SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
or
Transition report pursuant to Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file Number 0-17805
NEW RETAIL CONCEPTS, INC.
(Exact name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3275369
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) identification No.)
2975 Westchester Avenue, Purchase, New York 10577
(Address of Principal Executive Offices)
(914)694-8888
(Issuer's Telephone Number)
(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 of 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 ISSUER
Shares of Common Stock outstanding at August 14, 1996: 5,787,039 (does not
include 536,454 treasury shares held by Company at August 14, 1996).
Transitional Small Business Disclosure Format (check one):
YES NO X
NEW RETAIL CONCEPTS, INC.
INDEX TO FORM 10-QSB
FOR THE PERIOD ENDED JUNE 30, 1996
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Balance Sheet at June 30, 1996 (unaudited) 3-4
Condensed Statements of Operations for the
Three Months Ended June 30, 1996 and 1995 (unaudited) 5
Condensed Statements of Cash Flows for the Three
Months Ended June 30, 1996 and 1995 (unaudited) 6
Notes to Interim Financial Statements 7-8
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II - Other Information 11
ITEM 2. Exhibits and Reports on Form 8-K 11
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
June 30, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 157,394
Accounts receivable - net of allowance for
doubtful accounts of $12,000 194,281
Note receivable -NES 157,543
Loan receivable - officers 104,911
Other current assets 18,242
Total current assets 632,271
FIXED ASSETS - AT COST:
Furniture and equipment 101,657
Less accumulated depreciation (101,657)
-
Note receivable - NES 629,079
Investment in Candie's, Inc. 1,445,510
2,074,589
OTHER ASSETS 3,000
$ 2,709,960
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
June 30, 1996
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - current $ 300,000
Accounts payable - trade 85,000
Accrued expenses and other current
liabilities 97,202
Total current liabilities 482,202
DEFERRED INCOME TAXES 100,000
STOCKHOLDERS' EQUITY:
Preferred stock - par value $.01; authorized,
1,000,000 shares, no shares issued -
Common stock - par value $.01; authorized,
25,000,000 shares; issued 6,378,498 shares 63,785
Additional paid-in capital 3,473,984
Accumulated deficit (1,135,502)
2,402,267
Less:
Common stock in treasury at cost;
536,454 shares 274,509
2,127,758
$ 2,709,960
THE ACCOMPANYING STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30,
1996 1995
Revenues:
License and marketing fees $ 158,124 $ 152,577
Costs and expenses:
Selling, general
and administrative 155,437 203,473
Interest expense 4,356 6,875
Total costs and expenses 159,793 210,348
Operating loss (1,669) (57,771)
Other income (expense):
Equity in losses of
affiliate (5,564) (6,536)
Other, net 45,649 13,771
40,085 7,235
Income (loss) before provision
for income taxes 38,416 (50,536)
Provision for income taxes 4,000 1,951
Net income (loss) $ 34,416 $ (52,487)
Net income (loss) per share of
common stock $ 0.01 $( 0.01)
Weighted average number of
shares outstanding 6,051,557 6,762,548
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Net income (loss) $ 34,416 $ (52,487)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Equity in losses of affiliate 5,564 6,536
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (110,388) 75,845
(Increase) decrease in due from
Candie's, Inc. 0 (3,467)
(Increase) decrease in other
current assets 38,945 6,518
Increase (decrease) in accounts payable 0 30,500
Increase (decrease) in accrued expenses and
other current liabilities 12,563 49,480
(53,316) 165,472
Net cash (used in) provided by
operating activities (18,900) 112,985
Cash flows from investing activities:
(Increase) decrease in loan
receivable - officers 2,696 (97,250)
Payments received on notes receivable 37,982 0
Net cash provided by (used in)
investing activities 40,678 (97,250)
Cash flows from financing activities:
Repayment of long-term debt,
including current maturities (100,000) (3,862)
Purchase of treasury stock (10,000) (8,018)
Net cash used in financing
activities (110,000) (11,880)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (88,222) 3,855
Cash and cash equivalents at beginning of period 245,616 123,512
Cash and cash equivalents at end of period $ 157,394 $ 127,367
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
NEW RETAIL CONCEPTS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
NOTE A - ORGANIZATION AND BASIS FOR PRESENTATION
New Retail Concepts, Inc. ("NRC" or the "Company"), is engaged in
managing its existing corporate assets and in seeking other business
opportunities for acquisition or merger.
The condensed financial statements included herein are unaudited and
include all adjustments which are, in the opinion of management, necessary for a
fair presentation of the results of operations of the interim period pursuant to
the rules and regulations of the U.S. Securities and Exchange Commission.
Certain information and footnote disclosures normally included in generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures in
such financial statements are adequate to make the information presented not
misleading. These condensed financial statements should be read in conjunction
with the Company's Financial Statements and the notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 1996.
The Company has no full-time employees and three part-time employees
which include the Chairman of the Board and President and the Chief Financial
Officer of the Company.
NOTE B - CORPORATE ASSETS
The Company owns 1,227,696 shares of the common stock of Candie's, Inc.
("Candie's"), a Delaware corporation whose shares are traded on the NASDAQ
National Market System, warrants to purchase 700,000 additional shares of such
common stock exercisable at an initial price of $1.2375 per share and an option
to purchase for $1.15 per share 100,000 additional shares of such common stock.
The Company's holding in Candie's is recorded on the equity method of
accounting. At June 30, 1996, such holding was carried at $1,445,510, including
approximately $700,000 of goodwill (net of amortization) which is being
amortized over a ten-year period. Revenues, gross profit and net income of
Candie's for the three months ended April 30, 1996 are as follows:
Net Revenues $6,258,373
Gross Profit $1,630,674
Net Loss $(423,338)
The other corporate assets involving management by the Company include
an account receivable from No Excuses Sportswear, Ltd. ("NES"), license
agreements calling for the payment of royalties to the Company for the use of
the NO EXCUSES trademark, and the trademark CRAYONS.
NOTE C - MAJOR LICENSEES (CUSTOMERS)
Two major licensees (customers) accounted for 83% and 17%,
respectively, of total revenues for the three months ended June 30, 1996. Three
major licensees accounted for 56.6%, 29.5% and 13.0%, respectively, of total
revenues for the three month period ended June 30, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended June 30, 1996 and 1995
Total revenues for the three months ended June 30, 1996 were $158,124
as compared to $152,577 for the corresponding period ended June 30, 1995. This
increase is primarily attributable to an increase in reported shipments of its
licensee for No Excuses footwear.
Net income for the three months ended June 30, 1996 was $34,416 or $.01
per share of Common Stock, as compared to a net loss of $(52,487) or $(.01) per
share of Common Stock, for the three months ended June 30, 1995. This increase
in net income is principally due to a decrease in operating expenses and an
increase in other income due to a gain on an investment.
Selling, general and administrative expenses decreased from $203,473
for the three months ended June 30, 1995 to $155,437 for the three months ended
June 30, 1996. This decrease was primarily attributable to decreases in
advertising, royalty and professional fee expenses.
Interest expense for the three months ended June 30, 1996 was
$4,356 as compared to $6,875 for the three months ended June 30, 1995. This
decrease is due to a reduction in notes payable.
Liquidity and Capital Resources
At June 30, 1996 the Company had working capital of $150,069 as
compared to working capital of $79,944 at March 31, 1996. This increase in
working capital arose primarily as a result of net income for the period.
The Company satisfies its present working capital and other financial
needs from royalties earned on its licensing agreements and the proceeds from
the sale of certain licensing rights. Management of the Company believes that
the Company will generate sufficient cash flow for the next twelve months from
its current cash position and licensing fees as the sublicensor of the NO
EXCUSES trademark.
Subsequent to June 30, 1996, the Company completed an agreement to
repurchase 55,000 shares of the Company's common stock at an aggregate purchase
price of $20,000. All such shares were repurchased in a private transaction.
NEW RETAIL CONCEPTS, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 - Computation of earnings per common share.
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
ended June 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEW RETAIL CONCEPTS, INC.
DATED: BY: /s/ Neil Cole
Neil Cole
President
Chairman
Chief Executive Officer
Chief Accounting Officer
EXHIBIT INDEX
Exhibit No. Description Page
11 Computation of Earnings per Share 11
(Three months ended June 30, 1996 and 1995)
27 Financial Data Schedule 12
Exhibit 11
Page 1
NEW RETAIL CONCEPTS, INC.
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
June 30, 1996 June 30, 1995
Fully Fully
Primary Diluted Primary Diluted
Net Income $ 34,416 $ 34,416 $ (52,487) $ (52,487)
Weighted average number
of shares outstanding 5,843,028 5,843,028 6,762,548 6,762,548
Shares issuable upon
exercise of options
and warrants 785,000 785,000 0 0
Shares assumed to be
repurchased under the
treasury stock method (576,471) (576,471) 0 0
6,051,557 6,051,557 6,762,548 6,762,548
NET INCOME (LOSS) PER SHARE $0.01 $0.01 $(0.01) $(0.01)