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 September 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) (Zip Code)
(914) 694-8888
(Issuer's Telephone Number, Including Area Code)
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 November 14, 1996: 5,717,039.
Transitional Small Business Disclosure Format (check one):
YES NO X
NEW RETAIL CONCEPTS, INC.
INDEX TO FORM 10-QSB
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Balance Sheet at September 30, 1996 (unaudited) 3-4
Condensed Statements of Operations for the Six Months and
Three Months Ended September 30, 1996 and 1995 (unaudited) 5
Condensed Statements of Cash Flows for the Six
Months Ended September 30, 1996 and 1995 (unaudited) 6-7
Notes to Interim Financial Statements 8-9
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-11
PART II - Other Information 12
ITEM 2. Exhibits and Reports on Form 8-K 12
Page 2
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 418,212
Accounts receivable - net of allowance for
doubtful accounts of $12,000 82,421
Note receivable -NES 160,000
Loan receivable - officers 91,677
Other current assets 16,260
Total current assets 768,570
FIXED ASSETS - AT COST:
Furniture and equipment 101,657
Less accumulated depreciation (101,657)
0
Note receivable - NES 587,622
Investment in Candie's, Inc. 1,372,892
1,960,514
OTHER ASSETS 3,000
$ 2,732,084
THE ACCOMPANYING STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 3
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - current $ 300,000
Accounts payable - trade 75,000
Accrued expenses and other current
liabilities 108,210
Total current liabilities 483,210
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 6,323,493 shares 63,235
Additional paid-in capital 3,454,534
Accumulated deficit (1,094,386)
2,423,383
Less:
Common stock in treasury at cost;
536,454 shares 274,509
2,148,874
$2,732,084
THE ACCOMPANYING STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 4
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues:
License and marketing fees $ 432,294 $ 394,531 $ 274,170 $ 241,954
Costs and expenses:
Selling, general
and administrative 321,408 404,425 165,971 200,952
Interest expense 9,356 14,915 5,000 8,040
Total costs and expenses 330,764 419,340 170,971 208,992
Operating income (loss) 101,530 (24,809) 103,199 32,962
Other income (expense):
Equity in (losses) gains
of affiliate (78,182) 132,952 (72,618) 139,488
Other income 58,166 25,030 12,517 11,259
(20,016) 157,982 (60,101) 150,747
Income before provision
for income taxes 81,514 133,173 43,098 183,709
Provision for income taxes 5,982 21,111 1,982 19,160
Net Income $ 75,532 $ 112,062 $ 41,116 $ 164,549
Net Income per share
of common stock:
Primary and Fully Diluted $0.01 $ 0.02 $ 0.01 $ 0.03
Weighted average number of
shares outstanding:
Primary and Fully Diluted 6,034,024 6,643,693 6,016,492 6,490,995
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 5
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net income $ 75,532 $ 112,062
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in (gains) losses of affiliate 78,182 (132,952)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 1,472 75,159
(Increase) decrease in other current assets 40,927 8,729
(Increase) decrease in prepaid income taxes 0 3,989
Increase (decrease) in income taxes payable 0 13,860
Increase (decrease) in accounts payable (10,000) 75,559
Increase (decrease) in accrued expenses and
other current liabilities 23,571 59,612
Increase (decrease) is due to/from
Candie's, Inc. 0 30,000
134,152 120,095
Net cash provided by operating
activities 209,684 246,018
Cash flows from investing activities:
Increase in loan receivable - officers 15,930 (161,971)
Payments received on notes receivable 76,982 600,000
Net cash provided by investing
activities 92,912 438,029
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 6
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (CONT'D)
(Unaudited)
Six Months Ended
September 30,
1996 1995
Cash flows from financing activities:
Repayment of notes payable
including current maturities (100,000) (154,242)
Purchase of treasury stock (30,000) (169,262)
Net cash used in financing
activities (130,000) (323,504)
INCREASE IN CASH AND CASH EQUIVALENTS 172,596 360,543
Cash and cash equivalents at beginning of period 245,616 123,512
Cash and cash equivalents at end of period $418,212 $484,055
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
Page 7
NEW RETAIL CONCEPTS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
September 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, 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 September 30, 1996, such holding was carried at $1,372,892,
including approximately $670,000 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 six months ended July 31, 1996 are as follows:
Net Revenues $15,041,826
Gross Profit $2,553,067
Net Income $439,539
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(R) trademark, and the trademark CRAYONS(R).
Page 8
NOTE C - MAJOR LICENSEES (CUSTOMERS)
Two major licensees (customers) accounted for 84% and 16%, respectively, of
total revenues for the six months ended September 30, 1996. Three major
licensees accounted for 62%, 26% and 12%, respectively, of total revenues for
the six month period ended September 30, 1995.
Page 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Results of Operations
Six Months Ended September 30, 1996 and 1995
Total revenues for the six months ended September 30, 1996 were $432,294 as
compared to $394,531 for the corresponding period ended September 30, 1995. This
increase is primarily attributable to an increase in reported shipments of the
Company's No Excuses footwear licensee.
Net income for the six months ended September 30, 1996 was $75,532 or $.01
per share of Common Stock, as compared to net income of $112,062 or $.02 per
share of Common Stock, for the six months ended September 30, 1995. This
decrease in net income is principally due to the equity in losses of its
affiliate, Candie's, Inc. for the period.
Selling, general and administrative expenses decreased from $404,425 for
the six months ended September 30, 1995 to $321,408 for the six months ended
September 30, 1996. This decrease was primarily attributable to decreases in
advertising, royalty and professional fee expenses.
Interest expense for the six months ended September 30, 1996 was $9,356 as
compared to $14,915 for the six months ended September 30, 1995. This decrease
is due to a reduction in notes payable.
Three Months Ended September 30, 1996 and 1995
Total revenues for the three months ended September 30, 1996 were $274,170
as compared to $241,954 for the corresponding period ended September 30, 1995.
This increase is primarily attributable to an increase in reported shipments of
the Company's footwear licensee.
Net income for the three months ended September 30, 1996 was $41,116 or
$.01 per share of Common Stock, as compared to net income of $164,549 or $.03
per share of Common Stock, for the three months ended September 30, 1995. This
decrease in net income is principally due to the losses in the equity of the
investment in Candie's, Inc. during the period.
Selling, general and administrative expenses decreased from $200,952 for
the three months ended September 30, 1995 to $165,971 for the three months ended
September 30, 1996. This decrease was primarily attributable to decreased
professional fees during the period.
Interest expense for the three months ended September 30, 1996 was $5,000
as compared to $8,040 for the three months ended September 30 1995. This
decrease is due to a reduction in notes payable.
Page 10
Liquidity and Capital Resources
At September 30, 1996 the Company had working capital of $285,360 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(R)
trademark.
Subsequent to September 30, 1996, the Company repurchased 70,000 shares of
the Company's common stock at an aggregate purchase price of $21,054. Of such
shares, 20,000 were repurchased in a private transaction and 50,000 shares were
repurchased in the open market.
Page 11
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 September 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: November 14, 1996 BY: /s/ Neil Cole
Neil Cole
President
Chairman
Chief Executive Officer
Chief Accounting Officer
Page 12
EXHIBIT INDEX
Exhibit No. Description Page
11 Computation of Earnings per Share 14
(Six months ended September 30, 1996 and 1995)
Computation of Earnings per Share 15
(Three months ended September 30, 1996 and 1995)
27 Financial Data Schedule 16
Page 13
Exhibit 11
Page 1
NEW RETAIL CONCEPTS, INC.
COMPUTATION OF EARNINGS PER SHARE
Six Months Ended
September 30, 1996 September 30, 1995
Fully Fully
Primary Diluted Primary Diluted
Net Income $ 75,532 $ 75,532 $ 112,062 $ 112,062
Weighted average number
of shares outstanding 5,825,495 5,825,495 6,494,829 6,494,829
Shares issuable upon
exercise of options
and warrants 785,000 785,000 385,000 385,000
Shares assumed to be
repurchased under the
treasury stock method (576,471) (576,471) (258,229) (236,136)
6,034,024 6,034,024 6,621,600 6,643,693
NET INCOME (LOSS) PER SHARE $0.01 $0.01 $ 0.02 $ 0.02
Page 14
Exhibit 11
Page 2
NEW RETAIL CONCEPTS, INC.
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
September 30, 1996 September 30, 1995
Fully Fully
Primary Diluted Primary Diluted
Net Income $ 34,416 $ 34,416 $ 164,549 $ 164,549
Weighted average number
of shares outstanding 5,807,963 5,807,963 6,193,267 6,193,267
Shares issuable upon
exercise of options
and warrants 785,000 785,000 385,000 385,000
Shares assumed to be
repurchased under the
treasury stock method (576,471) (576,471) (131,458) (87,272)
6,016,492 6,016,492 6,446,809 6,490,995
NET INCOME (LOSS) PER SHARE $0.01 $0.01 $ 0.03 $ 0.03