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 April 30, 1997
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
-------- ----------
(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: 1,781,223 shares of common stock, par value $.0002 per
share.
JIM HJELM'S PRIVATE COLLECTION, LTD.
INDEX
Part 1. Financial Information
Item 1. Financial Statements
Balance Sheets at April 30, 1997 and
October 31, 1996...................................... 3-4
Statements of Income for the three and six
months ended April 30, 1997 and 1996.................. 5
Statements of Cash Flows for the
six months ended April 30, 1997 and 1996.............. 6
Notes to Financial Statements........................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K................. 9
Signature................................................ 10
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
<TABLE>
<CAPTION>
BALANCE SHEETS
(Unaudited)
ASSETS
April 30, October 31,
1997 1996
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 363,398 $ 83,807
Accounts receivable, net of allowance
for doubtful accounts and trade dis-
counts - $275,176 at April 30, 1997
and $196,308 at October 31, 1996 3,224,182 2,590,706
Inventories 1,764,873 1,734,491
Prepaid expenses and other current assets 329,155 289,522
--------- ---------
Total current assets 5,681,608 4,698,526
Property and equipment - at cost net of ac-
cumulated depreciation and amortization
of $382,104 at April 30, 1997 and $353,599
at October 31, 1996 246,315 231,244
Other assets 197,484 194,695
---------- ----------
$6,125,407 $5,124,465
========== ==========
See accompanying notes to financial statements.
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
BALANCE SHEETS
(Unaudited)
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
April 30, October 31,
1997 1996
----------- -----------
<S> <C> <C>
Current liabilities
Notes payable $1,035,649 $1,064,955
Accounts payable 1,165,435 850,596
Payroll taxes payable 30,607 97,728
Income taxes payable 280,986 263,946
Accrued expenses and
other current liabilities 446,227 436,134
---------- ---------
Total current liabilities 2,958,904 2,713,359
---------- ---------
Other liabilities 73,768 71,937
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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 1,744,965
at April 30, 1997 and 1,637,823
at October 31, 1996 349 328
Additional paid-in capital 2,400,742 2,071,572
Accumulated earnings 755,384 331,009
---------- ---------
3,156,475 2,402,909
Less: Note receivable and accrued
interest (58,750) (58,750)
1,667 shares held in treasury (4,990) (4,990)
---------- ----------
Total shareholders' equity 3,092,735 2,339,169
---------- ----------
$6,125,407 $5,124,465
========= ==========
See accompanying notes to financial statements.
JIM HJELM'S PRIVATE COLLECTION, LTD.
<CAPTION>
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 1997 AND 1996
(Unaudited)
Three Months Ended Six Months Ended
1997 1996 1997 1996
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net sales $3,962,619 $2,966,627 $7,165,152 $5,279,751
Cost of goods sold 2,512,067 1,879,755 4,474,954 3,393,640
---------- ---------- --------- ----------
Gross profit 1,450,552 1,086,872 2,690,198 1,886,111
Selling, general and
administrative ex-
penses 1,001,362 879,934 1,858,090 1,556,014
---------- ---------- --------- ----------
Income from continu-
ing operations before
provision for income
taxes 449,190 206,938 832,108 330,097
Provision for income
taxes 220,103 75,000 407,733 120,000
---------- ---------- --------- ---------
Net income $ 229,087 $131,938 $424,375 $210,097
============ ========= ========= ==========
Net income per com-
mon and common equi-
valent share
Primary $ 0.12 $ 0.09 $ 0.22 $ 0.15
============ ======== ========== ==========
Fully Diluted $ 0.12 $ 0.08 $ 0.22 $ 0.14
============ ======= ========= ==========
See accompanying notes to financial statements.
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
<CAPTION>
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
APRIL 30, 1997 and 1996
1997 1996
------------- ---------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 424,375 $210,097
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation and amortization 28,505 18,600
Accrued interest on note receivable - (1,750)
Provision for doubtful accounts and trade discounts 78,868 74,330
Deferred income taxes - 45,556
Changes in operating assets and liabilities
Increase in accounts receivable (712,344) (479,373)
(Increase) decrease in inventories (30,382) 210,609
Decrease in note receivable - 8,505
Increase in prepaid expenses and
other current assets (39,633) (3,850)
Increase in security deposits
and other assets (2,789) (19,146)
(Decrease) increase in accounts payable 314,839 (45,486)
Increase (decrease) in payroll taxes payable
and other current liabilities (39,988) (269,947)
Increase (decrease) in long term liabilities 1,831 (1,615)
--------- ---------
Net Cash (used in) Operating Activities 23,282 (253,470)
--------- ---------
Cash Flows From Investing Activities
Purchase of property and equipment (43,576) (1,948)
--------- ---------
Net Cash used in Investing Activities (43,576) (1,948)
--------- ---------
Cash Flows from Financing Activities
Net (reduction) proceeds from
short term borrowing (29,306) 203,479
Proceeds from sale of common stock 300,979 50,000
Proceeds from exercise of options 28,212 -
--------- --------
Net Cash provided by Financing Activities 299,885 253,479
--------- --------
Net (decrease) increase in cash 279,591 (1,939)
Cash, beginning of year 83,807 36,645
--------- --------
Cash, end of period $ 363,398 $34,706
========= =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General
The Balance Sheet as of April 30, 1997, the Statements of Income
for the six month periods ended April 30, 1997 and 1996 and the
Statements of Cash Flows for the six month periods ended April 30,
1997 and 1996 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 April 30, 1997 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, 1996 which was
filed with the Securities and Exchange Commission.
Note 2. Composition of Inventory
Fiscal Quarter Ended Fiscal Year Ended
April 30, 1997 October 31, 1996
------------------- ------------------
Raw materials $ 847,269 $ 755,536
Work-in-process 211,989 103,056
Finished Goods 705,615 875,899
----------- ----------
$1,764,873 $1,734,491
------------ ----------
Note 3. Notes Payable
In February 1996, the Company entered into a $1,500,000
revolving loan agreement (the "Credit Line") with CBC of New York
Inc. (the "Bank"), which bears interest at the rate of 12.25% per
annum. The Credit Line was increased to $1,700,000 in July 1996.
The Bank is secured by a first lien on all of the Company's
accounts receivable and the personal guaranties of Jim Hjelm,
Joseph L. Murphy and Joseph O'Grady, officers and/or shareholders
of the Company. The balances outstanding as of April 30, 1997 and
April 30, 1996 were $1,035,649 and $1,064,955, respectively.
Note 4. Subsequent Event
On May 1, 1997, the Company acquired all of the outstanding
shares of stock of Alvina Valenta Couture Collection, Inc. ("Alvina
Valenta") for 36,400 shares of Common Stock of the Company and
$25,000.
<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 April 30, 1997 as compared to three months ended
April 30, 1995 and six months ended April 30, 1997 as compared to
six months ended April 30, 1996.
For the first six months of the Company's fiscal year ending
October 31, 1997 ("Fiscal 1997"), revenues increased to $7,165,152
from $5,279,751, an increase of 35.7% over the same period a year
ago. Net income was $424,375, or $.22 per share, for this period
as compared to net income of $210,097, or $.08 per share, in the
first six months of Fiscal 1996. Gross profit as a percentage of
sales increased to 37.5% from 35.7% in the first six months of the
prior year largely due to volume efficiencies. Selling, general
and administrative expenses as a percentage of net sales was 25.9%
in both periods.
For the quarter ended April 30, 1997, revenues increased to
$3,962,619 from $2,966,627, an increase of 33.5% over the
comparable period a year ago. Net income increased to $220,987, or
$.12 per share, for the quarter ended April 30, 1997 as compared to
$131,938, or $.09 primary ($.08 fully-diluted per share) for the
period ended April 30, 1996. Gross profits as a percentage of
sales remained at 36.6% in the quarter ended April 30, 1997.
Selling, general and administrative expenses as a percentage of
sales decreased to 25.3% in the current quarter from 29.7% in the
comparable period a year ago.
Liquidity and Capital Resources
The Company's working capital increased to $2,722,704 at April
30, 1997 from $1,985,167 at October 31, 1996. The Company's
current ratio increased to 1.92 to 1 at April 30, 1997 from 1.73 to
1 at October 31, 1996.
During the six months ended April 30, 1997, the Company
generated cash from operating activities of $23,282, as compared to
using $253,470 of cash during the earlier period. The Company used
cash to purchase equipment during the six months ended April 30,
1997 of $43,576 as compared to $1,948 in the year earlier period.
The Company generated cash from financing activities during the six
months ended April 30, 1997 of $299,885 as compared to $253,479 in
the year earlier period. This was largely due to increased sales
of Common Stock in the current period as compared to increased
short-term borrowings in the year earlier period.
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
During the first quarter of Fiscal 1997, the Company through
a private placement offering consisting of an aggregate of 75,000
shares of Common Stock and 22,500 warrants to purchase additional
shares of Common Stock at prices ranging from $4.37 to $6.62 were
issued for net proceeds of $300,979 (after private placement
offering expenses). These funds along with the Credit Line are
expected to be sufficient for the Company to meet its cash flow
requirements.
In the event the Bank does not renew the Credit Line in
February 1998, when it expires, and the Company is unable to obtain
a substitute line of credit, the Company would likely experience a
working capital shortage which could materially disrupt its
operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
None.
SIGNATURE
Pursuant to the requirements of the Securities 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: June 13, 1997 By: --------------------------------
Joseph L. Murphy
President and Chief
Financial Officer
hjelm\10q.697
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 363,398
<SECURITIES> 0
<RECEIVABLES> 3,499,358
<ALLOWANCES> 275,176
<INVENTORY> 1,764,873
<CURRENT-ASSETS> 5,681,608
<PP&E> 628,419
<DEPRECIATION> 382,104
<TOTAL-ASSETS> 6,125,407
<CURRENT-LIABILITIES> 2,958,904
<BONDS> 0
0
0
<COMMON> 349
<OTHER-SE> 3,092,386
<TOTAL-LIABILITY-AND-EQUITY> 6,125,407
<SALES> 7,165,152
<TOTAL-REVENUES> 7,165,152
<CGS> 4,474,954
<TOTAL-COSTS> 1,858,090
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 832,108
<INCOME-TAX> 407,733
<INCOME-CONTINUING> 424,375
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 424,375
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
