UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
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[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
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FLORIDINO'S INTERNATIONAL HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 59-3479186
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3560 Cypress Gardens Road
Winter Haven, Florida 33884
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (863) 326-1006
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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 March 31, 2000, there were 7,257,000the following shares of the
Registrant's common stock were issued and outstanding:
25,000,000 shares authorized, $0.001 par value 7,257,000 issued and outstanding
<PAGE>
ITEM 1. Financial Statements
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
As Restated
-----------
<TABLE>
<CAPTION>
As of As of
March 31, 2000 December 31, 1999
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 121,759 $ 359,449
Accounts Receivable 63,952 0
Investment in marketable securities 621,849 471,250
Inventory 107,529 52,354
----------- -----------
Total Current Assets 915,089 883,053
Property and equipment:
Buildings & equipment 1,217,720 1,451,297
Leasehold improvements 976,248 942,519
Less accumulated depreciation (322,818) (274,729)
Land 320,000 320,000
Other assets 42,547 42,547
Goodwill (net of amortization) 337,932 0
Organization costs (net of amortization) 0 1,690
----------- -----------
Total Assets $ 3,486,718 $ 3,366,377
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 566,803 490,924
Accrued expenses 48,836 61,200
Notes payable to banks 159,112 159,112
Current portion of capital lease obligations 20,119 21,669
Current portion of long term debt 690,866 699,866
----------- -----------
Total Current Liabilities 1,485,736 1,432,771
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Long term debt:
Capital lease obligations 172,859 105,889
Long term notes and mortgages 554,343 744,812
Convertible promissory notedebentures 486,111 361,111
(net of amortization) ----------- -----------
Total Liabilities 2,699,049 2,644,583
----------- -----------
Stockholders' Equity:
Common stock, $.001 par value; authorized
25,000,000 shares, issued, and outstanding
7,757,000 (including 500,000
shares of treasury stock) at March 31, 2000 and
7,707,000 at December 31, 1999 7,757 7,707
Additional paid in capital 3,468,359 3,068,409
Accumulated deficit (2,688,447) (2,354,322)
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Total stockholders' equity $ 787,669 $ 721,794
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Total Liabilities & Stockholders' Equity $ 3,486,718 $ 3,366,377
=========== ===========
</TABLE>
Please see the accompanying notes to the financial statements.
3
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND MARCH 31, 1999
As restated
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March 31, 2000 March 31, 1999
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Revenues:
Food and beverage sales $51 7,998 $ 367,213
Franchise fee revenue 15,216 15,189
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Total gross sales 533,214 382,402
Less cost of goods sold (367,463) (236,736)
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Gross profit 165,751 145,666
Operating expenses:
Administrative expenses (504,820) (426,654)
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Net loss from operations (339,069) (280,988)
Other income (expense):
Unrealized gain on short term investment 124,500 0
Other income 142,526 0
Loss on sale of real estate assets (90,236) 0
Interest expense (171,846) (6,675)
----------- -----------
Loss from operations before
income tax provision (334,125) (287,663)
Income tax provision 0 0
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Net loss ($ 334,125) ($ 287,663)
=========== ===========
Net loss per common share:
Basic: Net loss per share ($. 05) ($ 0.05)
Weighted average of common shares:
Basic 7,407,889 5,467,500
Please see the accompanying notes to the financial statements.
4
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
As restated
-----------
March 31, 2000 March 31, 1999
-------------- --------------
Operating Activities:
Net loss ($334,125) ($287,663)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 177,665 25,144
Unrealized gain on short term investment (124,500) 0
Loss on disposal of real estate assets 90,236 0
Changes in operating assets and liabilities:
Accounts Receivable (63,952) 0
Inventory (55,175) (3,452)
Short term investments (26,099) 0
Other assets 0 (11,403)
Accounts payable 42,909 (15,386)
Accrued expenses (12,364) 1,107
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Net cash used by operations (305,405) (291,653)
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Investing Activities:
Sale of real estate assets 409,764 0
Purchase of property and equipment (161,263) (9,138)
--------- ---------
Net cash provided by (used by)
investing activities 248,501 (9,138)
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Financing Activities:
Proceeds from issuance of common stock 20,233 346,500
Payment of capital lease obligations (1,550) (2,884)
Payment of long term debt (199,469) (8,857)
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Net cash (used) provided (180,786) 334,759
by financing activities -- --
Net (decrease) increase in cash during
the period (237,690) 33,968
5
<PAGE>
Cash balance at beginning of fiscal year 359,449 15,502
-------- --------
Cash balance at end of the period $121,759 $ 49,470
======== ========
Supplemental disclosures of cash flow information:
Interest paid during the period $ 2,100 $ 6,675
Income taxes paid during the period $ 0 $ 0
Please see the accompanying notes to the financial statements.
6
<PAGE>
FLORIDINO'S INTERNATIONAL HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD JANUARY 1, 2000 TO MARCH 31, 2000
As restated
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<TABLE>
<CAPTION>
Common Stock Paid in Accumulated
Shares Amount Capital Deficit Total
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<S> <C> <C> <C> <C> <C>
Balance at 7,707,000 $ 7,707 $3,068,409 (2,354,322) $ 721,794
Jan. 1, 2000
Issuance of
common stock
to purchase
subsidiary 50,000 50 399,950 400,000
Return of common stock
to treasury (500,000)
Net loss during (334,125) (334,125)
the period
------------------------------------------------------------------------------------------
Balance at
March 31, 2000 7,257,000 $ 7,757 $3,468,359 ($2,688,447) $787,669
===========================================================================================
</TABLE>
Please see the accompanying notes to the financial statements.
7
<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 three months ended March 31, 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") on Form 10-KSB/A for the fiscal
year ended 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 convertible
promissory note is convertible into 140,845 common shares at March 31, 2000. The
effects of the convertible promissory notedebentures have not been included
since their inclusion would be anti-dilutive.
Note 3- Common 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.
8
<PAGE>
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 $2,886.
The former owners of Triton have remained with the Company as executive
salesmen. The Purchase Agreement provides for certain payments or adjustments
to be made by the Company to the executive salesmen contingent upon the sales
levels attained by the unit. Specifically, a commission will be paid to the
executive salesmen equal to the excess of 7.5% of gross sales over salesmen
salaries. Conversely, salaries of the executive salesmen will be reduced by the
amount salaries exceed 7.5% of gross sales. The Company will account for these
adjustments by accruing commission expense in the period when the contingency
has been met.
The consolidated pro-forma comparative results of operations of the Company for
the three months ended March 31, 2000 and March 31, 1999 is as follows:
2000 1999
---- --------
Sales revenues $552,648 $382,402
======== ========
Net loss ($350,769) ($287,663)
======== ========
Net loss per share ($.05) ($.05)
======== ========
9
<PAGE>
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.
A cash balance of $20,233 was acquired in the purchase of Triton.
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 Delray Ray Beach, Florida. Frozen foods
includes the results of operations of Specialties located in Lakeland. Florida
and Triton Prestige located in Palm City, Florida.
The following is a summary of the Company's segment information for the three
months ended March 31, 2000 and March 31, 1999:
3/31/00 3/31/99
Gross Sales:
Restaurants $ 445,894 $ 382,402
Frozen foods 87,320 0
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Total gross sales $ 533,214 $ 382,402
========= =========
Gross Profit
Restaurants $ 157,689 $ 145,666
Frozen foods 8,062 0
--------- ---------
Total gross profit $ 165,751 $ 145,666
========= =========
Loss from operations:
Restaurants ($ 69,738) ($145,121)
Frozen foods (186,099) (116,077)
Corporate (83,232) (19,790)
--------- ---------
Total from operations ($339,069) ($280,988)
========= =========
10
<PAGE>
Depreciation & amortization:
Restaurants $ 28,933 $ 17,007
Frozen foods 10,115 0
Corporate 11,927 8,137
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Total $ 50,975 $ 25,144
=========== =========
Interest expense:
Restaurants 9,490 4,910
Frozen foods 1,307 0
Corporate 161,049 1,765
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Total $ 171,846 $ 6,675
=========== =========
Total Assets:
Restaurants $1,225,150 $ 133,184
Frozen foods 751,792 199,995
Corporate 1,509,776 414,654
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Total assets $3,486,718 $ 747,833
========== ==========
Corporate includes the transactions of the Floridino's International Holdings,
Inc., Holdings, the parent company, and Toho Holdings, Inc., 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.
Note 7 - Restatement and prior period adjustments
Subsequent to the year end, it was determined that the accounting for the
convertible promissory note and the amortization of the resultant debt discount
had not been properly reflected based on the then current understanding of the
transaction by management. This correction affected the balance sheet, statement
of operations, earnings per share, the statement of cash flows and changes in
stockholders' equity as originally reported.
In addition, the accounting for the operations of the closed restaurants had
been originally disclosed as discontinued operations. This original treatment
was correct based upon management's intention when the original financial
statements were prepared. Subsequent to year end, management decided to continue
their restaurant operations. The restated statement of operations properly
discloses the operations of the closed restaurants into their attendant
categories. The correction affected the balances of food and beverage sales,
cost of sales, and general administrative expenses.
11
<PAGE>
In addition, the issuance of preferred stock to an officer in exchange for real
estate assets needed to be restated as an issuance of common stock because the
Company's articles of incorporation precluded an issuance of preferred stock.
The balances of common stock, preferred stock, and additional paid in capital
have been affected by the restatement.
11
<PAGE>
There are no differences in the reporting basis from the Annual Report on
Form10-KSB/A for the fiscal year ended December 31, 1999.
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 March 31,
2000, the Company has four (4) franchise restaurants.
The Company also operates a frozen foods segment which develops and produces
frozen food products including clones, 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.
12
<PAGE>
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 Prestige
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 Delray Beach, Florida. Management
closed the Delray restaurant in July 2000 since they concluded that the
restaurant had not met management's initial expectations for success.
Food processing includes the results of operations of Specialties located in
Lakeland, Florida and Triton Prestige located in Palm City, Florida.
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 on Form10-KSB/A for the fiscal year ended 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
13
<PAGE>
on Form 10-KSB/A for the fiscal year ended 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 March 31, 2000.
Three months ended March 31, 2000 compared to three months ended March 31, 1999:
Consolidated sales, gross profit, and net income:
During the first three months of fiscal year 2000, the Company had combined
gross sales of $533,214, compared to $382,402 in first quarter of fiscal year
1999, an increase of more than 39%. Gross profits reached $165,751 for the three
months ended March 31, 2000 as compared to $145,666 for the three months
ended March 31, 1999. Gross profits as a percent of gross sales decreased to
31% for the period as compared to 38% for the prior year's first quarter. 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 quarter ended March 31, 2000
increased to $504,820 as compared to $426,654 for the quarter ended March 31,
1999, an increase of 18%. Some of the material increases during this quarter as
compared to the prior year's first quarter are detailed as follows:
* Insurance costs increased approximately $20,000
* Corporate travel costs increased approximately $16,000
* Corporate payroll costs increased approximately $23,000
* General advertising costs increased approximately $25,000
The majority of these increased costs are directly attributable to
implementation of management's plan outlined in the Annual Report on
Form10-KSB/A for the fiscal year ended 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 March 1999 and March 2000.
The Company recognized unrealized and realized gains from its stock investments
of $267,026 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
from $6,675 in the first three months of fiscal 1999 to $171,846 in the
comparable period in fiscal 2000. This increase is attributable to a $750,000
convertible promissory note issued in October 1999 bearing interest of 9% and
the increase in long-term debt and capital
14
<PAGE>
leases during the latter part of fiscal 1999 (see Annual Report on Form 10-KSB/A
for the fiscal year ended December 31, 1999). In addition, $125,000 of the
beneficial conversion feature recognized when the convertible promissory note
was issued was amortized to interest expense during the quarter.
Net loss for the first quarter of fiscal 2000 increased to $334,125, or 27%,
from $287,663 recognized in the first quarter of fiscal 1999. On a per share
basis, basic loss per share remained flat at $.05 in the first quarter of fiscal
2000 from $.05 in the comparable quarter in fiscal 1999.
Restaurants:
Gross sales from the Company's restaurants and franchise segment increased to
$445,894 in the first quarter of fiscalQ1 2000 from $382,402 in the same quarter
of fiscalQ1 1999, or 17%. Consequently gross profits increased to $157,689 from
$145,666, or 8%. Gross profits as a percentage of gross sales decreased to 35%
in the first quarter of fiscalQ1 2000 from 38% in the comparable quarter of
fiscalQ1 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 loss from operations of the restaurant segment decreased to $69,738 in the
first three months of fiscalQ1 2000 from $145,121 in the comparable quarter of
fiscalQ2 1999, or 52%. As expected, the restructuring of the restaurant segment
to a more self-service concept from the prior full service concept is more
compatible with today's restaurant consumer and is less expensive to maintain.
Management is encouraged by this progress and expects this trend to continue.
The operations of the restaurant segment include the results of the Floridino's,
Inc., Lakeland, and the Delray restaurants for the entire quarter. The Lake
Wales restaurant, although scheduled to open this quarter, was not opened until
the latter half of May 2000. The opening of the restaurant was delayed due to a
county ordinance requirement that had yet to be met. The requirement was
subsequently been met and the restaurant is scheduled to opened in late May
2000. In July 2000, management decided to close the Delray restaurant because
the restaurant had not met management's initial expectations of success.
The Company has no plans to open any additional restaurants in the foreseeable
future. However, should a favorable opportunity arise, the Company may open
additional restaurants according to its new self-service fast Italian theme.
During the quarter, the Company added another franchisee bringing the total
franchisees to four at March 31, 2000. Revenues from franchise fees have not
significantly changed from the first quarter of fiscalQ1 1999 to the comparable
quarter of fiscalQ2 2000. However, 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
15
<PAGE>
Company and is therefore a more attractive area to pursue given the Company's
current financial condition.
Frozen Foods:
The frozen foods segment finally became operational during the quarter after
nearly a year of investing and planning. The Company's food processing plant in
Lakeland, Florida generated sales of approximately $29,000. Coupled with the
revenues generated from Triton, frozen foods revenues in the first quarter of
operations reached $87,320. The Company is aggressively marketing its products
produced at its two plants and has expanded its sales force. It is expected that
future sales can be generated without a significant increase in plant costs as
the plant's capacities are currently operating at about 10%.
Gross profits are at 9% of gross sales, or $8,062 for the quarter. As expected
by management, the frozen food segment emphasizes a higher volume of sales but
earns 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 first quarter of fiscalQ1 2000 of
$186,099 as opposed to $116,077 for the comparable quarter of fiscalQ1 1999, an
increase of 60%. The plants are currently operating at a very low capacity, and
therefore overhead costs remain high per unit of production. The operation of
the plant is labor intensive and the increase in overhead is due mostly to the
expansion of plant personnel when comparing the quarterly period of fiscalQ1
2000 to the same quarter of fiscalQ1 1999.
Management expects that no significant additional expenditures will be needed in
order to meet the expected demand for its products. Since the plants are
currently operating at 10% of capacity and they undergo a significant increase
in volume without the attendant increase in overhead costs.
Discussion of Financial Condition- Liquidity and Capital Resources
At March 31, 2000, the Company had a working capital deficit of $570,647 as
compared to a working capital deficit of $549,718 at December 31, 1999. On a
consolidated basis at March 31, 2000, cash on hand was $121,759 as compared to
$359,449 at December 31, 1999. The decrease in cash balance resulted from the
normal variations in the utilization of cash in its operations. In addition, the
Company sold two buildings during the period for approximately $410,000. The
proceeds from the sale of these buildings were used to fund the Company's
operations and to satisfy the outstanding mortgages on the properties sold.
Total current liabilities at March 31, 2000 increased to $1,485,736 from
$1,432,771 at December 31, 1999. The increase of current liabilities is mainly a
result of increased unpaid balances to suppliers of food and raw materials for
the frozen food segment.
16
<PAGE>
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
=========
Amortization of goodwill for the period is $2,886.
Triton was established in July and holds food service contracts to a variety of
school districts and other institutional accounts in the southeastern United
States. The plant specializes in producing frozen pizzas. Management expects
that the addition of Triton would enable the Company to expand its client base
for the products that it currently produces at its Lakeland plant, such as
calzones and pazza rolls.
Total assets at March 31, 2000 increased to $3,486,718 from $3,366,377 at
December 31, 1999. Total current liabilities at March 31, 2000 increased to
$1,485,736 from $1,432,771 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. In November 2000, the maturity
dates for these loans was extended to January 2002.
The majority of long-term debt is a $500,000 loan obtained in late 1999 from a
financing company which matures in fiscal year 2002 and 2003. The Company's
plant assets at Lakeland and the land adjacent to the plant secure these loans.
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The Company's total stockholders' equity increased from $721,794 at December 31,
1999 to $787,669 at March 31, 2000. This increase is a result of a combination
of the issuance of 50,000 shares of common stock for the purchase of Triton and
the operating losses incurred during the first quarter of fiscal 2000.
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 plans to utilize current cash
on hand to fund its current operations and to pay outstanding debt. The Company
continues to seek a settlement with respect to its outstanding bank loan of
$159,112 attributable to the unprofitable restaurants closed in 1999. Resolution
of this loan is expected in the second quarter of fiscal 2000. The loans were
taken out in prior years and are secured by the equipment of restaurants that
are now closed and in storage.
Additional sources of funds are the Company's investment in common stock which
is valued at approximately $622,000 at March 31, 2000.
Management expects the frozen food segment to grow significantly in fiscal year
2000 as a result of an aggressive marketing campaign for the Company's products
by its recently expanded sales force. This segment is expected to be profitable
in fiscal year 2000 although management cannot reasonably assure that its
marketing efforts will be successful or this eventuality will occur.
The self-service fast casual restaurant concept envisioned by management's plans
discussed more fully in the Annual Report on Form 10-KSB/A for the fiscal
year ended 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
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Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule
Reports on Form 8-K
Form 8-K dated January 17, 2000 filed with the Securities and Exchange
Commission on January 24, 2000, amended March 27, 2000 and July 21, 2000.
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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: December 29, 2000
By: /s/ Nick Pirgousis
---------------------
CHAIRMAN OF THE BOARD
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