UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1996
Commission file number 0-23072
DUNN'S SUPPLY STORE, INC.
(Exact name of small business issuer as specified in its
charter)
Tennessee 62-0991139
(State of other jurisdiction of (I.R.S.
employer
incorporation or organization) identification
number)
1 Madison Avenue, Grand Junction, Tennessee 38039
(address of principal executive offices)
Registrant's telephone number, including area code: (901)
764-6901
Check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.
Yes X No
The registrant had 4,360,388 shares of its $.01 par value
common stock issued and outstanding as of August 31, 1996.
Transitional Small Business Disclosure Format (check one):
Yes No X
Total number of sequentially numbered pages in this Report: 20
TABLE OF CONTENTS
Page No.
PART I - FINANCIAL INFORMATION
3
Item 1. Financial Statements:
4
Balance Sheets-
August 31, 1996 and May 31, 1996
4
Statement of Operations-
Three months ended August 31, 1996 and 1995
6
Statement of Cash Flows-
Three months ended August 31, 1996 and 1995
7
Notes to Financial Statements as of
August 31, 1996
8
Item 2. Management's Discussion and Analysis of
Financial Condition
9
A. Financial Condition
9
B. Results of Operations
14
PART II - OTHER INFORMATION
17
Item 1. Legal Proceedings
17
Item 2. Changes in Securities
17
Item 3. Defaults Upon Senior Securities
17
Item 4. Submission of Matters to a Vote of Securities
Holders 17
Item 5. Other Information
18
Item 6. Exhibits and Reports on Form 8-K
18
Signature
20
PART I - FINANCIAL INFORMATION
DUNN'S SUPPLY STORE, INC.
The consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the
rules
and regulations of the Securities and Exchange Commission.
Certain
information and footnote disclosures normally included in
financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations: however, the Company believes that
the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, the financial
statements
include all adjustments necessary to present fairly the
financial
position of the Company as of August 31, 1996 and May 31, 1996,
the
results of its operations for the three months ended August 31,
1996, and August 31, 1995, and its statement of cash flows for
the
three months ended August 31, 1996 and August 31, 1995. It is
suggested that these financial statements be read in conjunction
with financial statements and the notes thereto included in the
Company's Annual Report for the fiscal year ended May 31, 1996
on
Form 10-KSB. These financial statements reflect all adjustments
which, in the opinion of management, are necessary for a fair
presentation of the interim periods presented.
<TABLE>
Part I. Financial Information
Item 1. Financial Statements
DUNN'S SUPPLY STORE, INC.
Balance Sheet as of
August 31, 1996 and May 31, 1996
(in thousands)
August 31, 1996 May 31,
1996
Assets
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents294Accounts
Receivable-Trade-Net78104Accounts Receivable-Officer &
Employees9494Allowance for Bad Debt(91)(91)Inventories826956Prepaid
Expenses3740Prepaid Catalog Cost234289Total Current Assets1,2071,396
Property and Equipment1,5751,573Less Depreciation and
Amortization(1,196)(1,185)Net Property and Equipment379388 Other
Assets:Restricted Cash300300Prepaid Loan Costs00Miscellaneous
Assets00Total Other Assets300300Total Assets1,8862,084</TABLE>
<TABLE>
Part I. Financial Information
Item 1. Financial Statements (continued)
DUNN'S SUPPLY STORE, INC.
Balance Sheet as of
August 31, 1996 and May 31, 1996
(in thousands)
August 31, 1996 May 31, 1996
Liabilities and Stockholders' Equity
<S> <C> <C>
Current Liabilities:Accounts Payable1,4571,268Accrued
Expenses6098Other Current Liabilities4649Current Maturities of Notes
Payable673644Total Current Liabilities2,2362,059 Notes Payable Less
Current Maturities585625 Total Liabilities2,8212,684 Stockholders'
EquityCommon Stock4443Additional Paid in Capital3,3903,390Less
Subscription Receivable(300)(300)Accumulated deficit -
5/31/96(3,733)(2,317)Current Year Earnings (Loss)(336)(1,415)Total
Stockholders' Equity(935)(599)Total Liabilities and
Stockholders'Equity1,8862,085</TABLE>
<TABLE>
Part I. Financial Information
Item 1. Financial Statements (continued)
Dunn's Supply Store, Inc.
Statements of Operations
For the Three Months Ended August 31, 1996 and 1995
(in thousands except per share data)
August 31, 1996 August 31, 1995
(Unaudited)
(Unaudited)
<S> <C> <C>
Revenues1,4312,894Less Cost of Sales8841,807Gross
Profit5471,087Operation Expenses: Catalog Costs275537 Operation
Expenses550719 Interest Expense4555 Depreciation and
Amortization1216Total Operating Expense8821,327Income Taxes00Net
Income (Loss)(335)(240)Primary Income (Loss) Per Share: Net Income
(Loss) ($0.08)($0.05)Weighted Shares
Outstanding4,360,3884,368,402</TABLE>
<TABLE>
Part I. Financial Information
Item 1. Financial Statements (continued)
DUNN'S SUPPLY STORE, INC.
Statements of Cash Flow
For the Three Months Ended August 31, 1996 and 1995
(in thousands)
August 31, 1996
August 31, 1995
(Unaudited)
(Unaudited)
<S> <C> <C>
Net Income (Loss)(335)(240)Adjustments to Reconcile Net Income to Net
CashProvided (Used) by Operating ActivitiesDepreciation and
Amortization1216(Increase) Decrease in Accounts
Receivable27(53)(Increase) Decrease in Inventories130(236)(Increase)
Decrease in Prepaid Assets57(307)(Decrease) Increase in Accounts
Payable189813(Decrease) Increase in Other Current
Liabilities(6)(14)Increase in Deferred Revenue30Increase in Accrued
Expenses(38)7Net Cash (Used by Operating Activities)39(28)Cash Flow
From Investing Activities(Increase) in Fixed Assets(3)(4)(Increase)
Decrease in Other Assets018Net Cash Used by Investment
Activities(3)14 Cash Flow From Financing Activities(Decrease) in
Notes Payable(11)(36)Issuance of Restricted Stock for Services038Net
Cash Provided by Financing Activities(11)2Net Increase (Decrease) in
Cash252Cash at Beginning of Period412Cash at End of Period2914</TALBE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AUGUST 31, 1996
Summary of Significant Accounting Policies
Dunn's Supply Store, Inc. (the "Company"), a Tennessee
corporation, is a direct market retailer, primarily focusing on the
sale of equipment, apparel, firearms, and services to those engaged
in hunting sports. Most of its merchandise is sold through mail-
order catalogs that are published in various seasonal formats.
Sportsmen interested in field trialing, dog training, shotguns,
rifles, wild-fowling, big game, and upland birds are typical
customers of the Company. The Company is headquartered in Grand
Junction, Tennessee (located 40 miles east of Memphis, Tennessee),
where its executive offices, computer center, and warehousing
facilities are located. The Company also operates a retail store
and the catalog fulfillment center opposite its executive offices
in Grand Junction, Tennessee. The Company also provides packaged
hunting trips, and a full service gunsmithing shop. Substantially
all sales are on a cash or credit card basis.
The Company was incorporated under the laws of the State of
Tennessee on December 29, 1976. The Company amended and restated
its Articles of Incorporation and Bylaws, effective as of March 25,
1993.
The Company acquired all the outstanding stock of Paul Jaeger,
Inc. ("Jaeger"), in accordance with the provisions of the Company's
plan of reorganization effective February 28, 1993. The
transaction was accounted for by the pooling of interests method.
During the fiscal years 1995 and 1996, the Company
incorporated three wholly owned subsidiaries: Dunn's Adventure
Travel, Inc. (Adventure Travel); Dunn's Retail Store, Inc. (Retail
Store); and Dunn's Supply Catalog, Inc.
Jaeger sells firearms and accessories and offers gunsmithing
services at the Company's facilities in Grand Junction, Tennessee.
Adventure Travel offers packaged hunting trips, fishing trips, and
non-hunting safaris throughout the world with high-quality
outfitters serving as guides. Jaeger and Adventure Travel products
are advertised for sale in the Company's catalogs. Adventure
Travel and Jaeger add strength to the catalog's focus and provide
the Company with additional customers and the opportunity to
provide additional products for its customers.
The consolidated financial statements reflect the accrual
basis of accounting, which requires recognition of revenues when
earned and expenses when incurred without regard to the exchange of
cash. The accompanying consolidated financial statements include
the accounts of the Company and all subsidiaries.
All significant intercompany transactions and balances have
been eliminated in consolidation.
Inventories are stated at the lower of cost (first-in, first-
out basis) or market.
The Company records investments in land, buildings, machinery
and equipment, and furniture and fixtures at cost. Improvements
are capitalized, while repair and maintenance costs are charged to
operations as incurred. When assets are retired or disposed of,
the related cost and accumulated depreciation are removed from the
accounts and gains or losses are included in operations.
For financial statement purposes, depreciation is provided on
a straight-line basis over the estimated useful lives of the
various assets: buildings and improvements 10-31 years, and
furniture and equipment 3-7 years.
Income taxes are accounted for in accordance with the
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes."
Prepaid catalog costs consist of the cost to produce, print,
and distribute the Company's mail-order catalogs. Such costs are
amortized over the expected sales life of each catalog, not
exceeding 10 months.
Dunn's had a "Phase I Environmental Site Assessment" prepared
in connection with obtaining its term loan from First South Bank.
Based on the site survey and review of regulatory documents the
report concluded "the probability of increasing environmental
impairment due to past usage or current operation is minimal."
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A. FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
The Company's catalog business is highly seasonal in nature,
with 60% of catalog sales typically generated in the final five
months of a calendar year. The Company's catalog business requires
the maintenance of adequate inventory levels and the timely mailing
of catalogs, all of which contain seasonal products, in order to
maximize the Company's sales potential.
At present, many of the Company's inventory and catalog
related purchases require cash payments. Vendors have restricted
their credit terms with the Company because of the losses for
fiscal year 1996 and the shortage of working capital. This limits
Dunn's ability to carry adequate supplies of inventory. Because
of the highly seasonal nature of sales associated with the
Company's catalog business, in which customer orders are
concentrated during the last five months of a calendar year, the
Company needs to build inventory reserves and stimulate demand
through the mailing of catalogs in advance of and during these
months.
As such, the strength of the Company's operating performance,
and hence its profitability, is highly dependent upon its having
the liquidity prior to and during these peak selling periods to
purchase inventory and timely print and mail its catalogs. The
production and distribution of catalogs have been adversely
affected by the working capital shortage because the Company has
been unable to print and mail fall catalogs.
In fiscal years 1993, 1994, and 1995 several events
contributed significantly toward revitalization of the Company's
liquidity and overall financial condition. The first was the
effectiveness of the Company's chapter 11 reorganization,
consummated on February 28, 1993, whereby $1.94 million in
postpetition working capital advances and nearly $2.5 million in
prepetition trade credit were voluntarily converted to Common Stock
in the Company, as more fully described in the Company's
Registration Statement of Form 10-SB, dated December 10, 1993. The
Company's chapter 11 recapitalization enabled the Company to begin
rebuilding inventory reserves, regaining lost customers through
timely catalog distributions, and restoring the confidence of its
vendors. Customer and vendor confidence has been adversely
affected due to the current lack of working capital.
The second important event was the closing in September 1993
of a $1,000,000 term loan facility with First South Bank, which was
80% guaranteed by the Federal Farmers Home Administration. After
payment of closing costs, senior priority debt, and short-term
bridge loans, the remaining approximately $400,000 in loan proceeds
enabled the Company to mail fall and holiday catalogs to its
customers and restock inventories to satisfy the heightened
anticipated demand that would be stimulated by the catalog
mailings. With this infusion, the Company's order fulfillment rate
during the fiscal year ended May 31, 1994 improved to approximately
83% and to 87% for the fiscal year ended May 31, 1995. The
Company's order fulfillment rate for the fiscal year ended May 31,
1996 and the current period declined due to low inventory levels.
The First South Bank term note bears interest at an annual
rate that is 2 3/4% above the prime rate of interest as published
in The Wall Street Journal. Principal and interest payments are
made in equal monthly installments over a seven year period. The
note provides for a prepayment penalty during the first 24 months
after the closing pursuant to which all prepayments in excess of
20% of the outstanding principal balance will cause the Company to
incur a penalty equal to 1% of the amount prepaid. The prepayment
penalty is no longer applicable as the two year period expired in
September 1, 1995. The First South loan is secured by a first
priority security interest in substantially all of the Company's
assets. First South Bank was to retain five percent ($50,000) of
the original loan during the life of the loan as additional
security for repayment, however this was transferred to the
operating account at First South Bank. Also, there are $300,000 in
certificates of deposit held by First South Bank to secure the note
payable.
To supplement the Company's liquidity during its primary
selling season, the Company obtained on November 2, 1994, a
$500,000 loan from its existing long term lender, First South Bank,
collateralized by the Company's working capital assets and
scheduled to mature on November 2, 1995. As a result of this
advance, the Company determined not to refinance its existing term
loan facility with a revolving credit facility, thereby avoiding
substantial loan closing transactional costs. This cash infusion
in November 1994 enabled the Company to bolster inventory levels
for improved profitability. The Company attempted to negotiate an
increase in the note from $500,000 to $750,000 for the 1995 fall
and holiday season. First South Bank declined to increase the note
in part because they were advised by the Farmers Home
Administration that their loan guarantee could be impaired if the
Bank loaned additional funds to Dunn's. The note matured on
November 2, 1995. The note is currently due and its payment will
depend on the ability of the Company to acquire additional equity.
The balance of the note at August 31, 1996 was $480,000.
On August 13, 1996 First South Bank notified the Company that
it was not in compliance with several provisions of the two loans
currently outstanding. Since receiving the letter the Company has
had several meetings with First South Bank, with the bank agreeing
to defer July, August, and September principal if interest during
that period was current. First South Bank currently receives daily
information on receipts and checks written and weekly information
on inventory levels. As of the date of this report, the Company is
considered to be out of compliance with both loans.
As reflected in the consolidated financial statements for the
first quarter of fiscal year ending May 31, 1997 (the "Current
Period Financial Statements"), the Company reported total current
assets of $1,207,000 and total current liabilities of $2,236,000 as
of August 31, 1996, compared with total current assets of
$1,396,000 and total current liabilities of $2,059,000 as of May
31, 1996. Accordingly, the Company's ratio of current assets to
current liabilities decreased in the Current Period from .68 to
.54.
Trade receivables decreased by $56,000 to $78,000 at August
31, 1996. The decrease resulted from a decline in credit card
receivables, which is a direct result of the decline in sales
previously discussed.
Trade accounts receivable - officers and employees and due
from officers and employees remained unchanged at August 31, 1996.
The amounts due from William Roberts Wilson, Jr. remained at
$91,000. Due to the age and uncertainty of collection of Mr.
Wilson's accounts, an allowance for bad debt of $91,000 was
established as of May 31, 1996.
Inventories decreased $130,000 to $826,000 at August 31, 1996.
The decline resulted from the inability of the Company to replenish
inventory as a result of the lack of working capital.
Prepaid catalog costs decreased $55,000 to $234,000 at August
31, 1996. This is due to the decline of catalogs in circulation at
August 31, 1996.
Accounts payable and accrued expenses increased by $151,000 to
$1,517,000 at August 31, 1996. Other current liabilities declined
by $3,000 to $46,000.
Notes payable decreased by $11,000 to $1,258,000 at August 31,
1996. The decreases result from amortization of the principal for
June 1996 as required by the loan agreements. The bank has agreed
to defer principal payments for July and August if interest was
paid current.
The Company's Class A Warrants and Class D-1 Warrants expired
on December 31, 1994. The Company's Class B Warrants and Class D-2
Warrants expired on January 2, 1996. The Company does not
anticipate equity infusions from the possible exercise of some or
all of the 181,995 Class C Warrants and 196,823 Class D-3 Warrants,
issued as of January 2, 1996, both allowing holders to purchase one
share of Common Stock per warrant for $1.25 per share through
January 2, 1997.
Under the Plan of Reorganization, certain contingent
"Augmentation Rights" were granted to the unsecured creditors,
entitling them to payments of up to $375,000 if they complied with
certain procedures. The unsecured creditors were required to
submit their claims to said rights on or before February 28, 1995.
The total amount claimed by the unsecured creditors was $184,000.
Payments were as follows: $125,000 was paid on March 31, 1995 and
$59,000 was paid on December 31, 1995. The Company had previously
established a reserve of $125,000 on its financial statements for
Augmentation Rights payments. The Company established, as of May
31, 1995, the balance of the additional reserve of $59,000 payable
December 31, 1995. No further payments will be required.
The Company is exploring alternative opportunities for raising
additional equity to alleviate the shortage of working capital and
the need for additional inventory. Dunn's had entered into an
agreement with Spira and Associates to provide investment banking
consulting services. In connection with that agreement Dunn's has
issued unregistered, lettered common stock as compensation for
their services. Dunn's has also been informed by their current
lender and by prospective lenders that the terms of any new
borrowing would be favorably affected if Dunn's were to increase
its capital.
</TABLE>
<TABLE>
B. RESULTS OF OPERATIONS
Summary of Historical Results of Operations. The table that
follows sets forth for the periods indicated the Company's
statements of operations, with cost, profit, and expense items
listed as a percentage of total revenues for such periods:
(in thousands except per share data)
<S> <C> <C>
ThreeThreeMonths(%)Months(%)Ended(of)Ended(of)8/31/96(Rev.)8/31/95(Rev
.)Revenues$1,431100.0%$2,894100.0%Less Cost of
Sales88461.8%1,80762.4%Gross Profit54738.2%1,08737.6%Operating
Expenses: Catalog Costs27519.2%53718.6% Other Operating
Expenses55038.4%71924.8% Interest Expense453.1%551.9% Deprec. &
Amortization120.8%160.6%Total Operating Expense88261.6%1,32745.9%Net
Income (Loss)(335)-23.4%(240)-8.3%Primary Income (Loss) Per Share:
Net Income (Loss)($0.08)($0.05)Weighted Shares
Outstanding4,360,3884,368,402</TABLE>
Revenues. The revenue of the Company for the current period
declined from $2,894,000 in the comparable period to $1,431,000.
The decline for the current period was due to Dunn's inability to
mail catalogs and fulfill sales due to the shortage of inventory
previously discussed.
The revenue of the Retail Store, Jaeger, and Adventure Travel
in the current period compared to the comparable prior period:
8/31/96 8/31/95
Retail Store $63,000 $143,000
Jaeger 47,000 74,000
Adventure Travel 11,000 22,000.
The Retail Store sales for the current period declined by
$80,000. This decline primarily is due to the generally soft
retail market, increased competition in Memphis, and low inventory
levels. Additionally, the Retail Store sales declined due to not
having a store wide sale as was conducted the prior fiscal year.
The seasonal nature of the Company's catalog and retail store
business does not apply to the Company's Jaeger and Adventure
Travel divisions.
Jaeger's revenue is down $27,000 for the current period
compared to the comparable period. The decline is due to an
inadequate gun inventory caused by a shortage of working capital,
lower then expected gunsmithing sales as a result of the inadequate
gun inventory, and the lack of advertising due to the Company's
inability to mail catalogs. We are carefully reviewing the
operations of the gunsmithing department to improve the billings
and efficiency of the department.
Dunn's Adventure Travel revenue declined by $11,000 for the
current period compared to the comparable period. The decline is
due primarily to changes in key sales personnel of the Adventure
Travel division and difficulty in locating high quality hunting
trips in the western U.S., Canada, and Alaska.
The Company had sales refunds and credits of $61,000 for the
current period compared to $181,000 for the comparable period. The
refunds and credits represent 4.3% of revenue for the current
period and 6.3% for the comparable period.
Gross Profit Margins. As a percentage of revenues, gross
profit margins for the current period declined to $547,000 (38.2%
of total revenues) compared with $1,087,000 (37.6% of total
revenues) in the comparable period of the prior fiscal year.
The Company is continually working to improve gross profit
margins. The Company has increased the use of private label
merchandise, beginning in the last quarter of fiscal year 1994.
Private labels and offshore assembly offer an opportunity to
improve gross profit margins. The Company believes that its gross
profit margins could improve by such a shift to use of private
label items. For the current period such purchases have been
adversely effected due to the lack of working capital.
Operating Expenses. Operating expenses for the current period
decreased from $1,327,000 to $882,000. Operating expense as a
percent of revenue increased for the current period to 61.6%
compared with 45.9% in the comparable period of the prior fiscal
year. The primary causes of the decline in operating expenses are
the decline in catalog circulation, the downsizing of the Company
and it's divisions and subsidiaries.
Catalog expenses decreased by $262,000 to $275,000 for the
current period. The decline is attributed to the decline in
catalog circulation.
Other operating costs decreased by $169,000 for the current
period. The primary cause of the decrease was the downsizing of
the Company and it's divisions and subsidiaries.
Interest expense decreased by $10,000 during the current
period to $45,000.
Depreciation and amortization declined by $4,000 during the
current period compared to the comparable quarter of the prior
fiscal year. The decline was due to several assets which became
fully depreciated during the last quarters of the prior fiscal
year.
The Company believes that operating expenses including catalog
costs will remain stable for the balance of fiscal year 1997. The
Company has offset a large portion of the 14% postage increase with
less and lighter-weight catalog paper, without sacrifice to catalog
content. The Company does not expect paper prices to continue to
increase for the fiscal year 1997. The effect of the existing
increases has been partially offset by increases in retail prices,
the use of lighter paper, and reduced trim size on catalogs.
Net Earnings. The Company's consolidated loss from operations
for the first quarter of fiscal year 1997 was $335,000, compared
with a net operating loss of $240,000 in the comparable period.
The decline in income is primarily attributable to the reduced
level of sales. This reduction in sales is a result of the
Company's inability to mail catalogs and to fill customer orders
due to the lack of working capital. Additionally, the decline in
income is attributable to losses in various divisions and
subsidiaries previously discussed.
Going Concern. The Company's financial statements have been
presented on the basis that it is a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company, during
the current period and the prior fiscal year, has experienced
substantial losses from operations and currently has cash flow
problems. The ability of the Company to remain as a going concern,
during the next 9 months, will depend on the Company's success in
acquiring additional equity. Statements contained in this report,
which refer to events over the next 9 months, should be viewed in
this context.
Income Taxes. As of August 31, 1994, the Company had a
federal net operating loss carryforward ("NOL") of approximately
$4,275,000, of which approximately $2,070,000 is subject to
limitations under Section 382 of the Internal Revenue Code.
Inflation. The Company generally is able to reflect increases
and decreases in costs as a result of inflation through its selling
process. Accordingly, the Company does not believe that the
results of operations for the periods discussed have been
significantly affected by inflation.
PART II
OTHER INFORMATION
ITEM 1
LEGAL PROCEEDINGS
The Company currently has one complaint filed against it in
the state of Mississippi by one of its vendors. The complaint
requests an answer, which the Company's legal representative is
currently preparing.
There are no other legal proceedings that the company is a
party to and the Company is not aware of any other pending
litigation. As was disclosed on Form 10-QSB for quarter ended
February 28, 1995, on January 6, 1995 W.R. Wilson, Jr. filed a
petition for relief under Chapter 11 Bankruptcy code, in the
Southern District of Mississippi. Mr. Wilson guarantees certain of
Dunn's Supply Store, Inc. loans and the lender has been notified of
the filing. We have been advised that there will be no changes in
our loan agreements as a result of the filing. There will be no
material adverse effect in the operations of Dunn's Supply Store,
Inc. as a result of the filing.
ITEM 2
CHANGE IN SECURITIES
Nothing to report.
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
Nothing to Report.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Nothing to Report.
ITEM 5
OTHER INFORMATION
Nothing to Report.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
Exhibit No. Description
3 Amended and Restated Articles of
Incorporation and Amended and Restated
Bylaws of Dunn's Supply Store, Inc., a
Tennessee Corporation (Note 1)
4.1 Specimen of Stock Certificate (Note 1)
4.2 Warrant Agreement (Note 1)
4.3 Specimen of Class A Warrant Certificate
(Note 2)
4.4 Specimen of Class B Warrant Certificate
(Note 2)
4.5 Specimen of Class D-1 Warrant
Certificate (Note 2)
4.6 Specimen of Class D-2 Warrant
Certificate (Note 2)
9 Order Confirming Second Amended Plan of
Reorganization (Modified) of Dunn's
Supply Store, Inc., including Exhibits
(Note 1)
10.1 Loan Agreement date September 2, 1993
between the Company and First South Bank
(Note 1)
10.2 Promissory Note and Security Agreement
Date November 2, 1994 by the Company in
favor of First South Bank (Note 2)
10.3 1994 Stock Option Plan (Note 2)
13.1 Independent Auditors Report of Company's
Financial Statements for the Fiscal Year
Ended August 31, 1993 and the Fiscal
Year Ended August 31, 1992 (Incorporated
in to text of 10K)
13.2 Disclosure Statement of the Second
Amended Plan of Reorganization
(Modified) of Dunn's Supply Store, Inc.,
as Approved by Order of the Bankruptcy
Court Date January 8, 1993 (Note 1)
13.3 Independent Auditors Report of Company's
Financial Statements for the Nine Months
Ended May 31, 1994 and the Fiscal Year
Ended August 31, 1993 (Note 3)
13.4 Independent Auditors Report of Company's
Financial Statements for the Fiscal Year
Ended May 31, 1995 and the Nine Months
Ended May 31, 1994 (Note 4)
21 Subsidiaries of Registrant
B. REPORTS ON FORM 8-K
Nothing to Report.
Note 1 The Exhibits for Note 1 are attached to the Company's
initial registration statement of Form 10-SB dated December 10,
1993.
Note 2 The Exhibits for Note 2 are attached to form 10-QSB filed
for the Quarter Ended November 30, 1994.
Note 3 The Exhibits for Note 3 are incorporated in the Company's
form 10-KSB for the Nine Months Ended May 31, 1994.
Note 4 The Exhibits for Note 4 are incorporated in the Company's
form 10-KSB for the Fiscal Year Ended May 31, 1995.
SIGNATURES
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, thereunto duly authorized.
DUNN'S SUPPLY STORE, INC.
Date: October , 1996 By: Robert K. Turner
Robert K. Turner
CEO/Chairman
