SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: March 26, 2001
DONINI, INC. (formerly PRS Sub VI, Inc.)
(Exact name of Registrant as specified in its Charter)
NEW JERSEY
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
22-3768426
(IRS Employer Identification Number)
425 Eagle Rock Avenue
Roseland, New Jersey 07068
(Address of Principal Executive offices) (Zip Code)
(973) 226-4600
Registrant's Telephone Number,
Including Area Code
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On January 18, 2001 certain shareholders of Pizza Donini Inc. ("Pizza Donini") a
company organized under the laws of the Province of Quebec, Canada, acquired
eighty-two percent (82%) of the outstanding shares of the Company on condition
that the parties cause a combination between the Company and an entity with an
excess of $1 million in assets and the Company receive two years of certified
financial statements from said entity. On January 29, 2001, the parties entered
into an agreement pursuant to which the Company agreed to assume all liabilities
of Pizza Donini subject to certain conditions including the delivery by Pizza
Donini of two years of certified financial statements. Pursuant to the terms of
this agreement, on February 19, 2001, the last remaining condition in both
agreements was satisfied with the delivery and receipt of the certified
financial statements. As a result, the former owners of Pizza Donini as a group
own 82% of the outstanding stock of the Company and the Company owns 100% of the
Common Stock Pizza Donini.
As of this date, the Company has 10,000,000 shares of Common Stock issued and
outstanding.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
DESCRIPTION OF BUSINESS. On February 19, 2001, the Company completed the
acquisition of all the outstanding shares of Company Stock of Pizza Donini.
Pizza Donini was organized in 1987 and at present operates a franchise
management company supporting over thirty franchised pizza outlets in the
Greater Montreal area. As franchisor, Pizza Donini supplies the franchisees,
through its wholly owned subsidiary Pizado Foods (2001) Inc. ("Pizado") with the
dough and sauces used in the preparation of Pizza Donini recipes. Pizado also
supplies a separate product line of pizza dough and sauces to other restaurants
in the Greater Montreal area. In addition to supplying its franchisees with food
supplies, Pizza Donini also provides various forms of marketing support. In
addition to traditional radio, print and direct mail advertising, it operates,
through another wholly owned subsidiary, PizzaDonini.Com Inc., a call center
that executes home delivery through one central telephone number. The call
center dispatches telephone orders to the closest franchisee for prompt
delivery.
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In addition to expanding its existing base of franchised outlets, Pizza Donini
intends to move into retail grocery distribution by targeting such customers as
supermarkets and mass merchandise stores. It also plans to expand its efforts
into alternative business-to-business (B2B) distribution channels to sell to
such customers as department store cafeterias and other restaurants. In this
regard, Pizza Donini developed a line of frozen, ready-to-use pizza products
with self-rising crust capable of being prepared, freezer to table, in six to
eight minutes.
MANAGEMENT'S DISCUSSION AND ANALYSIS. Pizza Donini supports thirty-two (32)
pizza outlets. At May 31, 2000 twenty-nine (29) were franchised and three (3)
were company owned. The Company maintains up to five (5) company owned stores,
which are typically in the process of renovation with the intention to sell as
Pizza Donini franchises. All outlets are in Greater Montreal. In addition, Pizza
Donini has recently entered into an agreement with Zellers Inc., a national
merchandise chain, to offer for sale Pizza Donini products in twenty five (25)
of its in store restaurants within its department stores, all in the Province of
Quebec as a one year test project. The Company is hopeful that it will be able
to expand this operation after the first year into the entire Zeller's chain,
which consists of approximately 250 outlets throughout Canada.
In addition to generating revenues from its franchisees in the form of initial
franchise fees and royalties, Pizza Donini revenues have also been generated by
two operating subsidiaries, Pizado Foods (2001) Inc. ("Pizado") and Pizza
Donini.Com Inc. Pizado intends to expand its business by marketing its own brand
of Pizza Donini frozen pizza to retail grocery outlets including mass
merchandise stores and supermarkets. Pizza Donini.Com Inc. manages the call
center that executes home delivery orders to the closest franchisee.
Pizza Donini is in process of developing the B2B (business to business)
distribution of a fully-topped, frozen pizza product to foodservice customers
such as department store cafeterias, other restaurants, hospitality and leisure
venues, convenience stores, and contract caterers.
In fiscal 2000 franchise operations accounted for approximately 58% of the
Company's total revenues, while the sale of wholesale food products equaled
approximately 41% and the remaining revenues accounted for 1%. This compares to
65%, 34% and 1% respectively for fiscal 1999. The change in sales mix resulted
primarily from increased management focus on the wholesale food products
markets.
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During the last fiscal year Pizza Donini experienced a decline in revenues.
Sales for fiscal year ending May 31, 2000 were $1,390,917 a decrease of $23,621
over fiscal year 1999 sales of $1,414,538. This decrease occurred as a result of
Management closing certain unprofitable pizza outlets and focusing on opening
new outlets with better locations and stronger franchisees. Working capital
deficit during this period increased from $435,475 at May 31, 1999 to $679,162
at May 31, 2000. Total assets increased from $516,335 as of May 31, 1999 to
$576,605 as of May 31, 2000. Net profits (losses) decreased from $(77,286)
during the period ended May31, 1999, to $(249,730) at May 31, 2000.
For the six months ended November 30, 2000, sales were $862,291 compared to
$584,249 for the same period ending November 30, 1999. During the same periods
net income was $12,386, compared to a loss of $(117,366) respectively.
Management believes the above is a result of improved profitability and
operations of existing franchisees and increases in wholesale food products
revenues. Total assets increased $220,337 during the six months ended November
30, 2000 to $796,942. This increase is primarily a result of store upgrades.
Management believes that the results reflected above are due to a continuing
effort to improve cost controls, the elimination of various marginal pizza
outlets, the acquisition of more potentially profitable locations, and the
marketing and development expenses relating to establishing a brand name. In
addition, Management believes that its investment into its centralized call
center and other marketing efforts of Pizza Donini.Com Inc. and its development
of a high quality product line will result in future expansion and increased
profitability. Management believes that operating profits have been lowered due
to the investment into new products, and market development but expects the
recent increase during the six months ended November 30, 2000 in sales and
profits to continue during this fiscal year and into the next two fiscal years.
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The Company maintains that its liquidity will improve marginally with improved
earnings, but will not be sufficient to allow it to expand its operating to any
significant degree without an infusion of additional equity capital or debt.
Pizza Donini has maintained its liquidity through net borrowings (repayments) in
short and long term debt of approximately $60,000, ($123,000) and ($59,000) for
the years ended May 31, 1999, 2000 and the six months ended November 30, 2000
respectively. In addition, Pizza Donini issued subordinated debentures in the
amounts of $100,000 and $400,000 during the year ended May 31, 2000 and the six
months ended November 30, 2000 respectively.
RISK FACTORS.
1. No Significant History of Earnings. Although organized and operating since
1987 the Company's operating subsidiary Pizza Donini Inc. has only recently made
a profit and has an accumulated deficit from prior operations.
2. Low Profit Margins Characterize the Food Industry. In the past, the food
industry, including the restaurant business, has been characterized by low
profit margins and even though the Company has introduced certain cost saving
measures and is benefiting from certain economies of size, the Company will
still be faced with the need to further implement cost controls and expand its
operations to improve its profitability.
3. Dependence on Key Personnel. The Company is highly dependent on its key
management personnel and executives, particularly Messrs Peter Deros, Denis
Paquette, Theo Kalaitzis and Sarkis Tsaoussian, the loss of any one of whom
could have a substantial and adverse effect upon the Company's operations and
finances. In addition, if the Company expands its operations, as its business
plan contemplates, it will need to attract and retain additional qualified
management personnel at compensation levels it can afford. The Company has only
limited key man life insurance on its officers and directors. There can be no
assurance any additional policies will be available to the Company on
commercially reasonable terms, if at all.
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4. Limited Public Market. To date there has been no public market for the
Company's common stock. There can be no assurance that an active and reliable
public market will develop or, if developed, that such market will be sustained.
As a result, investors may find it difficult to liquidate their investment in
the Company should they desire to do so. The Company intends to apply to have
its common stock approved for quotation on the Nasdaq SmallCap Market. Even if
the Company meets the minimum requirements to apply for inclusion in The Nasdaq
SmallCap Market, there can be no assurance, that approval will be received or,
if received, that the Company will meet the requirements for continued listing
on the Nasdaq SmallCap Market. Further, Nasdaq reserves the right to withdraw or
terminate a listing on the Nasdaq SmallCap Market at any time and for any reason
in its discretion. Irrespective of whether or not the common stock is included
in the Nasdaq SmallCap system, there is no assurance that any public market for
the common stock will become active or liquid in the future.
5. Need for Additional Capital. The Company is dependent on its ability to raise
additional capital in order to implement its business plan and to expand its
operations. There are no assurances that any additional capital will be
available when needed on commercially reasonable terms.
6. Control by Current Management and Stockholders. At present, and in the
foreseeable future, the Company's officers and principal stockholders, control
the election of the Board of Directors and therefore will be able to direct the
executive and financial policies of the Company.
7. Substantial Competition. The food industry is highly competitive and is
dominated by several large public multinational food companies including several
which dominate the pizza market. In addition there are a great number of
independently owned single or small multi location chains, many of which compete
with the Company in its present market area. The ability of the Company to
succeed will depend on its ability to maintain and improve its competitive
position.
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8. No Dividends. The Company has not in the past paid any dividends, on its
common stock and does not expect to pay any dividends in the foreseeable future.
The payment of any dividend will be at the discretion of the Board of Directors
and will depend on the Company's future operations, future capital needs and
financial condition.
9. Limitation of Liability of Directors and Officers. The Company's Certificate
of Incorporation and or bylaws provide that to the extent permitted by New
Jersey Law, officers and Directors will not be personally liable to its
shareholders for monetary damages under certain circumstances.
10. Company's Products Subject to Changing Consumer Tastes. Although the Company
recently had an independent market research firm conduct a survey, which
ascertained that its products compared favorably to its present competitors,
there can be no assurance that the public's taste will remain attracted to the
Company's products. In order to maintain its favorable consumer acceptance the
Company will have to maintain its high quality of products and competitive
prices.
DESCRIPTION OF PROPERTY. The Company does not own any real estate, but through
its subsidiaries it leases five locations. Pizado Foods (2001) Inc. leases 6,518
square feet on a five-year lease expiring October 2003, which it uses as
production facilities and administrative offices. In addition, Pizza Donini.com
Inc. leases 1,560 square feet on a three-year lease expiring May 2004, which it
uses as its call center. Pizza Donini Inc. leases four restaurant facilities:
800 square feet on a one-year lease; 450 square feet on a five-year lease
expiring February 2005; 700 square feet on a five-year lease ending May 2005 and
2000 square feet on a four-year lease expiring December 2004. All lease rates
are considered by Management to be at market and none is leased from an
affiliate.
EMPLOYEES. The Company has a total of approximately 50 employees of whom 5 are
executives, 10 are clerical and administrative, 10 are manufacturing and 25 are
sales and marketing. One officer of the Company receives a salary in excess of
$50,000 (US) per year. No Director is compensated for his/her services rendered
as a member of the Board of Directors, however the Company intends to reimburse
its Directors for reasonable expenses incurred in connection with their
directorship.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following
table sets forth information as of March 15, 2001, with respect to security
ownership of Management and persons known to the Company to be the beneficial
owners of more than 5% of the common stock, $.001 par value of the Company.
Except as noted, each person has sole voting power with respect to the shares
shown.
PRINCIPAL SHAREHOLDERS TABLE
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Ownership of Class
- - ---------------------------------------------------------------------------
Common Peter Deros 1,576,000 15.8%
8220 Birnam Apt. 2
Montreal, Quebec H3N 2T9
Canada
Common Ansbacher (Bahamas) 3,000,0001 30.0%
Limited, Trustee of
the Spartan Trust
c/o Ansbacher (Bahamas) Limited
Ansbacher House
Bank Lane
P.O. Box N-7768
Nassau, Bahamas
Common William L. Mouris, 3,000,0002 30.0%
Trustee of the
Deros Family Trust
204 Whitemud Business Park
9622-42 Avenue
Edmonton, Alberta T6E 5Y4
Canada
Common Theo Kalaitzis 19,500 .2%
12 Garland
Dollard Des Ormeaux
Quebec H9G 2B6
Canada
Common Sarkis Tsaoussian 9,750 .1%
561 Carleton
Chomedey, Laval
Quebec H7W 4R1
Canada --------- ---------
Total 7,605,250 76.1%
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(1) Ownership of these shares was transferred from Maria Asimakopoulos to a
Trust pursuant to a Deed of Settlement dated March 9, 2001by way of a gift.
Peter Deros and members of his family and relatives are discretionary
beneficiaries of the Trust.
(2) Ownership of these shares was transferred from Rocco Sgambetterra to the
Trust pursuant to a Deed of Settlement dated March 1, 2001by way of a gift.
Peter Deros and members of his family and relatives are discretionary
beneficiaries of the Trust.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
There has been no change in the accountant of the Company. The financial
statements accompanying this report have been audited by KPMG, the independent
auditors for the Company's wholly owned operating subsidiary, Pizza Donini Inc.
ITEM 5. OTHER EVENTS
The Registrant has undergone the following significant events:
On February 6, 2001, the Company amended its Certificate of Incorporation
changing its name from PRS Sub VI, Inc. to Donini, Inc. and increasing its
authorized shares of Common Stock from 10,000,000 to 100,000,000, par value
$.001.
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ITEM 6. RESIGNATION OF OFFICERS AND DIRECTORS.
At a meeting of the Board of Directors held February 20, 2001, John Frohling
resigned as President and Chairman of the Board of Directors of the Company and
Linda Pellegrino resigned as Secretary, Treasurer and Director of the Company,
effective February 23, 2001. In accordance with the Company's By-Laws, the
Directors elected Peter Deros, President, Chief Executive Officer, Treasurer and
Director, Catherine Pantoulous Secretary and Terence Byrne Director, which
appointments took effect February 23, 2001.
The following sets forth, as of March 1, 2001, the names and ages of all
directors and executive officers of the Company; the date when each director was
appointed; and all positions and offices in the Company held by each. Each
director will hold office until the next annual meeting of shareholders and
until his or her successor has been elected and qualified:
DATE
OFFICES APPOINTED
NAME AGE HELD DIRECTOR
- - ----------------- ------ --------- ----------
Terence Byrne 42 Director February 2001
Peter Deros 52 Director, President, February 2001
Chief Executive Officer
and Treasurer
BIOGRAPHIES OF DIRECTORS AND OFFICERS OF THE COMPANY. Set forth below are the
names of the directors and officers of the Company, all positions and offices
with the Company held, the period during which he has served as such, and the
business experience during at least the last five years:
PETER DEROS. Mr. Deros has been in the quick-service restaurant industry for 35
years, founded Pizza Donini in 1987 and has served as its President and Chief
Executive Officer since inception. Prior to founding Pizza Donini, Mr. Deros was
President and Chief Operating Officer of a highly successful public pizza chain.
Under his leadership sales for this chain grew from $5 million to more than $50
million over a 12-year period.
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TERENCE BYRNE. Mr. Byrne is a principal of T.T. Byrne Capital Investments an
investment banking firm. Mr. Byrne has been involved in venture capital arena
for most of the past decade and is advisor to the Bartholemew Venture Fund.
Prior to this position, Mr. Byrne was the controlling shareholder, officer and
director of Bartholemew & Byrne, Inc., a consulting firm specializing in
corporate finance and general business consulting. Mr. Byrne has been a Director
of the Company since February 23, 2001.
CATHERINE PANTOULIS. Ms. Pantoulis graduated from Universite de Montreal,
Faculty of Law in 1983 and has been a member of the Quebec Bar Association since
1984. At present she is associated with Kounadis Perreault, which serves as
counsel to Pizza Donini Inc. Ms. Pantoulis has been Secretary of the Company
since February 23, 2001.
DENIS PAQUETTE. Mr. Paquette is Vice-President, Franchise Operations and
Development for Pizza Donini Inc. and has worked in restaurant franchise
development, operations and training for the last sixteen years. Prior to his
association with Pizza Donini, Mr. Paquette was Vice President, Operations and
Training for Sportscene Restaurants Inc., a publicly owned corporation, and one
of Quebec's largest chain of theme restaurants.
THEO KALAITZIS. Mr. Kalaitzis is President and Chief Operating Officer of Pizado
Foods (2001) Inc. ("Pizado") He is responsible for the day-to-day supervision
and supply of all franchise operations and for the management of Pizado's
production facility. Mr. Kalaitzis joined Pizza Donini in 1987. Prior to this
position, Mr. Kalaitzis held management positions with a multi-unit franchisee
of A & W Food Services of Canada and operated his own restaurant.
SARKIS TSAOUSSIAN. Mr. Tsaoussian is President and Chief Operating Officer of
PizzaDonini.Com Inc., the Company's call center. Mr. Tsaoussian joined Pizza
Donini in 1992 as a field supervisor and progressed through various more
responsible positions until he was appointed to his current office in 1997.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit A. Amendment to Certificate of Incorporation effecting a
change of the name of the Company and increasing the number of
authorized shares of Common Stock.
Exhibit B. Unit License Agreement by and between Pizza Donini Inc. and
Zellers Inc.
Exhibit C. Financial Statements of Pizza Donini Inc.
Exhibit D. Financial Statements of Donini, Inc.(1)
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(1) Filed with the Securities and Exchange Commission on December 8, 2001
as an exhibit to the registration statement of the Registrant on Form
10-SB, Registration No. 000-32133, which exhibit is incorporated herein
by reference.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
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Signatures
Pursuant to the requirements of the Securities Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Donini, Inc.
March 26, 2001 By: /s/ Peter Deros
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President and Chief
Executive Officer
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