<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 28, 1996
AMENDED AND RESTATED
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 33-42701
PREMIER CONCEPTS, INC.
----------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Colorado 84-1186026
- ------------------------------- ----------------------------
(State or other jurisdiction (IRS Employer Identification)
of incorporation or organization)
3033 South Parker Road, Suite 120, Aurora, Colorado
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(Address of principal executive offices) (Zip Code)
(303) 338-1800
-----------------------------------------------
(Issuer's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the last 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 / /
As of August 15, 1996, the Registrant had 3,744,695 shares of its $.0004 par
value Common Stock outstanding.
Transitional Small Business Disclosure Format (check one): Yes / / No / X /
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INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheet as of July 28, 1996 and
January 28, 1996 4
Statement of Operations for the Three Months
Ended July 28, 1996 and Three Months Ended
July 30, 1995 5
Statement of Operations for the Six Months
Ended July 28, 1996 and Six Months Ended
July 30, 1995 6
Statement of Changes in Stockholders' Equity for
the Six Months Ended July 28, 1996 7
Statement of Cash Flows for the Six Months Ended
July 28, 1996 and Six Months Ended July 30, 1995 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 10
Liquidity and Capital Resources 10
Results of Operations 12
PART II. OTHER INFORMATION 21
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of
Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The Company's method of financial reporting is a fifty-two - fifty-three
(52-53) week fiscal year ending on the last Sunday in January of each year. The
accompanying Balance Sheet at July 28, 1996, Statement of Operations for the
Three and Six Months Ended July 28, 1996 and Six Months Ended July 30, 1995,
Statement of Changes in Stockholders' Equity at July 28, 1996, and Statement of
Cash Flows for the Six Months Ended July 28, 1996 and July 30, 1995 are
unaudited but reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the financial position and results of
operations for the interim period presented. The Balance Sheet as of January
28, 1996 is derived from the audited financial statements, but does not include
all disclosures required by generally accepted accounting principles. As a
result, these financial statements should be read in conjunction with the
Company's Form 10-KSB/A for the year ended January 28, 1996.
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<TABLE>
PREMIER CONCEPTS, INC.
BALANCE SHEET
AS OF JULY 28, 1996 AND JANUARY 28, 1996
<CAPTION>
July 28, 1996 January 28, 1996
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<S> <C> <C>
ASSETS
Current Assets:
Cash & Cash Equivalents $ 421,008 $ 327,198
Investments, at market 10,813 45,113
Inventories 1,391,835 1,393,925
Prepaid Expenses & Other Current Assets 125,935 95,503
----------- -----------
Total Current Assets 1,949,591 1,861,739
Property and Equipment, net 1,041,886 977,727
Trademarks, net 94,700 104,900
Deferral Offering Costs 88,239
Other Assets 103,506 92,428
----------- -----------
Total Assets $3,277,922 $3,036,794
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
Current Liabilities:
Notes Payable and Current Portion of
Long Term Debt:
Related Parties $ 64,420 $ 98,879
Other 304,040 378,902
Accounts Payable 743,571 291,905
Other Accrued Liabilities 293,934 408,881
----------- -----------
Total Current Liabilities $1,405,965 $1,178,567
Long-Term Debt, Less Current Portion 713,432 759,864
Other Liabilities 87,385 56,159
----------- -----------
Total Liabilities 2,206,782 1,994,590
----------- -----------
Shareholders' Equity:
Preferred Stock, $.10 par value,
20,000,000 shares authorized;
416,670 issued and outstanding
at July 28, 1996 41,667 --
Common Stock, $.002 par value;
850,000,000 shares authorized;
3,744,695 shares issued and outstanding 1,498 1,498
Additional Paid-in Capital 2,940,070 2,756,737
Accumulated Deficit (1,912,095) (1,716,031)
----------- -----------
Total Stockholders' Equity 1,071,140 1,042,204
----------- -----------
Total Liabilities & Equity $ 3,277,922 $ 3,036,794
============ ============
/TABLE
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<TABLE>
PREMIER CONCEPTS, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JULY 28, 1996 AND JULY 30, 1995
(UNAUDITED)
<CAPTION>
Three Months Ended Three Months Ended
July 28, 1996 July 30, 1995
------------------ -------------------
<S> <C> <C>
Revenues:
Retail Sales $2,070,988 $2,100,584
Wholesale Sales 12,911 16,677
------------ ------------
Total Revenues 2,083,899 2,117,261
Cost of Goods Sold 609,155 634,847
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Gross Margin 1,474,744 1,482,414
Operating Expenses:
Selling, General & Administrative 1,438,698 1,467,938
Depreciation & Amortization 75,031 75,937
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Total Operating Expenses 1,513,729 1,543,875
------------ ------------
Operating Profit (Loss) (38,985) (61,461)
Other Income (Expenses):
Interest, net (25,261) (34,059)
Increase (Decrease) in Fair Value
-- Tradeable Securities (27,043) (133,197)
Loss Provision on Guarantee -- (31,000)
Provision for store closures -- 92,000
Store Closing Expenses -- (93,419)
Other 10,965 46,859
------------ ------------
Other, net (41,339) (152,816)
Loss Before Income Tax Benefit and
Discontinued Operation (80,324) (214,277)
Income Tax Benefit 5,000 --
------------ ------------
Income (Loss) Before Discontinued Operation(75,324) (214,277)
Income from Discontinued Operation 6,600 --
------------ ------------
Net Income (Loss) $ (68,724) $ (214,277)
============ ============
Net Income (Loss) Available to
Common Shareholders $ (71,724) $ (214,277)
============ ============
Net Income (Loss) Per Share
Before Discontinued Operation $ (0.02) $ (0.10)
Discontinued Operations -- --
Dividends Applicable to
Preferred Stock -- --
------------ ------------
Net Income (Loss) Per Share $ (0.02) $ (0.10)
============ ============
Weighted Average Shares Outstanding 3,744,695 2,175,160
============ ============
/TABLE
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<TABLE>
PREMIER CONCEPTS, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JULY 28, 1996 AND JULY 30, 1995
<CAPTION>
Six Months Ended Six Months Ended
July 28, 1996 July 30, 1995
------------------ -------------------
<S> <C> <C>
Revenues:
Retail Sales $3,940,997 $4,098,221
Wholesale Sales 16,455 41,108
------------ ------------
Total Revenues 3,957,452 4,139,329
Cost of Goods Sold 1,179,665 1,326,517
------------ ------------
Gross Margin 2,777,787 2,812,812
Operating Expenses:
Selling, General & Administrative 2,850,805 2,971,550
Provision for store closures -- 1,419
Depreciation & Amortization 140,314 170,511
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Total Operating Expenses 2,991,119 3,143,480
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Operating Profit (Loss) (213,332) (330,668)
Other Income (Expenses):
Interest, net (54,422) (65,858)
Increase (Decrease) in Fair Value
-- Tradeable Securities 16,264 (145,876)
Reduction of Accounts Payable
Other 29,249 90,381
------------ ------------
Other, net (8,909) (121,353)
Loss Before Income Tax Benefit and
Discontinued Operation (222,241) (452,021)
Income Tax Benefit 10,000 55,000
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Income (Loss) Before
Discontinued Operation (212,241) (397,021)
Income from Discontinued Operation 16,177 90,390
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Net Income (Loss) $ (196,064) $ (306,631)
============ ============
Net Income (Loss) Available to
Common Shareholders $ (199,064) $ (306,631)
============ ============
Net Profit (Loss) Per Share
Before Discontinued Operation $ (0.06) $ (0.18)
Discontinued Operations .01 .04
Dividends Applicable to
Preferred Stock -- --
------------ ------------
Net Profit (Loss) Per Share $ (0.05) $ (0.14)
============ ============
Weighted Average Shares Outstanding 3,744,745 2,172,949
============ ============
/TABLE
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<TABLE>
PREMIER CONCEPTS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 28, 1996 THROUGH JULY 28, 1996
<CAPTION>
Preferred Stock Common Stock Additional
-------------------- ------------------
Paid-In Accumulated
Shares Amount Shares Amount Capital (Deficit) Total
------ ------ ------ ------ ------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Balances,
January 28, 1996 -- -- 3,744,695 $1,498 $2,756,737 $(1,716,031) $(1,042,204)
Preferred stock issued for
cash 416,670 41,667 -- -- 183,333 -- 225,500
Net Loss
Through July 28,
1996 -- -- -- -- -- (196,064) (196,064)
-------- -------- --------- ------ ----------- ------------- -------------
Balances, July 28,
1996 416,670 41,667 3,744,695 $1,498 $2,940,070 $(1,912,095) $ (1,071,140)
======== ======== ========== ====== ========== ============ =============
</TABLE>
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<TABLE>
PREMIER CONCEPTS, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JULY 28, 1996 AND JULY 30, 1995
<CAPTION>
Six Months Ended Six Months Ended
July 28, 1996 July 30, 1995
------------------ -------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $(196,064) $(306,631)
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Stock for services -- --
Reduction of account payable-
Discontinued Operations (26,177) (145,390)
Provision for store closure -- (1,419)
Depreciation and amortization 140,314 170,511
(Gain) loss on marketable securities (16,264) 145,876
Other, net (11,078) (9,165)
Changes in operating assets and liabilities:
(Increase) decrease in:
Inventories 2,090 20,765
Other assets (30,432) (14,590)
Increase (decrease) in:
Accounts payable and accrued
liabilities 362,896 411,355
Other liabilities 31,226 (97,358)
---------- ----------
Net cash provided by operating
activities 256,511 173,594
Cash Flows From Investing Activities:
Capital expenditures for property
and equipment (194,273) (2,810)
Cash balances of businesses acquired -- --
Proceeds from sale of investments 50,564 96,612
Purchase of investments -- --
---------- ----------
Net cash provided by (used in)
investing activities (143,709) 93,802
Cash Flows From Financing Activities:
Deferred Offering Costs (88,239) --
Proceeds from issuance of Preferred Stock255,000 --
Proceeds from issuance of common stock -- 141,625
Proceeds from issuance of notes payable -- --
Payments on notes payable (155,753) (380,567)
---------- ----------
Net cash used by financing activities (18,992) (238,942)
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Increase (Decrease) in Cash 93,810 28,814
Cash & Cash Equivalents,
beginning of period 327,198 171,164
---------- ----------
Cash & Cash Equivalents,
end of period $ 421,008 $ 199,978
========== ==========
Supplemental Schedule of Cash Flow Information:
Cash paid for interest $ 60,479 $ 66,717
========== ==========
/TABLE
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PREMIER CONCEPTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 28, 1996
COMMITMENTS AND CONTINGENCIES
------------------------------
Litigation.
----------
The Company is subject to legal proceedings, claims and liabilities, which arise
in the ordinary course of its business. In the opinion of management, the
disposition of these actions will not have a material adverse effect upon the
Company's financial position or results of operations. (See PART II. OTHER
INFORMATION--Item 1. Legal Proceedings.)
SEASONALITY AND QUARTERLY FLUCTUATIONS
--------------------------------------
The Company's faux jewelry chain, Impostors, historically has realized
lower sales during the first three quarters which has resulted in the Company
incurring losses during those quarters. To this end, the Company generated a
loss during the six months ended July 28, 1996 of $(196,064).
The Company historically realizes approximately twenty percent (20%) of its
revenues during December as a result of the Christmas season. If the Company's
sales are substantially below seasonal expectations during December, the
Company's annual results will be adversely affected.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this report.
RETAIL FISCAL YEAR
The method of financial reporting is a fifty-two to fifty-three (52-53)
week fiscal year ending on the last Sunday in January of each year. Likewise,
reporting quarters end on the Sunday closest to the calendar end of April, July
and October. Each reporting quarter contains 13 weeks of operations.
LIQUIDITY AND CAPITAL RESOURCES
Approximately 20% of the Company's business is generated during the
Christmas holiday season. The Company's cash position will therefore be the
highest at the end of December as compared to any other month of the year, and
tends to decrease during the first and second quarter. On June 24, 1996, the
Company successfully completed a bridge financing in which it sold an aggregate
of 416,670 (pre-split) shares of Series A Convertible Preferred Stock and
208,335 (pre-split) Class B Warrants, realizing net proceeds of $225,000. As a
result, the Company's cash position increased from $93,810 from $327,198 at
January 28, 1996 to $421,008 at July 28, 1996. These funds have been largely
used to finance the store remodels that were completed during the first six
months of fiscal 1997. The capital raised in the bridge financing has also been
utilized to purchase fixtures and equipment for several store locations and the
corporate offices.
During the first six months of fiscal 1996, the Company continued its
efforts to liquidate its common stock position in Global Casinos, Inc.
Therefore, marketable securities decreased from $45,113 at January 28, 1996 to
$10,813 at July 28, 1996. Management intends to liquidate its remaining
securities holdings as allowed by the general market conditions.
Inventories would typically decline moderately during the first six months
of a fiscal year to reflect the lower seasonal sales during this period.
However, for the six months ended July 28, 1996, inventories were essentially
unchanged from $1,393,925 at January 28, 1996 to $1,391,835 at July 28, 1996.
The relatively constant inventory level during the six month period reflects the
Company's inventory buildup during the month of July, 1996 to prepare for the
opening of the Company's new store at the Park Meadows shopping mall in Denver,
Colorado, which opened on August 30, 1996.
During the six months ended July 28, 1996, the Company invested $194,273 in
leasehold improvements, furniture and equipment. Approximately $166,000 of this
investment represents leasehold improvements, furniture and fixtures in
connection with the remodels and investments in the locations in St. Louis,
Missouri, Tucson, Arizona, Bellevue, Washington, and Denver, Colorado. The
balance of $28,000 represents investments in corporate furniture and equipment
in connection with the relocation of the corporate office in January, 1996.
Therefore, property and equipment, net of $126,454 in depreciation,
increased $64,159 from $977,727 at January 28, 1996, to $1,041,866 at July 28,
1996. At January 28, 1996, the Company's trademark assets were $104,900, net of
accumulated amortization, which represented the goodwill associated with the
Impostors trademark and other intellectual property acquired as part of the
<PAGE>
<PAGE>
purchase of the Impostors' assets in February, 1994. The Company's trademark
asset is being amortized over a 10 year period, and had an amortized book value
was $94,700 at July 28, 1996.
The Company has incurred costs in connection with its proposed public
financing of $88,239 which primarily represent professional services, printing
and other administrative costs. It is estimated that the total costs to
complete the offering will approximate $250,000 which will be offset against the
proceeds from the financing.
As of July 28, 1996, the Company had a total outstanding liabilities of
$2,206,782 compared to $1,994,590 at January 28, 1996, representing an increase
of $212,192 which was due to an increase in current liabilities of $212,192,
from $1,994,590 at January 28, 1996 to $1,405,965 at July 28, 1996. This
increase was primarily the result of an addition to accounts payable of $451,666
from $291,905 at January 28, 1996 to $743,571 at July 28, 1996, which reflects a
normal seasonal increase combined with management's efforts to gain more
favorable terms with its vendors. Also, management continued its efforts to
purchase larger quantities of inventories to maintain favorable inventory costs.
Accounts payable also increased due to the inventory buildup discussed above in
anticipation of the opening of the Company's store in Park Meadows in Denver.
As a result of the foregoing, working capital decreased by $139,546, from
$683,172 at January 28, 1996 to $543,626 at July 28, 1996.
The amount borrowed from related parties was $64,420 at July 28, 1996 which
reflects a reduction of $34,459, from the January 28, 1996 figure of $98,879.
During the six month period, the Company also reduced other short and long term
notes by $121,294, which resulted in other notes payable of $1,017,742 as of
July 28, 1996 compared to $1,138,766 at January 28, 1996. As of July 28, 1996,
the Company was in arrears in the payment of two notes totalling, in the
aggregate, approximately $120,000. Management has been in discussions with the
two noteholders and plans to retire these two notes with the proceeds its
proposed public financing.
The largest portion of the Company's long-term debt is comprised of a
$635,000 promissory note, which note carries interest at the rate of 10% per
annum and is payable in monthly interest payments of approximately $5,300 and is
due February 22, 1998. The remainder of the Company's long-term notes of
$713,432 represents liabilities that the Company assumed as part of the of the
Impostors acquisition in February, 1994.
Other accrued liabilities decreased from $408,881 at January 28, 1996 to
$293,934 at July 28, 1996, a decrease of $114,947 or nearly 28%. Other accrued
liabilities primarily represent expenses accrued in the ordinary course of
business in connection with the operation of the Company's Impostors retail
chain. As a result of the Company's net loss for the six months of $196,064,
accumulated deficit increased from $1,716,031 at January 28, 1996 to a deficit
of $1,912,095 at July 28, 1996. However, due to the Company realizing $225,000
from the Bridge Offering, stockholders' equity increased in the six months from
$1,042,204 at January 28, 1996 to $1,071,140 at July 28, 1996.
Net cash provided by operating activities for the period ended July 28,
1996 was $256,511, compared to $173,594 for the six months ended July 30, 1995.
The improvement was principally due to lower overhead costs and a resulting
reduction in the operating loss for the period.
The positive cash flow generated by operations in the six month periods
ended July 30, 1995 as well as for the period ended July 28, 1996, reflects the
seasonal build-up accounts payable of $411,355 and $362,896 for the two periods
receptively.
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<PAGE>
During the period ended July 28, 1996, the Company invested $194,273 in
capital equipment, which reflects the investments in leasehold improvements,
furniture and equipment discussed above. During the period, management
continued its efforts to sell its holdings of Global Casinos common stock, which
resulted in proceeds of $50,564. For the period ended July 30, 1995, the
Company's investments in assets were immaterial, while the sale of Global
Casinos common stock resulted in proceeds of $96,612.
Net cash used in financing activities for the six months ended July 30,
1995 and July 28, 1996 was $238,942 and $18,992 respectively, reflecting a
reduction of $219,950. The majority of the change was the result of reduced
payments on notes in 1996 as compared to 1995 in the amount of $224,814 as well
as proceeds from the Bridge Offering of $225,000 in June, 1996.
The foregoing resulted in an increase in the Company's cash position of
$64,996, from $28,814 at July 30, 1995 to $93,810 at July 28, 1996.
At January 28, 1996, the Company had a net operating loss carryforward for
federal tax purposes of $680,000 that may be utilized to offset future profits.
As discussed above, the Company opened its 27th retail location in Denver,
Colorado, on August 30, 1996. In addition, the Company has executed a lease to
open a new location at the Rio Hotel & Casino' retail expansion which is
scheduled to open in February, 1997. Several other real estate sites are
currently being evaluated, and the Company expects to execute a minimum of five
additional leases to open new retail stores within its current fiscal quarter.
Depending on location and size, the opening of a new retail location represents
an aggregate capital commitment of approximately $100,000-$200,000 which
includes leasehold improvements, furniture,fixture, equipment and inventory.
The Company intends to use the proceeds from its proposed secondary
financing to fund the growth of its retail chain and take advantage of other
distribution opportunities such as direct mail, home shopping and internet
distribution. However, the majority of the proceeds from the financing will be
utilized to build the retail chain with the goal of having 50 stores within the
next 12 to 18 months. Initial expansion plans have been concentrated on the
states of Florida, New Jersey, Illinois, Massachusetts, New York and Nevada.
The Company believes the proceeds from the proposed public offering, along
with cash flow generated by operations will be sufficient to meet the Company's
capital needs over the next two years. However, if the Company is unsuccessful
in securing the contemplated financing, its ability to pursue additional
opportunities for distribution and retail store expansion will be significantly
impaired and the results of operations for future periods may be adversely
affected.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, the percentage
relationship between selected items in the Consolidated Statements of
Operations to net sales:
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<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
July 30, 1995 July 28, 1996
------------- -------------
<S> <C> <C> <C> <C>
Sales $4,139,329 100% $3,957,452 100%
Cost of goods sold 1,326,517 32.0% 1,179,665 29.8%
Gross Margin 2,812,812 68.0% 2,777,787 70.2%
Operating Expenses 3,143,480 75.9% 2,991,119 75.6%
Operating loss (330,668) (8.0%) (213,332) (5.4%)
Other Income (121,353) (2.9%) (8,909) (0.2%)
(expenses), net
Income (loss) before (397,631) (7.4%) (212,241) (5.4%)
discontinued operation
Net Income (loss) (306,631) (7.4%) (196,064) (5.0%)
Net Income (loss) (.71) (.26)
per share
</TABLE>
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED JULY 28, 1996 COMPARED TO THREE
MONTHS ENDED JULY 30, 1995
The Company's total revenues for the three months ended July 28, 1996 were
$2,083,899 compared to $2,117,261 for the comparable period in 1995. The
decrease of $33,362 is the result of the Company owning and operating only 26
stores in the three month period ended July 28, 1996 compared to 29 stores for
the same period in 1995. Comparable same store sales were $1,973,217 for the
three months ended July 28, 1996 as compared to $1,933,288 for the three months
ended July 30, 1995, an increase of 2.1%. Management attributes its increase in
comparable same store sales to an continued improvement in merchandise mix which
included the introduction of a genuine sterling silver line of products in May,
1996.
Included in total revenues are sales from wholesale operations, primarily
to former franchisees and jewelry repair income, of $12,911 and $16,677 for the
three months ended July 28, 1996 and July 30, 1995, respectively.
For the three months ended July 28, 1996, cost of goods sold was $609,155
resulting in a gross margin of $1,474,744, or 70.8%. This compares to the three
months ended July 30, 1995 in which cost of goods sold was $634,847 resulting in
a gross margin of $1,482,414, or 70.0%. The improvement in gross margin
percentage is the result of less promotional activity and capitalizing on buying
opportunities offering lower merchandise costs.
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<PAGE>
Selling, general and administrative expenses were $1,438,698 for the three
months ended July 28, 1996, compared to $1,467,938 for the three months ended
July 30, 1995. The majority of these expenses we comprised of personnel
expenses, which amounted to $680,830 and $698,564 for the three months ended
July 28, 1996, and July 30, 1995 respectively, and occupancy costs of $487,027
and $489,624 respectively. Depreciation and amortization expense was $75,031
for the three months ended July 28, 1996, and $75,937 for the three months ended
July 30, 1995, essentially unchanged. The Company attributes the net decrease
in total operating expenses of approximately $30,000 primarily to a reduction in
the Company's corporate overhead expenses realized from the relocation of the
corporate from California to Colorado.
As a result of the foregoing, the Company's net operating loss for the
three months ended July 28, 1996 was $38,985 as compared to an operating loss of
$61,460 for the comparable three months ended July 30, 1995.
Net interest expense was $25,262 and $34,059 for the three months ended
July 28, 1996 and July 30, 1995 respectively. The decrease of approximate of
approximately $8,800 is attributable to a continued effort to reduce debt.
During the three months ended July 28, 1996, the Company sold most of its
holdings of Global Casino, Inc. common stock to satisfy a debt obligation and to
provide cash for capital expenditures. Due to market conditions existing in the
quarter, these sales resulted in a loss of approximately $27,000. For the three
months ended July 30, 1995, the Company recognized a loss on marketable
securities approximately $133,000. The Company intends to liquidate its
remaining securities holdings as market conditions and cash requirements
indicate.
Other expenses for the three month period ended July 28, 1996 were $41,339,
which represented an decrease of $111,477 from other expenses of $152,816 from
the same period in 1995. The majority of the decrease in expenses was the
result of reduction in the Company's holdings of tradable securities, from which
the Company recorded a loss of $133,197 in the three month period ended July 30,
1995 compared to a loss of $27,043 for the same period in 1996.
<PAGE>
Other income (expenses) include approximately $6,000 income from license
fees from three former franchisees operating five locations, who executed
license agreements with the Company that entitles them to use the Impostors
trademark for one year. These license agreements, which require an annual
licensee fee of $5,000, will expire in January and February of 1997. The
Company may renew these agreements at its discretion.
Based on the foregoing, the Company reported a net loss for the three
months ended July 28, 1996 of $68,724. Taking into effect the preferred stock
cumulative dividends, which is accrued but not paid, the net loss available to
common shareholders was $71,724 which translates to a net loss of $(.02) per
share based on 3,744,695 weighted average shares outstanding. This compares
with a reported net loss for the three months ended July 30, 1995 of $214,277,
or $(.10) per share, based on 2,175,160 weighted average shares outstanding, and
represents an improvement of $145,553, or $.08 per share.
<PAGE>
<PAGE>
RESULTS OF OPERATIONS - SIX MONTHS ENDED JULY 28, 1996 COMPARED TO SIX MONTHS
ENDED JULY 30, 1995
Revenues for the period ended July 30, 1995 were $4,139,329 which reflects
revenues from 29 retail locations. The Company's total revenues for the six
months ended July 28, 1996 were $3,957,452 a decrease of $181,877 which reflects
a reduction in the number of retail locations from 29 in the six month period
ended July 30, 1995 to 26 in the period ended July 28, 1996. Comparable same
store sales were $3,731,821 for the six months ended July 28, 1996 compared to
$3,644,764 for the same period in 1995, indicating an increase of 2.4%.
Management's attributes this increase to a continued improvement in the
Company's merchandise assortment and strategy, which included the introduction
of a genuine sterling silver line of products in May, 1996.
Sales from wholesale operations of $16,455 and $41,108 in the six month
periods in 1996 and 1995 are included in total revenues for the six months ended
July 28, 1996 and July 30, 1995, respectively.
For the six months ended July 28, 1996, cost of goods sold was $1,179,665
and the gross margin was $2,777,787, or approximately 70%. For the six months
ended July 28, 1995, cost of goods sold was $1,326,517 and the gross margin was
$2,812,812 or approximately 68%. The Company attributes the improvement in
gross margin percentage to less promotional activity and capitalization on
buying opportunities to reduce merchandise costs.
Selling, general and administrative expenses were $2,850,805 for the six
months ended July 28, 1996, compared to $2,971,550 for the period ended July 30,
1995. The majority of these expenses were comprised of personnel expenses,
which amounted to $1,344,750 and $1,424,165 for the six months ended July 28,
1996 and July 30, 1995, respectively, and occupancy costs of $961,987 and
$988,792 respectively. Depreciation and amortization expense was $140,314 for
the six months ended July 28, 1996, and $170,511 for the six months ended July
30, 1995, representing a reduction of $30,197 due to a reduced depreciable asset
base. The Company credits the majority of the decrease in total operating
expenses of $152,361 to owning and operating three fewer stores in the six
months ended July 28, 1996 compared to the same period in 1995. Also, the
Company's relocation of its corporate offices from California to Colorado in
January, 1996 resulted in lower personnel and occupancy costs of approximately
$75,000 for the six months ended July 28, 1996.
As a result of the foregoing, the Company's net operating loss for the six
months ended July 28, 1996 was $213,332. This compares with a loss from
operations for the six months ended July 30, 1995 of $330, 668.
Net interest expense was $54,422 and $65,858 for the six months ended July
28, 1996, and July 30, 1995, respectively. The Company's gain on investments of
$16,264 for the period ended July 28, 1996 relates to the Company's holdings of
common stock in Global Casinos, Inc. During the six months ended July 28, 1996,
the Company sold most of its holdings of these securities and management intends
to liquidate its remaining holdings of Global common stock as allowed by general
market conditions. For the period ended July 30, 1995, the Company reported
loss of $145,876 on its investment in tradable securities.
<PAGE>
[PERIOD]
For the period ended July 28, 1996, the Company reported other income of
$29,249, which includes a settlement with a former franchisee for approximately
$10,000 in cash and inventory, and approximately $7,000 in recognized license
fees associated with the renewal of five licensee agreement which allow these
former franchisees the use of the Impostors' trademark for an additional year.
These agreements will expire in the first quarter of fiscal 1998 at which time
the agreements may be renewed at the discretion of management.
For the period ended July 30, 1995, other income, net of other expenses,
was $90,381, of which approximately $72,000 represented income from a settlement
with a former franchisee, which receivable had been previously written off in
fiscal 1994.
Income from discontinued operations, net of income tax benefit of $10,000,
was $16,177 for the six months ended July 28, 1996, compared a income tax
benefit of $55,000 and other income $90,390 for the six months ended July 30,
1995. The income from discontinued operations reflects negotiated settlements
with creditors relating to the Company's previous gaming operations.
Based on the foregoing, the Company reported a net loss for the six months
ended July 28, 1996 of $196,064, which translates to a net loss per share, after
income from discontinued operations, of $0.05 based on 3,744,695 weighted
average shares outstanding. This compares with a reported net loss for the six
months ended July 30, 1995 of $306,631 or $0.14 per share, based on 2,175,160
weighted average shares outstanding as of that date.
Other than the foregoing, management knows of no trends, or other demands,
commitments, events or uncertainties that will result in, or that are reasonably
likely to result in, a material impact on the income and expenses of the
Company.
IMPAIRMENT OF LONG-LIVED ASSETS
- -------------------------------
In March 1996, the Financial Accounting Standards Board issued a statement
entitled "Accounting for Impairment of Long-Lived Assets." In the event that
facts and circumstances indicate that the cost of assets or other assets may be
impaired, an evaluation of recover ability would be performed. If an evaluation
is required, the estimated future in discounted cash flows associated with the
asset would be compared to asset's carrying amount to determine if a
write-down to market value or discounted cash flow value is required.
Adoption of FAS 121 had no effect on the unaudited July 28, 1996, financial
statements.
STOCK-BASED COMPENSATION
- ------------------------
In October 1995, the Financial Accounting Standards Board issued a new
statement titled "Accounting for Stock-Based Compensation" (FAS 123). The new
statement is effective for fiscal years beginning after December 15, 1995. FAS
123 encourages, but does not require, companies to recognize compensation
expense for grants of stock, stock options, and other equity instruments to
employees based on fair value. Companies that do not adopt the fair value
accounting rules must disclose the impact of adopting the new method in the
notes to the financial statements. Transactions in equity instruments with non-
employees for goods or services must be accounted for on the fair value method.
The Company has elected not to adopt the fair value accounting prescribed by AS
123 for employees, and will be subject only to the disclosure requirements
prescribed by AS 123.
<PAGE>
<PAGE>
Other than what has been discussed above, management knows of no trends, or
other demands, commitments, events or uncertainties that will result in, or that
are reasonably likely to result in a material impact on the income and expenses
of the Company.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is currently involved in the following legal proceedings:
Premier Concepts, Inc. v. William T. and Martha A. Jackling,
-----------------------------------------------------------
Civil Action No. 7599-94 pending in the State Court of New York, County
of Monroe. This action has also been brought by the Company to collect
approximately $80,000 due and owing on open account from former franchisees of
AFJ. In the case, the Company has also asserted against the Defendants' claims
of trademark infringement, unfair competition and breach of contract in
connection with the Defendants' continued use of the Company's registered
trademark "Impostors" without legal authorization.
Premier Concepts, Inc. v. R & L Imports Corporation.
----------------------------------------------------
The Company has filed a Complaint in the Puerto Rico District Court for
San Juan against R & L Imports Corporation for amounts due for inventory
purchased by R & L Imports Corporation from the Company, and on amounts due on
the notes payable executed as part of the Customer and Settlement Agreements
entered into by the defendant and American Fashion Jewels, Inc. on January 20,
1994. The Company seeks damages in excess of $27,000. Both claims are supported
by written contracts and written admissions by the defendant. The Company is
represented in Puerto Rico by the law firm of Cancio, Nadal, Rivera & Diaz.
Premier Concepts, Inc. v. St. Moritz, Inc.
------------------------------------------
The Company has filed a complaint in the County Court for Dallas County,
Texas against St. Moritz, Inc. for amounts due on inventory purchased by St.
Moritz from the Company between October, 1995 and January, 1996. The Company is
seeking full payment for the merchandise delivered in the amount of $28,644.
SEC Investigation.
------------------
During 1995, the Company received requests for information from the U.S.
Securities and Exchange Commission ("SEC") related to an investigation begun by"
the SEC during 1994 into various matters, including certain transactions in
securities by a former officer and director of the Company. The Company has
fully complied with all requests; however, as of June 12, 1996, neither
management of the Company nor the Company's legal counsel have been informed of
the results, if any, of the SEC's investigation or of any timetable for the SEC
to complete its investigation.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
quarter ended July 28, 1996.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
--------
Exhibit 27 - Financial Data Schedule
Reports on Form 8-K:
-------------------
None
<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 hereunto duly authorized.
PREMIER CONCEPTS, INC.
Dated: September 3, 1996 By: /s/ Sissel Greenberg
---------------------- --------------------------------------
Sissel Greenberg, President
Dated: September 3, 1996 By: /s/ Todd Huss
---------------------- -------------------------------------
Todd Huss, Chief Financial Advisor,
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Balance Sheet and Statement of Opertions found on pages 4 through 6 of
the Company's Amended and Restated Form 10-QSB for the year-to-date.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-START> JAN-29-1996
<PERIOD-END> JUL-28-1996
<CASH> 421,008
<SECURITIES> 10,813
<RECEIVABLES> 76,670
<ALLOWANCES> 27,000
<INVENTORY> 1,391,835
<CURRENT-ASSETS> 1,949,591
<PP&E> 2,569,504
<DEPRECIATION> 1,554,361
<TOTAL-ASSETS> 3,277,922
<CURRENT-LIABILITIES> 1,405,965
<BONDS> 0
0
41,667
<COMMON> 1,498
<OTHER-SE> 1,027,975
<TOTAL-LIABILITY-AND-EQUITY> 3,277,922
<SALES> 2,083,899
<TOTAL-REVENUES> 2,083,899
<CGS> 609,155
<TOTAL-COSTS> 609,155
<OTHER-EXPENSES> 1,555,068
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,261
<INCOME-PRETAX> (68,724)
<INCOME-TAX> 0
<INCOME-CONTINUING> (75,324)
<DISCONTINUED> 6,600
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (68,724)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>