<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1999
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 December 15, 1999, the Registrant had 1,537,118 shares of its $.002 par
value Common Stock outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements 3
Balance Sheet as of October 31, 1999 and January 31, 1999 4
Statement of Operations and Comprehensive Income for the
Three Months Ended October 31, 1999 and October 25,
1998 6
Statement of Operations and Comprehensive Income for the
Nine Months Ended October 31, 1999 and October 25,
1998 8
Statement of Cash Flows for the Nine Months Ended
October 31, 1999 and October 25, 1998 10
Notes to Consolidated Financial Statements 12
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations 15
Liquidity and Capital Resources 15
Results of Operations - Three Months Ended October 31, 1999
Compared To Three Months Ended October 25, 1998 19
Results of Operations - Nine Months Ended October 31,
1999 Compared To Nine Months Ended October 25, 1998 21
PART II. OTHER INFORMATION 25
Item 1. Legal Proceedings 25
Item 2. Changes in Securities 25
Item 3. Defaults Upon Senior Securities 25
Item 4. Submission of Matters to a Vote of Security Holders 25
Item 5. Other Information 25
Item 6. Exhibits and Reports on Form 8-K 25
<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 October 31, 1999, Statement of Operations and
Comprehensive Income for the Three and Nine Months Ended October 31, 1999 and
October 25, 1998, and Statement of Cash Flows for the Nine Months Ended
October 31, 1999 and October 25, 1998 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 31, 1999 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 31, 1999.
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>
PREMIER CONCEPTS, INC.
BALANCE SHEET
AS OF OCTOBER 31, 1999 AND JANUARY 31, 1999
<TABLE>
<CAPTION>
October 31, January 31,
1999 1999
----------- -----------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash & Cash Equivalents $ 137,703 $ 221,273
Merchandise Inventories 2,075,767 1,975,595
Prepaid Expenses & Other Current Assets 165,076 97,295
Total Current Assets 2,378,546 2,294,163
Property and Equipment, net 2,521,702 2,699,376
Trademarks, net 53,733 63,033
Other Assets 71,132 80,132
------------ -----------
Total Assets $5,025,113 $ 5,136,704
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
Current Liabilities:
Notes Payable and Current Portion
of Long Term Debt $ 583,181 $ 683,110
Accounts Payable 1,175,018 965,189
Accrued Liabilities 650,696 584,461
------------ -----------
Total Current Liabilities 2,408,895 2,232,760
Long-Term Debt, Less Current Portion - 49,032
Other Liabilities 240,128 201,244
------------ -----------
Total Liabilities 2,649,023 2,483,036
------------ -----------
Shareholders' Equity:
Preferred Stock, $.10 par value,
20,000,000 shares authorized;
223,385 shares issued and
outstanding at October 31, 1999,
and none issued and outstanding at
January 31, 1999 22,339 -
Common Stock, $.002 par value;
850,000,000 shares authorized;
1,069,128 shares issued and
outstanding at October 31, 1999,
and 887,513 shares issued and
outstanding at January 31, 1999 2,133 1,775
Additional Paid-in Capital 6,146,026 5,660,263
Accumulated Deficit (3,794,408) (3,008,370)
------------ -----------
Total Stockholders' Equity 2,376,090 2,653,668
------------ -----------
Total Liabilities & Equity $5,025,113 $ 5,136,704
============ ===========
</TABLE>
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE PERIOD ENDED OCTOBER 31, 1999 AND OCTOBER 25, 1998
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
October 31, 1999 October 25, 1998
------------------ -----------------
<S> <C> <C>
Revenues:
Retail Sales $ 2,958,879 $ 2,641,650
Wholesale Sales 107 54,779
----------- ------------
Total Revenues 2,958,986 2,696,429
Cost of Goods Sold 855,092 884,031
----------- ------------
Gross Margin 2,103,894 1,812,398
Operating Expenses:
Personnel 1,007,322 1,002,829
Occupancy 748,199 729,997
Other Selling, General and
Administrative 481,214 456,389
Depreciation and Amortization 129,995 128,362
Store Closing Costs - 101,958
----------- -----------
Total Operating Expenses 2,366,730 2,419,535
Operating Loss (262,836) (607,137)
Other Income (Expenses):
Interest, net (17,724) (10,423)
Other 6,505 2,824
----------- -----------
Other, net (11,219) (7,599)
----------- -----------
Net Loss and Comprehensive Loss (274,055) (614,736)
Preferred Stock Dividends (9,540) -
----------- -----------
Net Loss Available to Common
Shareholders $ (283,595) $ (614,736)
=========== ===========
Net Loss Per Common Share
(Basic and Diluted): $ (0.27) $ (0.69)
=========== ============
Weighted Average Shares Outstanding 1,069,128 887,513
=========== ============
</TABLE>
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE PERIOD ENDED OCTOBER 31, 1999 AND OCTOBER 25, 1998
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
October 31, 1999 October 25, 1998
----------------- -------------------
<S> <C> <C>
Revenues:
Retail Sales $ 8,539,658 $ 8,489,753
Wholesale Sales 8,263 89,739
------------- -------------
Total Revenues 8,547,921 8,579,492
Cost of Goods Sold 2,568,863 2,803,024
------------- -------------
Gross Margin 5,979,058 5,776,468
Operating Expenses:
Personnel 2,871,354 3,018,994
Occupancy 2,181,903 2,203,926
Other Selling, General and
Administrative 1,306,713 1,400,314
Depreciation and Amortization 378,369 377,540
Store Closing Costs - 101,958
------------- -------------
Total Operating Expenses 6,738,339 7,102,732
Operating Loss (759,281) (1,326,264)
Other Income (Expenses):
Interest, net (41,572) (33,825)
Other 14,815 18,688
------------- ------------
Other, net (26,757) (15,137)
------------- ------------
Net Loss and Comprehensive Loss (786,038) (1,341,401)
Preferred Stock Dividends (9,540) -
Preferred Stock Dividends - Imputed (157,560) -
------------- ------------
Net Loss Available to Common
Shareholders $ (953,138) $(1,341,401)
============= =============
Net Loss Per Common Share
(Basic and Diluted): $ (0.95) $ (1.51)
============= =============
Weighted Average Shares Outstanding 1,007,509 887,513
============= =============
</TABLE>
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED OCTOBER 31, 1999 AND OCTOBER 25, 1998
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
October 31, 1999 October 25, 1998
----------------- -------------------
<S> <C> <C>
Cash Flows From Operating
Activities:
Net Loss $ (786,038) $(1,341,401)
Adjustments to reconcile net
loss to net cash from
operating activities:
Amortization of warrants
issued for services 16,200 -
Depreciation and amortiza-
tion 378,369 377,540
Store closing costs - 67,627
Changes in operating assets and
liabilities:
(Increase) decrease in:
Merchandise inventories (100,172) 289,415
Other assets (47,981) 93,220
Increase (decrease) in:
Accounts payable and accrued
liabilities 266,524 572,418
Other liabilities 38,884 39,657
------------ -------------
Net cash provided (used) by
operating activities (234,214) 98,476
Cash Flows From Investing Activities:
Capital expenditures for property
and equipment (186,395) (760,194)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock 220,769 -
Proceeds from issuance of preferred
stock 279,231 -
Deferred offering costs (14,000) -
Proceeds from issuance of note
payable 12,000 610,000
Payments on notes payable (160,961) (654,941)
------------ ------------
Net cash provided (used) by
financing activities 337,039 (44,941)
------------- ------------
Decrease in Cash & Cash Equivalents (83,570) (706,659)
Cash & Cash Equivalents, beginning
of period 221,273 806,049
------------- ------------
Cash & Cash Equivalents, end of
period $ 137,703 $ 99,390
============= ============
Supplemental Schedule of Cash Flow
Information:
Cash paid for interest $ 35,077 $ 53,882
============= =============
Preferred Stock dividend - Non-cash $ 9,540 $ -
============= =============
</TABLE>
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
COMMITMENTS AND CONTINGENCIES
- -----------------------------
LITIGATION: The Company has been named as a defendant in a civil action filed
in the Supreme Court of the State of New York, County of Onondaga on May 21,
1999. The lawsuit was brought by EkleCo, as plaintiff, against the Company,
and asserts claims against the Company for rent and other sums due under the
Company's commercial lease for its retail store located in the Palisades
Center in West Nyack, New York. The Company has denied liability and on July
27, 1999 the Company filed a counter claim against the landlord asserting
breach of contract, false representation and fraud in the inducement in the
Company's entering into the lease. The Company intends to vigorously defend
the action and prosecute its counterclaims. Based upon its assessment of the
facts and consultations with legal counsel, management of the Company believes
that the likelihood of a material adverse outcome in the matter is remote.
The Company is also 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, operating under the trade names
Impostors and Elegant Pretenders, has historically 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 nine months ended October 31, 1999, of $759,281, as compared to an
operating loss of $1,326,264 for the nine months ended October 25, 1998.
The Company's business is highly seasonal with its mall locations
generating approximately 20% of revenues during the December holiday season.
The Company's 10 tourist locations experience sales fluctuations, based upon
such factors as seasonality, economic conditions and other factors affecting
tourism in their particular locations.
COMMON SHARES
- -------------
In January 1999, the Company's stockholders approved a 1 for 2 reverse
stock split at a future date at the discretion of the Company. In April 1999,
the Company's Board of Directors approved the reverse split. Accordingly, all
common stock reflected in the accompanying financial statements and in
Management's discussion and analysis reflect this reverse split for all
periods presented.
PREFERRED STOCK AND ADDITIONAL WARRANT
- --------------------------------------
On June 30, 1999, the Company sold 223,385 shares of its $.10 par value
Preferred Stock in a private placement to Infusion Capital Partners, LLC
(Investor), for $279,231, or $1.25 per share. The Preferred Stock has been
designated as Series A Convertible Preferred Stock ("Series A Preferred
Stock"), having a stated value of $1.25 per share. The Series A Preferred
Stock is convertible by the holder at any time into shares of the Company's
$.002 par value Common Stock at a conversion price equal to the Series A
Preferred Stock stated value. It may also be converted at the Company's
option if the shares of the common stock underlying the conversion are subject
to an effective registration statement and have traded for a period of twenty
(20) consecutive trading days at a price in excess of 150% of the conversion
price.
The holders of the Series A Preferred Stock are entitled to receive
dividends at the annual rate of 10% per year based on the preferred stock's
stated value. The dividend is payable only upon conversion of the Series A
Preferred Stock (dividend payment date). The dividend is payable only by the
issuance of shares of the Company's $.002 par value Common Stock valued at
fair market value on the dividend payment date, and is calculated as the
average closing bid price of the Company's common stock for the fifteen (15)
trading days immediately preceding the dividend payment date.
In the event of any liquidation of the Company, the holders of the Series
A Preferred Stock would be entitled to be paid out of the assets available for
distribution to shareholders prior to any distribution to holders of the
Company's $.002 par value Common Stock, at an amount equal to the stated value
of the Preferred Stock. In addition to these preferential liquidation rights,
the holders of the Series A Preferred Stock are entitled to vote with the
holders of shares of the Company's $.002 par value Common Stock on all matters
presented for a vote to the shareholders of the Company. Each share of Series
A Preferred Stock will be entitled to one vote.
In addition to the Series A Preferred Stock, the Investor also received a
warrant to purchase eighty thousand (80,000) shares of the Company's $.002 par
value Common Stock at an exercise price of $4.10 per share of common stock.
The warrant has a term of three years and expires on June 30, 2002. For
purposes of financial reporting, the imputed value of this warrant was
recorded as a dividend during the quarter ended August 1, 1999.
On November 11, 1999 the Investor converted the Series A Preferred Stock
to common stock. A total of 234,419 shares of common stock were issued in the
conversion which included 11,034 shares issued attributable to the dividend
feature.
PREFERRED STOCK DIVIDENDS - IMPUTED
- -----------------------------------
As noted above, the Series A Preferred Stock is convertible to shares of
the Company's $.002 Common Stock at $1.25 per share ("conversion price"). On
June 30, 1999 the date of issuance of the Series A Preferred Stock, the
underlying shares of common stock had a market value of $1.625 per share. The
amount of $83,769 representing the difference between the conversion price and
the market value on the issuance date has been recorded as an imputed dividend
on June 30, 1999. On August 1, 1999 the market value of the underlying shares
of common stock had a market value of $1.25 per share.
In addition, the imputed value of the warrant to purchase eighty thousand
(80,000) shares of the Company's $.002 par value Common Stock as discussed
above, was recorded as a dividend on June 30, 1999. The imputed value of the
warrant was estimated to be $73,791on June 30, 1999.
<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 - OCTOBER 31, 1999 COMPARED TO JANUARY 31,
1999
At October 31, 1999 the cash balance of $137,703 was approximately 38%
less than the cash balance of $221,273 at January 31, 1999.
On March 11, 1999 we received approximately $221,000 in proceeds from the
sale of 176,615 shares of common stock. On June 30, 1999 approximately
$279,000 was received from the sale of 223,385 shares of $.10 par value
preferred stock. The preferred stock is convertible to shares of common stock
at a conversion price of $1.25 per share. (See detail discussion above in the
Notes to Financial Statements.) These funds are being used for the
development of our e-commerce business, and for the reduction of the principal
balance of the Bank Note as discussed below, as well as for general working
capital.
On April 1, 1999 we made a principal reduction of $112,000 on the note
payable (Bank Note) with a Colorado Financial institution. Upon maturity on
May 28, 1999, the Bank Note was renewed. The renewed note bears interest at
the Bank's prime lending rate plus 1.5%, and requires monthly payments of
$1,000 plus accrued interest, beginning in June, 1999 and continuing until the
maturity date of June 20, 2000. A one time principal payment of $37,000 is
due on December 20, 1999. All fees and financial covenants have been waived
until maturity on June 20, 2000. The Bank Note principal balance of $443,000
is classified as short-term debt at October 31, 1999.
On January 31, 1999, $122,000 of accounts payable relating to the spring
1998 construction of the store at Palisades Center in West Nyack, New York was
converted to a long-term note. The note requires monthly installments of
$5,000 including principal and interest at 10%, with a single payment of
$35,000 due January 1, 2000. The principal balance of $89,154 at October 31,
1999 is classified as current debt.
During the nine months ended October 31, 1999, merchandise inventories
increased $100,172, or approximately 5% from $1,975,595 at January 31, 1999 to
$2,075,767 at October 31, 1999. This increase reflects seasonal purchasing in
preparation of the 1999 holiday shopping season.
Prepaid expenses and other current assets increased $67,781 from $97,295
at January 31, 1999 to $165,076 at October 31, 1999. The increase is
primarily the result of costs accrued and paid with respect to a Management
Services Agreement executed on March 11, 1999. The agreement provides for
certain consulting services including arrangement of the first and second
equity fundings as discussed above, as well as strategic, operational and
investment banking advice. The total cash amount of the consulting agreement
is $50,000, and an additional $27,000 has been capitalized as the imputed
value of the warrant to purchase 25,000 shares of common stock at $1.25 per
share as discussed above in the Notes to Financial Statements. The costs of
the agreement are being amortized over one year, and at October 31, 1999, had
an amortized book value of approximately $28,000. On November 1, 1999 the
Management Services Agreement was extended an additional two years through
December 2002.
Also included in prepaid expenses and other current assets is
approximately $24,000 of costs associated with the replacement of our point of
sale computer systems at all the retail stores, and a point of sale and
inventory control software conversion completed in September, 1999. These
costs are being amortized over three years.
As a result of the foregoing, current assets increased by $84,383, from
$2,294,163 at January 31, 1999, to $2,378,546 at October 31, 1999.
As of October 31, 1999, approximately $95,000 had been invested to design
and construct a new e-commerce website that is expected to be launched in
December 1999. Also, during the nine months ended October 31, 1999
approximately $40,000 was invested in computer equipment and fixture
improvements at the Company's corporate offices in Aurora, Colorado. Other
asset additions include $11,500 invested to develop additional design concepts
for future retail expansion, approximately $20,000 in minor improvements in
existing retail locations, and $13,750 associated with securing the lease for
a retail store location in the new Aladdin Hotel and Casino in Las Vegas,
Nevada. This store is expected to open in the summer of 2000. The total
investments made during the nine months ended October 31, 1999 of $186,395
compares to the $760,194 invested in property and equipment for the nine
months ended October 25, 1998. These investments consisted of leasehold
improvements in connection with the remodeling of the stores in Palm Desert
and Pleasanton, California, and in Menlo Park, New Jersey, as well as four new
locations at the Riverwalk in New Orleans, Louisiana, Franklin Mills in
Philadelphia, Pennsylvania, Palisades Center in West Nyack, New York, and the
Fashion Outlet in Primm, Nevada.
Based on the foregoing, property and equipment, net of accumulated
depreciation, decreased approximately $178,000, from $2,699,376 at January 31,
1999, to $2,521,702 at October 31, 1999.
The Company's trademark assets, representing the goodwill of the
Impostors trademark and other intellectual property, was acquired as part of
the Company's acquisition of Impostors in 1994. This asset is being amortized
over a 10-year period, and had an amortized book value of $53,733 at October
31, 1999.
As of October 31, 1999, the Company had total outstanding liabilities of
$2,649,023 compared to $2,483,036 at January 31, 1999, an increase of
$165,987. Current liabilities increased $176,135, from $2,232,760 at January
31, 1999 to $2,408,895 at October 31, 1999, primarily reflecting normal
increases in accounts payable and accrued liabilities associated with
merchandise buying and other costs incurred in preparation for the holiday
shopping season, and the reductions of the Bank Note and construction note
payable as discussed above.
In addition to the Bank Note and the store construction note payable,
both as discussed above, the current portion of long-term debt includes notes
that were part of the Impostors retail chain acquisition in February, 1994.
The total debt related to these notes was reduced by $7,213 as the result of
normal scheduled payments from $50,142 at January 31, 1999, to $42,929 at
October 31, 1999.
Subsequent to October 31, 1999, a settlement was reached on a note
payable that was due for legal services relating to the acquisition of the
retail chain in 1994. On November 3, 1999, $6,000 was paid, with the $30,000
balance of the note due on December 28, 1999.
Accounts payable increased by $209,829 from $965,189 at January 31, 1999
to $1,175,018 at October 31, 1999. Other accrued liabilities increased by
$66,235 from $584,461 at January 31, 1999 to $650,696 at October 31, 1999.
Accounts payable and accrued liabilities represent expenses incurred in the
ordinary course of business in connection with the operation of the Impostors
retail chain.
Working capital (deficit) decreased by $91,752, from $61,403 at
January 31, 1999, to $(30,349) at October 31, 1999, primarily as the result of
the increase in merchandise inventories of approximately $100,200, and the
increase in accounts payable and accrued liabilities of approximately
$276,000.
Other liabilities increased $38,884 from $201,244 at January 31, 1999, to
$240,128 at October 31, 1999, resulting from the recognition of rental expense
on a straight line basis on leases that contain predetermined fixed
escalations of the minimum rents during the initial term of the lease.
The increase in preferred stock of $22,339, the increase in common stock
of $358 from $1,775 at January 31, 1999 to $2,133 at October 31, 1999, and the
net increase in additional paid-in capital of $485,763 from $5,660,263 to
$6,146,026 at January 31, 1999 and October 31, 1999, respectively, reflects
the proceeds received from the March and June, 1999 equity fundings as
discussed above, net of $14,000 of direct costs of the offerings, and the
preferred stock dividend of $9,540.
As a result of the net loss for the nine months ended October 31, 1999 of
$786,038 the accumulated deficit increased from $3,008,370 at January 31, 1999
to a deficit of $3,794,408 at October 31, 1999. As a result of the loss and
considering the equity funding as discussed above, total stockholders' equity
decreased $277,578 from $2,653,668 at January 31, 1999, to $2,376,090 at
October 31, 1999.
Net cash used by operating activities for the nine months ended October
31, 1999 was $234,214, compared with cash provided by operating activities of
$98,476 for the nine months ended October 25, 1998. This change of
approximately $333,000 primarily reflects the effect of the increase in
merchandise inventories of approximately $100,200 for the nine months ended
October 31, 1999 compared to the decrease in merchandise inventories of
approximately $289,000 during the comparable nine months ended October 25,
1998, as well as the reduction of accounts payable and accrued liabilities of
approximately $276,000 for the nine months ended October 31, 1999, as compared
to the increase in accounts payable and accrued liabilities of approximately
$572,000 for the comparable nine months ended October 25, 1998.
Cash used in investing activities of $186,395, primarily represents the
investment in the new e-commerce website and improvements in computer
equipment at the corporate offices in Aurora, Colorado as discussed above.
This compares with net cash used by investing activities of $760,194 during
the nine months ended October 25, 1998 which primarily represents investments
in new retail stores and remodeling efforts as discussed above.
Net cash provided by financing activities for the nine months ended
October 31, 1999, was $337,039, and represents the net proceeds of the equity
funding, and payments on notes payable, both as discussed above. This
compares to net cash used by financing activities of $44,941 for the nine
months ended October 25, 1998, representing payments on notes payable.
The foregoing resulted in a decrease in the cash position of $83,570,
from $221,273 at January 31, 1999 to $137,703 at October 31, 1999.
On August 20, 1999 a lease was executed to open a retail store in the new
Aladdin Hotel and Casino in Las Vegas, Nevada. This store is expected to open
in the summer of 2000. No additional leases to open retail locations have
been executed. However, possible new locations are currently being evaluated.
Depending on location and size, the opening of a new retail location
represents an aggregate capital requirement of approximately $75,000-$200,000,
including the lease build-outs, fixtures, equipment and inventory. As
discussed above, the funds received in the March and June 1999, equity
financing, provided new capital to meet current obligations, and provided
capital to further the Company's business plan.
On November 12, 1999, 228,571 shares of common stock were sold to an
investor for $200,000. The proceeds from the equity sale are being held in
escrow and will be used as partial collateral to obtain additional debt
financing of up to $500,000 to provide capital for retail expansion, further
development of e-commerce, and general working capital. Additional sources of
capital are currently being evaluated to meet plans for future capital
investment and working capital needs. However, there can be no assurance that
such financing will be secured.
RESULTS OF OPERATIONS - THREE MONTHS ENDED OCTOBER 31, 1999 COMPARED TO THREE
MONTHS ENDED OCTOBER 25, 1998
Set forth below is selected summary financial data derived from the financial
statements and financial records.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
October 31, 1999 October 25, 1998
------------------ ------------------
<S> <C> <C>
Statements of Operations Data:
Total Revenues $ 2,958,986 $ 2,696,429
Operating income (loss) (262,836) (607,137)
Net income (loss) (274,055) (614,736)
Net income (loss) available to
common shareholders (283,595) (614,736)
Net income (loss) per common share (0.27) (.69)
Weighted average shares outstanding 1,069,128 887,513
Statistical Data:
Store revenues $ 2,956,552 $ 2,638,046
Store gross margin 2,101,681 1,797,287
Store operating expenses 1,932,604 2,050,759
Store operating profit (loss) 169,076 (253,470)
Corporate overhead operating expenses 433,379 365,190
Gross margin percentage 71.1% 67.2%
Comparable same store sales (35 stores) 2,896,916 2,508,769
Comparable same store sales growth 15.5% N/A
</TABLE>
Total revenues for the three months ended October 31, 1999 were
$2,958,986 (36 stores), as compared to $2,696,429 (39 stores), for the
comparable period ended October 25, 1998, an increase of $262,557, or 9.7%.
Comparable same store sales were $2,896,916 for the three months ended October
31, 1999 as compared to $2,508,769 for the comparable period ended October 25,
1998, an increase of $388,147, or 15.5%. The increase was attributable to
increased traffic, merchandise and promotional improvements, as well as
operational changes initiated during the first quarter of 1999.
Sales from wholesale and non-store retail operations were $107 and
$54,779, and are included in total revenues for the three months ended October
31, 1999 and October 25, 1998, respectively.
For the three months ended October 31, 1999, cost of goods sold was
$855,092 and the gross margin was $2,103,894, or 71.1%. For the three months
ended October 25, 1998, cost of goods sold was $884,031 and the gross margin
was $1,812,398, or 67.2%. The 3.9% improvement in gross margin is attributed
to a more focused merchandise mix, and more effective promotional activity
during the three months ended October 31, 1999 as compared to the same period
during 1998.
Total operating expenses were $2,366,730 for the three months ended
October 31, 1999, compared to $2,419,345 for the period ended October 25,
1998, or 80.0% and 89.7% of revenues, respectively, representing a decrease of
approximately $52,800 for the comparable period. The majority of these
expenses were comprised of personnel expenses, which amounted to $1,007,322
and $1,002,829 for the three months ended October 31, 1999, and October 25,
1998, respectively. Occupancy costs of $748,199, and $729,997, and general
administrative costs of $481,214 and $456,389 are included in total operating
expenses for the three months ended October 31, 1999 and October 25, 1998,
respectively.
Included in operating expenses are corporate overhead expenses of
$433,379, or 14.6% of total revenues, for the three months ended October 31,
1999, as compared to $365,190, or 13.6% of total revenues, for the three
months ended October 25, 1998, representing an increase of approximately
$68,200 for the comparable period. The increase is attributable to the hiring
of our Chief Operating Officer in November 1998, and to the expenses
associated with the Management Services Agreement as discussed above. It is
expected that corporate overhead will decrease as a percentage of sales as new
retail stores and additional distribution is added. Efforts to continue to
improve and utilize technological resources and control administrative costs
are ongoing.
Also included in total operating expenses are depreciation and
amortization expenses that were $129,995 and $128,362 for the three months
ended October 31, 1999 and October 25, 1998, respectively.
During the three months ended October 25, 1998 three non-performing
stores were closed. Store closing costs of $101,958 included approximately
$67,000 of leasehold write-offs, $30,000 of lease termination fees, and $5,000
of professional fees associated with the lease termination negotiations. No
stores were closed during the three months ended October 31, 1999.
As a result of the foregoing, the loss from operations for the three
months ended October 31, 1999 was $262,836, as compared with a loss from
operations for the three months ended October 25, 1998 of $607,137, an
improvement of $344,301.
Interest expense was $19,493 and $14,266 for the three months ended
October 31, 1999, and October 25, 1998, respectively, and is comprised
primarily of interest charged on the Bank Note discussed above. Interest
income was $1,769 and $3,843 for the three months ended October 31, 1999, and
October 25, 1998, respectively, and results from the daily investing of
available cash balances.
Other income was $6,505 and $2,824 for the three months ended October 31,
1999, and October 25, 1998, respectively, and consists primarily of 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 2000, and are renewable at our option.
Based on the foregoing, the net loss for the three months ended October
31, 1999 was $274,055, which translates to a net loss per share of $(0.27)
after taking into effect the $9,540 of preferred stock dividends as discussed
above, based on 1,069,128 weighted average shares outstanding. This compares
with a net loss for the three months ended October 25, 1998 of $614,736, or
$(0.69) per share, based on 887,513 weighted average shares outstanding as of
that date.
RESULTS OF OPERATIONS - NINE MONTHS ENDED OCTOBER 31, 1999 COMPARED TO NINE
MONTHS ENDED OCTOBER 25, 1998
Set forth below is selected summary financial data derived from the
financial statements and financial records.
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
October 31, 1999 October 25, 1998
------------------- -----------------
<S> <C> <C>
Statements of Operations Data:
Total Revenues $ 8,547,921 $ 8,579,492
Operating income (loss) (759,281) (1,362,264)
Net income (loss) (786,038) (1,341,401)
Net income (loss) available to
common shareholders (953,138) (1,341,401)
Net income (loss) per common share (.95) (1.51)
Weighted average shares outstanding 1,007,509 887,513
Statistical Data:
Store revenues $ 8,528,814 $ 8,480,783
Store gross margin 5,976,003 5,760,214
Store operating expenses 5,459,811 5,922,348
Store operating profit (loss) 516,192 (162,134)
Corporate overhead operating expenses 1,276,467 1,161,802
Gross margin percentage 69.9% 67.3%
Comparable same store sales
(31 stores) 7,672,785 7,459,148
Comparable same store sales growth 2.9% N/A
</TABLE>
Total revenues for the nine months ended October 31, 1999 were $8,547,921
(36 stores), as compared to $8,579,492 (40 stores) for the comparable period
ended October 25, 1998, a decrease of approximately $31,600, or 0.4 %.
Comparable same store sales were $7,672,785 for the nine months ended October
31, 1999 as compared to $7,459,148 for the comparable period ended October 25,
1998, an increase of approximately $213,600, or 2.9%. The increase was
attributable to increased traffic, merchandise and promotional improvements,
as well as operational changes initiated during the first quarter of 1999.
Sales from wholesale and non-store retail operations were $8,263 and
$89,739, and are included in total revenues for the nine months ended October
31, 1999 and October 25, 1998, respectively.
For the nine months ended October 31, 1999, cost of goods sold was
$2,568,863 and the gross margin was $5,979,058, or 69.9%. For the nine months
ended October 25, 1998, cost of goods sold was $2,803,024 and the gross margin
was $5,776,468, or 67.3%. The 2.6% improvement in gross margin is attributed
to a more focused merchandise mix, and more effective promotional activity
during the nine months ended October 31, 1999 as compared to the same period
during 1998.
Total operating expenses were $6,738,339 for the nine months ended
October 31, 1999, compared to $7,102,732 for the period ended October 25,
1998, or 78.8% and 82.8% of revenues, respectively, representing a decrease of
approximately $364,400 for the comparable period. The majority of these
expenses were comprised of personnel expenses, which amounted to $2,871,354
and $3,018,994 for the nine months ended October 31, 1999, and October 25,
1998, respectively, a decrease of approximately $147,600. Occupancy costs of
$2,181,903, and $2,203,926, and general administrative costs of $1,306,713 and
$1,400,314 are included in total operating expenses for the nine months ended
October 31, 1999 and October 25, 1998, respectively.
Included in operating expenses are corporate overhead expenses of
$1,276,467, or 14.9% of total revenues, for the nine months ended October 31,
1999, as compared to $1,161,802, or 13.5% of total revenues, for the nine
months ended October 25, 1998, representing an increase of approximately
$114,700 for the comparable period. The increase is primarily attributable to
the hiring of our Chief Operating Officer in November 1998, and to the
expenses associated with the Management Services Agreement as discussed above.
It is expected that corporate overhead will decrease as a percentage of sales
as new retail stores and additional distribution is added. Efforts to continue
to improve and utilize technological resources and control administrative
costs are ongoing.
Also included in total operating expenses are depreciation and
amortization expenses that were $378,369 and $377,540 for the nine months
ended October 31, 1999 and October 25, 1998, respectively.
During the nine months ended October 25, 1998 three non-performing stores
were closed. Store closing costs of $101,958 included approximately $67,000
of leasehold write-offs, $30,000 of lease termination fees, and $5,000 of
professional fees associated with the lease termination negotiations. No
stores were closed during the nine months ended October 31, 1999.
As a result of the foregoing, the loss from operations for the nine
months ended October 31, 1999 was $759,281, as compared with a loss from
operations for the nine months ended October 25, 1998 of $1,326,264, an
improvement of approximately $567,000.
Interest expense was $48,991 and $48,485 for the nine months ended
October 31, 1999, and October 25, 1998, respectively, and is comprised
primarily of interest charged on the Bank Note discussed above. Interest
income was $7,419 and $14,660 for the nine months ended October 31, 1999, and
October 25, 1998, respectively, and results from the daily investing of
available cash balances.
Other income was $14,815 and $18,688 for the nine months ended October
31, 1999, and October 25, 1998, respectively, and consists almost entirely of
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 2000, and are renewable at our option.
Based on the foregoing, the net loss for the nine months ended October
31, 1999 was $786,038, which translates to a net loss per share of $(0.78)
before taking into effect the $167,100 of preferred stock dividends as
discussed above, based on 1,007,509 weighted average shares outstanding, or
$(0.95) after consideration of the preferred stock dividends. This compares
with a net loss for the nine months ended October 25, 1998 of $1,341,401, or
$(1.51) per share, based on 887,513 weighted average shares outstanding as of
that date.
MERGER WITH AMAZESCAPE.COM
On November 12, 1999 the Board of Directors of Premier Concepts, Inc.
unanimously approved a term sheet presented by AmazeScape.com for a merger of
the two entities. The transaction is subject to several conditions precedent.
The Board-approved term sheet contemplates that the Company will become a
holding company named AmazeScape.com, Inc. and will survive the merger. The
holding company will trade on the Nasdaq stock exchange under a new symbol
that reflects it name and Internet orientation, and will be managed by the
management and Board of Directors of AmazeScape.com. The current businesses
of Premier Concepts, Inc. and AmazeScape.com will operate within wholly owned
subsidiaries of the holding company. Subject to the execution of definitive
agreements and shareholder and Nasdaq approval, AmazeScape.com's management
and Board of Directors will assume control of both entities.
YEAR 2000
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities. The Company
is working to resolve the potential impact of the year 2000 by upgrading
certain aspects of its computer hardware and software systems. As of the date
of this filing the Company has completed the hardware upgrades and software
conversions, and believes that these efforts will mitigate the Year 2000
Issue, and with regards to its own internal systems the Year 2000 Issue will
not have a material impact on the operations of the Company. The Company has
also initiated formal communications with its significant suppliers and large
customers to determine the extent to which the Company is vulnerable to those
third parties' failure to remedy their own Year 2000 Issue. In view of the
foregoing, there is reasonable assurance that the Year 2000 Issue will not
have a material adverse effect upon the Company. However, there can be no
guarantee that the systems of other companies on which the Company's business
relies will be timely converted, or that failure to convert by another
company, or a conversion that is incompatible with the Company's systems,
would not have a material adverse effect on the Company.
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.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company has been named as a defendant in a civil action filed in the
Supreme Court of the State of New York, County of Onondaga on May 21, 1999.
The lawsuit was brought by EkleCo, as plaintiff, against the Company, and
asserts claims against the Company for rent and other sums due under the
Company's commercial lease for its retail store located in the Palisades
Center in West Nyack, New York. The Company has denied liability and on July
27, 1999 the Company filed a counter claim against the landlord asserting
breach of contract, false representation and fraud in the inducement in the
Company's entering into the lease. The Company intends to vigorously defend
the action and prosecute its counterclaims. Based upon its assessment of the
facts and consultations with legal counsel, management of the Company believes
that the likelihood of a material adverse outcome in the matter is remote.
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 October 31, 1999.
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: December 15, 1999 By: /s/ Sissel Greenberg
----------------- -------------------------------
Sissel Greenberg, President
Dated: December 15, 1999 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, STATEMENTS OF OPERATIONS AND STATEMENT OF CASH FLOWS FOUND ON PAGES 4
THROUGH 11 OF THE COMPANY'S FORM 10-QSB FOR THE NINE MONTHS ENDED OCTOBER 31,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> OCT-31-1999
<CASH> 137,703
<SECURITIES> 0
<RECEIVABLES> 66,938
<ALLOWANCES> (35,698)
<INVENTORY> 2,075,767
<CURRENT-ASSETS> 2,378,546
<PP&E> 4,366,395
<DEPRECIATION> 1,844,693
<TOTAL-ASSETS> 5,025,113
<CURRENT-LIABILITIES> 2,408,895
<BONDS> 0
0
22,339
<COMMON> 2,133
<OTHER-SE> 2,351,618
<TOTAL-LIABILITY-AND-EQUITY> 5,025,113
<SALES> 2,958,986
<TOTAL-REVENUES> 2,958,986
<CGS> 855,092
<TOTAL-COSTS> 2,366,730
<OTHER-EXPENSES> (6,505)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,493
<INCOME-PRETAX> (283,595)
<INCOME-TAX> 0
<INCOME-CONTINUING> (283,595)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (283,595)
<EPS-BASIC> (.27)
<EPS-DILUTED> (.27)
</TABLE>
