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 January 31, 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: 1,736,073 shares of common stock, par value $.0002 per
share.
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
INDEX
Part 1. Financial Information
Item 1. Financial Statements
Balance Sheets at January 31, 1997 and
October 31, 1996.......................................3-4
Statements of Income for the three
months ended January 31, 1997 and 1996...................5
Statements of Cash Flows for the
three months ended January 31, 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
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<PAGE>
<TABLE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
BALANCE SHEETS
(Unaudited)
ASSETS
January 31, October 31,
1997 1996
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 426,018 $ 83,807
Accounts receivable, net of allowance
for doubtful accounts and trade dis-
counts - $200,176 at January 31, 1997
and $196,308 at October 31, 1996 3,303,126 2,590,706
Inventories 1,836,989 1,734,491
Prepaid expenses and other current assets 345,720 289,522
---------- ---------
Total current assets 5,911,853 4,698,526
Property and equipment - at cost net of ac-
cumulated depreciation and amortization
of $366,024 at January 31, 1997 and $353,599
at October 31, 1996 245,313 231,244
Other assets 114,482 194,695
----------- ----------
$6,271,648 $5,124,465
=========== ==========
See accompanying notes to financial statements
-3-
<PAGE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
BALANCE SHEETS
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
January 31, October 31,
1997 1996
----------- -----------
<S> <C> <C>
Current liabilities
Notes payable $1,471,194 $1,064,955
Accounts payable 1,262,055 850,596
Payroll taxes payable 54,627 97,728
Income taxes payable 176,983 263,946
Accrued expenses and
other current liabilities 394,209 436,134
---------- ---------
Total current liabilities 3,359,068 2,713,359
---------- ---------
Other liabilities 71,768 71,937
---------- ---------
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 1,718,715
at January 31, 1997 and 1,637,823
at October 31, 1996 344 328
Additional paid-in capital 2,377,911 2,071,572
Accumulated earnings 526,297 331,009
--------- ---------
2,904,552 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 2,840,812 2,339,169
--------- ----------
$6,271,648 $5,124,465
========= ==========
See accompanying notes to financial statements
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<PAGE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JANUARY 31, 1997 AND 1996
(Unaudited)
1997 1996
---------- ----------
<S> <C> <C>
Net sales $3,202,533 $2,313,124
Cost of goods sold 1,962,887 1,513,885
--------- ----------
Gross profit 1,239,646 799,239
Selling, general and
administrative ex-
penses 856,728 676,080
--------- ----------
Income from continu-
ing operations before
provision for income
taxes 382,918 123,159
Provision for income
taxes 187,630 45,000
--------- ---------
Net income $ 195,288 $ 78,159
======= ======
Net income per com-
mon and common equi-
valent share
Net income $ .10 $ 0.06
====== ======
See accompanying notes to financial statements
-5-
<PAGE>
<CAPTION>
JIM HJELM'S PRIVATE COLLECTION, LTD.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
JANUARY 31, 1997 and 1996
1997 1996
---------- ---------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 195,288 $ 78,159
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 12,425 9,185
Accrued interest on note receivable - (875)
Provision for doubtful accounts
and trade discounts 3,868 35,330
Deferred income taxes - 44,682
Changes in operating assets and liabilities
Increase in accounts receivable (716,288) (265,302)
(Increase) decrease in inventories (102,498) 164,024
(Increase) decrease in prepaid
expenses and other current assets (56,198) 46,297
Decrease (increase) in security deposits
and other assets 80,213 (646)
Increase in accounts payable 411,459 8,926
Decrease in payroll taxes payable and
other current liabilities (171,989) (162,336)
Decrease in long term liabilities (169) (1,615)
--------- ----------
Net Cash (used in) Operating Activities (343,989) (44,171)
--------- ----------
Cash Flows From Investing Activities
Purchase of property and equipment (26,494) -
--------- ----------
Net Cash used in Investing Activities (26,494) -
--------- ----------
Cash Flows from Financing Activities
Net proceeds (payment of) from 406,239 (20,000)
short term borrowing
Net proceeds from sale of common stock 300,979 50,000
Proceeds from exercise of options 5,360 -
--------- ---------
Net Cash provided by Financing Activities 712,578 30,000
--------- ---------
Net increase (decrease) in cash 342,211 (14,171)
Cash, beginning of year 83,807 36,645
--------- ---------
Cash, end of period $ 426,018 $ 22,474
========= =========
</TABLE>
See accompanying notes to financial statements
-6-
<PAGE>
JIM HJELM'S PRIVATE COLLECTION, LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1.
The balance sheet as of January 31, 1997, the statements of income
for the three month periods ended January 31, 1997 and 1996 and the
statements of cash flows for the three month periods ended January
31, 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 January 31, 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
January, 31, 1997 October 31, 1996
------------------- ------------------
Raw materials $821,493 $755,536
Work-in-process 206,310 103,056
Finished Goods 809,186 875,899
---------- -----------
$1,836,989 $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.
-7-
<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 January 31, 1997 as compared to three months
ended January 31, 1996.
For the first three months of the Company's fiscal year ending
October 31, 1997 ("Fiscal 1997"), revenues increased to $3,202,533
from $2,313,124, an increase of 38.5% over the same period a year
ago. Net income was $195,288 or $.10 per share for this period as
compared to net income of $78,159 or $.06 per share in the first
three months of Fiscal 1996. Gross profit as a percentage of sales
increased to 38.7% from 34.6% in the first three months of the
prior year largely due to the product mix. Selling, general and
administrative expenses as a percentage of net sales was 26.8% in
the current period as compared to 29.2% in the prior period.
Liquidity and Capital Resources
The Company's working capital increased to $2,552,785 at
January 31, 1997 from $1,985,167 at October 31, 1996. The
Company's current ratio increased to 1.76 to 1 at January 31, 1997
from 1.73 to 1 at October 31, 1996.
During the three months ended January 31, 1997, the Company
used $343,989 from operating activities as compared to using
$44,171 during the year earlier period. This use was largely to
finance significantly increased accounts receivable. The Company
used cash in investing activities (purchase of equipment) during
the three months ended January 31, 1997 of $26,494 as compared to
no cash in the year earlier period. The Company generated $712,578
from financing activities during the three months ended January 31,
1997 as compared to $30,000 in the year earlier period. This was
largely due to increased sales of the Common Stock and increased
borrowings during the current period.
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 increased credit
line with its current bank (the "Credit Line") are expected to be
sufficient for the Company to meet its cash flow requirements.
In the event the Company's 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.
-8-
PART II. OTHER INFORMATION
Item 6.
Exhibits and reports on Form 8-K.
None.
-9-
<PAGE>
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: March 14, 1997 By: --------------------------------
Joseph L. Murphy
President and
Chief Financial Officer
-10-
hjelm\10q.197
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 426,018
<SECURITIES> 0
<RECEIVABLES> 3,303,126
<ALLOWANCES> 200,176
<INVENTORY> 1,836,989
<CURRENT-ASSETS> 5,911,853
<PP&E> 245,313
<DEPRECIATION> 366,024
<TOTAL-ASSETS> 6,271,648
<CURRENT-LIABILITIES> 3,359,068
<BONDS> 0
0
0
<COMMON> 344
<OTHER-SE> 2,840,468
<TOTAL-LIABILITY-AND-EQUITY> 6,271,648
<SALES> 3,202,533
<TOTAL-REVENUES> 3,202,533
<CGS> 1,962,887
<TOTAL-COSTS> 856,728
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 382,918
<INCOME-TAX> 187,630
<INCOME-CONTINUING> 195,288
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 195,288
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
