<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 27, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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
of incorporation or organization) Identification Number)
3033 South Parker Road, Suite 120, Aurora, Colorado, 80014
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 338-1800
------------------------------------------------
(Issuer's telephone number, including area code)
- ----------------------------------------------------------------------
(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 September 5, 1997, the Registrant had 1,782,208 shares of its $.002 par
value Common Stock outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
<PAGE>
<PAGE>
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheet as of July 27, 1997 and
January 26, 1997 4
Statement of Operations for the Three Months
Ended July 27, 1997 and Three Months Ended
July 28, 1996 5
Statement of Operations for the Six Months
Ended July 27, 1997 and Six Months Ended
July 28, 1996 6
Statement of Changes in Stockholders' Equity
for the Six Months Ended July 27, 1997 7
Statement of Cash Flows for the Six Months Ended
July 27, 1997 and Six Months Ended July 28, 1996 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 17
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
The 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 26, 1997, Statement of Operations for the
Three and Six Months Ended July 27, 1997 and Six Months Ended July 28, 1996,
Statement of Changes in Stockholders' Equity at July 27, 1997, and Statement
of Cash Flows for the Six Months Ended July 27, 1997 and July 28, 1996 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
26, 1997 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 for the year ended January 27, 1997.
FORWARD-LOOKING STATEMENTS
- --------------------------
In addition to historical information, this Quarterly Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective. The forward-looking
statements contained herein are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reflected in
the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, competitive pressures, changing economic
conditions, those discussed in the Section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and other
factors, some of which will be outside the control of the Company. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which reflect management's analysis only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements
to reflect events or circumstances that arise after the date hereof. Readers
should refer to and carefully review the information in future documents the
Company files with the Securities and Exchange Commission.
<PAGE>
<PAGE>
<TABLE>
PREMIER CONCEPTS, INC.
BALANCE SHEET
AS OF JULY 27, 1997 AND JANUARY 26, 1997
<CAPTION>
July 27, 1997 January 26, 1997
------------- ----------------
<S> <C> <C>
ASSETS
------
Current Assets:
Cash & Cash Equivalents $ 1,171,046 $ 218,388
Inventories 2,080,225 1,749,643
Prepaid Expenses & Other Current Assets 248,292 118,536
------------- -------------
Total Current Assets 3,499,563 2,086,567
Property and Equipment, net 2,438,950 2,033,939
Trademarks, net 81,633 87,833
Deferral Offering Costs -- 425,423
Deferred Tax Asset 39,000 39,000
Other Assets 89,787 139,012
------------- -------------
Total Assets $ 6,148,933 $ 4,811,774
============= =============
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities:
Notes Payable and Current Portion of
Long Term Debt:
Related Parties $ -- $ 74,420
Other 701,335 263,312
Accounts Payable 629,112 1,153,495
Other Accrued Liabilities 593,387 427,281
------------- -------------
Total Current Liabilities $ 1,923,834 $ 1,918,508
Long-Term Debt, Less Current Portion 31,713 1,792,624
Other Liabilities 138,257 103,239
------------- -------------
Total Liabilities 2,093,804 3,814,371
------------- -------------
Shareholders' Equity:
Preferred Stock, $.10 par value,
20,000,000 shares authorized;
none issued and outstanding at
July 27, 1997; 416,670 issued and
outstanding at January 26, 1997 -- 41,667
Common Stock, $.002 par value;
850,000,000 shares authorized;
1,782,208 shares issued and
outstanding at July 27, 1997;
560,167 shares issued and outstanding
at January 26, 1997 3,524 1,120
Additional Paid-in Capital 5,647,805 2,316,123
Accumulated Deficit (1,596,200) (1,361,507)
------------- -------------
Total Stockholders' Equity 4,055,129 997,403
------------- -------------
Total Liabilities & Equity $ 6,148,933 $ 4,811,774
============= =============
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PREMIER CONCEPTS, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JULY 27, 1997 AND JULY 28, 1996
(UNAUDITED)
<CAPTION> Three Months Three Months
Ended Ended
July 27, 1997 July 28, 1996
------------- -------------
<S> <C> <C>
Revenues:
Retail Sales $ 2,793,699 $ 2,070,988
Wholesale Sales 1,691 12,911
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Total Revenues 2,795,390 2,083,899
Cost of Goods Sold 809,745 609,155
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Gross Margin 1,985,645 1,474,744
Operating Expenses:
Selling, General & Administrative 2,021,220 1,438,698
Depreciation & Amortization 109,229 75,031
------------- -------------
Total Operating Expenses 2,130,449 1,513,729
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Operating Profit (Loss) (144,804) (38,985)
Other Income (Expenses):
Interest, net 1,108 (25,261)
Increase (Decrease) in Fair Value
of Tradable Securities - (27,043)
Other 8,219 10,965
------------- -------------
Other, net 9,327 (41,339)
Loss Before Income Tax Benefit and
Discontinued Operation (135,477) (80,324)
Income Tax Benefit - 5,000
------------- -------------
Income (Loss) Before Discontinued Operation (135,477) (75,324)
Income from Discontinued Operation - 6,600
------------- -------------
Net Income (Loss) $ (135,477) $ (68,724)
============= =============
Net Income (Loss) Available to
Common Shareholders $ (135,477) $ (71,724)
============= =============
Net Income (Loss) Per Share
Before Discontinued Operation $ (0.08) $ (0.10)
Discontinued Operations -- --
Dividends Applicable to Preferred Stock -- --
------------- -------------
Net Income (Loss) Per Share $ (0.08) $ (0.10)
============= =============
Weighted Average Shares Outstanding 1,782,208 748,939
============= =============
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PREMIER CONCEPTS, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JULY 27, 1997 AND JULY 28, 1996
<CAPTION>
Six Months Six Months
Ended Ended
July 27, 1997 July 28, 1996
------------- --------------
<S> <C> <C>
Revenues:
Retail Sales $ 5,586,078 $ 3,940,997
Wholesale Sales 5,671 16,455
------------- -------------
Total Revenues 5,591,749 3,957,452
Cost of Goods Sold 1,603,666 1,179,665
------------- -------------
Gross Margin 3,988,083 2,777,787
Operating Expenses:
Selling, General & Administrative 3,948,694 2,850,805
Depreciation & Amortization 201,885 140,314
------------- -------------
Total Operating Expenses 4,150,579 2,991,119
------------- -------------
Operating Profit (Loss) (162,496) (213,332)
Other Income (Expenses):
Interest, net (86,620) (54,422)
Increase (Decrease) in Fair Value --
Tradable Securities -- 16,264
Other 14,423 29,249
------------- -------------
Other, net (72,197) (8,909)
Loss Before Income Tax Benefit and
Discontinued Operation (234,693) (222,241)
Income Tax Benefit -- 10,000
------------- -------------
Income (Loss) Before Discontinued Operation (234,693) (212,241)
Income from Discontinued Operation -- 16,177
------------- -------------
Net Income (Loss) $ (234,693) $ (196,064)
============= =============
Net Income (Loss) Available to
Common Shareholders $ (252,448) $ (199,064)
============= =============
Net Profit (Loss) Per Share
Before Discontinued Operation $ (0.20) $ (0.29)
Discontinued Operations -- .02
Dividends Applicable to Preferred Stock (.01) --
------------- -------------
Net Profit (Loss) Per Share $ (0.21) $ (0.27)
============= =============
Weighted Average Shares Outstanding 1,184,616 748,939
============= =============
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PREMIER CONCEPTS, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JULY 27, 1997 AND JULY 28, 1996
<CAPTION>
Six Months Six Months
Ended Ended
July 27, 1997 July 28, 1996
------------- -------------
<C> <S> <S>
Cash Flows From Operating Activities:
Net income (loss) $ (234,693) $ (196,064)
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Income from discontinued operations -- (26,177)
Depreciation and amortization 201,885 140,314
(Gain) loss on marketable securities -- (16,264)
Other, net 45,805 (11,078)
Changes in operating assets and liabilities:
(Increase) decrease in:
Inventories (330,582) 2,090
Other assets (129,756) (30,432)
Increase (decrease) in:
Accounts payable and accrued liabilities (358,277) 362,896
Other liabilities 35,018 31,226
------------- -------------
Net cash provided (used) by
operating activities (770,600) 256,511
Cash Flows From Investing Activities:
Capital expenditures for property and
equipment (600,697) (194,273)
Proceeds from sale of investments -- 50,564
------------- -------------
Net cash provided by (used in)
investing activities (600,697) (143,709)
Cash Flows From Financing Activities:
Deferred Offering Costs (164,791) (88,239)
Proceeds from issuance of preferred stock -- 255,000
Proceeds from issuance of common stock 3,882,633 --
Payments on notes payable (1,393,887) (155,753)
------------- -------------
Net cash provided (used) by
financing activities 2,323,955 (18,992)
------------- -------------
Increase (Decrease) in Cash 952,658 93,810
Cash & Cash Equivalents, beginning of period 211,575 327,198
------------- -------------
Cash & Cash Equivalents, end of period $ 1,164,233 $ 421,008
============= =============
Supplemental Schedule of Cash Flow
Information:
Cash paid for interest $ 123,881 $ 60,479
============= =============
</TABLE>
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 27, 1997
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 an
operating loss during the six months ended July 27, 1997 of $(162,496), as
compared to an operating loss of $(213,332) for the six months ended July 28,
1996.
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.
<PAGE>
<PAGE>
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 - JULY 27, 1997 COMPARED TO JANUARY 26, 1997
- ----------------------------------------------------------------------------
On April 25, 1997 a secondary public offering was successfully completed
in which 1,100,00 units were sold, each unit consisting of one share of Common
Stock and one Class A Common Stock Purchase Warrant (Warrant). Two Warrants
entitle the holder to purchase one share of Common Stock at a price of $5.00
during the three year period ending April 21, 2000. Proceeds of approximately
$3.3 million were realized, after costs of the offering, of which $1,120,000
was used to retire Convertible Promissory Notes (Convertible Notes) issued on
December 27, 1997 as part of a bridge financing completed to repurchase shares
of Common Stock from certain shareholders and to provide working capital. An
additional $273,887 was used to retire various other short term notes.
During the quarter ended July 27, 1997, merchandise inventories increased
$330,582, or approximately 19%, from $1,749,643 at January 26, 1997, to
$2,080,225 at July 27, 1997. This increase reflects merchandise purchased for
six new stores opened during the six months ended July 27, 1997, as follows:
<TABLE>
<CAPTION>
STORE LOCATION DATE OPEN
----- -------- ---------
<S> <C> <C>
Elegant Pretenders The Rio Hotel and Casino, Las Vegas, NV February 7, 1997
Impostors Miami International Mall, Miami, FL February 17, 1997
Impostors Beach Place, Ft. Lauderdale, FL February 14, 1997
Impostors The Falls, Miami, FL June 28, 1997
Impostors North County Fair, Escondido, CA July 13, 1997
Impostors Kiosk Washington National Airport,
Arlington, VA July 19, 1997
</TABLE>
Prepaid expenses and other current assets increased $129,756, from
$118,536 at January 26, 1997, to $248,292 at July 27, 1997. Included in
prepaid expenses are estimated federal and state income tax payments of
approximately $42,000.
As a result of the foregoing, current assets increased by $1,412,996,
from $2,086,567 at January 26, 1997, to $3,499,563 at July 27, 1997.
During the six months ended July 27, 1997, $600,697 was invested in
property and equipment, consisting of leasehold improvements in connection
with the April relocation of the store in the Valley Fair Shopping Center in
Santa Clara, California, the remodel of the Horton Plaza store in San Diego,
California, completed in July, 1997, and the six new stores as noted above.
Therefore, property and equipment, net of accumulated depreciation, increased
$405,011, from $2,033,939 at January 26, 1997, to $2,438,950 at July 27, 1997.
Trademark assets, representing the goodwill of the Impostors trademark
and other intellectual property was acquired as part of the acquisition of
Impostors in March, 1994. The asset, with an amortized book value was $81,633
at July 27, 1997, is being amortized over a 10-year period.
Deferred offering costs of $425,423 at January 26, 1997 increased by
$164,791 prior to completion of the secondary public offering noted above.
These costs, totaling $590,214 were netted against the offering proceeds upon
completion of the offering on April 25, 1997.
As of July 27, 1997, total outstanding liabilities were $2,093,804
compared to $3,814,371 at January 26, 1997, a decrease of $1,720,567, which
reflects the retirement of the Convertible Notes and other long term debt
totaling approximately $1.4 million. Total current liabilities increased
slightly, from $1,918,508 at January 26, 1997 to $1,923,834 at July 27, 1997.
Accounts payable and accrued liabilities were decreased by approximately
$358,000, primarily reflecting payments to contractors for new store projects
completed in the fourth quarter of fiscal 1996/97, and in the first quarter of
the current year. In the first quarter, a $635,000 bank note that matures in
February, 1998, was reclassified as a current liability. The note carries
interest at the rate of ten percent (10%) per annum and is payable in monthly
interest only payments of $5,300. Discussions with the bank and various
financial institutions in Colorado are ongoing to restructure the note as part
of a banking services consolidation. As a result of the foregoing, working
capital increased by $1,407,670, from $168,059 at January 26, 1997, to
$1,575,729 at July 27, 1997.
Amounts borrowed from related parties of $74,420 at January 26, 1997,
were retired during the second quarter. Current notes payable increased from
$263,312 at January 26, 1997, to $701,335 at July 27, 1997, an increase of
$428,023, primarily as a result of the reclassification of the bank note as
discussed above.
Long-term debt, net of the current portion, was $31,713 at July 27, 1997,
as compared to $1,792,624 at January 26, 1997, a decrease of approximately
$1.76 million, which was the result of the payments of the Convertible Notes
and reclassification of the bank note, as discussed above. The remainder of
long-term debt represents notes that were part of the Impostors retail chain
acquisition in March, 1994.
Accounts payable decreased by $524,383 or approximately 45%, from
$1,153,495 at January 26, 1997 to $629,112 at July 27, 1997, primarily as a
result of payments to contractors for new store projects completed in the
fourth quarter of fiscal 1996/97, and in the first quarter of the current
year, as discussed above. Other accrued liabilities increased by $166,106
from $427,281 at January 26, 1997 to $593,387 at April 27, 1997, or
approximately 39%. Included in accrued expenses is approximately $125,000 of
unpaid expenses associated with the public offering completed on April 25,
1997. The remaining approximately $468,000 of accrued liabilities represent
expenses incurred in the normal course of business. Settlement of the unpaid
offering costs is expected to occur during the third quarter of the current
fiscal year.
As a result of the Company's net loss for the six months of $234,693, the
accumulated deficit increased from $1,361,507 at January 26, 1997 to a deficit
of $1,596,200 at July 27, 1997. As discussed above, on April 25, 1997, the
Company successfully completed a secondary offering of 1,100,00 units
consisting of one share of Common Stock and two Warrants, which after costs of
the offering, increased stockholders' equity by $3,270,886. As a result,
total stockholders' equity increased from $997,403 at January 26, 1997, to
$4,055,129 at July 27, 1997.
Net cash used in operating activities for the six months ended July 27,
1997, was $770,600, compared with cash provided by operating activities of
$256,511 for the six months ended July 28, 1996. This was a result of
increased inventory balances for the six new stores opened during the period,
and the significant reductions of accounts payable as discussed above.
Cash used in investing activities of $600,697, represents investments in
stores as discussed above. This compares with net cash used by investing
activities of $143,709 during the six months ended July 28, 1996, and
represents an increase of $456,988.
Net cash provided by financing activities for the six months ended July
27, 1997, was $2,323,955, primarily representing the completion of the
secondary offering, as discussed throughout this document. This compares to
net cash used by financing activities of $18,992 for the six months ended July
28, 1996, which resulted from costs incurred in connection with the public
offering, payments on notes payable, and proceeds of $225,000 realized from
the completion of a bridge financing in which an aggregate of 416,670 shares
of Series A Convertible Preferred Stock and 208,335 Class B Warrants were
sold. The Preferred shares automatically converted to 102,041 shares of
common stock upon completion of the public offering on April 25, 1997.
The foregoing resulted in an increase in cash and cash equivalents of
$952,658, from $211,575 at January 26, 1997, to $1,164,233 at July 27, 1997.
Leases to open three additional locations over the next nine months have
been executed. These new stores will be located in Florida, New York, and in
Nevada. Other retail locations are currently being evaluated, although to date
no additional retail leases have been executed. Depending on location and
size, the opening of a new retail location represents an aggregate capital
requirement of approximately $75,000-$150,000, including the leasehold
improvements, fixtures, equipment and inventory.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JULY 27, 1997 COMPARED TO THREE
MONTHS ENDED JULY 28, 1996
- ---------------------------------------------------------------------------
Set forth below is selected summary financial data derived from the financial
statements and financial records.
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
July 27, 1997 July 28, 1996
------------- -------------
<S> <C> <C>
Statements of Operations Data:
Total Revenues $ 2,795,390 $ 2,083,899
Operating income (loss) (144,804) (38,985)
Net income (loss) (135,477) (68,727)
Net income (loss) available to
common shareholders (135,477) (71,724)
Net income (loss) per common share (.08) (.10)
Weighted average shares outstanding 1,782,208 748,939
Statistical Data:
Store revenues $ 2,793,395 $ 2,079,152
Store gross margin 1,988,107 1,472,509
Store operating expenses 1,756,649 1,166,331
Store operating profit 231,458 306,178
Corporate overhead operating expenses 373,799 347,400
Gross margin percentage 71.0% 70.8%
Comparable same store sales (26 stores) 2,046,210 2,036,639
Comparable same store sales growth 0.5% N/A
</TABLE>
Total revenues for the three months ended July 27, 1997 were $2,795,390
as compared to $2,083,899 for the comparable period ended July 28, 1996, an
increase of $711,491, or 34%. The increase is due to the addition of 12 new
locations since August 30, 1996, and a slight increase in comparable same
store sales of .5% in the quarter. Comparable same store sales were
$2,046,210 for the three months ended July 27, 1997 as compared to $2,036,639
for the comparable period ended July 28, 1996, an increase of approximately
$10,000. A continued focus on the merchandise quality, improving stock levels
in key items, and the remodeling of retail locations is expected to improve
sales in existing locations. Sales from wholesale and non store retail sales
of $1,995 and $4,747 are included in total revenues for the three months ended
July 27, 1997 and July 28, 1996, respectively.
For the three months ended July 27, 1997, cost of goods sold was $809,745
and the gross margin was $1,985,645, or approximately 71.0%. For the three
months ended July 28, 1996, cost of goods sold was $609,155 and the gross
margin was $1,474,744, or approximately 70.8%. The .2% increase in gross
margin is attributed to buying opportunities offering lower merchandise costs.
Selling, general and administrative expenses were $2,021,220 for the
three months ended July 27, 1997, compared to $1,438,698 for the period ended
July 28, 1996, or 72.3% and 69.0% of revenues, respectively. The majority of
these expenses were comprised of personnel expenses, which amounted to
$918,955, and $680,830 for the three months ended July 27, 1997, and July 28,
1996, respectively, and occupancy costs of $703,726, and $487,027
respectively. Depreciation and amortization expense was $109,229 for the
three months ended July 27, 1997, and $75,031 for the three months ended
July 28, 1996.
Included in operating expenses are corporate overhead expenses of
$373,799, or 13.4% of total revenues, for the three months ended July 27,
1997, as compared to $347,400, or 16.7% of total revenues, for the three
months ended July 28, 1996. It is expected that corporate overhead will
continue to decrease as a percentage of sales as new retail stores and
additional distribution are added. Efforts to continue to improve and utilize
technological resources and control administrative costs are ongoing.
As a result of the foregoing, the loss from operations for the three
months ended July 27, 1997 was $144,804, as compared with a loss from
operations for the three months ended July 28, 1996 of $38,985. The increase
in the current period's loss as compared to the three months in 1996, is
primarily due to the seasonality of the Florida market which experiences
slower tourist traffic in the second quarter of the fiscal year, and to
expenses incurred in anticipation of new store openings that were delayed
during the quarter.
Interest expense was $20,331 and $26,598 for the three months ended July
27, 1997, and July 28, 1996, respectively, and is comprised primarily of
interest charged on the $635,000 bank note discussed above. Interest expense
for the three months ended July 27, 1997, was offset by $20,331 of interest
income realized from the short term investment of cash proceeds from the
public offering completed on April 25, 1997.
Unrealized loss on investments of $27,043 for the period ended July 28,
1996, relates to holdings of common stock in Global Casinos, Inc.(Global).
Since July 28, 1996, most of the investment has been liquidated, and as of
July 27, 1997, holdings of Global common stock were immaterial. The remaining
shares of Global will be liquidated as market conditions allow.
For the three months ended July 27, 1997, other income was $8,219,
consisting almost entirely of recognized license fees associated with
extension agreements that will allow certain former franchisees to use the
Impostors trademark. The license agreements have a one year term expiring in
January, 1998, and are renewable at our option. For the three months ended
July 28, 1996, other income was $10,695, which included approximately $7,000
in license fees.
For the three months ended July 28, 1996, income from discontinued
operations of $6,600, and income tax benefit of $5,000, represented negotiated
settlements with several creditors that had resulted from business activities
prior to the acquisition of Impostors.
Based on the foregoing, the net loss for the three months ended July 27,
1997 was $135,477, which translates to a net loss per share of $(0.08) based
on 1,782,208 weighted average shares outstanding. This compares with a net
loss for the three months ended July 28, 1996 of $68,724, or $(0.10) per
share, based on 748,939 weighted average shares outstanding as of that date,
an improvement of $.02 per weighted average share.
Other than the foregoing, no trends, or other demands, commitments,
events or uncertainties are known that will result in, or that are reasonably
likely to result in, a material impact on the income and expenses of the
Company.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JULY 27, 1997 COMPARED TO SIX MONTHS
ENDED JULY 28, 1996
- -----------------------------------------------------------------------------
Set forth below is selected summary financial data derived from the financial
statements and financial records.
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
July 27, 1997 July 28, 1996
------------- -------------
<S> <C> <C>
Statements of Operations Data:
Total Revenues $ 5,591,749 $ 3,957,457
Operating income (loss) (162,496) (213,332)
Net income (loss) (234,693) (196,064)
Net income (loss) available to
common shareholders (252,448) (199,064)
Net income (loss) per common share (.21) (.27)
Weighted average shares outstanding 1,184,616 748,939
Statistical Data:
Store revenues $ 5,585,646 $ 3,949,134
Store gross margin 3,992,694 2,775,731
Store operating expenses 3,452,214 2,310,106
Store operating profit 540,480 465,625
Corporate overhead operating expenses 698,365 681,014
Gross margin percentage 71.3% 70.2%
Comparable same store sales (26 stores) 4,089,117 3,907,683
Comparable same store sales growth 4.6% N/A
</TABLE>
Total revenues for the six months ended July 27, 1997 were $5,591,749 as
compared to $3,957,452 for the comparable period ended July 28, 1996, an
increase of $1,634,297, or 41%. The increase is due to the addition of 12 new
locations since August 30, 1996, and an increase in comparable same store
sales of 4.6%. Comparable same store sales were $4,089,117 for the six months
ended July 27, 1997 as compared to $3,907,683 for the comparable period ended
July 28, 1996, an increase of approximately $181,000. A continued focus on the
merchandise quality, improving stock levels in key items, and the remodeling
of retail locations is expected to continue to improve sales in existing
locations. Sales from wholesale and non store retail sales of $5,671 and
$16,455 are included in total revenues for the six months ended July 27, 1997
and July 28, 1996, respectively.
For the six months ended July 27, 1997, cost of goods sold was $1,603,666
and the gross margin was $3,988,083, or approximately 71.3%. For the six
months ended July 28, 1996, costs of goods sold was $1,179,665 and the gross
margin was $2,777,787, or approximately 70.2%. The 1.1% increase in gross
margin is attributed to less promotional activities, and buying opportunities
offering lower merchandise costs.
Selling, general and administrative expenses were $3,948,694 for the six
months ended July 27, 1997, compared to $2,850,805 for the period ended July
28, 1996, or 70.6% and 72.0% of revenues, respectively. The majority of these
expenses were comprised of personnel expenses, which amounted to $1,830,375,
and $1,344,750 for the six months ended July 27, 1997, and July 28, 1996,
respectively, and occupancy costs of $1,373,203, and $961,987 respectively.
Depreciation and amortization expense was $201,885 for the six months ended
July 27, 1997, and $140,314 for the six months ended July 28, 1996.
Included in operating expenses are corporate overhead expenses of
$698,365, or 12.5% of total revenues for the six months ended July 27, 1997,
as compared to $681,014, or 17.2% of total revenues, for the six months ended
July 28, 1996. It is expected that corporate overhead will continue to
decrease as a percentage of sales as new retail stores and additional
distribution are added. Efforts to continue to improve and utilize
technological resources and control administrative costs are ongoing.
As a result of the foregoing, the loss from operations for the six months
ended July 27, 1997 was $162,496, as compared with a loss from operations for
the six months ended July 28, 1996 of $213,332. The improvement in operating
results is attributed to the 1.1% increase in gross margin, and the decrease
in operating expenses as a percentage of revenue realized from revenue growth
and control of corporate overhead expenses as discussed above.
Interest expense was $109,901 and $55,844 for the six months ended July
27, 1997, and July 28, 1996, respectively. Interest for the six months ended
July 27, 1997 includes approximately $66,500 attributed to non-recurring
interest paid and deferred financing costs written off upon retirement of the
Convertible Notes on April 25, 1997. Interest expense for the six months
ended July 27, 1997, was partially offset by $23,000 of interest income
realized from the short term investment of cash proceeds from the public
offering completed on April 25, 1997.
Unrealized gain on investments of $16,264 for the period ended July 28,
1996, relates to holdings of common stock in Global Casinos, Inc.(Global).
Since July 28, 1996, most of the investment has been liquidated, and as of
July 27, 1997, holdings of Global common stock were immaterial. The remaining
shares of Global will be liquidated as market conditions allow.
For the six months ended July 27, 1997, other income was $14,423,
consisting almost entirely of recognized license fees associated with
extension agreements that will allow certain former franchisees to use the
Impostors trademark. The license agreements have a one year term expiring in
January, 1998, and are renewable at our option. For the six months ended July
28, 1996, other income was $29,249, which included approximately $12,500 in
license fees, and approximately $12,700 of income from a settlement with a
former franchisee.
For the six months ended July 28, 1996, income from discontinued
operations of $16,177, and income tax benefit of $10,000, represented
negotiated settlements with several creditors that had resulted from business
activities prior to the acquisition of Impostors.
Based on the foregoing, the net loss available to common shareholders for
the six months ended July 27, 1997 was $252,488, which translates to a net
loss per share of $(0.21) based on 1,184,616 weighted average shares
outstanding. This compares with a net loss available to common shareholders
for the six months ended July 28, 1996 of $199,064, or $(0.27) per share,
based on 748,939 weighted average shares outstanding as of that date.
Other than the foregoing, no trends, or other demands, commitments,
events or uncertainties are known that will result in, or that are reasonably
likely to result in, a material impact on the income and expenses.
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 27, 1997,
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. Premier Concepts, Inc. has elected not to adopt the fair value
accounting prescribed by FAS 123 for employees, and will be subject only to
the disclosure requirements prescribed by FAS 123.
Other than what has been discussed above, no trends, or other demands,
commitments, events or uncertainties are known 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.
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. The Company has been informed that the SEC staff intends to
recommend to the Commission that an action be brought against certain
persons including three of the Company's former shareholders and two
of its former directors. Management does not believe that this
investigation of the activities of these persons will have a direct
impact on the Company or its business operations.
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 27, 1997.
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>
<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 9, 1997 By: /s/ Sissel Greenberg
------------------- -----------------------------------
Sissel Greenberg, President
Dated: September 9, 1997 By: /s/ Todd Huss
------------------- -----------------------------------
Todd Huss, Chief Financial Advisor,
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENTS OF OPERATIONS FOUND ON PAGES 4, 5 AND 6 OF THE COMPANY'S
FORM 10-QSB FOR THE SIX MONTHS ENDED JULY 27, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-26-1997
<PERIOD-END> JUL-27-1997
<CASH> 1,171,046
<SECURITIES> 0
<RECEIVABLES> 87,939
<ALLOWANCES> (19,000)
<INVENTORY> 2,080,225
<CURRENT-ASSETS> 3,499,563
<PP&E> 3,496,156
<DEPRECIATION> (1,057,206)
<TOTAL-ASSETS> 6,148,933
<CURRENT-LIABILITIES> 1,923,834
<BONDS> 0
0
0
<COMMON> 3,524
<OTHER-SE> 4,051,605
<TOTAL-LIABILITY-AND-EQUITY> 6,148,933
<SALES> 5,591,749
<TOTAL-REVENUES> 5,591,749
<CGS> 1,603,666
<TOTAL-COSTS> 4,150,579
<OTHER-EXPENSES> 72,197
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109,901
<INCOME-PRETAX> (234,693)
<INCOME-TAX> 0
<INCOME-CONTINUING> (234,693)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (234,693)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
