<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 21, 1996
------------------------------
RENAISSANCE COSMETICS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 33-87280 06-1396287
- --------------------------------------------------------------------------------
(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
955 Massachusetts Avenue
Cambridge, Massachusetts 02139
- --------------------------------------------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
(617) 497-5584
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 21, 1996, the Registrant, through its wholly-owned subsidiary,
Cosmar Corporation, consummated the acquisition of all of the stock of Great
American Cosmetics, Inc. ("GACI") from Mr. Larry Pallini and Mr. Vincent Carbone
(the "GACI Shareholders") (the "Acquisition").
The total purchase price for the Acquisition was $15.25 million in cash,
(1) approximately $14.209 million of which was paid to the GACI Shareholders at
closing, (2) approximately $.041 million of which was retained by the Registrant
to fund possible severance bonuses to certain GACI employees and (3) $1.0
million of which was placed in escrow to secure the GACI Shareholders' post-
closing indemnity obligations under the Acquisition documents. In connection
with the closing, Registrant also (a) repaid $796,312 of GACI indebtedness and
(b) agreed to fund (with up to $.10 million of its own funds and up to $.041
million of the Purchase Price held back from the GACI Shareholders for this
purpose) $.141 million of possible severance bonuses to GACI employees. The
Registrant funded the purchase price with proceeds received from the recent
sales of (1) $85.0 million aggregate liquidation preference 14% senior
redeemable preferred stock and (2) $5.0 million of its common stock and warrants
to purchase approximately 17% of its common stock on a fully diluted basis. The
nature and amount of consideration paid in connection with the Acquisition was
determined based on negotiations between the Registrant and the GACI
Shareholders. Prior to the Acquisition, there were no material relationships
among the Registrant or any of its affiliates, directors or officers or any
associates thereof and the GACI Shareholders and/or GACI. In connection with
the Acquisition, Cosmar Corporation has retained Mr. Pallini for three years and
Mr. Carbone for one year as consultants to it and its affiliates.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
1. Audited financial statements for Great American Cosmetics, Inc., for
the years ended December 31, 1994 and 1995.
2. Unaudited financial statements for Great American Cosmetics, Inc., for
the quarter ended March 31, 1996.
(b) PRO FORMA FINANCIAL INFORMATION. It is impracticable to provide the pro
forma financial information required under Item 7(b) of Form 8-K at the
time this Form 8-K is required to be filed. In accordance with Item
7(b)(2) of Form 8-K, the Registrant will file the required pro forma
financial information under cover of Form 8-K/A as soon as practicable, but
not later than November 4, 1996.
(c) EXHIBITS.
99.1 Stock Purchase Agreement among Cosmar Corporation, a Delaware
corporation, Larry Pallini, Vincent Carbone and Great American
Cosmetics, Inc., a New York corporation, entered into on June 27,
1996 and effective on and as of May 1, 1996 (incorporated by
reference to the Registrant's Quarterly Report filed on Form 10-Q
for the fiscal quarter ended June 30, 1996).
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RENAISSANCE COSMETICS, INC.
(Registrant)
/s/ John R. Jackson
---------------------------
Date: September 4, 1996 By: John R. Jackson
Title: Vice President and General Counsel
<PAGE>
AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED
DECEMBER 31, 1995 AND 1994, AND THE UNAUDITED FINANCIAL
STATEMENTS FOR THE QUARTER ENDED MARCH 31, 1996
OF GREAT AMERICAN COSMETICS, INC.
<PAGE>
[LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Great American Cosmetics, Inc.
Port Washington, New York
We have audited the accompanying Balance Sheets of Great American
Cosmetics, Inc. as of December 31, 1995 and 1994 and the related Statements of
Income, Retained Earnings, and Cash Flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
We did not observe the taking of the physical inventory at December 31,
1993, 1994, and 1995 since we were not engaged to audit the Company's records
until after that date. We were able to satisfy ourselves by means of other
procedures concerning inventory quantities.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Great American Cosmetics,
Inc. as of December 31, 1995 and 1994 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Deutsch, Marin & Company
July 11, 1996
<PAGE>
GREAT AMERICAN COSMETICS, INC.
BALANCE SHEETS
AS AT DECEMBER 31
1995 1994
-------- --------
A S S E T S
------------
CURRENT ASSETS
Cash $ 310,903 $ 130,081
Accounts receivable 871,198 715,052
Merchandise inventories (Note 1) 2,201,359 789,786
Prepaid expenses and other current assets 25,466 5,402
---------- ----------
TOTAL CURRENT ASSETS 3,408,926 1,640,321
FIXED ASSETS (Note 1,3) 44,637 46,508
Intangible assets, net of accumulated
amortization of $706,012 and $482,678 (Note 2) 1,268,988 1,492,322
Deposits 8,139 7,750
---------- ----------
TOTAL ASSETS $4,730,690 $3,186,901
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
-----------------------------------
CURRENT LIABILITIES
Current installments of
long-term debt (Note 4) $ 425,000 $ 250,000
Accounts payable 561,533 310,164
Due to shareholders (Note 5) 100,000 80,000
Accrued expenses and taxes payable 631,794 183,783
---------- ----------
TOTAL CURRENT LIABILITIES 1,718,327 823,947
Long-term debt (Note 4) 1,058,405 1,360,595
Due to shareholders (Note 5) 81,500 181,500
Commitments and contingencies (Note 7) - -
SHAREHOLDERS' EQUITY
Common stock - no par value;
200 shares issued and outstanding 2,000 2,000
Retained earnings 1,870,458 818,859
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 1,872,458 820,859
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,730,690 $3,186,901
---------- ----------
---------- ----------
The accompanying letter and notes are an integral part of these statements
<PAGE>
GREAT AMERICAN COSMETICS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31
1995 1994
-------- --------
INCOME
From sales $7,885,916 $4,175,342
COST OF GOODS SOLD
Inventories - January 1, 789,786 411,337
Purchases 5,557,433 2,716,179
Freight and duty 341,459 130,156
Other direct costs 50,735 22,948
---------- ----------
TOTAL AVAILABLE FOR SALES 6,739,413 3,280,620
Inventories - December 31, 2,201,359 789,786
---------- ----------
COST OF GOODS SOLD 4,538,054 2,490,834
---------- ----------
GROSS MARGIN ON SALES 3,347,862 1,684,508
---------- ----------
OPERATING EXPENSES
Selling 837,947 512,944
General and administrative 429,035 272,023
Management fees - 84,500
Taxes 28,018 18,722
Officers' salaries 134,850 94,000
Depreciation and amortization 257,113 238,573
---------- ----------
TOTAL OPERATING EXPENSES 1,686,963 1,220,762
---------- ----------
NET INCOME FOR YEAR BEFORE PROVISION
FOR INCOME TAXES 1,660,899 463,746
Provision for income taxes 609,300 147,633
---------- ----------
NET INCOME FOR YEAR 1,051,599 316,113
Retained earnings - January 1, 818,859 502,746
---------- ----------
Retained earnings - December 31, $1,870,458 $ 818,859
---------- ----------
---------- ----------
The accompanying letter and notes are an integral part of these statements
<PAGE>
GREAT AMERICAN COSMETICS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for year $ 1,051,599 $ 316,113
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 257,113 238,573
Changes in assets and liabilities:
Accounts receivable ( 156,146) ( 197,316)
Inventories ( 1,411,573) ( 378,449)
Prepaid expenses ( 20,064) 231
Deposits ( 389) ( 7,750)
Accounts payable 251,369 238,841
Accrued expenses and taxes payable 448,011 79,299
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 419,920 289,542
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of shareholder loans ( 80,000) ( 54,500)
Purchase of fixed assets ( 31,908) ( 30,630)
---------- ----------
NET CASH (USED IN) INVESTING ACTIVITIES ( 111,908) ( 85,130)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of notes payable 150,000 -
Repayment of installment indebtedness ( 277,190) ( 236,961)
---------- ----------
NET CASH (USED IN) FINANCING ACTIVITIES ( 127,190) ( 236,961)
-------- --------
NET CHANGES IN CASH EQUIVALENTS 180,822 ( 32,549)
Cash balance - January 1, 130,081 162,630
---------- ----------
Cash balance - December 31, $ 310,903 $ 130,081
---------- ----------
---------- ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 8,496 $ 6,011
-------- --------
-------- --------
Taxes $ 93,275 $ 29,021
-------- --------
-------- --------
The accompanying letter and notes are an integral part of these statements
<PAGE>
GREAT AMERICAN COSMETICS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1995
Note 1: - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPANY'S ACTIVITIES - The Company is a New York corporation,
organized in May, 1990, and formerly known as Unforgettable Cosmetics,
Inc. The Company is a wholesaler of health, beauty aids and
fragrances selling to predominantly chain drugstores, mass
merchandisers and other wholesalers.
MERCHANDISE INVENTORIES - Inventories consist of finished goods,
unpackaged product components (bulk), and displays, materials and
supplies and are valued at the lower of cost or market, primarily on a
first-in, first-out (FIFO) cost basis. All obsolete or non-saleable
merchandise has been valued at net realizable value.
FIXED ASSETS AND DEPRECIATION - Fixtures and equipment are stated
at cost and are depreciated for both financial reporting and income
tax purposes under the Modified Accelerated Cost Recovery System
(MACRS). In accordance with this provision, equipment is being
depreciated using the double declining balance method over a
five/seven year period. These procedures differ from generally
accepted accounting principles, which require depreciation to be
provided over the estimated average useful lives of the assets. Any
difference in the current year's provision for depreciation on these
assets, based upon the usage of MACRS, rather than the estimated
average useful lives, is not significant.
Property sold or retired is eliminated from the asset and reserve
accounts in the year of disposition. Any differences between the
proceeds on disposition and undepreciated cost are reflected in other
income.
Expenditures for maintenance, repairs and minor renewals which do
not naturally extend the life of assets are charged against earnings
when incurred. Additions and major renewals are capitalized.
CONCENTRATION OF CREDIT RISK - The Company's credit risks
primarily consist of accounts receivable from various drug store
chains. Management performs ongoing credit evaluations of its
customers and provides allowances as deemed necessary.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
<PAGE>
GREAT AMERICAN COSMETICS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 2: - ACQUISITION OF NAT ROBBINS LTD.
On December 1, 1992, the Company acquired the operations and
substantially all assets of Nat Robbins Ltd., a New York corporation
in a business similar to their own.
Assets included were as follows:
Trademark $1,000,000
Customer list 400,000
Goodwill 75,000
Equipment 25,000
----------
$1,500,000
----------
----------
In addition, a four year non-competition agreement was entered
into between the seller and the Company, at a cost of $500,000. With
the exception of the noncompete covenant and equipment, each asset
acquired is amortized over a fifteen year period in accordance with
the Revenue Reconciliation Act of 1993.
Note 3: - FIXED ASSETS
Fixed assets and depreciation are comprised as follows:
<TABLE>
<CAPTION>
Accumulated Book
Cost Depreciation Value Depreciation
---- ------------ ----- ------------
December 31, 1995
-----------------
<S> <C> <C> <C> <C>
Machinery
and equipment $ 81,254 $ 38,915 $42,339 $13,304
Furniture
and fixtures 10,975 10,975 - 9,753
Shelves and racks 14,147 11,849 2,298 10,722
-------- -------- ------- --------
TOTAL $106,376 $ 61,739 $44,637 $33,779
-------- -------- ------- --------
-------- -------- ------- --------
<CAPTION>
December 31, 1994
-----------------
<S> <C> <C> <C> <C>
Machinery
and equipment $ 60,282 $ 25,611 $34,671 $12,892
Furniture
and fixtures 8,551 1,222 7,329 1,222
Shelves and racks 5,635 1,127 4,508 1,127
-------- -------- ------- --------
TOTAL $ 74,468 $ 27,960 $46,508 $15,241
-------- --------- -------- --------
-------- --------- -------- --------
</TABLE>
<PAGE>
GREAT AMERICAN COSMETICS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 4: - LONG TERM DEBT
Long-term debt is comprised as follows:
1995 1994
---------- -----------
Various installment notes for
equipment and intangibles $1,333,405 $1,610,595
Notes payable - Quality Supply
Corp., with interest at 13%,
due November 5, 1996 100,000 -
Notes payable - Christine
Tsaktsirlis, with interest
at 13%, due November 5, 1996 50,000 -
----------- ----------
1,483,405 1,610,595
Amounts due within one year 425,000 250,000
----------- ----------
$1,058,405 $1,360,595
----------- ----------
----------- ----------
The various installment notes result from an agreement dated
December 1, 1992 for the purchase of the name and sundry assets of Nat
Robbins, Ltd. (Note 2). The total purchase price was $2,000,000,
which included the assumption by the Company of certain liabilities of
the seller in the amount of $328,000. The payments due under the note
are calculated at 8% of the net sales of Nat Robbins products and are
payable on a monthly basis. The seller has received a security
interest in the acquired assets, which the seller assigned to
Extebank. At the direction of the seller, the Company had been
remitting any amounts due under the agreement equally to pay both the
assumed liabilities and Extebank. At December 31, 1994, the assumed
liabilities were paid in full.
Management has been negotiating with a third party lender a
refinancing of the Extebank indebtedness so as to achieve more
favorable principal repayment terms. (See Note 8.)
Management, based upon its 1995 and 1994 sales of "Nat Robbins"
products, has classified $275,000 and $250,000 respectively of the
obligation as a current maturity of long-term debt.
<PAGE>
GREAT AMERICAN COSMETICS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 5: - RELATED PARTY TRANSACTIONS
The shareholders of the Company have made various advances of
working capital, when needed, to the Company. These advances are
payable on demand, without collateral, and interest is charged at
prevailing market rates.
The shareholders have agreed not to withdraw portions of their
respective loans to the company for the next twelve (12) month period.
As such, these amounts have been classified as long-term.
Note 6: - INCOME TAXES
The provision for income taxes consist of the following:
1995 1994
-------- --------
Federal income tax, at
applicable rates $453,400 $119,588
New York State franchise tax 155,900 28,045
-------- --------
TOTAL $609,300 $147,633
--------- --------
--------- --------
The Company is currently being audited by the Internal Revenue
Service for years 1993 and 1994. Management does not feel that any
adjustment will be material. The issues under review, if adjusted by
the IRS, will merely result in a timing difference as to the deduction
of certain costs.
Note 7: - COMMITMENTS AND CONTINGENCIES
In November of 1994, the Company moved to a new location where
the minimum annual rental commitment in effect at December 31, 1995 is
as follows:
1996 $48,205
1997 50,065
1998 51,925
1999 53,785
2000 4,495
<PAGE>
GREAT AMERICAN COSMETICS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 7: - COMMITMENTS AND CONTINGENCIES (Continued)
The lease requires payment of real estate taxes, electric and
other expenses. The Company also leases additional office space in Florida
under a lease expiring February, 1997, which provides for the lessee to be
responsible for all insurance, utilities and real estate taxes. Rent expense
relating to these arrangements aggregated $58,511 and $21,539 for 1995 and 1994
respectively.
Note 8: - SUBSEQUENT EVENT
REFINANCING - In April, 1996, the Company obtained a $600,000
loan from Chase Manhattan Bank, which funds were used for the purpose of
repayment of the existing notes with Extebank. In accordance with an
agreement with Extebank, the Company received a $350,000 discount on the
early retirement of the debt. In addition, the Company entered into a
revolving credit agreement with Chase that provides for advances up to a
maximum of $900,000.
PENDING SALE - The shareholders of the Company have entered into
a stock purchase agreement dated June 27, 1996 with Cosmar Corporation (the
Buyer). Pursuant to the agreement, the Buyer is acquiring from the shareholders
all of the outstanding capital stock of Great American Cosmetics, Inc. The
transaction contemplated under the agreement is scheduled to close by August 31,
1996.
<PAGE>
[LETTERHEAD]
To the Board of Directors
Great American Cosmetics, Inc.
Port Washington, New York
Our examination was made primarily for the purpose of rendering an opinion
on the Financial Statements of Great American Cosmetics, Inc. as of December 31,
1995 and 1994 and the years then ended taken as a whole. The supplementary data
included in the accompanying schedules, although not considered necessary for a
fair presentation of financial position and results of operations, are presented
primarily for supplemental analysis purposes.
The additional information has been subjected to audit procedures applied
in our examination of the Financial Statements and is, in our opinion, fairly
stated in all material respects on a consistent basis in relation to the
Financial Statements taken as a whole.
/s/ Deutsch, Marin & Company
July 11, 1996
<PAGE>
GREAT AMERICAN COSMETICS, INC.
SUPPLEMENTAL SCHEDULES
FOR THE YEARS ENDED DECEMBER 31
1995 1994
-------- --------
SELLING COSTS
-------------
Commissions $527,712 $299,296
UPS and postage 4,907 3,604
Conventions and shows 28,994 38,279
Entertainment 25,342 27,580
Advertising 152,121 63,025
Travel 72,325 64,310
Automobile 23,614 16,091
Samples 2,932 1,759
-------- --------
TOTAL $837,947 $512,944
-------- --------
-------- --------
GENERAL AND ADMINISTRATIVE
--------------------------
Payroll - manager $ 60,683 $ 58,083
- office and administrative 92,775 57,402
Rent and utilities 58,511 21,539
Telephone 24,219 16,886
Office supplies and expenses 26,147 21,422
Computer supplies and expenses 37,848 16,677
Professional fees 24,959 18,557
Equipment rental 29,105 14,111
Interest and bank charges 8,496 6,011
Insurance 20,664 8,542
Employee benefits 28,678 20,787
Dues, subscriptions and memberships 14,701 4,448
Contributions 1,275 450
Repairs and maintenance 974 986
Moving costs - 6,122
-------- --------
TOTAL $429,035 $272,023
-------- --------
-------- --------
The accompanying letter and notes are an integral part of these statements
<PAGE>
GREAT AMERICAN COSMETICS, INC.
BALANCE SHEET
AS AT MARCH 31, 1996
A S S E T S
-----------
CURRENT ASSETS
Cash $ 48,119
Accounts receivable 1,874,439
Merchandise inventories - submitted 3,394,221
Prepaid expenses and other current assets 9,072
----------
TOTAL CURRENT ASSETS 5,325,851
Fixed Assets 130,333
Accumulated depreciation 67,906 62,427
----------
Intangible assets, net of accumulated
amortization of $761,845 1,213,155
Deposits 8,139
----------
TOTAL ASSETS $6,609,572
----------
----------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $1,474,559
Notes payable 650,000
Current installments of long-term debt 227,400
Due to shareholders 100,000
Accrued expenses and taxes payable 993,925
----------
TOTAL CURRENT LIABILITIES 3,445,884
Long-term debt 697,505
Due to shareholders 81,500
Commitments and contingencies -
SHAREHOLDERS' EQUITY
Capital stock 2,000
Retained earnings 2,382,683
----------
TOTAL SHAREHOLDERS' EQUITY 2,384,683
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,609,572
----------
----------
See Accountant's Report
<PAGE>
GREAT AMERICAN COSMETICS, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
INCOME
From Sales - net $2,380,729
COST OF GOODS SOLD
Inventories - January 1, 2,201,359
Purchases 2,480,661
Freight and duty 65,152
Other direct costs 9,180
-----------
TOTAL AVAILABLE FOR SALES 4,756,352
Inventories - March 31, 3,394,221
-----------
COST OF GOODS SOLD 1,362,131
----------
GROSS MARGIN ON SALES 1,018,598
OPERATING EXPENSES
Selling 277,709
General and administrative 136,255
Officers' salaries 34,471
Taxes 8,773
Depreciation and amortization 62,000
----------
TOTAL OPERATING EXPENSES 519,208
----------
NET OPERATING INCOME FOR PERIOD BEFORE
OTHER INCOME 499,390
Gain on restructuring of debt 350,000
Interest income 2,235
----------
NET INCOME FOR PERIOD BEFORE PROVISION
FOR INCOME TAXES 851,625
Provision for income taxes 339,400
----------
NET INCOME FOR PERIOD 512,225
Retained earnings - January 1, 1996 1,870,458
----------
Retained earnings - March 31, 1996 $2,382,683
----------
See Accountant's Report
<PAGE>
GREAT AMERICAN COSMETICS, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for period $ 512,225
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 62,000
Gain on restructuring of debt ( 350,000)
Changes in assets and liabilities:
Accounts receivable ( 1,003,241)
Inventory ( 1,192,862)
Prepaid expenses 16,394
Accounts payable 913,026
Accrued expenses and taxes payable 362,131
--------------
NET CASH (USED IN) OPERATING ACTIVITES ( 680,327)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets ( 23,957)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of notes payable 1,250,000
Repayment of installment indebtednesss ( 808,500)
-------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 441,500
-------------
NET CHANGES IN CASH EQUIVALENTS ( 262,784)
Cash balance - January 1, 1996 310,903
-------------
Cash balance - March 31, 1996 $ 48,119
-------------
-------------
Supplemental Disclosure of Cash Flow Information
Cash paid during this period for:
Interest $ 7,427
--------
--------
Income taxes $ 11,384
--------
--------
See Accountant's Report
<PAGE>
GREAT AMERICAN COSMETICS, INC.
SUPPLEMENTAL SCHEDULES
FOR THE THREE MONTHS ENDED MARCH 31, 1996
SELLING COSTS
-------------
Commissions $ 95,704
UPS and postage 3,567
Conventions and shows 11,850
Entertainment 6,310
Bad debts 49,427
Advertising 87,085
Travel 15,702
Automobile 7,112
Samples 952
------------
TOTAL $277,709
------------
------------
GENERAL AND ADMINISTRATIVE
--------------------------
Payroll - manager $ 14,900
- office and administrative 28,802
Rent and utilities 14,487
Telephone 11,011
Office supplies and expenses 9,417
Computer supplies and expenses 6,021
Professional fees 14,441
Equipment rental 7,801
Interest and bank charges 10,176
Insurance 6,199
Employee benefits 7,263
Dues, subscriptions and memberships 637
Agency fees 4,000
Temporary help 1,100
------------
TOTAL $136,255
-----------------
-----------------
See Accountant's Report
