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 June 30, 1997
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)
(Former name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 August 28, 1997: 6,423,493 (does not
include 729,854 treasury shares held by Company at August 28, 1997).
Transitional Small Business Disclosure Format (check one):
YES NO X
NEW RETAIL CONCEPTS, INC.
INDEX TO FORM 10-QSB
FOR THE PERIOD ENDED JUNE 30, 1997
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Balance Sheet at June 30, 1997 (unaudited) 3-4
Condensed Statements of Operations for the
Three Months Ended June 30, 1997 and 1996 (unaudited) 5
Condensed Statements of Cash Flows for the Three
Months Ended June 30, 1997 and 1996 (unaudited) 6
Notes to Interim Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - Other Information 10
ITEM 1. Legal Proceedings 10
ITEM 2. Exhibits and Reports on Form 8-K 10
Page 2
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
JUNE 30, 1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 450,462
Accounts receivable - net of allowance for
doubtful accounts of $12,000 112,026
Note receivable - NES 166,930
Other current assets 46,357
Total current assets 775,775
FIXED ASSETS - AT COST:
Furniture and equipment 101,657
Less accumulated depreciation (101,657)
-
Note receivable - NES 462,149
Investment in Candie's, Inc. 1,771,515
2,233,664
$ 3,009,439
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 3
NEW RETAIL CONCEPTS, INC.
CONDENSED BALANCE SHEET
JUNE 30, 1997
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - current $ 300,000
Accounts payable - trade 5,299
Accrued expenses and other current
liabilities 88,397
Total current liabilities 393,696
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 6,423,493 shares 63,250
Additional paid-in capital 3,470,504
Accumulated deficit ( 614,718)
2,919,036
Less:
Common stock in treasury at cost;
711,354 shares 403,293
2,515,743
$ 3,009,439
THE ACCOMPANYING STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 4
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30,
1997 1996
Revenues:
License and marketing fees $ 140,028 $ 158,124
Costs and expenses:
Selling, general
and administrative 96,900 155,437
Interest expense 3,750 4,356
Total costs and expenses 100,650
159,793
Operating income (loss) 39,378 (1,669)
Other income (expense):
Equity in gains (losses)of
affiliate 174,433 (5,564)
Other, net 12,610 45,649
187,043 40,085
Income before provision
for income taxes 226,421
38,416
Provision for income taxes 5,000 4,000
Net income $ 221,421 $
34,416
Net income per share of
common stock $ 0.04 $ 0.01
Weighted average number of
shares outstanding 6,272,000 6,051,557
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
Page 5
NEW RETAIL CONCEPTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Net cash used in operating activities $ (7,505) $
(18,900)
Cash flows from investing activities:
Net cash provided by investing
activities 40,243 40,678
Cash flows from financing activities:
Net cash used in financing
activities (43,310) (110,000)
DECREASE IN CASH AND CASH EQUIVALENTS (10,572) (88,222)
Cash and cash equivalents at beginning of period 461,034 245,616
Cash and cash equivalents at end of period $ 450,462 $ 157,394
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
Page 6
NEW RETAIL CONCEPTS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
June 30, 1997 AND 1996
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, 1997.
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 System, 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 June 30, 1997, such holding was
carried at $1,771,515, including approximately $593,400 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 six months ended July 31,
1997 are as follows:
Net Revenues $46,587,253
Gross Profit $11,725,174
Net Income $ 3,018,277
The other corporate assets involving management by the Company
include an account receivable from No Excuses Sportswear, Ltd. ("NES") and
license agreements calling for the payment of royalties to the Company for
the use of the NO EXCUSES(R) trademark and the CRAYONS(R) trademark.
Page 7
NOTE C - MAJOR LICENSEES (CUSTOMERS)
Two major licensees (customers) accounted for 88% and 12%,
respectively, of total revenues for the three months ended June 30, 1997.
Three major licensees accounted for 83.6%, 29.5% and 13.0%, respectively, of
total revenues for the three month period ended June 30, 1996.
Page 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended June 30, 1997 and 1996
Total revenues for the three months ended June 30, 1997 were
$140,028 as compared to $158,124 for the corresponding period ended June 30,
1996. This decrease is primarily attributable to a decrease in reported
shipments of its licensee for No Excuses footwear.
Net income for the three months ended June 30, 1997 was $221,421 or
$.04 per share of Common Stock, as compared to net income of $34,416 or $.01
per share of Common Stock, for the three months ended June 30, 1996. This
increase in net income is principally due to an due to the equity in the
gains of Candie's, Inc.
Selling, general and administrative expenses decreased from
$155,437 for the three months ended June 30, 1996 to $96,900 for the three
months ended June 30, 1997. This decrease was primarily attributable to
decreases in advertising, royalty and professional fee expenses.
Interest expense for the three months ended June 30, 1997 was
$3,750 as compared to $4,356 for the three months ended June 30, 1996. This
decrease is due to a reduction in notes payable.
Liquidity and Capital Resources
At June 30, 1997 the Company had working capital of $382,079 as
compared to working capital of $335,760 at March 31, 1997. This increase in
working capital arose primarily as a result of operating income for the
period.
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(R) trademark.
Subsequent to June 30, 1997, the Company repurchased 18,500 shares
of the Company's common stock at an aggregate purchase price of $19,663. All
such shares were repurchased in the open market.
Page 9
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 June 30, 1997.
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: August 29, 1997 BY: /s/ Neil Cole
Neil Cole
President
Chairman
Chief Executive Officer
Chief Accounting Officer
Page 10
EXHIBIT INDEX
Exhibit No. Description Page
11 Computation of Earnings per Share 12
(Three months ended June 30, 1997 and 1996)
27 Financial Data Schedule 13
Page 11
Exhibit 11
NEW RETAIL CONCEPTS, INC.
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
June 30, 1997 June 30, 1996
Fully Fully
Primary Diluted Primary Diluted
Net Income $221,421 $221,421 $ 34,416 $ 34,416
Weighted average number
of shares outstanding 5,743,000 5,743,000 5,843,028 5,843,028
Shares issuable upon
exercise of options
and warrants 685,000 685,000 785,000 785,000
Shares assumed to be
repurchased under the
treasury stock method (156,000) (156,000) (576,471) (586,471)
6,272,000 6,272,000 6,051,557 6,051,557
NET INCOME PER SHARE $0.04 $0.04 $ 0.01 $ 0.01
Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-QSB AT June 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 450,462
<SECURITIES> 0
<RECEIVABLES> 124,026
<ALLOWANCES> 12,000
<INVENTORY> 0
<CURRENT-ASSETS> 775,775
<PP&E> 101,657
<DEPRECIATION> 101,657
<TOTAL-ASSETS> 3,009,439
<CURRENT-LIABILITIES> 393,696
<BONDS> 0
<COMMON> 63,250
0
0
<OTHER-SE> 2,452,493
<TOTAL-LIABILITY-AND-EQUITY> 2,515,743
<SALES> 140,028
<TOTAL-REVENUES> 140,028
<CGS> 0
<TOTAL-COSTS> 96,900
<OTHER-EXPENSES> (187,043)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,750
<INCOME-PRETAX> 38,416
<INCOME-TAX> 5,000
<INCOME-CONTINUING> 221,421
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 221,421
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
