SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 2000 Commission File Number 0 - 18064
YES CLOTHING CO.
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation or organization)
95-376867
(I.R.S. Employer I.D. No.)
4695 MacArthur Court, Suite 1450, Newport Beach, California 92660
(Address of principal executive offices, including zip code)
(949) 833-2094
(Registrant's telephone number, including area code)
4695 MacArthur Court, Suite 530, Newport Beach, California 92660
(Former Address, if changed since last report)
N/A
(Former telephone number, 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 for shorter period that the Company was
required to file such reports), and [2] has been subject to such filing
requirements for the past 90 days.
YES _X NO ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of capital stock, as of the latest practicable date.
Class Outstanding at August 15, 2000
Common Stock, $.01 par value 12,786,492
<PAGE>
YES CLOTHING CO.
INDEX
Page
PART I
Item 1. Financial Information
Balance Sheets..................................................... 3
Statements of Operations........................................... 4
Statements of Cash Flows........................................... 5
Notes to Financial Statements...................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk......... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................. 8
Item 2. Changes in Securities.............................................. 8
Item 3. Defaults Upon Senior Securities.................................... 8
Item 4. Submission of Matters to a Vote of Security Holders................ 8
Item 5. Other Information.................................................. 8
Item 6. Exhibits and Reports on Form 8-K................................... 8
Signatures......................................................... 9
<PAGE>
YES CLOTHING CO.
Consolidated Condensed Balance Sheets
As of June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
June 30, 2000 March 31, 2000
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets $ - $ -
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable $ 1,180,000 $ 1,180,000
Accrued expenses 495,000 485,000
Income taxes payable 971,000 971,000
Due to affiliate 266,000 256,000
Total current liabilities 2,912,000 2,892,000
Shareholder's Deficit:
Series A convertible preferred stock, no par;
2,000,000shares authorized; 1,277,005 shares issued
and outstanding; convertible into 41,694,213 shares
of common stock 1,409,000 1,409,000
Common stock, no par; 20,000,000 shares authorized;
12,786,492 issued and outstanding 11,949,000 11,949,000
Accumulated deficit (16,270,000) (16,250,000)
Total shareholders' deficit (2,912,000) (2,892,000)
$ - $ -
</TABLE>
See accompanying notes to these condensed financial statements.
<PAGE>
YES CLOTHING CO.
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Net sales $ - $ -
Cost of sales - -
Gross loss - -
Expenses:
Selling, general and administrative 20,000 48,000
Loss from operations (20,000) (48,000)
Other income (expense):
Interest Expense - (48,000)
Loss before income taxes (20,000) (48,000)
Income tax expense - -
Net loss $ (20,000) $ (48,000)
Basic and diluted earnings (loss) per share: $ (.00) $ (.01)
Basic and diluted weighted average common shares
outstanding 12,786,492 12,786,492
</TABLE>
See accompanying notes to these condensed financial statements.
<PAGE>
YES CLOTHING CO.
Condensed Statements of Cash Flows
For the Three Months Ended
June 30, 2000 and 1999
<TABLE>
<CAPTION>
Three Months Ended
June 30,
2000 1999
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (20,000) $ (48,000)
Reconciliation of net loss to net cash
used by operating activities:
Increases in cash due to changes in
operating assets and liabilities:
Accrued expenses 20,000 48,000
Net cash (used) by operating activities - -
Cash and cash equivalents, beginning of period - -
Cash and cash equivalents, end of period $ - $ -
</TABLE>
See accompanying notes to these condensed financial statements
<PAGE>
YES CLOTHING CO.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2000
Note 1. Organization
Yes Clothing Co. (the "Company") was incorporated on July 1, 1982, in the State
of California. Through July 1997, the Company designed, manufactured and
marketed a diversified line of apparel primarily for women and young men. The
Company sold its garments throughout the United States and Canada to retail
department stores, specialty chains and specialty stores.
In June 1996, the Company's principal shareholder sold approximately 50% of the
Company's outstanding shares to an individual who assumed the position of
Chairman and Chief Executive Officer of the Company. In July 1997, due to a lack
of trade credit and working capital, the Company temporarily suspended its
operations pending receipt of additional capital or third party credit. In
December 1997, the Company filed for protection from its creditors pursuant to
Chapter 11 of the United States Bankruptcy Code. In March 1998, the Bankruptcy
Court dismissed the Company's bankruptcy proceedings.
In April 1998, the Company relinquished its rights to the YES(R) trademarks in
connection with a purchase and sale agreement whereby an affiliate of the
Company satisfied certain senior secured debt on behalf of the Company (see Note
7).
Note 2. Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. The Company has experienced recurring losses since
1992. At June 30, 2000, the Company has liabilities in excess of assets totaling
approximately $2.9 million. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management intends to execute
its plan of reorganization, which contemplates that the Company will satisfy
substantially all its obligations through the issuance of common stock, among
other things.
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition And
Results of Operations
Results of Operations
Quarter Ended June 30, 2000 versus June 30 1999
In July 1997, due to a lack of trade credit and working capital, we temporarily
suspended our operations pending receipt of additional capital or third party
credit. We began liquidating our inventory and other assets at below cost. On
December 17, 1997, we filed for protection from our creditors pursuant to
Chapter 11 of the United States Bankruptcy Code. In March 1998, we were
dismissed from our bankruptcy proceedings.
There were no operations during first quarter of fiscal 2000, and 1999. As a
result, there were no revenues or cost of revenues were incurred..
Total selling, general and administrative ("SG&A") expenses decreased 140% from
$48,000 in fiscal 1999 to $20,000 in fiscal 2000. The increase is attributed to
an accrued expenses for services that began in the second quarter of fiscal
1999.
Capital Resources and Liquidity
We have incurred net losses and negative cash flows from operating activities
since inception. At June 30, 2000, through the date of this filing, our
liabilities exceed our assets by approximately $2.9 million. We currently
receive financial support from NuVen. Our future depends on our ability to
execute a plan of reorganization which consists of the satisfaction of our
obligations primarily through the issuance of shares of common stock. Upon the
completion of our plan of reorganization, if successful, we intend to reacquire
the Yes Clothing Co. trademarks. This will pave the way for us to raise capital
through a private or public offering of securities; however, there are no
assurances that we will be successful in raising such capital. Upon completing a
raise of capital, we plan to secure licenses for rights to manufacture,
distribute and sell clothing and accessories containing the Yes trademark. These
contracts will, if successful, generate license acquisition fees to provide
working capital. We do not intend to operate in the day-to-day operations of
manufacturing, distributing and marketing products containing the Yes brand.
These factors discussed above raise substantial doubt about our ability to
continue as a going concern. As such, our independent auditors have modified
their report to include an explanatory paragraph with respect to such
uncertainty. There were no adjustments made to the financial statements as a
result of such uncertainty
Item 3. Quantitative and Qualitative Disclosures about Market Risk
N/A
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No change from that which was reported in the Form 10K for the year
ended March 31, 2000.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
YES CLOTHING CO.
Dated: August 21, 2000 By: /s/ Fred G. Luke
Fred G. Luke
President
