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UNITED STATES SEC File Number
SECURITIES AND EXCHANGE COMMISSION 0-21335
Washington, D.C. 20549
Cusip Number
366033108
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check One) [X]Form 10-K and Form 10-KSB [ ]Form 20-F [ ]Form 11-K
[ ]Form 10-Q and Form 10-QSB [ ]Form N-SAR
For Period Ended: December 31, 1997
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[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended:
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If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates:
Part I, Item 1, Part II, Items 6, 7 and 8; Part IV, Item 14(a) and Exhibit 23.1
(Consent of Ernst & Young LLP) and Exhibit 27.1 (Financial Data Schedule) of
Item 14(c)
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PART I - REGISTRANT INFORMATION
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Full Name of Registrant
GARGOYLES, INC.
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Address of Principal Executive Office (Street and Number)
20121 48th Avenue West
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City, State and Zip Code
Lynnwood, Washington 98036
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PART II - RULES 12b-25(b) and (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following
should be completed. (Check appropriate box)
[X] (a) The reasons described in reasonable detail in Part III of this
form could not be eliminated without unreasonable effort or
expense;
[X] (b) The subject annual report, on Form 10-K, or portion thereof,
will be filed on or before the fifteenth calendar day following
the prescribed due date; and
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[X] (c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
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PART III -- NARRATIVE
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State below in reasonable detail the reasons why Form 10-K and Form 10-KSB,
20-F, 11-K, 10-Q and Form 10-QSB, N-SAR, or the transition report or portion
thereof could not be filed within the prescribed period:
The information required by Item 1 of Part I, Items 6, 7 and 8 of Part II
and Item 14(a) of Part IV of Form 10-K and Exhibit 23.1 (Consent of Ernst &
Young LLP) and Exhibit 27 (Financial Data Schedule) of Item 14(c) have not been
filed with the registrant's report on Form 10-K for the year ended December 31,
1997 (the "1997 10-K").
The registrant has experienced significant management turnover since
December 31, 1997. The registrant's Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, and Senior Vice President, Sales, as well as
its Controller and its only financial analyst left the Company in the first
quarter of 1998. The registrant hired a new Controller in March 1998. The
registrant appointed Leo Rosenberger as Chief Executive Officer and Chief
Financial Officer and Cynthia Pope as Vice President and General Counsel in
February 1998.
New management has had difficulty gathering and evaluating information
needed to prepare the financial statements, and recent developments in the
registrant's business and review of financial records have resulted in
complexities that have required extensive analysis. In addition, information
affecting the financial statements and other disclosures in the 1997 10-K was
received by management from third parties in late March 1998. In addition, the
registrant has been engaged in negotiations with its bank concerning
restructuring its credit facility, and reached an agreement in principle with
the bank on March 31, 1998.
The terms of the restructured credit facility will require substantial
analysis to determine its effects on the financial statements and other
disclosure in the 1997 10-K. The registrant has not had sufficient opportunity
to complete the analysis of the revised terms of its restructured credit
facility and other information necessary to determine its effect on the
financial statements or other disclosures in the 1997 10-K in order to
complete a timely filing.
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PART IV -- OTHER INFORMATION
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(1) Name and telephone number of person to contact in regard to this
notification
Name: Cynthia Pope, Vice President, General Counsel and Corporate Secretary
Telephone Number: (425) 921-3600 ext. 3404
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(2) Have all other periodic reports required under section 13 or 15(d) of
the Securities Exchange Act of 1934 or section 30 of the Investment Company Act
of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is no,
identify report(s). X Yes No
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(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject report or
portion thereof?
X Yes No
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The registrant estimates that net sales increased from $33.1 million in
1996 to approximately $41 million in 1997, and net loss for 1997 was
approximately $14.4 million or $1.94 per share, compared with a net loss of
$2.8 million, or $.47 per share, in 1996.
Gargoyles, Inc. has caused this notification to be signed on its behalf by
the undersigned thereunto duly authorized.
Date April 1, 1998 By /s/ LEO ROSENBERGER
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Leo Rosenberger, Chief Executive Officer
Exhibit 1 Letter dated March 31, 1998, from Ernst & Young LLP to Leo
Rosenberger, CEO of Gargoyles, Inc.
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Exhibit 1
March 31, 1998
Mr. Leo Rosenberger
Chief Executive Officer
Gargoyles, Inc.
20121 48th Avenue West
Lynnwood, WA 98036
Dear Leo,
In accordance with the notification to the Securities and Exchange Commission
(the "Commission") on Form 12b-25 of Gargoyles, Inc.'s (the "Company")
inability to timely file its complete annual report on Form 10-K for the year
ended December 31, 1997 ("1997 10-K"), the factors described in the succeeding
paragraph make impractical the submission of our report as of a date which will
permit timely filing of your complete 1997 10-K to the Commission.
The Company is in the process of finalizing an amended credit facility with its
primary lender and reached an agreement in principle with its lender on March
31, 1998. The terms of the amended credit facility will require substantial
analysis by the Company to determine its effect on the financial statements and
other disclosures in the 1997 10-K. We will not be able to complete our audit
procedures, and issue our related report, until the Company has finalized the
preparation of its financial statements and related disclosures.
You are authorized to attach a copy of this letter as an exhibit to Form 12b-25
to the Commission.
Very truly yours
/s/ Ernst & Young LLP
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Ernst & Young LLP
