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, 1996
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 telephone 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: 1,472,803 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, 1996 and
October 31, 1995. . . . . . . . . . . . . . . . . . . . . .3-4
Consolidated Statements of Income for the three
and nine months ended July 31, 1996 and 1995. . . . . . . . .5
Consolidated Statements of Cash Flows for the
nine months ended July 31, 1996 and 1995. . . . . . . . . . . .6
Notes to Consolidated Financial Statements. . . . . . . . . .7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . .9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . 10
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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<PAGE>
<TABLE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
BALANCE SHEETS
(Unaudited)
ASSETS
July 31, October 31,
1996 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 21,642 $ 36,645
Accounts receivable, net of allowance
for doubtful accounts and trade dis-
counts - $258,000 at July 31, 1996 and
$121,670 at October 31, 1995 2,619,052 1,869,711
Inventories 1,742,526 1,795,840
Note receivable - 8,505
Deferred Income taxes - 18,556
Prepaid expenses and other current assets 440,411 471,630
--------- ---------
Total current assets 4,823,631 4,200,887
Property and equipment - at cost net of ac-
cumulated depreciation and amortization
of $334,441 at July 31, 1996 and $304,606
at October 31, 1995 221,222 196,749
Other assets
Deferred income taxes - 27,000
Security deposits and other 106,807 101,711
---------- ----------
$5,151,660 $4,526,347
========== ==========
See accompanying notes to financial statements.
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<PAGE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
BALANCE SHEETS (continued)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
July 31, October 31,
1996 1995
----------- -----------
<S> <C> <C>
Current liabilities
Note payable $1,233,961 $1,300,000
Accounts payable 1,651,880 1,227,939
Payroll taxes payable 53,094 384,365
Other current liabilities 282,728 84,941
---------- ---------
Total current liabilities 3,221,663 2,997,245
---------- ---------
Other long term liabilities 58,679 74,056
---------- ---------
Shareholders' equity
Preferred stock - $.0001 par value, authorized
1,000,000 shares; issued and outstanding- none - -
Common stock - $.0002 par value, authorized
10,000,000 shares; issued and outstanding
1,422,803 at July 31, 1996 and 1,372,803
at October 31, 1995 285 275
Additional paid-in capital 1,702,077 1,652,087
Retained earnings (accumulated deficit) 229,196 (139,701)
---------- ---------
1,931,558 1,512,661
Less: Note receivable and accrued
interest 55,250 52,625
5,000 shares held in treasury 4,990 4,990
---------- ----------
Total shareholders' equity 1,871,318 1,455,046
---------- ----------
$5,151,660 $4,526,347
========= ==========
See accompanying notes to financial statements.
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<PAGE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
STATEMENT OF INCOME
FOR THE THREE AND NINE MONTHS ENDED JULY 31, 1996 AND 1995
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $3,902,308 $2,082,003 $9,182,059 $5,639,027
Cost of goods sold 2,650,996 1,465,398 6,044,636 3,819,705
--------- ---------- ---------- ----------
Gross profit 1,251,312 616,605 3,137,423 1,819,322
Selling, general and
administrative ex-
penses 962,512 545,568 2,518,526 1,609,924
--------- ---------- ---------- ---------
Income from continu-
ing operations before
provision for income
taxes 288,800 71,037 618,897 209,398
Provision for income
taxes 130,000 21,311 250,000 62,819
------- ---------- --------- ---------
Net income $ 158,800 $ 49,726 $368,897 $146,579
======= ========== ========= =========
Net income per common
and common equivalent
share
Primary $ 0.11 $ 0.04 $ 0.26 $ 0.12
========= ========== ========= =========
Fully diluted $ 0.10 $ 0.04 $ 0.23 $ 0.12
========= ========== ========= =========
See accompanying notes to financial statements.
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<PAGE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
JULY 31,
1996 1995
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<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 368,897 $146,579
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 29,835 48,825
Accrued interest on note receivable (2,625) (2,625)
Provision for doubtful accounts and trade
discounts 136,330 10,000
Deferred income taxes - 12,061
Changes in operating assets and liabilities
Increase in accounts receivable (885,671) (507,140)
(Increase) decrease in inventories 53,314 (150,555)
Decrease in note receivable 8,505 48,911
Decrease in deferred income taxes 45,556 -
(Increase) decrease in prepaid expenses and
other current assets 31,219 (30,764)
Decrease (increase) in security deposits
and other assets (5,096) 19,900
(Decrease) in accounts payable 423,941 (61,878)
Increase (decrease) in payroll taxes payable
and other current liabilities (133,484) 62,023
Decrease in long term liabilities (15,377) (3,551)
------------- --------
Net Cash (used in) Operating Activities 55,344 (408,214)
------------- ---------
Cash Flows From Investing Activities
Purchase of property and equipment (54,308) (28,509)
------------ ----------
Net Cash used in Investing Activities (54,308) (28,509)
------------ -----------
Cash Flows from Financing Activities
Net proceeds (reductions) from short term
borrowing (66,039) 229,717
Proceeds from sale of common stock 50,000 230,000
------------ ----------
Net Cash (used) provided by Financing Activities (16,039) 459,717
------------ ----------
Net increase (decrease) in cash (15,003) 22,994
Cash, beginning of year 36,645 39,086
------------ --------
Cash, end of period $ 21,642 $ 62,080
============ =========
See accompanying notes to financial statements.
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</TABLE>
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(continued)
Note 1.
The balance sheet as of July 31, 1996, the statements of income for the nine
month periods July 31, 1996 and 1995 and the statements of cash flows for
the nine month periods ended July 31, 1996 and 1995 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, 1996 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, 1995 which was filed with the Securities and Exchange
Commission.
Note 2.
Composition of Inventory
Fiscal Quarter Ended Fiscal Year Ended
July 31, 1996 October 31, 1995
-------------------- -----------------
Raw materials $ 648,229 $ 580,948
Work - in - process 283,373 161,484
Finished Goods 810,924 1,053,408
----------- ---------
$ 1,742,526 $ 1,795,840
----------- ---------
Note 3.
Notes Payable
The Company had a $1,000,000 revolving line of credit with a bank, with
interest payable at 2% above the bank's prime rate of interest. As of
October 31, 1995, there was an outstanding balance of $1,000,000. On
February 20, 1996, this line of credit was replaced with a $1,500,000 line
of credit with another financial institution bearing an interest rate of 4%
above prime. The line has since been raised to $1,700,000. As of July 31,
1996, there was an outstanding balance of $1,133,961.
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JIM HJELM'S PRIVATE COLLECTION, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(continued)
In September 1995 the Company borrowed $100,000 from a shareholder. The
rate of interest was 12%. The loan was repayable in monthly installments of
$20,000, commencing January 15, 1996. The balance outstanding as of July
31, 1996 and October 31, 1995 was $ -0- and $100,000, respectively.
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 bank's prime
rate. Payment of the principal of this line is subordinate to payment of
the Company's revolving line of credit. As of July 31, 1996 and October 31,
1995, there was $100,000 and $200,000, respectively, outstanding.
-8-
<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, 1996 as compared to three months ended July 31,
1995 and nine months ended July 31, 1996 as compared to nine months ended
July 31, 1995
For the first nine months of the Company's fiscal year ending October
31, 1996 ("Fiscal 1996"), revenues increased to $9,182,059 from $5,639,027
an increase of 63% over the same period a year ago. Net income was $368,897
or $.26 per share for this period as compared to net income of $146,579 or
$.12 per share in the first nine months of Fiscal 1995. Gross profit as a
percentage of sales increased to 34.2% from 32.3% in the first nine months
of the prior year largely due to volume efficiencies. Selling, general and
administrative expenses ("SGA Expenses") as a percentage of net sales
decreased to 27.4% in the current period as compared to 28.5% in the prior
period due to a faster increase in sales as compared to SGA Expenses.
For the quarter ended July 31, 1996, revenues increased to $3,902,306
from $2,082,003, an increase of 91% over the comparable period a year ago.
Net income increased to $158,800 for the quarter ended July 31, 1996 as
compared to $49,726 for the period ended July 31, 1995. Gross profits as a
percentage of sales increased to 32.1% in the quarter ended July 31, 1996
from 29.6% in the year ago. SGA Expenses as a percentage of sales decreased
to 24.7% in the current quarter from 26.2% in the comparable period a year
ago due to a faster increase in sales as compared to SGA Expenses.
Liquidity and Capital Resources
The Company's working capital increased to $1,601,968 at July 31, 1996
from $1,203,642 at October 31, 1995. The Company's current ratio increased
to 1.5 to 1 at July 31, 1996 from 1.4 to 1 at October 31, 1995.
During the nine months ended July 31, 1996 the Company generated cash
from operating activities of $55,344 as compared to using $408,214 during the
earlier period largely due to increased net income and a reduction of inventory
during the current period. The Company used cash in investing activities
(purchase of equipment) during the nine months ended July 31, 1996 of
$54,308 as compared to $28,509 in the year earlier period. The Company
used cash from financing activities during the nine months ended
July 31, 1996 of $16,039 as compared to generating $459,717 in the year
earlier period. In the year earlier period the Company sold significantly
more of its Common Stock and increased its borrowings, as compared to the
current period when it sold less of its Common Stock and reduced its
borrowings.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K.
None.
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<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 13, 1996 By: -------------------------------------
Joseph L. Murphy
President
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hjelm\796-10q
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 21,642
<SECURITIES> 0
<RECEIVABLES> 2,619,052
<ALLOWANCES> 258,000
<INVENTORY> 1,742,526
<CURRENT-ASSETS> 4,823,631
<PP&E> 221,222
<DEPRECIATION> 334,441
<TOTAL-ASSETS> 5,151,660
<CURRENT-LIABILITIES> 3,221,663
<BONDS> 0
0
0
<COMMON> 285
<OTHER-SE> 1,871,318
<TOTAL-LIABILITY-AND-EQUITY> 5,151,660
<SALES> 3,902,308
<TOTAL-REVENUES> 3,902,308
<CGS> 2,650,996
<TOTAL-COSTS> 962,512
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 288,800
<INCOME-TAX> 130,000
<INCOME-CONTINUING> 158,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158,800
<EPS-PRIMARY> .11
<EPS-DILUTED> .10
</TABLE>
