FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 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 0-19000
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JIM HJELM'S PRIVATE COLLECTION, LTD.
------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3337553
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(State or other jurisdiction of (IRS Employer)
incorporation or organization) Identification No.)
225 West 37th Street, New York, New York 10018
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(212) 921-7058
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(Registrant's telehone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
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 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
-- ----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 1,372,803 shares of common stock, par value $.0002 per
share.<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
INDEX
Part 1. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at July 31, 1995 and
October 31, 1994.........................................3
Consolidated Statements of Income for the three
and nine months ended July 31, 1995 and 1994.............4
Consolidated Statements of Cash Flows for the
nine months ended July 31, 1995 and 1994...................5
Notes to Consolidated Financial Statements.................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K...................7
Signature..................................................8
2
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<CAPTION>
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
BALANCE SHEETS
(Unaudited)
ASSETS
July 31, October 31,
1995 1994
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 62,080 $ 39,086
Accounts receivable, net of allowance
for doubtful accounts and trade dis-
counts - $81,670 at July 31, 1995 and
$71,670 at October 31, 1994 1,805,960 1,308,820
Inventories 1,876,152 1,725,597
Note receivable 10,085 47,496
Deferred Income taxes 28,315 40,376
Prepaid expenses and other current assets 523,404 492,640
--------- ---------
Total current assets 4,305,996 3,654,015
Property and equipment - at cost net of ac-
cumulated depreciation and amortization
of $305,317 at July 31, 1995 and $256,492
at October 31, 1994 194,014 214,330
Other assets
Deferred income taxes 27,000 27,000
Security deposits and other 97,477 117,377
---------- ----------
$4,624,487 $4,012,722
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Note payable - bank $ 999,717 $ 970,000
Note payable - other 200,000 -
Accounts payable 1,194,672 1,256,550
Payroll taxes payable 455,859 384,147
Other current liabilities 150,615 160,304
---------- ---------
Total current liabilities 3,000,863 2,771,001
---------- ---------
Other long term liabilities 73,260 76,811
Shareholders' equity
Preferred stock - $.0001 par value, authorized
1,000,000 shares; issued and outstanding- none - -
Common stock - $.0002 par value, authorized
3,333,333 shares; issued and outstanding
1,372,803 at July 31, 1995 and 1,142,803
at October 31, 1994 275 229
Additional paid-in capital 1,652,087 1,422,133
Accumulated deficit (56,708) (203,287)
---------- ---------
1,595,654 1,219,075
Less: Note receivable and accrued
interest 40,300 49,175
5,000 shares held in treasury 4,990 4,990
---------- ----------
Total shareholders' equity 1,550,364 1,164,910
---------- ----------
$4,624,487 $4,012,722
========= ==========
See accompanying notes to consolidated financial statements
3
<PAGE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
STATEMENT OF INCOME
FOR THE THREE AND NINE MONTHS ENDED JULY 31, 1995 AND 1994
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $2,082,003 $1,703,261 $5,639,027 $4,959,179
Cost of goods sold 1,465,398 1,154,389 3,819,705 3,222,358
--------- ---------- ---------- ----------
Gross profit 616,605 548,872 1,819,322 1,736,821
Selling, general and
administrative ex-
penses 545,568 529,228 1,609,924 1,444,143
-------- ---------- ---------- ---------
Income from continu-
ing operations before
provision for income
taxes 71,037 19,644 209,398 292,678
Provision for income
taxes 21,311 6,115 62,819 102,437
------ ---------- ---------- ---------
Income from continuing
operations before cum-
ulative effect of
change in accounting
principle 49,726 13,529 146,579 190,241
Loss from discontinued
operations - (38,118) - (62,367)
Loss from sale of
discontinued operations - (56,262) - (56,262)
------- ----------- ----------- ---------
Income before cumula-
tive effect of change
in accounting
principle 49,726 (80,851) 146,579 71,612
Cumulative effect of
change in accounting
principle - - - 75,000
------------ ------------ ------------ ----------
Net income $ 49,726 ($80,851) $146,579 $146,612
============ ============ ============ ===========
Net income per com-
mon and common equi-
valent share
Income from cont-
inuing operations $ 0.04 $ - $0.12 $0.16
Loss from discon-
tinued operations - ($0.03) $ - ($0.05)
Loss from sale of
discontinued opera-
tions $ - ($0.05) $ - ($0.05)
Cumulative effect
of change in ac-
counting prin-
ciple $ - $ - $ - $0.06
------------ ------------ ------------ ------------
Net income $ 0.04 ($0.08) $0.12 $0.12
============ ============ ============ ============
See accompanying notes to consolidated financial statements
4
<PAGE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
JULY 31,
1995 1994
------------- ---------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $146,579 $190,241
Adjustments to reconcile net income
to net cash used in operating activities:
Loss from discontinued operations - (62,367)
Loss from sale of discontinued operations - (56,262)
Cumulative effect of accounting change - 75,000
Depreciation and amortization 48,825 7,046
Accrued interest on note receivable (2,625) (2,624)
Provision for doubtful accounts and trade discounts 10,000 20,102
Deferred income taxes 12,061 (75,000)
Changes in operating assets and liabilities
Increase in accounts receivable (507,140) (507,404)
(Increase) decrease in inventories (150,555) 169,557
Decrease (increase) in note receivable 48,911 (18,000)
Decrease in miscellaneous receivable - 17,509
(Increase) in prepaid expenses and
other current assets (30,764) (70,811)
Decrease (increase) in security deposits
and other assets 19,900 (12,379)
(Decrease) in accounts payable (61,878) (755)
Increase in payroll taxes payable and
other current liabilities 62,023 126,674
Decrease in long term liabilities (3,551) (8,090)
------------- --------
Net Cash (used in) Operating Activities (408,214) (167,563)
------------- ---------
Cash Flows From Investing Activities
Purchase of property and equipment (28,509) (3,376)
Note receivable from sale of
discontinued operations - (103,553)
------------ ----------
Net Cash used in Investing Activities (28,509) (106,929)
------------ -----------
<PAGE>
Cash Flows from Financing Activities
Net proceeds from short term borrowing 229,717 65,000
Proceeds from sale of common stock and
exercise of options and warrants 230,000 100,000
------------ ----------
Net Cash provided by Financing Activities 459,717 165,000
------------ ----------
Net increase (decrease) in cash 22,994 (109,492)
Cash, beginning of year 39,086 139,058
------------ --------
Cash, end of period $62,080 29,566
======= =========
See accompanying notes to consolidated financial statements
5
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1.
The balance sheet as of July 31, 1995, the statements of income for
the nine month periods July 31, 1995 and 1994 and the
statements of cash flows for the nine month periods ended July 31,
1995 and 1994 have been prepared by the company, without audit. In
the opinion of management, all adjustments necessary to present
fairly the financial position, results of operations and cash flows,
as of July 31, 1995 and for all periods presented have been made.
The results of operations are not necessarily indicative of the
results to be expected for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-KSB
for its fiscal year ended October 31, 1994 which was filed with the
Securities and Exchange Commission.
Note 2.
The operations of the company's subsidiary is included in the
company's consolidated financial statements from the acquisition
date of October 31, 1990.
Note 3.
Composition of Inventory
Fiscal Quarter Ended Fiscal Year Ended
July 31, 1995 October 31, 1994
-------------------- -----------------
Raw materials $709,041 $725,698
Work - in - process 461,928 352,208
Finished Goods 705,183 647,691
----------- -----------
$1,876,152 $1,725,597
----------- -----------
Note 4.
Note Payable - Other
In December 1994, with the consent of the Company's bank, the
Company obtained a short term line of credit of up to $200,000 from
a shareholder. Interest under this line accrues at a rate of 6%
above the banks prime rate. Payment of the principal of this line
is subordinate to payment of the Company's revolving line of credit.
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6
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months ended July 31, 1995 as compared to three months ended July 31,
1994
Nine months ended July 31, 1995 as compared to nine months ended July 31,
1994
For the first nine months of the Company's fiscal year ending October 31,
1995 ("Fiscal 1995"), revenues increased to $5,639,027 from $4,959,179 an
increase of 14% over the same period a year ago. Net income was $146,579 or
$.12 per share for this period as compared to net income of $146,612 or $.16
per share in the first nine months of Fiscal 1994. Included in net income
for the first nine months of Fiscal 1994 is $75,000 of income relating to
the change in an accounting principle offset by $118,629 loss from
discontinued operations. Gross profit as a percentage of sales decreased to
32.3% from 35.0% in the first nine months of the prior year largely due to
the product mix. Selling, general and administrative expenses as a
percentage of net sales decreased to 28.5% in the current period from 29.5%
in the prior period.
For the quarter ended July 31, 1995 revenues increased to $2,082,003 from
$1,703,261 an increase of 22.2% over the comparable period a year ago. Net
income increased to $49,726 for the quarter ended July 31, 1995 as compared
a loss of $80,851 for the period ended July 31, 1994. Gross profit as a
percentage of sales decreased to 30% in the quarter ended July 31, 1995 from
32% in the year ago. Selling, general and administrative expenses as a
percentage of sales decreased to 26.2% in the current quarter from 31.1% in
the comparable period a year ago. In addition to increased profits due to
increased sales in the current period the Company reported a loss from
discontinued operations and sale of discontinued operations during the prior
period of over $94,000.
Liquidity and Capital Resources
The Company's working capital increased to $1,305,133 at July 31, 1995 from
$883,014 at October 31, 1994. The Company's current ratio increased to 1.43
to 1 at July 31, 1995 from 1.31 to 1 at October 31, 1994.
During the first quarter of Fiscal 1995, with the consent of the bank, the
Company obtained a short term line of credit of up to $200,000 from a
shareholder. Interest under this line accrues at a rate of 6% over the
bank's prime rate. Payment of the principal of this line is subordinate to
the payment of the Company's revolving line of credit.
The Company continues to experience a tight liquidity position, resulting in
the need for increased borrowing and sizable short term debt, including
payroll tax obligations. In the event the Company was unable to maintain
its current borrowing facilities this could result in a severe cash shortage
which could negatively impact the company's operations materially.
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K.
None.
7
<PAGE>
Signature
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.
JIM HJELM'S PRIVATE COLLECTION, LTD.
Registrant
s/Joseph L. Murphy
Dated: September 19, 1995 By: -------------------------------------
Joseph L. Murphy
President
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> JUL-31-1995
<CASH> 62,080
<SECURITIES> 0
<RECEIVABLES> 1,805,960
<ALLOWANCES> 0
<INVENTORY> 1,876,152
<CURRENT-ASSETS> 4,305,996
<PP&E> 194,014
<DEPRECIATION> 305,317
<TOTAL-ASSETS> 4,624,487
<CURRENT-LIABILITIES> 3,000,863
<BONDS> 0
<COMMON> 275
0
0
<OTHER-SE> 1,550,364
<TOTAL-LIABILITY-AND-EQUITY> 4,624,487
<SALES> 2,082,003
<TOTAL-REVENUES> 2,082,003
<CGS> 1,465,398
<TOTAL-COSTS> 545,568
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 71,037
<INCOME-TAX> 21,311
<INCOME-CONTINUING> 49,726
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,726
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
