UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
---------------------------------------------
or
[ ] 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 registrant as specified in its charter)
Delaware 13-3835325
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
448 West 16th Street, New York, New York 10011
(Address of principal executive offices) (Zip Code)
(212) 675-6666
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has 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 [xx] No [
]
APPLICABLE ONLY TO CORPORATE ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common stock, par value $.001 per share: 3,005,000 shares outstanding as of
December 31, 1997.
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONTENTS
Page
Number
PART 1- FINANCIAL INFORMATION
ITEM 1- FINANCIAL STATEMENTS
<S> <C> <C> <C>
Consolidated balance Sheets as of December 31, 1997 (Unaudited)
and September 30, 1997 3
Consolidated statements of Operations (Unaudited) for the three
months ended December 31, 1997 and December 31, 1996 4
Consolidated statements of Cash Flows (Unaudited) for the three months
ended December 31, 1997 and December 31, 1996 5
Notes to Financial Statements (Unaudited) 6
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 9
PART II- OTHER INFORMATION 10
Signatures 11
</TABLE>
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1997 and September 30, 1997
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ................................................. $ 1,072,068 $ 13,189
Accounts receivable ....................................................... 374,289 723,112
Advances to supplier ...................................................... -- 60,000
Inventories ............................................................... 94,000 66,662
Loans and advances-affiliate .............................................. 89,815 89,815
Loan receivable-officer ................................................... 489,543 1,314,596
------------ ------------
Total current assets .............................................. 2,119,715 2,267,374
------------ ------------
FIXED ASSETS:
Furniture and fixtures .................................................... 11,547 11,547
Machinery and equipment ................................................... 17,814 17,814
------------ ------------
29,361 29,361
------------ ------------
Less: accumulated depreciation ............................................. 29,361 29,361
------------ ------------
------------ ------------
------------ ------------
OTHER ASSETS:
Investment in convertible preferred stock (Note 3) ........................ 4,221,490 4,221,490
Advances to equity investee ............................................... 140,000 140,000
Due from affiliate (Note 4) ........................... 1,368,735 1,276,235
Security deposit 50 50
------------ ------------
5,730,275 5,637,775
------------ ------------
Total assets ...................................................... $ 7,849,990 $ 7,905,149
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .......................................................... $ 427,940 $ 429,283
Accrued expenses and other liabilities .................................... 29,844 29,844
Payroll taxes withheld and payable ........................................ 23,682 23,682
------------ ------------
Total current liabilities ......................................... 481,466 482,809
------------ ------------
MINORITY INTEREST IN SUBSIDIARY (Note 2) ................................... -- --
------------ ------------
Total liabilities ................................................. 481,466 482,809
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; 10,000,000
shares authorized, 3,005,000 shares issued
and outstanding ......................................................... 3,005 3,005
Additional paid-in capital ............................................... 13,102,005 13,102,005
Retained earnings (Deficit) ............................................... (5,736,486) (5,682,670)
------------ ------------
7,368,524 7,422,340
----------- ------------
Total liabilities and stockholders' equity ........................ $ 7,849,990 $ 7,905,149
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PERATIONS
(Unaudited)
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<CAPTION>
Three Months Ended
Dec 31, Dec 31,
1997 1996
<S> <C> <C>
REVENUES, net sales ..................... $ 234,501 $ --
----------- -----------
COSTS AND EXPENSES:
Cost of sales .......................... 128,547 --
Operating expenses ..................... 179,906 183,050
----------- -----------
308,453 183,050
----------- -----------
OPERATING INCOME (LOSS) ................. (73,952) (183,050)
----------- -----------
OTHER INCOME
Interest income ........................ 20,136 12,024
----------- -----------
INCOME (LOSS) BEFORE
MINORITY INTERESTS .................... (53,816) (171,026)
Minority interests (Note 2) .......... -- --
----------- -----------
NET (LOSS) .............................. $ (53,816) $ (171,026)
=========== ===========
Basic and Diluted (loss) per common share $ (.018) $ (.057)
=========== ===========
Weighted average number of common shares
outstanding .................... 3,005,000 3,005,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Three Months Ended
December 31, December 31,
1997 1996
----- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss .................................................... $ (53,816) $ (171,026)
----------- -----------
Adjustments to reconcile net loss to cash (used)
provided for operating activities:
Depreciation and amortization ............................. -- 1,500
Changes in assets and liabilities:
Decrease in Accounts receivable ............................. 348,823 1,191,510
(Increase) in Merchandise inventories (27,338) 8,090
Decrease in advances to supplier ........................... 60,000 --
(Decrease) in accounts payable .............................. (1,343) (35,550)
(Decrease) in accrued expenses and other liabilities ........ -- (1,813)
----------- -----------
Total adjustments .................................. 380,142 1,163,737
----------- -----------
Net cash provided by operating activities .......... 326,326 992,711
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Reduction (increase) in loans receivable-officer .......... 825,053 (423,249)
----------- -----------
Net cash provided by( used for) investing activities 825,053 (423,249)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans received from (repaid to) affiliate ................. (92,500) 55,000
----------- -----------
Net cash provided by (used for) financing activities (92,500) 55,000
----------- -----------
NET INCREASE (DECREASE) IN CASH ............................. 1,058,879 624,462
Cash, beginning of period ................................... 13,189 491,262
----------- -----------
Cash, end of period ......................................... $ 1,072,068 $ 1,115,724
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid ............................................... $ -- $ --
Taxes paid .................................................. $ -- $ --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1- BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and the
instructions to Form 10-QSB. Accordingly, they do not include
all the information and footnotes required by generally accepted
accounting principles for more complete financial statements. In
the opinion of management, the interim financial statements
include all adjustments considered necessary for a fair
presentation of the Company's financial position and the results
of its operations for the three months ended December 31, 1997,
and are not necessarily indicative of the results to be expected
for the full fiscal year. For further information, refer to the
Company's Annual report on Form 10-KSB for the fiscal year ended
September 30, 1997, as filed with the Securities and Exchange
Commission.
Note 2- DESCRIPTION OF COMPANY:
Multimedia Concepts International, Inc. ("the Company") is a
Delaware corporation which was organized in June 1994 under the
name U.S. Food Corporation. The Company changed its name to
American Eagle Holdings Corporation in April 1995 and then to
its present name in June 1995. The Company was initially formed
as a holding company for the purpose of forming an integrated
clothing design, manufacturing and distribution operation. In
June 1994, the Company acquired 55% of the outstanding shares of
common stock of American Eagle Industries Corp., which acquired
100% of the outstanding shares of Match 11, Inc. The Company
also acquired 34% of the issued and outstanding common stock of
Multi Media Publishing Corp. in June 1995.
In December 1996, the Company held a special meeting of its
shareholders who authorized the Company to sell or dispose of its
shares in American Eagle Industries Corp. (and its' subsidiary,
Match 11) or effect the dissolution thereof. These subsidiaries
had ceased operations in September 1996. In January 1997, in
accordance with the vote of its shareholders, the Company
terminated its financing and business relationships with these
subsidiaries.
In December 1996, the shareholders also authorized the
Company to dispose of its 34% interest in an unconsolidated
subsidiary, Multi Media Publishing Corp., which had no revenues
or operations. In January 1997, in accordance with the vote of
its shareholders, the Company terminated all business
relationships with this entity, but it intends to seek the return
of certain funds it had advanced.
In January 1997, the Company formed a new wholly-owned
subsidiary, U.S. Apparel Corp., which is engaged in the design
and manufacture of a line of T-shirts and other tops,
predominately for men. U.S. Apparel Corp. began operations in
January 1997. U.S. Apparel Corp. is the sole source of operating
revenue for the Company for the three months ended December 31,
1997.
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3- INVESTMENT IN PREFERRED STOCK:
The Company has reflected its' investment in convertible
preferred stock in accordance with Statement of Financial
Standards No. 115- "Accounting for Certain Investments in Debt
and Equity Securities". This Standard requires that certain
debt and equity securities be adjusted to fair value at the
end of each accounting period. Unrealized gains or losses for
securities treated as available for sale securities are to be
charged or credited to a separate component of stockholders'
equity. The Company determined that as of September 30, 1996,
the decline in the value of its investment in preferred stock
was other than temporary, and accordingly wrote down the cost
basis of this security to fair value.
Note 4- DUE FROM AFFILIATE:
As of December 31, 1997, United Textiles and Toys Corp.
(formerly Mister Jay Fashion International, Inc.) an entity
in which the chief operating officer is President, was
indebted to the Company in the aggregate of $1,368,735. The
amount due from this affiliate as of December 31 1996 was
$620,000. The loans bear interest at an annual rate of 8%.
The Company does anticipate full payment during the coming
year.
Note 5- NEW ACCOUNTING PRONOUNCEMENT:
For the quarter ended December 31, 1997, the Company adopted
the provisions of Statement of Financial Accounting Standards
No. 128, "Earnings per Share". Under this Standard, the
Company is required to report basic and diluted (loss) per
share. Basic earnings (loss) per share is calculated by
dividing the net income (loss) for each period by the weighted
average number of common shares outstanding. Diluted earnings
(loss) per share is similar in calculation except that the
weighted average number of common shares is increased to
reflect the effects of potential additional shares that would
result from the exercise of stock options or other convertible
instruments.
For the three months ended December 31, 1997 and 1996, there
is no difference between basic and diluted earnings (loss) per
share as the inclusion of additional potential shares is
anti-dilutive due to the net loss presented in each period.
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6- SUBSEQUENT EVENTS:
On January 2, 1998, the Company was issued 3,571,429
shares of common stock of United Textiles and Toys Corp.
("UTTC"), a company of which the Company's President is also
President, Chief Executive Officer and a Director. The
receipt of these common shares at a price of $.28 per share
($.01 above the closing price on December 31, 1997)
represented payment for $1,000,000 loaned by the Company to
UTTC. (see Note 4)
As a result of this transaction, the Company owns 78.5%
of the outstanding shares of common stock of UTTC,
effectively making UTTC a subsidiary of the Company. Because
UTTC owns 61% of the outstanding shares of common stock of
Play Co. Toys & Entertainment Corp. ("Play Co"), thus the
Company and its management obtained beneficial vesting
control of Play Co.
On January 20, 1998, U.S. Stores Corp. ("U.S. Stores")
acquired 1,465,000 shares of the Company's common stock.
U.S. Stores was incorporated on November 10, 1997. The
Company's President is also President and Director of U.S.
Stores. After this transaction, U.S. Stores held an
aggregate of 1,868,000 shares of the Company's common stock
or 62.2% of the outstanding shares, effectively making the
Company a subsidiary of U.S. Stores.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
Results of Operations
Statements contained in this report which are not
historical facts may be considered forward looking
information with respect to plans, projections or future
performance of the Company as defined under the Private
Securities Litigation Reform Act of 1995. These forward
looking statements are subject to risks and uncertainties
which could cause actual results to differ materially from
those projected.
Three months ended December 31, 1997 compared to the
three months ended December 31, 1996:
Sales for the three months ended December 31, 1997 were
$234,501 as compared to the three months ended December 31,
1996 in which there were no reportable sales. This is
reflective of the start up of operations of the Company's
subsidiary U.S. Apparel Corp. in January 1997, and the
cessation of operating activities of American Eagle Corp.
and its subsidiary Match 11.
Cost of sales for the three months ended December 31,
1997 were $128,501, as compared to the three month period
ended December 31, 1996 in which there were no operating
activities, due to the cessation of operations of American
Eagle and Match 11. For the three months ended December 31,
1997, cost of sales were 54.8% of sales.
Operating expenses were $179,906 or 76.7% of sales for
the three months ended December 31, 1997. For the three
months ended December 31, 1996, operating expenses were
$183,050.
For the three months ended December 31, 1997, the
Company reported a net loss of $53,816 as compared to a net
loss of $171,026 in the three months ended December 31,
1996, in which there were no reported operating revenues.
The basic loss per share for the three months ended
December 31, 1997 was $(.018) compared to a net loss of
$(.057) per share in the comparable three month period ended
December 31, 1996.
Liquidity and Capital Resources
At December 31, 1997, the Company reported cash and
cash equivalents of $1,072,068, working capital of
$1,638,249 and stockholders' equity of $7,368,524.
At September 30, 1997, the Company reported cash and
cash equivalents of $13,189, working capital of $1,784,565
and stockholders' equity of $7,422,340.
<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 Security Holders: None
ITEM 5 - Other Information:
On January 2, 1998, the Company was issued 3,571,429 shares of common stock
of United Textiles and Toys Corp. ("UTTC"), a company of which the Company's
President is also President, Chief Executive Officer and a Director. The receipt
of these common shares at a price of $.28 per share ($.01 above the closing
price on December 31, 1997) represented payment for $1,000,000 loaned by the
Company to UTTC.
As a result of this transaction, the Company owns 78.5% of the outstanding
shares of common stock of UTTC, effectively making UTTC a subsidiary of the
Company. Because UTTC owns 61% of the outstanding shares of common stock of Play
Co. Toys & Entertainment Corp. ("Play Co"), thus the Company and its management
obtained beneficial vesting control of Play Co.
On January 20, 1998, U.S. Stores Corp. ("U.S. Stores") acquired 1,465,000
shares of the Company's common stock. U.S. Stores was incorporated on November
10, 1997. The Company's President is also President and Director of U.S. Stores.
After this transaction, U.S. Stores held an aggregate of 1,868,000 shares of the
Company's common stock or 62.2% of the outstanding shares, effectively making
the Company a subsidiary of U.S. Stores.
ITEM 6 - Exhibits and Reports on Form 8-K
Exhibits: None
Reports on Form 8-K: None
<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: February 27, 1998
Multimedia Concepts International, Inc.
(Registrant)
\s\ Ilan Arbel
Ilan Arbel
President
\s\ Allean Goode
Allean Goode
Treasurer
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<ARTICLE> 5
<LEGEND>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC.
EXHIBIT 27
FINANCIAL DATA SCHEDULE
ARTICLE 5 OF REGULATION S-X
The schedule contains summary financial information extracted from the financial
statements for the three months ended December 31, 1997 and is qualified in
its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> sep-30-1997
<PERIOD-END> dec-31-1997
<CASH> 1,072,068
<SECURITIES> 0
<RECEIVABLES> 374,289
<ALLOWANCES> 0
<INVENTORY> 94,000
<CURRENT-ASSETS> 2,119,715
<PP&E> 29,361
<DEPRECIATION> (29,361)
<TOTAL-ASSETS> 7,849,990
<CURRENT-LIABILITIES> 481,466
<BONDS> 0
0
0
<COMMON> 3,005
<OTHER-SE> 7,365,519
<TOTAL-LIABILITY-AND-EQUITY> 7,849,990
<SALES> 234,501
<TOTAL-REVENUES> 254,607
<CGS> 128,547
<TOTAL-COSTS> 128,547
<OTHER-EXPENSES> 179,906
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (53,816)
<INCOME-TAX> 0
<INCOME-CONTINUING> (73,952)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (53,816)
<EPS-PRIMARY> (.018)
<EPS-DILUTED> (.018)
</TABLE>
