<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 May 31, 1997
[ ] 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)
561-563-0263
------------
(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 7,788,622 shares of common stock, $0.01 par value,
outstanding at May 31, 1997.
Transitional Small Business Disclosure Format (Check one): Yes ; No X
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
---------------------
Page No.
--------
<S> <C> <C> <C>
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets
May 31, 1997 and August 31, 1996 1-2
Consolidated Statements of Income and
Accumulated Deficit
Three Months and Nine Months Ended May 31, 1997
and May 31, 1996 3-4
Consolidated Statements of Cash Flows
Nine Months Ended May 31, 1997
and May 31, 1996 5-6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-13
<CAPTION>
PART II OTHER INFORMATION
-----------------
<S> <C> <C>
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 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 MAY 31 AUGUST 31
1997 1996
-----------------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,645 $ 3,671
Restricted cash 77 99
Accounts Receivable:
Members, less allowances of $491
at May 31, 1997 and $532 at
August 31, 1996 1,306 1,202
Charge card issuers 1,986 326
Other 85 73
--------------------
3,377 1,601
Deferred tax asset 271 261
Prepaid and other assets 130 54
--------------------
TOTAL CURRENT ASSETS 8,500 5,686
Property and equipment, at cost:
Fixtures and equipment 1,249 1,188
Computer systems 784 670
Communication Systems 1,035 929
Leasehold improvements 504 25
--------------------
3,572 2,812
Accumulated depreciation
and amortization 2,659 2,534
--------------------
913 278
Excess of cost over net assets
of acquired business 1,995 1,995
Deferred tax asset, net of allowance 654 602
Other 104 261
--------------------
2,753 2,858
TOTAL ASSETS 12,166 8,822
====================
</TABLE>
See accompanying notes
1
<PAGE> 4
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS)
MAY 31 AUGUST 31
1997 1996
-----------------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 79
Accounts payable 5,682 3,913
Accrued expenses 1,616 1,036
Unearned directory income 95
Member benefits 192 170
--------------------
TOTAL CURRENT LIABILITIES 7,585 5,198
Long term debt, less current maturities 80 334
Membership security deposits 58 53
--------------------
TOTAL LIABILITIES 7,723 5,585
STOCKHOLDERS' EQUITY
Preferred stock ($10 par value, 600,000 shares
authorized, none issued)
Common stock - ($.01 par value, 70,000,000
shares authorized, 8,243,597 and 8,232,727
issued at May 31, 1997 and August 31, 1996,
respectively, 7,788,622 and 8,209,727
outstanding at May 31, 1997 and August 31, 1996,
respectively 83 83
Additional paid-in capital 10,098 10,087
Treasury stock, 454,975 shares at cost (1,343)
Accumulated deficit (4,395) (6,933)
--------------------
TOTAL STOCKHOLDERS' EQUITY $ 4,443 $ 3,237
--------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,166 $ 8,822
====================
</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 NINE MONTHS ENDED
------------------ -----------------
MAY 31 MAY 31 MAY 31 MAY 31
1997 1996 1997 1996
------------------ -----------------
(Unaudited)
<S> <C> <C> <C> <C>
NET REVENUES:
Member dues and fees $ 637 $ 538 $ 1,771 $ 1,514
Floral and other order
Processing 2,079 1,916 5,002 4,643
Directory and advertising fees 372 362 1,028 954
Charge card processing 413 386 1,204 1,037
Other revenue 6 2 18 39
--------------------------------------------
3,507 3,204 9,023 8,187
EXPENSES:
General and administrative 1,670 1,614 4,514 4,150
Selling and advertising 974 804 2,535 2,133
Directory publishing 101 146 288 303
Depreciation, amortization and
retirements 64 104 191 310
--------------------------------------------
2,809 2,668 7,528 6,896
--------------------------------------------
OPERATING INCOME 698 536 1,495 1,291
OTHER INCOME (EXPENSE)
Interest expense (1) (77) (5) (235)
Other 1 919 1
Interest income 57 31 131 77
--------------------------------------------
57 (46) 1,045 (157)
INCOME BEFORE TAXES AND
EXTRAORDINARY ITEM $ 755 $ 490 $ 2,540 $ 1,134
Income taxes 14 2 40
--------------------------------------------
INCOME BEFORE EXTRAORDINARY ITEM 755 476 2,538 1,094
Extraordinary item 125
--------------------------------------------
NET INCOME $ 755 $ 476 $ 2,538 $ 1,219
</TABLE>
See accompanying notes
3
<PAGE> 6
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MAY 31 MAY 31 MAY 31 MAY 31
1997 1996 1997 1996
------------------ -----------------
(Unaudited)
<S> <C> <C> <C> <C>
NET INCOME: $ 755 $ 476 $ 2,538 $ 1,219
Accumulated deficit at
beginning of period (5,150) (8,452) (6,933) (9,195)
---------------------------------------------------------
ACCUMULATED DEFICIT AT
END OF PERIOD $ (4,395) $ (7,976) $ (4,395) $ (7,976)
---------------------------------------------------------
Primary earnings per common share:
Income before extraordinary item $ 0.09 $ 0.07 $ 0.29 $ 0.18
Extraordinary item 0.02
---------------------------------------------------------
NET INCOME $ 0.09 $ 0.07 $ 0.29 $ 0.20
=========================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 8,655,000 6,503,000 8,685,000 6,211,000
Fully diluted earnings per common share:
Income before extraordinary item $ 0.09 $ 0.07 $ 0.29 $ 0.17
Extraordinary item -- -- -- 0.02
---------------------------------------------------------
NET INCOME $ 0.09 $ 0.07 $ 0.29 $ 0.19
=========================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 8,740,000 6,526,000 8,800,000 6,292,000
</TABLE>
See accompanying notes
4
<PAGE> 7
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MAY 31 MAY 31
1997 1996
-----------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,538 $ 1,219
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Depreciation, amortization, and retirements 150 225
Provision for doubtful accounts 162 193
Deferred Income Taxes (62)
Amortization of discount on debt 24
Increase (decrease) in cash
flows due to changes in:
Accounts receivable (1,938) (1,538)
Prepaid and other assets (76) (21)
Other Assets 157 87
Accounts payable 1,769 1,323
Accrued liabilities 697 505
Membership security deposits 5 (7)
--------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,402 2,010
INVESTING ACTIVITIES
Capital expenditures (785) (112)
Release of restricted cash 22 495
--------------------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES $ (763) $ 383
</TABLE>
See accompanying notes
(CONTINUED)
5
<PAGE> 8
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MAY 31 MAY 31
1997 1996
-----------------
(Unaudited)
<S> <C> <C>
FINANCING ACTIVITIES
Proceeds from issuing debt 2,500
Purchases of treasury stock (1,343)
Proceeds from issuing stock 11 127
Payments of debt (333) (3,168)
--------------------
NET CASH USED IN
FINANCING ACTIVITIES (1,665) (541)
--------------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 974 1,852
Cash and cash equivalents
at beginning of year 3,671 1,972
--------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 4,645 3,824
====================
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ 1 $ 245
Cash paid during the period for
Income tax $ 52 $ 8
====================
</TABLE>
See accompanying notes
6
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 1996.
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
May 31, 1997 and the consolidated results of operations and cash flows for the
nine months ended May 31, 1997. Certain income statement items have been
reclassified to conform to current period presentation.
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
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 are significant, representing 62% of gross floral order revenue for
the nine months ended May 31, 1997 compared to 57% for the nine months ended May
31, 1996.
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 the
case and the case was ultimately ruled on by the Oklahoma Supreme Court. During
the current fiscal year the Oklahoma Supreme Court upheld the decision of the
trial court, and ruled in favor of Florafax.
The Company's legal counsel tried this case on a contingency fee basis. The
agreement between the Company and its legal counsel stipulated that the
Company's attorneys were to receive 40% of the net proceeds if the case reached
the appellate court. Consequently, during the nine months ended May 31, 1997 the
Company received 60% of the ultimate proceeds, which amounted to $1,041,000.
7
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note (3) Pending Accounting Changes
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("FASB 128"), which
establishes standards for computing and presenting earnings per share, FASB 128
replaces the presentation of primary and fully diluted earnings per share with
basic and diluted earnings per share, respectively. Basic earnings per share are
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share are computed similarly to fully diluted earnings per share. The standard
is effective for financial statements for periods ending after December 15,
1997, with earlier application not permitted.
8
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's sustained profitability has allowed the Company to generate
significant cash flows. Cash provided by operating activities was $3,402,000
(including a lawsuit settlement of $1,041,000, as discussed in note 2) for the
nine months ended May 31, 1997 compared to $2,010,000 for the nine months ended
May 31, 1996. Cash and cash equivalents at May 31, 1997 were $4,645,000 compared
to $3,671,000 at August 31, 1996 and $3,824,000 at May 31, 1996.
As a result of the significant cash flows during the current year the Company
decided to use the cash to improve operations and increase shareholder value, as
discussed in the following three paragraphs.
First, during the first quarter of 1997 the Company retired $333,000 of long
term debt bearing interest at 10%, thereby eliminating nearly all interest
expense of the Company. This 10% interest rate was well in excess of the
short-term rates the Company could obtain if it chose to hold and invest this
cash.
Second, at the end of the third quarter of 1997 the Company completed the
expansion of its headquarters in Vero Beach, Florida. The cost of the expansion
was approximately $500,000. The expansion provides for additional administrative
and marketing offices, and increases the call center to allow for nearly 150
telephone sales representatives.
Third, as previously reported to the public, the Company began repurchasing
shares of it's own common stock in an effort to increase shareholder value. As
of May 31, 1997 the Company had 454,975 shares of it's own common stock held in
treasury, at a cost of $1,343,000. The Company may from time to time purchase
additional shares of it's own common stock.
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.
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).
9
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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 a significant portion of its funds within days after
processing the transaction.
RESULTS OF OPERATIONS
General Comments
Revenues are up in every material category for the nine and three month periods
ended May 31, 1997 when compared to the same periods in the previous year. Total
net revenues are up 9% and 10% for the quarter and nine months ended May 31,
1997, respectively, when compared to the same periods in the prior year.
Operating income increased 30% for the quarter and 16% for the nine months ended
May 31, 1997.
Net Revenues
Revenue from member dues and fees has increased for both the nine and
three-month periods ended May 31, 1997 when compared to the same periods in the
prior year. This increase is attributable to two revenue areas. First, there has
been a slight increase in dues as well as an increase in dues paying members.
Second, there has been an increase in certain order fees resulting from
increased order volume.
Floral order revenue is up for both the quarter and nine months compared to the
same periods last year. The increase is attributable primarily to an increase in
Flower Club revenues and also revenues generated by the Talking Bouquet, a new
product introduced by the Company in the current year. During the third quarter
of 1996 the Company produced new selection guides for it's floral membership.
These selection guides are produced only once every four or five years. The
effect of the selection guides was to increase net order revenue in 1996. Had
these selection guides not been produced in 1996 the Company would have
experienced an even greater increase in current year revenues when compared to
the previous year.
Net revenues from credit card operations increased for both the quarter and nine
months ended May 31, 1997 when compared to the same periods in the prior year.
The increase is due to increased dollar volumes processed. The increase in
credit card dollar volumes processed actually exceeds the increase in the net
revenue because the Company has had to lower its discount rate in certain
industries to remain competitive. Management believes the Companies current
pricing strategy allows the company to remain fairly competitive in the
industries the Company services.
10
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Advertising and directory fees increased for both the quarter and nine months
ended May 31, 1997 when compared to the same periods in the prior year. This is
due primarily to an increase in members. However, during the third quarter of
the prior year the Company published two directories compared to only one being
published in the third quarter of the current year, resulting in greater
directory revenues being recorded in the prior year.
Expenses
Member support, general and administrative expenses increased for both the
quarter and nine months ended May 31, 1997 when compared to the prior year. The
primary component of the increase was labor costs associated with the increased
Flower Club order volume. While labor costs associated with Flower Club orders
increased, they were offset somewhat by a decrease in telephone expense due to a
rate decrease from the Company's long distance carrier.
Selling and advertising expenses increased for both the quarter and nine months
ended May 31, 1997 when compared to the prior year. There are two main reasons
for the increase. First, the Company has increased its sales staff in order to
continue to grow its floral membership. Second, the Company paid higher
marketing commissions and printing costs related to Flower Club volume in 1997
when compared to 1996.
Directory publishing expense was greater for both the quarter and nine months
ended May 31, 1996 when compared to the same periods this year. This is a result
of publishing two directories in the third quarter of 1996 compared to only one
directory in the third quarter of 1997.
Depreciation and amortization declined significantly for both the quarter and
nine months ended May 31, 1997 when compared to the prior year. Many of the
Company's depreciable assets have become fully depreciated. In addition, a
significant portion of the decline is a result of terminating the Floranet 5000
program in the last quarter of fiscal 1996. At the time this program was
terminated all Floranet 5000 equipment and related software development costs
were charged to expense. In addition, during the second quarter of 1997 the
Company wrote off the remaining balance of a consulting agreement, thereby
eliminating any further amortization related to this contract. This charge to
earnings is included in other income, not depreciation and amortization. The
Company has recently completed the expansion of its headquarters in Vero Beach,
Florida. Now that the expansion is complete depreciation should be expected to
increase as a result of depreciation on the building itself as well as the
related furniture and equipment that is now being used in the new facility.
11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Other income (expense)
Interest expense has been virtually eliminated during the quarter and nine
months ended May 31, 1997. During the last quarter of fiscal 1996 the majority
of the Company's debt was converted to equity, thereby eliminating the interest
expense associated with this debt. In addition, shortly after year-end the
Company retired another $333,000 of debt, bringing the total long-term debt of
the Company to $80,000 as of May 31, 1997.
The primary components of other income for the nine months ended May 31, 1997
are as follows. First, during February 1997 the Company received the proceeds
from the GTE/MR litigation in the amount of $1,041,000 (see note 2). Second, the
Company terminated a consulting agreement with a marketing consultant in
Westlake Village, California. At the time the agreement was terminated the
Company charged to earnings $87,000 which had been capitalized when the
agreement was entered into.
Income Taxes
The Company accounts for income taxes using Financial Accounting Standard Board
Statement No. 109, Accounting for Income Taxes, which requires the asset and
liability method of accounting for income taxes. Under the asset and liability
method deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Until 1996, the Company had provided the full valuation allowance on net
deferred tax assets based on the Company's history of losses and the uncertainty
surrounding the Company's ability to recognize such assets. However, during the
year ended August 31, 1996 the Company re-evaluated its historical losses, and
its projected future earnings, and reached the conclusion that it was more
likely than not that some portion of the deferred tax asset would be realized.
At that time the valuation allowance was reduced resulting in a net deferred tax
benefit. For the quarter ended May 31, 1997 the Company has recorded no income
tax expense. Based on facts and circumstances at May 31, 1997 it appears that
the Company may have no material tax liability during the fiscal year ended
August 31, 1997. Consequently, for the nine months ended May 31, 1997 the
Company has recorded no income tax expense other than alternative minimum tax.
The Company will continue to evaluate the valuation allowance based on current
and projected future earnings and will make adjustments to the allowance based
on the evidence and circumstances at that time.
12
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-looking statements
When used in this report, the words "plan(s)", "intends(s)", "expect(s)",
"feel(s)", "will", "may", "believe(s)", "anticipate(s)", and similar expressions
are intended to identify forward-looking statements. The events described in
such statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. Readers are cautioned
not to place undue reliance on these forward-looking statements which speak only
as of the date hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. Readers are also
urged to carefully review and consider the various disclosures made by the
Company which attempt to advise interested parties of the factors which affect
the Company's business, including the disclosures made under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the report, as well as the Company's periodic reports of Form
10-KSB, 10-QSB and 8-K filed with the Securities and Exchange Commission.
13
<PAGE> 16
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, 1996 and to Note 2 of the Notes to Consolidated Financial
Statements included in this filing.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. The Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on form 8-K
Exhibits
(27) Financial Data Schedule (for SEC use only).
The following items have been included as exhibits in filings by the Company in
a previous filing and, accordingly, are incorporated here by reference.
Exhibit Reference
(3) Articles of incorporation and Bylaws of the Registrant, as
amended.
(10) Material Contracts
14
<PAGE> 17
Exhibit Reference
(a) Convertible subordinated notes due to Clark Estates maturing June
30, 1996.
(b) Subordinated debentures maturing in 1998.
(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.).
(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.
(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.
(m) 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.
(n) Security agreement dated February 28, 1996 executed in connection
with the $2,500,000 Convertible Promissory Note.
15
<PAGE> 18
Exhibit Reference
(o) Common Stock Purchase Warrant for 250,000 shares of the registrants
common stock expiring January 1, 2001.
(p) Common Stock Purchase Warrant for 400,000 shares of the registrants
Common stock expiring January 1, 2001.
(q) Construction Agreement dated September 30, 1996 between Registrant
And C.E. Block, Architect of Vero Beach, Florida.
(22) Subsidiaries of the Registrant
Reports on Form 8-K
No reports on Form 8-K were filed during the third quarter of fiscal 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: July 11, 1997 James H. West
------------- -------------------
President and Chief
Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> MAY-31-1997
<CASH> 4,722,000
<SECURITIES> 0
<RECEIVABLES> 3,868,000
<ALLOWANCES> 491,000
<INVENTORY> 0
<CURRENT-ASSETS> 8,500,000
<PP&E> 3,572,000
<DEPRECIATION> 2,659,000
<TOTAL-ASSETS> 12,166,000
<CURRENT-LIABILITIES> 7,585,000
<BONDS> 80,000
0
0
<COMMON> 83,000
<OTHER-SE> 4,360,000
<TOTAL-LIABILITY-AND-EQUITY> 4,443,000
<SALES> 0
<TOTAL-REVENUES> 9,023,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,528,000
<LOSS-PROVISION> 162,000
<INTEREST-EXPENSE> 5,000
<INCOME-PRETAX> 2,540,000
<INCOME-TAX> 2,000
<INCOME-CONTINUING> 2,538,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,538,000
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
