<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended February 29, 1996
-----------------
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from to
---------------- ----------------
Commission File Number: 0-5531
------------------------------------------------
FLORAFAX INTERNATIONAL, INC.
-----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 41-0719035
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8075 20th Street, Vero Beach, Florida 32966
--------------------------------------------------------------------
(Address of principal executive offices)
407-563-0263
------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
--- ---
The registrant had 6,022,973 shares of common stock, $0.01 par value,
outstanding at February 29, 1996,
Transitional Small Business Disclosure Format (Check one): Yes ; No X
------ ------
<PAGE> 2
INDEX
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION Page No.
---------------------
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets
February 29, 1996 and August 31, 1995 1 - 2
Consolidated Statements of Income and
Accumulated Deficit
Three Months and Six Months Ended February 29, 1996
and February 28, 1995 3
Consolidated Statements of Cash Flows
Six Months Ended February 29, 1996
and February 28, 1995 4 - 5
Notes to Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 12
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 - 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14 - 16
Signatures 17
</TABLE>
<PAGE> 3
FLORAFAX INTERNATIONAL, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In Thousands)
ASSETS February 29 August 31
1996 1995
----------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $3,349 $1,972
Restricted cash and investments 107 566
Accounts receivable:
Members, less allowances of $465 at
February 29, 1996 and $706 at
August 31, 1995 1,653 1,289
Charge card issuers 682 225
Other 257 34
------ ------
2,592 1,548
Prepaid and other assets 109 31
------ ------
TOTAL CURRENT ASSETS 6,157 4,117
Property and equipment, at cost:
Fixtures and equipment 605 1,347
Computer systems 539 1,114
Communication systems 1,268 1,516
Leasehold improvements 23 311
------ ------
2,435 4,288
Accumulated depreciation
and amortization 2,163 3,919
------ ------
272 369
Other assets:
Excess of cost over net assets
of acquired business 1,995 1,995
Other 321 371
------ ------
2,316 2,366
------ ------
TOTAL ASSETS $8,745 $6,852
====== ======
</TABLE>
See accompanying notes.
1
<PAGE> 4
FLORAFAX INTERNATIONAL, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In Thousands)
LIABILITIES AND STOCKHOLDERS' NET CAPITAL DEFICIENCY February 29 August 31
1996 1995
---------- ---------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt 2,578 466
Accounts payable 5,453 3,919
Accrued liabilities:
Member benefits 162 150
Other 1,085 980
------ ------
TOTAL CURRENT LIABILITIES 9,278 5,515
Long-term debt, less current maturities:
9 1/2% convertible subordinated notes 2,567
Other 365 467
------ ------
365 3,034
Membership security deposits 49 59
Unearned directory income 35
------ ------
TOTAL LIABILITIES 9,727 8,608
Stockholders' net capital deficiency:
Preferred stock (par value $10, 600,000
shares authorized, none issued)
Common stock - ( par value $.01,
18,000,000 shares authorized, 6,045,973 and 5,793,874
issued at February 29, 1996 and August 31, 1995, respectively,
6,022,973 and 5,770,874 outstanding at February 29, 1996
and August 31, 1995, respectively 61 58
Additional paid-in capital 7,409 7,381
Accumulated deficit (8,452) (9,195)
------ ------
TOTAL STOCKHOLDERS' NET CAPITAL
DEFICIENCY (982) (1,756)
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' NET
CAPITAL DEFICIENCY $8,745 $6,852
====== ======
</TABLE>
See accompanying notes.
2
<PAGE> 5
FLORAFAX INTERNATIONAL, INC.
Consolidated Statements of Income and Accumulated Deficit
(In Thousands Except per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- ------------------------------
February 29 February 28 February 29 February 28
1996 1995 1996 1995
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
NET REVENUES:
Member dues and fees $ 507 $ 501 $ 976 $ 977
Floral and other order processing 1,186 820 1,770 1,186
Directory and advertising fees 296 301 592 593
Charge card processing 348 344 658 738
Other revenue 13 7 37 17
------ ------ ------ ------
2,350 1,973 4,033 3,511
EXPENSES:
General and administrative 1,416 1,340 2,543 2,449
Selling, advertising and promotion 215 116 372 266
Directory publishing 81 75 157 153
Depreciation, amortization and retirements 103 109 206 219
------ ------ ------ ------
1,815 1,640 3,278 3,087
------ ------ ------ ------
OPERATING INCOME 535 333 755 424
OTHER INCOME (EXPENSE):
Interest expense (80) (77) (158) (153)
Other -- 1 5
Interest income 26 -- 46 --
------ ------ ------ ------
(54) (77) (111) (148)
------ ------ ------ ------
INCOME BEFORE TAXES AND EXTRAORDINARY ITEM $ 481 $ 256 $ 644 $ 276
------ ------ ------ ------
INCOME TAXES 20 26
------ ------ ------ ------
INCOME BEFORE EXTRAORDINARY ITEM 461 256 618 276
EXTRAORDINARY ITEM (GAIN ON FORGIVENESS OF DEBT)
LESS APPLICABLE INCOME TAXES 125 125
------ ------ ------ ------
NET INCOME 586 256 743 276
Accumulated deficit at beginning of period (9,038) (9,882) (9,195) (9,902)
Accumulated deficit at end of period (8,452) (9,626) (8,452) (9,626)
====== ====== ====== ======
Primary and fully diluted earnings
per common share:
Income before extraordinary item $ 0.06 $ 0.04 $ 0.09 $ 0.05
Extraordinary item 0.02 0.00 0.02 0.00
------ ------ ------ ------
NET INCOME $ 0.08 $ 0.04 $ 0.11 $ 0.05
====== ====== ====== ======
</TABLE>
See accompanying notes.
3
<PAGE> 6
FLORAFAX INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
(In Thousands)
<TABLE>
<CAPTION>
Six months ended
February 29 February 28
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $743 $276
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation, amortization, and retirements 150 170
Provision for doubtful accounts 103 143
Non cash compensation expense 37
Increase (decrease) in cash
flows due to changes in:
Accounts receivable (1,147) (276)
Prepaid and other assets (78) (52)
Other assets 50 52
Accounts payable 1,534 1,219
Accrued liabilities 152 371
Unearned directory income 30
Membership security deposits (10) (3)
------ ------
Net cash provided by
operating activities 1,497 1,967
INVESTING ACTIVITIES
Capital expenditures (53) (80)
Release of restricted cash 459
------ ------
Net cash (used in) provided by
investing activities $406 ($80)
</TABLE>
(Continued)
4
<PAGE> 7
FLORAFAX INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
(In Thousands)
<TABLE>
<CAPTION>
Six months ended
February 29 February 28
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
FINANCING ACTIVITIES
Proceeds from issuing debt 2,500
Proceeds from issuing stock 31
Reduction in bank overdraft (1,065)
Payments of debt (3,057) (65)
------- -------
Net cash used in
financing activities (526) (1,130)
------- -------
NET INCREASE IN
CASH AND CASH EQUIVALENTS 1,377 757
Cash and cash equivalents
at beginning of year 1,972 558
------- -------
CASH AND CASH EQUIVALENTS
AT EMD OF PERIOD $ 3,349 $ 1,315
======= =======
Supplemental disclosures of
cash flow information:
Cash paid during the period for interest $ 208 $ 143
Cash paid during the period for income tax $ 6
======= =======
</TABLE>
See accompanying notes.
5
<PAGE> 8
FLORAFAX INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
Six Months Ended February 29, 1996
Note (1) Management's Opinion and Accounting Policies
The accompanying interim financial statements should be read in conjunction
with the Florafax International, Inc. (the Company's) Form 10-KSB for the year
ended August 31, 1995.
In the opinion of Management the unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the Company's consolidated financial position as of
February 29, 1996 and the consolidated results of operations and cash flows for
the three months ended February 29, 1996.
Historically, the Company's flowers-by-wire operation is seasonal in that its
member florists send a much larger volume of orders during Thanksgiving, the
Christmas season, Valentine's Day, Easter and Mother's Day. Therefore, the
results of operations of an interim period may not necessarily be indicative of
the results expected for a full year. In an effort to increase orders to member
florists the Company continues to engage in non traditional campaigns through
it's wholly owned subsidiary, The Flower Club (800 800 SEND). The Flower Club,
Inc. was formed to generate additional orders by pursuing relationships with
nationally recognized corporations. The Company engages in joint marketing
campaigns with these corporations not only during holidays, but also during non
seasonal periods in an effort to provide member florists with orders during
slow periods of the year. Floral orders and handling fees generated through The
Flower Club have become significant, representing 58% of gross floral order
revenue for the six months ended February 29, 1996 compared to 44% for the six
months ended February 28, 1995. Management expects orders generated by The
Flower Club to continue to represent a significant portion of floral order
revenue.
Note (2) Contingencies
Florafax International, Inc. vs. Bellerose Floral Inc. and GTE Market Resources
Inc., et al.
During 1990 the Company filed a lawsuit against GTE Market Resources, Inc.
(GTE/MR) for failure on the part of GTE/MR to fulfill certain contractual
telecommunication services on behalf of Florafax. On November 23, 1993 a jury
awarded Florafax $1,481,000 in net damages against GTE/MR.
GTE/MR appealed this case and posted bond with the Court in order to do so. On
December 22, 1994 this case was assigned to the Oklahoma Court of Appeals by
the Oklahoma Supreme Court. On April 4, 1995 the Court of Appeals of the State
of Oklahoma released for publication its decision on the appeal filed by
GTE/MR. The award to the Company of $743,117 for consequential damages was
affirmed. To the extent that the Company was awarded lost profits for two
years in the amount of $750,000, the judgment was reversed and remanded for a
determination of lost profits as limited by Oklahoma law.
6
<PAGE> 9
FLORAFAX INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
Six Months Ended February 29, 1996
The award to GTE/MR of a set-off amount of $88,750 for unpaid invoices was
affirmed, a contractual rate of 18% per annum applied for prejudgment interest
was applied and the case remanded for a determination of an award of GTE's
reasonable attorney's fees, expenses and other collection costs incurred in
recovering the unpaid invoice amounts, but not their fees or expenses in
defending against the claims of the Company or in pursuing other unsuccessful
aspects of GTE/MR's counterclaim. The denial of the Company's request for
attorney's fees was affirmed. The Company and GTE/MR have each petitioned the
Oklahoma Supreme Court for writ of certiorari to review the portions of the
Oklahoma Court of Appeals decision adverse to their respective interests, and
both of the parties appeals have been granted. There are no assurances that
the Company will obtain a favorable ruling from the Oklahoma Supreme Court.
The Company's legal counsel has tried this case on a contingency fee basis and,
accordingly, the Company has incurred minimal expenses related to this
litigation. However, the agreement between the Company and its legal counsel
stipulates that the Company's attorneys are to receive 40% of the net proceeds
now that the case has reached the appellate court. Consequently, the Company
is to receive 60% of the ultimate proceeds. Recognition of any of these
amounts will not be reflected in the financial statements until ultimate
resolution.
Other
The Company is involved in various disputes involving routine business matters,
the resolution of all of which in management's opinion will not have a material
adverse effect upon the Company.
Note (3) Current Maturities of Debt
On February 28, 1996 the Company issued to St. James Capital Partners, Ltd. a
secured Convertible Promissory Note ("Note") in the amount of $2,500,000
bearing interest at seven percent per annum with a maturity date of February
28, 1997. The Note is convertible into common stock of the Company at a rate of
$1.25 per share on certain terms and conditions contained in the Note.
The funds from the Note were used primarily to retire outstanding debt of the
Company in the amount of $2,419,000 due to mature September 15, 1996. Prior to
the funding of the Note the Company negotiated a discount on its debt in the
amount of $124,000. This discount has been reported as an extraordinary gain in
the Company's income statement for the quarter and six months ended February
29, 1996.
7
<PAGE> 10
FLORAFAX INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
Six Months Ended February 29, 1996
In conjunction with the issuance of the Promissory Note the Registrant issued
to Purchaser a total of 650,000 warrants to purchase Common Stock of the
Registrant with an exercise price of $1.00 per share, on the terms and
conditions contained in the warrants. Purchaser has also been granted certain
registration rights for resale of the shares of common stock issuable upon
exercise of the warrants. All of the warrants expire January 1, 2001.
Subsequent to February 29, 1996 $500,000 of the original Note and 130,000
warrants were transferred from St. James Capital Partners, Ltd. and were
reissued in the name of SV Capital Partners, LP. The new $500,000 note and the
130,000 warrants were issued with the same terms and conditions contained in
the original Note and warrants.
8
<PAGE> 11
FLORAFAX INTERNATIONAL, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
Liquidity and Capital Resources
Sources of cash to meet future requirements are existing cash balances and
internally generated funds. For the past several years management had been
pursuing various options that would give the Company access to additional
working capital. During the second quarter of fiscal 1996 the Company was
successful in refinancing the majority of its debt that was due to mature on
September 15, 1996, as discussed in the following two paragraphs.
On February 28, 1996 the Company issued to St. James Capital Partners, Ltd. a
secured Convertible Promissory Note ("Note") in the amount of $2,500,000
bearing interest at seven percent per annum with a maturity date of February
28, 1997. The Note is convertible into common stock of the Company at a rate of
$1.25 per share on certain terms and conditions contained in the Note.
The funds from the Note were used primarily to retire outstanding debt of the
Company in the amount of $2,419,000 due to mature September 15, 1996. Prior to
the funding of the Note the Company negotiated a discount on its debt in the
amount of $124,000. This discount has been reported as an extraordinary gain in
the Company's income statement for the quarter and six months ended February
29, 1996.
In addition, as discussed in Note 2, the Company is hopeful that they will
reach a settlement with GTE/MR during the current year, which could provide an
additional source of working capital. However, there is no guaranty that the
Company will receive any funds as a result of the GTE/MR judgment.
The Company continues to generate positive cash flow from operations. Cash
provided by operations for the six months ended February 29, 1996 was
$1,497,000 compared to $1,967,000 for the six months ended February 28, 1995.
For the six months ended February 29, 1996 the Company reported a total
increase in cash of $1,377,000 compared to an overall cash increase of $757,000
for the six months ended February 28, 1995.
Operating cash flows historically have been generated primarily from processing
floral orders and charge card transactions for the Company's member florists,
as well as collecting dues, fees and directory advertising from the members.
Floral order processing may require settlement with the fulfilling florist
before collection of funds from the sending florist. Charge card processing,
however, generally allows the Company to collect funds from the charge card
issuer prior to settlement with the merchant. Since in both types of
transactions the Company is both collecting and settling funds, the timing of
these cash flows has a significant impact on the Company's liquidity.
9
<PAGE> 12
FLORAFAX INTERNATIONAL, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
As discussed in Note 1 to the consolidated financial statements the Company
continues to engage in non traditional campaigns through it's wholly owned
subsidiary, The Flower Club (800 800 SEND). This has helped to improve the
Company's cash flow as the majority of orders generated through The Flower Club
are paid for by credit cards. This allows the Company to receive its funds
within days after processing the transaction. For the quarter ended February
29, 1996 floral orders and handling fees generated through The Flower Club
amounted to approximately $5,024,000 compared to $3,007,000 for the quarter
ended February 28, 1995, an increase of 67%. For the six months ended February
29, 1996 floral orders and handling fees generated through The Flower Club
amounted to approximately $7,691,000 compared to $4,399,000 for the six months
ended February 28, 1995, an increase of 75%.
RESULTS OF OPERATIONS
General Comments
During fiscal 1995 the Company reported net income of $707,000, which was the
Companies most profitable year since 1983. During the first six months of
fiscal 1996 the Company is reporting net income of $743,000, which surpasses
net income for the entire previous year. In addition, net income for the
quarter ended February 29, 1996 was $585,000, which is the Companies most
profitable second quarter in over ten years. Total revenues increased by 19%
during the quarter ended February 29, 1996 when compared to the same period in
the prior year while operating expenses increased by only 11%. For the six
months ended February 29, 1996 total revenues increased by 15% when compared to
the same period in the prior year while operating expenses increased by only
6%.
Net Revenues
Revenues from member dues and fees remained relatively constant during the
quarter and six months ended February 29, 1996 when compared to the same period
in the prior year. Management believes that the number of orders that the
Company is now providing to it's members has allowed the Company to maintain
it's membership base.
Floral order revenue increased by 45% and 49% for the quarter and six months
ended February 29, 1996, respectively, when compared to the same periods in the
previous year. This increase is primarily a result of orders generated by The
Flower Club. Orders and handling fees generated by The Flower Club increased by
67% and 75% for the quarter and six months ended February 29, 1996,
respectively, when compared to the same period in the previous year. In
addition, traditional orders were slightly greater (approximately 3%) for the
quarter ended February 29, 1996 when compared to the same quarter in the prior
year.
10
<PAGE> 13
FLORAFAX INTERNATIONAL, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
Net revenues from credit card operations remained relatively constant for the
quarter ended February 29, 1996 when compared to the same quarter in the
previous year. The gross dollar amount of credit cards processed actually
increased by 26%, however there were four primary factors that offset the
increase in volume, as follows. First, the Company lowered it's discount rate
to be more competitive in certain markets. Second, the Company experienced an
increase in the cost to clear credit card transactions as well as an increase
in data capture and authorization fees. Third, certain credit card companies
began settling credit card transactions directly with a segment of the
Company's merchants, which eliminated the Companies ability to charge a
discount rate on these transactions. Fourth, the Company no longer processes
the credit card transactions for the Oklahoma State Treasurers office. For the
six months ended February 29, 1996 the Company experienced an 11% decrease in
net charge card processing revenue when compared to the same period in the
previous year. The gross dollar amount of credit cards processed actually
increased by 27%, however the aforementioned four factors caused net revenues
to decline. The reason that income for the two quarters was fairly constant and
income for the six months shows a decline is as follows. The time at which
certain credit card companies began settling transactions directly with
Florafax merchants occurred early in the second quarter of fiscal 1995.
Accordingly, during the first quarter of fiscal 1995 the Company continued to
charge a processing fee for these transaction whereas during the second quarter
the Company was unable to charge these fees. Consequently, year to date charge
card revenue for 1995 exceed year to date charge card revenue for 1996.
Expenses
Member support, general and administrative expenses increased by 6% and 4% for
the quarter and six months ended February 29, 1996, respectively, when compared
to the same periods in the previous year. The main component of the increase
was payroll and related benefits. The increase in payroll was due two factors.
First, there was an increase in labor necessary to handle to increased volume
of orders generated by The Flower Club. Second, there were normal pay increases
given to employees throughout the Company.
Selling and advertising expenses increased significantly for both the quarter
and six months ended February 29, 1996 when compared to the same period in the
prior year. The main component of this increase was an increase in advertising
costs. Now that the Company is operating at a profit management has begun to
focus on increasing membership which required expenditures for advertising. It
is anticipated that the Company will continue to incur advertising costs in an
effort to increase membership.
11
<PAGE> 14
FLORAFAX INTERNATIONAL, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
Other income (expense)
The Company is reporting interest income of $26,000 and $46,000 for the quarter
and six months ended February 29, 1996 compared to no interest income for the
same periods in the prior year. The current year interest income is a result of
the Companies improved cash position when compared to the same period last
year.
12
<PAGE> 15
PART II OTHER INFORMATION
Item 1. Legal Proceedings
For a summary of legal proceedings, reference is made to Item 3, Legal
Proceedings, included in the Company's annual report on Form 10-KSB for the
year ended August 31, 1995 and to Note 2 of the Notes to Consolidated Financial
Statements included in this filing.
Item 2. Changes in Securities
As more fully discussed in note 3 to the financial statements the Company
issued a $2,500,000 convertible promissory note with a maturity date of
February 28, 1997, along with a related security agreement. Under the terms of
the security agreement, without written consent of the note holders the Company
may not declare, make or pay any dividends, other than dividends between the
Company and its subsidiaries.
Item 3. Defaults Upon Senior Securities
None
Item 4. The Submission of Matters to a Vote of Security Holders
An annual meeting of the shareholders of the Company was held on January 30,
1996 pursuant to notice of the meeting and the proxy statement for the annual
meeting first mailed on or about December 22, 1995 to all shareholders of
record as of December 4, 1995.
The meeting was held:
1) To elect seven directors;
2) To approve the appointment of auditors for the 1996 fiscal year;
3) To approve the adoption of the Nonemployee Directors' Stock Option Plan;
4) To approve the Management Incentive Stock Option Plan; and
5) To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
13
<PAGE> 16
The following individuals were nominated as directors and were the only
nominees submitted to the shareholders. The number of shares voted and those
withheld from each such nominee are listed below:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
T. Craig Benson 5,166,409 29,387
Solomon O. Howell, Jr. 5,161,409 34,387
Glenn R. Massey 5,158,409 37,387
William E. Mercer 5,166,409 29,387
James H. West 5,166,409 29,387
Andrew W. Williams 5,163,609 32,187
Kenneth G. Puttick 5,158,409 37,387
</TABLE>
There were no abstentions or broker non votes.
Other matters submitted to a vote by the shareholders are shown below, along
with the votes for and against each matter.
<TABLE>
<CAPTION>
BROKER
------
FOR AGAINST ABSTAIN NON VOTES
--- ------- ------- ---------
<S> <C> <C> <C> <C>
Appointment of the auditors for
for the 1996 fiscal year 5,188,960 6,035 801 0
Adoption of the Nonemployee
Director Stock Option Plan 2,235,140 634,465 110,138 2,216,053
Adoption of the Management
Incentive Stock Plan 2,928,402 101,951 4,333 2,161,110
</TABLE>
There was no other business to come before the meeting. The total number of
shares present at the meeting in person or by proxy was 5,195,796 representing
88% of the shares outstanding, 5,922,973.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
14
<PAGE> 17
Exhibits
The following documents were filed as exhibits with the form 8-K filed on
February 8, 1996 and, accordingly, are incorporated here by reference.
Exhibit Reference
(10) Material Contracts
Agreement of Purchase and Sale made and entered into to be
effective December 29, 1995 by and between Registrant and St.
James Partners, LTD.
7% Convertible Promissory Note in the amount of $2,500,000
dated Dated February 28, 1996 due February 28, 1997.
Security agreement dated February 28, 1996 executed in
connection with the $2,500,000 Convertible Promissory Note.
Common Stock Purchase Warrant for 250,000 shares of the
registrants common stock expiring January 1, 2001.
Common Stock Purchase Warrant for 400,000 shares of the
registrants common stock expiring January 1, 2001.
The following items have been included as exhibits in filings by the Company in
a previous year and, accordingly, are incorporated here by reference.
Exhibit Reference
(3) Articles of incorporation and Bylaws of the Registrant, as
amended.
(10) Material Contracts
(a) Convertible subordinated notes due to Clark Estates, now
paid in full.
(b) Subordinated debentures maturing in 1998.
15
<PAGE> 18
(c) Agreement dated December 3 1993, Addendum, Second
Addendum, Third Addendum, Fourth Addendum and
Fifth Addendum thereto by and between the
Registrant and Citizens Fidelity Bank and
Trust Company (now PNC Bank, Kentucky, Inc.),
now expired.
Exhibit Reference
(d) Purchase Agreement for certain assets formerly owned
by Savannah Floral Services, Inc. dated March
10, 1994.
(e) Note Payable to Andrew Williams dated March 10, 1994,
now paid n full.
(f) Promissory Note to Citrus Bank dated November 9, 1993.
(g) Promissory Note to Citrus Bank dated November 17,
1993.
(h) Promissory Note to Citrus Bank dated January 25, 1994.
(i) Loan to James H. West, Director, President and Chief
Financial Officer, dated August 28, 1994.
(j) Consulting agreement with David Harper of Ventura
County California dated December 10, 1993.
(k) Promissory Note to Citrus Bank dated August 31, 1995.
(l) Operating lease agreement between Registrant and
Alvin Wunderlich dated April 1995.
(22) Subsidiaries of the Registrant
Filed herewith
(27) Financial Data Schedule (For SEC use only).
Reports on Form 8-K
On February 8, 1996 the Company filed form 8-K with the Securities and Exchange
Commission, announcing the issuance of a $2,500,000 Convertible Promissory Note
bearing interest at seven percent per annum with a maturity date of February
28, 1997.
16
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Florafax International, Inc.
Date: April 3, 1996 James H. West
------------- -------------
James H. West
President and Chief
Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-29-1996
<EXCHANGE-RATE> 1
<CASH> 3,456,000
<SECURITIES> 0
<RECEIVABLES> 3,057,000
<ALLOWANCES> 465,000
<INVENTORY> 0
<CURRENT-ASSETS> 6,157,000
<PP&E> 2,435,000
<DEPRECIATION> 2,163,000
<TOTAL-ASSETS> 8,745,000
<CURRENT-LIABILITIES> 9,278,000
<BONDS> 2,865,000
0
0
<COMMON> 61,000
<OTHER-SE> (1,043,000)
<TOTAL-LIABILITY-AND-EQUITY> 8,745,000
<SALES> 0
<TOTAL-REVENUES> 2,350,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,815,000
<LOSS-PROVISION> 63,000
<INTEREST-EXPENSE> 80,000
<INCOME-PRETAX> 481,000
<INCOME-TAX> 20,000
<INCOME-CONTINUING> 461,000
<DISCONTINUED> 0
<EXTRAORDINARY> 125,000
<CHANGES> 0
<NET-INCOME> 586,000
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
