<PAGE> 1
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(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)
<TABLE>
<S> <C>
DELAWARE 41-0719035
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
</TABLE>
<TABLE>
<S> <C>
8075 20TH STREET, VERO BEACH, FLORIDA 32966
(Address of principal executive offices) (Zip Code)
</TABLE>
Issuer's telephone number (561) 563-0263
(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
FLORAFAX INTERNATIONAL, INC.
EXPLANATORY NOTE TO FORM 10-QSB/A
This quarterly report on Form 10-QSB/A amends and supersedes, to the extent
set forth herein, the Registrant's Quarterly Report on Form 10-QSB for the
quarter ended November 30, 1998 previously filed on January 13, 1999. As more
fully set forth below, the following financial and related information has been
updated in connection with the filing of the restated financial statements
included herein.
The Items of Form 10-QSB affected by this Amendment No. 1 on Form 10-QSB/A
are as follows:
Part I -- Item 1. Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Stockholders'
Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Part I -- Item 2. Management's Discussion and Analysis or Plan of
Operation
Page numbers for the amended Items set forth in this Form 10-QSB/A
correspond to the page numbering of the same Items in the original Form 10-QSB.
<PAGE> 3
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30 AUGUST 31
1998 1998
----------- ---------
(UNAUDITED) (RESTATED
(RESTATED SEE NOTE 6)
SEE NOTE 6)
<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.................................................. 168 110
------- -------
2077 1,742
Deferred tax asset, net of allowance........................ 103 301
Prepaid and other assets.................................... 398 165
------- -------
Total current assets................................... 5,851 5,752
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......... 1,995 1995
Deferred tax asset, net of allowance........................ 1,881 1,881
Marketing techniques........................................ 62 100
Other....................................................... 147 176
------- -------
4,085 4,152
------- -------
Total assets........................................... $11,975 $11,886
======= =======
</TABLE>
See accompanying notes.
1
<PAGE> 4
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30 AUGUST 31
1998 1998
----------- ---------
(UNAUDITED) (RESTATED
(RESTATED SEE NOTE 6)
SEE NOTE 6)
<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 revenue............................................ 85 --
Membership security deposits................................ 47 52
------- -------
Total liabilities...................................... 7,045 7,329
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......................................... (3,836) (4,123)
------- -------
Total stockholders' equity............................. 4,930 4,557
------- -------
Total liabilities and stockholders' equity............. $11,975 $11,886
======= =======
</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
----------- --------
(RESTATED
SEE NOTE 6)
<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................................... 1,383 1,271
Publications.............................................. 179 91
Depreciation and amortization............................. 153 69
------- -------
3,146 2,767
------- -------
Operating Income............................................ 609 493
Other income (expense):
Interest expense.......................................... (26) (2)
Other..................................................... (85) 2
Interest income........................................... 17 36
------- -------
(94) 36
------- -------
Income before taxes......................................... 515 529
Income tax expense.......................................... 228 191
------- -------
Net Income.................................................. $ 287 $ 338
======= =======
Net income.................................................. $ 287 $ 338
Accumulated deficit at beginning of period................ (4,123) (3,500)
------- -------
Accumulated deficit at end of period........................ $(3,836) $(3,162)
------- -------
Basic earnings per common share............................. $ .04 $ .04
======= =======
Weighted average shares outstanding......................... 7,944 7,751
======= =======
Fully diluted earnings per common share..................... $ .03 $ .04
======= =======
Weighted average shares outstanding......................... 8,801 8,718
======= =======
</TABLE>
See accompanying notes.
3
<PAGE> 6
FLORAFAX INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30
-----------------------
1998 1997
----------- ------
<S> <C> <C>
(RESTATED
SEE NOTE 6)
<CAPTION>
<S> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 287 $ 338
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 153 54
Provision for doubtful accounts........................ 37 38
Deferred income taxes.................................. 198 153
Increase (decrease) in cash flows due to changes in:
Accounts receivable.................................. (372) (223)
Prepaid and other assets............................. (233) (215)
Other assets......................................... 15
Accounts payable..................................... 549 367
Deferred revenue..................................... 85
Accrued liabilities.................................. 105 290
Membership security deposits......................... (5) --
------- ------
Net cash provided by operating activities................. 804 817
------- ------
Investing activities
Capital expenditures...................................... (143) (421)
Purchase of common stock.................................. (100)
(Increase) decrease in restricted cash.................... (3) (17)
------- ------
Net cash (used in) investing activities................... $ (146) $ (538)
======= ======
</TABLE>
<TABLE>
FINANCING ACTIVITIES
<S> <C> <C>
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.
4
<PAGE> 7
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/A, filed on
April 9, 1999 (See Note 6), 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 operates three primary information technology computer systems,
which are a main frame, a network based order entry system, and a telephone
system. A year 2000 discussion of each of these systems is as follows.
The Company operates a main frame computer system that processes floral
orders, credit card transactions, and performs the Company's monthly billings to
its member florists. The year 2000 software upgrade has been installed, tested,
and is currently in use. The manufacturer of the software has provided the
Company with the year 2000 upgrade at no charge. In addition, all internally
developed software applications have been modified to be year 2000 compliant. At
this time, these modifications are being tested and are expected to be
operational by March 31, 1999. The cost to update these applications was less
than $50,000.
The Company operates a network based order entry system. The manufacturers
operating system software is year 2000 compliant. However, not all internally
developed software applications have been modified to be year 2000 compliant.
The Company is in the process of modifying its internally developed software
applications and expects to complete the modifications no later than June 30,
1999. These internal programs are being modified by current employees and, as a
result, the cost of these modifications is not expected to be material.
The Company operates a telephone system which is integrated with the order
entry system discussed in the preceding paragraph. The Company recently learned
that a primary component of this system will need to be upgraded or replaced to
be year 2000 compliant. The company is in the process of evaluating whether to
upgrade or replace this component. Regardless of which option is selected by the
Company, this component is expected to be operational no later than, July 31,
1999, at a cost not to exceed $200,000.
Currently the company does not operate any significant non-information
technology systems.
Management believes the most reasonably likely worst case year 2000
scenario would occur if the order entry system failed, which would prevent
automated processing of floral orders. At this time, there is no indication that
this will happen. However, should this occur, the Company would be forced to
process incoming floral orders manually, until such time that the failure could
be corrected. This could cause labor costs to double or triple during the time
period while the system failure was being corrected.
5
<PAGE> 8
The Company relies on two main vendors to operate the credit card portion
of its business. Both of these vendors have represented that they are year 2000
compliant. One vendor has provided the Company written certification of their
year 2000 readiness. The other vendor has provided the Company with limited
written certification regarding a particular type of credit card terminal used
by merchants who process transactions with the Company.
Other significant vendors include certain third party service providers,
such as those supplying electricity, water or telephone service. If these
vendors experience year 2000 difficulties this could result in disruption of
service to the Company, and a shutdown of the Company's facilities could occur
for the duration of the disruption. None of these vendors have certified that
their systems are year 2000 compliant.
NOTE (3) CONTRACT MODIFICATION
As a result of the Companies contract modification with Marketing Projects
Inc. ("MPI") during 1998 the Company is required to make additional contingent
payments to MPI, contingent upon the attainment of quarterly revenue targets. If
made, these payments will be recorded as commission expense in the period in
which they were earned. For the quarter ended November 30, 1998, the Company
recorded $122,000 of commission expense 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 Company's common stock reaches
certain prices for a specified number of trading days. The current rise in the
price of the Company's common stock will cause the Company to record non-cash
compensation expense, in addition to ordinary salaries and wages, of
approximately $1,373,000 for the quarter ended February 28, 1999.
NOTE (6) RESTATEMENT
Effective May 1, 1998 the Company entered into a contract modification
agreement with Marketing Projects Inc. At that time, the contract was accounted
for as a business combination, however, subsequent to the original accounting of
the transaction, the Company had several discussions with the Securities and
Exchange Commission. As a result of these conversations, the Company
re-evaluated the facts and circumstances surrounding the MPI transaction and
concluded that the transaction should be accounted for as a contract
modification rather than a business combination. Consequently, the Company has
restated its financial statements to account for the transaction as a contract
modification.
6
<PAGE> 9
The following tables reflect the more significant effects of the
restatements on certain components of operations:
<TABLE>
<S> <C>
EFFECTS ON OPERATIONS
Operating income, as previously reported.................... $ 723
Adjustment related to:
Adjustment to amortization expense........................ 8
Contingent commission expense............................. (122)
------
Restated operating income................................... 609
======
Net income, as previously reported.......................... $ 391
Adjustment related to:
Adjustment to amortization expense........................ 8
Contingent commission expense............................. (122)
Income tax effects of adjustments......................... 10
------
Restated net income......................................... 287
======
Basic income, per share, as previously reported............. $ 0.05
Adjustment related to:
Adjustment to amortization expense........................ --
Contingent commission expense............................. (0.01)
Income tax effects of adjustments......................... --
------
Restated basic income (loss) per share...................... 0.04
======
Diluted income, per share, as previously reported........... $ 0.04
Adjustment related to:
Adjustment to amortization expense........................ --
Contingent commission expense............................. (0.01)
Income tax effects of adjustments......................... --
------
Restated diluted income (loss) per share.................... 0.03
======
</TABLE>
7
<PAGE> 10
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 $804,000 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 it's 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 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 Company's common stock reaches
certain prices for a specified number of trading days. The current rise in the
price of the Company's common stock will cause the Company to record non-cash
compensation expense, in addition to ordinary salaries and wages, of
approximately $1,373,000 for the quarter ended February 28, 1999.
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 24% 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.
8
<PAGE> 11
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.
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 increased by nine percent for the quarter
ended November 30, 1998 when compared to the same period in the prior year.
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 MPI, 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, as well as contingent commissions related to the MPI
contract modification (see Note 6). 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
contract modification agreement with Marketing Projects, Inc. during 1998 caused
the Company to record certain intangible assets. The amortization of these
intangible assets increased amortization expense for the quarter ended November
30, 1998.
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 operates three primary information technology computer systems,
which are a main frame, a network based order entry system, and a telephone
system. A year 2000 discussion of each of these systems is as follows.
The Company operates a main frame computer system that processes floral
orders, credit card transactions, and performs the Company's monthly billings to
its member florists. The year 2000 software upgrade has been installed, tested,
and is currently in use. The manufacturer of the software has provided the
Company with the year 2000 upgrade at no charge. In addition, all internally
developed software applications have been modified to be year 2000 compliant. At
this time, these modifications are being tested and are expected to be
operational by March 31, 1999. The cost to update these applications was less
than $50,000.
9
<PAGE> 12
The Company operates a network based order entry system. The manufacturers
operating system software is year 2000 compliant. However, not all internally
developed software applications have been modified to be year 2000 compliant.
The Company is in the process of modifying its internally developed software
applications and expects to complete the modifications no later than June 30,
1999. These internal programs are being modified by current employees and, as a
result, the cost of these modifications is not expected to be material.
The Company operates a telephone system which is integrated with the order
entry system discussed in the preceding paragraph. The Company recently learned
that a primary component of this system will need to be upgraded or replaced to
be year 2000 compliant. The company is in the process of evaluating whether to
upgrade or replace this component. Regardless of which option is selected by the
Company, this component is expected to be operational no later than, July 31,
1999, at a cost not to exceed $200,000.
Currently the company does not operate any significant non-information
technology systems.
Management believes the most reasonably likely worst case year 2000
scenario would occur if the order entry system failed, which would prevent
automated processing of floral orders. At this time, there is no indication that
this will happen. However, should this occur, the Company would be forced to
process incoming floral orders manually, until such time that the failure could
be corrected. This could cause labor costs to double or triple during the time
period while the system failure was being corrected.
The Company relies on two main vendors to operate the credit card portion
of its business. Both of these vendors have represented that they are year 2000
compliant. One vendor has provided the Company written certification of their
year 2000 readiness. The other vendor has provided the Company limited written
certification regarding a particular type of credit card terminal used by
merchants who process transactions with the Company.
Other significant vendors include certain third party service providers,
such as those supplying electricity, water or telephone service. If these
vendors experience year 2000 difficulties this could result in disruption of
service to the Company, and a shutdown of the Company's facilities could occur
for the duration of the disruption. None of these vendors have certified that
their systems are year 2000 compliant.
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.
10
<PAGE> 13
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)
<TABLE>
<S> <C>
Date: April 8, 1999 /s/ JAMES H. WEST
-----------------------------------------------------
James H. West
President and Chief
Financial Officer
</TABLE>
11
