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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(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, 1998
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 0-21335
GARGOYLES, INC.
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(Exact name of registrant as specified in its charter)
Washington 91-1247269
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(State of Incorporation) (I.R.S. Employer Identification Number)
5866 SOUTH 194TH STREET
KENT, WASHINGTON 98032
(253) 796-2752
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(Address and telephone number of registrant's principal executive offices)
Indicate by check mark whether the registrant (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 [X] No [ ]
As of September 30, 1998, there were 7,837,191 outstanding shares of the
registrant's common stock, no par value, which is the only class of common or
voting stock of the registrant.
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The Company's report on Form 10-Q for the period ended September 30, 1998
is amended to add the following section to Item 2, Management's Discussion and
Analysis of Financial Condition and Results of Operations:
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
YEAR 2000 ISSUES
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Because the real-time clocks in many existing computer chips do not
properly recognize a year that begins with "20" rather than "19," many computer
applications based upon those chips could fail or create erroneous results at
and after midnight on December 31, 1999. Because many of these chips are
embedded in existing items of equipment and are non-programmable, components or
all of the equipment must be replaced to obviate these failures or erroneous
results. To the extent that faulty chips are not replaced in critical
components of equipment, heat, power, telephone and other services to the
Company, as well as the Company's own computers, could fail, causing disruption
to the Company's business. To the extent that the Company's suppliers and
customers may have operational problems arising from these types of failures
and errors associated with the Year 2000, the Company could be adversely
impacted. The Company has determined that it will need to modify or replace
certain portions of its software so that its computer and communications
systems will function properly with respect to dates in the year 2000 and
beyond. The Company has established a Year 2000 contingency plan which is
being addressed by a team of internal staff and outside consultants. The
team's activities are designed to ensure that there is no adverse effect on the
Company's core business operations and that transactions with customers,
suppliers, and financial institutions are fully supported. The Company is well
under way with these efforts, which are scheduled to be completed by September
1999. The Company has initiated and completed discussions with its key vendors
and customers and with its bank to ensure that those parties have appropriate
plans to remediate Year 2000 issues where their systems interface with the
Company's systems or otherwise impact its operations. The Company has
completed its assessment of its systems in its Kent, Washington facilities and
is in the process of assessing its systems in its Farmingdale, New York
facility. The Company has also completed the upgrade of its telephone systems,
its backup software, and certain of its PC software upgrades at a cost of less
than $10,000. The Company estimates the total cost to date of system upgrades
required for Year 2000 compliance will not exceed $125,000. However, in view
of the subtlety of the problem and the unfamiliarity with the scope of the
problem by many in the business community, there can be no assurance that the
Company, or its critical suppliers or customers, will not encounter some form
of computer or service failures at or after midnight on December 31, 1999 which
could result in disruption of the Company's business, perhaps materially so, to
the Company's detriment.
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.
Gargoyles, Inc.
(Registrant)
Date: March 22, 1999 By: /s/ Leo Rosenberger
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Leo Rosenberger
Chief Executive Officer, Chief
Financial Officer and Treasurer
