SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 2001 Commission File Number 0 - 18064
YES CLOTHING CO.
(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation or organization)
95-376867
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(I.R.S. Employer I.D. No.)
4695 MacArthur Court, Suite 1450, Newport Beach, California 92660
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(Address of principal executive offices, including zip code)
(949) 833-2094
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(Registrant's telephone number, including area code)
N/A
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(Former Address, if changed since last report)
N/A
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(Former telephone number, if changed since last report)
Indicate by check mark whether the Registrant [1] has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the Company 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:
Indicate the number of shares outstanding of each of the issuer's
classes of capital stock, as of the latest practicable date.
Class Outstanding at July 23, 2001
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Common Stock, $.01 par value 37,044,158
YES CLOTHING CO.
INDEX
Page
PART I
Item 1. Financial Information
Balance Sheet....................................................3
Statements of Operations.........................................4
Statements of Cash Flows.........................................5
Notes to Financial Statements....................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................8
Item 3. Quantitative and Qualitative Disclosures about Market Risk.......8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................9
Item 2. Changes in Securities............................................9
Item 3. Defaults Upon Senior Securities .................................9
Item 4. Submission of Matters to a Vote of Security Holders..............9
Item 5. Other Information................................................9
Item 6. Exhibits and Reports on Form 8-K.................................9
Signatures......................................................10
2
YES CLOTHING CO.
Consolidated Condensed Balance Sheet
As of June 30, 2001
(Unaudited)
June 30, 2001
-------------
ASSETS
Current Assets -
Prepaid Taxes $ 800
------------
Total current assets $ 800
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities -
Accounts payable $ 1,193,300
Accrued expenses 482,300
Due to affiliates 366,100
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Total current liabilities 2,041,700
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Shareholder's Deficit -
Common stock, $.001 par; 75,000,000 shares authorized;
37,044,158 issued and outstanding 37,000
Additional paid in capital 13,438,900
Accumulated deficit (15,516,800)
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Total shareholders' deficit (2,040,900)
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$ 800
============
See accompanying notes to these condensed financial statements.
3
YES CLOTHING CO.
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended
June 30, 2001 and 2000
(Unaudited)
2001 2000
--------- ---------
Net sales $ - $ -
Cost of sales - -
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Gross loss - -
General and administrative 32,300 20,000
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Net loss $ (32,300) $ (20,000)
========= =========
Basic and diluted loss per share: $ (.00) $ (.16)
========= =========
Basic and diluted weighted average common
shares outstanding 9,791,863 127,865
========= =========
See accompanying notes to these condensed financial statements.
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YES CLOTHING CO.
Condensed Statements of Cash Flows
For the Three Months Ended
June 30, 2001 and 2000
(Unaudited)
2001 2000
---------- ----------
Cash Flows from Operating Activities:
Net loss $ (32,300) $ (20,000)
Reconciliation of net loss to net cash used by
operating activities:
Changes in operating assets and liabilities:
Decrease in accounts payable (4,000) -
Increase in accrued expenses - 20,000
--------- ---------
Net cash used by operating activities (36,300) -
--------- ---------
Cash Flows from Financing Activities:
Increase in due to affiliates 36,300 -
--------- ---------
Net cash provided by financing activities 36,300 -
--------- ---------
Net change in cash - -
Cash and cash equivalents, beginning of period - -
--------- ---------
Cash and cash equivalents, end of period $ - $ -
========= =========
Non-cash Financing Activities:
Stock issued in satisfaction of accounts
payable $ 87,900 $ -
========= =========
Stock issued in satisfaction of amounts
due to affiliates $ 30,000 $ -
========= =========
See accompanying notes to these condensed financial statements
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YES CLOTHING CO.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2001
Note 1. Organization
Yes Clothing Co. (the "Company") was incorporated on July 1, 1982, in the State
of California. Through July 1997, the Company designed, manufactured and
marketed a diversified line of apparel primarily for women and young men. The
Company sold its garments throughout the United States and Canada to retail
department stores, specialty chains and specialty stores.
In June 1996, the Company's principal shareholder sold approximately 50% of the
Company's outstanding shares to an individual who assumed the position of
Chairman and Chief Executive Officer of the Company. In July 1997, due to a lack
of trade credit and working capital, the Company temporarily suspended its
operations pending receipt of additional capital or third party credit. In
December 1997, the Company filed for protection from its creditors pursuant to
Chapter 11 of the United States Bankruptcy Code. In March 1998, the Bankruptcy
Court dismissed the Company's bankruptcy proceedings.
In April 1998, the Company relinquished its rights to the YES(R) trademarks in
connection with a purchase and sale agreement whereby an affiliate of the
Company satisfied certain senior secured debt on behalf of the Company . In
March 2001, the affiliate sold the license to an unrelated third party.
On November 13, 2000, Yes California was merged into Yes Clothing Company, Inc.
("Yes Nevada" or "the Company"), a Nevada corporation formed by it on July 31,
2000. At that time, Yes Nevada exchanged one (1) share for every one hundred
(100) shares of Yes California. The merger was recorded at historical costs
since the companies were under common control, and all amounts, including share
information, have been retroactively restated for the periods presented.
In October 2000, NewBridge Captial, Inc. ("NBRG") converted 177,005 shares of
the Company's Series A Preferred into 5,779,213 shares of common stock. These
shares reverted to 57,792 after the reverse split in November, 2000. Upon
issuance of the common shares, NBRG owned approximately 50% of the outstanding
common shares of the Company.
On May 8, 2001, the Company issued 943,472 shares of its common stock to various
consultants and directors for their services rendered through March 31, 2001
valued at $117,934. The related expenses were accrued in the fourth quarter of
fiscal year 2001.
On June 7, 2001, the holders of the remaining 1,100,000 shares of the Preferred
Stock converted their shares at the conversion rate of 32 65/100th shares into
35,915,000 shares of the Company's common stock. As a result of the exchange,
NewBridge increased its holdings to 32,742,940 shares of common stock or 88.4%
of the outstanding common shares and NuVen Limited Partnership increased its
holdings to 3,265,000 shares of common stock or 8.8% of the outstanding common
shares.
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YES CLOTHING CO.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2001
Note 2. Summary Of Significant Accounting Policies
Going Concern
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which
contemplates continuation of the Company as a going concern. The Company has
experienced recurring losses since 1992. At June 30, 2001, the Company has
liabilities in excess of assets totaling approximately $2.0 million, as well as
a shareholders' deficit of $2.0 million. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management intends
to satisfy or restructure its debt, which contemplates that the Company will
satisfy substantially all its obligations through the issuance of common stock,
among other things. There are no assurances that the Company will be successful
in satisfying or restructuring its debt and/or seeking capital to resume
operations. No adjustments have been made to the accompanying financial
statements as a result of these uncertainties.
Unaudited Interim Financial Statements
In the opinion of management, the unaudited financial statements include all
adjustments (consisting of normal recurring accruals) necessary to present
fairly the Company's results of operation for the three months ended June 30,
2001 and 2000 and cash flows for the three months ended June 30, 2001 and 2000.
These results are not necessarily indicative of the results expected for the
year ending March 31, 2002.
Restatement of Shares Outstanding
All historical share and per share amounts have been restated to reflect the one
for one hundred exchange of shares resulting from the Company reincorporating in
Nevada and effecting the merger on November 13, 2000 (Note 1).
7
Item 2: Management's Discussion and Analysis of Financial Condition
And Results of Operations
Results of Operations
Quarter Ended June 30, 2001 versus June 30 2000
In July 1997, due to a lack of trade credit and working capital, we temporarily
suspended our operations pending receipt of additional capital or third party
credit. We began liquidating our inventory and other assets at below cost. On
December 17, 1997, we filed for protection from our creditors pursuant to
Chapter 11 of the United States Bankruptcy Code. In March 1998, we were
dismissed from our bankruptcy proceedings.
There were no operations during first quarter of fiscal 2001, and 2000. As a
result, there were no revenues or cost of revenues.
Total general and administrative expenses increased $12,300 from $20,000 in
fiscal 2000 to $32,300 in fiscal 2001. The increase is attributed to accrued
expenses for services rendered to the company.
Capital Resources and Liquidity
We have incurred net losses and negative cash flows from operating activities
since inception. At June 30, 2001, through the date of this filing, our
liabilities exceed our assets by approximately $2.0 million. We currently
receive financial support from NewBridge. Our future depends on our ability to
execute a plan of reorganization which consists of the satisfaction of our
obligations primarily through the issuance of shares of common stock, among
other things. There are no assurances that the Company will be successful in
satisfying or restructuring its debt and/or seeking capital to resume
operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
N/A
8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No change from that which was reported in the Form 10K for the year
ended March 31, 2001.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
9
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 thereunto duly authorized.
YES CLOTHING CO.
Dated: August 6, 2001 By: /s/ Fred G. Luke
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Fred G. Luke
President
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