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 June 30, 2000
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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 June 30, 2000, the following shares of the Registrant's
common stock were issued and outstanding:
25,000,000 shares authorized, $0.001 par value
7,207,000 issued and outstanding
<PAGE>
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
<TABLE>
As of As of
June 30, 2000 December 31, 1999
-----------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,273 $ 359,449
Accounts Receivable 51,171 0
Investment in marketable
securities 392,869 471,250
Inventory 111,516 52,354
-----------------------------------
Total Current Assets 558,829 883,053
Property and equipment:
Buildings & equipment 1,392,074 1,451,297
Leasehold improvements 976,248 942,519
Less accumulated
depreciation (344,673) (274,729)
Land 320,000 320,000
-----------------------------------
Other assets 40,476 42,547
Goodwill
(net of amortization) 335,802 0
Organization costs
(net of amortization) 0 1,690
-----------------------------------
Total Assets $3,278,756 $3,366,377
===================================
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 645,518 490,924
Accrued expenses 146,122 61,200
Notes payable to banks 0 159,112
Current portion of
capital lease obligations 24,670 21,669
Current portion of
long term debt 703,338 699,866
-----------------------------------
Total Current Liabilities 1,519,648 1,432,771
Long term debt:
Capital lease obligations 166,183 105,889
Long term notes and
mortgages 521,638 744,812
Convertible debentures 611,111 361,111
Shareholders' Equity:
Common stock, $.001 par value;
authorized 25,000,000 shares,
issued, and outstanding
7,707,000 (including 500,000
shares of treasury stock) at
June 30, 2000 and 7,657,000
at December 31, 1999 7,707 7,657
Preferred stock, 38,000
shares issued and outstanding,
convertible to 38,000 shares at
March 31, 2000 of common stock,
par value $5, nonparticipating,
50,000 December 31, 1999 190,000 250,000
Additional paid in capital 3,196,463 2,736,513
Accumulated deficit (2,933,994) (2,272,376)
-----------------------------------
Total stockholders' equity $460,176 $721,794
-----------------------------------
Total Liabilities &
Shareholders' Equity $3,278,756 $3,366,377
===================================
Please see the accompanying notes to the financial statements.
</TABLE>
<PAGE>
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX AND THREE MONTHS
ENDING JUNE 30, 2000 AND JUNE 30, 1999
<TABLE>
Six Months Six months Three months
Three months
6/30/00 6/30/99 6/30/00
6/30/99
-------------------------------------------------------------
<S> <C> <C> <C>
<C>
Revenues:
Food and beverage sales $1,040,274 $546,261 $522,276
$179,048
Franchise fee revenue 25,438 41,844 10,222
26,655
-------------------------------------------------------------
Total gross sales 1,065,712 588,105 532,498
205,703
Less cost of goods sold (719,501) (353,616) (352,038)
(128,880)
-------------------------------------------------------------
Gross profit 346,211 234,489 180,460
76,823
Operating expenses:
Selling, general, and
administrative expenses (1,198,061) (855,958) (693,241)
(417,304)
-------------------------------------------------------------
Net loss from operations (851,850) (621,469) (512,781)
(340,481)
Other income (expense):
Unrealized gain on
investment 60,252 57,596 (64,248)
57,596
Realized gain on investment 562,399 0 419,873
0
Loss on sale of assets (90,236) 0 0
0
Interest expense (342,183) (11,072) (170,337)
(4,397)
-------------------------------------------------------------
Loss from operations before
income tax provision (661,618) (574,945) (327,493)
(287,282)
Income tax provision 0 0 0
0
-------------------------------------------------------------
Net loss ($661,618) ($574,945) ($327,493)
($287,282)
=============================================================
Net loss per common share:
Basic:
Net loss per share ($.09) ($.11) ($.05)
($.05)
Weighted average of common shares:
Basic 7,286,006 5,310,717 7,207,000
5,322,766
</TABLE>
Please see the accompanying notes to the financial
statements.
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH
FLOWS
FOR THE SIX MONTHS ENDING JUNE 30, 2000 AND JUNE
30, 1999
<TABLE>
As of
As of
June 30, 2000
June 30, 1999
-----------------------------------
<S> <C> <C>
Operating Activities:
Net loss ($ 661,618) ($
574,945)
Adjustments to reconcile net income:
Depreciation and amortization 74,960
94,182
Unrealized gain on short term investment (60,252)
(57,596)
Loss on disposal of real estate assets 90,236
0
Amortization of debt discount 250,000
0
Changes in other assets and liabilities:
Accounts Receivable (51,171)
(12,929)
Inventory (59,162)
(3,453)
Short term investments 138,633
(98,500)
Other assets 3,761
(36,228)
Accounts payable 154,594
122,817
Accrued expenses 84,922
(60,288)
Current portion of capital lease obligations 3,001
90,288
Current portion of long term debt 3,472
81,357
-----------------------------------
Net cash used by operations (28,624)
(455,295)
Investing Activities:
Sale of real estate assets 409,764
0
Purchase of equipment (375,263)
(35,353)
-----------------------------------
Net cash provided by (used by)
investing activities 34,501
(35,353)
Financing Activities:
Proceeds from issuance of common stock 20,233
689,036
Loan payable to stockholder 0
(152,799)
Payment of bank loan (159,112)
0
Payment of long term debt (223,174)
252,603
-----------------------------------
Net cash provided (used)
by financing activities (362,053)
788,840
-----------------------------------
Net change in cash during the period (356,176)
298,192
Cash balance at beginning of fiscal year 359,449
15,502
-----------------------------------
Cash balance at end of the period $ 3,273
$313,694
===================================
Supplemental disclosures:
Interest paid during the period $58,433
$10,777
Income taxes paid during the period $0
$0
Please see the accompanying notes to the financial statements.
</TABLE>
<PAGE>
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
FOR THE PERIOD JANUARY 1, 2000 TO JUNE 30,
2000
<TABLE>
Common Stock Preferred Stock Paid in
Accumulated
Shares Amount Shares Amount Capital
Deficit Total
-----------------------------------------------------------------
-
<S> <C> <C> <C> <C> <C> <C>
<C>
Balance at
1/1/00 7,657,000 $7,657 50,000 $250,000
$2,736,513($2,272,376) $721,794
Issuance of
common stock
to purchase
subsidiary 50,000 50 399,950
400,000
Return of stock
To treasury (500,000)
Cancellation of
preferred stock
by officer (12,000) (60,000) 60,000
0
Net loss during
the period (661,618)
(661,618)
-----------------------------------------------------------------
---
Balance at
6/30/00 7,207,00 $7,707 38,000
$190,000$3,196,463($2,933,994)$460,176
=================================================================
===
</TABLE>
Please see the accompanying notes to the financial statements.
<PAGE>
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1- 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 to Form 10-QSB. 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, all adjustments considered
necessary for a fair presentation have been included. The
results of operations for the six months ending June 30, 2000
are not necessarily indicative of the results to be expected for
the full fiscal year. For further information, refer to the
consolidated financial statements and footnotes thereto included
in the Annual Report of Floridino's International Holdings, Inc.
and subsidiaries (the "Company") Form 10-KSB/A for the year
ending December 31, 1999.
The consolidated financial statements include the accounts of the
Company and its subsidiaries. Significant inter-company balances
and transactions have been eliminated in consolidation.
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.
Note 2- Earnings Per Share
The Company applies SFAS No. 128, Earnings Per Share. In
accordance with SFAS No. 128, basic net loss per share has been
computed based on the weighted average of common shares
outstanding during the period. The effects of convertible
debentures and convertible preferred stock have not been
included since their inclusion would be anti-dilutive.
Note 3- Common and Preferred Stock Transactions
During the period, the Company issued 50,000 shares of common
stock to purchase 100% of the issued and outstanding common stock
of Triton Prestige Products, Inc., a privately held company
specializing in Italian food processing. See Note 4 for further
discussion.
In addition, an officer of the Company returned 500,000 shares of
common stock to treasury at no cost to the Company and 12,000
shares of preferred stock held by the same officer were cancelled
by the Company. The par value of the preferred stock cancelled,
$60,000, was recognized as donated capital to the Company and
recorded as additional paid in capital.
Note 4- Purchase of Triton Prestige Products Inc.
In February 2000, the Company issued 50,000 shares of common
stock to purchase 100% of the issued and outstanding common stock
of Triton Prestige Products, Inc., a privately held company
specializing in Italian food processing. Triton became a wholly
owned subsidiary of the Company and its results of operations are
included in the frozen food segment. The purchase method of
accounting was used to record the transaction and accordingly,
the fair market value of the assets acquired and the liabilities
assumed at the date of the transaction are recorded in the books
and records of the Company. The difference between the fair
market value of the shares given and the fair market value of the
net assets acquired is recognized as goodwill. Goodwill resulting
from the transaction is being amortized over a period of twenty
years.
The calculation of goodwill at the date of the transaction is as
follows:
Fair value of stock transferred
(50,000 at $8 per share) $400,000
Less cash balance acquired (20,233)
Less fair value of assets acquired (196,011)
Add fair value of liabilities assumed 157,062
-----------
Goodwill $340,818
===========
Amortization of goodwill for the period is $5,016.
Note 5- Addendum to Consolidated Statement of Cash Flows
Certain non-cash transactions are not reflected in the
consolidated statement of cash flows for the period. These
include the following:
The issuance of common stock in the Triton purchase valued at
$379,767 in exchange for $196,011 of fixed assets, $66,970 of
capital lease obligations, $57,387 accounts payable, $32,970 of
long term debt, and $340,818 of goodwill.
The cancellation of 12,000 shares of preferred stock held by an
officer with a par value of $60,000 and the transfer of the par
value of the preferred stock canceled to additional paid in
capital.
The amortization of the favorable conversion feature of the
convertible debentures to interest expense in the amount of
$250,000.
Note 6- Segment Information
The Company's business operations are divided into two segments,
restaurants (including franchising activities) and frozen foods.
The Company's business segments are based on business units or
entities that offer different products. The restaurant segment
includes the results of operations of Floridino's Inc. located in
lower Manhattan, New York City, New York, Lakeland located in
Lakeland, Florida, and Delray located in Del Ray Beach, Florida.
Frozen foods includes the results of operations of Specialties
located in Winterhaven, Florida and Triton Prestige located in
Palm City, Florida.
The following is a summary of the Company's segment information
for the six and three months ending June 30, 2000 and June 30,
1999.
Corporate includes the transactions of the Floridino's Holdings,
the parent company, and Toho Holdings, organized in early 1999 to
hold title to the real estate assets of the Company. The expenses
of the Company not directly attributable to a specific segment
are included in the corporate segment.
Six months Six months Three months Three months
6/30/00 6/30/99 6/30/00 6/30/99
Gross Sales
Restaurants $944,021 $588,105 $498,127 $205,703
Frozen foods 121,691 0 34,371 0
-------------------------------------------------
Total gross
sales $1,065,712 $588,105 $532,498 $205,703
=================================================
Gross Profit
Restaurants $335,259 $234,489 $177,570 $ 76,823
Frozen foods 10,952 0 2,890 0
Total gross
profit $346,211 $234,489 $180,460 $ 76,823
================================================
Income from operations
Restaurants $34,116 ($621,469) $103,854 ($340,481)
Frozen foods (363,541) 0 (177,442) 0
Corporate (522,425) 0 (439,193) 0
------------------------------------------------
Total from
operations ($851,850 ($621,469) ($512,781) ($340,481)
================================================
Depreciation & amortization
Restaurants $44,557 $84,958 $15,624 $69,951
Frozen foods 11,741 0 1,626 0
Corporate 13,646 9,224 1,719 1,087
------------------------------------------------
Total $69,944 $94,182 $18,969 $71,038
================================================
Interest expense
Restaurants $53,988 $ 7,953 $44,498 $ 3,043
Frozen foods 6,228 0 4,921 0
Corporate 281,967 3,119 120,918 1,354
------------------------------------------------
Total $342,183 $11,072 $170,337 $ 4,397
================================================
Total Assets
Restaurants $1,195,015 $847,045
Frozen foods 1,132,568 0
Corporate 951,173 1,053,654
-------------------------------
Total assets $3,278,756 $1,900,699
===============================
There are no differences in the reporting basis from the annual
report 10-KSB 10-KSB/A for December 31, 1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
FLORIDINO'S INTERNATIONAL HOLDINGS INC., (the "Company"), was
organized in June 1997 under the laws of the State of Florida,
having the stated purpose of engaging in any lawful act
or activity for which corporations may be organized under the
General Corporation Law of Florida.
The Company designs, develops, owns and operates family style
neighborhood Italian food restaurants featuring freshly prepared,
moderately priced pizza and pasta dishes. Floridino's
restaurants seek to incorporate a self-service upscale fast
casual dining experience for its customers providing high quality
Italian food. Its operations encompass two segments from which
the Company seeks to generate revenue: operation of restaurants
and sale of frozen foods.
The restaurant segment of the Company produces and provides food
products through restaurant outlets. The products focus on
Italian foods such as pasta, pizza, sandwiches and salads as an
alternative to the quick serve food industry which offer
hamburgers, chicken and fried fish.
The goal of the Company's concept is to serve authentic Italian
cuisine in a fast food environment. This format incorporates
express style restaurants with customers being served at the
counter for carry out or on premises dining. An upscale ambiance
is incorporated into the concept to provide for a casual dining
experience in a warm, relaxed setting.
The Company also franchises its concept to individuals interested
in operating a business under the Floridino's name. The
franchise concept of the Company operates through the Company's
wholly owned subsidiary, Floridino's International Inc., which
was incorporated in September 1993. As of June 30, 2000, the
Company has four (4) franchise restaurants.
The Company also operates a frozen foods segment which develops
and produces frozen food products including calzones, pizza and
pazzo rolls. This segment operates from a 6,000 square foot
operating plant in Lakeland, Florida. In February 2000, the
Company purchased Triton Prestige Products Inc., which operated
an Italian food processing plant in Palm City, Florida. Triton
specializes in catering to school districts in the Southeast
United States. Management believes that the addition of Triton
shall enable the Company to expand its brands and products.
The Company seeks to market and sell its frozen food products
through grocery and convenience stores as well as food service
entities such as restaurants, caterers and institutional
accounts. The frozen food manufacturing segment operates under
the name "Floridino's Specialties Inc." and Triton Presitge
Products, Inc., which are wholly owned subsidiaries of the
Company.
General Statement- Factors that may affect future results
With the exception of historical information, the matters
discussed in Management's Discussion and Analysis of Financial
Condition and Results of Operations contain forward looking
statements under the 1995 Private Securities Litigation Reform
Act that involve various risks and uncertainties. Typically,
these statements are indicated by words such as "anticipates",
"expects", "believes", "plans", "could", and similar words and
phrases. Factors that could cause the company's actual results
to differ materially from management's projections, forecasts,
estimates and expectations include but are not limited to the
following:
* Inability of the company to secure additional financing
* Unexpected economic changes in the United States
* The imposition of new restrictions or regulations by government
agencies that affect the Company's restaurants and food
processing activities.
To the extent possible, the following discussion will highlight
the relative activities of the Company of both its restaurant
segment and its frozen food segment.
-Segment Reporting Disclosures
The Company's business operations are divided into two segments,
restaurants (including franchising activities) and frozen foods.
The Company's business segments are based on business units or
entities that offer different products. The restaurant segment
includes the results of operations of Floridino's Inc., located
in lower Manhattan, New York City, New York, Lakeland located in
Lakeland, Florida, and Delray located in Del Ray Beach, Florida.
Food processing includes the results of operations of Specialties
located in Winterhaven, Florida and Triton Prestige located in
Palm City, Florida.
I. Results of Operations
It should be noted that the Company's auditors have expressed
significant doubt as to the Company's ability to continue to
operate as a going concern (see annual report 10-KSB/A as of
December 31, 1999) due to the significant losses that the Company
has incurred in the last two fiscal years. Management has
addressed these concerns as outlined in the annual report
10-KSB/A for December 31, 1999. However, the future success of
management's plans implemented to address the going concern issue
cannot be reasonably assured. In fact, the Company continues to
experience significant losses through June 30, 2000.
Six months ended June 30, 2000 compared to the six months
ended June 30, 1999:
Consolidated sales, gross profit, and net income:
During the six months of fiscal year 2000, the Company
had combined gross sales of $1,065,712, compared to $588,105 in
the first six months of fiscal year 1999, an increase of 81%.
Consequently, gross profits reached $346,211 for the six months
ending June 30, 2000 as compared to $234,489 for the six months
ending June 30, 1999, an increase of 48%. Gross profits as a
percent of gross sales decreased to 32% for the period as
compared to 43% for the prior year. This decrease is a result of
the addition of the frozen food segment, which has a lower profit
margin than the restaurant segment. Management expects the
consolidated gross profit percentage to continue to decrease in
the future, as the frozen food segment becomes a larger part of
the Company's overall business.
General and administrative expenses for the six months ending
June 30, 2000 increased to $1,198,061 as compared to $855,958 for
the six months ending June 30, 1999, an increase of 40%. Some of
the material increases during this six month period as compared
to the prior year's first quarter are detailed as follows:
* Insurance costs increased approximately $40,000
* Corporate travel costs increased approximately $32,000
* Corporate payroll costs increased approximately $50,000
* General advertising costs increased approximately $50,000
The majority of these increased costs are directly attributable
to implementation of management's plan outlined in the annual
report 10-KSB/A as of December 31, 1999.
During 1999, new management was hired and the accounting staff
increased in order to meet management's goals. Travel costs
increased as a result of the increase in travel by corporate
management located in New York and the operations in Florida.
Insurance costs increased as the number of employees increased
from 25 to 55 between June 1999 and June 2000.
The Company has recognized trading gains from its stock
investments of $622,651 during the period. In addition, the
Company sold two parcels of real estate during the period with a
book value of $500,000 for $409,764 and therefore recognized a
loss on the sale of $90,236. Interest expense increased
substantially from $11,072 in 1999 to $342,183 in year 2000.
This increase is mainly attributable to $750,000 of convertible
debentures issued during the latter part of fiscal 1999 and the
recognition of $250,000 of debt discount amortization to interest
expense attributable to the debentures.(see annual report on Form
10KSB/A for December 31, 1999).
Net loss for the six months ending June 30, 2000 increased to
$661,618 compared to a loss of $574,945 for the six month period
in 1999, an increase in the loss of approximately 10%. On a per
share basis, basic loss per share decreased to $.09 at June 30,
2000 compared to an $.11 loss per share at June 30, 1999.
Restaurants:
Gross sales from the Company's restaurants and franchise segment
increased to $944,021 in 2000 from $588,105 in 1999, or an
increase of 60%. Consequently gross profits increased to
$335,259 or 43%. Gross profits as a percentage of gross sales
decreased to 36% in 2000 from 40% in 1999 mainly as a result of
higher depreciation costs associated with the significant
reconstruction costs capitalized in the latter part of fiscal
1999. The decrease was not as a result of lower prices on food
products sold.
Depreciation costs decreased significantly for the period, from
$84,958 in 1999 to 444,557 in 2000. As expected, depreciation
costs decreased because of the restaurant closings and the
transfer of much of the old restaurant equipment out of
production. Interest costs increased from $7,953 to $53,988 for
the six month period comparing 1999 to 2000. The increase in
interest costs is due to the $495,000 in notes payable used to
finance the reconstruction of the New York restaurant. Interest
on the debt is at 8.25%.
The restaurant segment has net operating income of $34,116 for
the six months ending June 30, 2000 as compared to a loss of
$621,469 for the six months ending June 30, 1999. A significant
achievement that is attributable to the implementation of
management's plan to close all the unprofitable restaurants
during fiscal year 1999 and to reopen new restaurants under a
fast casual self service theme.
The company currently operates four restaurants. It should be
noted that the segment's success is directly attributable to the
results of operations of Floridino's Inc. (New York). The New
York restaurant is located in lower Manhattan in New York City,
New York. The restaurant was acquired in November 1998 and was
closed for reconstruction in August 1999. The popularity of the
restaurant has grown significantly. The gross sales of the New
York restaurant accounts for approximately 70% of the segment and
its net profit from operations through the six months is
approximately $84,000. In fact, if not for the New York
restaurant, the segment would have shown a slight operating loss
for the period.
The operations of the restaurant segment include the results of
the Floridino's Inc., Lakeland, and the Del Ray restaurants for
the entire period. The Lake Wales opened in late May 2000.
The Company has no plans to open any additional restaurants in
the foreseeable future. However, should a favorable opportunity
arise, the Company will open additional restaurants according to
its new self-service fast Italian theme.
During the period, the Company added no other franchisee.
Revenues from franchise fees have decreased from the six month
period ending June 30, 1999 compared to the six month period
ending June 30, 2000. Management intends to aggressively pursue
its new self service casual franchise concept in the future
because it is an avenue to enhance the Company's name and brands
and will lead to more business for its frozen food division. The
franchise concept generally requires no initial capital
expenditures on the part of the Company and is therefore a more
attractive area to pursue given the Company's current financial
condition.
The assets for the revenue segment have increased by
approximately $348,000 at June 30, 2000 to $1,1195,005 as
compared to $847,045 at June 30, 1999. The main cause of this
increase were the capitalized construction costs of the New York
and Lakeland restaurants. The restaurants had been closed in
August and October of 1999 for reconstruction and were reopened
in September and October of 1999. The restaurant equipment of
the closed restaurants is still being stored at the plant and has
a book value of approximately $55,000.
Frozen Foods:
The frozen foods segment finally became operational during the
period after nearly a year of investing and planning. The
Company's food processing plants in Winterhaven, Florida and Palm
City, Florida generated sales of approximately $122,000.
Management is not satisfied with these results. Initial
production problems caused scheduling changes and delivery
delays. This has caused a lower than anticipated frozen food
orders from our customers. Management has evaluated the
situation and believes that the plants must be come more
automated to meet the significant demand that will be experienced
if the Company can instill confidence in meeting orders on a
timely basis.
Management will continue to monitor the situation through the
next quarter and provide and business plan that will automate the
plants in the most effective manner.
Gross profits are at 9% of gross sales, or approximately $11,000
for the period. As expected by management, the frozen food
segment emphasizes a higher volume of sales but earn lower profit
margins. Buyers of the Company's processed food products are
fast food entities, large restaurants, school districts, and
other food chains located in the southeast United States.
The frozen food segment showed a loss for the period $363,541.
The plant is currently operating at about 15% capacity. Plant
overhead costs average about $60,000 per month. The is currently
operating at a very low capacity, and therefore overhead costs
remain high per unit of production.
Management expects no significant additional expenditures to be
needed in order to meet the expected demand for its products.
The plants are currently operating at 10% of capacity and can
undergo a significant increase in volume without the attendant
increase in overhead costs.
Three months ended June 30, 2000 compared to the three months
ended ended June 30, 1999:
Consolidated sales, gross profit, and net income:
During Q2 2000 the Company had combined gross sales of $532,498,
compared to $205,703 for Q2 1999, an increase of 127%.
Consequently, gross profits reached $180,460 for Q2 2000 as
compared to $78,823 for Q2 ending June 30, 1999, an increase of
129%. Gross profits as a percent of gross sales decreased to 34%
for the period as compared to 38% for the prior year. This
decrease is a result of the addition of the frozen food segment,
which has a lower profit margin than the restaurant segment.
Management expects the consolidated gross profit percentage to
continue to decrease in the future, as the frozen food segment
becomes a larger part of the Company's overall business.
Overhead expenses for the quarter increased to $512,781 as
compared with $340,348 incurred in Q2 1999. Some of the material
increases are due to the following increases:
* Insurance costs increased approximately $40,000
* Corporate travel costs increased approximately $32,000
* Corporate payroll costs increased approximately $50,000
The majority of these increased costs are directly attributable
to implementation of management's plan outlined in the annual
report 10-KSB/A as of December 31, 1999.
During 1999, new management was hired and the accounting staff
increased in order to meet management's goals. Travel costs
increased as a result of the increase in travel by corporate
management located in New York and the operations in Florida.
Insurance costs increased as the number of employees increased
from 25 to 55 between June 1999 and June 2000.
The Company has recognized trading gains from its stock
investments of $355,625 during the period. After deducting
interest costs of 170, 337, the Company recognized net loss for
the quarter of $327,493, or $.05 per share as compared with
$287,282 or $.05 per share, in Q2 1999.
Interest costs increase substantially in Q2 2000 compared to Q2
1999.
This increase is mainly attributable to $750,000 of convertible
debentures issued during the latter part of fiscal 1999 and the
recognition of $250,000 of debt discount amortization to interest
expense attributable to the debentures.(see annual report on
Form 10KSB/A for December 31, 1999).
Restaurants:
Gross sales from the Company's restaurants and franchise segment
increased to $498,127 in Q2 2000 from $205,703 in Q2 1999, or an
increase of 142%. Consequently gross profits increased to
$177,570 or 131%. Gross profits as a percentage of gross sales
decreased to 36% in 2000 from 37% in 1999 mainly as a result of
higher depreciation costs associated with the significant
reconstruction costs capitalized in the latter part of fiscal
1999. The decrease was not as a result of lower prices on food
products sold.
The restaurant segment has net operating income of $103,854 for
the quarter ending June 30, 2000 as compared to a loss of
$340,481 for the quarter ending June 30, 1999. A significant
achievement that is attributable to the implementation of
management's plan to close all the unprofitable restaurants
during fiscal year 1999 and to reopen new restaurants under a
fast casual self service theme.
The company currently operates four restaurants. It should be
noted that the segment's success is directly attributable to the
results of operations of Floridino's Inc. (New York). The New
York restaurant is located in lower Manhattan in New York City,
New York. The restaurant was acquired in November 1998 and was
closed for reconstruction in August 1999. The popularity of the
restaurant has frown significantly.
The operations of the restaurant segment include the results of
the Floridino's Inc., Lakeland, and the Del Ray restaurants for
the entire period. The Lake Wales opened in late May 2000.
The Company has no plans to open any additional restaurants in
the foreseeable future. However, should a favorable opportunity
arise, the Company will open additional restaurants according to
its new self-service fast Italian theme.
During the period, the Company added no other franchisee.
Frozen Foods:
Gross sales of frozen food products were $34,371 fro Q2 2000.
This is down from $87,320 in Q1 2000, the initial quarter of
operations. Gross profits for the quarter were $2,890 or
approximately 9% of gross sales. After deducting overhead costs
for the quarter, the segment showed an operating loss of
$177,442. As discussed above, management is closely monitoring
the reasons for this poor performance and expects to make a
decision on this segment within the coming quarter.
Corporate overhead for the entity has increased to$525,425 for
the six months ending June 30, 2000 as compared to $439,193 for
the six months ending June 30, 1999. The corporate accounting
staff has been increased in this period as compared to fiscal
1999. This accounts for most of the increases. Management has
no plans to increase corporate staff in the near future.
II. Discussion of Financial Condition- Liquidity and Capital
Resources
At June 30, 2000, the company had a working capital deficit of
$960,819 as compared to a working capital deficit of $549,718 at
December 31, 1999. On a consolidated basis at June 30, 2000,
cash on hand was $3,273 as compared to $359,449 at December 31,
1999. Cash of approximately $29,000 was provided by operations.
The Company sold two buildings in January 2000 for $410,000 and
purchased approximately $375,000 in plant and restaurant
equipment during the period with the proceeds of the building
sales. Approximately, $20,000 in cash was acquired in the
acquisition of Triton Prestige Products Inc. In early fiscal
2000. The Company used approximately $159,000 in cash to settle
outstanding bank loans on the closed restaurants. In addition,
the Company used approximately $223,000 to settle outstanding
long term debt to individuals incurred as a result of the plant
and restaurant acquisitions in prior fiscal years.
Accounts payable and accrued expenses increased to approximately
$791,000 at June 30, 2000 as compared to approximately $552,000
at December 31, 1999. The increases are the result of the
current liabilities acquired in the acquisition of Triton
Prestige Products.
In February 2000, the Company issued 50,000 shares of common
stock to purchase 100% of the issued and outstanding common stock
of Triton Prestige Products, Inc., a privately held company
specializing in Italian food processing. Triton became a wholly
owned subsidiary of the Company and its results of operations are
included in the frozen food segment. The purchase method of
accounting was used to record the transaction and accordingly,
the fair market value of the assets acquired and the liabilities
assumed at the date of the transaction are recorded in the books
and records of the Company. The difference between the fair
market value of the shares given and the fair market value net
assets acquired is recognized as goodwill. Goodwill of $340,818
is being amortized over a period of twenty years.
The calculation of goodwill at the date of the transaction is as
follows:
Fair value of stock transferred
(50,000 at $8 per share) $400,000
Less cash balance acquired ( 20,233)
Less fair value of assets acquired (196,011)
Add fair value of liabilities assumed 157,062
--------------
Goodwill $340,818
==============
Total assets at June 30 , 2000 increased to $3,278,756 from
$3,366,377 at December 31, 1999.
The majority of the current portion of long term debt represents
$258,020 owed to the chairman of the board for construction costs
reimbursements due for the New York restaurant and $237,207 due
to a general contractor for the reconstruction of the New York
restaurant. Both of these loans are unsecured. The majority of
long term debt is a $500,000 loan taken in late 1999 from a
financing company and mature in fiscal year 2002 and 2003. The
Company's plant assets secure these loans.
The Company's total stockholders' equity decreased from $721,794
at December 31, 1999 to $460,176 at June 30, 2000. The decrease
is the result of the combination of approximately $662,000 in net
losses and the increase of $400,000 resulting from the
acquisition of Triton.
During the balance of fiscal year 2000, the Company projects no
significant additional capital expenditures in connection with
any of the Company's restaurant or frozen food activities.
Management expects to fund its operations from current cash and
investment balances of approximately $396,000. Given the current
cost structure of the Company, there is a strong possibility that
the Company may not be able to meet is overhead costs beyond the
next fiscal year end. If the frozen food processing plant cannot
generate sufficient revenues to offset its production overhead
within the coming months, management plans to completely
restructure of dispose of the segment.
The self-service fast casual restaurant concept envisioned by
management's plans discussed more fully in the annual report form
10-KSB at December 31, 1999 has been implemented. The Lake Wales
restaurant is expected to be open for business in late May 2000.
After Lake Wales, no additional restaurants are planned to open
during fiscal 2000. However, the Company will endeavor to take
advantage of favorable opportunities as they present themselves.
Instead, the Company intends to emphasize its new self-service
fast casual concept as a franchise. The Company intends to
support and train new franchisees for a fixed fee and a
percentage of gross revenues. The intention being to generate
franchise fee revenues and additional demand for its frozen food
products, but without the significant investment needed to open
and operate a restaurant.
<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 been 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>
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: August 20, 2000
By: /s/ Nick Pirgousis
---------------------
CHAIRMAN OF THE BOARD
