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, 2001 .
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 0-23026
RAPTOR INVESTMENTS, INC.
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(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-3261564
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(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
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(ISSUER'S TELEPHONE NUMBER INCLUDING AREA-CODE)
ONE HARMON PLAZA, SECAUCUS, NEW JERSEY 07094
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(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 - 4,113,383 SHARES AS OF OCTOBER 14, 2001.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES X NO ___
-1-
RAPTOR INVESTMENTS, INC.
LIQUIDATION BASIS
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS PAGE
----------------------------- ----
Financial Statements - Liquidation Basis
Consolidated Statement of Net Assets in Liquidation
as of December 31, 2001. 3
Consolidated Statement of Net Assets in Liquidation
as of September 30, 2001. 4
Consolidated Statement of Changes in Net Assets in
Liquidation for the period from January 1, 2001
to September 30, 2001. 5
Notes to Financial Statements 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND CHANGES IN NET ASSETS
(LIQUIDATION BASIS) 8
PART II
Item 1 Legal Proceedings 12
Item 2 Changes in Securities 12
Item 3 Defaults upon Senior Securities 12
Item 4 Submission of Matters to a Vote
of Security Holders 12
Item 5 Other Information 12
Item 6 Exhibits and Reports on Form 8-K 13
SIGNATURES 14
-2-
PART I - FINANCIAL INFORMATION
RAPTOR INVESTMENTS, INC.
(FORMERLY PARAMARK ENTERPRISES, INC.)
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
DECEMBER 31, 2000
(AUDITED)
ASSETS
CASH $ 151,734
ACCOUNTS RECEIVABLE 47,114
OTHER ASSETS 58,676
CONTRACT RECEIVABLE 825,000
-----------
TOTAL CURRENT ASSETS 1,082,524
LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 714,496
-----------
NET ASSETS IN LIQUIDATION $ 368,028
===========
SEE NOTES TO FINANCIAL STATEMENTS
-3-
RAPTOR INVESTMENTS, INC.
(FORMERLY PARAMARK ENTERPRISES, INC.)
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
SEPTEMBER 30, 2001
(UNAUDITED)
Assets
Cash $ 17,388
Accounts Receivable 24,106
Other Assets 35,333
Contract Receivable 750,942
-----------
Total Assets 827,769
Liabilities
Accounts Payable and Accrued Expenses 688,958
Reserve for Legal Fees 125,000
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Total Liabilities 813,958
Net Assets in Liquidation $ 13,811
===========
SEE NOTES TO FINANCIAL STATEMENTS
-4-
RAPTOR INVESTMENTS, INC.
(FORMERLY PARAMARK ENTERPRISES, INC.)
STATEMENT OF CHANGES IN NET ASSETS
(LIQUIDATION BASIS)
(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)
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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 NOTES TO FINANCIAL STATEMENTS
-5-
RAPTOR INVESTMENTS, INC.
(FORMERLY PARAMARK ENTERPRISES, INC.)
Notes to Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
On December 15, 2000, the Company consummated an asset purchase agreement
(the "Rich Products Agreement") with Rich Products, pursuant
to which the Company sold its bakery operations located in El Cajon,
California representing a majority of the Company's operating
assets. The Rich Products Agreement provides for a purchase price
aggregating $2,193,950 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 also assumed
approximately $285,000 in equipment lease related debt. In addition,
pursuant to the terms of the Rich Products Agreement, Rich Products
entered into consulting agreements with Charles Loccisano, Alan Gottlich
and Wayne Sorensen, the Company's Chairman and CEO, President and
CFO, and Bakery General Manager, respectively. These consulting agreements
provided for compensation to Messrs. Loccisano, Gottlich and Sorensen over
a four year term in an annual amount of $50,000, $30,000 and $20,000,
respectively.
On December 15, 2000, the Company consummated an asset purchase and sale
agreement (the "Brooks Street Agreement") with Brooks Street Companies,
Inc. ("Brooks Street"), pursuant to which the Company sold the remainder
of its bakery operations to Brooks Street. The Brooks Street Agreement
provided for a purchase price in the form of the assumption by Brooks
Street of approximately $70,000 in equipment lease related debt, the
purchase of inventory by Brooks Street in the amount of $12,500 and the
agreement by Brooks Street to make royalty payments to the Company, over a
period of four (4) years, equal to 5% of net sales of pull-apart cakes to
existing customers of the Company plus 1 1/2% of net sales of pull-apart
cakes to new customers of Brooks Street.
The Company's shareholders approved a plan of liquidation on December 15,
2000 pursuant to which the Company would distribute all remaining net
proceeds form the Rich Products transaction and the Brooks Street
transaction to its shareholders over a period of four (4) years . Prior to
implementing the plan of liquidation, the Company intends to explore
various options available to the Company. The Board of Directors reserves
the right to terminate the plan of liquidation to the extent any of the
options explored by the Company are financially beneficial to the
Company's shareholders.
As a result of the sale of substantially all of the Company's
assets to Rich Products and Brooks Street and the plan of liquidation and
dissolution, the Company changed its basis of accounting from the going
-6-
concern basis to the liquidation basis in accordance with generally
accepted accounting principles, effective October 1, 2000. This basis of
accounting is considered appropriate when, among other things, liquidation
of a company appears imminent and the net realizable value of its assets
are reasonably determinable. Consequently, assets have been valued at
their estimated net realizable value and liabilities are estimated at
their estimated settlement amounts. Because of the approval of the plan of
liquidation, comparative financial information from previous years and
certain other disclosures are not meaningful and have not been presented
in the consolidated financial statements.
The Company is continuing to explore a number of strategic alternatives
which would allow the Company to continue as a going concern. In view of
these matters, continued operations of the Company are dependent upon
these possible strategic alternatives and a termination of the plan of
liquidation.
IN AUGUST 2001, THE COMPANY COMPLETED THE SALE OF 500,000 SHARES OF THE
COMPANYS COMMON STOCK IN A PRIVATELY NEGOTIATED TRANSACTION FOR A PURCHASE
PRICE OF $30,000. THE SHARES WERE SOLD TO INVESTORS, PAUL, MATTHEW AND
MARC LOVITO (THE LOVITOS) PURSUANT TO AN AMENDED AND RESTATED AGREEMENT
DATED AUGUST 22, 2001 BETWEEN THE COMPANY, THE LOVITOS, CHARLES LOCCISANO,
THE FORMER CHAIRMAN OF THE COMPANY, AND ALAN GOTTLICH, THE FORMER
PRESIDENT AND CHIEF FINANCIAL OFFICER OF THE COMPANY (THE LOVITO
AGREEMENT). PURSUANT TO THE TERMS OF THE LOVITO AGREEMENT, ON SEPTEMBER
22, 2001 THE COMPANY'S FORMER OFFICERS AND DIRECTORS RESIGNED AND WERE
REPLACED BY THE LOVITOS ON THE BOARD. PAUL LOVITO SERVES AS THE CHAIRMAN,
PRESIDENT AND CHIEF EXECUTIVE OFFICER, MARC LOVITO SERVES AS VICE
PRESIDENT AND SECRETARY AND MATTHEW LOVITO SERVES AS THE COMPANY'S VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER. SEE MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
IN OCTOBER 2001 THE COMPANY CHANGED ITS NAME TO RAPTOR INVESTMENTS, INC.
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AND CHANGED ITS TRADING SYMBOL TO RAPT.
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The primary statements required under the liquidation basis of accounting
are Statements of Net Assets in Liquidation as of September 30, 2001 and
December 31, 2000, respectively, and a Statement of Changes in Net Assets
in Liquidation for the period from January 1, 2001 to September 30, 2001.
With the exception of the Statement of Net Assets in Liquidation as of
December 31, 2000, all statements are unaudited. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the interim period are not necessarily indicative of financial
results for the full year.
Additionally, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principals have been omitted. It is suggested that
these unaudited financial statements be read in connection with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2000. There
have been no significant changes of accounting policies since December 31,
2000.
-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.
The methods used by management in estimating the value of the
Company's assets and liabilities do not, with certainty, result in an
exact determination of value nor are they intended to indicate the amount, if
any, a stockholder may receive in liquidation. The amount of liquidation
proceeds depends largely on factors beyond the Company's control,
including without limitation, the rate of inflation, changes in interest rates,
the final outcome of all pending litigation, the amount and nature of any
unknown contingent liabilities and the ability to collect its receivables,
contract payments and royalty payments.
OVERVIEW
- --------
On December 15, 2000, the Company consummated an asset purchase agreement
(the "Rich Products Agreement") with Rich Products, pursuant to
which the Company sold its bakery operations located in El Cajon, California
representing a majority of the Company's operating assets. The Rich
Products Agreement provides for a purchase price aggregating $2,182,750
inclusive of a payment for inventory. The aggregate purchase price will be paid
as follows: $182,750 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 also assumed approximately $285,000 in equipment lease related
debt. In addition, pursuant to the terms of the Rich Products Agreement, Rich
Products entered into consulting agreements with Charles Loccisano, Alan
Gottlich and Wayne Sorensen, the Company's Chairman and CEO, President
and CFO, and Bakery General Manager, respectively. These consulting agreements
provided for compensation to Messrs. Loccisano, Gottlich and Sorensen over a
four year term in an annual amount of $50,000, $30,000 and $20,000,
respectively.
On December 15, 2000, the Company consummated an asset purchase and sale
agreement (the "Brooks Street Agreement") with Brooks Street Companies, Inc.
("Brooks Street"), pursuant to which the Company sold the remainder of its
-8-
bakery operations to Brooks Street. The Brooks Street Agreement provided for a
purchase price in the form of the assumption by Brooks Street of approximately
$70,000 in equipment lease related debt, the purchase of inventory by Brooks
Street in the amount of $12,500 and the agreement by Brooks Street to make
royalty payments to the Company, over a period of four (4) years, equal to 5% of
net sales of pull-apart cakes to existing customers of the Company plus 1 1/2%
of net sales of pull-apart cakes to new customers of Brooks Street.
The Company's shareholders approved a plan of liquidation on
December 15, 2000 Pursuant to which the Company would distribute all remaining
net proceeds form the Rich Products transaction and the Brooks Street
transaction to its shareholders over a period of four (4) years . Prior to
implementing the plan of liquidation, the Company intends to explore various
options available to the Company. The Board of Directors reserves the right to
terminate the plan of liquidation to the extent any of the options explored by
the Company are financially beneficial to the Company's shareholders.
In August 2000, Charles Loccisano, the Company's Chairman and Chief
Executive Officer, provided the Company with a loan of $150,000. The loan
provided for a term of one year and provided for interest in the amount of 5%
per annum. The Company granted Mr. Loccisano 50,000 unregistered shares of
common stock as additional consideration for providing this loan. This loan was
repaid in full out of the proceeds of a loan with Gelt Financial Corporation in
September 2000.
In September 2000, Gelt Financial Corporation ("Gelt")
provided the Company with a credit line in the amount of $250,000. The credit
line loan provided for a term of one year and provided for interest of 5% above
the prime rate. In addition, the Company paid Gelt a placement fee in the amount
of $31,250 and granted Gelt 20,000 unregistered shares of common stock as
additional consideration for providing this loan. The balance of this credit
line loan will be repaid in full out of the proceeds of the Rich Products
Transaction.
In September 2000, Charles Loccisano, the Company's Chairman and
Chief Executive Officer, provided the Company with a credit line in the amount
of $150,000. The credit line provided for a term of one year and provided for
interest in the amount of 5% per annum. The Company granted Mr. Loccisano
150,000 unregistered shares of common stock as additional consideration for
providing this loan. The balance of this credit line will be repaid in full out
of the proceeds of the Rich Products Transaction.
In August 2001, the Company completed the sale of 500,000 shares of the
Companys common stock in a privately negotiated transaction for a purchase price
of $30,000. The shares were sold to investors, Paul, Matthew and Marc Lovito
(the Lovitos) pursuant to an Amended and Restated Agreement dated August 22,
2001 between the Company, the Lovitos, Charles Loccisano, the former Chairman of
the Company, and Alan Gottlich, the former President and Chief Financial Officer
of the Company (the Lovito Agreement).
-9-
THE LOVITO AGREEMENT ALSO PROVIDES THAT WITHIN 12 MONTHS AFTER THE
COMPLETION OF THE STOCK SALE TRANSACTION, THE LOVITOS SHALL CAUSE THE COMPANY TO
MAKE AN OFFER TO ALL HOLDERS OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON
STOCK TO REPURCHASE THEIR SHARES AT A PRICE OF $0.20 PER SHARE THROUGH A TENDER
OFFER PROVIDED THE MARKET BID PRICE OF THE COMPANY'S COMMON STOCK IS NOT GREATER
THAN $0.20 PER SHARE FOR ANY CONSECUTIVE 30 DAY PERIOD DURING THE ONE YEAR
PERIOD FOLLOWING THE CLOSING OF THE PREVIOUSLY DESCRIBED STOCK SALE TRANSACTION.
AS A RESULT, NO ASSURANCE CAN BE GIVEN THAT THE REPURCHASE WILL BE COMMENCED OR
THAT THE REPURCHASE WILL OCCUR ON THE TERMS DESCRIBED HEREIN. IF THE FOREGOING
OFFER TO SHAREHOLDERS IS REQUIRED AND THE LOVITOS DO NOT FULFILL THEIR
OBLIGATIONS IN CONNECTION THEREWITH, THE LOVITO AGREEMENT PROVIDES THAT THE
LOVITOS SHALL TAKE ALL ACTIONS NECESSARY TO ADD FOUR NEW MEMBERS TO THE BOARD
SELECTED BY MESSRS. LOCCISANO AND GOTTLICH.
PURSUANT TO THE TERMS OF THE LOVITO AGREEMENT, ON SEPTEMBER 22, 2001 THE
COMPANY'S FORMER OFFICERS AND DIRECTORS RESIGNED AND WERE REPLACED BY THE
LOVITOS ON THE BOARD. PAUL LOVITO SERVES AS THE CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, MARC LOVITO SERVES AS VICE PRESIDENT AND SECRETARY AND
MATTHEW LOVITO SERVES AS THE COMPANY'S VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
THE LOVITO AGREEMENT ALSO PROVIDES THAT EACH OF MESSRS. LOCCISANO AND
GOTTLICH HAS THE RIGHT TO REQUIRE THE LOVITOS TO PURCHASE OR THE COMPANY TO
REPURCHASE UP TO ONE-HALF OF THEIR PARAMARK SHARES (THE LOCCISANO/GOTTLICH SALE
OFFER) ON THE 60TH DAY AFTER THE EARLIER OF: (I) THE COMPLETION OF A 30
CONSECUTIVE TRADING DAY PERIOD WHERE THE COMPANYS COMMON STOCK HAD A BID PRICE
OF $0.20 PER SHARE OR HIGHER DURING THE ONE YEAR PERIOD FOLLOWING THE
CONSUMMATION OF THE LOVITO AGREEMENT; OR (II) THE COMPLETION OF THE COMPANYS
REPURCHASE, DESCRIBED ABOVE. THE PURCHASE PRICE PAID BY THE COMPANY OR THE
LOVITOS FOR THE LOCCISANO AND GOTTLICH SHARES WILL BE $0.20 PER SHARE. AT
SEPTEMBER 30, 2001, MESSRS. GOTTLICH AND LOCCISANO BENEFICIALLY OWNED 1,431,924
AND 187,339 SHARES, RESPECTIVELY, OF THE COMPANY'S COMMON STOCK.
THE PROPOSED PAYMENTS TO MESSRS. GOTTLICH AND LOCCISANO UPON THE SALE OF
THEIR SHARES ARE SUBJECT TO A GUARANTEE AGREEMENT ENTERED INTO BETWEEN THE
LOVITOS AND MESSRS. GOTTLICH AND LOCCISANO. UNDER THE TERMS OF THE LOVITO
GUARANTEE AGREEMENT, THE LOVITOS, JOINTLY AND SEVERALLY, GUARANTEE THE
FULFILLMENT OF THE OBLIGATIONS DEFINED IN THE LOVITO GUARANTEE. UNDER THE TERMS
OF THE AGREEMENT, MESSRS. GOTTLICH AND LOCCISANO AGREED NOT TO TENDER ANY SHARES
DURING THE COMPANYS REPURCHASE, IF COMMENCED. IN ADDITION, UNDER THE TERMS OF
THE AGREEMENT, MESSRS. GOTTLICH AND LOCCISANO AGREED NOT TO TENDER ANY SHARES
DURING THE COMPANY'S REPURCHASE, IF COMMENCED OR OTHERWISE SELL THEIR
SHARES EXCEPT PURSUANT TO THE LOCCISANO/GOTTLICH SALE OFFER FOR A SPECIFIED
PERIOD. IN CONSIDERATION OF THIS RESTRICTION, THE LOVITOS AGREED TO PAY MESSRS.
LOCCISANO AND GOTTLICH AN AGGREGATE FEE OF $66,000 PAYABLE IN 12 MONTHLY
INSTALLMENTS.
THE LOVITO AGREEMENT PROVIDES FOR THE ESTABLISHMENT OF AN ESCROW ACCOUNT
WHICH SHALL BE USED TO FUND CERTAIN EXPENSES OF THE COMPANY EXISTING PRIOR TO
THE STOCK SALE TRANSACTION INCLUDING, AMOUNTS DUE TO MESSRS LOCCISANO AND
GOTTLICH PURSUANT TO THEIR EMPLOYMENT AGREEMENTS, DIRECTOR AND OFFICER INSURANCE
PREMIUMS AND OUTSTANDING TRADE OBLIGATIONS AND LEGAL FEES OF THE COMPANY AND
MESSRS. LOCCISANO AND GOTTLICH RESULTING FROM THE PENSABENE LITIGATION.
-10-
THE OBLIGATIONS OF THE COMPANY UNDER THE AGREEMENT ARE ALSO SECURED BY AN
AGREEMENT BETWEEN THE LOVITOS AND MESSRS. LOCCISANO AND GOTTLICH WHICH PROVIDES
THAT MESSRS. LOCCISANO AND GOTTLICH MAY DESIGNATE FOUR NEW BOARD MEMBERS IF THE
LOVITOS FAIL TO FULFILL THEIR OBLIGATIONS UNDER THE AGREEMENT AND THE LOVITOS
AGREE TO TAKE ALL CORPORATE ACTION NECESSARY TO ADD SUCH INDIVIDUALS TO THE
BOARD.
AS PART OF THESE TRANSACTIONS, THE LOVITOS AGREED TO ENTER INTO CONSULTING
AGREEMENTS WITH EACH OF MESSRS. GOTTLICH AND LOCCISANO WHICH REQUIRE MESSRS.
LOCCISANO AND GOTTLICH TO CONSULT WITH THE LOVITOS ON THE OPERATIONS OF A PUBLIC
COMPANY AND RELATED MATTERS IN EXCHANGE FOR THE PAYMENT OF $24,000 PAYABLE IN 12
EQUAL MONTHLY INSTALLMENTS. PURSUANT TO THE TERMS OF THE LOVITO AGREEMENT, THE
LOVITOS ALSO AGREED TO TAKE ACTION TO CAUSE PARAMARK TO REGISTER THE LOCCISANO
AND GOTTLICH SHARES FOR RESALE PURSUANT TO THE APPLICABLE REQUIREMENTS OF THE
SEC. THE AGREEMENT ALSO PROVIDES THAT THE COMPANY'S OBLIGATIONS TO
MESSRS. LOCCISANO AND GOTTLICH PURSUANT TO THEIR EMPLOYMENT AGREEMENTS SHALL BE
SECURED BY THE ASSIGNMENT OF PAYMENTS FROM THE RICH PRODUCTS ASSET PURCHASE
AGREEMENT.
ADOPTION OF THE LIQUIDATION BASIS OF ACCOUNTING
- -----------------------------------------------
As a result of the sale of substantially all of the Company's
assets to Rich Products and Brooks Street and the plan of liquidation, the
Company changed its basis of accounting from the going concern basis to the
liquidation basis in accordance with generally accepted accounting principles,
effective October 1, 2000. This basis of accounting is considered appropriate
when, among other things, liquidation of a company appears imminent and the net
realizable value of its assets are reasonably determinable. Consequently, assets
have been valued at their estimated net realizable value and liabilities are
estimated at their estimated settlement amounts. Because of the approval of the
plan of liquidation, comparative financial information from previous years and
certain other disclosures are not meaningful and have not been presented in the
consolidated financial statements.
CHANGES IN NET ASSETS FOR THE PERIOD JANUARY 1, 2001 TO SEPTEMBER 30, 2001
- --------------------------------------------------------------------------
The decrease in net assets in liquidation of $354,217 was due primarily to
the costs associated with the "winding-down" of the
Company's operations and a reserve in the amount of $125,000 for legal
costs in connection with the defense of outstanding legal proceedings. The costs
of winding-down" of the Company's operations included
approximately $114,500 of legal fees which include the legal costs associated
with defending the pending legal actions against the Company, approximately
$14,000 of accounting fees and approximately $31,600 of insurance premiums
relating to the Company's director and Officer insurance policy.
-11-
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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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.
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
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Not Applicable
-12-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) EXHIBITS.
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The following exhibits are filed herewith.
EXHIBIT NUMBER DESCRIPTION
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27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
--------------------
The Company filed a current report on Form 8-K on
August 23, 2001 regarding the closing of the Lovito
transaction.
-13-
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: October 14, 2001 By: /S/ PAUL LOVITO
------------------
Paul Lovito,
Chairman and Chief Executive Officer
By: /S/ MATTEW LOVITO
------------------------------------
Matt Lovito,
President and Chief Financial Officer
(Principal Accounting Officer)
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