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 SEPTEMBER 30, 2002 .
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-23026
RAPTOR INVESTMENTS, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
FLORIDA 22-3261564
----------------------------------- ------------------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION
OF INCORPORATION OR ORGANIZATION) NO.)
105 N.W. 13 AVENUE, POMPANO BEACH, FLORIDA 33069
--------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
954-695-0195
(ISSUER'S TELEPHONE NUMBER INCLUDING AREA-CODE)
(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
APPLICABLE ONLY TO CORPORATE ISSUERS
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON
STOCK AS OF THE LATEST PRACTICABLE DATE:
COMMON STOCK, $.01 PAR VALUE - 48,887,681 SHARES AS OF September 30, 2002.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES X NO
--- ---
RAPTOR INVESTMENTS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2002
RAPTOR INVESTMENTS, INC.
AND SUBSIDIARIES
CONTENTS
PAGE 1 CONDENSED BALANCE SHEETS AS OF SEPTEMBER 30, 2002
(CONSOLIDATED) (UNAUDITED) AND DECEMBER 31, 2001
(COMBINED) (UNAUDITED)
PAGE 2 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2002 (UNAUDITED)
PAGE 3 CONDENSED STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD
FROM JANUARY 1, 2001 TO SEPTEMBER 30, 2001 (UNAUDITED)
PAGE 4 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2002 (UNAUDITED)
PAGES 5 - 9 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
ASSETS
September 30, 2002 December 31, 2001
(Consolidated) (Combined)
(Unaudited) (Unaudited)
------------------ -----------------
CURRENT ASSETS
Cash $ 109,875 $ 105,134
Royalty receivable, net 20,924 29,280
Accounts receivable 732,347 16,303
Contract receivable - current portion 219,623 236,351
Exchange agreement -- 3,870
Inventory 203,976 --
Deposits 18,995 --
----------- -----------
Total Current Assets 1,305,740 390,938
----------- -----------
PROPERTY AND EQUIPMENT - NET 400,736 24,200
----------- -----------
OTHER ASSET
Building option 500,000 --
Contract receivable - long-term 343,719 448,600
Note receivable - stockholder 1,544,566 1,451,000
Due from stockholder -- 17,870
Loan receivable 9,500 1,800
Goodwill 1,195,044 --
----------- -----------
Total Other Assets 3,592,829 1,919,270
----------- -----------
TOTAL ASSETS $ 5,299,305 $ 2,334,408
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 711,708 $ 895,267
Loans payable - current 107,492 --
Loans payable - related parties 100,000 109,400
Stockholder loan 2,850 2,850
----------- -----------
Total Current Liabilities 922,050 1,007,517
----------- -----------
LONG-TERM LIABILITIES
Loans payable - long-term 209,931 --
Line of credit 2,825,000 --
----------- -----------
Total Long-Term Liabilities 3,034,931 --
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares
authorized, Class A, $.01 par value, 15 and none
shares issued and outstanding, respectively 1 --
Common stock, $.01 par value, 100,000,000 shares
authorized, 48,887,681 and 43,887,681 shares
issued and outstanding, respectively 488,878 438,878
Additional paid-in capital 9,258,737 8,778,739
Treasury stock (39,107) (39,107)
Accumulated deficit (8,187,485) (7,666,419)
Stock subscription receivable (178,700) (185,200)
----------- -----------
Total Stockholders' Equity 1,342,324 1,326,891
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,299,305 $ 2,334,408
=========== ===========
See accompanying notes to condensed consolidated financial statements.
1
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2002 2002
-------------------- --------------------
REVENUE $ 2,559,998 $ 2,589,998
COST OF GOODS SOLD 1,985,599 1,985,599
------------ ------------
GROSS PROFIT 574,399 604,399
------------ ------------
OPERATING EXPENSES
Selling expenses 154,360 154,360
Professional fees 83,170 608,494
Other general and administrative 301,610 444,615
------------ ------------
Total Operating Expenses 539,140 1,207,469
------------ ------------
INCOME (LOSS) FROM OPERATIONS 35,259 (603,070)
------------ ------------
OTHER INCOME (EXPENSE)
Interest income 50,312 151,347
Interest expense (60,944) (69,344)
------------ ------------
Total Other Income (Expense) (10,632) 82,003
------------ ------------
NET INCOME (LOSS) $ 24,627 $ (521,067)
============ ============
NET INCOME (LOSS) PER SHARE
Net income (loss) $ 24,627 $ (521,067)
Preferred stock dividends -- (45,000)
------------ ------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 24,627 $ (566,067)
============ ============
Net income (loss) per common share - basic and diluted $ 0.00 $ (0.01)
============ ============
Weighted average number of common shares
outstanding - basic and diluted 48,887,681 46,803,432
============ ============
See accompanying notes to condensed consolidated financial statements.
2
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
(FORMERLY PARAMARK ENTERPRISES, INC. AND SUBSIDIARIES)
CONDENSED STATEMENT OF CHANGES IN NET ASSETS
(LIQUIDATION BASIS)
FOR THE PERIOD FROM JANUARY 1, 2001 TO SEPTEMBER 30, 2001
(UNAUDITED)
Net assets in liquidation at December 31, 2000 $ 368,028
-----------
Loss from activities during the "wind-down"
period from January 1, 2001 through
September 30, 2001 (229,217)
Reserve for legal fees in connection with
outstanding legal proceedings (125,000)
-----------
Decrease in net assets (354,217)
-----------
Net assets in liquidation at September 30, 2001 $ 13,811
===========
Number of common shares outstanding 4,113,383
===========
Net assets in liquidation per common share $ .003
===========
See accompanying notes to condensed consolidated financial statements.
3
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (521,067)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock issued for services 290,000
Depreciation 12,229
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (716,044)
Inventory (203,976)
Accrued interest receivable (108,066)
Royalty receivable 8,356
Deposits (18,995)
Exchange agreement 3,870
Increase (decrease) in:
Accounts payable 283,999
-----------
Net Cash Used In Operating Activities (969,694)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from contract receivable 121,609
Purchases of property and equipment (388,765)
Proceeds from note receivable - stockholder 14,500
Building purchase option (500,000)
Goodwill (1,195,044)
Proceeds from loan receivable (7,700)
Proceeds on due from shareholder 17,870
-----------
Net Cash Used In Investing Activities (1,937,530)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on loan payable - related party (9,400)
Proceeds from issuance of preferred stock 90,000
Proceeds from line of credit 2,825,000
Proceeds from subscription receivable 6,500
Payments on notes payable (150,136)
Proceeds from stock options exercised 150,000
-----------
Net Cash Provided By Financing Activities 2,911,964
-----------
NET INCREASE IN CASH 4,740
CASH - BEGINNING OF PERIOD 105,135
-----------
CASH - END OF PERIOD $ 109,875
===========
NON-CASH FINANCING AND INVESTING ACTIVITIES:
As of September 30, 2002, $467,559 was reclassified from accounts payable to
loans payable.
See accompanying notes to condensed consolidated financial statements.
4
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally
accepted in The United States of America and the rules and regulations
of the Securities and Exchange Commission for interim financial
information. Accordingly, they do not include all the information
necessary for a comprehensive presentation of financial position and
results of operations.
It is management's opinion, however that all material adjustments
(consisting of normal recurring adjustments) have been made which are
necessary for a fair financial statements presentation. The results for
the interim period are not necessarily indicative of the results to be
expected for the year.
The September 30, 2001 financial statement is presented on the
liquidation basis of accounting because the Company had previously
adopted a plan of liquidation.
For further information, refer to the financial statements and footnotes
for the year ended December 31, 2001 included in the Company's Form
10-KSB.
(B) PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of
Raptor Investments, Inc. and its wholly owned subsidiaries LBI
Properties, Inc., and LBI Eweb Communities, Inc., for the nine months
ended September 30, 2002 and J&B Wholesale Produce, Inc. from July 2,
2002, the date of acquisition, through September 30, 2002 (collectively,
the "Company") (See Note 2(B)). All intercompany accounts and
transactions have been eliminated in consolidation.
(C) INVENTORY
Inventory consists of purchased produce (fruits and vegetables) and is
valued at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method.
(D) NEW ACCOUNTING PRONOUNCEMENTS
In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS 145 rescinds the provisions of SFAS No. 4 that
requires companies to classify certain gains and losses from debt
extinguishments as extraordinary items, eliminates the provisions of
SFAS No. 44 regarding transition to the Motor Carrier Act of 1980 and
amends the provisions of SFAS No. 13 to require that certain lease
modifications be treated as sale leaseback transactions. The provisions
5
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)
of SFAS 145 related to classification of debt extinguishments are
effective for fiscal years beginning after May 15, 2002. Earlier
application is encouraged. The Company does not believe the adoption of
this standard will have a material impact the financial statements.
In July 2002, the FASB issued SFAS No. 146, "Accounting for
Restructuring Costs." SFAS 146 applies to costs associated with an exit
activity (including restructuring) or with a disposal of long-lived
assets. Those activities can include eliminating or reducing product
lines, terminating employees and contracts and relocating plant
facilities or personnel. Under SFAS 146, the Company will record a
liability for a cost associated with an exit or disposal activity when
that liability is incurred and can be measured at fair value. SFAS 146
will require the Company to disclose information about its exit and
disposal activities, the related costs, and changes in those costs in
the notes to the interim and annual financial statements that include
the period in which an exit activity is initiated and in any subsequent
period until the activity is completed. SFAS 146 is effective
prospectively for exit or disposal activities initiated after December
31, 2002, with earlier adoption encouraged. Under SFAS 146, a company
cannot restate its previously issued financial statements and the new
statement grandfathers the accounting for liabilities that a company had
previously recorded under Emerging Issues Task Force Issue 94-3. The
Company does not believe the adoption of this standard will have a
material impact the financial statements.
NOTE 2 BUSINESS COMBINATIONS
(A) ACQUISITION OF REAL ESTATE AND INTERNET MARKETING COMPANIES
Effective January 7, 2002, the Company acquired LBI Properties, Inc. and
LBI Eweb Communities, Inc. by issuing 19,974,298 and 19,800,000 common
shares of the Company's stock for all of the outstanding common stock of
LBI Properties, Inc. and LBI Eweb Communities, Inc., respectively. The
merger has been accounted for as a business combination of entities
under common control because all of the entities had common ownership
interests, and accordingly, the condensed consolidated financial
statements have been prepared to include the combined results of
operations, financial position and cash flows of the Company and these
subsidiaries for all the period presented. The Companies were not in
operations during the period ended September 30, 2001 and therefore
comparative operating results and cash flows have not been presented.
(B) ACQUISITION OF PRODUCE COMPANY
On June 21, 2002, Raptor Investments, Inc. ("Raptor") entered into a
stock purchase agreement to acquire J&B Wholesale produce, Inc. ("J&B").
Under the terms of the agreement, which closed July 2, 2002, Raptor
acquired all the issued and outstanding common stock of J&B in exchange
for cash of $2,325,000 (See Note 5). Contemporaneously, Raptor entered
6
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)
into a one-year lease of the cold storage facility and executive offices
occupied by J&B at $6,500 per month and paid $500,000 for a one-year
option to purchase the facility at a sale price of $875,000. If the
option is exercised, the option price of $500,000 will be credited
toward the sale price.
The J&B acquisition was recorded under the purchase method of accounting
and accordingly, the results of operations and cash flows of J&B from
the acquisition date of July 2, 2002 are included in the accompanying
condensed consolidated financial statements. The purchase price of
$2,325,000 was allocated to the assets acquired and liabilities assumed
based on the fair market values at the date of acquisition. The fair
market value of assets acquired and liabilities assumed is summarized as
follows:
Current assets $ 733,813
Property and equipment 387,714
Other assets 8,429
Goodwill 1,195,044
---------------
$ 2,325,000
===============
The following unaudited pro forma financial information for the Company
gives effect to the J&B acquisition as if it occurred on January 1,
2002. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of
operations which actually would have resulted had the acquisition
occurred on the date indicated, or which may result in the future.
Net revenue $ 8,055,231
Net loss $ (103,231)
Net loss per share - basic and diluted $ (0.00)
Shares used in per calculation - basic and diluted 46,803,432
NOTE 3 LOANS PAYABLE - RELATED PARTIES
During 2002, the Company became indebted to a related party in the
amount of $100,000 as a result of the business combination discussed in
Note 2.
NOTE 4 STOCK ISSUANCES
(A) COMMON STOCK
During April 2002, the Company issued 3,000,000 common stock options at
an exercise price of $0.05 per share to consultants for services valued
at $90,000. During May 2002, the consultants exercised all 3,000,000
options for aggregate cash proceeds of $150,000.
7
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)
During April 2002, the Company issued 2,000,000 shares of common stock
to an attorney for legal services having a fair value of $200,000.
(B) PREFERRED STOCK
During 2002, the Company designated 15 shares of preferred stock as
"Class A Preferred" with the following preferences: annual dividend of
$12,000 payable quarterly; convertible in whole only into one half of
one percent of the total number of issued and outstanding common shares
of the Company on the date of conversion limited to a maximum conversion
of 375,000 common shares.
During June 2002, the Company issued 15 shares of Class A Preferred
stock for cash of $90,000.
NOTE 5 LINE OF CREDIT
In order to effectuate the purchase of J&B and an option to purchase a
building, the Company entered into an agreement and signed a promissory
note for a line of credit in the amount of $2,825,000, which shall cap
at $2,000,000 when the principal balance is reduced to that amount. The
note is due and payable in July 2005, but may be extended at the option
of the Company if, on the original maturity date, the principal balance
is equal to or less than $1,500,000. The note bears interest at the rate
of LIBOR (1.77% at September 30, 2002) plus 10% per annum payable
monthly. The agreement also requires that the principal amount owed on
the note be reduced by the greater of (1) $250,000 per annum commencing
after the first full calendar year following execution of the note, or
(2) 50% of J&B's net operating earnings per fiscal quarter commencing
with the first full fiscal quarter following execution of the note (See
Note 2(B)).
NOTE 6 SEGMENT INFORMATION
The Company operates in two business segments, Produce and Other. The
Company operates the Produce segment through its wholly owned subsidiary
J&B Wholesale Produce, Inc. ("J&B"). J&B receives its revenues from
selling produce wholesale to restaurants and stores. Raptor Investments,
Inc., LBI Properties, Inc. and LBI Eweb Communities, Inc. do not meet
the quantitative thresholds for a reportable segment and are therefore
included in the Other segment. The accounting policies of the segments
are the same as described in the summary of significant accounting
policies. The Company evaluates segment performance based on income from
operations. All intercompany transactions between segments have been
eliminated. As a result, the components of operating loss for one
segment may not be comparable to another segment. The following is a
summary of the Company's segment information for the period ended
September 30, 2002:
8
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)
Produce Other Total
------------- -------------- -------------
Revenues $ 2,539,998 $ 50,000 $ 2,589,998
Segment profit (loss) (139,971) (381,096) (521,067)
Total assets 2,416,560 2,882,745 5,299,305
Additions to long-lived assets 388,765 - 388,765
Depreciation and amortization 10,789 1,440 12,229
NOTE 7 GOING CONCERN
As shown in the accompanying condensed consolidated financial
statements, the Company incurred a net loss of $521,067, a negative cash
flow from operations of $969,694 and has an accumulated deficit of
$8,187,485. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
Management's plan for the Company in regards to these matters is to
continue to grow the produce operations of the business through the J&B
Produce subsidiary, which management believes will provide the necessary
revenue and earnings to enhance shareholder value. Management intends to
focus the business on profitable core customers and reduce costs using
inventory controls. The Company is also actively seeking to refinance
its long-term debt on terms more favorable to the Company. Management
believes that the actions presently taken to reduce operating costs and
obtain refinancing provide for the Company to operate as a going
concern.
9
PART I ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
FORWARD LOOKING STATEMENTS
--------------------------
When used in this Quarterly Report, the words or phrases "will likely result",
"are expected to", "will continue", "is anticipated", "estimate", "projected",
"intends to" or similar expressions are intended to identify "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Company's forward-looking statements reflect the company's best
judgment based on current information and are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
expressed in, or implied by, these statements. Readers are cautioned that they
should not place undue reliance on any forward-looking statements because such
statements speak only as of the date they are made.
PLAN OF OPERATION
-----------------
The Company plans to develop into a holding company through the acquisition of
various business operations. The Company closed on the Acquisition of J&B
Wholesale Produce, Inc. on July 2, 2002 and the Acquisition was reported on Form
8-K, which form is incorporated herein and made a part hereof by reference.
The Company completed the acquisition of LBI E Web Communities, Inc. LBI E Web
is an Internet related holding company that currently owns the following five
domain names: FinanceItOnTheWeb.com (a financial services directory site),
Brassbulls.com (a public relations and financial information site),
MyEnumber.com (an online address book and one stop Rolodex), Homewaiter.com (a
food delivery and information site), and Mimesaro.com (a Spanish food delivery
and information site). The Brassbulls.com website was completed in April 2002
and is fully operational. LBI E Web plans to create a network of self-developed
websites covering a diverse universe of subjects.
The Company continues to pursue business consulting contracts from publicly
traded and privately held companies. The Company plans to provide consultation
in various areas including: mergers and acquisitions; venture capital; public
relations; restructuring and financing. The Company plans to market its services
to publicly traded and privately held companies through referrals and
advertising in various business publications.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2002, the Company had a stockholder's equity of $5,299,305.
As of September 30, 2002 the Company incurred net profit of $24,627. The Company
plans to generate revenue in the future by retaining business consulting clients
in the private and public sector. In addition, the Company plans to seek the
acquisition of additional income producing assets such as J&B Wholesale Produce,
Inc.
10
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-------------------------
In May of 2002, the Company (through LBI Group, Inc.) was named as a Defendant
in a Civil Action brought by John Lary in the Circuit Court of Madison County,
Alabama. The suit alleged a violation under the Telephone Consumer Protection
Act of 1991, in that the Company, in concert with other individuals and
corporations, is alleged to have delivered an unsolicited facsimile
communication to one person. The Company has filed responsive pleadings in the
suit denying any wrongdoing. The management of the Company deems the amount in
controversy to be in-material to the business of the Company.
From time to time, the Company is involved as plaintiff or defendant in various
legal proceedings arising in the normal course of its business. While the
ultimate outcome of these various legal proceedings cannot be predicted with
certainty, it is the opinion of management that the resolution of these legal
actions should not have a material effect on the Company's financial position,
results of operations or liquidity.
There was no litigation or liability related to any litigation either threatened
or actual assumed by the Company as a result of the acquisition of J&B Wholesale
Produce, Inc.
J&B Wholesale Produce Inc. has a dispute with the former CPA firm of J&B, for an
unpaid invoice in the amount of $130.76. Under the terms of the Acquisition
Agreement between Gennaro Mugnano and the Company, Mr. Mugnano was to provide
for the payment of all accounts receivable of J&B incurred prior to July 1,
2002. The CPA firm, Scutillo, Blake, McMillan & Joyce, PA, maintains that the
$130.76 is due and payable. Mr. Mugnano disputes the debt and has not made
payment.The address of the firm Scutillo, Blake, McMillan & Joyce, PA is 8000
North University Drive, Fort Lauderdale, Florida 33321-2118
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-------------------------------------------------
On June 27, 2002 the Company issued fifteen (15) shares of Preferred Stock,
Class A, to Mr. Christian T. Chiari in exchange for certain financial consulting
services provided to the Company by Mr. Chiari, including the acquisition by Mr.
Chiari of funding from Gelpid Associates, LLC in order that the Company could
close on it's acquisition of J&B Wholesale Produce, Inc. The acquisition of J&B
Wholesale Produce, Inc., and a description of the transaction between the
Company and Gelpid Associates LLC is contained within the 8-K filing of the
Company which is incorporated herein and made a part hereof by reference.
The Preferred Stock, Class A, has an annual dividend of $12,000 per share,
payable in equal quarterly installments beginning with the date of issue. The
Preferred Stock, Class A is convertible, in whole, but not in part, into so many
shares of the Common Stock of the Company as equals one half of one percent
(0.5%) of the total number of shares of issued and outstanding Common Stock of
the Company on the date of conversion. However, no shares of Preferred Stock,
Class A, is convertible into more than 375,000 Common shares. The Company failed
to make the quarterly dividend payment on the Class A Preferred Stock due
September 30, 2002.
11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
---------------------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------
Not Applicable
ITEM 5. OTHER INFORMATION
The Company completed the acquisition of J&B Wholesale Produce, Inc. ("J&B") on
July 1, 2002. The Company acquired 100% of the issued and outstanding common
stock Of J&B, a privately held Florida Corporation, from Gennaro Mugnano in
exchange for $ 2,325,000. J&B is engaged in the wholesale produce business in
Florida. Pursuant to The agreement between Gennaro Mugnano and the Company, the
Company acquired 1000 shares of J&B Common Stock, and J&B became a wholly-owned
subsidiary of the Company. The financial information reported by the Company
herein includes the results of operations from J&B for the period July 1, 2002
to September 30, 2002.
In order to effectuate the purchase, Raptor and J & B borrowed $2,825,000. from
Gelpid Associates LLC ("Gelpid") a Florida Limited Liability Company. A
promissory note ("Note") in the amount of $2,825,000. was executed. The Note has
a term of three years, and bears interest at the rate of LIBOR plus ten percent,
adjusted monthly. The minimum monthly payment due under the Note is accrued
interest only. There is no prepayment penalty under the Note.
The Note is secured by the machinery, equipment, furniture, fixtures, inventory,
accounts receivable, work in progress, , motor vehicles, computer hardware and
computer software of J & B. UCC-1 Financing Statements have been filed by Gelpid
and Gelpid has taken possession of the titles to all of the motor vehicles owned
by J&B as per the Terms of the Loan Agreement between Raptor and Gelpid.
Contemporaneously with the execution of the Note, Raptor and J & B entered into
a loan agreement with Gelpid which permits Gelpid to either appoint one member
to the Board of Directors of Raptor and J & B, or at the election of Gelpid to
appoint an observer to be present at the meetings of the Board of Directors of
Raptor and J & B.
The loan agreement requires, in addition to the minimum monthly interest
payments under the Note, that the principal balance due under the Note be
reduced by an amount equal to the greater of $250,000. per annum or 50% of net
operating earnings of J & B per fiscal quarter.
As of September 30, 2002, the Company had not made any payments to reduce the
principal Balance under the Note. Gelpid had not appointed any member to the
Board of the Company And had not appointed any Board observer as of September
30, 2002.
-------------------------
Not Applicable
12
ITEM 6. EXHIBITS
--------------------------
(a) EXHIBITS.
The following exhibits are filed herewith.
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
(a) Financial Data Schedule
--------------------
The Company filed a current report on Form 8-K on March 27, 2002 regarding a
change in accounting firms.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
RAPTOR INVESTMENTS, INC.
DATED: November 29, 2002
BY: /S/ PAUL LOVITO
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PAUL LOVITO,
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
BY: /S/ MATTEW LOVITO
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MATTHEW LOVITO,
TREASURER AND CHIEF FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING OFFICER)
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