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, 1997
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)
(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 November 14, 1997: 5,693,639
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, 1997
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Balance Sheet at September 30, 1997 (unaudited) 3-4
Condensed Statements of Operations for the Six Months and
Three Months Ended September 30, 1997 and 1996 (unaudited) 5
Condensed Statements of Cash Flows for the Six Months
Ended September 30, 1997 and 1996 (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 1. Legal Proceedings 11
ITEM 2. Exhibits and Reports on Form 8-K 11
Page 2
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 362,742
Accounts receivable - net 207,645
Note receivable - NES 169,363
Other current assets 20,111
Total current assets 759,861
FIXED ASSETS - AT COST:
Furniture and equipment 101,657
Less accumulated depreciation (101,657)
-
Note receivable - NES 418,885
Investment in Candie's, Inc. 1,823,149
2,242,034
$ 3,001,895
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 3
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - current $ 300,000
Accounts payable - trade 9,045
Accrued expenses and other current
liabilities 122,648
Total current liabilities 431,693
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 6,423,493 shares 64,235
Additional paid-in capital 3,468,534
Accumulated deficit ( 640,595)
2,892,174
Less:
Common stock in treasury at cost;
729,854 shares 421,972
2,470,202
$ 3,001,895
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,
1997 1996 1997 1996
Revenues:
License and marketing fees $ 264,685 $ 432,294 $ 124,657 $ 274,170
Costs and expenses:
Selling, general
and administrative 307,388 321,408 210,488 165,971
Interest expense 7,500 9,356 3,750 5,000
Total costs and expenses 314,888 330,764 214,238 170,971
Operating (loss) income (50,203) 101,530 (89,581) 103,199
Other income (expense):
Equity in gains (losses)
of affiliate 226,067 (78,182) 51,634 (72,618)
Other Income 24,680 58,166 12,070 12,517
250,747 (20,016) 63,704 (60,101)
Income (loss) before provision
for income taxes 200,544 81,514 (25,877) 43,098
Provision for income taxes 5,000 5,982 0 1,982
NET INCOME (LOSS) $ 195,544 $ 75,532 $ (25,877) $ 41,116
Net income (loss) per share
of common stock:
Primary and Fully Diluted $0.03 $0.01 $(0.00) $0.01
Weighted average number of
shares outstanding:
Primary and Fully Diluted 6,283,779 6,034,024 5,702,155 6,016,492
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,
1997 1996
Cash flows from operating activities:
Net cash (used in) provided by
operating activities $(116,392) $ 209,684
Cash flows from investing activities:
Net cash provided by investing
activities 81,074 92,912
Cash flows from financing activities:
Net cash used in financing
activities (62,974) (130,000)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (98,292) 172,596
Cash and cash equivalents at beginning of period 461,034 245,616
Cash and cash equivalents at end of period $ 362,742 $ 418,212
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
Page 6
NEW RETAIL CONCEPTS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
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, 1997.
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 September 30, 1997, such holding was carried at
$1,823,149, including approximately $568,000 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,
1997 are as follows:
Net Revenues $46,587,253
Gross Profit $11,725,174
Net Income $ 3,018,277
Page 7
The other corporate assets involving management by the Company
include an account receivable from No Excuses Sportswear, Ltd. ("NES") and
license agreements calling for the payment of royalties to the Company for
the use of the NO EXCUSES(R) trademark and the CRAYONS(R) trademark.
NOTE C - MAJOR LICENSEES (CUSTOMERS)
Two major licensees (customers) accounted for 85% and 15%,
respectively, of total revenues for the six months ended September 30, 1997.
Two major licensees accounted for 84% and 16%, respectively, of total
revenues for the six month period ended September 30, 1996.
Page 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Results of Operations
Six Months Ended September 30, 1997 and 1996
Total revenues for the six months ended September 30, 1997 were
$264,685 as compared to $432,294 for the corresponding period ended September
30, 1996. This decrease is primarily attributable to a decrease in reported
shipments of its licensee for No Excuses footwear and the expiration of the
Company's license for children's sportswear at July 31, 1997.
Net income for the six months ended September 30, 1997 was $195,544
or $.03 per share of Common Stock, as compared to net income of $75,532 or
$.01 per share of Common Stock, for the six months ended September 30, 1996.
This increase in net income is principally due to the equity in the gains of
Candie's, Inc.
Selling, general and administrative expenses decreased from $321,408
for the six months ended September 30, 1996 to $307,388 for the six months
ended September 30, 1997. This decrease was primarily attributable to
decreases in advertising, royalty and professional fee expenses.
Interest expense for the six months ended September 30, 1997 was
$7,500 as compared to $9,356 for the six months ended September 30, 1996.
This decrease is due to a reduction in notes payable.
Three Months Ended September 30, 1997 and 1996
Total revenues for the three months ended September 30, 1997 were
$124,657 as compared to $274,170 for the corresponding period ended September
30, 1996. This decrease is primarily attributable to a decrease in reported
shipments of the Company's footwear licensee and the expiration of the
Company's license for children's sportswear at July 31, 1997.
Net loss for the three months ended September 30, 1997 was $25,877
or $0.00 per share of Common Stock, as compared to net income of $41,116 or
$.01 per share of Common Stock, for the three months ended September 30,
1996. This loss of net income is principally due to the decrease in
licensing revenues and an increase in current quarter operating expenses.
Selling, general and administrative expenses increased from $165,971
for the three months ended September 30, 1996 to $210,488 for the three
months ended September 30, 1997. This increase was primarily attributable to
an increase in payroll expenses during the period.
Interest expense for the three months ended September 30, 1997 was
$3,750 as compared to $5,000 for the three months ended September 30, 1996.
This decrease is due to a reduction in notes payable.
Page 9
Liquidity and Capital Resources
At September 30, 1997 the Company had working capital of $328,168 as
compared to working capital of $335,760 at March 31, 1997. This decrease in
working capital arose primarily as a result of an operating loss 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.
Page 10
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, 1997.
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, 1997 BY:______________________
Neil Cole
President
Chairman
Chief Executive Officer
Chief Accounting Officer
Page 11
EXHIBIT INDEX
Exhibit No. Description Page
11 Computation of Earnings per Share 13
(Six months ended September 30, 1997 and 1996)
Computation of Earnings per Share 14
(Three months ended September 30, 1997 and 1996)
27 Financial Data Schedule 15
Page 12
Exhibit 11
Page 1
NEW RETAIL CONCEPTS, INC.
COMPUTATION OF EARNINGS PER SHARE
Six Months Ended
September 30, 1997 September 30, 1996
Fully Fully
Primary Diluted Primary Diluted
Net Income $ 195,544 $ 195,544 $ 75,532 $ 75,532
Weighted average number
of shares outstanding 5,716,243 5,716,243 5,825,495 5,825,495
Shares issuable upon
exercise of options
and warrants 885,000 885,000 785,000 785,000
Shares assumed to be
repurchased under the
treasury stock method (317,464) (255,831) (576,471) (576,471)
6,283,779 6,345,411 6,034,024 6,034,024
NET INCOME PER SHARE $0.03 $0.03 $0.01 $0.01
Page 13
Exhibit 11
Page 2
NEW RETAIL CONCEPTS, INC.
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
September 30, 1997 September 30, 1996
Fully Fully
Primary Diluted Primary Diluted
Net (loss) income $ (25,877) $ (25,877) $ 34,416 $ 34,416
Weighted average number
of shares outstanding 5,702,155 5,702,155 5,807,963 5,807,963
Shares issuable upon
exercise of options
and warrants N/A N/A 785,000 785,000
Shares assumed to be
repurchased under the
treasury stock method N/A N/A (576,471) (576,471)
5,702,155 5,702,155 6,016,492 6,016,492
NET (LOSS) INCOME PER SHARE $0.00 $0.00 $0.01 $0.01
Page 14