SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
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 SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 13-3835325
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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1385 BROADWAY, SUITE 814, NEW YORK, NEW YORK 10018
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(212) 391-1111
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(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 SECURITIES EXCHANGE ACT OF 1934 DURING THE PAST 12
MONTHS (OR FOR SUCH SHORTER PERIOD THAT 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 OF EACH OF THE ISSUER'S CLASSES OF COMMON EQUITY
OUTSTANDING AS OF THE LATEST PRACTICABLE DATE: COMMON STOCK, $0.001 PER SHARE:
3,005,000 SHARES OUTSTANDING AS OF DECEMBER 9, 1999.
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MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION Page Number
Item 1. FINANCIAL STATEMENTS
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CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1999 (UNAUDITED) and
March 31, 1999 3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) for the three
and six months ended September 30, 1999 and 1998 4
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) for the six 5
months ended September 30, 1999 and 1998
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 6-8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9-12
PART II. OTHER INFORMATION 13
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<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of September 30, 1999 and March 31, 1999
<TABLE>
<CAPTION>
Sept. 30, March 31,
1999 1999
(UNAUDITED) (NOTE 1)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ........................................................... $ 1,511,506 $ 1,110,966
Advances to supplier ................................................................ 235,993 474,572
Accounts receivable ................................................................. 527,712 692,266
Inventories ......................................................................... 15,212,625 11,595,284
Stock subscription receivable ....................................................... 723,678 --
PREPAID EXPENSES AND OTHER CURRENT ASSETS ........................................... 2,431,290 1,315,851
------------ ------------
Total current assets ...................................................... 20,642,804 15,188,939
PROPERTY AND EQUIPMENT-NET .......................................................... 7,250,128 5,350,285
OTHER ASSETS:
Advances to equity investee ......................................................... 140,000 140,000
Due from affiliates ................................................................. -- 136,662
Deposits and other assets ........................................................... 3,484,478 2,783,430
------------ ------------
3,624,478 3,060,092
------------ ------------
TOTAL ASSETS .............................................................. $ 31,517,410 $ 23,599,316
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................................................... $ 19,311,187 $ 9,653,563
Accrued expenses and other liabilities .............................................. 368,604 689,580
Current portion of notes payable and capital lease obligations ...................... 864,429 1,352,197
Due to affiliates ................................................................... 45,000 423,888
------------ ------------
Total current liabilities ...................................................... 20,589,220 12,119,228
LONG-TERM LIABILITIES:
Borrowings under financing agreement ................................................ 10,725,774 7,814,666
Note payable and current lease obligations, net of current portion .................. 1,000,637 585,681
Deferred rent liability ............................................................. 130,881 126,769
------------ ------------
Total long-term liabilities ............................................... 11,857,292 8,527,116
------------ ------------
Total liabilities ......................................................... 32,446,512 20,646,344
MINORITY INTEREST IN SUBSIDIARIES (NOTE 3) .......................................... (1,543,173) 1,003,700
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) ......................................................... (12,490,939) (11,155,738)
------------ ------------
614,071 1,949,272
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................ $ 31,517,410 $ 23,599,316
============ ============
</TABLE>
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
Restated Restated
(Note 6) (Note 6)
<S> <C> <C> <C> <C>
REVENUES, net sales ........................... $ 7,048,659 $ 6,656,037 $ 14,546,458 $ 13,978,783
Cost of sales ................................. 3,825,705 3,775,821 8,235,072 8,180,243
------------ ------------ ------------ ------------
Gross profit .................................. 3,222,954 2,880,216 6,311,386 5,798,540
Operating expenses:
Operating expenses .......................... 3,798,958 2,798,044 7,713,252 5,664,530
Depreciation expense ........................ 228,514 194,029 453,217 382,681
------------ ------------ ------------ ------------
Total operating expenses ............ 4,027,472 2,992,073 8,166,469 6,047,211
OPERATING INCOME (LOSS) ....................... (804,518) (111,857) (1,855,083) (248,671)
OTHER INCOME
Interest and other income ................... -- 2 20,613 12,502
INTEREST EXPENSE:
Interest and finance charges .................. 300,269 156,860 584,933 295,312
Amortization of debt issuance costs ........... 47,424 27,202 78,154 54,402
------------ ------------ ------------
Total interest expense .............. 347,693 184,062 663,087 349,714
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY INTERESTS
(1,152,211) (295,917) (2,497,557) (585,883)
------------ ------------ ------------ ------------
MINORITY INTERESTS (NOTE 3) .................. 1,188,119 415,119 2,546,873 682,351
------------ ------------ ------------ ------------
NET INCOME (LOSS) ............................. 35,908 119,202 49,316 96,468
Effect of non-cash dividends on preferred stock
(799,402) (477,973) (1,384,517) (751,779)
------------ ------------ ------------ ------------
LOSS APPLICABLE TO COMMON SHARES .............. (763,494) (358,771) (1,335,201) (655,311)
============ ============
Basic and diluted income (loss) per common
SHARE ...................................... $ (.26) $ (.12) $ (.45) $ (.22)
============
Weighted average number of common shares
OUTSTANDING ................................ 3,005,000 3,005,000 3,005,000 3,005,000
============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS
3
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Six Months Ended
Sept. 30, Sept. 30,
1999 1998
Restated
(Note 6)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) ................................................................. $ 49,316 $ 96,468
Adjustments to reconcile net loss to cash (used) provided for operating activities:
Depreciation and amortization .................................................. 453,217 382,681
Deferred rent .................................................................. 4,112 9,102
Minority interests in net losses of subsidiaries ............................... (2,546,873) (682,351)
Changes in assets and liabilities:
(Increase) decrease in advances to suppliers ...................................... 238,579 --
Decrease in accounts receivable ................................................... 164,554 (134,214)
(Increase) in merchandise inventories ............................................. (3,617,341) (4,350,069)
(Increase ) decrease in prepaid expenses and other current assets ................. (1,115,439) (750,243)
(Increase) decrease in deposits and other assets .................................. (701,048) 68,419
Increase in accounts payable ...................................................... 8,273,087 3,498,786
Increase in accrued expenses and other liabilities ................................ (320,976) 262,695
Total adjustments ....................................................... 831,872 (1,695,194)
Net cash provided by operating activities ............................... 881,188 (1,598,726)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ................................................ (2,353,040) (1,160,919)
Net cash provided by (used for) investing activities .................... (2,353,040) (1,160,919)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under financing agreement of subsidiary ............................ 2,911,108 3,036,798
Repayment of notes payable ........................................................ (72,812) (352,550)
Stock subscription receivable ..................................................... (723,678) --
Loans received from (repaid to) affiliate - net ................................... (242,226) --
Net cash provided by (used for) financing activities .................... 1,872,392 2,684,248
NET INCREASE (DECREASE) IN CASH ................................................... 400,540 (75,397)
Cash, beginning of period ......................................................... 1,110,966 1,635,058
CASH, END OF PERIOD ............................................................... $ 1,511,506 $ 1,559,661
===========
Supplemental disclosure of cash flow information:
Interest paid ..................................................................... $ 663,087 $ 349,714
Taxes paid ........................................................................ $ -- $ --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS
4
<PAGE>
MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(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 instruction 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 six months ended September 30, 1999 and are
not necessarily indicative of the results to be expected for the fiscal year.
For further information, refer to the Company's Annual Report on Form 10-KSB for
the year ended March 31, 1999, 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 February 1997, the Company formed a new wholly owned subsidiary, U.S.
Apparel Corp. ("U.S. Apparel"), which is engaged in the design and manufacture
of a line of T-shirts and other tops, predominately for men and boys.
On January 2, 1998, the Company acquired 3,571,429 shares of the
outstanding common stock of United Textiles and Toys Corp. ("United Textiles"),
a company of which the Company's President is also President, Chief Executive
Officer, and a Director. The issuance of these shares at a price of $0.28 per
share ($0.01 above the closing price on December 31, 1997) was made in
conjunction with a conversion into equity of United Textiles' $1,000,000 debt
owed to the Company for a loan made by the Company. As a result of this
transaction, the Company owns 78.5% of the outstanding shares of common stock of
United Textiles, effectively making United Textiles a subsidiary of the Company.
United Textiles was a company engaged in the design, manufacturing, and
marketing of a variety of lower priced women's dresses, gowns, and separates for
special occasions and formal events. In April 1998, United Textiles, having
sustained continuous losses, discontinued operating activities.
NOTE 2 - DESCRIPTION OF COMPANY (CONTINUED):
In September 1999, United Textiles sold 55,000 shares of Play Co. stock on
the open market reducing United Textiles' ownership to 43.9% of the outstanding
common shares of Play Co. Toys and Entertainment Corp. ("Play Co."), a company
that sells toys and educational games primarily on a retail basis. Through its
ownership of United Textiles, which still is considered to have a controlling
influence over Play Co., the Company also effectively maintains control over
Play Co.
NOTE 3 - MINORITY INTEREST:
The Company owns a majority interest, 78.5%, in United Textiles, which in
turn owns a controlling interest, 43.9%, in Play Co. The minority interest
liability represents the minority shareholders' portion, 21.5%, of United
Textiles' equity and 56.1% of Play Co.'s equity at September 30, 1999.
<PAGE>
NOTE 4 - INVESTMENT BY U.S. STORES CORP.:
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 a 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 63% of the outstanding shares,
effectively making the Company a subsidiary of U.S. Stores.
On February 28, 1998, American Telecom Corporation ("American Telecom")
acquired 100% of the outstanding common shares of U.S. Stores. American Telecom
was incorporated on November 10, 1997. The Company's President is also President
and a Director of American Telecom. After this transaction, American Telecom
effectively obtained beneficial control of the Company and its subsidiaries.
In April 1998, American Telecom, in a transaction in which shares were
exchanged, exchanged all of its outstanding common shares with American Telecom,
PLC, a publicly traded company in Great Britain. After this transaction,
American Telecom effectively became a subsidiary of American Telecom, PLC.
Additionally, as part of this transaction, American Telecom, PLC acquired 100%
of the outstanding common shares of U.S. Stores, thereby effectively making U.S.
Stores a direct subsidiary of American Telecom, PLC.
NOTE 5 - YEAR 2000:
The Company does not believe that the impact of the year 2000 computer
issue will have a significant impact on its operations or its financial
position. Furthermore, the Company does not believe that it will be required to
significantly modify its internal computer systems. However, if internal systems
do not correctly recognize date information when the year changes to 2000, there
could be an adverse impact on the Company's operations. Furthermore, there can
be no assurances that another entity's failure to ensure year 2000 capability
would not have an adverse effect on the Company and its subsidiaries, United
Textiles and Play Co.
NOTE 6 - RESTATEMENT OF FINANCIAL STATEMENTS - SEPTEMBER 30, 1998:
The consolidated financial statements for the three months ended September
30, 1998 have been restated to reflect a restatement by Play Co. of its dividend
attributable to the beneficial conversion feature of its Series E preferred
stock. This restatement resulted in an increase of $188,366 for the three months
ended September 30, 1998 and in an increase of $295,277 for the six months ended
September 30, 1998.
5
<PAGE>
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 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 SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998
Consolidated sales for the three months ended September 30, 1999 were
$7,048,659. Consolidated sales for the three months ended September 30, 1998
were $6,656,037. The increase of $392,622 or 5.9% is primarily due to sales
contributions from Play Co.'s new stores.
Consolidated cost of sales for the three months ended September 30, 1999
was $3,825,705, or 54.3% of sales, as compared to the three months ended
September 30, 1998 in which the cost of sales was $3,775,821, or 56.7% of sales.
The increase of $49,884 or 1.3% is primarily associated with the opening of new
stores by Play Co.
Consolidated operating expenses (excluding depreciation and amortization
expenses) were $3,798,958, or 53.9% of sales, for the three months ended
September 30, 1999 as compared to the three months ended September 30, 1998 in
which the operating expenses were $2,798,044, or 42% of sales. The increase of
$1,000,914, or 35.8%, is primarily due to an increase in payroll and related
expenses as well as an increase in rent expense associated with the opening of
new retail stores by Play Co.
Consolidated depreciation and amortization expense included in the
operating expenses for the three months ended September 30, 1999 was $228,514.
The consolidated depreciation and amortization expense included in the operating
expenses for the three months ended September 30, 1998 was $194,029.
For the three months ended September 30, 1999, subsequent to the adjustment
for the minority interest in the net loss of subsidiaries, the Company reported
a consolidated net loss of $763,494, or $0.26 per common share. For the three
months ended September 30, 1998, the Company reported a restated consolidated
net loss of $358,771, or $0.12 per common share.
SIX MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE SIX MONTHS ENDED
SEPTEMBER 30, 1998
Consolidated sales for the six months ended September 30, 1999 were
$14,546,458. Consolidated sales for the six months ended September 30, 1998 were
$13,978,783. The increase of $567,675 or 4.1% is primarily due to sales
contributions from Play Co.'s new stores.
Consolidated cost of sales for the six months ended September 30, 1999 was
$8,235,072, or 56.6% of sales, as compared to the six months ended September 30,
1998 in which the cost of sales was $8,180,243, or 58.5% of sales. The increase
of $54,829 or 0.7% is primarily associated with the opening of new stores by
Play Co.
Consolidated operating expenses (excluding depreciation and amortization
expenses) were $7,713,252, or 53% of sales, for the six months ended September
30, 1999 as compared to the six months ended September 30, 1998 in which the
operating expenses were $5,664,530, or 40.5% of sales. The increase of
$2,048,722, or 36.2%, is primarily due to an increase in payroll and related
expenses as well as an increase in rent expense associated with the opening of
new retail stores by Play Co.
<PAGE>
Consolidated depreciation and amortization expense for the six months ended
September 30, 1999 was $453,217. The consolidated depreciation and amortization
for the six months ended September 30, 1998 was $382,681.
For the six months ended September 30, 1999, subsequent to the adjustment
for the minority interest in the net loss of subsidiaries, the Company reported
a consolidated net loss of $1,335,201, or $0.45 per common share. For the six
months ended September 30, 1998, the Company reported a restated consolidated
net loss of $655,311, or $0.22 per common share.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company reported cash and cash equivalents of
$1,511,506, working capital of $53,584, and stockholders' equity of $614,071.
At March 31, 1999, the Company reported cash and cash equivalents of
$1,110,966, working capital of $3,069,711, and stockholders' equity of
$1,949,272.
The Company has generated operating losses for the past several years and
has historically financed those losses and its working capital requirements
through loans. There can be no assurance that the Company or any of its
subsidiaries will be able to generate sufficient revenues or have sufficient
controls over expenses and other charges to achieve profitability.
During the six months ended September 30, 1999, operating activities
provided funds in the amount of $881,188 as compared to $1,598,726 used by
operating activities in the six months ended September 30, 1998.
The Company used $2,353,040 in investing activities in the six months ended
September 30, 1999 as compared to a use of $1,160,919 in the six months ended
September 30, 1998. The use is primarily due, in both periods, to the Company's
subsidiary's (Play Co.) purchase of property and equipment in relation to new
store openings.
Financing activities provided $1,872,392 and $2,684,248 to the Company
during the six months ended September 30, 1999 and September 30, 1998,
respectively. This reduction is primarily due to a lower level of borrowing in
the period ended September 30, 1999.
As a result of these operating, investing, and financing activities, the
Company reported a consolidated increase in cash of $400,540 for the six months
ended September 30, 1999 and a decrease in cash of $75,397 for the six months
ended September 30, 1998. On November 19, 1999, Play Co.'s subsidiary completed
an initial public offering (the "Offering") on the SMAX segment of the Frankfurt
Stock Exchange in Germany. The Offering was underwritten by Concord.
This subsidiary sold 2 million shares, or a 16.7% interest, in the Offering
for gross proceeds of approximately $27 million. The Offering was priced at 13
Euro per share, or approximately $13.52 per share. Play Co. retained majority
ownership of the subsidiary holding a 58.4% equity interest in same and, as a
result, will continue to consolidate the subsidiary's operations into its
financial statements.
In addition to the 2 million shares sold by the subsidiary in the Offering,
Concord and CDMI each sold 200,000 shares in the form of a greenshoe allotment.
Both Concord and CDMI invested in the subsidiary in a private placement in July
1999. The total Offering size, including the greenshoe allotment, was 2.4
million shares.
Play Co. expects to complete the accounting for the net proceeds of the
Offering during the quarterly period ending December 31, 1999.
<PAGE>
TRENDS AFFECTING LIQUIDITY, CAPITAL RESOURCES AND OPERATIONS
As a result of its current merchandise mix, which emphasizes specialty and
educational toys, Play Co. enjoyed significant sales and gross profits in fiscal
year 1999.
Play Co.'s current sales efforts focus primarily on a defined geographic
segment consisting of the southern california area and the southwestern and
midwestern united states. its future financial performance will depend upon (i)
continued demand for toys and hobby items and management's ability to adapt to
continuously changing customer preferences and the market for such items, (ii)
the general economic condition within Play Co.'s geographic area, as same may be
expanded, (iii) Play Co.'s ability to chose locations for new stores, (iv) play
co.'s ability to purchase product at favorable prices and on favorable terms,
and (v) the effects of increased competition.
The toy and hobby retail industry faces a number of potentially adverse
business conditions including price and gross margin pressures and market
consolidation. Play Co. competes with a variety of mass merchandisers,
superstores, and other toy retailers, including Toys-R-Us, Kay Bee Toy Stores,
Wal-Mart, and K-Mart. Competitors that emphasize specialty and educational toys
include Disney Stores, Warner Brothers Stores, Learning Smith, Lake Shore, Zainy
Brainy, and Noodle Kidoodle. There can be no assurance that Play Co.'s business
strategy will enable it to compete effectively in the toy industry or that Play
Co. will be able to generate sufficient revenues or have sufficient control over
expenses and other charges to increase profitability.
U.S. Apparel's sales are generated from short-term purchase orders from
customers who place orders on an as-needed basis. U.S. Apparel typically
manufactures its products upon receipt of orders from customers and delivers
finished goods within four weeks of receipt of an order. In anticipation of
reorders from customers, U.S. Apparel generally manufactures 10% more goods than
are ordered by such customers.
U.S. Apparel has been able to purchase raw materials from a variety of
suppliers.
YEAR 2000
The Company does not believe that the impact of the year 2000 computer
issue will have a significant impact on its operations or its financial
position. Furthermore, the Company does not believe that it will be required to
significantly modify its internal computer systems. However, if internal systems
do not correctly recognize date information when the year changes to 2000, there
could be an adverse impact on the Company's operations. Furthermore, there can
be no assurance that another entity's failure to ensure year 2000 capability
would not have an adverse effect on the Company and its subsidiaries, United
Textiles and Play Co.
INFLATION AND SEASONALITY
The impact of inflation on the Company's results of operations has not been
significant. Each subsidiary attempts to pass on increased costs by increasing
product prices over time.
Play Co.'s operations are highly seasonal with approximately 30-40% of its
net sales falling within its third quarter, which coincides with the Christmas
selling season. Play Co. intends to open stores throughout the year, but
generally before the Christmas selling season, which will make its third quarter
sales an even greater percentage of the total year's sales.
U.S. Apparel's operations are generally not seasonal and are generally
spread throughout the year.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS: None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS: None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None
ITEM 5. OTHER INFORMATION: None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) The following exhibits are filed with this Form 10-QSB for the quarter
ended September 30, 1999:
27.1 Financial Data Schedule
(b) During the quarter ended September 30, 1999, no reports on Form 8-K
were filed with the Securities and Exchange Commission.
<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, ON THIS 10TH day of December 1999.
MULTIMEDIA CONCEPTS INTERNATIONAL, INC.
BY: /S/ ILAN ARBEL
Ilan Arbel
President
BY: /S/ ALLEAN GOODE
Allean Goode
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
ARTICLE 5 OF REGULATION S-X
This schedule contains summary financial information extracted from Balance
Sheet, Statement of Operations, Statement of Cash Flows and Notes thereto
incorporated in Part 1, Item 1, of this Form 10-QSB and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> mar-31-2000
<PERIOD-END> sep-30-1999
<CASH> 1,511,506
<SECURITIES> 0
<RECEIVABLES> 527,712
<ALLOWANCES> 0
<INVENTORY> 15,212,625
<CURRENT-ASSETS> 20,642,804
<PP&E> 11,830,144
<DEPRECIATION> (4,580,016)
<TOTAL-ASSETS> 31,517,410
<CURRENT-LIABILITIES> 20,589,220
<BONDS> 0
0
0
<COMMON> 3,005
<OTHER-SE> 611,066
<TOTAL-LIABILITY-AND-EQUITY> 31,517,410
<SALES> 14,546,458
<TOTAL-REVENUES> 14,567,071
<CGS> 8,235,072
<TOTAL-COSTS> 8,235,072
<OTHER-EXPENSES> 8,166,469
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 663,087
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