<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 November 30, 1998
[ ] 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:
8,085,106 as of December 29, 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
November 30, 1998 and August 31, 1998 1 - 2
Consolidated Statements of Income and
Accumulated Deficit
Three Months Ended November 30, 1998
and November 30, 1997 3 - 4
Consolidated Statements of Cash Flows
Three Months Ended November 30, 1998
and November 30, 1997 5 - 6
Notes to Consolidated Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis or
Plan of Operation 9 - 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13 - 15
Signatures 16
</TABLE>
<PAGE> 3
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS)
NOVEMBER 30 AUGUST 31
1998 1998
----------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,164 $ 3,438
Restricted cash 109 106
Accounts receivable:
Trade, less allowances of $462 at November 30,
1998 and $482 at August 31, 1998 1,697 1,421
Charge card issuers 212 211
Other 154 110
------- -------
2,063 1,742
Deferred tax asset, net of allowance 1,057 1,265
Prepaid and other assets 398 151
------- -------
TOTAL CURRENT ASSETS 6,791 6,702
Property and equipment, at cost:
Fixtures and equipment 1,662 1,594
Computer systems 992 977
Communication systems 1,171 1,121
Land, building and leasehold improvements 1,292 1,282
------- -------
5,117 4,974
Accumulated depreciation
and amortization 3,078 2,992
------- -------
2,039 1,982
Excess of cost over net assets
of acquired business 5,780 5,704
Deferred tax asset, net of allowance 163 163
Other 147 176
------- -------
6,090 6,043
TOTAL ASSETS $14,920 $14,727
======= =======
</TABLE>
See accompanying notes
1
<PAGE> 4
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS)
NOVEMBER 30 AUGUST 31
1998 1998
-------- --------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt 80 80
Accounts payable 4,535 3,986
Accrued expenses 1,177 1,077
Member benefits 121 116
-------- --------
TOTAL CURRENT LIABILITIES 5,913 5,259
Long term debt, less current maturities 1,000 2,018
Deferred tax liability 450 450
Deferred revenue 85
Membership security deposits 47 52
-------- --------
TOTAL LIABILITIES 7,495 7,779
STOCKHOLDERS' EQUITY
Preferred stock ($10 par value, 600,000 shares authorized at November 30, 1998
and August 31, 1998, none issued)
Common stock - ($.01 par value, 70,000,000 shares authorized, 8,523,577 and
8,449,198 shares issued at November 30, 1998 and
August 31, 1998, respectively 86 85
Additional paid-in capital 10,296 10,211
Treasury stock at cost (1,616) (1,616)
Accumulated deficit (1,341) (1,732)
-------- --------
TOTAL STOCKHOLDERS' EQUITY $ 7,425 $ 6,948
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,920 $ 14,727
======== ========
</TABLE>
See accompanying notes
2
<PAGE> 5
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30
1998 1997
------- -------
<S> <C> <C>
NET REVENUES:
Member dues and fees $ 700 $ 629
Floral and other order
processing 1,882 1,814
Publication and advertising fees 679 360
Charge card processing 463 424
Other revenue 31 33
------- -------
3,755 3,260
EXPENSES:
General and administrative 1,431 1,336
Selling and advertising 1,261 1,271
Publications 179 91
Depreciation and amortization 161 69
------- -------
3,032 2,767
------- -------
OPERATING INCOME 723 493
OTHER INCOME (EXPENSE)
Interest expense (26) (2)
Other (85) 2
Interest income 17 36
------- -------
(94) 36
------- -------
INCOME BEFORE TAXES 629 529
Income tax expense 238 191
------- -------
NET INCOME $ 391 $ 338
======= =======
</TABLE>
See accompanying notes
3
<PAGE> 6
FLORAFAX INTERNATIONAL ,INC.
CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
(IN THOUSANDS EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30
1998 1997
------- -------
<S> <C> <C>
NET INCOME: $ 391 $ 338
Accumulated deficit at
Beginning of period (1,732) (3,500)
------- -------
ACCUMULATED DEFICIT AT
END OF PERIOD $(1,341) $(3,162)
------- -------
Basic earnings per common share: $ .05 $ .04
WEIGHTED AVERAGE
SHARES OUTSTANDING 7,944 7,751
Fully diluted earnings per common share:
$ .04 $ .04
WEIGHTED AVERAGE SHARES
OUTSTANDING 8,801 8,718
</TABLE>
See accompanying notes
4
<PAGE> 7
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30
1998 1997
----- -----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 391 $ 338
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and amortization 160 54
Provision for doubtful accounts 37 38
Deferred income taxes 208 153
Increase (decrease) in cash flows due to changes in:
Accounts receivable (358) (223)
Prepaid and other assets (247) (215)
Other assets 1 15
Accounts payable 549 367
Deferred revenue 85
Accrued liabilities 105 290
Membership security deposits (5)
----- -----
NET CASH PROVIDED BY
OPERATING ACTIVITIES 926 817
INVESTING ACTIVITIES
Capital expenditures (143) (421)
Increase in Goodwill (122)
Purchase of common stock (100)
(Increase) decrease in restricted cash (3) (17)
----- -----
NET CASH (USED IN) INVESTING ACTIVITIES $(268) $(538)
</TABLE>
See accompanying notes
5
<PAGE> 8
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30
1998 1997
------- -------
<S> <C> <C>
FINANCING ACTIVITIES
Purchases of treasury stock (178)
Proceeds from issuing stock 86 2
Payments of debt (1,018) --
------- -------
NET CASH (USED IN)
FINANCING ACTIVITIES $ (932) (176)
------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ (274) 103
Cash and cash equivalents
at beginning of period 3,438 4,170
------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 3,164 $ 4,273
======= =======
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for interest 18 --
Cash paid during the period for
income tax 30 38
</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, 1998.
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
November 30, 1998 and the consolidated results of operations and cash flows for
the three months ended November 30, 1998. For the quarter ended November 30,
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. 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) YEAR 2000 ISSUE
The Company believes that it has adequately addressed its year 2000 issues. The
Company has implemented the majority of the necessary internal system changes
and expects to be year 2000 compliant by February 28, 1999. Costs associated
with those changes were not material. For externally purchased software the
Company has performed various test transactions and concluded that these
applications are ready for use in the year 2000. In addition, major vendors that
the Company relies upon to operate the credit card segment of the Company's
business have notified the Company that they are year 2000 compliant. Although
the Company believes its efforts to be year 2000 compliant will be successful,
there can be no guarantee that these efforts will be adequate to address all of
the potential year 2000 issues. If these efforts are unsuccessful it could have
a material adverse effect on the Company's systems and results of operations
which could lead to an inability to process orders, bill florists, process
credit card transactions, and collect payments from florists. In addition, if
certain third party service providers, such as those supplying electricity,
water or telephone service, experience difficulties resulting in disruption of
service to the Company, a shutdown of the Company's facilities could occur for
the duration of the disruption.
7
<PAGE> 10
NOTE (3) INCREASE IN GOODWILL
As a result of the Companies acquisition of Marketing Projects Inc. ("MPI")
during 1998 the Company is required to make additional contingent payments to
the seller of MPI, based upon the operating performance of the business
acquired. If made, these payments will be recorded as an increase to goodwill at
that time. For the quarter ended November 30, 1998, the Company recorded
$122,000 of goodwill related to these contingent payments.
NOTE (4) RECENT PRONOUNCEMENTS
For a discussion of recent accounting pronouncements please refer to the
Company's 10-KSB for the year ended August 31, 1998.
NOTE (5) SUBSEQUENT EVENTS
On December 9, 1998 the Company entered into a definitive merger with privately
held Gerald Stevens Inc., a Fort Lauderdale, Florida based retailer of flowers,
floral-related merchandise and gifts. Under terms of the agreement, Gerald
Stevens' shareholders will receive 1.25 to 1.35 common shares of the Company for
each common share of Gerald Stevens share owned. The exchange rate will be
determined based on the average closing sales price of Florafax common stock for
the 45 consecutive trading days prior to the third trading day before the merger
is completed. Depending on the conversion ratio, Gerald Stevens' shareholders
will own approximately 75% of the Company's common stock after the merger. The
parties expect the transaction to be treated as a pooling-of-interests for
accounting purposes and anticipate that the merger will be completed by the end
of March 1999. Merger related expenses during the quarter ended November 30,
1998 amounted to $85,000. Upon consummation of the merger the Company will incur
additional significant merger related expenses, including accounting, legal and
investment banking fees. These expenses are expected to result in the Company
reporting a net loss for that quarter.
Certain options granted by the Company in 1997 created a variable stock
compensation plan. As a result the, Company is required to recognize non cash
compensation expense when the price of the Companies common stock reaches
certain prices for a specified number of trading days. The current rise in the
price of the companies common stock will cause the Company to record non-cash
compensation expense, in addition to ordinary salaries and wages, of
approximately $725,000 for the quarter ended February 28, 1999. In addition, if
the Companies stock sustains a price of $12.50 or greater for 20 consecutive
trading days during the quarter ended February 28, 1999, the Company will
recognize an additional $650,000 in non-cash compensation expense.
8
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to generate adequate operational cash flows. Cash provided
by operating activities was $926,000 for the three months ended November 30,
1998 compared to $817,000 for the three months ended November 30, 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 its wholly owned
subsidiary, The Flower Club. This generally has a positive impact on 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 the proceeds from these orders within days after processing the
transaction.
On December 10, 1998 the Company announced that it will merge with privately
held Gerald Stevens Inc., a Fort Lauderdale, Florida based retailer of flowers,
floral-related merchandise and gifts. Under terms of the agreement, Gerald
Stevens' shareholders will receive 1.25 to 1.35 common shares of the Company for
each common share of Gerald Stevens share owned. The exchange rate will be
determined based on the average closing sales price of Florafax common stock for
the 45 consecutive trading days prior to the third trading day before the merger
is completed. Depending on the conversion ratio, Gerald Stevens' shareholders
will own approximately 75% of the Company's common stock after the merger. The
parties expect the transaction to be treated as a pooling-of-interests for
accounting purposes and anticipate that the merger will be completed by the end
of March 1999. Merger related expenses during the quarter ended November 30,
1998 amounted to $85,000. Upon consummation of the merger the Company will incur
additional significant merger related expenses, including accounting, legal and
investment banking fees. These expenses are expected to result in the Company
reporting a net loss for the quarter.
9
<PAGE> 12
Certain options granted by the Company in 1997 created a variable stock
compensation plan. As a result the, Company is required to recognize non cash
compensation expense when the price of the Companies common stock reaches
certain prices for a specified number of trading days. The current rise in the
price of the companies common stock will cause the Company to record non-cash
compensation expense, in addition to ordinary salaries and wages, of
approximately $725,000 for the quarter ended February 28, 1999. In addition, if
the Companies stock sustains a price of $12.50 or greater for 20 trading days
during the quarter ended February 28, 1999, the Company will recognize an
additional $650,000 in non-cash compensation expense.
RESULTS OF OPERATIONS
GENERAL COMMENTS
Revenues are up in every major category for the quarter ended November 30, 1998
when compared to the same period in the previous year. Aggregate net revenues
were up 15% for the quarter ended November 30, 1998 when compared to the same
quarter in the prior year. Operating income increased by 47% for the quarter
when compared to the same period in the prior year.
NET REVENUES
Revenue from member dues and fees has increased for the quarter ended November
30, 1998 when compared to the same period 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 moderately for the quarter ended November 30,
1998 when compared to the same period last year. This is attributable primarily
to an increase in Flower Club revenues as well as an increase in shop to shop
revenues.
Net revenues from credit card operations increased for the quarter ended
November 30, 1998 when compared to the same period in the prior year. This is
primarily attributable to an increase in gross dollars processed by the
Company's merchants and a non recurring credit to income in the amount of
$25,000 during the quarter ended November 30, 1998.
Advertising and publication fees increased significantly for the quarter ended
November 30, 1998 when compared to the same period in the prior year. This is
due to the publication of new selection guides in the quarter ended November 30,
1998. Selection guides are recipe books and sales materials used by member
florists when producing the various flower arrangements that the Company
advertises throughout the country. New selection guides are published
approximately every three years.
10
<PAGE> 13
EXPENSES
General and administrative expenses increased by 7% for the quarter ended
November 30, 1998 when compared to the same period in the prior year. There was
no primary expense item that caused the increase. Certain expenses related to
payroll, postage, insurance, legal fees and supplies all increased for the
quarter while other expenses such as travel, lodging and consulting fees
declined for the quarter. In addition, the quarter ended November 30, 1997
included a credit from the Company's long distance telephone provider in the
approximate amount of $45,000, with no similar credit in the quarter ended
November 30, 1998.
Selling and advertising expenses remained relatively constant for the quarter
ended November 30, 1998 when compared to the same period in the prior year.
However, there were several components that changed within the selling and
advertising expense category, as follows. For the quarter ended November 30,
1998 the Company eliminated commission expenses paid to an outside marketing
firm, as this marketing function is now performed internally by a newly formed
marketing department. These decreased commissions were offset somewhat by
expenses related to the new marketing department. The Company also experienced
an increase in amounts paid to Flower Club corporate partners as a result of
increased order volume and due to several new contracts that call for additional
commissions to these partners. The Company also experienced an increase in
salaries and commissions to sales persons, but experienced a decline in
advertising and tradeshow expenses.
Depreciation and amortization increased during the quarter ended November 30,
1998 when compared to the quarter ended November 30, 1997. During 1998 the
Company expanded its facilities as well as purchased new computer and telephone
equipment, thereby causing an increase in depreciation. In addition, the
acquisition of Marketing Projects, Inc. during 1998 caused the Company to record
a significant amount of goodwill, as well as a noncompete agreement. The
amortization of these intangible assets increased amortization expense for the
quarter ended November 30, 1998, and is expected to increase amortization
expense in future periods.
OTHER INCOME (EXPENSE)
Other expense for the quarter ended November 30, 1998 consisted of legal and
accounting fees related to the merger between the Company and Gerald Stevens,
Inc.
YEAR 2000 ISSUE
The Company believes that it has adequately addressed its year 2000 issues. The
Company has implemented the majority of the necessary internal system changes
and expects to be year 2000 compliant by February 28, 1999. Costs associated
with those changes were not material. For externally purchased software the
Company has performed various test transactions and concluded that these
applications are ready for use in the year 2000. In addition, major vendors that
the Company relies upon to operate the credit card segment of the Company's
business have notified the Company that they are year 2000 compliant. Although
the Company believes its efforts to be year 2000 compliant will be successful,
there can be no guarantee that these efforts will be adequate to address all of
the potential year 2000 issues. If these efforts are unsuccessful it could have
a material adverse effect on the Company's systems and results of operations
which could lead to an inability to process orders, bill florists, process
credit card transactions, and collect payments from florists. In addition, if
certain third party service providers, such as those supplying electricity,
water or telephone service, experience difficulties resulting in disruption of
service to the Company, a shutdown of the Company's facilities could occur for
the duration of the disruption.
11
<PAGE> 14
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 and gift industry as a whole.
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, 1998.
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.
13
<PAGE> 16
(10) Material Contracts
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 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.
(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.
14
<PAGE> 17
Exhibit Reference
- -----------------
(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
(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.
(hh) Management Incentive Stock Plan approved January 30, 1996
(ii) Non-Employee Director Stock Option Plan approved January 30,
1996.
(jj) Agreement and Plan of Merger dated December 9, 1998 by and
among Registrant, Red Cannon Acquisition Corp. and Gerald
Stevens, Inc.
(kk) Voting Agreement between affiliates of Registrant and Gerald
Stevens, Inc.
(ll) Voting Agreement between affiliates of Gerald Stevens, Inc. and
Registrant
REPORTS ON FORM 8-K
On December 11, 1998 the company filed a form 8-K announcing that effective
December 9, 1998 the Company had entered into a merger agreement with Gerald
Stevens, Inc. Under the terms of the agreement the Company is expected to issue
additional shares of its common stock that will result in Gerald Stevens, Inc.
owning approximately 75% of the Company. The Company anticipates filing the
required financial statements pursuant to this merger no later than February 22,
1999.
15
<PAGE> 18
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: January 13, 1999 James H. West
President and Chief
Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 3,273,000
<SECURITIES> 0
<RECEIVABLES> 2,525,000
<ALLOWANCES> 462,000
<INVENTORY> 0
<CURRENT-ASSETS> 6,791,000
<PP&E> 5,117,000
<DEPRECIATION> 3,078,000
<TOTAL-ASSETS> 14,920,000
<CURRENT-LIABILITIES> 5,913,000
<BONDS> 1,080,000
0
0
<COMMON> 86,000
<OTHER-SE> 7,339,000
<TOTAL-LIABILITY-AND-EQUITY> 14,920,000
<SALES> 0
<TOTAL-REVENUES> 3,755,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,032,000
<LOSS-PROVISION> 37,000
<INTEREST-EXPENSE> 26,000
<INCOME-PRETAX> 629,000
<INCOME-TAX> 238,000
<INCOME-CONTINUING> 391,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 391,000
<EPS-PRIMARY> .05
<EPS-DILUTED> .04
</TABLE>
