FORM 10-QSB. --- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997 TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-13518
Gaylord Companies, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 31-1421571
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4006 Venture Court, Columbus, Ohio 43228
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(Address of Principal Executive Office)
(614) 771-2777
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(Issuer's telephone number)
Check whether the issuer (1) 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
State the number of shares outstanding of each of the registrant's
classes of common equity, as of the last practicable date: 3,795,000 as of June
30, 1997.
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GAYLORD COMPANIES, INC.
INDEX
<TABLE>
<S> <C>
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of June 30, 1997 (unaudited) 1
Consolidated Statements of Operations (unaudited) for the Six
and Three months ended June 30, 1997 and 1996 2
Consolidated Statements of Cash Flows (unaudited) for the
Six months ended June 30, 1997 and 1996 3
Notes to the financial statements 4-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6-12
PART II - OTHER INFORMATION 13
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature 14
Exhibit Index 15-16
</TABLE>
<PAGE>
GAYLORD COMPANIES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, 1997
ASSETS
CURRENT ASSETS:
Cash $ 19,333
Accounts receivable - trade 40,102
Other receivables 198,230
Inventories 2,126,110
Prepaid expenses and other current assets 683,595
-------------
TOTAL CURRENT ASSETS 3,067,370
PROPERTY AND EQUIPMENT 637,645
GOODWILL 117,613
DEFERRED INCOME TAXES 396,135
INVESTMENT 125,000
OTHER ASSETS 27,944
-------------
$ 4,371,707
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,380,240
Line of credit 1,213,263
Note payable - short term 30,000
Sales tax payable 113,208
Current installments of capital lease obligations 3,888
Other current liabilities 228,101
-------------
TOTAL CURRENT LIABILITIES 3,968,700
Senior Note 251,667
------------
4,220,367
------------
STOCKHOLDERS' EQUITY:
Receivable For Stock (168,571)
Unearned Stock Compensation (48,462)
Cumulative preferred stock, par value $.01 per share; 1,500,000
shares authorized, 60,000 shares issued and outstanding 300,000
Common stock, par value $.01 per share; 10,000,000 shares
authorized, 3,795,000 shares issued and outstanding 37,950
Paid-in-capital in excess of par 2,344,838
Retained earnings (deficit) (2,314,415)
-------------
TOTAL STOCKHOLDERS' EQUITY 151,340
-------------
$ 4,371,707
================
See notes to consolidated financial statements.
1
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GAYLORD COMPANIES, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
TSixeMonthssEndedd
June 30, June 30,
--------------------------------------------------------------------------
1997 1996 1997 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
NET SALES $ 2,665,361 $ 2,656,311 $ 5,573,051 $ 5,541,130
COST OF GOODS SOLD, including store
occupancy and delivery costs 2,107,179 2,044,066 4,366,294 4,250,428
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 558,182 612,245 1,206,757 1,290,702
---------------- ---------------- ---------------- ----------------
OPERATING EXPENSES:
Store operating expenses 647,093 580,949 1,309,303 1,185,241
Administrative 469,228 314,482 875,642 624,682
Depreciation and amortization 52,952 48,062 105,738 96,124
---------------- ---------------- ---------------- ----------------
1,169,273 943,493 2,290,683 1,906,047
---------------- ---------------- ---------------- ----------------
OPERATING INCOME (LOSS) (611,091) (331,248) (1,083,926) (615,345)
---------------- ---------------- ---------------- ----------------
OTHER INCOME (EXPENSE):
Interest expense - net (101,634) (72,489) (182,889) (149,306)
Amortization of discount on notes payable (18,500) - (37,000) -
Other income (expense) 480 4,481 495 (9,874)
---------------- ---------------- ---------------- ----------------
(119,654) (68,008) (219,394) (159,180)
---------------- ---------------- ---------------- ----------------
INCOME (LOSS) BEFORE INCOME TAX
EXPENSE (BENEFIT) (730,745) (399,256) (1,303,320) (774,525)
INCOME TAX EXPENSE (BENEFIT) 1,212 (161,703) 2,875 (311,810)
---------------- ---------------- ---------------- ----------------
NET INCOME (LOSS) $ (731,957) $ (237,553) $ (1,306,195) $ (462,715)
================ ================ ================ ================
EARNINGS (LOSS) PER COMMON SHARE $ (0.19) $ (0.09) $ (0.35) $ (0.17)
================ ================ ================ ================
WEIGHTED AVERAGE COMMON SHARES USED 3,785,000 2,750,000 3,735,000 2,750,000
================ ================ ================ ================
See notes to consolidated financial statements.
2
</TABLE>
<PAGE>
GAYLORD COMPANIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
-----------------------------------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,306,195) $ (462,715)
--------------- ----------------
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 105,738 96,124
Noncash imputed compensation expense 55,705 -
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 40,227 12,955
Decrease (increase) in other receivables (21,013) (38,061)
Decrease (increase) in inventory 84,130 15,395
Decrease (increase) in prepaid expenses and other assets (474,023) (418,983)
Decrease (increase) in deferred income taxes 2,061 (301,814)
Increase (decrease) in accounts payable 134,592 (287,874)
Increase (decrease) in sales tax payable (77,266) (79,354)
Increase (decrease) in other current liabilties 228,101 (88,559)
--------------- ----------------
Total adjustments 78,252 (1,090,171)
--------------- ----------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (1,227,943) (1,552,886)
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (6,929) (7,004)
--------------- ----------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (6,929) (7,004)
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 885,263 1,017,500
Repayments of debt (434,994) (349,719)
Preferred stock dividend (9,000)
Principal payments of capital lease obligations (5,582) (4,816)
--------------- ----------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 435,687 662,965
--------------- ----------------
INCREASE (DECREASE) IN CASH (799,185) (896,925)
CASH AT BEGINNING OF PERIOD 818,518 899,019
--------------- ----------------
CASH AT END OF PERIOD $ 19,333 $ 2,094
=============== ================
See notes to consolidated financial statements.
3
</TABLE>
<PAGE>
GAYLORD COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited, but
reflect all adjustments which, in the opinion of management, are
necessary for a fair presentation of financial position and the results
of operations for the interim periods presented. All such adjustments
are of a normal and recurring nature. The results of operations for any
interim period are not necessarily indicative of the results attainable
for a full fiscal year.
2. LOSS PER SHARE
Per share information is computed based on the weighted
average number of shares outstanding during the period with net income
(loss) reduced by preferred stock dividends.
3. CONSULTING AGREEMENT
In February 1997, the Company issued 150,000 shares to an
individual in exchange for a two year consulting agreement. The shares
were valued at their fair value which results in a consulting charge of
$150,000 which is being amortized over the two year term of the
consulting agreement.
4. LOAN AGREEMENT
In April 1997, the Company entered into a loan and security agreement
(the "Agreement") with Greenfield Commercial Credit, L.L.C. (the
"Lender"). Pursuant to the agreement, the Lender established a
revolving credit loan facility for the Company in an amount of up to
$1,000,000 (the "Revolving Credit Loan") and advanced $350,000 at
closing as a term loan (the "Term Loan"). The Term Loan and Revolving
Credit Loan are referred to as the "Loans".
The Revolving Credit Loan bears interest at the prime rate plus eight
percent per annum. The Term Loan bears interest at the prime rate plus
five and eighty-five hundredths
4
<PAGE>
percent per annum. The Revolving Credit Loan is payable upon demand,
but if demand is not made, than not later than July 22, 1997, subject
to the Company's right to extend the maturity date until October 20,
1997 upon the payment of an extension fee of $5,000. The Term Loan is
payable upon demand, but if demand is not made, then not later than
October 20, 1997. The Loans are secured by a lien on substantially all
of the Company's assets. The Loans have been guaranteed by the
Company's Chairman of the Board and Chief Executive Officer and such
guarantee is secured by a third mortgage on his principal residence.
The proceeds of the loans were used primarily to repay amounts owed to
Bank One Columbus, N.A. and for working capital purposes.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
FORWARD - LOOKING STATEMENTS
When used in the Form 10-QSB and future filings by the Company with the
Securities and Exchange Commission, the words or phrase "will likely result",
"the Company expects", "will continue", "is anticipated", "project" or "outlook"
or similar expressions are intended to identify "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. The
Company wishes to caution readers not to place undue reliance on such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertain ties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. The Company has no obligation to publicly release the
results of any revisions which may be made to any forward-looking statements to
reflect anticipated or unanticipated events or circumstances occurring after the
date of such statements.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 and 1997
Consolidated Operations
The Company incurred a net loss of $731,957 in the three months ended
June 30, 1997 as compared to a net loss of $237,553 for the comparable period in
the prior year. Management believes that the increase in the net loss was
primarily due to lower compara ble store sales, higher store level expenses
relative to lower sales in the two newest Cookstores that have yet to reach
sales maturity, lower gross margins, higher store operating expenses and higher
administrative expenses in the three months ended June 30, 1997 as compared to
the same period in 1996. Additionally, the Company recorded a tax expense of
$1,212 in the three months ended June 30, 1997 as compared to a tax benefit of
$161,703 for the prior year.
Net sales in the three months ended June 30, 1997 were $2,665,361, a
0.3% increase over net sales of $2,656,311 for the comparable period in the
prior year. Management believes that the increase was due primarily to the fact
that while comparable store sales decreased 5.5%, the two newest Cookstores that
were opened on December 1, 1996 contributed additional sales for the three
months ended June 30, 1997 as compared to the same period in the prior year.
6
<PAGE>
Cost of goods sold, including store occupancy and delivery costs, was
$2,107,179 for the three months ended June 30, 1997 as compared to $2,044,066
for the three months ended June 30, 1996. Management believes that such increase
was due primarily to addition of the costs of goods sold, including store
occupancy and delivery costs from the two newest Cookstores that were opened on
December 1, 1996. Gross profit as a percent age of net sales was 21.0% for the
three months ended June 30, 1997 as compared to 23.1% during the same period in
1996. Management believes that the decrease in gross profit as a percentage of
net sales in the three months ended June 30, 1997 as compared to the same period
in the prior year is due primarily to the fact that while comparable store sales
decreased, occupancy costs remained relatively fixed. The Company experienced
higher occupancy costs as a percentage of net sales due primarily to a lower
than normal level of sales in the two newest Cookstores that were opened in
December 1996 and have not yet reached maturity.
Store level operating expenses for the three months ended June 30, 1997
were $647,093 compared to $580,949 for the three months ended June 30, 1996.
Management believes that the increase in such expenses was due primarily to the
addition of store level expenses from the two newest Cookstores that were opened
on December 1, 1996. Store operating expenses were 24.3% of net sales for the
three months ended June 30, 1997 as compared to 21.9% in the same period in
1996. Management believes that the increase in such expenses as a percentage of
net sales are due primarily to the fact that while store level operating
expenses increased in the three months ended June 30, 1997 as compared to the
same period in the prior year, comparable store sales decreased. The Company
experi enced higher store level expenses relative to lower sales in the two
newest Cookstores that have yet to reach sales maturity.
Administrative expenses for the three months ended June 30, 1997 were
$469,228 as compared to $314,482 for the three months ended June 30, 1996.
Management believes that the increase in administrative expenses is due
primarily to an increase in professional, consulting and financing fees in the
three months ended June 30, 1997 as compared to the same period in the prior
year.
Depreciation and amortization for the three months ended June 30, 1997
were $52,952 compared to $48,062 for the three months ended June 30, 1996.
Interest expense for the three months ended June 30, 1997 were $103,086
compared to $85,251 for the three months ended June 30, 1996. Management
believes that the increase in interest expense is due primarily to higher
interest rates or the revolving credit loan as compared to previous borrowings.
Amortization of discount on notes payable for the three months ended
June 30, 1997 was $18,500 compared to $0 for the three months ended June 30,
1996.
7
<PAGE>
Cookstore Operations
Net sales in the three months ended June 30, 1997 were $722,057, a
28.1% increase over net sales of $563,846 during the same period in the prior
year. The increase was due primarily to the opening of the two newest Cookstores
on December 1, 1996. Comparable store net sales increased 0.7% in the three
months ended June 30, 1997 as compared to the same period in the prior year.
Cost of goods sold, including store occupancy and delivery costs, was
$564,895 for the three months ended June 30, 1997 as compared to $418,473 for
the three months ended June 30, 1996. Management believes that such increase was
due primarily to the increased level of sales and the inclusion of the occupancy
costs for the two newest Cookstores opened on December 1, 1996. Gross profit as
a percentage of net sales was 21.8% for the three months ended June 30, 1997 as
compared to 25.8% during the same period in 1996. Management believes that the
primary reasons for the lower gross profit as a percentage of net sales for the
three months ended June 30, 1997, as compared to the same period in 1996, is
higher occupancy costs as a percentage of net sales due primarily to a lower
than normal level of sales in the two newest Cookstores that were just recently
opened which have not yet reached maturity.
Bookstore Operations
Net sales in the three months ended June 30, 1997 were $1,943,304 a
7.1% decrease over net sales of $2,092,466 in the prior year. Management
believes that the decrease was due primarily to the fact that the Company's
bookstores in Cincinnati, Boardman and Columbus, Ohio (Sawmill Road) posted
significant sales decreases in the three months ended June 30, 1997 as a result
of new competition from stores operated by Barnes and Noble, Inc. and
Borders-Walden Group, Inc., in close proximity. All Bookstore net sales are
comparable in the period.
Cost of goods sold, including store occupancy and delivery costs, was
$1,542,284 for the three months ended June 30, 1997 as compared to $1,625,593
for the three months ended June 30, 1996. Gross profit as a percentage of net
sales was 20.7% for the three months ended June 30, 1997 as compared to 22.3%
during the same period in 1996. Management believes that the decrease in the
gross profit as a percentage of net sales for the three months ended June 30,
1997 as compared to the same period in the prior year is due primarily to the
fact that while sales decreased, occupancy costs remained relatively fixed.
Six Months Ended June 30, 1996 and 1997
Consolidated Operations
8
<PAGE>
The Company incurred a net loss of $1,306,195 in the six months ended
June 30, 1997 as compared to a net loss of $462,715 for the comparable period in
the prior year. Management believes that the increase in the net loss was
primarily due to lower compara ble store sales, higher store level expenses
relative to lower sales in the two newest Cookstores that have yet to reach
sales maturity, lower gross margins, higher store level operating expenses and
higher administrative expenses in the six months ended June 30, 1997 as compared
to the same period in 1996. Additionally, the Company recorded a tax expense of
$2,875 in the six months ended June 30, 1997 as compared to a tax benefit of
$311,810 for the prior year.
Net sales in the six months ended June 30, 1997 were $5,573,051, a 0.6%
increase over net sales of $5,541,130 for the comparable period in the prior
year. Management believes that the increase was due primarily to the fact that
while comparable store sales decreased 5.4%, the two newest Cookstores that were
opened on December 1, 1996 contributed additional sales for the six months ended
June 30, 1997 as compared to the same period in the prior year.
Cost of goods sold, including store occupancy and delivery
costs, was $4,366,294 for the six months ended June 30, 1997 as compared to
$4,250,428 for the six months ended June 30, 1996. Management believes that such
increase was due primarily to addition of the costs of goods sold, including
store occupancy and delivery costs from the two newest Cookstores that were
opened on December 1, 1996. Gross profit as a percentage of net sales was 21.7%
for the six months ended June 30, 1997 as compared to 23.3% during the same
period in 1996. Management believes that the decrease in gross profit as a
percentage of net sales in the six months ended June 30, 1997 as compared to the
same period in the prior year is due primarily to the fact that while comparable
store sales decreased, occupancy costs remained relatively fixed. The Company
experienced higher occupancy costs as a percentage of net sales due primarily to
a lower than normal level of sales in the two newest Cookstores which have not
yet reached maturity.
Store level operating expenses for the six months ended June 30, 1997
were $1,309,303 compared to $1,185,241 for the six months ended June 30, 1996.
Management believes that the increase in such expenses was due primarily to the
addition of store level expenses from the two newest Cookstores that were opened
on December 1, 1996. Store level operating expenses were 23.5% of net sales for
the six months ended June 30, 1997 as compared to 21.4% in the same period in
1996. Management believes that the increase in such expenses as a percentage of
net sales is due primarily to the fact that while store level operating expenses
increased in the six months ended June 30, 1997 as compared to the same period
in the prior year, comparable store sales decreased. The Company experienced
higher store level operating expenses relative to lower sales in the two newest
Cookstores which have yet to reach sales maturity.
9
<PAGE>
Administrative expenses for the six months ended June 30, 1997 were
$875,642 compared to $624,682 for the six months ended June 30, 1996. Management
believes that the increase in administrative expenses is due primarily to an
increase in professional, consulting and financing fees in the six months ended
June 30, 1997 as compared to the same period in the prior year.
Depreciation and amortization for the six months ended June 30, 1997
were $105,738 compared to $96,124 for the six months ended June 30, 1996.
Interest expense for the six months ended June 30, 1997 were $188,039
compared to $162,067 for the six months ended June 30, 1996. Management believes
that the increase in interest expense is due primarily to higher interest rates
on the revolving credit loan as compared to previous borrowings.
Amortization of discount on notes payable for the six months ended June
30, 1997 was $37,000 compared to $0 for the six months ended June 30, 1996.
Cookstore Operations
Net sales in the six months ended June 30, 1997 were $1,469,592, a
28.5% increase over net sales of $1,143,387 during the same period in the prior
year. The increase was due primarily to the opening of the two newest Cookstores
on December 1, 1996. Comparable store net sales decreased 0.2% in the six months
ended June 30, 1997 as compared to the same period in the prior year.
Cost of goods sold, including store occupancy and delivery costs, was
$1,143,528 for the six months ended June 30, 1997 as compared to $838,899 for
the six months ended June 30, 1996. Management believes that such increase was
due primarily to the increased level of sales and the inclusion of the occupancy
costs for the two newest Cookstores opened on December 1, 1996. Gross profit as
a percentage of net sales was 22.2% for the six months ended June 30, 1997 as
compared to 26.6% during the same period in 1996. Management believes that the
lower gross profit as a percentage of net sales for the six months ended June
30, 1997, as compared to the same period in 1996 is primarily attributable to
higher occupancy costs as a percentage of net sales due primarily to a lower
than normal level of sales in the two newest Cookstores.
Bookstore Operations
Net sales in the six months ended June 30, 1997 were $4,103,459 a 6.7%
decrease over net sales of $4,397,744 in the comparable period in the prior
year. Management believes that the decrease was due primarily to the fact that
bookstores in Cincinnati, Boardman and Columbus, Ohio (Sawmill Road) posted
significant sales decreases in the six
10
<PAGE>
months ended June 30, 1997 as a result of new competition from stores operated
by Barnes and Noble, Inc. and Borders-Walden Group, Inc., in close proximity.
All Bookstore net sales are comparable in the period.
Cost of goods sold, including store occupancy and delivery costs, was
$3,222,766 for the six months ended June 30, 1997 as compared to $3,411,529 for
the six months ended June 30, 1996. Gross profit as a percentage of net sales
was 21.5% for the six months ended June 30, 1997 as compared to 22.4% during the
same period in 1996. Management believes that the decrease in the gross profit
as a percentage of net sales for the six months ended June 30, 1997 as compared
to the same period in the prior six months ended is due primarily to the fact
that while sales decreased, occupancy costs remained relatively fixed.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had a working capital deficit of $901,330
compared to working capital of $231,457 at year end December 31, 1996. The
decrease of $1,132,787 is primarily attributable to the net loss incurred during
the quarter. Cash used by operating activities was $1,227,943 resulting from the
net loss of $1,306,195 adjusted by noncash charges of $161,443 and decreased by
changes in operating assets and liabilities of $83,191.
In April 1997, the Company entered into a loan and security agreement
(the "Agreement") with Greenfield Commercial Credit, L.L.C. (the "Lender").
Pursuant to the agreement, the lender established a revolving credit loan
facility for the Company in an amount of up to $1,000,000 (the "Revolving Credit
Loan") and advanced $350,000 at closing as a term loan (the "Term Loan"). The
Term Loan and Revolving Credit Loan are referred to as the "Loans."
The Revolving Credit Loan bears interest at the prime rate plus eight
percent per annum. The Term Loan bears interest at the prime rate plus five and
eighty-five hun dredths percent per annum. The Revolving Credit Loan is payable
upon demand. On July 22, 1997, the Company exercised its right to extend the
maturity date until October 20, 1997 with the payment of an extension fee of
$5,000. The Term Loan is payable upon demand, but if demand is not made, then
not later than October 20, 1997. The Loans are secured by a lien on
substantially all of the Company's assets. The Loans have been guaranteed by the
Company's Chairman of the Board and Chief Executive Officer and such guarantee
is secured by a third mortgage on his principal residence. The proceeds of the
loans were used primarily to repay amounts owed to Bank One Columbus, N.A. and
for working capital purposes.
11
<PAGE>
The failure of the Company to refinance the Loans and obtain additional
equity, of which there can be no assurance, would have a material adverse
effect on the Company. The Company is seeking to raise additional equity capital
and to obtain a permanent credit facility. The Company believes that it is
necessary for the Company to obtain such financing for it to be able to
increase the number of Cookstores to become profitable and to continue as a
going concern.
At June 30, 1997, the Company had approximately $398,000 recorded as
deferred tax assets, representing amounts the Company believes are more likely
than not to be recovered through future operations, of which there can be no
assurance. Taxable income would need to aggregate approximately $1,000,000 prior
to expiration of the related net operating loss carry forwards in the year 2011,
for the Company to realize their full benefit. The Company's evaluation of the
recoverability of the deferred tax assets is based on certain assumptions
regarding future operations, of which there can be no assurance. Specifically,
such evaluation assumes an annualized profitability on the two new Cookstores
opened in December 1996, the anticipation of opening two additional new
Cookstores within three years of December 31, 1996 and that such stores will
experience similar profitability to the Company's existing Cookstores. There can
be no assurance that the Company's assumptions will be accurate.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - NONE
Item 2. CHANGES IN SECURITIES - NONE
Item 3. DEFAULTS UPON SENIOR SECURITIES - NONE
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS - NONE
Item 5. OTHER INFORMATION - NONE
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company filed a report on Form 8-K May 9,1997
13
<PAGE>
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.
GAYLORD COMPANIES, INC.
By: /s/ John Gaylord
Chairman and Chief Executive Officer
Date: August 18, 1997
<PAGE>
GAYLORD INDEX OF EXHIBITS.
Number Description of Exhibit
1.1 -- Form of Underwriting Agreement between the Company and the
Underwriters.+
3.1 -- Certificate of Incorporation of the Company.+
3.2 -- By-Laws of the Company.+
4.1 -- Form of Warrant Agreement between the Company and Continental Stock
Transfer & Trust Company, as warrant agent.+
4.2 -- Specimen Certificate of the Company's Common Stock.+
4.3 -- 1994 Stock Option Plan, as amended.+
4.4 -- Specimen Certificate of the Company's Warrant.+
4.5 -- Form of Underwriter's Warrants.+
4.6 -- Option Agreement between the Company and Lido Equities Corp.**
4.7 -- Option Agreement between the Company and Solay, Inc.**
4.8 -- Stock Option Agreement between the Company and Rodika Salter.**
4.9 -- Form of Convertible Note.**
10.1 -- Form of Employment Agreement between the Company and John D. Critser.+
10.2 -- Form of Employment Agreement between the Company and John Gaylord.+
10.3 -- Form of Employment Agreement between the Company and George Gaylord.+
10.4 -- Agreements between the Subsidiaries and Bank One, Columbus, N.A.+
10.5 -- Exchange Agreement, dated as of August 1, 1994, by and among George
Gaylord, John Gaylord, Janet Gaylord Goodburn, Susan Gaylord Noble,
Judy Gaylord, Jennifer Lynn Gaylord, John D. Critser and Gaylord
Companies, Inc.+
10.6 -- Lease, dated September 30, 1987, between UAP-Columbus JV326132, as
Landlord, and Gaylord Book Company, as Tenant, as amended, for
premises located at 1655 and 1657 West Lane Avenue, Lane Avenue
Shopping Center, Upper Arlington, Ohio.+
10.7 -- Lease, dated December 15, 1988, between Retail Projects of
Cincinnati, Inc., as Landlord, and Little Professor Enterprises,
Inc., as Tenant, as subsequently assigned to Gaylord's Inc. and
amended, for premises located at Space 180, Forest Fair Mall, Forest
Park, Ohio.+
10.8 -- Lease, dated June 13, 1989, between UAP-Columbus JV326132, as
Landlord, and The Cookstore, Inc., as Tenant, as amended, for
premises located at 1677 West Lane Avenue, M-1/4 and M-6, Lane Avenue
Shopping Center, Upper Arlington, Ohio.+
10.9 -- Lease, dated September 24, 1990, between Planned Communities Company,
as Landlord, and Little Professor Enterprises, Inc., as Tenant, for
premises located at Worthington Square Shopping Center, Worthington,
Ohio.+
10.10 -- Lease, dated July 16, 1992, between Sawmill Place Plaza
Associates, as Landlord, and Little Professor Enterprises, Inc., as
Tenant, as amended, for premises known as Space 122, Plaza at Sawmill
Place, 2700 Sawmill Place Blvd., Columbus, Ohio.+
10.11 -- Lease, dated September 10, 1993, between UAP-Columbus, JV326132, as
Landlord, and Gaylord Book Co., Inc., as Tenant, as amended, for
premises located at 1595 West Lane Avenue, Upper Arlington, Ohio.+
10.12 -- Lease, dated September 13, 1993, between Aetna Life Insurance
Company, as Landlord, and Gaylord Companies, Inc., as Tenant, for
premises located at Worthington Mall, Worthington, Ohio.+
10.13 -- Lease, dated October 21, 1993, between Greater Boardman Plaza, Inc.,
as Landlord, and Gaylord
15
<PAGE>
Number Description of Exhibit
Enterprises, Inc., as Tenant, for premises located at Room No. 101,
Greater Boardman Plaza Shopping Center, 255 Boardman-Canfield Road,
Youngstown, Ohio.+
10.14 -- Lease, dated July 15, 1994, between Glimcher Properties Limited
Partnership, as Landlord, and Gaylord Companies, as Tenant, for
premises located at the Mall at Fairfield Commons, Store #E181,
Beavercreek, Ohio.+
10.15 -- Lease, dated August 19, 1994, between DeBartolo Capital Partnership,
as Landlord, and The Cookstore Inc., as Tenant, for premises located
at Room 240, Summit Mall Shopping Center, 3265
West Market Street, Akron, Ohio.+
10.16 -- Sublease, dated August 31, 1994, between J.E. Hanger, Inc.,
sublessor and The Gaylord Companies, Inc., sublessee, as a sublease
under the master lease dated April 23, 1991 between Teachers
Insurance and Annuity Association, as lessor, and J. E. Hanger, Inc.,
as lessee, for premises located at 4006 Venture Court, Columbus,
Ohio.+
10.17 -- Consignment Agreement, dated February 25, 1989, between Ingram
Industries, Inc., as Consignor, and Gaylord's, Inc., as Consignee,
relating to the store located at 1018 Forest Fair Drive, Cincinnati,
Ohio.+
10.18 -- Consignment Agreement dated May 21, 1991, between Ingram Book Company,
as Consignor, and Little Professor Enterprises, Inc., as Consignee,
relating to the store located at 155 Worthington Square, Worthington,
Ohio.+
10.19 -- Consignment Agreement, dated February 10, 1993, between Ingram Book
Company, as Consignor, and Gaylord Book Company, as Consignee,
relating to the store located at 1646 W. Lane Avenue, Columbus, Ohio.+
10.20 -- Consignment Agreement, dated February 10, 1993, between Ingram
Book Company, as Consignor, and Little Professor Enterprises, Inc.,
as Consignee, relating to the store located at 6490 Sawmill Road,
Columbus, Ohio.+
10.21 -- Consignment Agreement, dated December 1993, between Ingram Book
Company, as Consignor, and Gaylord Enterprises, Inc., as Consignee,
relating to the store located at 101 Boardman-Canfield Road,
Boardman, Ohio.+
10.22 -- License Agreement, dated as of January 1, 1994, between Sawworth Book
Company, as License Owner, and Little Professor Book Centers, Inc., as
Franchisor, relating to 155 Worthington Square, Worthington, Ohio. +
10.23 -- License Agreement, dated as of January 1, 1994, between Sawworth Book
Company, as License Owner, and Little Professor Book Centers, Inc., as
Franchisor, relating to 6490 Sawmill Road, Columbus, Ohio.+
10.24 -- License Agreement, dated as of January 1, 1994, between Gaylord
Enterprises, Inc., as License Owner, and Little Professor Book
Centers, Inc., as Franchisor, relating to 101 Boardman-Canfield
Road, Boardman, Ohio.+
10.25 -- License Agreement, dated as of January 1, 1994, between Gaylord's,
Inc., as License Owner, and Little Professor Book Centers, Inc., as
Franchisor, relating to 1018 Forest Fair Drive, Cincinnati, Ohio.+
10.26 -- License Agreement, dated as of January 1, 1994, between Gaylord Book
Company, as License Owner, and Little Professor Book Centers, Inc., as
Franchisor, relating to 1657 W. Lane Avenue, Columbus, Ohio.+
10.27 -- Agreement, dated as of January 1, 1994, between the Company and Little
Professor Book Centers, Inc.+
16
<PAGE>
Number Description of Exhibit
10.28 -- Letter Agreement, dated September 12, 1994, from Little Professor Book
Centers, Inc. to Gaylord Family Limited.+
10.29 -- Mutual Release Agreement, dated September 12, 1994, among Little
Professor Book Centers, Inc. and the Company Gaylord's, Inc., Gaylord
Family Investments, Inc., Gaylord Book Company, Sawworth Book Company,
Gaylord Enterprises, Inc., Gaylord Family Limited, George Gaylord and
John Gaylord.+
10.30 -- Form of Engagement Agreement: Financial Consultant Services between
the Underwriter and the Company.+
10.31 -- Consulting Agreement dated as of April 23, 1996 by and between Solay,
Inc. and the Company.**
10.32 -- Consulting Agreement between the Company and Lido Equities Corp.**
10.33 -- Amendments to Agreements between the Company and Bank One Columbus,
N.A.**
10.34 -- Amendment No. 1 to Employment Agreement between the Company and John
Critser.**
10.35 -- Amendment No. 1 to Employment Agreement between the Company and John
Gaylord.**
10.36 -- Amendment No. 1 to Employment Agreement between the Company and George
Gaylord.**
10.37 -- Agreements between the company and Greenfield Commercial Credit,
LL. C. ***
16.1 -- Letter from KPMG Peat Marwick, LLP on change in certifying
accountant.+
21.1 -- List of Subsidiaries.+
27.1 -- Financial Data Schedule.
+ Previously filed with the Registration Statement on Form SB-2, Registration
No. 33-90832.
** Previously filed with the Registration Statement on Form SB-2, Registration
No. 33-07324.
*** Previously filed with current report on Form 8-K dated May 9,1997
17
<PAGE>
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