<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number 0-17941
SPECIALTY RETAIL SERVICES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-2686442
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
150 East 58th Street, 10155
New York, New York (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (212) 935-5030
Not Applicable
(Former name, 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
Exchange Act of 1934 during the preceding 12 months (or 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
Number of shares of common stock outstanding at April 26, 1995
(latest practicable date): Issued and Outstanding: 6,485,294
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PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
SPECIALTY RETAIL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN
NET ASSETS AVAILABLE IN LIQUIDATION
<TABLE>
<CAPTION>
(000'S Omitted)
March 31, December 31,
1995 1994
---------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash $ 2 $ 1
------- -------
TOTAL ASSETS $ 2 $ 1
------- -------
LIABILITIES
Note payable bank 19 19
Accounts payable and accrued liabilities 2,416 2,416
Accrued lease obligation 1,894 1,894
Subordinate notes payable 1,557 1,606
Advances from related parties 880 780
Accrued interest payable and dividends 808 788
------- -------
TOTAL LIABILITIES 7,574 7,503
------- -------
Net deficiency in assets
available in liquidation $(7,572) $(7,502)
------- -------
------- -------
STOCKHOLDERS' DEFICIENCY IN ASSETS:
Preferred stock, 6% cumulative
callable, $100 par value, 4,550
shares issued and outstanding 455 455
Common stock, $.01, par value;
15,000,000 authorized;
6,485,294 shares issued and
outstanding 65 65
Additional paid in capital 2,975 2,975
Accumulated deficit (11,067) (10,997)
------- -------
NET STOCKHOLDERS' DEFICIENCY IN ASSETS $(7,572) $(7,502)
------- -------
------- -------
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
SPECIALTY RETAIL SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIENCY
IN NET ASSETS AVAILABLE IN LIQUIDATION
<TABLE>
<CAPTION>
(000's Omitted)
Three months ended
March 31, 1995
------------------
(unaudited)
<S> <C>
Changes in deficiency in net assets
available in liquidation
attributed to:
Decrease in subordinated notes payable $ 49
Increase in advance from related parties (100)
Increase in accrued interest and dividends (20)
Increase in cash 1
-------
(70)
Deficiency in net assets available in
liquidation at beginning of period (7,502)
-------
Deficiency in net assets available in
liquidation at March 31, 1995 $(7,572)
-------
-------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
SPECIALTY RETAIL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIENCY IN NET ASSETS
(UNAUDITED)
(in 000's)
<TABLE>
<CAPTION>
Additional
Preferred Stock Common Stock Paid-in Accum
--------------- ------------
Shares Amount Shares Amount Capital Deficit Total
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bal, Jan 1, 1995 4.5 $455 6,485.3 $65 $2,975 $(10,997) $(7,502)
Decrease in Sub-
ordinated Notes 49 49
Advances from
Related Parties (100) (100)
Increase in Accrued
Interest (13) (13)
Increase in Cash 1 1
Dividends accrued
on Preferred Stock - - - - - (7) (7)
--------------------------------------------------
Bal, March 31, 1995 4.5 $455 6,485.3 $65 $2,975 $(11,067) $(7,572)
--------------------------------------------------
--------------------------------------------------
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
SPECIALTY RETAIL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1995 and 1994
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly certain information and footnote disclosures normally
included in the consolidated financial statements prepared in
accordance with generally accepted accounting principles have been
omitted. It is suggested that these unaudited condensed financial
statements be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's 10-K
for the year ended December 31, 1994.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the
consolidated statement of deficiency in net assets available in
liquidation and changes in deficiency in net assets available in
liquidation at March 31, 1995 and for all periods presented herein
have been made.
B - Liquidation of business
On October 24, 1991, the Company announced that the Board of
Directors of Gobi-Primak, Inc., ("Gobi"), its principal operating
subsidiary, determined there were no further sources of capital
available to meet the severe working capital shortages faced by Gobi,
and announced it intended to explore various alternatives, including
the sale of Gobi.
On November 5, 1991, Fleet Credit Corporation ("Fleet"), sent
Gobi-Primak, Inc. a letter of an event of default under the loan
agreement, demanding immediate repayment of all sums outstanding under
the loan agreement. The Company entered into an arrangement with
Fleet, whereby Fleet would take peaceful possession of all of Gobi's
assets and begin the orderly liquidation of Gobi's assets.
Fleet immediately appointed a liquidator, Alco Capital, to
supervise the liquidation of all of Gobi's assets. In 1992, all the
assets of Gobi had been liquidated.
ITEM 2. Management's Discussion and Analysis of Deficiency
in Net Assets Available in Liquidation
5
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In the third quarter of 1994, the Company settled a disagreement
with subordinated note holders. The subordinated note holders will
begin to be paid amounts due, commencing October 1, 1994, through June
1, 1999. The principal and accrued interest of approximately $800,000
is included in the Consolidated Statement of Deficiency in Net Assets
in Liquidation, and the balance of approximately $140,000 will be
recognized as interest in future periods as per the subordinated note
terms. These obligations have been personally guaranteed by a
director of the Company. The director is currently satisfying the
notes and as payments are made, the Company will have an obligation to
repay the director. The director has the option to pledge certain
securities to the payees of these notes, in which event the Company
shall be released of all obligations to those individuals.
During 1992, the Company's bank, Fleet Credit Corporation
completed the liquidation of Gobi's assets and generated funds to
reduce the note payable to the bank by approximately $1,400,000.
There are no assets available for disbursement to unsecured
creditors.
PART II - OTHER INFORMATION
ITEM 3. Defaults upon Senior Securities
On November 5, 1991 the Company was notified by Fleet
Credit Corporation ("Fleet") that an Event of Default existed under
its Amended and Restated Revolving Credit Loan Agreement dated as of
April 25, 1989. The Company's Board of Directors elected to turn over
all of Gobi's assets to Fleet for liquidation on a peaceful possession
basis. Fleet immediately began the liquidation of Gobi's assets. In
1992, all the assets of Gobi had been liquidated.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
6
<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.
SPECIALTY RETAIL SERVICES, INC.
(Registrant)
/s/ MURRAY STEINFINK
-----------------------------------
Murray Steinfink
Chairman and President
Date: May 12, 1995
7
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 2
<SECURITIES> 0
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<ALLOWANCES> 0
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<BONDS> 0
<COMMON> 65
0
455
<OTHER-SE> (8,092)
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<OTHER-EXPENSES> 12
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