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 JUNE 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
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(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION
OF INCORPORATION OR ORGANIZATION) NO.)
105 N.W. 13 AVENUE, POMPANO BEACH, FLORIDA 33069
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(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 - 48,897,681 SHARES AS OF June 15, 2002.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES X NO
--- ---
RAPTOR INVESTMENTS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF June 30, 2002
RAPTOR INVESTMENTS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2002
RAPTOR INVESTMENTS, INC.
AND SUBSIDIARIES
CONTENTS
PAGE 1 CONDENSED BALANCE SHEETS AS OF JUNE 30, 2002 (CONSOLIDATED)
(UNAUDITED) AND DECEMBER 31, 2001 (COMBINED) (UNAUDITED)
PAGE 2 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
THREE AND SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)
PAGE 3 CONDENSED STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD
FROM JANUARY 1, 2001 TO JUNE 30, 2001 (UNAUDITED)
PAGE 4 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX
MONTHS ENDED JUNE 30, 2002 (UNAUDITED)
PAGES 5 - 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
ASSETS
June 30, 2002 December 31, 2001
(Consolidated) (Combined)
(Unaudited) (Unaudited)
-------------- -----------------
CURRENT ASSETS
Cash $ 35,538 $ 105,134
Royalty receivable, net 20,789 29,280
Accounts receivable 16,717 16,303
Contract receivable - current portion 205,261 236,351
Exchange agreement 135 3,870
Deposits 16,470 --
----------- -----------
Total Current Assets 294,910 390,938
----------- -----------
PROPERTY AND EQUIPMENT - NET 24,200 24,200
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OTHER ASSET
Contract receivable 343,719 448,600
Note receivable - stockholder 1,508,616 1,451,000
Due from shareholder 14,800 17,870
Loan receivable 16,200 1,800
----------- -----------
Total Other Assets 1,883,335 1,919,270
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TOTAL ASSETS $ 2,202,445 $ 2,334,408
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 479,276 $ 895,267
Loans payable 313,823 --
Loans payable - related parties 113,400 109,400
Shareholder loan 4,250 2,850
Deferred revenue 20,000 --
----------- -----------
Total Current Liabilities 930,749 1,007,517
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STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued -- --
Preferred stock - Class A, $.01 par value, 15 shares authorized and issued 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 9,212,736 8,778,739
Treasury stock (39,107) (39,107)
Accumulated deficit (8,212,112) (7,666,419)
Stock subscription receivable (178,700) (185,200)
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Total Stockholders' Equity 1,271,696 1,326,891
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,202,445 $ 2,334,408
=========== ===========
See accompanying notes to condensed consolidated financial statements.
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RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Three For the Six
Months Ended June Months Ended
30, 2002 June 30, 2002
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REVENUE $ 30,000 $ 30,000
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OPERATING EXPENSES
Professional fees 221,250 525,324
Other general and administrative 101,065 143,005
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Total Operating Expenses 322,315 668,329
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LOSS FROM OPERATIONS (292,315) (638,329)
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OTHER INCOME (EXPENSE)
Interest income 85,351 101,035
Interest expense (5,000) (8,400)
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Total Other Income 80,351 92,635
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NET LOSS $ (211,964) $ (545,694)
============ ============
NET LOSS PER SHARE
Net loss $ (211,964) $ (545,694)
Preferred stock dividends (45,000) (45,000)
------------ ------------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $ (256,964) $ (590,694)
============ ============
Net loss per common share - basic and diluted $ (0.00) $ (0.01)
============ ============
Weighted average number of common shares outstanding - basic and diluted 47,579,989 44,205,802
============ ============
See accompanying notes to condensed consolidated financial statements.
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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 JUNE 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 June 30, 2001 (169,124)
Reserve for legal fees in connection with outstanding legal proceedings (50,000)
-----------------
Decrease in net assets (219,124)
Net assets in liquidation at June 30, 2001 $ 148,904
=================
Number of common shares outstanding 3,613,383
=================
Net assets in liquidation per common share $ .04
=================
See accompanying notes to condensed consolidated financial statements.
-3-
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(545,694)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock issued for services 483,998
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (414)
Accrued interest receivable (72,116)
Royalty receivable 8,491
Deposits (16,470)
Stock subscription receivable 6,500
Exchange agreement 3,735
Increase (decrease) in:
Accounts payable 51,568
Deferred revenue 20,000
---------
Net Cash Used In Operating Activities (60,402)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from contract receivable 135,971
Proceeds from note receivable - stockholder 14,500
Proceeds from loan receivable (14,400)
Proceeds on due from shareholder 3,070
---------
Net Cash Provided By Investing Activities 139,141
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan payable - related party 4,000
Payments on loans payable (153,736)
Proceeds from note receivable - stockholder 1,400
---------
Net Cash Provided By Financing Activities (148,336)
---------
NET DECREASE IN CASH (69,597)
CASH - BEGINNING OF YEAR 105,135
---------
CASH - END OF YEAR $ 35,538
=========
NON-CASH FINANCING AND INVESTING ACTIVITIES:
As of June 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
JUNE 30, 2002
7
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) BASIS OF PRESENTATION
The accompanying unaudited 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 June 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
In 2002, consolidated financial statements for the period ended June 30,
2002 include the accounts of Raptor Investments, Inc. (Florida) and its
wholly owned subsidiaries LBI Properties, Inc. and LBI Eweb Communities,
Inc., after elimination of all significant intercompany balances and
transactions.
NOTE 2 BUSINESS COMBINATION
Effective January 7, 2002, the Company acquired LBI Properties, Inc. and
LBI Eweb Communities, Inc. by issuing 19,974,298 and 19,800,000 shares,
respectively of its common 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 consolidated financial statements have
been prepared to include the combined results of operations, financial
position and cash flows of the Company and its subsidiaries for all the
period presented. The Companies were not in operations during the period
ended June 30, 2001 and therefore comparative operating results and cash
flows have not been presented.
-5-
NOTE 3 LOANS PAYABLE - RELATED PARTIES
During 2002, a related party loaned the Company $5,000. The loan is
non-interest bearing and due on demand. The Company also became indebted
to another related party in the amount of $100,000 as a result of the
business combination discussed in Note 2.
NOTE 4 STOCK ISSUANCES
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.
During April 2002, the company issued 2,000,000 of common stock to an
attorney for legal services having a fair value of $200,000.
NOTE 5 GOING CONCERN
As shown in the accompanying consolidated financial statements, the
Company incurred a net loss of $545,694 from operations, a negative cash
flow from operations of $60,402 and a working capital deficiency of
$635,839. 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 seek
to become a diversified holding company with a primary focus on providing
corporate financial consulting services to various business entities and
the acquisition, management, sale and lease of real estate. The Company
will also seek to enhance shareholder value through the acquisition of
various private companies.
NOTE 6 SUBSEQUENT EVENTS
(A) ACQUISITION
In July 2002, the Company entered into a stock purchase agreement whereby
it acquired 100% of the issued and outstanding common stock of J&B
Wholesale Produce, Inc., ("J&B") a Florida corporation engaged in the
wholesale produce industry, in exchange for cash of $2,325,000.
Concurrently, the Company entered into a lease with option to purchase
("Lease") with individuals to lease the cold storage facility and
executive offices occupied by the Company from the individuals for a
period of one year for $6,500 per month. The Company also paid $500,000
for a one-year option to purchase the cold storage facility which is the
subject of the Lease at a purchase price of $875,000. If the Company
exercises the option, the option price of $500,000 will be credited
toward the sale price.
-6-
(B) NOTE PAYABLE
In order to effectuate the purchase of J&B, the Company borrowed
$2,825,000 in the form of a promissory note, from a Florida limited
liability company. The note has a term of three years and bears interest
at the rate of LIBOR plus 10% adjusted monthly. The note is secured by
the assets of J&B.
(C) DISPOSAL
In February 2002, the Company entered into a memoranda of understanding
with Wolfstone Corporation to transfer 100% of the Company's interest in
LBI Properties, Inc. As of the date of filing this report, the transfer
agreement has been terminated.
-7-
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 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.
In addition to its consulting services, the Company plans to develop the Company
into a holding company through the acquisition of various business operations.
In March 2002 the Company entered into a Memorandum of Understanding to acquire
a wholesale produce distribution company. 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.
-8-
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2002, the Company had a stockholder's equity of $2,334,408. As
of June 2002 the Company incurred a loss of $638,329.00. The Company plans to
reduce losses 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.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-------------------------
In 2000, the Company received discrimination and wrongful termination claims
brought by two separate employees (Vargas and DeSantiago) employed at the
Company's bakery facility in El Cajon, California. These claims are currently
pending in the California Department of Fair Employment and Housing. The Company
has fully responded to all requests for information and has formally denied
liability. The investigation regarding these claims is currently pending.
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.
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.
-9-
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
---------------------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------
Not Applicable
ITEM 5. OTHER INFORMATION
-------------------------
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
----------------------------------------
(a) EXHIBITS.
The following exhibits are filed herewith.
EXHIBIT NUMBER DESCRIPTION
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Financial Data Schedule
(b) REPORTS ON FORM 8-K.
--------------------
The Company filed a current report on Form 8-K on March 27, 2002 regarding a
change in accounting firms.
The Company filed a current report on Form 8-K on July 6, 2002 regarding the
Acquisition of J&B Wholesale Produce, Inc.
-10-
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: August 14, 2002
BY: /S/ PAUL LOVITO
------------------
PAUL LOVITO,
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
BY: /S/ MATTEW LOVITO
------------------------------------
MATTHEW LOVITO,
TREASURER AND CHIEF FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING OFFICER)
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