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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: November 2, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period ________________________to__________________________
Commission File Number: 0-25002
WHAT A WORLD !, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 59-3200879
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
10901-B Roosevelt Boulevard
Suite 100
St. Petersburg, Florida 33716
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number: (813) 577-9366
N/A
- --------------------------------------------------------------------------------
(Former Name, Former Address, and Former Fiscal Year,
if Changed Since Last Report)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: At December 16, 1996, there
were 2,118,125 shares outstanding of common stock, $.01 par value per share.
Transitional Small Business Disclosure Format (check one): [ __] Yes [ X ] No
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WHAT A WORLD!, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements (Unaudited):
Condensed Balance Sheets - February 3, 1996 and November 2, 1996 . . . . . . . . . . . . . . . . . 3
Condensed Statements of Operations for the Thirteen Weeks Ended
October 28, 1995 and November 2, 1996 and the Thirty Nine Weeks Ended
October 28, 1995 and November 2, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Statements of Cash Flows for the Thirty Nine Weeks Ended
October 28, 1995 and November 2, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
---------------------------
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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WHAT A WORLD!, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
February 3, November 2,
1996 1996
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $1,386,998 $ 215,515
Certificate of deposit 100,000 100,000
Construction allowance receivable 267,000 0
Inventories 978,229 2,191,369
Prepaid expenses and other current assets 179,829 165,068
---------- -----------
Total current assets 2,912,056 2,671,952
PROPERTY AND EQUIPMENT, net 2,653,755 2,519,176
OTHER ASSETS 25,093 32,285
---------- -----------
Total assets $5,590,904 $ 5,224,413
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $1,033,907 1,652,612
Current maturities of capital lease obligations 64,999 65,902
Notes payable to stockholders 300,000
---------- -----------
Total current liabilities 1,098,906 2,018,514
DEFERRED RENT 644,173 727,254
CAPITAL LEASE OBLIGATIONS 156,614 107,178
STOCKHOLDERS' EQUITY:
Common stock 21,181 21,181
Additional paid-in capital 4,538,782 4,538,782
Accumulated deficit (868,752) (2,188,496)
---------- -----------
Total stockholders' equity 3,691,211 2,371,467
---------- -----------
Total liabilities and stockholders' equity $5,590,904 $ 5,224,413
========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
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WHAT A WORLD!, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
October 28, November 2, October 28, November 2,
1995 1996 1995 1996
----------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
NET SALES $ 653,335 $ 1,274,978 $ 1,945,558 $ 3,796,111
COST OF SALES 330,755 678,655 996,268 1,988,294
---------- ------------ ------------ ------------
GROSS PROFIT 322,580 596,323 949,290 1,807,817
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 647,145 1,066,314 1,896,491 3,133,640
---------- ------------ ------------ ------------
LOSS FROM OPERATIONS (324,565) (469,991) (947,201) (1,325,823)
INTEREST AND OTHER INCOME 34,645 5,680 118,223 28,731
INTEREST EXPENSE (5,413) (9,422) (17,758) (22,652)
---------- ------------ ------------ ------------
29,232 (3,742) 100,465 6,079
---------- ------------ ------------ ------------
NET LOSS $ (295,333) $ (473,733) $ (846,736) $ (1,319,744)
========== ============ ============ ============
NET LOSS PER WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT SHARE $ (.14) $ (.22) $ (.40) $ (.62)
========== ============ ============ ============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 2,118,125 2,118,125 2,118,125 2,118,125
</TABLE>
The accompanying notes are an integral part of these statements.
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WHAT A WORLD!, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
39 Weeks Ended
October 28, November 2,
1995 1996
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (846,736) $(1,319,744)
Adjustments to reconcile net loss to net cash and
cash equivalents used in operating
activities-
Depreciation and amortization 125,059 256,032
Loss on sale of equipment - 4,114
Changes in operating assets and
liabilities-
(Increase) decrease in construction
allowance receivable (9,220) 267,000
Increase in inventories (399,028) (1,213,140)
(Increase) decrease in prepaid
expenses and other current assets (60,153) 14,761
Increase in other assets (41,754) (8,192)
Increase in accounts payable and
accrued expenses 353,100 618,705
Increase in deferred rent 110,174 83,081
----------- -----------
Net cash and cash equivalents
used in operating activities (768,558) (1,297,383)
INVESTING ACTIVITIES:
Purchases of property and equipment (758,320) (141,467)
Proceeds from sale of equipment - 15,900
----------- -----------
Net cash and cash equivalents
used in investing activities (758,320) (125,567)
FINANCING ACTIVITIES:
Proceeds from notes payable to stockholders - 300,000
Payments made on capital lease obligations (33,959) (48,533)
----------- -----------
Net cash and cash equivalents
(used in) provided by financing
activities (33,959) 251,467
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,560,837) (1,171,483)
CASH AND CASH EQUIVALENTS, beginning of period 2,952,129 1,386,998
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,391,292 $ 215,515
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 17,146 $ 19,652
</TABLE>
The accompanying notes are an integral part of these statements.
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WHAT A WORLD!, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
November 2, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying unaudited condensed interim financial statements of What A
World!, Inc. (the "Company") have been prepared in accordance with the
instructions to Form 10-QSB and do not include all of the information and notes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. These financial statements should be read in conjunction with
the financial statements and notes thereto for the year ended February 3, 1996,
which are included in the Company's Annual Report on Form 10-KSB filed on May
3, 1996.
Due to the seasonal nature of the Company's business, results for interim
periods are not necessarily indicative of the results that may be expected for
the entire fiscal year.
Fiscal Year
The Company's Fiscal Year ends on the Saturday closest to January 31.
Net Loss per Weighted Average Common and Common Equivalent Share
Net loss per weighted average common and common equivalent share is computed by
dividing net loss by the weighted average number of shares of common stock
outstanding. Common equivalent shares from stock options and warrants are not
considered because they are antidilutive for all periods presented.
2. 1994 STOCK OPTION PLAN:
Following the approval by the Board of Directors and Stockholders, effective
May 21, 1996, the 1994 Stock Option Plan (Stock Option Plan) was amended to add
300,000 shares to the previously authorized 260,000 shares that were subject to
options under the Stock Option Plan. The amendment, accordingly, results in a
total of 560,000 shares of common stock available to grant under the Stock
Option Plan.
During the quarter ended November 2, 1996, the Company granted 70,000 options
to certain officers and employees and a consultant at an exercise price of
$1.00 per share under the Stock Option Plan. The options are exercisable in
accordance with a specified schedule in the Stock Option Agreements that begins
at the date of grant and ends ten years from such date. The Company recognized
no compensation expense for these options.
As of November 2, 1996, 520,000 options were outstanding under the Stock Option
Plan.
3. NOTES PAYABLE TO STOCKHOLDERS:
On August 28, 1996, Mr. Miller, Mr. Cornstein, and Hugh H. Jones, Jr., also a
member of the Company's Board of Directors, (collectively, the "lenders")
entered into a commitment to lend the Company, for working capital purposes, as
needed, and to fund the opening of 13 temporary stores, up to an aggregate of
$600,000 at an interest rate of 12% per annum (the "Working Capital
Commitment"). All amounts outstanding under the Working Capital Commitment
will be due and payable, together with accrued
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interest thereon, on January 3, 1997 and such loans are secured by a first
priority lien on substantially all of the assets of the company. As of
November 2, 1996, $300,000 had been drawn under the Working Capital Commitment,
and as of December 16, 1996, $500,000 has been drawn under the Working Capital
Commitment. As partial consideration for the Working Capital Commitment, the
Company granted to the lenders options to purchase an aggregate of 200,000
shares at an exercise price of $1.00, exercisable until August 31, 2001. In
connection with the Working Capital Commitment, the Company granted to the
lenders certain demand and piggyback registration rights relating to the
securities underlying such warrants.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company was organized in July 1993 and opened its first permanent store in
August 1993. Eight of the Company's twelve permanent stores have been in
operation for over one year and the other four permanent stores were opened in
November 1995 and December 1995. Accordingly, the Company has a limited
operating history upon which an evaluation of its performance and prospects can
be made.
The Company operated eight permanent stores at October 28,1995 as compared to
twelve permanent stores at November 2, 1996. In addition, the Company was not
operating any temporary stores at October 28, 1995 as compared to eight
temporary stores at November 2, 1996.
This Quarterly Report on Form 10-QSB contains certain forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements as a result of certain factors, including, but not
limited to, the success of the Company's efforts to modify its product
assortment, the Company's ability to improve its merchandise presentation, the
Company's development of the temporary store concept during the Christmas
selling season, the timely introduction of new products, the modification of
the Company's cost structure and the seasonal impact of the Company's business.
RESULTS OF OPERATIONS
Net sales for the 13 weeks ended November 2, 1996 (the "Third Quarter of Fiscal
1996") increased by approximately $622,000 over net sales for the comparable 13
weeks ended October 28, 1995 (the "Third Quarter of Fiscal 1995"). Net sales
also increased by $1,851,000 for the 39 weeks ended November 2, 1996 over the
39 weeks ended October 28, 1995. The increases are principally a result of
additional sales from four permanent stores opened after the Third Quarter of
Fiscal 1995 and the operation of twelve permanent stores for the full 39 week
period ended November 2, 1996.
Comparable store sales (sales of stores opened during the same months during
the comparable period in the prior year) decreased 1.0% in the Third Quarter of
Fiscal 1996 and decreased 9.7% in the first 39 weeks of fiscal 1996. The
comparable store sales analysis for stores opened during fiscal 1995 includes
less days of operation during the initial month of operation as compared to the
comparable month in fiscal 1996. During the Second and Third Quarter of Fiscal
1996, the Company has adjusted its product assortment to respond to increased
competition and the changing demands of its customers. Management has taken
steps to improve its merchandise mix and increase inventory levels on key
items, which has resulted in improved sales trends during the Third Quarter of
Fiscal 1996. Merchandising efforts to increase the sale of key products will
continue through more attractive in-store presentations. Management will
continue to implement further modifications to the product assortment which
will include the introduction of new products and the continued focus on top
selling items; however, there can be no assurance that these actions or any
further actions will positively impact sales or profitability.
Gross Profit for the Third Quarter of Fiscal 1996 was approximately $596,000 or
46.8% of net sales, compared with approximately $323,000 or 49.4% of net sales
for the Third Quarter of Fiscal 1995. Gross Profit for the first 39 weeks of
fiscal 1996 was approximately $1,808,000, or 47.6% of net sales, as compared to
approximately $949,000, or 48.8% of net sales in the first 39 weeks of fiscal
1995. The decrease in gross profit as a percentage of net sales was
principally a result of markdowns which were taken during the Third Quarter of
Fiscal 1996 and the first 39 weeks of fiscal 1996 in an effort to refine the
product assortment. In addition, the gross profit has been negatively impacted
as a result of the Company incurring higher freight cost included within the
cost of sales as the Company increased the
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amount of vendor shipments directly to its stores. The change was made in
order to minimize lead time on product shipments and reduce the internal
handling charges associated with using the Company's central distribution
center.
Comparable store gross profit (gross profit of stores opened during the same
months during the comparable period in the prior year) for the Third Quarter of
Fiscal 1996 decreased approximately $26,000 to approximately $297,000, or 45.9%
of net sales, from approximately $323,000, or 49.4% of net sales, in the Third
Quarter of Fiscal 1995. Comparable store gross profit for the first 39 weeks of
fiscal 1996 decreased approximately $131,000 to approximately $818,000, or
46.5% of net sales, from approximately $949,000, or 48.8% of net sales, in the
comparable 39 weeks of fiscal 1995. The comparable store gross profit analysis
for stores opened during fiscal 1995 includes less days of operation during the
initial month of operation as compared to the comparable month in fiscal 1996.
The decrease in comparable store gross profit as a percentage of sales has
resulted primarily from inventory markdowns and the increased freight costs as
mentioned above.
Selling, general and administrative expenses ("SG&A") increased to
approximately $1,066,000 in the Third Quarter of Fiscal 1996 and to
approximately $3,134,000 for the first 39 weeks of fiscal 1996 from
approximately $647,000 and $1,896,000 for the Third Quarter of Fiscal 1995 and
the first 39 weeks of fiscal 1995, respectively. The primary components of SG&A
are store occupancy costs (which include rent, utilities, common area charges,
real estate taxes and other expenses associated with the operation of a retail
store in a regional mall), store management and sales staff payroll,
depreciation expense and corporate payroll. The increase in SG&A was, for the
most part, the result of increases in store operating expenses, including store
personnel compensation and occupancy costs associated with additional permanent
store openings. Included in the $1,066,000 of SG&A for the Third Quarter of
Fiscal 1996 was approximately $210,000 of corporate overhead expenses as
compared to $226,000 of corporate overhead expense incurred in the Third
Quarter of Fiscal 1995. The decrease in corporate overhead is a result of
management's efforts to reduce costs. In an effort to increase sales volume
while adding minimal additional SG&A throughout the fiscal year, and in order
to capitalize on the seasonal nature of the Company's business, the Company
plans to operate 13 seasonal stores during the 1996 Christmas selling season.
Interest and other income for the Third Quarter of Fiscal 1996 and in the first
39 weeks of fiscal 1996 was approximately $6,000 and $29,000, respectively, as
compared to approximately $35,000 and $118,000 from comparable periods in 1995.
The decreases are primarily a result of reduced levels of cash due to new
store openings.
Interest expense for the Third Quarter of Fiscal 1996 and in the first 39 weeks
of fiscal 1996 was approximately $9,000 and $23,000, respectively, as compared
to approximately $5,000 and $18,000 from comparable periods in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary ongoing capital requirements are anticipated to be for
merchandise inventory purchases and to fund its ongoing operations, including
its temporary store operation and any new permanent store openings.
The Company had working capital of approximately $653,000 and $1.8 million at
November 2, 1996 and February 3, 1996, respectively. In order to fund its
capital and operating requirements, the Company has in the past been primarily
dependent on cash proceeds received from loans from certain members of the
Board of Directors, cash proceeds received from the Company's initial public
offering in November 1994 (the "Offering") and, prior thereto, the Company was
dependent primarily on cash proceeds from sales of equity securities to David
B. Cornstein, the Company's Chairman of the Board of Directors, David F.
Miller, the Company's current President, and Edward J. Munley, the Company's
former President, each of whom is a director and founder of the Company
(collectively, the "Original Stockholders"), and on loans from others.
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On August 28, 1996, Mr. Miller, Mr. Cornstein, and Hugh H. Jones, Jr., also a
member of the Company's Board of Directors, (collectively, the "lenders")
entered into a commitment to lend the Company, for working capital purposes, as
needed, and to fund the opening of 13 temporary stores, up to an aggregate of
$600,000 at an interest rate of 12% per annum (the "Working Capital
Commitment"). All amounts outstanding under the Working Capital Commitment
will be due and payable, together with accrued interest thereon, on January 3,
1997 and such loans are secured by a first priority lien on substantially all
of the assets of the company. As of November 2, 1996, $300,000 had been drawn
under the Working Capital Commitment, and as of December 16, 1996, $500,000 has
been drawn under the Working Capital Commitment. As partial consideration for
the Working Capital Commitment, the Company granted to the lenders options to
purchase an aggregate of 200,000 shares at an exercise price of $1.00,
exercisable until August 31, 2001. In connection with the Working Capital
Commitment, the Company granted to the lenders certain demand and piggyback
registration rights relating to the securities underlying such warrants.
During the first 39 weeks of fiscal 1996, cash decreased by approximately
$1,171,000 to approximately $216,000. The overall decrease in cash resulted
primarily from cash used in operations of approximately $1,297,000. The
Company repaid approximately $49,000 in capital lease obligations during the
period.
During the first 39 weeks of fiscal 1995, cash decreased by approximately
$1,561,000 to approximately $1,391,000. The overall decrease in cash resulted
primarily from cash used in operations of approximately $769,000. The Company
repaid approximately $34,000 in capital lease obligations during the period.
Except as stated above, the Company currently does not maintain any lines of
credit or cash borrowings to finance its capital requirements. The Company
maintains a $100,000 letter-of-credit to serve as collateral for primarily all
of the Company's capital lease obligations. The letter-of-credit expires in
December 1997, at which time it will be considered for renewal.
During the first 39 weeks of fiscal 1996, the Company's inventories increased
by approximately $1,213,000 to approximately $2,191,000 from approximately
$978,000 at February 3, 1996. The increase is primarily a result of the
Company adjusting inventory quantities to levels which management believes will
improve sales volume and the purchase of initial inventory for several seasonal
locations. During the first 39 weeks of fiscal 1995, the Company's
inventories increased by approximately $399,000 to approximately $1,044,000
from approximately $645,000 at January 28, 1995. The increase was primarily a
result of the Company modifying inventory quantities to appropriate seasonal
levels. The most significant inventory needs are expected to be in
November/December. Primarily all of the Company's merchandise purchases are
initially financed by trade credit and the Company generally pays for its
inventory 30-45 days after receipt. Accordingly, the Company's most
significant cash needs in payment for inventory purchases are expected to be in
December/January.
In light of the Company's experience during the 1995 Christmas selling season,
which included the operation of three temporary stores, and in order to
capitalize on the seasonal nature of the Company's business, the Company's plan
of expansion is expected to continue to focus on the increased utilization of
temporary stores during the Christmas selling season. The Company is operating
13 temporary stores during the 1996 Christmas selling season. The average cost
associated with the opening of a temporary store is approximately $15,000
(excluding inventory), which primarily includes the costs of fixtures, cash
register equipment and licensing and permitting. Inventory required to open
such temporary stores is approximately $60,000 per store which was primarily
financed through trade credit. Management intends to closely monitor the
results of operations from the temporary stores during the 1996 Christmas
selling season and further consider an increased expansion of its temporary
store program for future Christmas selling seasons. However, if permanent
locations are identified which meet the Company's criteria and complement the
Company's expansion plan, the Company may open additional permanent stores.
The cost of leasehold improvements and fixtures for a typical permanent store
(net of landlord allowances) is approximately $180,000. Total initial
inventory cost per permanent store is approximately $90,000.
The Company expects to continue to use its cash available from operations and
the proceeds from the Working Capital Commitment to finance its losses from
operations and any new temporary or permanent
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store expansion. At the Company's current level of operations, its permanent
stores are not generating sufficient cash flow to support its current corporate
overhead expense, and the Company anticipates operating at a net loss for
fiscal 1996.
Except as noted above, the Company has no current arrangements with respect to,
or sources of, additional financing, and it cannot be anticipated that any of
the officers, directors or stockholders will provide any additional portion of
the Company's future financing requirements. Following the expiration of the
Working Capital Commitment on January 3, 1997, there can be no assurance that
additional financing will be available to the Company on commercially
reasonable terms, or at all. Any inability to obtain additional financing
could have a materially adverse effect on the Company, including possibly
requiring the Company to significantly curtail, and possibly causing the
Company to cease, its operations. In addition, any equity financing may
involve substantial dilution to the interests of the Company's then-existing
stockholders. Further, there can be no assurance that the Company will achieve
profitability or positive cash flow.
SEASONALITY AND QUARTERLY FLUCTUATIONS
As is the general pattern in the retail industry where disproportionately
higher sales levels are generated during the Christmas selling season, the
Company's business is, and is expected to continue to be, highly seasonal, with
a substantial portion of its revenues derived from product sales during the
months of November and December. Seasonality factors may cause the Company's
operating results to fluctuate significantly from quarter to quarter. If for
any reason the Company's sales were substantially below those normally expected
in the fourth quarter of any fiscal year, the Company's operating results for
such fiscal year would be materially adversely affected. The Company's results
of operations may also fluctuate significantly from quarter to quarter as a
result of a number of other factors, including the timing of new store openings
(and expenses incurred in connection therewith) by either the Company or its
competitors, the marketing activities of its competitors and the emergence of
new market entrants.
TAX LOSS CARRYFORWARDS
The Company's status as an S Corporation terminated upon the consummation of
the Offering. Any pro-rata net operating losses incurred by the Company prior
to such termination are not available to offset future taxable income of the
Company.
EFFECTS OF INFLATION
Inflation has not had a material effect on the Company's operations. The
Company anticipates that it will be able to diminish the effects of
inflationary cost increases by increasing its prices.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Pursuant to the present requirements of Nasdaq, to be eligible for continued
listing on the Nasdaq Small Cap Market, the Common Stock must maintain a
minimum bid price of $1.00 per share or, as an alternative if the bid price is
less than $1.00, maintain capital and surplus of $2,000,000 and a market value
of public float of at least $1,000,000. Nasdaq has recently proposed changes
to make its listing criteria more stringent and, if passed in the proposed
form, it will be difficult for the Company to meet such listing criteria. The
proposal would, among other things, eliminate the foregoing alternative listing
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criteria. On October 24, 1996, the Company was notified by Nasdaq that the
Company's Common Stock failed to maintain a closing bid price greater than or
equal to $1.00 during a period of ten consecutive trade dates prior to the date
of the notice. The Company was provided with a ninety day calendar day period
in which to regain compliance. In order to regain compliance, the Company's
common stock must report a closing bid price of $1.00 or greater (or meet the
alternative criteria) for a period of ten consecutive trading days and for each
trading day thereafter during the ninety day period. If the Company is unable
to demonstrate, on or before January 23, 1997, compliance with either the
minimum $1.00 closing bid price or the alternative requirement, it must submit
by that date its proposal for achieving compliance. Although the bid price of
the Company's common stock exceeded the minimum $1.00 bid price for more than
ten days since receiving the October 1996 notice, it has not done so on a
continual basis and accordingly is not in compliance with Nasdaq criteria.
Should the Company fail to submit the necessary information in the time frame
set forth by Nasdaq or if the submission is deemed to not warrant continued
listing, Nasdaq will issue a formal notice of deficiency which will specify the
delisting date for the Company's securities. In such event, trading, if any,
in the Company's securities would thereafter be conducted in the non-Nasdaq
over-the-counter market. As a result of such delisting, an investor could find
it more difficult to dispose of, or obtain accurate quotations as to the market
value of, the Company's securities. Delisting of the Company's securities may
result in lower prices for the Company's securities than might otherwise
prevail. Although the Company received similar notices from Nasdaq in April
1996 and July 1996 and each time met the requirement relating to the minimum
bid price per share, Nasdaq has stated in the October 1996 notice that the
Company will not be afforded another ninety day period with which to regain
compliance.
In addition, if the Common Stock were to become delisted from trading on Nasdaq
and the trading price of the Common Stock were to remain below $5.00 per share,
trading in the Common Stock would also be subject to the requirements of
certain rules promulgated under the Securities Exchange Act of 1934, as
amended, which require additional disclosure by broker-dealers in connection
with any trades involving a stock defined as a penny stock (generally, any
non-Nasdaq equity security that has a market price of less than $5.00 per
share, subject to certain exceptions). Such rules require the delivery, prior
to any penny stock market transaction, of a disclosure schedule explaining the
penny stock market and the risks associated therewith, and impose various sales
practice requirements on broker-dealers who sell penny stocks to persons other
than established customers and accredited investors (generally institutions).
For these type of transactions, the broker-dealers must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. The additional burdens
imposed upon broker-dealers by such requirements may discourage broker-dealers
from effecting transactions in the Company's securities which could severely
limit the market liquidity of the Company's securities, the ability of security
holders to sell the Company's securities in the secondary market and the
Company's ability to obtain additional financing.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11 Statement re Computation of Per Share Earnings (not required
because the relevant computations can be clearly determined
from material contained in the financial statements included
herein).
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
thirteen weeks ended November 2, 1996.
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Signatures
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
What A World!, Inc.
Date: December 16, 1996 By: /s/ David F. Miller
------------------------------------
David F. Miller
President
(Principal Executive Officer)
Date: December 16, 1996 By: /s/ Brian S. Lappin
------------------------------------
Brian S. Lappin
Vice President of Finance
(Principal Financial and
Accounting Officer)
13
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0
0
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