SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
CURRENT REPORT
Date of Report: June 30, 2003
IWI HOLDING LIMITED
(Exact name of registrant as specified in its charter)
Oakmont Centre, 1010 Executive Court, #300, Westmont, IL 60559
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (630) 887-2388
BVI 0-25108 None
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
--------
(Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes No X
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(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
IWI HOLDING LIMITED ANNOUNCES
SECOND QUARTER RESULTS
WESTMONT, ILLINOIS - September 15, 2003 -- IWI Holding Limited (OTCBB -
JEWLF), a U.S. based designer, merchandiser, and wholesale distributor of fine
jewelry, today reported its results of operations for the second quarter ended
June 30, 2003.
For the second quarter of 2003, IWI reported a net loss of $737,000 or
$0.29 per share on net sales of $5,079,000 compared to a net loss of $83,000 or
$0.03 per share on net sales of $5,320,000 for the comparable period in 2002.
For the six months ended June 30, 2003, the Company reported a net loss
of $1,121,000, or $0.44 per share on net sales of $9,603,000 compared to a net
loss of $404,000 or $0.16 per share on net sales of $9,076,000 for the
comparable period in 2002.
Sales for the six-month period ended June 30, 2003 increased $527,000
or 5.8% to $9,603,000 for the same period a year ago. Included in the reported
sales were liquidation sales of $544,000 in 2003 vs. $317,000 for the same
period in 2002, an increase of $227,000. Sales excluding liquidation sales
increased $300,000 or 3.4%. This increase in sales overcame an increase in
returns from customers in 2003 of $1,781,000, ($2,742,000 in 2003 vs. $961,000
in 2002). The large returns experienced in 2003 primarily reflect discontinuance
of certain items due to slower than anticipated sell through at one of the
Company's largest customers. These discontinued items were replaced with other
of the Company's products but due to the on hand inventory at this customer
these returns had a negative impact on overall sales growth as well as gross
profit and margin. With the change in product with this customer, increased sell
through is expected and the long term effect to the Company's sales and
profitability is expected to be positive although the impact will not be
sufficient to offset the losses generated by this program change in 2003. Gross
profit decreased $283,000 or 15.24% for the six month period ended June 30, 2003
and reflects the combination of increased returns and lower margin programs
reflecting the continuing tight economic conditions experienced in the first
half of 2003. Gross profit for the second quarter decreased $434,000 or 38.1%
from the same period a year ago reflecting the large returns and aggressive
liquidation program resulting in a loss within the quarter of $105,000.
Selling, General and Administrative expenses increased $390,000 or
18.1% for the six month period and increased $181,000 or 15.5% in the second
quarter. These increases were due primarily to increased salaries and related
costs principally caused by staffing levels in the production and quality
control areas ($187,000), a casualty loss net of insurance recovery on a lost
product shipment ($100,000), and legal, professional and bank charges relating
to the refinancing put in place in May of 2003 ($101,000). Interest expense
increased $44,000 or 43.1% to $146,000 for the six months ending June 30, 2003
and increased $39,000 or 75.0% to $91,000 for the second quarter, reflecting
increased borrowing and certain interest up charges by the prior lender which in
part precipitated the change in financial institutions in May 2003.
On May 29, 2003 the Company entered into a credit agreement with a new
financial institution, whereby the Company can borrow up to $5.0 million, plus a
seasonal over-line amount of $1.5 million. The total credit facility is governed
by a formula, as defined in the agreement, based principally on accounts
receivable and inventory levels. This agreement provides, among other things,
that the credit facilities are collateralized by substantially all the assets of
the Company. The credit agreement matures in two years, or may be accelerated by
the lender upon certain events as specified in the loan agreement. An officer of
the Company has agreed to personally guarantee up to $1,000,000 of the
borrowing. This loan replaces the credit facility put in place in September
2001.
The Company expects to gain market share with several of its
established customers during 2003 as well as through expansion of its customer
base. This is a result of the Company's commitment to continuously furnish
quality new product design, ability to deliver goods timely, ability to
interface with customer systems and an ongoing support of the customers' retail
programs. Due to the seasonality of the business the Company expects to continue
to report losses through the third quarter but report profitable results for the
fourth quarter.
This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company's actual results could
differ materially from those set forth in the forward-looking statements as a
result of among other factors, the risk factors set forth above, and in the
Company's filings with the Securities and Exchange Commission, changes in
general economic conditions and changes in the assumptions used in making such
forward-looking statements.
IWI HOLDING LIMITED
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
June December 31
ASSETS 2003 2002
- ------ ---- ----
Current Assets:
Cash $ 158 $ 16
Accounts Receivable, Less
Allowances for Doubtful
Accounts of $554 in 2003
and $568 in 2002 4,109 3,851
Inventories 9,352 9,605
Deferred Income Taxes 156 156
Prepaid Expenses 209 302
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Total Current Assets 13,984 13,930
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Property and Equipment 2,942 2,932
Less Accumulated Depreciation (2,693) (2,607)
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Property and Equipment - Net 249 325
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Total Assets $ 14,233 $14,255
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Line of Credit $ 4,968 $ 3,104
Notes Payable 230 315
Accounts Payable, Trade 5,006 4,574
Accounts Payable to Affiliated Company 1,019 1,758
Accrued Advertising 128 236
Accrued Liabilities 669 933
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Total Current Liabilities 12,020 10,920
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Stockholders' Equity:
Preferred Stock, $1 Par Value; 5,000,000 Shares
Authorized; 3,644,880 Shares Issued and Outstanding 3,645 3,645
Common Stock, No Par Value; 10,000,000 Shares
Authorized; 2,554,700 Shares Issued and
Outstanding -
-
Additional Paid in Capital 12,446 12,446
Retained Earnings (Deficit) (13,878) (12,756)
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Total Stockholders' Equity 2,213 3,335
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Total Liabilities and Stockholders' Equity $ 14,233 $14,255
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IWI HOLDING LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
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2003 2002 2003 2002
---- ---- ---- ----
Net Sales $ 5,079 $ 5,320 $ 9,603 $ 9,076
Cost of Sales 4,373 4,180 8,029 7,219
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Gross Profit (Loss) 706 1,140 1,574 1,857
Selling, general and administrative expenses 1,352 1,171 2,549 2,159
--------- -------- -------- ---------
Income (Loss) from Operations (646) (31) (975) (302)
Interest Expense 91 52 146 102
--------- -------- -------- ---------
Income (Loss) before Income (737) (83) (1,121) (404)
Taxes - - - -
--------- -------- -------- ---------
Income taxes (benefit)
Net Income (Loss) $ (737) $ (83) $(1,121) $ (404)
========= ========= ======== =========
Net Income (Loss) per Common Share $ (0.29) $ (0.03) $ (0.44) $ (0.16)
========= ========= ======== =========
Weighted Average Number of
Common Shares Outstanding 2,554,700 2,554,700 2,554,700 2,554,700
========== ========== ========= ==========
IWI HOLDING, LTD
Consolidated Statement of Cash Flows
(In Thousands)
(Unaudited)
Six Months Twelve Months
Ended Ended
June 30, 2003 December 31, 2002
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Cash Flows From Operating Activities:
Net Income (Loss) $(1,121) $ 278
Adjustment to reconcile net income loss to net
cash used on operating activities:
Depreciation and amortization
86 205
Provision for doubtful accounts
4 53
Changes in operating assets and liabilities:
Accounts receivable
(262) 536
Inventories
253 (3,417)
Deferred income taxes
- (36)
Prepaid expenses
93 (113)
Accounts payable trade
432 2,377
Accounts payable trade affiliated companies
(739) 977
Accrued liabilities
(373) (344)
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Net cash provided by (used in) operating activities:
(1,627) 516
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Investing activities:
Purchases of property and equipment
(10) (42)
Proceeds from sale of equipment
- -
Proceeds from sale of assets held for disposal
- -
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Net cash generated (used in) investing activities
(10) (42)
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Cash Flows from Financing Activities
Borrowings from (payments on) notes payable to employees
(85)
305
Proceeds from (payments on) lines of credit, net
1,864 (963)
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Net cash provided by (used in) financing activities
1,779 (658)
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Net increase (decrease) in cash
142 (184)
Cash at beginning of year/period
16 200
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Cash at End of Period $ 158 $ 16
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IWI HOLDINGS LIMITED
/s/ Joseph K. Lau
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Joseph K. Lau
President & Chief Executive Officer
Date: September 15 2003