<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, 1998
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.
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(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,
New York, New York 10155
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 935-5030
Not Applicable
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(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
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Number of shares of common stock outstanding at May 6, 1998 (latest
practicable date):
Issued and Outstanding: 3,367,018
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PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
SPECIALTY RETAIL SERVICES, INC.
CONDENSED BALANCE SHEETS
(000'S Omitted)
March 31, December 31,
1998 1997
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(unaudited)
ASSETS
Cash $ 1 1
------ ------
TOTAL ASSETS $ 1 $ 1
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 5 $ 5
Due to related party 11
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TOTAL CURRENT LIABILITIES 16 5
Stockholders' Equity:
Common stock, par value $.01 per share
authorized 10,000,000 and shares
issued and outstanding 3,367,018
shares 34 34
Additional paid in capital 5,724 5,724
(Deficit) (5,873) (5,762)
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TOTAL STOCKHOLDERS' EQUITY (15) (4)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1 $ 1
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See notes to condensed financial statements.
2
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SPECIALTY RETAIL SERVICES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(000's Omitted)
Three months ended
March 31,
------------------
1998 1997
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(unaudited)
COSTS AND EXPENSES
General and administrative $ 11 $ 4
Interest 40
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(11) 44
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NET (LOSS) $ (11) $ (44)
======== ========
NET (LOSS) PER SHARE (Based on
weighted average shares in 1998 and
1997 of 3,367,018 and 648,529) $ * $ (.07)
* Less than $.01 per share.
See notes to condensed financial statements.
3
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SPECIALTY RETAIL SERVICES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(000's Omitted)
Three months ended
March 31,
-------------------
1998 1997
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(unaudited)
OPERATING ACTIVITIES
Net (loss) $ (11) $ (44)
Increase in accrued interest 34
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NET CASH USED IN OPERATING ACTIVITIES (11) (10)
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INVESTING ACTIVITIES
NET CASH USED IN INVESTING ACTIVITIES - -
-------- -------
FINANCING ACTIVITIES
Decrease in subordinated notes payable (42)
Advances from related parties, net 11 52
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NET CASH PROVIDED BY FINANCING
ACTIVITIES 11 10
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INCREASE IN CASH - -
Cash at beginning of period 1 1
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CASH AT END OF PERIOD $ 1 $ 1
======== =======
See notes to condensed financial statements.
4
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SPECIALTY RETAIL SERVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1998
Note A - Basis of Presentation
The accompanying unaudited condensed 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. The financial statement information was derived from unaudited
financial statements unless indicated otherwise. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 1998 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1998.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
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General
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Through October 1991, the principal businesses of Specialty Retail
Services, Inc. (the "Company") through its wholly-owned subsidiaries was the
manufacturing, distribution and marketing of professional beauty products. Since
then the Company has had no principal business activities.
Results from Operations
- -----------------------
The Company had no operations for the three months ended March 31, 1998 or
the three months ended March 31, 1997.
Liquidity and Capital Resources
- -------------------------------
The Company had a working capital deficit of $15,000 on March 31, 1998 as
compared to a working capital deficit of $4,000 at the beginning of the year.
The Company continued to be funded by an affiliate of a director of the Company.
In the event that the director decides not to fund the Company's expenses, the
Company will be unable to continue as a going concern.
5
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Net Operating Loss Carryforwards
- --------------------------------
The Company has net operating loss carryforwards of approximately $1,610,000
which will expire in the year 2003. The amount of net operating loss
carryforward that can be used in any given year will be limited by the
applicable tax laws which are in effect at the time such carryforward can be
utilized. A valuation allowance of $580,000 has been established to offset any
benefit from the net operating loss carry forwards. It can not be determined
when or if the Company will be able to utilize the net operating losses.
Forward-Looking Statements
- --------------------------
Certain matters discussed in this Quarterly Report are "forward-looking
statements" intended to qualify for the safe harbors from liability established
by Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). These forward looking statements
can generally be identified as such because the context of the statement will
include words such as the Company "believes," "anticipates", "expects", or words
of similar import. Similarly, statements that describe the Company's future
plans, objectives or goals are also forward-looking statements. Such statements
may address future events and conditions concerning, among other things, the
Company's results of operations and financial condition; the consummation of
acquisition and financing transactions and the effect thereof on the Company's
business; capital expenditures; litigation; regulatory matters; and the
Company's plans and objectives for future operations and expansion. Any such
forward-looking statements would be subject to risks and uncertainties that
could cause actual results of operations, financial condition, acquisitions,
financing transactions, operations, expenditures, expansion and other events to
differ materially from those expressed or implied in such forward-looking
statements. Any such forward-looking statements would be subject to a number of
assumptions regarding, among other things, future economic, competitive and
market conditions generally. Such assumptions would be based on the facts and
conditions as they exist at the time such statements are made as well as
predictions as to future facts and conditions, the accurate prediction of which
may be difficult and involve the assessment of events beyond the Company's
control. Further, the Company's business is subject to a number of risks that
would affect any such forward-looking statements. These risks and uncertainties
could cause actual results to the Company to differ materially from those
projected or implied by such forward-looking statements.
6
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PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
There have been no material legal proceedings to which the Company is a
party which have not been disclosed in previous filings with the Securities and
Exchange Commission. There are no material developments to be reported in any
previously reported legal proceeding.
ITEM 2. Changes in Securities
Not applicable.
ITEM 3. Defaults upon Senior Securities
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
Not applicable.
ITEM 5. Other Events
Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits - 27.1 - Financial Data Schedule
(b) Reports on Form 8-K - none
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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)
By /s/ Murray Steinfink
-------------------------------------
Murray Steinfink - President
Date: May 6, 1998
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) FORM
10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-K
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1
<CURRENT-LIABILITIES> 16
<BONDS> 0
0
0
<COMMON> 34
<OTHER-SE> (49)
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11)
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<NET-INCOME> (11)
<EPS-PRIMARY> 0<F1>
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<FN>
<F1>*Less than $.01 per share
</FN>
</TABLE>
