<PAGE> 1
U. S. 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, 1998
[x] 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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 7,937,570 AS OF JULY 3, 1998.
Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets
May 31, 1998 and August 31, 1997 1 - 2
Consolidated Statements of Income and
Accumulated Deficit
Three and Nine Months Ended May 31, 1998
and May 31, 1997 3 - 4
Consolidated Statements of Cash Flows
Nine Months Ended May 31, 1998
and May 31, 1997 5 - 6
Notes to Consolidated Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis or
Plan of Operation 10 - 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and use of Proceeds 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 - 17
Signatures 18
</TABLE>
<PAGE> 3
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS)
MAY 31 AUGUST 31
1998 1997
------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,959 $ 4,170
Restricted cash 122 97
Accounts receivable:
Trade, less allowances of
$536 at May 31, 1998 and $509
at August 31, 1997 3,413 1,317
Charge card issuers 490 343
Other 143 94
------- -------
4,046 1,754
Deferred tax asset, net of allowance 264 264
Prepaid and other assets 111 40
------- -------
12,502 6,325
TOTAL CURRENT ASSETS
Property and equipment, at cost:
Fixtures and equipment 1,541 1,324
Computer systems 953 798
Communication systems 1,096 1,010
Land, building and leasehold
improvements 1,283 524
------- -------
4,873 3,656
Accumulated depreciation
and amortization 2,906 2,713
------- -------
1,967 943
Excess of cost over net assets
of acquired business 5,588 1,995
Deferred tax asset, net of allowance 574 1,236
Other 274 95
------- -------
6,436 3,326
TOTAL ASSETS $20,905 $10,594
======= =======
</TABLE>
See accompanying notes
1
<PAGE> 4
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS)
MAY 31 AUGUST 31
1998 1997
-------- ---------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt 80
Accounts payable $ 10,538 $ 3,754
Accrued expenses 1,270 1,308
Member benefits 150 147
-------- --------
TOTAL CURRENT LIABILITIES 12,038 5,209
Long term debt, less current maturities 2,500 80
Membership security deposits 59 52
-------- --------
TOTAL LIABILITIES 14,597 5,341
STOCKHOLDERS' EQUITY
Preferred stock ($10 par value,
600,000 shares authorized at
May 31, 1998 and August 31, 1997,
none issued)
Common stock - ($.01 par value, 70,000,000
shares authorized, 8,457,545 and 8,253,004
shares issued at May 31, 1998 and
August 31, 1997, respectively 83 83
Additional paid-in capital 10,123 10,108
Treasury stock at cost (1,616) (1,438)
Accumulated deficit (2,282) (3,500)
-------- --------
TOTAL STOCKHOLDERS' EQUITY $ 6,308 $ 5,253
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,905 $ 10,594
======== ========
</TABLE>
See accompanying notes
2
<PAGE> 5
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MAY 31 NINE MONTHS ENDED MAY 31
------------------------- ------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET REVENUES:
Member dues and fees $ 742 $ 637 $ 2,094 $ 1,771
Floral and other order
Processing 2,290 2,079 5,934 5,002
Directory and advertising fees 380 372 1,204 1,028
Charge card processing 478 413 1,385 1,204
Other revenue 15 6 95 18
-------- -------- -------- --------
3,905 3,507 10,712 9,023
EXPENSES:
General and administrative 1,852 1,670 5,064 4,514
Selling and advertising 1,145 974 3,297 2,535
Directory publishing 70 101 301 288
Depreciation and amortization 96 64 247 191
-------- -------- -------- --------
3,163 2,809 8,909 7,528
-------- -------- -------- --------
OPERATING INCOME 742 698 1,803 1,495
OTHER INCOME (EXPENSE)
Interest expense (4) (1) (7) (5)
Other 14 1 22 919
Interest income 45 57 121 131
-------- -------- -------- --------
55 57 136 1,045
-------- -------- -------- --------
INCOME BEFORE TAXES 797 755 1,939 2,540
Income taxes 297 721 2
-------- -------- -------- --------
NET INCOME $ 500 $ 755 $ 1,218 $ 2,538
</TABLE>
See accompanying notes
3
<PAGE> 6
FLORAFAX INTERNATIONAL ,INC.
CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MAY 31 NINE MONTHS ENDED MAY 31
------------------------- ------------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET INCOME: $ 500 $ 755 $ 1,218 $ 2,538
Accumulated deficit at
Beginning of period (2,782) (5,150) (3,500) (6,933)
------- ------- ------- -------
ACCUMULATED DEFICIT AT
END OF PERIOD $(2,282) $(4,395) $(2,282) $(4,395)
------- ------- ------- -------
Basic earnings per common share: $ .06 $ .09 $ .16 $ 0.31
WEIGHTED AVERAGE
SHARES OUTSTANDING 7,863 8,092 7,740 8,175
Fully diluted earnings per
common share: $ .06 $ .09 $ .14 $ .29
WEIGHTED AVERAGE SHARES OUTSTANDING 8,686 8,740 8,683 8,800
</TABLE>
See accompanying notes
4
<PAGE> 7
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MAY 31 MAY 31
1998 1997
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,218 $ 2,538
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation, amortization, and
retirements 247 150
Provision for doubtful accounts 136 162
Deferred income taxes 662 (62)
Increase (decrease) in cash flows due to changes in:
Receivables (2,428) (1,938)
Prepaid and other assets (71) (76)
Other assets (79) 157
Accounts payable 6,784 1,769
Accrued liabilities (35) 697
Membership security deposits 7 5
------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 6,395 3,402
INVESTING ACTIVITIES
Capital expenditures (1,218) (785)
Increase in Goodwill (3,600)
Purchase of common stock (100)
(Increase) decrease in restricted cash (25) 22
------- -------
NET CASH (USED IN) INVESTING ACTIVITIES ($4,943) $ (763)
</TABLE>
See accompanying notes
(CONTINUED)
5
<PAGE> 8
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MAY 31
1998 1997
------- -------
<S> <C> <C>
FINANCING ACTIVITIES
Proceeds from issuing debt 2,500
Purchases of treasury stock (178) (1,343)
Proceeds from issuing stock 15 11
Payments of debt (333)
------- -------
NET CASH (USED IN)
FINANCING ACTIVITIES 2,337 (1,665)
------- -------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 3,789 974
Cash and cash equivalents
at beginning of year 4,170 3,671
------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 7,959 4,645
======= =======
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ 1
Cash paid during the period for
income tax $ 60 $ 52
</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, 1997.
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, 1998 and the consolidated results of operations and cash flows for the
three and nine months ended May 31, 1998.
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.
NOTE (2) CONTINGENCIES
During the nine months ended May 31, 1997, the Company received a $1,041,000
court award related to a dispute that arose in 1990 with GTE/Market Resources,
Inc. There were no conditions attached to the award and, accordingly, the amount
was included in income in that quarter, which is the primary component of other
income in 1997.
NOTE (3) RECENT PRONOUNCEMENTS
EARNINGS PER SHARE - In February 1997, the FASB issued Statement No. 128,
EARNINGS PER SHARE, which is effective for periods ending after December 15,
1997. As a result, the Company implemented Statement No. 128 during the nine
months ended May 31, 1998. Under the new requirements, primary earnings per
share is replaced with basic earnings per share, which excludes the dilutive
effect of stock options and other common stock equivalents. In addition,
Statement No. 128 requires restatement of all prior periods. Accordingly, the
quarter and nine months ended May 31, 1997 have been restated to conform to
Statement No. 128.
7
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION (SFAS 131), which supersedes Financial
Accounting Standards No. 14. SFAS 131 uses a management approach to report
financial and descriptive information about a Company's operating segments.
Operating segments are revenue-producing components of the enterprise for which
separate financial information is produced internally for the Company's
management. SFAS 131 is effective for fiscal years beginning after December 31,
1997. Management is currently assessing the impact of this Standard.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, REPORTING COMPREHENSIVE INCOME (SFAS
130). SFAS 130 requires that total comprehensive income and comprehensive income
per share be disclosed with equal prominence as net income and earnings per
share. Comprehensive income is defined as changes in stockholders' equity
exclusive of transactions with owners such as capital contributions and
dividends. SFAS is effective for fiscal years beginning after December 15, 1997.
Management is currently assessing the impact of this Standard.
NOTE (4) CREDIT FACILITY
During the second quarter of 1998 the Company secured a $5 million revolving
credit facility with First Union National Bank of Florida. The credit facility,
collateralized by all the Company's assets, is for two years at the bank's prime
rate of interest, and will be used primarily to finance the acquisition of
companies that provide a strategic fit with Florafax's business. A $2 million
sublimit is also available for general working capital. During the quarter ended
May 31, 1998 the Company borrowed $2,500,000 from the facility for use in an
acquisition (See Note (5) Acquisition).
NOTE (5) ACQUISITION
During the quarter ended May 31, 1998, the Company acquired substantially all
the assets of Marketing Projects, Inc. ("MPI"), a California corporation. MPI is
in the business of marketing floral and gift products to nationally recognized
corporations, and had been the Company's primary marketing firm prior to this
purchase. The acquired assets consist primarily of the Proprietary System and
Know-How pertaining to the relationships with the Company's primary corporate
business partners. The purchase price for the assets was $3,600,000, which was
funded via a $2,500,000 loan from First Union National Bank and $1,100,000 from
cash on hand. In addition to the purchase price, the Company may pay up to
$125,000 in each of the next eight fiscal quarters contingent upon the
performance of the business acquired. In addition, the Company has agreed to pay
$100,000 for a two year non-compete agreement with the principal employees of
MPI.
8
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE (6) AMENDMENT TO THE MANAGEMENT INCENTIVE STOCK PLAN
At the annual shareholder meeting held during the second quarter of fiscal 1998
the shareholders voted to approve an amendment to the Management Incentive Stock
Plan (Incentive Plan) to increase the aggregate number of shares that may be
subject to awards under the Incentive Plan from 500,000 shares to 1,000,000
shares of common stock of the Company.
9
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to generate significant cash flows. Cash provided by
operating activities was $6,395,000 for the nine months ended May 31, 1998
compared to $3,402,000 (which includes proceeds of $1,041,000 from a litigation
settlement) for the nine months ended May 31, 1997.
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). 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.
During the nine months ended May 31, 1998 the Company purchased the land and
building which were previously leased as the Company's corporate headquarters.
The purchase price was $672,500. In addition, during the same nine months the
Company purchased a new telephone switch in the amount of $220,000. As a result
of the Company's cash position, both of these purchases were funded with
operating cash flows.
During the quarter ended May 31, 1998, the Company acquired substantially all
the assets of Marketing Projects, Inc. ("MPI"), a California corporation. The
purchase price for the assets was $3,600,000, which was funded via a $2,500,000
loan from First Union National Bank and $1,100,000 from cash on hand. In
addition to the purchase price, the Company may pay up to $125,000 in each of
the next eight fiscal quarters contingent upon the performance of the business
acquired. In addition, the Company has agreed to pay $100,000 for a two year
non-compete agreement with the principal employees of MPI.
10
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
GENERAL COMMENTS
Revenues are up in every category for the quarter and nine months ended May 31,
1998 when compared to the same periods in the previous year. Aggregate net
revenues were up 11% for the quarter and 19% for the nine months ended May 31,
1998 when compared to the same periods in the prior year. Operating income
increased by 6% for the quarter and 21% for the nine months ended May 31, 1998
when compared to the same periods in the prior year.
NET REVENUES
Revenue from member dues and fees has increased for both the quarter and nine
months ended May 31, 1998 when compared to the same periods in the prior year.
This increase is primarily attributable to an increase in member florists and a
minor increase in dues.
Floral order revenue increased for both the quarter and nine months ended May
31, 1998 when compared to the same periods last year. This is attributable
primarily to an increase in Flower Club revenues as well as an increase in shop
to shop revenues. In addition, the Company is experiencing positive results from
its gift basket program and also the Talking Bouquet, a product introduced by
the Company last year.
Net revenues from credit card operations increased for both the quarter and nine
months ended May 31, 1998 when compared to the same periods in the prior year,
which is primarily attributable to an increase in gross dollars processed by the
Company's merchants.
Advertising and directory fees increased for the nine months ended May 31, 1998
when compared to the same period in the prior year. This is due primarily to the
issuance of an additional directory in 1998 when compared to 1997, and also an
increase in advertising by member florists.
EXPENSES
General and administrative expenses increased for both the quarter and nine
months ended May 31, 1998 when compared to the same periods in the prior year.
The primary components of the increase were labor costs, telephone expense,
consulting fees and investor relation expenses. The labor costs increased as a
result of increased Flower Club order volume and general wage increases.
11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The increase in telephone related expenses was due to an increase in order
volume and certain usage expenses related to the new phone equipment in the
Companies order centers. The increased consulting fees and investor relation
expenses are a result of the Companies efforts to utilize the talents of certain
individuals on an "as needed" basis, including a public relations firm to assist
in maintaining the Company's presence in the investment community.
Selling and advertising expenses increased for both the quarter and nine months
ended May 31, 1998 when compared to the same periods in the prior year. There
are two main reasons for the increase. First, as a result of the acquisition
discussed in Note (5) to the consolidated financials statements the Company has
created it's own marketing department causing a noticeable increase in salaries.
Second, in an effort to continue to increase revenues, the Company increased
it's spending on coupons and catalogs when compared to the prior year.
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 in the future.
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. At August 31, 1996 the Company still had available
certain income tax benefits related primarily to timing differences and
operating loss carryforwards for which a valuation allowance was recorded, due
to uncertainties surrounding the Company's ability to ultimately realize the
entire amount of these benefits. During 1996 as the Company incurred income tax
expense there were corresponding reductions in the valuation allowance, thereby
resulting in certain income tax benefits. These income tax benefits exceeded the
income tax expense causing no income tax expense to be shown in 1996.
12
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
At August 31, 1997 the Company further reduced the valuation allowance so that
the deferred tax asset reflected the ultimate amount of tax benefits expected to
be realized. Consequently, during the quarter and nine months ended May 31, 1998
the Company recorded a net income tax expense, as there were no income tax
benefits to offset the income tax expense.
Although the Company has recorded income tax expense of $297,000 and $721,000
for the quarter and nine months ended May 31, 1998, respectively, there are
still available approximately $2,500,000 of tax loss carryforwards available at
May 31, 1998. Until such time as these loss carryforwards are utilized the
Company can expect to pay minimal income taxes, primarily alternative minimum
tax.
YEAR 2000 ISSUE
The Company believes that it has adequately addressed the year 2000 issues. For
externally purchased software the Company has performed various test
transactions and concluded that these applications are ready for use in the year
2000. For internally developed software the Company has assessed the
applications and determined that relatively minor changes will be required for
the year 2000 at a minimal cost and effort.
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 or Plan of Operation" 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.
The events described in such statements, and the success of the management
strategies described by those statements, are subject to certain risks and
uncertainties which could cause actual results to differ from those discussed;
among those risks and uncertainties which are particular to the Company are:
continued consumer spending on discretionary items such as flowers and gifts,
the success of the Company in maintaining relations with corporate marketing
partners, the success of the Company in maintaining a strong membership base,
the continued use of credit cards as a preferred method of payment by customers
of members, increased labor costs, constant competition, and the health of the
retail flower industry as a whole.
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, 1997 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
EXHIBIT REFERENCE
(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.
14
<PAGE> 17
EXHIBIT REFERENCE
(10) Material Contracts
(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.
15
<PAGE> 18
EXHIBIT REFERENCE
(n) Security agreement dated February 28, 1996 executed in
connection with the $2,500,000 Convertible Promissory Note.
(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.
(r) Building purchase Agreement between Registrant and Alvin
Wunderlich Sr. Trust Number 1.
(s) Building lease Agreement between Registrant and Verne W.
Anderson and Mariella Anderson Living Trust
(t) Nonqualified, Nonplan Option Agreement between Registrant and
Andrew W. Williams, Chairman of the Board and CEO.
(u) Nonqualified, Nonplan Option Agreement between Registrant and
James H. West, President and CFO.
(v) Nonqualified, Nonplan Option Agreement between Registrant and
Kelly S. McMakin, Treasurer and Secretary.
(w) Nonqualified, Nonplan Option Agreement between Registrant and
James J. Pagano, Vice President and Marketing Director
(x) Amendment dated January 7, 1998 to building purchase
agreement between Registrant and Alvin Wunderlich Sr. Trust
Number 1
(y) Promissory note agreement dated January 16, 1998 in the
amount of $5,000,000 between Registrant and First Union National
Bank
16
<PAGE> 19
EXHIBIT REFERENCE
(z) Loan agreement dated January 16, 1998 between Registrant and
First Union National Bank.
(aa) Security Agreement dated January 16, 1998 between Registrant
and First Union National Bank.
(bb)Closing Statement dated January 16, 1998 between Registrant
and First Union National Bank.
(cc)Asset purchase and sale agreement dated May 1, 1998 between
Registrant and Marketing Projects Inc., of Westlake Village
California
(dd) Noncompetiton and nondisclosure agreement dated May 29, 1998
between Registrant and David Appell, Robert Bourdom, Randolph
Commans and Phyllis Hooker of Westlake Village California
(ee) Bill of sale, assignment and assumption dated May 1, 1998
between Registrant and Marketing Projects, Inc., of Westlake
Village California.
(ff) Escrow agreement dated May 29, 1998 between Registrant,
Marketing Projects, Inc., and First Union National Bank.
(gg) First amendment to escrow agreement dated May 29, 1998
between Registrant, Marketing Projects, Inc., and First Union
National Bank.
(22) Subsidiaries of the Registrant
REPORTS ON FORM 8-K
On June 8, 1998 the Company filed a form 8-K with the Securities and Exchange
Commission, announcing the acquisition of substantially all of the assets of
Marketing Projects, Inc., a California Corporation, at a price of $3,600,000.
The Company was unable to provide the required financial information at the time
of filing this report, but will provide the required financial information on an
amended form 8-K not later than August 12, 1998.
17
<PAGE> 20
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FLORAFAX INTERNATIONAL, INC.
----------------------------
(Registrant)
/s/ James H. West
--------------------------
Date: July 13, 1998 James H. West
President and Chief
Financial Officer
18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> MAY-31-1998
<CASH> 8,081,000
<SECURITIES> 0
<RECEIVABLES> 4,582,000
<ALLOWANCES> 536,000
<INVENTORY> 0
<CURRENT-ASSETS> 12,502,000
<PP&E> 4,873,000
<DEPRECIATION> 2,906,000
<TOTAL-ASSETS> 20,905,000
<CURRENT-LIABILITIES> 12,038,000
<BONDS> 2,580,000
0
0
<COMMON> 83,000
<OTHER-SE> 6,225,000
<TOTAL-LIABILITY-AND-EQUITY> 20,905,000
<SALES> 0
<TOTAL-REVENUES> 10,712,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,909,000
<LOSS-PROVISION> 136,000
<INTEREST-EXPENSE> 7,000
<INCOME-PRETAX> 1,939,000
<INCOME-TAX> 721,000
<INCOME-CONTINUING> 1,218,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,218,000
<EPS-PRIMARY> .16
<EPS-DILUTED> .14
</TABLE>