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 March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 0-20769
CABLE & CO. WORLDWIDE, INC.
Exact name of registrant as specified in its charter
Delaware 22-3341195
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
724 Fifth Avenue, New York, New York 10019
(Address of principal executive offices) (Zip Code)
(212) 489-9686
Registrant's telephone number, including area code
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ] NO [X]
Indicate the number of shares outstanding of each of the registrants classes of
common equity, as of the latest practicable date:
The registrant had 3,394,237 shares of Common Stock, $.01 par value,
outstanding at July 18, 1996
There are 16 pages in this document.
The Exhibit Index appears on sequentially numbered page 15.
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 31, 1996 (unaudited) 3
Consolidated Statements of Operations for the Three-month
periods ended March 31, 1996 and 1995 (unaudited) 4
Consolidated Statement of Stockholders' Equity for the
Three-month period ended March 31, 1996 (unaudited) 5
Consolidated Statements of Cash Flows for the Three-month
periods ended March 31, 1996 and 1995 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-13
PART II - OTHER INFORMATION
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Exhibit Index 15
Signature 16
</TABLE>
- 2 -
<PAGE>
PART I - FINANCIAL INFORMATION
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
March 31, 1996
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash $ 54,801
Accounts receivable, less allowances for doubtful accounts
and sales discounts of $76,000 759,065
Inventory 2,649,042
Prepaid and other current assets 890,890
Deferred income tax asset, net of valuation allowance of $24,000
Total current assets 4,353,798
Property and Equipment, net of accumulated depreciation of $68,554 895,953
Trademark and Trade name, net of accumulated amortization of $73,246 1,098,691
Deferred Offering Costs (Note 5) 288,486
Debt Issue Costs (Note 4) 217,000
Other Intangible Assets, net of accumulated amortization of $16,035 26,889
Other Assets 7,015
--------------
Total Assets $6,887,832
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Due to factor $2,340,930
Bridge notes payable (Note 4) 1,099,000
Accounts payable 617,913
Accrued expenses and other current liabilities 1,079,982
Current portion of note payable 333,336
Current portion of capitalized lease obligations 27,682
-------------
Total current liabilities 5,498,843
Note Payable - net of current portion 416,664
Capitalized Lease Obligations - net of current portion 126,066
Deferred Rent 51,894
Deferred Income Tax Liability 35,662
-------------
Total Liabilities 6,129,129
Redeemable Preferred Stock - Series A - 12% Cumulative; $.01 par value;
authorized ,58,340 shares, issued and
outstanding 43,327 shares ($500,000 liquidation preference) 500,000
------------
Stockholders' Equity: (Notes 2, 3 and 4)
Preferred stock - $.01 par value; authorized 1,420,000 shares;
no shares issued
Common stock - $.01 par value; authorized 10,000,000 shares;
issued and outstanding 1,812,206 shares 18,122
Additional paid-in capital 3,196,217
Accumulated deficit (2,955,636)
------------
Stockholders' Equity 258,703
Total Liabilities and Stockholders' Equity $6,887,832
</TABLE>
See Notes to Consolidated Financial Statements.
- 3 -
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three-month period ended
March 31,
1995 1996
------------ ---------
<S> <C> <C>
Net sales $ 2,704,427 $ 3,676,582
Cost of goods sold 1,617,970 2,366,123
----------- -----------
Gross profit 1,086,457 1,310,459
Noncash compensatory charges (Notes 2 and 3) -- 2,390,231
Selling expenses 580,282 1,017,928
General and administrative expenses 257,400 473,156
----------- -----------
Income (loss) from operations 248,775 (2,570,856)
Interest expense 86,651 165,850
Bridge note discount (Note 4) -- 123,000
----------- -----------
Income (loss) before provision (benefit) for income taxes 162,124 (2,859,706)
Provision (benefit) for income taxes 67,000 (7,179)
----------- -----------
Net income (loss) 95,124 (2,852,527)
Dividends on preferred stock 7,234 14,961
----------- -----------
Net income (loss) applicable to common stock $ 87,890 $(2,867,488)
----------- -----------
Net income (loss) per common share $ .04 $ (1.58)
----------- -----------
Weighted average number of common shares outstanding 2,079,086 1,812,206
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
- 4-
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Three-month period ended March 31, 1996
(unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
Number of Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 1,007,445 $ 10,074 $ 34 $ (103,109) $ (93,001)
Issuance of common stock and warrants
to purchase common stock (Note 3) 400,000 4,000 1,721,000 1,725,000
Deferred consulting costs (Note 3) (1,685,000) (1,685,000)
Amortization of deferred consulting
costs (Note 3) 101,160 101,160
Issuance of common stock to existing
stockholders (Note 2) 224,761 2,248 941,748 943,996
Issuance of common stock and warrants
in connection with private placement
(Note 4) 180,000 1,800 34,200 36,000
Discount on bridge note (Note 4) 738,000 738,000
Release of escrow shares (Note 2) 1,345,075 1,345,075
Net loss (2,852,527) (2,852,527)
----------- ----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1996 1,812,206 $ 18,122 $ 3,196,217 $(2,955,636) $ 258,703
----------- ----------- ----------- ----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
- 5-
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three-month period ended
March 31
1995 1996
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 95,124 $(2,852,527)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 17,853 51,773
Provision for doubtful accounts and sales discounts 118,751 (24,125)
Provision for deferred income taxes -- 7,562
Noncash compensatory charges -- 2,390,231
Amortization of discount on bridge note -- 123,000
Changes in operating assets and liabilities, net of effect of purchase of the
Cable & Co. product line:
(Increase) in accounts receivable (1,199,682) (84,400)
Decrease in inventory 37,790 229,040
(Increase) in prepaid expenses and other current assets (281,669) (247,444)
(Increase) in intangibles (42,345) (579)
(Increase) in other assets (1,000) --
(Decrease) in accounts payable (602,964) (648,210)
Increase in accrued expenses and other liabilities 472,184 308,456
Increase (decrease) in income taxes payable 65,600 (14,300)
Increase in deferred rent -- 6,512
----------- -----------
Net cash used in operating activities (1,320,358) (755,011)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,755) (77,890)
Purchase of Cable & Co. product line (1,401,787) --
----------- -----------
Cash used in investing activities (1,403,542) (77,890)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred offering costs -- (288,486)
Debt issue costs -- (217,000)
Advances from (repayments to) factor, net 852,717 (184,741)
Repayment of term note payable -- (130,000)
Principal payments under capital lease obligations -- (6,748)
Principal payments of long-term note payable -- (83,333)
Proceeds from issuance of bridge notes payable -- 1,714,000
Proceeds from issuance of long-term note payable 1,000,000 --
Proceeds from issuance of common stock 150,100 76,000
Proceeds from issuance of preferred stock 750,000 --
----------- -----------
Net cash provided by financing activities 2,752,817 879,692
----------- -----------
Net increase in cash 28,917 46,791
Cash at beginning of period -- 8,010
----------- -----------
Cash at end of period $ 28,917 $ 54,801
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 86,651 $ 137,755
----------- -----------
Cash paid for income taxes $ 1,400 $ 25,540
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
- 6 -
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION:
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted from the accompanying financial
statements. The results of operations for the three-month period ended March 31,
1996 is not necessarily indicative of the results of operations expected for the
year ended December 31, 1996. The consolidated financial statements included
herein should be read in conjunction with the consolidated financial statements
and notes thereto for the year ended December 31, 1995.
The accompanying unaudited interim consolidated financial
statements include all adjustments (consisting only of those of a normal
recurring nature) necessary for a fair statement of the results of the interim
period.
2. SHARES ISSUED TO STOCKHOLDERS AND RELEASE OF ESCROW SHARES:
At the time of the acquisition of the Cable & Co. product line
(the "Cable product line") from Hongson, Inc. (see Note 1 of the December 31,
1995 consolidated financial statements of Cable & Co. Worldwide, Inc. ( the
"Company")), the stockholders of the Company, including the Company's
management, entered into a stockholders' agreement (the "Stockholders'
Agreement") with respect to their shares of common stock. Pursuant to the
Stockholders' Agreement, the Company's management placed an aggregate of 320,256
shares of common stock in escrow. In January 1996, the Company terminated the
Stockholders' Agreement and released all of the shares held in escrow. As a
result of this release, the Company has recorded a noncash compensatory charge
in the amount of $1,345,075.
In February 1996, the Company issued 224,761 shares of common
stock to certain existing stockholders. As a result of this issuance the Company
has recorded a noncash compensatory charge in the amount of $943,996 ($4.20 per
share).
The noncash compensatory charges relating to release of the
320,256 escrow shares and the issuance of the 224,761 shares are offset by an
increase in additional paid-in capital. There is no impact on total
stockholders' equity reflected on the Company's consolidated financial
statements as a result of these transactions. The charges related to the release
of the 320,256 escrow shares are not deductible for income tax purposes.
The following table illustrates the impact of the noncash
compensatory charges relating to the release of the escrow shares and the
issuance of common stock to certain existing stockholders for the three-month
period ended March 31, 1996:
-7-
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
<TABLE>
<CAPTION>
Impact of Without
As Stated Charges Charges
<S> <C> <C> <C>
Net sales $ 3,676,582 $ 3,676,582
Cost of goods sold 2,366,123 2,366,123
----------- -----------
Gross profit 1,310,459 1,310,459
Noncash compensatory charges (2,390,231) $ 2,289,071 (101,160)
Selling expenses (1,017,928) (1,017,928)
General and administrative expenses (473,156) (473,156)
----------- ----------- -----------
Loss from operations (2,570,856) 2,289,071 (281,785)
Interest expense 165,850 165,850
Bridge note discount 123,000 123,000
----------- ----------- -----------
Loss before income tax benefit (2,859,706) 2,289,071 (570,635)
Income tax benefit (7,179) (7,179)
----------- ----------- -----------
Net loss (2,852,527) 2,289,071 (563,456)
Dividends on preferred stock 14,961 14,961
----------- ----------- -----------
Net loss applicable to common stock $(2,867,488) $ 2,289,071 $ (578,417)
----------- ----------- -----------
Net loss per common share $ (1.58) $ (.32)
----------- -----------
Weighted average number of common
shares outstanding 1,812,206 1,812,206
----------- -----------
</TABLE>
The presentation of the net loss without the noncash
compensatory charges does not intend to represent an alternative to the
calculation of the net loss in accordance with generally accepted accounting
principles as an indicator of operating performance.
This information is presented to assist a reader of the
consolidated financial statements in understanding the effect of these
compensatory charges. These charges represent noncash items, which have no net
effect on the stockholders' equity.
3. INTERNATIONAL CONSULTING AGREEMENT:
In January, 1996, the Company entered into a three-year
international consulting agreement with U.K. Hyde Park Consultants, Ltd. ("Hyde
Park"). In addition, Hyde Park purchased 400,000 shares of common stock and
warrants to purchase up to 450,000 shares of common stock for $40,000. The
warrants are identical to the warrants issued in conjunction with the Company's
initial public offering (the "IPO") (see note 5). The agreement contains
cancellation clauses and stock repurchase provisions in the event that the
Company does not have a net worth of at least $3,000,000 at July 31, 1996.
-8-
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited)
The Company has valued these shares of common stock and
warrants to purchase shares of common stock at $1,725,000. The difference
between this amount and the purchase price of $40,000 will be recognized ratably
as a noncash compensatory charge over the life of the agreement. For the
three-month period ended March 31, 1996, the Company recognized $101,160 of
consulting expense in the accompanying consolidated statement of operations.
4. PRIVATE PLACEMENT:
On March 28, 1996, the Company completed a private placement,
whereby it issued 36 units at a price of $50,000 per unit. Each unit consisted
of a $49,000 promissory note ( the "Bridge Note"), 5,000 shares of common stock
and a warrant to purchase up to 5,000 shares of common stock, subject to
adjustment, as defined, at an exercise price of $7.20 per share, 120% of the IPO
price per share (see note 5). The Bridge Notes, aggregating $1,764,000 bear
interest at an annual rate of 11% and are due upon the earlier of 12 months from
the date of issuance or the Company's receipt of gross proceeds of at least
$4,080,000 from the sale of its debt and/or equity securities in a public or
private financing. The warrants are exercisable over a 3-year period, commencing
13 months from the date of issuance. Upon the closing of the Company's IPO, the
terms of the warrants were adjusted to be identical to the terms of the warrants
issued in conjunction with the IPO.
In connection with the private placement, a discount of
$738,000 has been recorded based upon the allocation of the proceeds between the
Bridge Notes payable and the common stock and warrants issued. The discount has
been reflected as a reduction of the face amount of the Bridge Notes payable.
This amount was calculated by attributing a value of $4.20 per share of common
stock and $.10 per warrant, less cash received of $36,000. The discount is being
amortized over a twelve month period.
The Bridge Notes were repaid, with accrued interest, in the
amount of $1,833,585 on June 19, 1996 with the proceeds from the IPO. The
discount on the Bridge Notes was fully amortized on June 19, 1996.
At March 31, 1996, the Company had incurred costs in
connection with the private placement in the amount of $217,000.
-9-
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Concluded
(unaudited)
5. INITIAL PUBLIC OFFERING:
On June 5, 1996, the Company effected an initial public
offering ("IPO"). A total of 1,130,000 common shares and common share purchase
warrants were sold to the public, of which 950,000 shares of common stock and
1,130,000 common share purchase warrants were sold by the Company and 180,000
shares of common stock were sold by the private placement investors (see note 4)
at a price of $6.00 per share and $.10 per warrant. The warrants entitle the
holder to purchase common stock at $7.20 per share over a 3-year period
beginning July 5, 1997. The warrants may be redeemed by the Company commencing
on June 5, 1997 at the price of $.10 per warrant, subject to the closing bid
price of the common stock.
On July 10, 1996, State Street Capital Markets Corp. (the
"Underwriter") exercised its over-allotment option to purchase from the Company,
an additional 169,500 shares of common stock and 169,500 common stock purchase
warrants at a price of $6.00 per share and $.10 per warrant.
At March 31, 1996, the Company has incurred costs in
connection with the IPO in the amount of $288,486.
-10-
<PAGE>
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company was formed on November 10, 1994, to purchase
certain net assets of Hongson, Inc. used in the sale and marketing of footwear
bearing the Cable & Co. trademark (the "Acquired Net Assets"). The Company
purchased the Acquired Net Assets effective as of the close of business on
December 31, 1994 for a net purchase price of $1,401,787.
The Company designs, imports and markets on a wholesale basis
a broad range of footwear bearing the Cable & Co. trademark. The Company markets
its products to approximately 700 department and specialty store locations in
the United States. In addition, the Company markets a line of casual men's
footwear under the name "Bacco Bucci." The Company has licensed the right to use
the Bacco Bucci name from D&D Design, an entity controlled by Alberto Salvucci,
a principal stockholder of the Company.
The Company plans to increase revenues by increasing sales to
existing accounts, establishing new accounts, developing high quality shoes with
styling and design detail to sell at competitive prices and expanding the
Company's marketing programs. The Company intends to increase its marketing to
include direct mail. The Company also intends to explore opportunities to
acquire rights to related products such as bags, belts, wallets, accessories and
other small leather goods. In addition, the Company may seek to grant license
rights to the Cable & Co. trademark.
Net Sales
The Company's net sales for the three-month period ended March
31, 1996 were $3,676,582 as compared to net sales of $2,704,427 for the
three-month period ended March 31, 1995, an increase of 36%. The Company
believes that the increase in net sales for the three-month period ended March
31, 1996 is primarily attributable to the addition of net sales of the women's
footwear of $257,896 and net sales of footwear bearing the Bacco Bucci name of
$747,422. Net sales of $2,704,427 for the three-month period ended March 31,
1995 were derived from the sale of men's footwear bearing the Cable & Co.
trademark as compared to net sales of $2,671,264 for the three-month period
ended March 31, 1996, a decrease of 1.2%.
Cost of Goods Sold
The Company's cost of goods sold for the three-month period
ended March 31, 1996 was $2,366,123 as compared to $1,617,970 for the
three-month period ended March 31, 1995, an increase of 46.2%. The Company
believes that such increase is primarily attributable to the increase in net
sales for the three-month period ended March 31, 1996. The Company's gross
profit as a percentage of net sales was 35.6% for the three-month period ended
March 31, 1996 as compared to 40.2% for the three-month period ended March 31,
1995. The Company believes that such decrease is primarily attributable to the
lower initial gross profit margins on the Bacco Bucci and women's footwear,
increased freight and manufacturing costs and a decline in the exchange rate of
the lira to the dollar.
-11-
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Noncash Compensatory Charges
For the three-month period ended March 31, 1996 the Company
incurred noncash compensatory charges of $2,390,231. Of such amount (I) $101,160
is attributable to shares of common stock issued pursuant to an international
consulting agreement, (ii) $1,345,075 is attributable to an aggregate of 320,256
shares of common stock held by David Albahari, the Company's Chairman of the
Board, President and Chief Executive Officer, Alan Kandall, the Company's
Executive Vice President, Treasurer and Chief Financial Officer, and Alberto
Salvucci, a principal stockholder of the Company, which shares were released
from escrow pursuant to the Stockholders Agreement, and (iii) $943,996 is
attributable to an aggregate of 224,761 shares of Common Stock issued to Mr.
Albahari, Mr. Kandall and Mr. Salvucci.
Operating Expenses
The Company's selling and general and administrative expenses
for the three-month period ended March 31, 1996 were $1,491,084, 40.6% as a
percentage of net sales, as compared to selling and general and administrative
expenses for the three-month period ended March 31, 1995 of $837,682, 31.0% as a
percentage of net sales. The Company believes that the increase in selling and
general and administrative expenses is primarily attributable to increases in
expenses incurred in connection with severing the Company's business with
Hongson, Inc., additional costs attributable to launching the Bacco Bucci line
and the women's footwear line in 1996, including increased selling expenses and
sampling costs, show expenses, additional marketing and advertising expenses,
higher rent expenses and increased factoring costs. In addition, management
believes that the increase is also attributable to increased warehouse costs of
approximately $43,000 which resulted from the Company terminating its warehouse
lease and moving its inventory and increased depreciation charges of
approximately $33,000.
Interest Expense and Bridge Note Discount
The Company's interest expense for the three-month period
ended March 31, 1996 was $165,850 as compared to interest expense for the
three-month period ended March 31, 1995 of $86,651, an increase of 91.4%. The
Company believes that the increase is primarily attributable to an increase in
borrowing relating to the higher sales and inventory levels for the three-month
period ended March 31, 1996 together with additional borrowing attributable to
the purchase in October 1995 of 266,880 shares of Common Stock and 21,660 shares
of Preferred Stock from a former shareholder. Additionally, the Company incurred
interest expense on the Bridge Notes payable in the amount of $30,695.
For the three-month period ended March 31, 1996, the Company
incurred a charge of $123,000 in relation to the discount on the Bridge Notes
payable. A total discount of $738,000 was recorded in February 1996 and is being
amortized over a 12 month period. The Company repaid the Bridge Notes in June
1996. Upon repayment of the Bridge Notes, the Company fully amortized the
remaining discount.
-12-
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Concluded)
Liquidity and Capital Resources
The Company has funded its requirements for the Acquisition,
working capital, capital expenditures and the purchase of stock from a former
shareholder from net cash provided through various borrowings, including
borrowings under its credit facility with Heller Financial, Inc. ("Heller") and
a $1,800,000 private placement (the " Bridge Financing"). As of March 31, 1996,
the Company had a working capital deficit of $1,145,045 and a debt to equity
ratio of 23.69 to 1.
The Company's obligations to Heller include a collateral
installment note in the original principal amount of $1,000,000 of which
$750,000 was outstanding as of March 31, 1996. The collateral installment note
is payable in 36 monthly installments of $27,777 and bears interest at 3% above
the prime rate of Chase Manhattan Bank, N.A. ("Chase"). In addition, the Company
may borrow from Heller the lesser of 50% of the Company's eligible inventory or
$2,000,000 (the "Inventory Loan"). The Inventory Loan bears interest at 2% above
Chase's prime rate. The Company also finances its accounts receivable under a
factoring agreement with Heller. Preapproved accounts are factored without
recourse to the Company and non-approved accounts are factored with recourse. At
March 31, 1996, $533,553 of the $2,890,143 (18.46%) of factored accounts
receivable, were factored with recourse. Heller is entitled to a fee equal to
1.25% of all accounts receivable purchased. Moreover, advances by Heller bear
interest at rates equal to Chase's prime rate plus 1.5% to 2%. Under the credit
facility, all of the Company's obligations to Heller may not exceed $6,000,000.
In March, 1996, the Company consummated the Bridge Financing
of 36 units (the "Units") at a purchase price of $50,000 per Unit, $1,800,000 in
the aggregate. Each Unit consists of the Company's 11% Bridge Note in the
original principal amount of $49,000, 5,000 shares of Common Stock and 5,000
common share purchase warrants (the "Bridge Warrants"). The Bridge Notes are due
and payable upon the earlier of February 2, 1997 or the Company's receipt of
gross proceeds of at least $4,080,000 from the sale of its debt and/or equity
securities in a public or private financing. The Bridge Notes were repaid, with
accrued interest, in the amount of $1,833,585 on June 19, 1996 with the proceeds
from the sale of 950,000 shares of common stock and 1,130,000 common share
purchase warrants. The gross proceeds from the sale were $5,813,000. The
proceeds were also used to redeem, on June 19, 1996, 43,327 shares of preferred
stock in the amount of $580,396, inclusive of accrued dividends. In conjunction
with the redemption of the preferred stock, 462,531 shares of Common Stock have
been issued to the preferred shareholders.
On July 10, 1996, the Underwriter exercised its over-allotment
option (the "Over-allotment") to purchase an additional 169,500 shares of common
stock and 169,500 common stock purchase warrants at an over-allotment price of
$6.00 per share and $.10 per warrant. The gross proceeds of the Over-allotment
were $1,033,950.
The Company believes that the proceeds of the IPO, together
with net cash provided by operations and available borrowings under the
Company's credit facility, will be sufficient to meet its anticipated cash
requirements for at least the 18 months subsequent to the closing of the IPO.
However, additional funds may be required for additional expansion.
-13-
<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 5. Other Information
On June 5, 1996, the Company effected an initial public
offering ("IPO"). A total of 1,130,000 common shares and common share purchase
warrants were sold to the public, of which 950,000 shares of common stock and
1,130,000 common share purchase warrants were sold by the Company and 180,000
shares of common stock were sold by the investors in the Bridge Financing at a
price of $6.00 per share and $.10 per warrant. The warrants entitle the holder
to purchase common stock at $7.20 per share over a 3-year period beginning July
5, 1997. The warrants may be redeemed by the Company commencing on June 5, 1997
at the price of $.10 per warrant, subject to the closing bid price of the common
stock.
On July 10, 1996, State Street Capital Markets Corp. ( the
"Underwriter") exercised its over-allotment option to purchase from the Company,
an additional 169,500 shares of common stock and 169,500 common share purchase
warrants at a price of $6.00 per share and $.10 per warrant.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Please see Exhibit Index on page 15.
(b) Reports on Form 8-K
None.
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<PAGE>
CABLE & CO. WORLDWIDE, INC. AND SUBSIDIARY
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description of Exhibit
<S> <C>
1.1 Form of Underwriting Agreement between the Company and State Street Capital Markets, Corp.
( the "Underwriter") *
2.1 Asset Purchase Agreement dated January 16, 1995 between Hongson, Inc. as seller and Cable & Co.
Worldwide, Inc. as buyer. *
3.1 Certificate of Incorporation of the Company, as amended. *
3.2 By-Laws of the Company. *
4.1 Form of Warrant Agreement between the Company and American Stock Transfer & Trust, as warrant
agent. *
4.2 Specimen Certificate of the Company's Common Stock. *
4.3 1996 Stock Option Plan. *
4.4 Specimen Certificate of the Company's Warrant. *
4.5 Form of Underwriter's Purchase Option. *
4.6 Form of Bridge Warrant. *
4.7 Form of Bridge Note. *
10.1 Employment Agreement dated as of January 1, 1995 between the Company and David Albahari. *
10.2 Employment Agreement dated as of January 1, 1995 between the Company and Alan Kandall. *
10.3 Agreements between the Company and Heller Financial, Inc. *
10.4 Intentionally omitted.
10.5 Agreement dated as of the 26th day of January 1996 between U.K. Hyde Park Consultants, Ltd.
and the Company. *
10.6 Lease dated July 28, 1995 between Raritan Plaza I Associates, L.P., as landlord, and Cable & Company
Enterprises, Ltd., as tenant. *
10.7 Lease dated May 16, 1995 between 724 Fifth Avenue Realty Co., as landlord, and Cable & Company
Enterprises, Ltd., as tenant. *
10.8 Financial Consulting Agreement between the Underwriter and the Company.*
10.9 Agreements between Gruntal & Co., Inc. and the Company. *
21.1 List of Subsidiaries. *
99.1 Cable & Co. Trademark Registration from the United States Patent and Trademark Office. *
</TABLE>
* Previously filed with the Company's Registration Statement, Registration No.
333-3000
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<PAGE>
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, thereunto duly authorized.
CABLE & CO. WORLDWIDE, INC.
(Registrant)
Date: July 18, 1996 /s/ Alan Kandall
Alan Kandall
Executive Vice-President; Chief Financial Officer
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