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 December 31, 1996
or
Transition report pursuant to Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file Number 0-17805
NEW RETAIL CONCEPTS, INC.
(Exact name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3275369
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) identification No.)
2975 Westchester Avenue, Purchase, New York 10577
(Address of Principal Executive Offices) (Zip Code)
(914)694-8888
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 of 15(d) of the Exchange Act 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 ISSUER
Shares of Common Stock outstanding at February 14, 1997: 5,681,639
Transitional Small Business Disclosure Format (check one):
YES NO X
NEW RETAIL CONCEPTS, INC.
INDEX TO FORM 10-QSB
FOR THE PERIOD ENDED DECEMBER 31, 1996
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Balance Sheet at December 31, 1996 (unaudited) 3-4
Condensed Statements of Operations for the Nine Months and
Three Months Ended December 31, 1996 and 1995 (unaudited) 5
Condensed Statements of Cash Flows for the Nine
Months Ended December 31, 1996 and 1995 (unaudited) 6
Notes to Interim Financial Statements 7-8
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II - Other Information 11
ITEM 2. Exhibits and Reports on Form 8-K 12
Page 2
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
DECEMBER 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 322,933
Accounts receivable - net of allowance for
doubtful accounts of $12,000 43,421
Note receivable - NES 162,169
Loan receivable - officers 132,947
Other current assets 59,160
Total current assets 720,630
FIXED ASSETS - AT COST:
Furniture and equipment 101,657
Less accumulated depreciation (101,657)
0
Note receivable - NES 546,821
Investment in Candie's, Inc. 1,372,892
1,919,713
OTHER ASSETS 0
TOTAL ASSETS $ 2,640,343
THE ACCOMPANYING STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 3
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
DECEMBER 31, 1996
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - current $ 300,000
Accounts payable - trade 75,000
Accrued expenses and other current
liabilities 102,672
Total current liabilities 477,672
DEFERRED INCOME TAXES 100,000
STOCKHOLDERS' EQUITY:
Preferred stock - par value $.01; authorized,
1,000,000 shares, no shares issued -
Common stock - par value $.01; authorized,
25,000,000 shares; issued 6,323,493 shares 63,235
Additional paid-in capital 3,454,534
Accumulated deficit (1,159,536)
2,358,233
Less:
Common stock in treasury at cost;
606,454 shares 295,562
Total Stockholders' Equity 2,062,671
Total Liabilities and Stockholders' Equity $2,640,343
THE ACCOMPANYING STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 4
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended Three Months Ended
December 31, December 31,
1996 1995 1996 1995
Revenues:
License and marketing fees $ 498,661 $ 519,751 $ 66,367 $ 125,220
Costs and expenses:
Selling, general
and administrative 469,880 561,023 148,472 156,598
Interest expense 13,106 19,974 3,750 5,059
Total costs and expenses 482,986 580,997 152,222 161,657
Operating income (loss) 15,675 (61,246) (85,855) (36,437)
Other income (expense):
Equity in (losses) gains
of affiliate (78,182) 81,799 0 (51,153)
Sale of licensing rights 0 1,062,039 0 1,062,039
Other income 78,872 38,600 20,706 13,570
690 1,182,438 20,706 1,024,456
(Loss)income before provision
for income taxes 16,365 1,121,192 (65,149) 988,019
Provision for income taxes 5,982 98,046 0 76,935
Net (Loss) Income $ 10,383 $1,023,146 $ (65,149) $ 911,084
Net (loss) income per share
of common stock:
Primary and Fully Diluted $0.00 $ 0.16 $ (0.01) $ 0.14
Weighted average number of
shares outstanding:
Primary and Fully Diluted 6,025,000 6,531,215 5,725,000 6,335,772
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 5
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
December 31,
1996 1995
Cash flows from operating activities:
Net cash provided by operating
activities $ 138,096 $ 80,551
Cash flows from investing activities:
Net cash provided by investing
activities 90,274 547,395
Cash flows from financing activities:
Net cash used in financing
activities (151,053) (323,504)
INCREASE IN CASH AND CASH EQUIVALENTS 77,317 304,442
Cash and cash equivalents at beginning of period 245,616 123,512
Cash and cash equivalents at end of period $322,933 $427,954
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 6
NEW RETAIL CONCEPTS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE A - ORGANIZATION AND BASIS FOR PRESENTATION
New Retail Concepts, Inc. ("NRC" or the "Company"), is engaged in managing
its existing corporate assets and in seeking other business opportunities for
acquisition or merger.
The condensed financial statements included herein are unaudited and
include all adjustments which are, in the opinion of management, necessary for
a fair presentation of the results of operations of the interim period pursuant
to the rules and regulations of the U.S. Securities and Exchange Commission.
Certain information and footnote disclosures normally included in generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures in
such financial statements are adequate to make the information presented not
misleading. These condensed financial statements should be read in conjunction
with the Company's Financial Statements and the notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31,
1996.
The Company has no full-time employees and three part-time employees which
include the Chairman of the Board and President and the Chief Financial Officer
of the Company.
NOTE B - CORPORATE ASSETS
The Company owns 1,227,696 shares of the common stock of Candie's, Inc.
("Candie's"), a Delaware corporation whose shares are traded on the Nasdaq
National Market, warrants to purchase 700,000 additional shares of such common
stock exercisable at an initial price of $1.2375 per share and an option to
purchase for $1.15 per share 100,000 additional shares of such common stock.
The Company's holding in Candie's is recorded on the equity method of
accounting. At December 31, 1996, such holding was carried at $1,372,892,
including approximately $645,000 of goodwill (net of amortization) which is
being amortized over a ten-year period. Revenues, gross profit and net income
of Candie's for the nine months ended October 31, 1996 are as follows:
Net Revenues $10,962,347
Gross Profit $ 2,284,498
Net (Loss) $ (167,928)
The other corporate assets involving management by the Company include an
account receivable from No Excuses Sportswear, Ltd. ("NES"), license agreements
calling for the payment of royalties to the Company for the use of the NO
EXCUSES trademark, and the trademark CRAYONS.
Page 7
NOTE C - MAJOR LICENSEES (CUSTOMERS)
Two major licensees (customers) accounted for 83.0% and 17.0%,
respectively, of total revenues for the nine months ended December 31, 1996.
Three major licensees accounted for 57%, 28% and 14%, respectively, of total
revenues for the nine month period ended December 31, 1995.
Page 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Results of Operations
Nine Months Ended December 31, 1996 and 1995
Total revenues for the nine months ended December 31, 1996 were $498,661
as compared to $519,751 for the corresponding period ended December 31, 1995.
This decrease is primarily attributable to a decrease in reported shipments by
the Company's No Excuses footwear licensee.
Net income for the nine months ended December 31, 1996 was $10,383 or
$0.00 per share of Common Stock, as compared to net income of $1,023,146 or
$.16 per share of Common Stock, for the nine months ended December 31, 1995.
This decrease in net income is principally due to the sale of licensing rights
during the nine months ended December 31, 1995.
Selling, general and administrative expenses decreased from $561,023 for
the nine months ended December 31, 1995 to $469,880 for the nine months ended
December 31, 1996. This decrease was primarily attributable to decreases in
advertising, royalty and professional fee expenses.
Interest expense for the nine months ended December 31, 1996 was $13,106
as compared to $19,974 for the nine months ended December 31, 1995. This
decrease is due to a reduction in notes payable.
Three Months Ended December 31, 1996 and 1995
Total revenues for the three months ended December 31, 1996 were $66,367
as compared to $125,220 for the corresponding period ended December 31, 1995.
This decrease is primarily attributable to a decrease in reported shipments of
the Company's footwear licensee.
Net loss for the three months ended December 31, 1996 was $65,149 or $0.01
per share of Common Stock, as compared to net income of $911,084, or $.14 per
share of Common Stock, for the three months ended December 31, 1995. This
decrease in net income is principally due to the sale of licensing rights
during the three months ended December 31, 1995.
Selling, general and administrative expenses decreased from $156,598 for
the three months ended December 31, 1995 to $148,472 for the three months ended
December 31, 1996. This decrease was primarily attributable to decreased
professional fees during the period.
Interest expense for the three months ended December 31, 1996 was $3,750
as compared to $5,059 for the three months ended December 31, 1995. This
decrease is due to a reduction in notes payable.
Page 9
Liquidity and Capital Resources
At December 31, 1996 the Company had working capital of $242,958 as
compared to working capital of $79,944 at March 31, 1996. This increase in
working capital arose primarily as a result of net income for the period and
reclassification of certain long-term assets at March 31, 1996.
The Company satisfies its present working capital and other financial
needs from royalties earned on its licensing agreements and the proceeds from
the sale of certain licensing rights. Management of the Company believes that
the Company will generate sufficient cash flow for the next twelve months from
its current cash position and licensing fees as the sublicensor of the NO
EXCUSES trademark.
Subsequent to December 31, 1996, the Company repurchased 35,400 shares of
the Company's common stock at an aggregate purchase price of $27,240. All such
shares were repurchased in the open market.
Page 10
NEW RETAIL CONCEPTS, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 - Computation of earnings per common share.
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
ended December 31, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEW RETAIL CONCEPTS, INC.
DATED: February 14, 1997 BY: /s/ Neil Cole
Neil Cole
President
Chairman
Chief Executive Officer
Chief Accounting Officer
Page 11
EXHIBIT INDEX
Exhibit No. Description Page
11 Computation of Earnings per Share 13
(Nine months ended December 31, 1996 and 1995)
Computation of Earnings per Share 14
(Three months ended December 31, 1996 and 1995)
27 Financial Data Schedule
Page 12
Exhibit 11
Page 1
NEW RETAIL CONCEPTS, INC.
COMPUTATION OF EARNINGS PER SHARE
Nine months Ended
December 31, 1996 December 31, 1995
Fully Fully
Primary Diluted Primary Diluted
Net Income $ 10,383 $ 10,383 $1,023,146 $1,023,146
Weighted average number
of shares outstanding 5,800,000 5,800,000 6,357,125 6,357,125
Shares issuable upon
exercise of options
and warrants 785,000 785,000 385,000 385,000
Shares assumed to be
repurchased under the
treasury stock method (560,000) (560,000) (210,910) (196,180)
6,025,000 6,025,000 6,531,215 6,545,945
NET INCOME (LOSS) PER SHARE $0.00 $0.00 $ 0.16 $ 0.16
Page 13
Exhibit 11
Page 2
NEW RETAIL CONCEPTS, INC.
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
December 31, 1996 December 31, 1995
Fully Fully
Primary Diluted Primary Diluted
Net (loss) income $(65,149) $(65,149) $ 911,084 $ 911,084
Weighted average number
of shares outstanding 5,725,000 5,725,000 6,067,039 6,067,039
Shares issuable upon
exercise of options
and warrants N/A N/A 385,000 385,000
Shares assumed to be
repurchased under the
treasury stock method N/A N/A (116,267) (116,267)
5,725,000 5,725,000 6,335,772 6,335,772
NET (LOSS) INCOME PER SHARE $(0.01) $(0.01) $ 0.14 $ 0.14
Page 14
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<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-QSB AT DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 322,933
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<RECEIVABLES> 43,421
<ALLOWANCES> 12,000
<INVENTORY> 0
<CURRENT-ASSETS> 720,630
<PP&E> 101,657
<DEPRECIATION> 101,657
<TOTAL-ASSETS> 2,640,343
<CURRENT-LIABILITIES> 477,672
<BONDS> 0
<COMMON> 63,235
0
0
<OTHER-SE> 1,999,436
<TOTAL-LIABILITY-AND-EQUITY> 2,640,343
<SALES> 498,661
<TOTAL-REVENUES> 498,661
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<TOTAL-COSTS> 469,880
<OTHER-EXPENSES> 690
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,106
<INCOME-PRETAX> 16,365
<INCOME-TAX> 5,982
<INCOME-CONTINUING> 10,383
<DISCONTINUED> 0
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<NET-INCOME> 10,383
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
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