U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
( ) 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: 0-26676
MULTIMEDIA CONCEPTS INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 13-3835325
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
448 West 16th Street, New York, NY 10011
(Address of principal executive offices)
(212) 675-6666
(Issuer's telephone number)
-------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, $.001 par value. 3,005,000 shares outstanding as of August 29,
1996
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page(s)
PART 1. Financial Information
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets - June 30, 1996
(Unaudited) and September 30, 1995 3.
Consolidated Condensed Statements of Operations (Unaudited) -
Nine and Three Months Ended June 30, 1996 and 1995 4.
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Nine Months Ended June 30, 1996 and 1995 5.
Notes to Interim Consolidated Condensed Financial
Statements (Unaudited) 6.-7.
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8.-9.
PART 2. Other Information 10.
SIGNATURES 11.
EXHIBITS: Exhibit 27 - Financial Data Schedule 12.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
- ASSETS -
<TABLE>
<CAPTION>
June 30, September 30
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 703,378 $ 2,207
Accounts receivable - net of allowances for doubtful accounts of $14,921 730,717 603,715
Inventories 630,000 1,785,189
Loans and advances - affiliates (Note 3a) 809,658 --
Advances to affiliate (Note 2) 285,000 --
Loan receivable - officer 331,136 257,222
Prepaid expenses and other current assets 29,500 29,500
----------- -----------
TOTAL CURRENT ASSETS 3,519,389 2,677,833
----------- -----------
FIXED ASSETS:
Furniture and fixtures 11,547 11,547
Machinery and equipment 17,814 17,814
----------- -----------
29,361 29,361
Less: accumulated depreciation 9,444 5,040
----------- -----------
19,917 24,321
----------- -----------
OTHER ASSETS:
Investment in convertible preferred stock (Note 4) 2,554,000 --
Security deposits 34,684 34,684
Deferred offering costs (Note 5) -- 145,000
Cost in excess of net assets acquired - net of accumulated amortization 25,167 26,667
----------- -----------
2,613,851 206,351
----------- -----------
$ 6,153,157 $ 2,908,505
=========== ===========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable $ 360,164 $ 502,298
Accrued expenses and other liabilities 231,763 64,788
----------- -----------
TOTAL CURRENT LIABILITIES 591,927 567,086
----------- -----------
LONG-TERM DEBT PAYABLE TO AFFILIATE (Note 3b) -- 989,500
----------- -----------
MINORITY INTEREST IN SUBSIDIARY (Note 1) -- --
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (Notes 3b and 5):
Common stock, $.001 par value; 10,000,000 shares authorized, 3,005,000 and
2,085,000 shares issued and outstanding at
June 30, 1996 and September 30, 1995, respectively 3,005 2,085
Additional paid-in capital 8,262,256 1,909,315
Retained earnings (deficit) (2,704,031) (559,481)
----------- -----------
5,561,230 1,351,919
----------- -----------
$ 6,153,157 $ 2,908,505
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
June 30, June 30,
---------------------------- ----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 1,466,454 $1,664,545 $ 3,439,896 $ 5,466,324
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of sales 2,179,993 1,467,039 4,789,593 4,964,624
Operating expenses 307,367 231,394 760,552 676,072
----------- ----------- ----------- -----------
2,487,360 1,698,433 5,550,145 5,640,696
----------- ----------- ----------- -----------
(LOSS) FROM OPERATIONS (1,020,906) (33,888) (2,110,249) (174,372)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (26,922) (18,750) (67,870) (136,845)
Interest and other income (expense) 21,636 11,494 33,569 558
----------- ----------- ----------- -----------
(5,286) (7,256) (34,301) (136,287)
----------- ----------- ----------- -----------
(LOSS) BEFORE MINORITY INTERESTS (1,026,192) (41,144) (2,144,550) (310,659)
Minority interests (Note 1) -- -- -- --
----------- ----------- ----------- -----------
(LOSS) BEFORE PROVISION (CREDIT)
FOR INCOME TAXES (1,026,192) (41,144) (2,144,550) (310,659)
Provision (credit) for income taxes -- -- -- --
----------- ----------- ----------- -----------
NET (LOSS) $(1,026,192) $ (41,144) $(2,144,550) $ (310,659)
=========== =========== =========== ===========
(LOSS) PER COMMON SHARE (Note 6) $(.34) $(.02) $(.83) $(.17)
===== ===== ===== =====
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
(Note 6) 3,005,000 1,800,000 2,592,007 1,800,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of thes
consolidated financial tatements.
4
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
June 30,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(2,144,550) $ (310,659)
Adjustments to reconcile net (loss) to net cash (used for) provided
by operating activities:
Allowance for doubtful accounts -- 8,000
Depreciation of fixed assets 4,404 4,717
Amortization of excess of costs over net assets acquired 1,500 1,500
Change in assets and liabilities:
(Increase) decrease in accounts receivable (127,002) 1,183,040
Decrease (increase) in inventories 1,155,189 (469,123)
(Increase) in loan to supplier -- (135,000)
(Increase) in prepaid expenses and other current assets -- (14,500)
(Decrease) in accounts payable (142,134) (231,163)
Increase in accrued expenses and other liabilities 166,975 8,560
----------- -----------
Net cash (used for) provided by operating activities (1,085,618) 45,372
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to officers (73,914) (114,992)
Advances to affiliates (809,658) --
Advances to equity investee (285,000) --
Purchases of fixed assets -- (28,496)
Security deposits paid -- (14,684)
----------- -----------
Net cash (used for) investing activities (1,168,572) (158,172)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of common stock and warrants 3,944,861 --
Expenses associated with initial public offering -- (145,000)
Loans received from (repaid to) affiliate (989,500) 290,546
----------- -----------
Net cash provided by financing activities 2,955,361 145,546
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 701,171 32,746
Cash and cash equivalents, at beginning of year 2,207 21,333
----------- -----------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 703,378 $ 54,079
=========== ===========
SUPPLEMENTAL INFORMATION:
Taxes paid $ -- $ --
Interest paid -- --
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of
Multimedia Concepts International Inc. ("the Company") and its 55%
owned subsidiary, American Eagle Industries Corp. "Industries" and its
wholly owned subsidiary, Match II, Inc. Through June 30, 1996 losses
applicable to the minority shareholders exceeded their interest in
Industries, which was reduced to zero, and as such, excess losses were
charged against the operations of the Company. Future earnings
attributable to the minority interest in Industries, if any, will
first be credited to the operations of the Company, to the extent that
such excess losses were previously absorbed by the Company. Industries
began operations in August 1994.
All intercompany transactions and balances have been eliminated on
consolidation.
In the opinion of management the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present
fairly the financial position of the Company as of June 30, 1996, the
statements of operations for the nine and three month periods ended
June 30, 1996 and 1995 and the statements of cash flows for the nine
month periods ended June 30, 1996 and 1995.
It is suggested that these financial statements be read in conjunction
with the financial statements and notes thereto of the Company,
included in its registration statement on Form SB-2, which became
effective on November 9, 1995 and which is incorporated herein by
reference.
The results of operations for the three and nine month periods ended
June 30, 1996, should not be regarded as necessarily indicative of the
results that may be expected for the full year.
NOTE 2 - ADVANCES TO AFFILIATE:
The Company owns 34% of the issued and outstanding stock of Multi
Media Publishing Corp. ("MMP"), a development stage company with no
significant operations. As of June 30, 1996, the Company had advanced
$100,000 to this affiliate.
NOTE 3 - DUE FROM (TO) AFFILIATES:
(a) As of June 30, 1996 the Company had advanced an aggregate of $809,658
to entities affiliated to one of the directors/executive officers of
the Company. Such advances are non-interest bearing and are repayable
on demand.
6
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - DUE FROM (TO) AFFILIATES (Continued):
(b) On September 28, 1995, an affiliate to whom the Company owed
$2,500,000, agreed to convert a portion of this receivable to equity
in the Company. In exchange for a reduction of $1,510,500 in the
amount it owed the affiliate, the Company agreed to issue 285,000
shares of common stock at $5.00 per share and 570,000 redeemable
common stock warrants at $.15 per warrant. These prices are the same
as the price offered to the public in an initial public offering (see
Note 5).
This debt, on which interest was being charged at an annual rate of
10%, was repaid in full as of June 30, 1996.
NOTE 4 - INVESTMENT IN PREFERRED STOCK:
In connection with an employment agreement entered into with an
executive officer, in May 1996 the Company granted an option to such
officer to acquire 2,900,000 common stock purchase warrants at a price
of $2.50 per warrant (market value), payable either in cash or other
securities. As of June 30, 1996, the officer had purchased these
warrants with payment being made through the transfer of 528,000
shares of convertible preferred stock in another publicly traded
company, Play Co. Toys & Entertainment Corp. The Company has valued
this preferred stock at $2,554,000, the deemed fair value based upon
such factors as dilution, lack of marketability, etc. This investment
has been reflected as a non-current asset based upon the intent of
management.
NOTE 5 - EQUITY FINANCING:
In January 1996, the Company, through its underwriter, successfully
completed an initial public offering of 920,000 shares of common stock
(including the underwriter's over allotment) at a price of $5.00 per
share, together with two warrants for each share, at a price of $.15
per warrant.
The net proceeds to the Company from the sale of the common stock and
warrants offered, after deducting underwriting discounts and
commissions and other expenses of the offering were approximately
$3,945,000.
NOTE 6 - EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share has been computed on the basis of the
weighted average number of common shares and common equivalent shares
outstanding during each period presented.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of significant
factors which have affected the registrant's financial position and
operations during the period ended June 30, 1996.
Multimedia Concepts International, Inc. (the "Company") is a Delaware
corporation which was organized in June 1994 under the name U.S. Food
Corporation; its name was changed to its present name in June 1995.
The Company acquired fifty-five (55%) percent of the capital stock of
American Eagle Industries Corp. ("Industries") in June, 1994. In June
1994, Industries acquired 100% of the issued and outstanding shares of
common stock of Match II, Inc. The Company also acquired thirty-four
(34%) percent of the issued and outstanding capital stock of Multi
Media Publishing Corp. ("MMP"), in June 1995.
Industries designs and manufactures a line of private label knit tops
predominantly for men and boys, including two types of t-shirts (one
with a pocket and one without) and two types of polo shirts (one with
a button collar and one without). American Eagle also manufactures a
lightweight denim jacket.
Match II sells its own brand name of ladies' tops and coordinates
under the tradename "Match II". The Match II garments are sold
nationally in boutique stores and specialty chain stores.
MMP is a development stage entity, with no significant operations,
which has to date completed the production of two computer compact
disc read only memory discs ("CD-ROM"), which are CD-ROM versions of
three clinical books.
The financial information presented herein includes: (i) Balance
sheets as of June 30, 1996 and September 30, 1995, (ii) Statements of
operations for the three and nine month periods ended June 30, 1996
and 1995 and (iii) Statements of cash flows for the nine month periods
ended June 30, 1996 and 1995.
Results of Operations
Sales for the three and nine months ended June 30, 1996 were
$1,466,000 and $3,440,000, respectively as compared to $1,665,000 and
$5,466,000, respectively for the comparable periods of the prior year.
These decreases were primarily due to a reduction in sales to the
Company's most significant customer, K-Mart. There is no assurance
that K-Mart will resume buying from the Company at previous levels or
that the Company will be able to replace this volume of sales lost
with another customer.
Overhead costs for the three and nine months ended June 30, 1996 were
$307,000 and $761,000, respectively. For the three and nine months
ended June 30, 1995, overhead costs were $231,000 and $676,000,
respectively. The increases in costs were primarily due to increased
consulting fees.
Interest expense decreased when comparing the nine months ended June
30, 1995 to June 30, 1996. For the nine month periods the decrease was
from $137,000 to $68,000, as the Company repaid all outstanding loans
from the proceeds of its initial public offering (see below).
8
<PAGE>
For the three months ended June 30, 1996 the Company reflected a loss
of approximately $1,026,000 or $.34 per share. For the three months
ended June 30, 1995 the Company reflected a loss of approximately
$41,000 or $.02 per share. The higher loss for 1996 was a result of
lower revenues and having a much higher cost of sales during the 1996
period. For the six months ended June 30, 1996, the Company reflected
a loss of $2,145,000 ($.83 per share) as compared to the six months
ended June 30, 1995 whereby the Company reflected a loss of $311,000
or $.17 per share. The higher 1996 loss was due to a 37% sales decline
and to a higher cost of sales.
Liquidity and Capital Resources
At June 30, 1996 the Company had cash of $703,000 and working capital
of $2,927,000. At September 30, 1995 the Company had cash of $2,000,
working capital of $2,111,000 and long- term debt of $989,000.
The improvement between September 30, 1995 and June 30, 1996 was due
to the fact that in January, 1996, the Company, through its
underwriter, successfully completed an initial public offering of
920,000 shares, including the underwriter's overallotment, of its
common stock (together with two warrants for each share) and received
net proceeds of approximately $3,945,000.
The Company currently has made no material capital commitments and
none are currently contemplated.
Management believes that the funds it presently has available
(primarily from its IPO) are sufficient for at least the ensuing
twelve month period.
9
<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. Submissions of Matters to a Vote of Security
Holders - None.
ITEM 5. Other Information - None.
ITEM 6. Exhibits
(a) Exhibit 27 - Financial Data Schedule
(b) None.
10
<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.
Dated: January 30, 1996
MISTER JAY FASHIONS
INTERNATIONAL, INC.
By: /s/ Ilan Arbel
-----------------------------------
ILAN ARBEL, Chief Executive Officer
By: /s/ Allean Goode
-----------------------------------
ALLEAN GOODE, Treasurer
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements for the nine months ended June 30, 1996
and is qualified in its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 703,378
<SECURITIES> 0
<RECEIVABLES> 745,638
<ALLOWANCES> 14,921
<INVENTORY> 630,000
<CURRENT-ASSETS> 3,519,389
<PP&E> 29,361
<DEPRECIATION> 9,444
<TOTAL-ASSETS> 6,153,157
<CURRENT-LIABILITIES> 591,927
<BONDS> 0
0
0
<COMMON> 3,005
<OTHER-SE> 5,558,225
<TOTAL-LIABILITY-AND-EQUITY> 6,153,157
<SALES> 3,439,896
<TOTAL-REVENUES> 3,439,896
<CGS> 4,789,593
<TOTAL-COSTS> 4,789,593
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,870
<INCOME-PRETAX> (2,144,550)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,144,550)
<EPS-PRIMARY> (.83)
<EPS-DILUTED> .00
</TABLE>
