOW FROM
INVESTING ACTIVITIES:
Purchase of land (320,000) 0
Purchase and acquisition of property
and Equipment (1,413,596) (26,174)
------------ ------------
Net Cash provided by (used by)
Investing Activities (1,733,596) (26,174)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of convertible
Debentures 500,000 0
Increase (decrease) in loans payable
To stockholders (10,495) 44,861
Increase in lease obligations 99,871 226,788
Increase of common stock upon exercise
of warrants 346,500 200,000
Issuance of common stock for
Compensation 90,000 0
Issuance of common stock through
Secondary offering 1,000,000 0
Issuance of preferred stock 123,481 0
Increase(decrease) in long term
Borrowings 468,860 (311,809)
------------ ------------
NET INCREASE/(DECREASE) CASH 171,978 19,546
CASH AT BEGINNING OF YEAR 15,502 0
------------ ------------
CASH AT END OF THE PERIOD $ 187,480 $ 19,546
============ ============
SUPPLEMENTAL DISCLOSURES:
Interest paid during the period $ 14,951 $ 11,926
Income taxes paid during the period 0 0
The accompanying notes are an integral part of these financial
statements. The financial statements and the notes should be
read in conjunction with the auditor's report.
</TABLE>
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1999
Note 1 - Nature of Operations
Floridino's International Holdings, Inc. (the Company) was
incorporated on June 25, 1997 in the State of Florida to develop, own,
operate, and franchise family style Italian restaurants. The
consolidated statements of the Company include the following
subsidiary companies:
Floridino's Pizza Etc., Inc.- a restaurant located in Winterhaven,
Florida.
Hard Ball Cafe, Inc.- a restaurant located in Winterhaven, Florida.
Floridino's Home of the Calzone, Inc.- a restaurant located in
Lakeland, Florida.
Floridino's International, Inc.- a restaurant franchiser located in
Winterhaven, Florida.
Floridino's of Bartow, Inc.- a restaurant located in Bartow, Florida.
Floridino's Specialties Distributions, Inc.- a food manufacturing
plant located in Lakeland, Florida.
Floridino's Express, Inc.- a restaurant incorporated in 1999 located
in Lake Wales, Florida.
Toho Holdings, Inc.- a company incorporated in 1999 to hold title to
the real estate and lease agreements of the consolidated companies.
Floridino's of Westbrook, Inc.- a restaurant incorporated in 1999
located in Westbrook, Maine.
Floridino's of New York, Inc.- a restaurant located in New York, New
York.
Note 2- Summary of Significant Accounting Policies
Consolidation- The accompanying consolidated financial statements
include the accounts of the company and all of its wholly owned and
majority owned subsidiaries. All significant inter-company balances
have been eliminated.
Revenue and Cost Recognition- The Company recognizes revenue from
food and beverage sales as the service is provided. Revenue from
franchise sales is recognized, net of allowance of uncollectible
amounts, when substantially all significant services provided by the
Company have been performed. Expenditures are recorded on the accrual
basis whereby expenses are recorded when incurred, rather than when
paid.
Use of Estimates- The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make reasonable estimates and assumptions that affect
the reported amounts of the assets and liabilities and disclosure of
contingent assets and liabilities and the reported amounts of revenues
and expenses at the date of the financial statements and for the
period they include. Actual results may differ from these estimates.
Investment in Marketable Securities- Investment in marketable
securities represents the purchase of shares of a NASDAQ listed stock
valued at the market at September 30, 1999. The unrealized gain on
this investment is recorded in "Other Income" in the statement of
operations.
Inventory- Inventory is stated at the lower of cost (first-in, first-
out method) or market and primarily consists of food and beverage
products.
Property and Equipment- Property and equipment are stated at cost.
Depreciation of property and equipment is provided using the straight-
line method over the estimated useful life of the asset. Improvements
made to leased property are depreciated on a straight-line basis over
the estimated useful life of the improvement or the period of the
lease remaining, whichever is less.
Expenditures for major repairs and renewals that extend the useful
life of the asset are capitalized. Minor repair expenditures are
charged to expense as incurred.
Income Taxes- The Company accounts for income taxes under the accrual
method established by Statement of Financial Accounting Standards No.
109, which requires recognition of deferred tax assets and liabilities
for the expected futures tax consequences and events that have been
included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on
the difference between the financial statements and tax bases of
assets and liabilities using enacted rates for the year in which the
differences are expected to reverse.
Management believes that based upon earnings through September 30,
1999, the realization of a tax-deferred asset through future earning
offsets of current losses cannot be determined. Therefore, a deferred
asset has not been reflected in the accompanying financial statements
as of September 30, 1999.
Extraordinary items- During the nine months ending September 30,
1999, the Company extinguished certain long term debt. The difference
between the carrying value of this debt and the fair value of the debt
at the date of extinguishment is recognized as an extraordinary item
in the consolidated statement of operations as a "gain on early
extinguishment of debt".
Fair Values of Financial Instruments- The carrying amounts of all
cash, accounts receivables, short term investments, inventories,
accounts payable, and other obligations reported in the statement of
financial position are estimated by management to approximate fair
value.
Organization Costs- Organization costs consist of costs incurred as a
result of the Company's initial private offering and are being
amortized over a period of sixty months.
Note 3- Going Concern Considerations
The accompanying consolidated financial statements have been presented
in accordance with generally accepted accounting principals, which
assumes the continuity of the Company as a going concern. However,
during the nine months ending September 30, 1999 and September 30,
1998, the Company experienced, and continues to experience, certain
going concern and liquidity problems. The Company has incurred net
losses of $762,528 and $74,132 for the nine months ending September
30, 1999 and September 30, 1998. This condition raises substantial
doubt to the ability of the Company to continue as a going concern.
Management's plans with regard to this matter is as follows; the
Company, through a plan instituted in fiscal year 1998, closed all
unprofitable restaurants and improved profitable restaurants through
reconstruction and reorganization. During the nine months ending
September 30, 1999, the Company raised proceeds of approximately $1.85
million dollars though a Regulation D 505 offering, the exercise of
common stock warrants, and a convertible debenture offering. These
funds were and are being used to satisfy the Company's outstanding
debt, reconstruct and improve current restaurant space, and to
complete the construction of its food manufacturing plant.
The eventual outcome of the success of management's plans cannot be
ascertained with any degree of certainty. The accompanying
consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Note 4- Discontinued Operations
Through September 30, 1999, the Company has completed its plans to
discontinue the operations of unprofitable restaurants. The results
of operations for these closed restaurants are included in "Loss from
Discontinued Operations" in the consolidated statement of operations.
The restaurants that were closed by management through September 30,
1999 are as follows:
Floridino's Pizza Etc., Inc.
Hard Ball Cafe, Inc.
Floridino's Home of the Calzone, Inc
Floridino's of Bartow, Inc.
Floridino's of Westbrook, Inc.
Note 5- Litigation
The Company and its subsidiaries are defendants in various lawsuits
filed by various suppliers for services rendered. The Company has
accrued the amounts of the proposed settlements in the accompanying
consolidated financial statements, as well as the amounts of potential
outstanding claims disclosed by the Company's outside counsel.
Management believes that the eventual disposition of these lawsuits
will not have a material impact on the consolidated financial
statements.
Note 6- Commitments and Contingencies:
The Company leases office space and certain equipment under operating
and capital leases. At September 30, 1999, total future minimum lease
payments under operating and capital leases is as follows:
September 30th,
2000 $162,852
2001 $144,072
2002 $114,072
2003 $ 80,562
Thereafter $214,442
Total future minimum lease payments $716,000
Note 7- Development Stage Company
The Company's subsidiary, Specialties Distributions, Inc. is a
development stage company formed in July 1998 to engage in the
manufacturing and marketing of Italian style frozen food products.
The manufacturing plant is near completion and is expected to begin
operations in January 2000. The subsidiary qualifies for treatment as
a "development stage company" under Statement of Financial Accounting
Standards No. 7. Accordingly, the results of operations for this
subsidiary are included in "Accumulated Deficit during the Development
Stage" in the consolidated statement of financial position. The
statement of financial position and results of operations for the
subsidiary is as follows:
SPECIALTIES DISTRIBUTIONS INC.
STATEMENT OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 1999
(a development stage enterprise)
(Unaudited)
Assets:
Current assets:
Cash $300
Accounts receivable 4,014
Security deposits 3,019
Total current assets 7,333
Property & equipment:
Equipment 280,299
Leasehold improvements 175,822
Less accumulated depreciation (22,775)
Total Assets 440,679
======
Liabilities & Stockholders' Equity:
Current liabilities:
Bank overdrafts $8,998
Accounts payable & accrued expenses 84,175
Accrued payroll & related liabilities 32,486
Current portion of lease obligations 89,906
Total current liabilities 215,565
Due to parent company 630,072
Stockholders Equity:
Common stock 100
Additional paid in capital 15,900
Accumulated deficit during the development stage (420,958)
Total stockholders deficit (404,958)
Total liabilities & stockholders' equity $440,679
=========
SPECIALTIES DISTRIBUTIONS INC.
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1999
(a development stage enterprise)
(Unaudited)
Revenues:
Food sales during the test period $31,606
Total gross sales 31,606
Less cost of goods sold (54,372)
Gross profit (22,765)
Operating expenses:
Selling, general, and administrative (168,385)
Payroll & related expenses (146,136)
Depreciation (22,775)
Income (loss) from operations before tax provision (360,061)
Income tax provision 0
Net loss during development stage ($360,061)
==========
Note 8- Common Stock Transactions
During the nine months ending September 30, 1999, the balance of
warrants outstanding from an offering completed in July 1997 were
exercised or expired. During the period, 558,000 warrants were
exercised resulting in net proceeds to the Company of $346,500 and the
issuance of 558,000 shares of common stock. The balance of the
outstanding warrants (63,000) expired on March 31, 1999.
In August 1999, the Company issued 140,000 shares of common stock in
return for services rendered by two consultants. Management has valued
these services at $90,000.
In July 1999, the Company completed a Regulation D 505 offering
resulting in net proceeds to the Company of $1,000,0000 and the
issuance of 2,000,000 shares of common stock.
Note 9- Convertible Debentures
In September 1999, the Company received net proceeds of $500,000 of a
$750,000 debenture offering resulting in the issuance of convertible
debentures. Each debenture is convertible into common stock within
one year of purchase at a 40% discount from the preceding five day
average of the prevailing market price of the stock at conversion.
The debentures are payable within one year of purchase with interest
computed at 9.50% payable semi-annually.
Note 10- Convertible Preferred Stock
In May 1999, the Company issued 50,000 of preferred stock to an
officer of the Company in exchange for real estate assets, along with
their corresponding mortgages, being transferred to the Company's
ownership. The preferred stock is convertible into 50,000 shares of
common stock at $5 per share. The amount of convertible preferred
stock will be equal to the net equity proceeds obtained from the sale
of the transferred property. The preferred stock becomes convertible
in May 2000.
Note 11- Long Term Debt
The Company has signed promissory notes totaling $540,444 in
connection with certain reconstruction costs incurred in 1999. The
notes are unsecured and carry interest rates of 8.25% and are due by
"balloon payment" in fiscal 2000.
Note 12- Related Parties
The Company is indebted its majority shareholder and chief executive
officer for the cost of certain reconstruction and lease payments
incurred by the Company. The amount of indebtedness is $298,020 and
is included in Long Term Debt discussed in Note 11.
Note 13- Earnings Per Share
The Company has adopted SFAS No. 128, "Earnings per Share". In
accordance with SFAS No. 128, basic earnings per share have been
computed based on the weighted average of common shares outstanding
during the period. The dilutive effects of warrants, convertible
debentures, and convertible preferred stock is not presented because
the effect of these items on earnings per share is anti-dilutive.
Note 14- Subsequent Events
In October 1999, the Company completed its debenture offering
initiated in September 1999 resulting in additional proceeds to the
Company of $250,000. The debentures contain the same terms and
provisions discussed in Note 9.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
FLORIDINO'S INTERNATIONAL HOLDINGS INC., (the "Company") designs,
develops, owns and operates family style neighborhood Italian
food restaurants featuring freshly prepared, moderately priced
pizza and pasta dishes. Its operations encompass three segments
from which the Company seeks to generate revenue: operation of
restaurants, production and sale of frozen foods and franchising
of the Company's restaurant concept.
During the past two years, the Company's operations failed to
realize net income due to a decrease in revenue and reduction in
patrons to its restaurants. The Company also experienced a
decrease in franchising fees and royalties as the franchise
stores operating under the Company's concept were also
experiencing decreased revenue. This led the Company to believe
that it required a new approach to its operations. The Company's
management was replaced in March 1999 and new management has
sought an aggressive approach to develop and market the Company's
product which management believes is of very high quality. New
management determined that the Company's restaurants required a
fresher, more-upscale image and ambiance to attract customers.
The Company in the past year has raised funding of approximately
$2.2 million which has been used to revamp and reconstruct the
Company's operations. These funds have been used to modernize
the Company's frozen foods development plant by acquiring
equipment to streamline the operation of this segment and also to
construct and develop its New York restaurant. Management's goal
is to have a state of the art processing plant producing the
Company's line of frozen foods. The Company has also expended
the funds it has raised to revamp its restaurant concept. New
management determined that the Company should create restaurants
which were more upscale and esthetically pleasing to customers
than those previously operated. As a result the Company shut all
but one of its restaurants. It then implemented its new concept
at its only full service restaurant in Florida. The Company at
this time intends on opening at least two additional restaurants
in the Florida area and has entered into two (2) leases at
separate sites for the construction of new establishments.
Funding of the Company's reconstruction and revamping has been
undertaken primarily through the private sale of equity in the
Company. The funds were used to repay previous debts of the
Company, acquire new plant and equipment and machinery for the
development of the Company's frozen food concept and for the
allocation of costs associated with the development of the
Company's new restaurants. The Company believes that it has the
capacity to raise additional funds if and when they are required.
Additional funds may be raised through the sale of the parcel of
real estate held by the Company. Additionally, the Company
believes that its newly developed concept and operations will
attract investors in placing additional funds with the Company.
At this time, the Company has no line of credit with any
financial institution. However, the Company believes that its
new operations and developed concept will generate sufficient
revenue during the next twelve months which will enable the
Company to secure a line of credit with a financial institution.
Also, the Company's newly acquired plant, equipment and machinery
enable the Company to utilize these assets as collateral in
securing loans or funding in the event the Company requires
funding.
During the next year, the main source of revenue for the Company
is expected to be that generated through the restaurant segment
and frozen food segment as it is these segments that the Company
has primarily focused on during its revamping and reconstruction
of operations. The primary expenses which the Company has
incurred during the reconstruction of its operations have been
associated with the purchase of new equipment and machinery for
its frozen food segment and for the development of its production
plant in Lakeland, Florida.
The Company intends to raise additional funds through the sale of
its real estate properties located at 300 Cypress Gardens Road,
Winter Haven, Florida and 1810 Third Street SE, Winter Haven,
Florida. The sale of both these parcels of land is expected to
provide the Company with approximately $250,000 in funding after
encumbrances and mortgages on these properties are extinguished.
The company has entered into a Contract of Sale for the purchase
of these properties at a total price of $400,000.
In the opinion of management, inflation at this time has not and
will not have a material effect on the operations of the Company.
Management focuses on the long term growth of the Company and
therefore any increase in inflation or jump in the price of raw
goods purchased by the Company will not result in an immediate
increase in prices to the consumer. Management believes that a
increase in its prices may lead to a loss of customers and
therefore hinder the Company's long term growth. At any course
however, management will evaluate the possible effects of
inflation on the Company as it relates to its business and
operations and proceed accordingly.
The Company would consider raising its prices in the event there
is a significant increase in the cost of labor. As of September
30, 1999, there were approximately 65 employees of the Company.
Within the next year, and as the Company opens additional
restaurants and expands its frozen food segment, the Company will
hire additional employees. As the number of employees increases,
any rise in the cost of labor will have a more significant impact
on the Company which may in turn cause the Company to increase
its prices.
In August 1999, the Company acquired for a period of five (5)
years a license for the use and display of the name "Chippery" to
be utilized by the Company on a specialized machine which
produces potato chips from raw potatoes. The consideration to be
paid to the licensor under this licensing arrangement will be ten
(10%) percent of all gross sales, or the sum of $1,000.00
whichever is greater, per month resulting from the sale of potato
chips produced by the "Chippery" machine. The use of the
"Chippery" name will enable the Company to further develop its
new upscale image and attract consumer interest. The rights
granted to the Company permit it to solely utilize the name at
the Company's New York restaurant located at 950 Broadway, New
York, New York.
Also in August 1999, the Company terminated its lease at 494
LaGuardia Place in New York and discontinued the operations of
its test store. The Company then reopened its New York City
store at the central location of 23rd Street and Broadway which
has benefitted the Company's image and sales in New York City.
As part of the termination of the lease, the Company owed to the
landlord the sum of $60,000.00 and relinquished to the landlord
the assets of the Company existing at the store as satisfaction
of the outstanding sum due to the landlord. The landlord of the
premises is Toho Partners, LLC., which is controlled by the
Company's CEO, Nick Pirgousis.
In September 1999, the Company undertook to raise $750,000.00
pursuant to the issuance of convertible securities in a private
placement in accordance with Rule 505 of Regulation D of the
Securities Act of 1933. The funds raised under this private
placement were used for shall be utilized for continuing working
capital, the payment of long term and revolving lines of debt and
for accounts payable.
The Company's viability to generate revenue and income is
dependent on the successful implementation of its new upscale
restaurant concept and the ability to produce quality frozen food
products at its production plant. The Company's operating
history, including its losses and revenues, primarily reflect its
operations for the past year. The increase in its cash balance
is reflective of the funds raised by the company through its
private placement of common stock during the past year. The
increase in debt and liabilities of the Company is reflective of
the additional costs and liabilities incurred during the
Company's expansion, re-opening of its restaurants and the
development of its frozen foods plant.
YEAR 2000 DISCLOSURE
The Company is actively addressing the issues related to the date
change in year 2000. This is necessary because many computer
systems were programmed using only two digits to contain the year
in the date fields. On January 1, 2000, many of these programs
will fail to perform date calculations correctly and produce
erroneous results. This could temporarily prevent the Company
from processing business transactions. The Company began efforts
to address this issue.
Currently, all computer systems including both IT and non-IT
systems and work is underway to remedy those systems deemed to be
year 2000 non-compliant. The non-IT systems are primarily
systems with embedded processors such as telephones and security
systems. The remediation of the IT and non-IT systems is
expected to be completed by the end of 1999. The Company has
obtained letters of certification from its mission critical
computer systems and software vendors.
The costs associated with the remediation efforts have been
internally generated. Any external costs, projected to be
incurred, to achieve compliance will be funded from the Company's
existing working capital and are not expected to be material in
nature.
There are significant risks associated with the year 2000 issues.
Many of these risks such as those associated with electrical
power or telecommunications are outside the reasonable control of
the Company. Although the Company believes its remediation and
contingency planning efforts adequately identify and address the
year 2000 issues that are within the Company's reasonable
control, there can be no assurance that the Company's efforts
will be fully effective. Due to the significant risks, the
Company's management is monitoring these efforts very closely.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are currently no pending legal proceedings against the
company.
Item 2. Changes in Securities
The instruments defining the rights of the holders of any class
of registered securities have not ben modified.
Item 3. Defaults upon Senior Securities
There has been no default in the payment of principal, interest,
sinking or purchase fund installment.
Item 4. Submission of Matters to a Vote of Security Holders
No matter has been submitted to a vote of security holders during
the period covered by this report.
Item 5. Other information
There is no other information to report which is material to the
company's financial condition not previously reported.
Item 6. Exhibits and Reports on Form 8-K
There are no exhibits attached and no reports on Form 8-K were
filed during the quarter for which this report is filed.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
FLORIDINO'S INTERNATIONAL HOLDINGS INC.
- ----------------------
(Registrant)
Date: November 10, 1999
By: /s/ Nick Pirgousis
-------------------------
CEO
