<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 July 30, 2000
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 13, 2000, the Registrant had 1,662,190 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 July 30, 2000 and January 30, 2000 4
Statement of Operations for the Three Months Ended July 30, 2000
and August 1, 1999 6
Statement of Operations for the Six Months Ended July 30, 2000
and August 1, 1999 8
Statement of Cash Flows for the Six Months Ended July 30, 2000
and August 1, 1999 10
Notes to Consolidated Financial Statements 12
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations 13
Liquidity and Capital Resources 13
Results of Operations 13
PART II. OTHER INFORMATION 27
Item 1. Legal Proceedings 27
Item 2. Changes in Securities 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Submission of Matters to a Vote of Security Holders 27
Item 5. Other Information 27
Item 6. Exhibits and Reports on Form 8-K 27
<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 30, 2000, statements of operations and for
the three and six months ended July 30, 2000, and August 1, 1999, and
statements of cash flows for the six months ended July 30, 2000, and August 1,
1999 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 30, 2000 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 Premier Concepts Form 10-KSB for the year ended January
30, 2000.
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 Premier Concepts.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof.
Premier Concepts 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 Premier Concepts files with the Securities and Exchange
Commission.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PREMIER CONCEPTS, INC.
BALANCE SHEET
AS OF JULY 30, 2000 AND JANUARY 30, 2000
(UNAUDITED)
July 30, January 30,
2000 2000
---------- ----------
ASSETS
------
<S> <C> <C>
Current Assets:
Cash & Cash Equivalents $ 121,961 $ 357,653
Restricted Cash 474,457 102,903
Merchandise Inventories 1,740,259 1,786,255
Prepaid Expenses & Other Current
Assets 241,011 260,229
----------- -------------
Total Current Assets 2,577,688 2,507,040
Property and Equipment, net 2,107,390 2,190,331
Other Assets:
Restricted Cash 200,000 200,000
Trademarks, net 44,433 50,633
Website Development Costs, net 132,866 131,058
Other 76,161 71,007
----------- -------------
Total Assets $5,138,538 $ 5,150,069
============ =============
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities:
Notes Payable $ 449,791 $ 466,903
Accounts Payable 1,240,736 1,062,071
Accrued Liabilities 362,603 644,676
------------ -------------
Total Current Liabilities 2,053,130 2,173,650
Deferred Rent 236,847 229,234
------------ -------------
Total Liabilities 2,289,977 2,402,884
------------ -------------
Redeemable Common Stock and Warrants,
$.002 par value, 228,571 shares issued
and outstanding and 32,000 warrants 200,000 200,000
Shareholders' Equity:
Preferred Stock, $.10 par value,
20,000,000 shares authorized; none
issued and outstanding at July 30,
2000 and January 30, 2000 - -
Series B Convertible Preferred Stock, 3%
cumulative, redeemable, convertible
to 369,231 shares of common stock,
120 shares authorized; none issued and
outstanding at July 30, 2000 and
January 30, 2000 - -
Common Stock, $.002 par value;
850,000,000 shares authorized;
1,433,619 shares issued and outstanding
at July 30, 2000, and 1,328,207 shares
issued and outstanding at January
30, 2000 2,867 2,656
Additional Paid-in Capital 7,034,690 6,298,084
Accumulated Deficit (4,388,996) (3,753,555)
----------- -------------
Total Stockholders' Equity 2,648,561 2,547,185
----------- -------------
Total Liabilities & Equity $5,138,538 $ 5,150,069
=========== =============
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PREMIER CONCEPTS, INC.
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED JULY 30, 2000 AND AUGUST 1, 1999
(UNAUDITED)
Three Months Ended Three Months Ended
July 30, 2000 August 1, 1999
-------------------- ------------------
<S> <C> <C>
Total Revenues 2,570,866 2,773,837
Cost of Goods Sold 788,327 848,736
------------- -------------
Gross Margin 1,782,539 1,925,101
Operating Expenses:
Personnel 922,726 932,532
Occupancy 688,322 717,380
Other Selling, General and
Administrative 386,075 414,217
Depreciation and Amortization 124,726 124,236
-------------- --------------
Total Operating Expenses 2,121,849 2,188,365
Operating Loss (339,310) (263,264)
Other Income (Expenses):
Interest, net (4,176) (13,132)
Other 4,960 3,601
-------------- ---------------
Other, net 784 (9,531)
-------------- ---------------
Net Loss (338,526) (272,795)
Preferred Stock Dividends
-- Imputed - (157,560)
-------------- ---------------
Net Loss Available to Common
Shareholders $ (338,526) $ (430,355)
=============== ================
Net Loss Per Common Share
(Basic and Diluted): $ (0.24) $ (0.40)
=============== ================
Weighted Average Shares
Outstanding 1,433,619 1,069,128
=============== ================
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PREMIER CONCEPTS, INC.
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED JULY 30, 2000 AND AUGUST 1, 1999
(UNAUDITED)
Six Months Ended Six Months Ended
July 30, 2000 August 1, 1999
-------------- ----------------
<S> <C> <C>
Total Revenues 5,218,443 5,588,935
Cost of Goods Sold 1,604,997 1,713,771
---------------- ----------------
Gross Margin 3,613,446 3,875,164
Operating Expenses:
Personnel 1,857,165 1,864,032
Occupancy 1,371,129 1,433,704
Other Selling, General and
Administrative 780,246 825,499
Depreciation and Amortization 238,605 248,374
----------------- -----------------
Total Operating Expenses 4,247,145 4,371,609
Operating Loss (633,699) (496,445)
Other Income (Expenses):
Interest, net (11,702) (23,848)
Other 9,960 8,310
----------------- -----------------
Other, net (1,742) (15,538)
----------------- -----------------
Net Loss (635,441) (511,983)
Preferred Stock Dividends
-- Imputed - (157,560)
----------------- ------------------
Net Loss Available to Common
Shareholders $ (635,441) $ (669,543)
================= ================
Net Loss Per Common Share
(Basic and Diluted): $ (0.45) $ (0.69)
================= =================
Weighted Average Shares
Outstanding 1,411,614 967,700
================ =================
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PREMIER CONCEPTS, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JULY 30, 2000 AND AUGUST 1, 1999
(UNAUDITED)
Six Months Ended Six Months Ended
July 30, 2000 August 1, 1999
--------------- -----------------
<S> <C> <C>
Cash Flows From Operating
Activities:
Net Loss $ (635,441) $ (511,983)
Adjustments to reconcile net
loss to net cash from
operating activities:
Amortization of warrants issued
for services 4,450 8,100
Depreciation and amortization 238,605 248,374
Changes in operating assets and
liabilities:
(Increase) decrease in:
Merchandise inventories 45,996 132,105
Other assets 9,615 (39,100)
Increase (decrease) in:
Accounts payable and accrued
liabilities (103,409) (110,149)
Other liabilities 7,613 26,170
---------------- ----------------
Net cash used by
operating activities (432,571) (246,483)
Cash Flows From Investing Activities:
Capital expenditures for property
and equipment (141,664) (31,203)
Capital expenditures for
development of website (9,608) (85,950)
---------------- ----------------
Net cash used by investing
activities (151,272) (117,153)
Cash Flows From Financing Activities:
Proceeds from exercise of options
and warrants 724,970 -
Proceeds from sales of warrants 11,847 -
Increase in restricted cash from
exercise of options and warrants,
and sale of warrants (741,554) -
Decrease in restricted cash for
capital expenditures and working
capital 370,000 -
Deferred offering costs - (14,000)
Proceeds from issuance of common
stock - 220,769
Proceeds from issuance of preferred
stock - 279,231
Issuance of note payable 30,538 12,000
Payments on notes payable (47,650) (141,200)
-------------- ---------------
Net cash provided by
financing activities 348,151 356,800
--------------- ---------------
Decrease in Cash and Cash
Equivalents (235,692) (6,836)
Cash & Cash Equivalents,
beginning of period 357,653 221,273
--------------- ----------------
Cash & Cash Equivalents,
end of period $ 121,961 $ 214,437
=============== ================
Supplemental Schedule of Cash
Flow Information:
Cash paid for interest $ 23,898 $ 25,002
=============== ================
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS
July 30, 2000
Note 1. Commitments and Contingencies
------- -----------------------------
LITIGATION. Premier Concepts 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 Premier's financial position or results of
operations. (See PART II. OTHER INFORMATION--Item 1. Legal Proceedings.)
Note 2. Seasonality and Quarterly Fluctuations
------- --------------------------------------
Our faux jewelry chain, operating under the trade names Impostors,
Elegant Pretenders and Joli Joli, historically has realized lower sales during
the first three quarters which has resulted in incurring operating losses
during those quarters. To this end, we have generated an operating loss
during the six months ended July 30, 2000 of $633,699, as compared to an
operating loss of $496,445 for the six months ended August 1, 1999.
Our retail business is highly seasonal with our mall locations generating
approximately 20% of revenues during the December holiday season. Our 10
tourist locations experience fluctuations, based upon such factors as
seasonality, economic conditions and other factors affecting tourism in their
particular locations.
Note 3. Proposed Merger:
------- ----------------
Premier Concepts has executed an Agreement and Plan of Merger with
AmazeScape.com, Inc. The pending merger is subject to stockholder approval.
The Merger Agreement was initially executed in February 2000. Since that time,
there has been a decline in the interest of the financial markets in the
Internet portal business such as the one operated by AmazeScape. Recognizing
this condition, the parties have begun preliminary discussions regarding
possible modifications to the terms of the merger and other alternative
transactions. However, as of the date of this report, the Merger Agreement is
still in full force and effect.
<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 30, 2000 COMPARED TO JANUARY 30, 2000
At July 30, 2000 our operating cash balance of $121,961 was approximately
66% less than the cash balance of $357,653 at January 30, 2000.
During the six months ended July 30, 2000, merchandise inventories
decreased $45,996, or approximately 3%, representing the normal reduction of
inventories during the slower summer retail season. Merchandise inventories
are expected to increase during the third and fourth quarters in preparation
of the 2000 holiday shopping season.
Prepaid expenses and other current assets, which primarily includes
prepaid operating expenses and accounts receivable, decreased slightly by
approximately $19,000. Included in other current assets is a receivable from
AmazeScape for costs incurred in connection with the proposed merger. Under
the terms of the merger agreement, these costs are to be paid by AmazeScape as
they come due. At July 30, 2000 the balance of the receivable had been
reduced by approximately $57,000 from $155,000 at January 30, 2000 to $98,000
at July 30, 2000. These costs primarily include legal and accounting fees in
connection with the proposed merger.
Also included in prepaid expenses and other current assets is
approximately $12,600 representing the remaining imputed value of a warrant to
purchase 25,000 shares of common stock at $.875 per share associated with a
two year extension of a Management Services Agreement. The agreement provides
for certain consulting services including arrangement of possible debt and
equity financing, as well as strategic, operational and investment banking
advice. On November 1, 1999 the Management Services Agreement was extended an
additional two years through December 2002. These costs are being amortized
as professional services over the life of the extended agreement.
As a result of the foregoing, current assets, net of restricted cash as
discussed below, decreased by $300,906 from $2,404,137 at January 30, 2000 to
$2,103,231 at July 30, 2000.
For the six months ended July 30, 2000, accounts payable and accrued
expenses decreased by $103,408, or approximately 6%, which decrease is
attributed primarily to the related decrease in merchandise inventory.
Accounts payable and accrued expenses primarily include amounts payable to
merchandise vendors and other suppliers of products and services used in the
ordinary course of business.
Notes payable, all maturing within one year, decreased slightly by
approximately $17,100. This decrease is the result of regularly scheduled
payments made of $47,650. In March 2000, a short-term note in the amount of
$17,023 was issued to finance a portion of our commercial liability insurance
package. The note bears interest at 11%, requires monthly principal and
interest payments of $1,979, and matures on November 28, 2000. In July 2000,
a short-term note in the amount of $13,515 was issued to finance a portion of
our directors' and officers' liability insurance package. The note bears
interest at 12.5%, requires monthly principal and interest payments of $1,817,
and matures in March 2001.
Included in notes payable is a bank note with a principal balance of
$398,000 at July 30, 2000. This note requires monthly principal payments of
$1,000 plus accrued interest at the Bank's prime lending rate plus 1.5%. A
one time principal payment of $37,000 was made in December 1999. The note
matured on June 20, 2000, and was extended to October 5, 2000, under
essentially the same terms. We are in discussions with the Bank to renew the
note beyond its October 2000 maturity.
Also included in notes payable is approximately $18,000 representing the
balance of a note payable to a contractor relating to the construction of a
store in Palisades Center in West Nyack, New York in 1998. This store was
closed in January 2000 due to poor performance. The note requires monthly
installments of $5,000 including principal and interest at 10%. The note
matures in November 2000.
As a result of the foregoing, current liabilities decreased $120,520 from
$2,173,650 at January 30, 2000, to $2,053,130 at July 30, 2000. Working
capital, net of restricted cash as discussed below, decreased $180,386 from
$230,487 at January 30, 2000 to $50,101 at July 30, 2000.
During the six months ended July 30, 2000 we invested $141,664 in
property and equipment. Approximately $98,000 was invested in development,
design and construction for our new store at the Aladdin Hotel and Casino in
Las Vegas, Nevada. The new store, operating under the trade name "Joli-Joli"
opened for business on August 17, 2000. In addition, during the six months
ended July 30, 2000, we invested approximately $11,000 to remodel our
Impostors store at Union Station in Washington D.C., which is expected to be
completed during the third quarter. Also during the six months ended July 30,
2000 we invested approximately $17,500 to upgrade our accounting software and
systems at our corporate offices in Aurora, Colorado. This compares with
approximately $31,200 invested in property and equipment for the six months
ended August 1, 1999, which consisted primarily of furniture and equipment
improvements at our corporate offices.
Based on the foregoing, property and equipment, net of accumulated
depreciation, increased $82,941, from $2,190,331 at January 30, 2000, to
$2,107,390 at July 30, 2000.
In October 1996, we developed and launched our first e-commerce website
"impostors.com" which provided our initial Internet presence. While the
website had the capability to generate sales of our product, we realized only
modest revenue generated directly from the website. In July 1999, we started
the process of developing a new e-commerce platform "premierjewelry.com" from
which we showcase existing and new product concepts. As of July 30, 2000, we
had invested $140,666 in the development of the new "premierjewelry.com"
website, of which approximately $9,600 was invested during the six months
ended July 30, 2000. The new site was launched on May 30, 2000. The
investment is being amortized over three years, and at July 30, 2000, we had
amortized $7,800 of this investment.
Our trademark assets, representing the goodwill of the Impostors
trademark and other intellectual property, was acquired as part of the
acquisition of Impostors in 1994. This asset is being amortized over a 10-
year period, and had an amortized book value of $44,433 at July 30, 2000.
Other non-current assets primarily include security deposits made to
landlords and utility service providers. The balance of $76,161 at July 30,
2000 is relatively unchanged from the January 30, 2000 balance of $71,007.
Deferred rent increased $7,613 from $229,234 at January 30, 2000, to
$236,847 at July 30, 2000, 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.
On November 12, 1999, 228,571 shares of common stock were sold to an
investor in a private placement for $200,000. The proceeds from the sale, and
the shares of common stock, are being held in escrow. The escrowed funds are
to be used as partial collateral to facilitate a debt financing. The funds
and the shares of common stock will be released from the escrow account upon
certain terms and conditions, including the approval of the Board of Directors
and consent of the lender in the proposed debt financing. In the event the
merger transaction described above is not consummated prior to October 31,
2000, at the investor's option the $200,000 will be released from escrow and
disbursed to the investor, and the 228,571 shares of common stock will be
returned and cancelled. These escrowed funds are classified as restricted
cash at July 30, 2000, and the escrowed shares of common stock are classified
as redeemable common stock.
During the six months ended July 30, 2000 certain employees purchased
30,000 shares of common stock through the exercise of stock options awarded
from our Incentive Stock Option Plan. The total proceeds from the exercise of
these options were $69,375.
Also during the six months ended July 30, 2000, 35,462 shares of common
stock were issued from exercises of the public "A" warrants that were issued
as part of the public offering completed in April 1997. Two "A" warrants are
exercisable to purchase one share of common stock at an exercise price of
$10.00 per share. In June 2000, the expiration date for these warrants was
extended to October 27, 2000. The total proceeds received from the exercise
of these warrants were $354,620.
Also during the six months ended April 30, 2000, 39,950 shares of common
stock were issued from the exercise of other options and warrants. Of this,
29,450 share of common stock were issued from the exercise of options held by
the representatives of the underwriter of our public offering completed in
April 1997. These options are exercisable to purchase one share of common
stock at an exercise price of $9.00 per share, and expire in April 2002. The
total proceeds from exercise of these options were $265,050. At July 30,
2000, there remained outstanding 25,550 representative options. In addition,
8,000 shares were issued to an investor from the exercise of warrants acquired
from the June 1999 private placement of convertible preferred stock. These
warrants are exercisable to purchase one share of common stock at an exercise
price of $4.10, and expire in June 2002. The total proceeds received from
exercise of these 8,000 warrants were $32,800. At July 30, 2000, 72,000 of
the warrants issued in connection with the June 1999 private placement
remained outstanding. Additionally, 2,500 shares were issued to an investor
from the exercise of warrants acquired in March 1999 as compensation for
providing services under a Management Services Agreement. These warrants are
exercisable to purchase one share of common stock at an exercise price of
$1.25 per share, and expire in June 2002. The total proceeds received from
exercise of these warrants were $3,125. At July 30, 2000, 22,500 of these
warrants were outstanding.
During the six months ended July 30, 2000, the representatives of the
underwriter of our public offering completed in April 1997, exercised options
to purchase 32,908 "A" warrants, the terms of which are described above. The
options are exercisable to purchase one "A" warrant at an exercise price of
$.36 per warrant. The total proceeds received from the exercise of these
options to purchase warrants were $11,487. At July 30, 2000, 22,092 options
to purchase "A" warrants were outstanding.
The total proceeds received from the exercise of options and warrants was
$736,817 for the six months ended July 30, 2000. Under the terms of the
Agreement and Plan of Merger with AmazeScape, we have placed into escrow all
of the cash proceeds from the exercise of options or warrants received after
November 17, 1999. In July 2000, by agreements with AmazeScape, $370,000 was
released from the escrow account. Of these funds released, Premier Concepts
received $300,000, of which $100,000 was designated to pay construction costs
for our new store at the Aladdin Hotel and Casino as discussed above, with the
remaining $200,000 available as general working capital. By agreement,
AmazeScape received $70,000 of the released funds, which were used to pay for
certain professional fees incurred in association with the proposed merger.
Premier Concepts was also entitled to receive an additional $50,000 of these
funds in August 2000, and at July 30, 2000 is classified as restricted cash.
In the event the merger transaction is consummated, the remaining
escrowed funds will be released to AmazeScape. In the event the merger
transaction is not consummated, the remaining funds will be released to
Premier Concepts. These escrowed funds with a balance of $474,457 at July 30,
2000, net of fees and interest earned, are classified as restricted cash.
As a result of the foregoing, common stock increased $211, from $2,656
(1,328,207 shares outstanding) at January 30, 2000, to $2,867 (1,433,619
shares outstanding) at July 30, 2000. Additional paid in capital increased
$736,606 from $6,298,084 at January 30, 2000 to $7,034,690 at July 30, 2000.
As a result of the net loss for the six months ended July 30, 2000 of
$635,441, the accumulated deficit increased from $3,753,555 at January 30,
2000 to $4,388,996 at July 30, 2000. Considering the net loss and the equity
transactions as discussed above, total stockholders' equity increased $101,376
from $2,547,185 at January 30, 2000 to $2,648,561 at July 30, 2000.
Net cash used by operating activities was $432,571 for the six months
ended July 30, 2000 compared with $246,483 for the six months ended August 1,
1999. The change of approximately $185,000 primarily represents the cash
effect of the increase in the net loss for the six months and the decreases in
merchandise inventories as discussed above.
Net cash used by investing activities was $151,272 for the six months
ended July 30, 2000 compared with $117,153 for the six months ended August 1,
1999. The change of approximately $34,000 is attributable to our investment
in the new store at the Aladdin Hotel and Casino in Las Vegas, Nevada, all as
discussed above, and our investment in the website during the six months ended
August 1, 1999, and July 30, 2000.
Net cash provided by financing activities for the six months ended July
30, 2000 was $348,151, and primarily represents the release of $370,000 from
restricted cash being held in escrow as discussed above, and the issuance of
notes payable and regularly scheduled payments on our notes payable. This
compares to net cash provided by financing activities of $356,800 for the six
months ended August 1, 1999, which represented $211,544 in proceeds (net of
$9,225 of costs of the offering), from a private placement of common stock in
March 1999, and a $112,000 principal reduction of our bank note, as well as
regularly scheduled payments on notes payable.
The foregoing resulted in a decrease of $235,692 in our operating cash
position from $357,653 at January 30, 2000 to $121,961 at July 30, 2000. This
compares with a decrease in cash of $6,836 from $221,273 at January 31, 1999
to $214,437 at August 1, 1999.
As of the date of this report, 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 from the exercises of options and
warrants is restricted under the terms of the merger agreement. Upon
completion of the merger, the current operations of Premier Concepts will be
entitled to a portion of these funds sufficient to meet our short-term capital
requirements. As discussed above, if the merger is not consummated, Premier
Concepts will be entitled to all such funds.
Also, as discussed above, in November 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, 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 July 30, 2000 Compared to Three
Months Ended August 1, 1999
Set forth below is selected summary financial data derived from the
financial statements and financial records.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
July 30, 2000 August 1, 1999
<S> <C> <C>
Statements of Operations Data:
Total Revenues $ 2,570,866 $ 2,773,837
Operating loss (339,310) (263,264)
Net loss (338,526) (272,795)
Net loss available to common
shareholders (338,526) (430,355)
Net loss per common share (.24) (.40)
Weighted average shares outstanding 1,433,619 1,069,128
Statistical Data:
Store revenues $ 2,566,617 $ 2,768,265
Store gross margin 1,781,711 1,925,968
Store operating expenses 1,702,305 1,765,947
Store operating profit 79,406 160,023
Corporate overhead operating expenses 409,484 421,644
Gross margin percentage 69.3% 69.4%
Comparable same store sales (32 stores) 2,504,859 2,451,127
Comparable same store sales growth 2.2% -1.7%
</TABLE>
Total revenues for the three months ended July 30, 2000 were $2,570,866
as compared to $2,773,837 for the comparable period ended August 1, 1999, a
decrease of $202,971, or 7%. However, comparable same store sales were
$2,504,859 for the three months ended July 30, 2000 as compared to $2,451,127
for the comparable period ended August 1, 1999, an increase of approximately
$53,700, or 2.2%. Non-same store sales of approximately $317,000 and $61,700
for the three months ended August 1, 1999, and July 30, 2000, respectively, is
attributable to three stores closed during the year ended January 30, 2000,
and one store closed in June 2000:
Paradise Valley, Phoenix, AZ -- closed December 26, 1999 upon expiration
of lease;
Pentagon City, Arlington, VA -- closed January 25, 2000 upon expiration
of lease;
Palisades Center, West Nyack, NY --closed January 25, 2000 due to poor
performance; and,
Tyson's Corner, McLean, VA -- closed June 27, 2000 upon expiration of
lease.
Also included in total revenues are approximately $4,250 and $5,570 for
the quarters ended July 30, 2000 and August 1, 1999, respectively. These
revenues generally represent sales generated from our website, catalog and
sales to wholesale customers.
For the three months ended July 30, 2000, cost of goods sold was $788,327
and the gross margin was $1,782,539, or 69.3%. For the three months ended
August 1, 1999, cost of goods sold was $848,736 and the gross margin was
$1,925,101, or 69.4%. Included in cost of goods sold are freight charges
incurred in the acquisition of our merchandise from vendors. Total freight
charges included in cost of goods sold was $25,593, or 1.0% of total revenue
for the quarter ended July 30, 2000. This compares with freight charges of
$20,699, or 0.75% of total revenue for the quarter ended August 1, 1999.
Total operating expenses were $2,121,849 for the quarter ended July 30,
2000, compared to $2,188,365 for the quarter ended August 1, 1999, or 82.5%
and 78.9% of revenues, respectively. The majority of these expenses were
comprised of store and corporate office personnel expenses, which amounted to
$922,726, or 35.9% of revenues, and $932,532, or 33.6% of revenues for the
quarters ended July 30, 2000, and August 1, 1999, respectively, a decrease of
approximately $9,800. This decrease is attributed primarily to operating
three fewer stores during the quarter ended July 30, 2000, than during the
quarter ended August 1, 1999. However, the increase in the relative
percentage to sales is the result of a store staffing increase initiated
during the second quarter of fiscal year ended January 30, 2000, to provide
greater store security as well as increased floor coverage during store
operating hours to enhance customer service. We expect that store personnel
expenses will decrease as a percentage of revenue as our operational and sales
training programs are fully implemented during the third quarter. Total
personnel costs for our corporate personnel remained unchanged from $225,257
to $225,243 for the quarters ended August 1, 1999, and July 30, 2000,
respectively.
Occupancy costs of $688,322, and $717,380, are included in total
operating expenses for the three months ended July 30, 2000 and August 1,
1999, respectively. The decrease of approximately $29,000 represents
operating three fewer stores during the quarter ended July 30, 2000 compared
to the quarter ended August 1, 1999.
Other selling, general and administrative expenses of $386,075 and
$414,217 are included in total operating expenses for the quarters ended July
30, 2000 and August 1, 1999, respectively, representing a decrease of
approximately $28,100. Following is a comparative summary of costs included
in other selling, general and administrative expenses, and their relationship
to total revenues for the periods:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
July 30, 2000 August 1, 1999
------------------- ------------------
<S> <C> <C> <C> <C>
Advertising and promotion $ 51,332 2.0% $ 55,756 2.0%
Banking fees 61,392 2.4% 62,991 2.3%
Merchandise distribution 40,284 1.6% 34,638 1.2%
Repairs and rentals 15,274 0.6% 14,423 0.5%
Property insurance, fees,
and taxes 35,123 1.4% 25,746 0.9%
Professional and service
fees 30,328 1.2% 60,482 2.2%
Supplies and product
packaging 49,380 1.9% 49,566 1.8%
Telephone and utilities 46,288 1.8% 58,261 2.1%
Travel 41,564 1.6% 40,047 1.4%
Other 15,110 0.6% 12,307 0.4%
----------- -----------
$ 386,075 15.0% $414,216 14.9%
=========== ===========
</TABLE>
Included in total operating expenses are corporate overhead expenses of
$409,484, or 15.9% of total revenues, for the three months ended July 30,
2000, as compared to $421,644, or 15.2% of total revenues, for the three
months ended August 1, 1999, representing a slight decrease of approximately
$12,200 for the comparable period. 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 $124,726 and $124,236 for the quarters ended
July 30, 2000 and August 1, 1999, respectively. Included in depreciation and
amortization for the quarter ended July 30, 2000 is $7,800 of amortization of
our website investment. Total depreciation expense relating to our property
and equipment was $113,827 and $121,136 for the quarters ended July 30, 2000,
and August 1, 1999, a decrease of approximately $7,300 and is attributed to
the three stores closed during the year ended January 30, 2000, as discussed
above.
As a result of the foregoing, the loss from operations for the quarter
ended July 30, 2000 was $339,310, as compared with a loss from operations for
the quarter ended August 1, 1999 of $263,264, an increase of $75,798.
Interest expense was $12,062 and $15,417 for the quarters ended July 30,
2000, and August 1, 1999, respectively, and is comprised primarily of interest
charged on the Bank Note as discussed above. Interest income was $7,886 and
$2,285 for the quarters ended July 30, and August 1, 1999, respectively, and
results from the daily investing of available cash balances.
Other income was $4,960 and $3,601 for the quarters ended July 30, 2000,
and August 1, 1999, 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 2001, and are renewable at our option.
On June 30, 1999 we issued 223,385 shares of Series A Convertible
Preferred Stock in a private placement for $279,231. Each share of preferred
stock was convertible to a share of common stock at $1.25 per share. On the
date of issuance, 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 of the underlying common stock on
the issuance date, was recorded as an imputed dividend on June 30, 1999. In
addition, the investor also received a warrant to purchase 80,000 shares of
common stock at an exercise price of $4.10 per share. The imputed value of the
warrant was estimated to be $73,791, and was also recorded as a dividend at
June 30, 1999.
Based on the foregoing, the net loss for the three months ended July 30,
2000 was $338,526, which translates to a net loss per share of $(0.24) based
on 1,433,619 weighted average shares outstanding. This compares with a net
loss for the three months ended August 1, 1999 of $430,355, or $(0.40) per
share, based on 1,069,128 weighted average shares outstanding as of that date.
Results of Operations - Six Months Ended July 30, 2000 Compared to Six Months
Ended August 1, 1999
Set forth below is selected summary financial data derived from the
financial statements and financial records.
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
July 30, 2000 August 1, 1999
---------------- -----------------
<S> <C> <C>
Statements of Operations Data:
Total Revenues $ 5,218,443 $ 5,588,935
Operating loss (633,699) (496,445)
Net loss (635,441) (511,983)
Net loss available to common
shareholders (635,441) (669,543)
Net loss per common share (.45) (.69)
Weighted average shares outstanding 1,411,614 967,700
Statistical Data:
Store revenues $ 5,211,616 $ 5,572,262
Store gross margin 3,613,655 3,874,322
Store operating expenses 3,418,316 3,527,207
Store operating profit 195,339 347,115
Corporate overhead operating expenses 818,541 843,088
Gross margin percentage 69.2% 69.3%
Comparable same store sales (32 stores) 5,059,984 4,941,771
Comparable same store sales growth 2.4% -2.7%
</TABLE>
Total revenues for the six months ended July 30, 2000 were $5,218,443 as
compared to $5,588,935 for the comparable period ended August 1, 1999, a
decrease of $370,492, or 7%. However, comparable same store sales were
$5,059,984 for the six months ended July 30, 2000 as compared to $4,941,771
for the comparable period ended August 1, 1999, an increase of approximately
$118,200, or 2.4%. Non-same store sales of approximately $630,500 and
$151,600 for the six months ended August 1, 1999, and July 30, 2000,
respectively, is attributable to three stores closed during the year ended
January 30, 2000, and one store closed in June 2000:
Paradise Valley, Phoenix, AZ -- closed December 26, 1999 upon expiration
of lease;
Pentagon City, Arlington, VA -- closed January 25, 2000 upon expiration
of lease;
Palisades Center, West Nyack, NY -- closed January 25, 2000 due to poor
performance; and,
Tyson's Corner, McLean, VA -- closed June 27, 2000 upon expiration of
lease.
Also included in total revenues are approximately $6,800 and $16.700 for
the six months ended July 30, 2000 and August 1, 1999, respectively. These
revenues generally represent sales generated from our website, catalog and
sales to wholesale customers.
For the six months ended July 30, 2000, cost of goods sold was $1,604,997
and the gross margin was $3,613,446, or 69.2%. For the six months ended
August 1, 1999, cost of goods sold was $1,713,771 and the gross margin was
$3,875,164, or 69.3%. Included in cost of goods sold are freight charges
incurred in the acquisition of our merchandise from vendors. Total freight
charges included in cost of goods sold was $51,981, or 1.0% of total revenue
for the six months ended July 30, 2000. This compares with freight charges of
$41,674, or 0.75% of total revenue for the six months ended August 1, 1999.
Total operating expenses were $4,247,145 for the six months ended July
30, 2000, compared to $4,371,609 for the six months ended August 1, 1999, or
81.4% and 78.2% of revenues, respectively. The majority of these expenses
were comprised of store and corporate office personnel expenses, which
amounted to $1,857,165, or 35.6% of revenues, and $1,864,032, or 33.4% of
revenues for the six months ended July 30, 2000, and August 1, 1999,
respectively, a decrease of approximately $7,000. This decrease is attributed
primarily to operating three fewer stores during the six months ended July 30,
2000, than during the six months ended August 1, 1999. However, the increase
in the relative percentage to sales is the result of a store staffing increase
initiated during the second quarter of fiscal year ended January 30, 2000, to
provide greater store security as well as increased floor coverage during
store operating hours to enhance customer service. We expect that store
personnel expenses will decrease as a percentage of revenue as our operational
and sales training programs are fully implemented during the third quarter.
Total personnel costs for our corporate personnel remained relatively
unchanged from $442,148 to $445,489 for the six months ended August 1, 1999,
and July 30, 2000, respectively.
Occupancy costs of $1,371,129, and $1,433,704, are included in total
operating expenses for the six months ended July 30, 2000 and August 1, 1999,
respectively. The decrease of approximately $62,600 represents operating
three fewer stores during the six months ended July 30, 2000 compared to the
six months ended August 1, 1999.
Other selling, general and administrative expenses of $780,246 and
$825,499 are included in total operating expenses for the six months ended
July 30, 2000 and August 1, 1999, respectively, representing a decrease of
approximately $45,300. Following is a comparative summary of costs included
in other selling, general and administrative expenses, and their relationship
to total revenues for the periods:
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
July 30, 2000 August 1, 1999
------------------- ------------------
<S> <C> <C> <C> <C>
Advertising and promotion $ 101,329 1.9% $ 102,406 1.8%
Banking fees 122,255 2.3% 123,175 2.2%
Merchandise distribution 82,051 1.6% 64,125 1.1%
Repairs and rentals 33,110 0.6% 33,758 0.6%
Property insurance, fees,
and taxes 66,828 1.3% 38,738 0.7%
Professional and service
fees 69,034 1.3% 121,995 2.2%
Supplies and product
packaging 107,803 2.1% 106,650 1.9%
Telephone and utilities 96,686 1.9% 113,424 2.0%
Travel 76,417 1.5% 92,096 1.6%
Other 24,733 0.5% 29,131 0.5%
---------- -----------
$ 780,246 14.9% $ 825,496 14.8%
========== ============
</TABLE>
Included in total operating expenses are corporate overhead expenses of
$818,541, or 15.7% of total revenues, for the six months ended July 30, 2000,
as compared to $843,088, or 15.1% of total revenues, for the six months ended
August 1, 1999, representing a decrease of approximately $24,600 for the
comparable period. 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 $238,605 and $248,374 for the six months ended
July 30, 2000 and August 1, 1999, respectively. Included in depreciation and
amortization for the six months ended July 30, 2000 is $7,800 of amortization
of our website investment. Total depreciation expense relating to our
property and equipment was $224,605 and $242,174 for the six months ended July
30, 2000, and August 1, 1999, respectively, a decrease of approximately
$17,600 and is attributed to the three stores closed during the year ended
January 30, 2000, as discussed above.
As a result of the foregoing, the loss from operations for the six months
ended July 30, 2000 was $633,699, as compared with a loss from operations for
the six months ended August 1, 1999 of $496,445, an increase of $137,004.
Interest expense was $23,967 and $29,497 for the six months ended July
30, 2000, and August 1, 1999, respectively, and is comprised primarily of
interest charged on the Bank Note as discussed above. Interest income was
$12,265 and $5,649 for the six months ended July 30, and August 1, 1999,
respectively, and results from the daily investing of available cash balances.
Other income was $9,960 and $8,310 for the six months ended July 30,
2000, and August 1, 1999, 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 2001, and are renewable at our option.
On June 30, 1999 we issued 223,385 shares of Series A Convertible
Preferred Stock in a private placement for $279,231. Each share of preferred
stock was convertible to a share of common stock at $1.25 per share. On the
date of issuance, 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 of the underlying common stock on
the issuance date, was recorded as an imputed dividend on June 30, 1999. In
addition, the investor also received a warrant to purchase 80,000 shares of
common stock at an exercise price of $4.10 per share. The imputed value of the
warrant was estimated to be $73,791, and was also recorded as a dividend at
June 30, 1999.
Based on the foregoing, the net loss for the six months ended July 30,
2000 was $635,441, which translates to a net loss per share of $(0.45) based
on 1,411,614 weighted average shares outstanding. This compares with a net
loss for the six months ended August 1, 1999 of $669,543, or $(0.69) per
share, based on 967,700 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 of the
Company.
Year 2000
The Year 2000 problem exists because many computer programs, embedded
systems and components were designed to refer to a year by the last two digits
of the year, such as "99" for "1999." We believe that our activities to
mitigate potential Year 2000 problems have been successful. However, there
are no assurances that the Year 2000 problems incurred by our vendors will not
have a material adverse effect on our business, financial condition or results
of operations.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time we are involved in commercial disputes in the ordinary
course of business with vendors, landlords and other parties, which on
occasion become the subject matter of litigation. At the present time, except
as set forth below, we are not a party to any legal proceedings outside of the
ordinary course of business or which would have a material adverse impact upon
our operations or properties.
We have 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, and asserts claims against us for
rent and other sums due under the commercial lease for its retail store
located in the Palisades Center in West Nyack, New York in an aggregate amount
of approximately $140,000. We have denied liability, and on July 27, 1999 we
filed a counter claim against the landlord asserting breach of contract, false
representation and fraud in inducing us to enter into the lease. We are
seeking damages in excess of $300,000. We intend to vigorously defend the
action and prosecute our counterclaims. Based upon our assessment of the facts
and consultations with legal counsel, we believe 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 July 30, 2000.
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 18, 2000 By: /s/ Sissel Eckenhausen
------------------ ----------------------------
Sissel Eckenhausen, President
Dated: September 18, 2000 By: /s/ Todd Huss
------------------- ------------------------------
Todd Huss, Chief Financial Advisor,
Principal Accounting Officer
