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, 2004
IWI HOLDING LIMITED
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(Exact name of registrant as specified in its charter)
Oakmont Centre, 1010 Executive Court, #300, Westmont, IL 60559
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (630) 887-2388
BVI 0-25108 None
(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
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(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):
FOR IMMEDIATE RELEASE
For Further Information:
Joseph Lau
IWI Holding Limited
(630) 887-8288
IWI HOLDING LIMITED ANNOUNCES
SECOND QUARTER RESULTS
WESTMONT, ILLINOIS - September 10, 2004 -- 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, 2004.
For the second quarter of 2004, IWI reported a net loss of $312,000 or
$0.12 per share on net sales of $5,058,000 compared to a net loss of $737,000 or
$0.29 per share on net sales of $5,079,000 for the comparable period in 2003.
For the six months ended June 30, 2004, the Company reported a net loss
of $502,000, or $0.20 per share on net sales of $10,552,000 compared to a net
loss of $1,121,000 or $0.40 per share on net sales of $9,603,000 for the
comparable period in 2003.
Sales for the six-month period ended June 30, 2004 increased $949,000
or 9.9% to $10,552,000 for the same period a year ago. Included in the reported
sales were liquidation sales of $992,000 in 2004 vs. $544,000 for the same
period in 2003, an increase of $438,000. Sales excluding liquidation sales
increased $511,000 or 5.6%. This increase in sales for the first half overcame
the loss of one of the Company's major customer whose sales represented 20% of
the Company's reported sales in 2003. The effect of the loss of this customer
compared with 2003 six months results was a decrease in sales of $2.1 million.
This was offset by a combination of expanding sales to other existing customers
and addition of new customers in the mid size market. This expansion into the
mid size market is a result of years of effort cultivating these new customers.
Liquidation sales continue to be a strategic part of the Companies process to
control and regulate its inventory. Most of the products sold under the
liquidation process represent customer returns and in some cases overstock.
Returns experienced in 2004 through June 30, 2004 decreased $1,259,000
($1,493,000 in 2004 vs. $2,742,000 in 2003). Returns reported in 2003 were high
by historical standards and reflected discontinuance of selected items at one of
our major customers and return of on hand inventory. Gross profit increased
$485,000 or 30.8% for the six month period ended June 30, 2004 and reflects the
combination of increased margins and the decrease in returned merchandise. Gross
profit for the second quarter increased $246,000 or 34.8%.
Selling, General and Administrative expenses decreased $121,000 or
4.75% for the six-month period and increased $148,000 or 11.0% in the second
quarter. These decreases were due primarily to the overhead reduction program
implemented in the first quarter with the benefit primarily realized during the
second quarter. Some of the efficiencies implemented were a force reduction of
nearly 10%. Salary reduction of 10% for the six highest paid employees, which
may be repaid upon certain profitability being achieved. Overtime has been
reduced and only incurred with the prior approval of the President. Where
feasible certain production functions are being sourced overseas. Health and
Dental insurance provided to the employees has been resourced and combined with
increased employee contributions, reduced the cost per employee to the Company
below 2003 levels. Interest expense decreased $13,000 or 8.9% to $133,000 for
the six months ending June 30, 2003 and decreased $31,000 or 34.0% to $60,000
for the second quarter, reflecting decreased borrowing, 2003 interest expense
included certain additional interest 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 replaced the credit facility in effect since September
2001. Effective June 1, 2004 the existing loan agreement was amended and
restructured to eliminate the seasonal over-line via increasing the maximum
borrowing from $5.0 million to $6.5 million. Certain covenants in the original
agreement were also streamlined. As a result of the above and based on the
performance experienced in 2003, interest rates charged by the financing
institution increased slightly under the amended agreement. This agreement
remains in effect until May 29, 2005.
The Company expects to gain market share with several of its
established customers during 2004 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 and year.
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.
###
(financials to follow)
IWI HOLDING LIMITED
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
June December 31
ASSETS 2004 2003
- ------ ---- ----
Current Assets:
Cash $ 41 $ -
Accounts Receivable, Less Allowances for Doubtful
Accounts of $547 in 2004 and $532 in 2003 3,936 5,557
Inventories 8,070 9,235
Deferred Income Taxes 156 156
Prepaid Expenses 78 181
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Total Current Assets 12,281 15,129
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Property and Equipment 2,964 2,964
Less Accumulated Depreciation (2,821) (2,766)
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Property and Equipment - Net 143 198
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Total Assets $ 12,424 $15,327
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Checks issued in excess of funds on deposit $ - $ 24
Line of Credit 3,582 5,250
Notes Payable 1,069 447
Accounts Payable, Trade 4,000 4,403
Accounts Payable to Affiliated Company 2,062 2,568
Accrued Liabilities 783 1,204
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Total Current Liabilities 11,496 13,896
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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) (15,163) (14,660)
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Total Stockholders' Equity 928 1,431
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Total Liabilities and Stockholders' Equity $ 12,424 $15,327
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Three Months Ended Six Months Ended
June 30 June 30
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2004 2003 2004 2003
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Net Sales $ 5,058 $ 5,079 $10,552 $ 9,603
Cost of Sales 4,106 4,373 8,493 8,029
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Gross Profit (Loss) 952 706 2,059 1,574
Selling, general and administrative expenses 1,204 1,352 2,428 2,549
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Income (Loss) from Operations (252) (646) (369) (975)
Interest Expense 60 91 133 146
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Income (Loss) before Income Taxes (312) (737) (502) (1,121)
Income taxes (benefit) - - - -
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Net Income (Loss) $ (312) $ (737) $ (502) (1,121)
=========== ========= ========== ==========
Net Income (Loss) per Common Share $ (0.12) $(0.29) $ (0.20) (0.44)
=========== ========= ========== ==========
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, 2004 December 31, 2003
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Cash Flows From Operating Activities:
Net Income (Loss) $ (502) $ (1,904)
Adjustment to reconcile net income loss to net
cash used on operating activities:
Depreciation and amortization 55 159
(Recoveries of) provision for doubtful accounts 16 (32)
Changes in operating assets and liabilities:
Accounts receivable 1,605 (1,674)
Inventories 1,164 370
Deferred income taxes - -
Prepaid expenses 103 121
Accounts payable trade (403) (171)
Accounts payable trade affiliated companies (506) 810
Accrued liabilities (421) 35
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Net cash provided by (used in) operating activities: 1,111 (2,286)
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Investing activities:
Purchases of property and equipment - (32)
Proceeds from sale of equipment - -
Proceeds from sale of assets held for disposal - -
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Net cash generated (used in) investing activities - (32)
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Cash Flows from Financing Activities
Checks issued in excess of Funds on deposit (24) 24
Borrowings from (payments on) notes payable to employees 622 132
Proceeds from (payments on) lines of credit, net (1,668) 2,146
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Net cash provided by (used in) financing activities (1,070) 2,302
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Net increase (decrease) in cash 41 (16)
Cash at beginning of year/period - 16
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Cash at End of Period $ 41 $ -
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10
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, 2004