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 April 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
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Commission file number 0-00167
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THE VILLAGE GREEN BOOKSTORE, INC.
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(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
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(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 April 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 months ended April 30,
1995 and May 1, 1994........................................ 3
Consolidated Balance Sheets as of
April 30, 1995 and January 29, 1995......................... 4
Consolidated Statement of Cash Flows for the
three months ended April 30, 1995 and
May 1, 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............................ 13
Index to Exhibits................................................... 14
2
<PAGE>
Item 1. Financial Statements.
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
APRIL 30, 1995 AND MAY 1, 1994
April 30, May 1,
1995 1994
----------- -----------
Net Sales $ 2,423,148 $ 2,275,353
Cost of Goods Sold 1,502,375 1,446,225
----------- -----------
Gross Profit $ 920,773 $ 829,128
Selling, General, and
Administrative Expenses 1,002,922 849,876
----------- -----------
Loss from Operations $ (82,149) $ (20,748)
Other Income (Expense)
Interest Expense (36,759) (34,206)
Amortization of Offering Costs (100,155) (45,824)
Other Income 17,428 4,902
Loss on Disposal of Assets 0 (1,563)
----------- -----------
Total Other Income (Expense) $ (119,486) $ (76,691)
----------- -----------
Loss before Income taxes $ (201,635) $ (97,439)
Income Tax (600) 0
----------- -----------
Net Loss $ (202,235) $ (97,439)
=========== ===========
Per Share Amounts
Net Loss $ (0.08) $ (0.08)
=========== ===========
See Notes to Consolidated Financial Statements
3
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1995 AND JANUARY 29, 1995
ASSETS
------
April 30, January 29,
Current Assets 1995 1995
- -------------- ---------- -----------
Cash and Cash Equivalents $2,301,013 $ 519,470
Accounts Receivable
Trade 13,331 14,206
Employees, net of allowance
for doubtful accounts of $6,523 12,233 12,029
Officers and Former Officers 39,677 54,940
Other 131,283 137,086
Note Receivable-Related Party 0 68,000
Merchandise Inventories 5,193,752 4,732,204
Prepaid Expenses 257,269 221,572
---------- ----------
Total Current Assets $7,948,558 $5,759,507
Property & Equipment, net
of Accumulated Depreciation 1,367,345 1,237,400
Deferred Debt Issuance Costs 95,125 195,281
Deferred Stock Offering Costs 0 163,563
Security Deposits 139,020 139,020
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Total Assets $9,550,048 $7,494,771
========== ==========
See Notes to Consolidated Financial Statements
4
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1995 AND JANUARY 29, 1995
LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
April 30, January 29,
Current Liabilities 1995 1995
- ------------------- ---------- -----------
Accounts Payable $2,454,050 $3,348,472
Current Portion of Debt 1,223,455 1,825,197
Accrued Payroll Expense 57,492 55,430
Accrued Taxes Payable 57,587 65,990
Other Current Liabilities 135,003 183,093
---------- ----------
Total Current Liabilities $3,927,587 $5,478,182
Long-Term Debt 32,929 1,246,163
Stockholders' Equity
- --------------------
Common Stock, $.001 par
Authorized 10,000,000 shares
Issued 3,927,755 shares and 1,710,880
shares at April 30, 1995 and
January 29, 1995, respectively
Outstanding, 3,741,255 shares and
1,710,880 shares at April 30, 1995
and January 29, 1995, respectively 3,928 1,711
Additional Paid-In Capital 8,438,197 3,232,573
Retained Deficit (2,666,093) (2,463,858)
----------- -----------
$ 5,776,032 $ 770,426
Less: Treasury stock, at cost
186,500 and 0 shares at
April 30, 1995 and January 29,
1995, respectively (186,500) 0
----------- -----------
Total Stockholders' Equity $ 5,589,532 $ 770,426
----------- -----------
Total Liabilities and
Stockholders' Equity $ 9,550,048 $ 7,494,771
=========== ===========
See Notes to Consolidated Financial Statements
5
<PAGE>
THE VILLAGE GREEN BOOKSTORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
QUARTERS ENDED APRIL 30, 1995 and MAY 1, 1994
April 30, May 1,
1995 1994
----------- ----------
Operating Activities:
Net Loss $ (202,235) $ (97,439)
Adjustments to reconcile Net Loss
to Net Cash Used in Operating Activities:
Depreciation 63,798 41,685
Amortized Debt Offering Costs 100,155 45,824
Loss on Disposal of Property
and Equipment 0 1,563
Changes in Operating Assets and Liabilities:
Accounts Receivable 6,474 15,519
Inventory and Prepaid Expenses (497,245) 155,709
Accounts Payable and Accrued Expenses (948,853) (744,012)
----------- ----------
Net Cash Used In Operating Activities (1,477,906) (581,151)
Investing Activities:
Purchase of Property and Equipment (193,743) (42,732)
Notes Receivable 68,000 0
Security Deposits 0 (9,849)
---------- ----------
Net Cash Used In Investing Activities (125,743) (52,581)
Financing Activities:
Payments on Credit Lines, Long-Term
Debt and Capital Lease Obligations (1,814,976) (29,230)
Debt Issuance Costs 0 (190,250)
Stock Offering Costs (1,278,920) 0
Proceeds from Issuance of Common Stock 6,650,325 224,400
Purchase of Treasury Stock (186,500) 0
Proceeds from Borrowings 0 1,200,000
Cash from (Payments to) Officers 15,263 (256)
----------- ----------
Net Cash Provided by (Used In)
Financing Activities 3,385,192 1,204,664
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Net Change In Cash 1,781,543 570,932
Balance at Beginning of Year 519,470 517,685
---------- ----------
Cash Balance at End of Period $2,301,013 $1,088,617
========== ==========
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 April 30, 1995 and
the consolidated statements of income for the three months
ended April 30, 1995 and May 1, 1994, the consolidated
statements of changes in financial position for the three
months ended April 30, 1995 and May 1, 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
April 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 Company's public offering consummated on March
23, 1995 (see Note 4).
Note 3. On April 28, 1994, the Company consummated a private
placement (the "1994 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. 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 each Unit was $3.00. The net proceeds to the Company
from the offering was approximately $4.7 million, giving
effect to expenses related to the offering. A portion of such
proceeds has been used to retire $1.8 million in indebtedness
related to the 1993 Private Placement.
On April 28, 1995, the Company received net proceeds of
approximately $569,000 in connection with a partial exercise
of the overallotment option relating to the public offering.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
OVERVIEW
- --------
During the first quarter of the current fiscal year, 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 (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 each Unit was $3.00. The
net proceeds to the Company from the Public Offering was approximately $4.7
million, giving effect to expenses related to the offering. In addition, on
April 28, 1995, the Company received net proceeds of approximately $569,000 in
connection with a partial exercise of the overallotment option relating to the
Public Offering.
FINANCIAL POSITION
- ------------------
Cash and cash equivalents amounted to $2,301,013 at April 30, 1995 as
compared to $519,470 at January 29, 1995. Cash was increased by approximately
$4.7 million from the net proceeds of the Public Offering. A portion of such
proceeds have been used to retire $1.8 million in indebtedness related to the
1993 Private Placement and to reduce certain trade accounts payable. Inventories
increased by $461,548 from $4,732,204 at January 29, 1995 to $5,193,752 at April
30, 1995. Prepaid expenses increased by $35,697. Other current liabilities,
accrued payroll and accrued sales taxes payable decreased, in the aggregate, by
$54,431 from $304,513 at January 29, 1995 to $250,082 at April 30, 1995. The
current portion of long-term debt decreased by $1,801,742 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.
RESULTS OF OPERATIONS
- ---------------------
Quarter Ended
Statement of April 30, May 1,
Operations Data 1995 1994
- --------------- ---- ----
Net Sales $2,423,148 $2,275,353
---------- ----------
As a Percentage of Net Sales: % %
Same Stores 93.3 100.0
New Stores 6.7 0.0
----- -----
Total Net Sales 100.0 100.0
9
<PAGE>
Cost of Sales 62.0 63.6
------ -----
Gross Profit 38.0 36.4
Selling, General and
Administrative Expenses 41.4 37.4
------ -----
Income from Operations (3.4) (1.0)
Net Income (8.4) (4.3)
====== ======
Net sales for the three months ended April 30, 1995 were $2,423,148 as
compared with $2,275,353 for the three months ended May 1, 1994, an increase of
6.5%. Comparable store sales decreased by 0.7% for the corresponding period.
Gross profit margin for the three months ending April 30, 1995 was 38.0%,
as compared to 36.4% for the same period last year. In absolute dollars, gross
profit increased from $829,128 for the three months ended May 1, 1994 to
$920,773 for the three months ended April 30, 1995. The increase in absolute
gross profit dollars of $91,645 resulted from improved margins and increased
sales volume during the current fiscal year.
Selling, general, and administrative expenses for the three months ended
April 30, 1995 increased by $153,046, or 18.0%. The increase is attributable to
the operation of an additional store during the first quarter ended April 30,
1995 as against the first quarter ended May 1, 1994. On a same store basis,
selling, general and administrative expenses increased by approximately $22,000.
The Company is continuing to make concerted efforts to reduce its operating
costs.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Working capital was $4,020,971 at April 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 April 30, 1995 was 2.02 to one, as compared to
1.05 to one at January 29, 1995.
The Public Offering resulted in net proceeds of approximately $4.7 million
to the Company. A portion of such proceeds have been used to retire $1.8 million
in indebtedness related to the 1993 Private Placement. The remainder of the
proceeds will be used to develop new stores, modernize existing facilities,
expand the Company's Management Information System, and for working capital.
10
<PAGE>
On April 28, 1995, the Company received net proceeds of approximately
$569,000 in connection with a partial exercise of the overallotment option
relating to the Public Offering. Such proceeds were allocated to working
capital.
At present, the Company has sufficient capital resources and cash flow to
maintain operations and to increase the number of its retail store units. The
Company is seeking a new banking relationship in order to establish a line of
credit to finance its working capital requirements.
11
<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.
1. Current Report of the Company on Form 8-K, dated
March 23, 1995.
Items Reported: Item 5.
Item 7.
2. Current Report of the Company on Form 8-K, dated
March 31, 1995 (the "March 8-K).
Items Reported: Item 5.
Item 7.
No financial statements were filed with the March 8-K.
12
<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: June 14, 1995 BY: /s/ Raymond C. Sparks
---------------------
Raymond Sparks,
President
Treasurer
Chief Operating Officer
Chief Financial Officer
13
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
Number Number
- ------ ------
11 Computation of Earnings per Common Share 15
14
THE VILLAGE GREEN BOOKSTORE, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
Three Months Ended
April 30,
1995
------------------
Primary Earnings Per Share (1)
Net Loss After Taxes $ (202,235)
Weighted Average Common
Shares Outstanding 2,489,412
Primary Earnings Per Share $(0.08)
(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.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary
financial information extracted from
the Company's Quarterly Report on
Form 10-QSB at April 30, 1995 and is
qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
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<PERIOD-START> JAN-30-1995
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<SALES> 2423148
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