UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
F O R M 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended July 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
Commission file number 0-00167
THE VILLAGE GREEN BOOKSTORE, INC.
(Exact name of Small Business Issuer as specified in its charter)
New York 16-1181167
(State or other jurisdiction of (IRS Employer
incorporation or organization) I.D. number)
1357 Monroe Avenue
Rochester, New York 14618
(Address of principal executive offices)
(716) 442-1151
(Issuer's telephone number, including area code)
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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__
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock outstanding as of July 30, 1995 was
3,741,255.
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Consolidated Statement of Operations
for the three and six months ended July 30,
1995 and July 31, 1994............................3
Consolidated Balance Sheets as of
July 30, 1995 and January 29, 1995................4
Consolidated Statement of Cash Flows for the
six months ended July 30, 1995 and
July 31, 1994.....................................6
Notes to Financial Statements.....................7
Item 2. Management's Discussion and Analysis
of Financial Conditions and
Results of Operations.............................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................n/a
Item 2. Changes in Securities...........................n/a
Item 3. Defaults Upon Senior Securities.................n/a
Item 4. Submission of Matter of a Vote of
Security Holders..............................n/a
Item 5. Other Information...............................n/a
Item 6. Exhibits and Reports on Form 8-K.................14
Index to Exhibits........................................15
2
<PAGE>
Item 1. Financial Statements.
<TABLE>
<CAPTION>
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED
JULY 30, 1995 AND JULY 31, 1994
Three Months Ended Six Months Ended
July 30, July 31, July 30, July 31,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 2,554,002 $ 2,294,729 $ 4,977,150 $ 4,570,082
Cost of Goods Sold 1,586,838 1,449,507 3,089,214 2,895,732
----------- ----------- ----------- -----------
Gross Profit $ 967,164 $ 845,222 $ 1,887,936 $ 1,674,350
Selling, General, and
Administrative Expenses 1,114,627 891,997 2,117,549 1,741,873
----------- ----------- ----------- -----------
Loss from Operations $ (147,463) $ (46,775) $ (229,613) $ (67,523)
Other Income (Expense)
Interest Expense (25,704) (58,910) (62,464) (93,114)
Amortization of Offering Costs (23,781) (69,606) (123,937) (115,430)
Other Income 28,034 12,350 45,462 17,251
Loss on Disposal of Assets 0 0 0 (1,563)
----------- ----------- ----------- -----------
Total Other Income (Expense) $ (21,451) $ (116,166) $ (140,939) $ (192,856)
----------- ----------- ----------- -----------
Loss before Income taxes $ (168,914) $ (162,941) $ (370,552) $ (260,379)
Income Tax (250) 0 (850) 0
----------- ----------- ----------- -----------
Net Loss $ (169,164) $ (162,941) $ (371,402) $ (260,379)
=========== =========== =========== ===========
Per Share Amounts
Net Loss $ (0.05) $ (0.10) $ (0.12) $ (0.18)
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 30, 1995 AND JANUARY 29, 1995
ASSETS
July 30, January 29,
Current Assets 1995 1995
----------- -----------
Cash and Cash Equivalents $ 1,185,882 $ 519,470
Accounts Receivable
Trade 12,124 14,206
Employees, net of allowance
for doubtful accounts of $6,523 11,517 12,029
Officers and Former Officers 40,147 54,940
Other 137,422 137,086
Note Receivable-Related Party 0 68,000
Merchandise Inventories 5,680,139 4,732,204
Prepaid Expenses 335,722 221,572
--------- ---------
Total Current Assets $ 7,402,953 $5,759,507
Property & Equipment, net
of Accumulated Depreciation 1,505,715 1,237,400
Deferred Debt Issuance Costs 71,344 195,281
Deferred Stock Offering Costs 0 163,563
Security Deposits 139,020 139,020
--------- ---------
Total Assets $ 9,119,032 $7,494,771
========= =========
See Notes to Consolidated Financial Statements
4
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 30, 1995 AND JANUARY 29, 1995
LIABILITIES AND STOCKHOLDERS EQUITY
July 30, January 29,
Current Liabilities 1995 1995
----------- ------------
Accounts Payable $ 2,174,977 $ 3,348,472
Current Portion of Debt 1,224,954 1,825,197
Accrued Payroll Expense 60,478 55,430
Accrued Taxes Payable 64,886 65,990
Other Current Liabilities 152,256 183,093
---------- ----------
Total Current Liabilities $ 3,677,551 $ 5,478,182
Long-Term Debt 28,423 1,246,163
Stockholders' Equity
Common Stock, $.001 par
Authorized 10,000,000 shares
Issued and Outstanding
3,741,255 shares and 1,710,880
shares at July 30, 1995 and
January 29, 1995, respectively 3,741 1,711
Additional Paid-In Capital 8,244,577 3,232,573
Retained Deficit (2,835,260) (2,463,858)
----------- -----------
Total Stockholders' Equity $ 5,413,058 $ 770,426
----------- ----------
Total Liabilities and
Stockholders' Equity $ 9,119,032 $ 7,494,771
=========== ==========
See Notes to Consolidated Financial Statements
5
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
for the Six Months Ended July 30, 1995 and July 31, 1994
Six Months Ended
July 30, July 31,
1995 1994
----------- -----------
Operating Activities:
Net Loss $ (371,402) $ (260,379)
Adjustments to reconcile Net Loss
to Net Cash Used in Operating Activities:
Depreciation 129,273 81,610
Amortized Debt Offering Costs 123,937 115,430
Loss on Disposal of Property
and Equipment 0 1,563
Changes in Operating Assets and Liabilities:
Accounts Receivable 2,258 (48,338)
Inventory and Prepaid Expenses (1,062,085) 299,811
Accounts Payable and Accrued Expenses (1,200,388) (1,236,131)
----------- -----------
Net Cash Used In Operating Activities $(2,378,407) $(1,046,434)
Investing Activities:
Purchase of Property and Equipment (397,536) (107,443)
Notes Receivable 68,000 0
Security Deposits 0 (9,849)
----------- -----------
Net Cash Used In Investing Activities $ (329,536) $ (117,292)
Financing Activities:
Payments on Credit Lines, Long-Term
Debt and Capital Lease Obligations (1,817,983) (36,379)
Debt Issuance Costs 0 (190,250)
Stock Offering Costs (1,286,280) 0
Proceeds from Issuance of Common Stock 6,650,325 282,550
Purchase of Treasury Stock (186,500) 0
Proceeds from Borrowings 0 1,200,000
Cash from (Payments to) Officers 14,793 166
----------- ----------
Net Cash Provided by (Used In)
Financing Activities 3,374,355 1,256,087
----------- ----------
Net Change In Cash 666,412 92,361
Balance at Beginning of Year 519,470 517,685
----------- ----------
Cash Balance at End of Period $ 1,185,882 $ 610,046
=========== ==========
See Notes to Consolidated Financial Statements
6
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The consolidated balance sheet as of July 30, 1995
and the consolidated statements of operations for the
three and six months ended July 30, 1995 and July 31,
1994, the consolidated statements of cash flows for the
six months ended July 30, 1995 and July 31, 1994 have
been prepared by the Company without audit. In the
opinion of management, all adjustments (which include
only normal adjustments) necessary to present fairly
the financial position, results of operations and
changes in financial position at those dates have been
made. The operating results for the quarter ended July
30, 1995 are not necessarily indicative of the results
that may be expected for the fiscal period ending
January 28, 1996, as the Company's sales volume is
seasonal.
Note 2. The Company completed a private placement on June
28, 1993 (the "1993 Private Placement"). This private
placement consisted of $1,800,000 7.5% senior
subordinated secured notes and $200,000 for 400,000
shares of common stock. Costs associated with this
private placement have been allocated between the debt
and equity portions of the private placement. The
costs allocated to the equity portion offset the
increase in additional paid-in capital. The
unamortized costs allocated to the debt portion were
expensed in full during the quarter ended April 30,
1995 as the principal was repaid from the proceeds of
the Public Offering (see Note 4).
Note 3. On April 28, 1994, the Company consummated a
private placement with respect to an aggregate of $1.2
million Principal Amount 7% Convertible Senior
Subordinated Debentures of the Company due two years
from the date of issuance, convertible into shares of
the Company's Common Stock at any time prior to
maturity, unless previously redeemed, at an initial
conversion price of $5.00 per share.
The Debentures are subordinated in right of payment
to any future bank indebtedness up to $1 million and are
expressly senior in right of payment to all other Company
obligations (but subordinated to the payment of any future
bank or institutional indebtedness up to $1 million). The
Debentures are
7
<PAGE>
redeemable, in whole only, from time to time at the option of
the Company at a redemption price equal to 100% of the
principal amount thereof plus accrued interest, provided that
the Debentures may not be redeemed prior to maturity unless,
during any period of 20 consecutive trading days ending within
30 days prior to the giving of the notice of redemption, the
market price for the Common Stock is at least 125% of the
conversion price.
Costs associated with this debt, totalling $190,250,
have been included in Deferred Debt Issuance Costs and will be
amortized over the life of the debt, which is two years.
Interest on the Debentures is payable semi-annually.
Note 4. On March 23, 1995, the Company consummated a public
offering of 2,000,000 Units through Thomas James Associates,
Inc., now known as H.J. Meyers & Co., Inc. as Representative
of the Underwriters. Each Unit consisted of one share of the
Company's Common Stock, par value $.001 per share and one
Redeemable Common Stock Purchase Warrant. The public offering
price of the Units was $3.00 per Unit. The net proceeds of the
Public Offering was approximately $4.7 million, giving effect
to expenses related to the offering.
The Company retired all outstanding indebtedness from
the 1993 Private Placement with the net proceeds from the
Public Offering.
Note 5. On April 30, 1995, the Company received net proceeds
of approximately $569,000 pursuant to the partial exercise of
the over-allotment option in connection with the public
offering.
Note 6. In May, 1995, the Company retired its 186,500 shares
of Treasury Stock.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
OVERVIEW
On March 23, 1995, the Company consummated a public offering of 2,000,000
Units through Thomas James Associates, Inc., now known as H.J. Meyers and Co.,
Inc., as Representative of the Underwriters (the "Public Offering"). Each Unit
consisted of one share of the Company's Common Stock, par value $.001 per share
and one Redeemable Common Stock Purchase Warrant. The Public Offering price of
the Units was $3.00 per Unit. The net proceeds of the Public Offering was
approximately $4.7 million, giving effect to expenses related to the offering.
On April 30, 1995, the Company received net proceeds of approximately
$569,000 pursuant to the partial exercise of the over-allotment option in
connection with the Public Offering.
On April 28, 1994 (the "1994 Closing Date"), the Company consummated a
private placement with respect to an aggregate of $1.2 million Principal Amount
7% Convertible Senior Subordinated Debentures of the Company due two years from
the date of issuance, convertible into shares of the Company's Common Stock at
any time prior to maturity, unless previously redeemed, at an initial conversion
price of $5.00 per share. Sands Brothers & Co., Ltd. ("Sands Brothers") acted as
placement agent in the sale of the Debentures. Net proceeds from the sale of
these debentures amounted to $1,009,750. Steven B. Sands and John P. Holmes,
directors of the Company, are a principal and managing director of Sands
Brothers, respectively.
The Company retired all outstanding indebtedness from the 1993 Private
Placement with the net proceeds from the Public Offering.
FINANCIAL POSITION
Cash and cash equivalents amounted to $1,185,882 at July 30, 1995 as
compared to $519,470 at January 29, 1995. Cash was increased as a result of a
Public Offering which was consummated on March 23, 1995, with approximately $1.2
million being used to timely reduce trade accounts payable and $1,800,000 used
to retire the debt relating to the 1993 Private Placement. Inventories increased
by $947,935 from $4,732,204 at January 29, 1995 to $5,680,139 at July 30, 1995.
Prepaid expenses increased by $114,150 due primarily to costs associated with
the opening of an additional store. Other current liabilities, accrued payroll
and accrued sales taxes payable decreased, in the aggregate, by $26,893 from
$304,513 at January 29, 1995 to $277,620 at July 30, 1995. The current portion
of long-term debt decreased by $1.8
9
<PAGE>
million as a result of the repayment of amounts due under the 1993 Private
Placement, and increased by $1.2 million due to the maturing of the debt
associated with the 1994 Private Placement.
10
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended Nine Months Ended
Statement of July 30, July 31, July 30, July 31,
Operations Data 1995 1994 1995 1994
---- ---- ---- ----
Net Sales $2,554,002 $2,294,729 $4,977,150 $4,570,082
---------- ---------- ---------- ----------
As a Percentage of Net Sales: % % % %
Same Stores 89.1 100.0 91.1 100.0
New Stores 10.9 0.0 8.9 0.0
------ ------ ------ -----
Total Net Sales 100.0 100.0 100.0 100.0
Cost of Sales 62.1 63.2 62.1 63.4
------ ------ ------ -----
Gross Profit 37.9 36.8 37.9 36.6
Selling, General and
Administrative Expenses 43.6 38.9 42.6 38.1
------ ------ ------ -----
Income from Operations (5.7) (2.1) (4.7) (1.5)
Net Income (6.6) (7.1) (7.5) (5.7)
====== ====== ====== ======
Net sales for the three months ended July 30, 1995 were $2,554,002 as
compared with $2,294,729 for the three months ended July 31, 1994, an increase
of 11.3%. For the six months ended July 30, 1995, net sales were $4,977,150, as
compared with $4,570,082 for the six months ended July 31, 1995. Comparable
store sales decreased by 0.8% for the six month period. Sales at the two new
stores have not met expectations due to low name recognition in their respective
markets.
Gross profit margin for the three months ending July 30, 1995 was 37.9%, as
compared to 36.8% for the same period last year. For the six months ended July
30, 1995, gross profit margin was 37.9% as compared to 36.6% for the six months
ended July 31, 1994. In absolute dollars, gross profit increased from $845,222
for the three months ended July 31, 1994 to $967,164 for the three months ended
July 30, 1995. For the six months ended July 30, 1995, absolute gross profit
dollars increased to $1,887,936 from $1,674,350 for the six months ended July
31, 1994. The increase in absolute gross profit dollars of $121,942 and $213,586
for the three and six month periods presented resulted from improved margins and
increased sales volume during the current fiscal year.
Selling, general, and administrative expenses for the three months ended
July 30, 1995 increased by $222,630, or 25.0%. For the six months ended July 30,
1995, selling, general and administrative expenses increased by $375,676, or
21.6%. The increases are attributable to the operation of two additional stores
during the current fiscal year as against the same period last year. On a same
store basis, selling, general and
11
<PAGE>
administrative expenses increased by approximately $53,500 for the three months
ended July 30, 1995 over the three months ended July 31, 1994. For the six
months ended July 30, 1995, selling, general and administrative expenses
increased on a same store basis by approximately $79,000 over the six months
ended July 31, 1994.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $3,725,402 at July 30, 1995, as compared to $281,325 as
of January 29, 1995. This increase was principally the result of the Public
Offering and repayment of the debt associated with the 1993 Private Placement.
The Company's current ratio as of July 30, 1995 was 2.01 to one, as compared to
1.05 to one at January 29, 1995.
Each Unit of the Public Offering consisted of one share of the Company's
Common Stock, par value $.001 per share and one Redeemable Common Stock Purchase
Warrant. The Public Offering price of the Units was $3.00 per Unit. The net
proceeds of the Public Offering was approximately $4.7 million, giving effect to
expenses related to the offering.
On April 30, 1995, the Company received net proceeds of approximately
$569,000 pursuant to the partial exercise of the over-allotment option in
connection with the Public Offering.
The Company retired all outstanding indebtedness from the 1993 Private
Placement with the net proceeds from the Public Offering.
At present, the Company has sufficient capital resources and cash flow to
maintain operations and to increase the number of its retail stores by two to
three units . The Company is seeking a new banking relationship in order to
establish a line of credit to finance its working capital requirements.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11 Computation of Earnings per Common Share
(b) Reports on Form 8-K.
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE VILLAGE GREEN BOOKSTORE, INC.
Dated: September 14, 1995 BY:/s/ Raymond C. Sparks
---------------------
Raymond Sparks,
President
Treasurer
Chief Operating Officer
Chief Financial Officer
14
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
Number Number
------ ------
11 Computation of Earnings per Common Share 16
15
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
Three Months Ended Six Months Ended
July 30, July 30,
1995 1995
----------- ----------
Primary Earnings Per Share (1)
Net Loss After Taxes $ (169,164) $ (371,402)
Weighted Average
Common Shares Outstanding 3,741,255 3,111,876
Primary Loss Per Share $ (0.05) $ (0.12)
(1) Warrants and options, which are potentially dilutive, were not considered in
the calculations because these items were anti-dilutive due to the net losses
incurred during the reporting period.
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Company's Quarterly Report on Form 10-QSB at July 30, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> MAY-01-1995
<PERIOD-END> JUL-30-1995
<CASH> 1185882
<SECURITIES> 0
<RECEIVABLES> 12,124
<ALLOWANCES> 6523
<INVENTORY> 5680139
<CURRENT-ASSETS> 7402953
<PP&E> 2268990
<DEPRECIATION> 763274
<TOTAL-ASSETS> 9119032
<CURRENT-LIABILITIES> 3677551
<BONDS> 0
<COMMON> 3741
0
0
<OTHER-SE> 5409317
<TOTAL-LIABILITY-AND-EQUITY> 9119032
<SALES> 2554002
<TOTAL-REVENUES> 2554002
<CGS> 1586838
<TOTAL-COSTS> 1586838
<OTHER-EXPENSES> 1114627
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25704
<INCOME-PRETAX> (168914)
<INCOME-TAX> 250
<INCOME-CONTINUING> (169164)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (169164)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
