UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended April 30, 1998 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: 0-15827
SHARPER IMAGE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2493558
(State of Incorporation) (I.R.S. Employer
Identification No.)
650 Davis Street, San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 445-6000
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 Exchange 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.
Common Stock, $0.01 par value, 8,525,850 shares as of June 11, 1998
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
SHARPER IMAGE CORPORATION
CONDENSED BALANCE SHEETS
<CAPTION>
April 30, April 30,
1998 January 31, 1997
Dollars in thousands, except per share amounts (Unaudited) 1998 (Unaudited)
----------- --------------- ------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $ 483 $ 3,501 $ 4,260
Accounts receivable, net of allowance for doubtful
accounts of $799, $508 and $512 6,872 8,189 4,499
Merchandise inventories 31,043 34,534 28,793
Deferred catalog costs 5,523 4,982 3,696
Prepaid expenses and other 5,274 3,429 6,103
-------- -------- --------
Total Current Assets 49,195 54,635 47,351
Property and equipment, net 20,129 20,842 22,145
Deferred taxes and other assets 3,185 3,185 3,430
-------- -------- --------
Total Assets $ 72,509 $ 78,662 $ 72,926
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 24,242 $ 35,271 $ 32,864
Deferred revenue 6,481 6,784 5,622
Current portion of notes payable 952 947 931
-------- -------- --------
Total Current Liabilities 31,675 43,002 39,417
Revolving loan 7,616 - -
Notes payable 3,059 3,299 4,011
Other liabilities 3,171 3,205 3,215
-------- -------- --------
Total Liabilities 45,521 49,506 46,643
-------- -------- --------
Stockholders' Equity:
Preferred stock, $0.01 par value:
Authorized 3,000,000 shares: Issued and outstanding, none - - -
Common stock, $0.01 par value:
Authorized 25,000,000 shares: Issued and outstanding,
8,365,100, 8,356,280 and 8,266,940 shares 83 83 83
Additional paid-in capital 9,726 9,704 9,590
Retained earnings 17,179 19,369 16,610
-------- -------- --------
Total Stockholders' Equity 26,988 29,156 26,283
-------- -------- --------
Total Liabilities and Stockholders' Equity $ 72,509 $ 78,662 $ 72,926
======== ======== ========
<FN>
See notes to financial statements.
</FN>
</TABLE>
2
<PAGE>
<TABLE>
SHARPER IMAGE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
Dollars in thousands, except per share amounts April 30,
--------------------------
<S> <C> <C>
1998 1997
---- ----
REVENUES:
Sales $ 45,108 $ 41,185
Less: returns and allowances 5,870 5,304
--------- ---------
Net Sales 39,238 35,881
Other revenue 513 392
--------- ---------
39,751 36,273
--------- ---------
COST AND EXPENSES:
Cost of products 20,743 19,563
Buying and occupancy 6,337 5,707
Advertising and promotion 4,512 3,546
General, selling, and administrative 11,646 11,021
--------- ---------
43,238 39,837
--------- ---------
OPERATING LOSS (3,487) (3,564)
OTHER INCOME (EXPENSE):
Interest expense - net (165) (55)
Other-net 2 10
--------- ---------
(163) (45)
--------- ---------
Loss Before Income Tax Benefit (3,650) (3,609)
Income Tax Benefit (1,460) (1,443)
--------- ---------
Net Loss $ (2,190) $ (2,166)
========= ==========
Net Loss Per Share - basic and diluted $ (0.26) $ (0.26)
========== ==========
Weighted Average Number of Shares - basic and diluted 8,361,017 8,266,940
=========== =========
<FN>
See notes to financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
SHARPER IMAGE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
April 30,
----------------------
<S> <C> <C>
Dollars in thousands 1998 1997
---- ----
Cash was Provided by (Used for) Operating Activities:
Net loss $ (2,190) $ (2,166)
Adjustments to reconcile net loss to net cash
provided by (used for) operations:
Depreciation and amortization 1,148 1,136
Deferred rent expense 18 49
Deferred income taxes (1,460) (1,443)
Changes in:
Merchandise inventories 3,491 (1,428)
Accounts receivable 1,317 1,416
Deferred catalog costs, prepaid expenses and other (926) (146)
Accounts payable and accrued expenses (10,862) (3,790)
Deferred revenue and other liabilities (354) 258
---------- ---------
Cash Used for Operating Activities ( 9,818) (6,114)
---------- ---------
Cash was Provided by (Used for) Investing Activities:
Property and equipment expenditures (603) (269)
---------- ---------
Cash Used for Investing Activities (603) (269)
---------- ---------
Cash was Provided by (Used for) Financing Activities:
Issuance of common stock for stock options 22 -
Proceeds from revolving loan 12,166 -
Principal payments on notes payable and revolving loan (4,785) (230)
---------- ---------
Cash Provided by (Used for) Financing Activities 7,403 (230)
---------- ---------
Net Decrease in Cash and Equivalents (3,018) (6,613)
---------- ---------
Cash and Equivalents at Beginning of Period 3,501 10,873
---------- ---------
Cash and Equivalents at End of Period $ 483 $ 4,260
========== =========
Supplemental Disclosure of Cash Paid for:
Interest $ 162 $ 135
Income Taxes $ 0 $ 383
<FN>
See notes to financial statements.
</FN>
</TABLE>
4
<PAGE>
SHARPER IMAGE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
Three-month periods ended April 30, 1998 and 1997
(Unaudited)
NOTE A- Financial Statements
The condensed balance sheets at April 30, 1998 and 1997, and the related
condensed statements of operations and cash flows for the three-month periods
ended April 30, 1998 and 1997 have been prepared by the Company, without audit.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at April 30, 1998 and 1997, and for all
periods presented, have been made. The Company's business is seasonal in nature
and the results of operations for the interim periods presented are not
necessarily indicative of the results for the full fiscal year.
The balance sheet at January 31, 1998, presented herein, has been derived from
the audited balance sheet of the Company.
Certain information and footnote disclosures normally included in the footnotes
to the annual financial statements prepared in accordance with generally
accepted accounting principles have been omitted from these interim financial
statements. Accordingly, these interim financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's 1997 Annual Report.
NOTE B- Revolving Loan and Notes Payable
The Company has a revolving secured credit facility with The CIT Group/Business
Credit, Inc. (CIT) which expires September 2003. The credit facility has been
amended on several occasions and, as of April 30, 1998, the agreement allows the
Company borrowings and letters of credit up to a maximum of $28 million for the
period from October 1, 1998 through December 31, 1998, and $20 million for other
times of the year based on inventory levels. The credit facility is secured by
the Company's inventory, accounts receivable, general intangibles and certain
other assets. Borrowings under this facility bear interest at either prime plus
0.50% per annum or at LIBOR plus 2.50% per annum. The credit facility contains
certain financial covenants pertaining to interest coverage ratio and net worth
and contains limitations on operating leases, other borrowings, dividend
payments and stock repurchases. For the period ended April 30, 1998, the Company
was in compliance with all covenants. At April 30, 1998, the Company had $7.6
million outstanding on its revolving credit facility. Letter of credit
commitments outstanding under the credit facility were $1.7 million.
5
<PAGE>
In addition, the credit facility provides for term loans for capital
expenditures (Term Loans) up to an aggregate of $4.5 million. Amounts borrowed
under the Term Loans bear interest at a variable rate of either prime plus 0.75%
per annum or at LIBOR plus 2.75% per annum. Each Term Loan is to be repaid in 36
equal monthly principal installments. Notes payable included a Term loan which
bears interest at a variable rate of prime plus 0.75%, provides for monthly
principal payments of $55,555 plus the related interest payment, and matures in
October 1999. At April 30, 1998, the balance of the Term Loan was $1 million.
Notes payable also included two mortgage loans collateralized by certain
property and equipment. In connection with the expansion of the Company's
distribution center in 1995, the Company refinanced the mortgage loan. This $3
million note bears interest at a fixed rate of 8.40%, provides for monthly
payments of principal and interest in the amount of $29,367, and matures in
January 2011. The other note bears interest at a variable rate equal to the rate
on 30-day commercial paper plus 3.82%, provides for monthly payments of
principal and interest in the amount of $14,320, and matures in January 2000.
NOTE C- Commitments and Contingencies
The Company is party to various legal proceedings arising from normal business
activities. Management believes that the resolution of these matters will not
have a material effect on the Company's financial position or results of
operations.
NOTE D- Reclassifications
Certain reclassifications have been made to prior periods' financial statements
in order to conform with current period classifications.
INDEPENDENT ACCOUNTANTS REVIEW REPORT
The condensed balance sheets of the Company as of April 30, 1998 and 1997, and
the related condensed statements of operations and cash flows for the three
month periods then ended have been reviewed by the Company's independent
accountants, Deloitte & Touche LLP, whose report covering their review of the
financial statements is presented herein.
6
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Shaper Image Corporation
San Francisco, California
We have reviewed the accompanying condensed balance sheets of Sharper Image
Corporation as of April 30, 1998 and 1997, and the related condensed statements
of operations and cash flows for the three-month periods then ended. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Sharper Image Corporation as of January 31,
1998, and the related statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein); and in our report dated
March 25, 1998, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed balance sheet as of January 31, 1998 is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.
May 20, 1998
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table is derived from the Company's Statements of Operations and
shows the results of operations for the periods indicated as a percentage of
total revenues.
Percentage of Total Revenues
----------------------------
Three Months Ended
April 30,
---------
1998 1997
------- -------
Revenues:
Net store sales 66.7% 70.7%
Net catalog sales 32.0 28.2
Other revenue 1.3 1.1
------- -------
Total Revenues 100.0% 100.0%
Costs and Expenses:
Cost of products 52.2 53.9
Buying and occupancy 15.9 15.7
Advertising and promotion 11.4 9.8
General, selling
and administrative 29.3 30.4
Other Expense 0.4 0.1
------- -------
Loss Before Income Tax Benefit (9.2) (9.9)
Income Tax Benefit 3.7 3.9
------- -------
Net Loss (5.5)% (6.0)%
======= =======
8
<PAGE>
Revenues
Net sales for the three-month period ended April 30, 1998, increased $3,357,000,
or 9.4%, from the comparable period of the prior year. Returns and allowances
for the three-month period ended April 30, 1998, were 13.0% of sales, as
compared with 12.9% of sales for the comparable prior year period. For the
three-month period ended April 30, 1998, as compared with the same period last
year, net store sales increased $864,000, or 3.4%, comparable store sales were
even with last year and net catalog sales increased $2,493,000 or 24.3%.
The increase in net store sales for the three-month period ended April 30, 1998
as compared with the same prior year period reflects a 8.8% increase in average
revenue per transaction, partially offset by a 4.9% decrease in total store
transactions. The increase in net catalog sales for the three-month period ended
April 30, 1998 reflects an increase of 31.1% in total catalog orders, partially
offset by a 3.4% decrease in average revenue per order, compared to the same
prior year period. The increase in net catalog sales is due to increases in
sales for both The Sharper Image and The Sharper Image Home Collection catalogs,
reflecting increased circulation and improved productivity. The increase in The
Sharper Image catalog sales also reflects the emphasis and the increase in sales
of the Company's Sharper Image Design proprietary products. The increase in net
store sales for the three-month period ended April 30, 1998 is attributable to
the new stores opened during the last nine months of the prior fiscal year.
Cost of Products
Cost of products for the three-month period ended April 30, 1998 increased
$1,180,000, or 6.0%, from the comparable prior year period. The increase was due
to higher sales volume compared to the same period last year. The gross margin
rate for the three-month period was 47.1%, which was 1.6 percentage points
better than the 45.5% for the same period last year. The higher gross margin
rate reflected an increase in sales of the Sharper Image Design proprietary
products, which generally carry higher margins.
Buying and Occupancy
Buying and occupancy costs increased $630,000 due primarily to increased store
occupancy expenses. Store occupancy expense for the three-month period ended
April 30, 1998 increased $531,000 or 9.8%, from the comparable prior year
period. The increase primarily reflects the occupancy costs associated with the
six new stores opened during the last nine months of the prior fiscal year,
which was partially offset by the elimination of the occupancy costs of the two
Sharper Image stores closed during the three-month period ended April 30, 1998.
Advertising and Promotion Expenses
Advertising and promotion expenses for the three-month period ended April 30,
1998 increased $966,000, or 27.2%, from the comparable prior year period. The
increase in advertising and promotion expenses for the three-month period ended
April 30, 1998 reflects primarily a 10.0% increase in pages circulated for The
Sharper catalog and an increase in circulation of the Sharper Image Home
Collection catalog from the same period in the prior year.
General, Selling and Administrative Expenses
General, selling and administrative expenses (GS&A) for the three-month period
ended April 30, 1998 increased $625,000 or 5.7%, from the comparable prior year
period. The increase was primarily due to the increases in overall selling
expenses related to the increase in net sales and certain additional
administrative support costs.
9
<PAGE>
Liquidity and Capital Resources
The Company met its short-term liquidity needs and its capital requirements in
the three-month period ended April 30, 1998 with available cash, trade credit,
and borrowings under the credit facility. During the three-month period ended
April 30, 1998, the Company's cash decreased by $3,018,000 to $483,000 primarily
due to the funding of working capital for the period.
The Company has a revolving secured credit facility with The CIT Group/Business
Credit, Inc. (CIT) which expires September 2003. The credit facility has been
amended on several occasions and, as of April 30, 1998, the agreement allows the
Company borrowings and letters of credit up to a maximum of $28 million for the
period from October 1, 1998 through December 31, 1998, and $20 million for other
times of the year based on inventory levels. The credit facility is secured by
the Company's inventory, accounts receivable, general intangibles and certain
other assets. Borrowings under this facility bear interest at either prime plus
0.50% per annum or at LIBOR plus 2.50% per annum. The credit facility contains
certain financial covenants pertaining to interest coverage ratio and net worth
and contains limitations on operating leases, other borrowings, dividend
payments and stock repurchases. For the period ended April 30, 1998, the Company
was in compliance with all covenants. At April 30, 1998, the Company had $7.6
million outstanding on its revolving credit facility. Letter of credit
commitments outstanding under the credit facility were $1.7 million.
In addition, the credit facility provides for term loans for capital
expenditures (Term Loans) up to an aggregate of $4.5 million. Amounts borrowed
under the Term Loans bear interest at a variable rate of either prime plus 0.75%
per annum or at LIBOR plus 2.75% per annum. Each Term Loan is to be repaid in 36
equal monthly principal installments. Notes payable included a Term Loan which
bears interest at a variable rate of prime plus 0.75%, provides for monthly
principal payments of $55,555 plus the related interest payment, and matures in
October 1999. At April 30, 1998, the balance of the Term Loan was $1 million.
Notes payable also included two mortgage loans collateralized by certain
property and equipment. In connection with the expansion of the Company's
distribution center in 1995, the Company refinanced the mortgage loan. This $3
million note bears interest at a fixed rate of 8.40%, provides for monthly
payments of principal and interest in the amount of $29,367, and matures in
January 2011. The other note bears interest at a variable rate equal to the rate
on 30-day commercial paper plus 3.82%, provides for monthly payments of
principal and interest in the amount of $14,320, and matures in January 2000.
The Company's merchandise inventories at April 30, 1998 were approximately 7.8%
higher than that of April 30, 1997. Management believes that the increased
inventory levels during the three-month period ended April 30, 1998 had a
positive impact on the improved sales.
During the three-month period ended April 30, 1998, the Company closed two
stores located in Escondido, California and Gurnee Mills, Illinois. The Company
is currently evaluating its plan to open four to eight new Sharper Image stores
during fiscal 1998. Total capital expenditures estimated for the new and
existing stores, including the remodel of a number of existing stores, corporate
headquarters, and the distribution center for fiscal 1998 are between $6 million
to $8 million.
The Company believes it will be able to fund its cash needs for the remainder of
the fiscal year through internally generated cash, trade credit and the credit
facility.
10
<PAGE>
Seasonality
The Company's business is highly seasonal, reflecting the general pattern
associated with the retail industry of peak sales and earnings during the
Christmas season. The secondary peak period for the Company is June, reflecting
the gifting for Father's Day and graduations. A substantial portion of the
Company's total revenues and all or most of the Company's net earnings occur in
the fourth quarter ending January 31. The Company generally experiences lower
revenues and earnings during the other quarters and, as is typical in the retail
industry, has incurred and may continue to incur losses in these quarters. The
results of operations for these interim periods are not necessarily indicative
of the results for the full fiscal year.
Year 2000 Compliance
The Company recognizes that the arrival of the year 2000 poses a unique
worldwide challenge to the ability of all systems to recognize the date change
from December 31, 1999, to January 1, 2000. The Company has assessed its
computer and business processes, and is reprogramming its computer applications
to provide for their continued functionality. An assessment of the readiness of
the external entities with which it interfaces is ongoing.
The Company expects that the principal costs will be those associated with the
remediation and testing of its computer applications. This effort was begun in
1996 and is following a process of inventory, scoping and analysis,
modification, testing and implementation. These efforts will be met primarily
from existing resources through reprioritization of technology development
initiatives. The Company expects to complete the majority of its efforts in this
area during 1998 with final completion in mid-1999. The estimated cost for this
project is between $500,000 and $1,000,000 and is being funded through operating
cash flows. The cost of the project and the expected completion dates are based
on management's best estimates.
Uncertainties and Risk
The foregoing discussion and analysis should be read in conjunction with the
Company's financial statements and notes thereto included with this report. The
foregoing discussion contains certain forward-looking statements that are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those set forth in such forward-looking statements. Such
risks and uncertainties include, without limitation, risks of changing market
conditions in the overall economy and the retail industry, consumer demand, the
opening of new stores, actual advertising expenditures by the Company, the
success of the Company's advertising and merchandising strategy, availability of
products, and other factors detailed from time to time in the Company's annual
and other reports filed with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date thereof. The Company undertakes no obligations to
publicly release any revisions to these forward-looking statements or reflect
events or circumstances after the date hereof.
11
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amended and Restated Stock Option Plan. (Incorporated by reference to
Registration Statement on Form S-8 filed on January 19, 1996
(Registration No. 33-3327).)
10.2 1994 Non-Employee Director Stock Option Plan dated October 7, 1994.
(Incorporated by reference to Registration Statement on Form S-8 filed
on January 19, 1996 (Registration No. 33-3327).)
10.3 Cash or Deferred Profit Sharing Plan, as amended. (Incorporated by
reference to Exhibit 10.2 to Registration Statement on Form S-1
(Registration No. 33-12755).)
10.4 Cash or Deferred Profit Sharing Plan Amendment No. 3. (Incorporated by
reference to Exhibit 10.15 to Form 10-K for fiscal year ended January
31, 1988).
10.5 Cash or Deferred Profit Sharing Plan Amendment No. 4. (Incorporated by
reference to Exhibit 10.16 to Form 10-K for fiscal year ended January
31, 1988.)
10.6 Form of Stock Purchase Agreement dated July 26, 1985 relating to shares
of Common Stock purchased pursuant to exercise of employee stock
options. (Incorporated by reference to Exhibit 10.3 to Registration
Statement on Form S-1 (Registration No. 33-12755).)
10.7 Form of Stock Purchase Agreement dated December 13, 1985 relating to
shares of Common Stock purchase pursuant to exercise of employee stock
options. (Incorporated by reference to Exhibit 10.4 to Registration
Statement on Form S-1 (Registration No. 33-12755).)
10.8 Form of Stock Purchase Agreement dated November 10, 1986 relating to
shares of Common Stock purchased pursuant to exercise of employee stock
options. (Incorporated by reference to Exhibit 10.5 to Registration
Statement on Form S-1 (Registration No. 33-12755).)
10.9 Form of Director Indemnification Agreement. (Incorporated by reference
to Exhibit 10.42 to Registration Statement on Form S-1 (Registration
No. 33-12755).)
10.10 Real Estate Installment Note and Mortgage dated October 4, 1993 among
the Company and Lee Thalheimer, Trustee for the Alan Thalheimer Trust.
(Incorporated by reference to Exhibit 10.20 to Form 10-K for fiscal
year ended January 31, 1994)
10.11 Financing Agreement dated September 21, 1994 between the Company and
CIT Group/Business Credit Inc. (Incorporated by reference to Exhibit
10.12 to Form 10-Q for the quarter ended October 31, 1994)
12
<PAGE>
10.12 The Sharper Image 401(K) Savings Plan (Incorporated by reference to
Exhibit 10.21 to Registration Statement of Form S-8 (Registration No.
33-80504) dated June 21, 1994))
10.13 Chief Executive Officer Compensation Plan dated February 3, 1995.
(Incorporated by reference to Exhibit 10.24 to the Form 10-K for the
fiscal year ended January 31, 1995.)
10.14 Annual Report for the Sharper Image 401(K) Savings Plan (incorporated
by reference to Form 11-K (Registration No. 33-80504) for the plan year
ended December 31, 1995.)
10.15 Split-Dollar Agreement between the Company and Mr. R. Thalheimer, its
Chief Executive Officer dated October 13, 1995, effective as of May 17,
1995. (Incorporated by reference to Exhibit 10.17 to the Form 10-K for
the fiscal year ended January 31, 1996.)
10.16 Assignments of Life Insurance Policy as Collateral, both dated October
13, 1995, effective May 17, 1995. (Incorporated by reference to Exhibit
10.18 to the Form 10-K for the fiscal year ended January 31, 1996.)
10.17 Amendment to the Financing Agreement dated May 15, 1996 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by
reference to Exhibit 10.19 to the Form 1Q for the quarter ended April
30, 1996).
10.18 Warrant to Purchase Common Stock Agreement dated May 15, 1996 between
the Company and The CIT Group/Business Credit Inc. (Incorporated by
reference to Exhibit 10.20 to the Form 10Q for the quarter ended April
30, 1996).
10.19 CAPEX Term Loan Promissory note dated October 15, 1996 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by
reference to Exhibit 10.21 to the Form 10Q for the quarter ended
October 31, 1996.)
10.20 Employment Agreement between the Company and Mr. Barry Gilbert, its
Vice Chairman and Chief Operating Officer dated and effective December
2, 1996. (Incorporated by reference to Exhibit 10.20 to the Form 10-K
for the fiscal year ended January 31, 1997.)
10.21 Amendment to the Financing Agreement dated February 13, 1997 between
the Company and The CIT Group/Business Credit Inc. (Incorporated by
reference to Exhibit 10.21 to the Form 10-K for the fiscal year ended
January 31, 1997.)
10.22 Warrant to Purchase Common Stock Agreement dated February 13, 1997
between the Company and The CIT Group/Business Credit Inc.
(Incorporated by reference to Exhibit 10.22 to the Form 10-K for the
fiscal year ended January 31, 1997.)
10.23 Amendmentto the Financing Agreement dated March 24, 1997 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by
reference to Exhibit 10.23 to the Form 10-K for the fiscal year ended
January 31, 1997.)
10.24 Warrant to Purchase Common Stock Agreement dated April 6, 1998 between
the Company and the CIT Group/Business Credit Inc. (Incorporated by
reference to Exhibit 10.24 to the Form 10-K for the fiscal year ended
January 31, 1998.)
13
<PAGE>
10.25 Amendmentto the Financing Agreement dated April 6, 1998 between the
Company and The CIT Group/Business Credit Inc. (Incorporated by
reference to Exhibit 10.25 to the Form 10-K for the fiscal year ended
January 31, 1998.)
11.1 Statement Re: Computation of Earnings per Share.
15.0 Letter Re: Unaudited Interim Financial Information.
27.0 Financial Data Schedule.
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K for the three months
ended April 30, 1998.
14
<PAGE>
SIGNATURES
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.
SHARPER IMAGE CORPORATION
Date: June 12, 1998 by: /s/ Barry Gilbert
------------- ----------------------------
Barry Gilbert
Vice Chairman
Chief Operating Officer
by: /s/ Tracy Y. Wan
----------------------------
Tracy Y. Wan
Senior Vice President
Chief Financial Officer
15
Exhibit 11.1
SHARPER IMAGE CORPORATION
STATEMENTS RE: COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
April 30,
---------
Dollars in thousands, except per share amounts 1998 1997
------------ -----------
Net Loss $ (2,190) $ (2,166)
Average shares of common stock
outstanding during the period 8,361,017 8,266,940
============ ===========
Basic Loss per Share $ (0.26) $ (0.26)
============ ===========
Average shares of common stock
outstanding during the period 8,361,017 8,266,940
Add:
Incremental shares from assumed
exercise of stock options (Diluted) * *
8,361,017 8,266,940
============ ===========
Diluted Loss per Share $ (0.26) $ (0.26)
============ ===========
* Incremental shares from assumed exercise of stock options are
antidilutive for diluted loss per share, and therefore not presented.
16
Exhibit 15.0
June 11, 1998
Board of Directors
Sharper Image Corporation
San Francisco, California
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Sharper Image Corporation for the periods ended April 30, 1998
and 1997, as indicated in our report dated May 20, 1998; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended April 30, 1998 is
incorporated by reference in Registration Statements No. 33-12755, No. 33-80504,
and No. 33-3327 on Form S-8 of Sharper Image Corporation.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Yours truly,
17
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