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 MARCH
31, 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.)
2855 NORTH UNIVERSITY DRIVE ROAD, SUITE 320, CORAL SPRINGS, FL 33065
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
954-346-5799
(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 MAY 14, 2002.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES X NO
--- ---
RAPTOR INVESTMENTS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2002
RAPTOR INVESTMENTS, INC.
AND SUBSIDIARIES
CONTENTS
PAGE 1 BALANCE SHEETS AS OF MARCH 31, 2002 (CONSOLIDATED) (UNAUDITED)
AND DECEMBER 31, 2001 (COMBINED) (UNAUDITED)
PAGE 2 CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 2002
PAGE 3 STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD FROM
JANUARY 1, 2001 TO MARCH 31, 2002
PAGE 4 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS
ENDED MARCH 31, 2002
PAGES 5-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
BALANCE SHEETS
MARCH 31, 2002
ASSETS
------
March 31, 2002 December 31, 2001
(Consolidated) (Combined)
CURRENT ASSETS (Unaudited) (Unaudited)
----------------------- ----------------------
Cash $ 1,548 $ 105,134
Royalty receivable, net 20,826 29,280
Accounts receivable 16,261 16,303
Contract receivable - current portion 212,135 236,351
Exchange agreement - 3,870
Deposits 16,470 -
----------------------- ----------------------
Total Current Assets 267,240 390,938
----------------------- ----------------------
PROPERTY AND EQUIPMENT - NET 24,200 24,200
----------------------- ----------------------
OTHER ASSET
Contract receivable 448,600 448,600
Note receivable - stockholder 1,438,000 1,451,000
Due from shareholder - 17,870
Loan receivable 1,800 1,800
----------------------- ----------------------
Total Other Assets 1,888,400 1,919,270
----------------------- ----------------------
TOTAL ASSETS $ 2,179,840 $ 2,334,408
------------
======================= ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Overdraft $ 2,203 $ -
Accounts payable and accrued expenses 967,225 895,267
Loans payable - related parties 113,000 109,400
Shareholder loan 4,250 2,850
----------------------- ----------------------
Total Current Liabilities 1,086,678 1,007,517
----------------------- ----------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized,
none issued
Common stock, $.01 par value, 100,000,000 shares authorized, 43,887,681
and 43,887,681 shares
issued and outstanding , respectively 438,878 438,878
Common stock to be issued, 2,000,000 shares 20,000 -
Additional paid-in capital 8,958,739 8,778,739
Treasury stock (39,107) (39,107)
Accumulated deficit (8,000,148) (7,666,419)
Stock subscription receivable (185,200) (185,200)
Less: stock issued for future services (100,000) -
----------------------- ----------------------
Total Stockholders' Equity 1,093,162 1,326,891
----------------------- ----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,179,840 $ 2,334,408
------------------------------------------ ======================= ======================
See accompanying notes to consolidated financial statements.
1
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2002
REVENUE $ -
----------------------
OPERATING EXPENSES
Professional fees 304,074
Other general and administrative 41,940
----------------------
Total Operating Expenses 346,014
----------------------
LOSS FROM OPERATIONS (346,014)
OTHER INCOME (EXPENSE)
Interest income 15,684
Interest expense (3,400)
----------------------
Total Other Income 12,284
----------------------
NET LOSS $ (333,730)
--------
======================
Net loss per common share - basic and diluted $ -
======================
Weighted average number of common shares outstanding - basic and diluted 40,794,124
======================
See accompanying notes to consolidated financial statements.
2
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
(FORMERLY PARAMARK ENTERPRISES, INC. AND SUBSIDIARIES)
STATEMENT OF CHANGES IN NET ASSETS
(LIQUIDATION BASIS)
FOR THE PERIOD FROM JANUARY 1, 2001 TO MARCH 31, 2001
Net assets in liquidation at December 31, 2000 $ 368,028
====================
Loss from activities during the "wind-down" period from January 1, 2001
through March 31, 2001 (135,899)
Reserve for legal fees in connection with outstanding legal proceedings (50,000)
--------------------
Decrease in net assets (185,899)
Net assets in liquidation at March 31, 2001 $ 182,129
====================
Number of common shares outstanding 3,613,383
====================
Net assets in liquidation per common share $ .05
====================
See accompanying notes to consolidated financial statements.
3
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (333,730)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock issued for services 100,000
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable 8,496
Accrued interest receivable (15,684)
Other current assets 1,400
Exchange agreement 3,870
Increase (decrease) in:
Overdraft 2,203
Accounts payable 71,959
----------------------
Net Cash Used In Operating Activities (161,486)
----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from contract receivable 39,900
----------------------
Net Cash Provided By Investing Activities 39,900
----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan payable - related party 5,000
Proceeds from note receivable - stockholder 13,000
----------------------
Net Cash Provided By Financing Activities 18,000
----------------------
NET DECREASE IN CASH (103,586)
CASH - BEGINNING OF YEAR 105,134
----------------------
CASH - END OF YEAR $ 1,548
------------------ ======================
See accompanying notes to consolidated financial statements.
4
RAPTOR INVESTMENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
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(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 March 31, 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 March
31, 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 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 3.
NOTE 3 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.
7
NOTE 4 GOING CONCERN
------ -------------
As shown in the accompanying consolidated financial statements, the
Company incurred a net loss of $333,730 from operations, a negative
cash flow from operations of $161,486 and a working capital deficiency
of $819,438. 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 5 SUBSEQUENT EVENTS
--------------------------
(A) ACQUISITION
---------------
In March 2002, the Company entered into a memoranda of understanding to
acquire a wholesale produce distribution company. As of the day of
filing this report, the acquisition agreement has not been finalized.
(B) 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 not been finalized.
(C) 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. The
portion of the $200,0000 attributable to future services, in the amount
of $100,000, has been deferred and is classified in the stockholder's
equity section of the balance sheet.
8
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's operations for 2001 consisted of "winding down" the Company's
previous operations. In September of 2001 the Company changed management and the
focus of the Company's operations. 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. As
of March 31,2002 the Company had been unable to secure any contracts. 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 is currently seeking
capital to complete this acquisition and to date has been unable to procure
financing. Due to the Company's lack of capital, there can be no assurances that
it will be able to complete the acquisition of the wholesale produce
distribution company.
In January 2002, the Company closed on the acquisition of LBI Properties, Inc.
LBI Properties is an early stage real estate holding company. LBI Properties
currently owns a residential lot in Cape Coral, Florida, and has identified two
additional residential lots that it intends to acquire in the near future. In
addition to the foregoing, LBI Properties is seeking acquisitions in the
following areas: income producing commercial and residential properties,
residential development projects, leisure and destination properties, and real
estate service operations. The Company plans to fund the acquisition of real
estate through mortgage financing, seller financing and the issuance of its
stock. In February 2002, the Company entered into an agreement to transfer its'
100% interest in LBI Properties to Wolfstone Corporation. As a result of the
agreement, the Company will own 9,000,000 shares or 74% of Wolfstone's issued
and outstanding common stock. Wolfstone Corporation currently trades on the PINK
SHEETS under the symbol WFST. The acquisition is expected to be completed in the
second quarter of 2002.
In addition to the acquisition of LBI Properties, 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. LBI E Web plans
to create a network of self-developed websites covering a diverse universe of
subjects.
RESULTS OF OPERATIONS.
From inception to December 2000, the Company was engaged in the wholesale bakery
business. In December 2000, the Company entered into an asset purchase agreement
with Rich Products Manufacturing Corporation (Rich Products) through which the
Company sold to Rich Products a majority of the assets comprising its bakery
operations in El Cajon, California. The Rich Products agreement provided for a
purchase price aggregating $2,182,750 inclusive of a payment for inventory. The
aggregate purchase price will be paid as follows: $193,950 on October 16, 2000,
$1,000,000 on December 15, 2000, and $1,000,000 payable in semiannual
installments over a period of four (4) years. Rich Products is also assuming
approximately $285,000 in equipment lease related debt.
Since December 2000, the Company had been "unwinding" the previous operations,
defending any outstanding litigation and resolving any outstanding debts. In
September of 2001 the Company changed management and the focus of the Company's
operations. 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.
Revenues for the first quarter ended March 31, 2002 remained at $0 as they were
for the same period the previous year. The lack of revenues is a result of the
sale of the majority of the Company's assets to Rich Products in December 2000
and the Company's inability to secure any business consulting contracts. The
Company incurred operating losses of $346,014 in the first quarter ended March
31, 2002. These losses were a result of professional fees associated with the
sale of the Company's previous operations, the change in management and a change
in the focus of the Company's operations.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2002, the Company had a stockholder's equity of $1,093,162. As
of March 2002 the Company incurred a loss of $333,730. 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 income producing assets in exchange for its securities.
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 January 2001, the Company and certain of its officers were named as a
defendant in a civil action filed by Pensabene International, Inc. (the
"Plaintiff") in the Superior Court for the State of California. The claim is for
damages for misappropriation of trade secrets, trade libel, breach of
confidentiality, breach of fiduciary duty, tortious interference with economic
relations, breach of contract, common law palming off, unfair business practices
and a violation of state antitrust laws. This action arose resulted from the
Company's employment of Kandy Konn, a former employee and consultant of the
Plaintiff. The Company believes these claims are frivolous and without merit,
and the Company intends to vigorously defend this action. On February 8, 2002
the Company and certain of its former officers received a jury verdict in favor
of all defendants on all claims.
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
-------------------------------------------------
None
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
-------------- -----------
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
--------------------
The Company filed a current report on Form 8-K on January 7, 2002 regarding the
closing of the acquisitions of LBI Properties, Inc. and LBI E Web Communities,
Inc.
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: MAY 15, 2002 BY: /S/ PAUL LOVITO
------------------
PAUL LOVITO,
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
BY: /S/ MATTEW LOVITO
------------------------------------
MATT LOVITO,
TREASURER AND CHIEF FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING OFFICER)