-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JlZ93WFiA/25IsuGMJ3lTLP9w3hV61NsBcP1yLPCpRzQeKSsC7CcUXlGnDI9UXmM fi2QkZSsMQpiIC7WZyiGBA== /in/edgar/work/20000814/0000912057-00-037367/0000912057-00-037367.txt : 20000921 0000912057-00-037367.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-037367 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RETROSPETTIVA INC CENTRAL INDEX KEY: 0001015383 STANDARD INDUSTRIAL CLASSIFICATION: [2330 ] IRS NUMBER: 954298051 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13101 FILM NUMBER: 699633 BUSINESS ADDRESS: STREET 1: 8825 WEST OLYMPIC BLVD CITY: BEVERLY HILLS STATE: CA ZIP: 90211 10QSB 1 a10qsb.txt FORM 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to ___________ For the quarterly period ended ________________________ Commission file number: 333-29295 RETROSPETTIVA, INC. (Exact name of small business issuer as specified in its charter) California 95-4298051 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8825 West Olympic Boulevard Beverly Hills, CA 90211 (Address of principal executive offices) (310) 657-1745 (Issuer's telephone number) Check whether the registrant (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 [X] No [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY 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 court. Yes [ ] 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, No Par Value, 3,177,916 shares as of August 1, 2000. Transitional Small Business Disclosure Format: Yes [ ] No [X] RETROSPETTIVA, INC. AND SUBSIDIARY FORM 10-QSB INDEX
Part I Financial Information Page Item 1. Financial Statements: Balance Sheets as of June 30, 2000 and December 31, 1999 1 Statements of Operations for the Three Months and Six Months Ended June 30, 2000 and 1999 2 Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 3 Notes to Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Part II Other Information and Signatures 10
RETROSPETTIVA, INC. AND SUBSIDIARY BALANCE SHEETS ASSETS
December 31, June 30, 1999 2000 ------------ ------------ (Unaudited) CURRENT ASSETS Cash $ 85,857 $ 328,579 Accounts receivable, net, pledged 1,088,811 1,355,788 Due from factor 742,950 303,096 Note receivable, current portion, pledged 36,000 18,000 Note receivable, stockholder 300,160 106,247 Inventories, pledged 10,253,949 8,671,861 Income taxes receivable 72,949 85,007 Deferred tax asset, current portion -- 201,000 Accrued interest receivable, stockholder 78,551 78,551 Due from vendors 580,882 456,520 Product development costs 179,721 -- Other current assets 87,812 87,812 ------------ ------------ Total Current Assets 13,507,642 11,692,461 PROPERTY AND EQUIPMENT, at cost, net 1,085,117 1,052,764 NOTES RECEIVABLE, net of current portion 50,851 50,851 DEFERRED TAX ASSETS, net of current portion 47,000 47,000 OTHER ASSETS 18,295 18,845 ------------ ------------ $ 14,708,905 $ 12,861,921 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable, trade $ 3,126,098 $ 1,371,076 Line of credit 2,110,817 2,299,010 Due to vendor -- 104,588 Accrued expenses 45,621 43,308 Payroll taxes payable -- 8,091 ------------ ------------ Total Current Liabilities 5,282,536 3,826,073 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock - authorized 1,000,000 shares - none issued or outstanding Common stock - authorized 15,000,000 shares, no par value; 3,177,916 issued and outstanding 6,765,480 6,765,480 Subscription receivable (164,790) (164,790) Additional paid-in capital 230,000 230,000 Retained earnings 2,595,679 2,205,158 ------------ ------------ Total Stockholders' Equity 9,426,369 9,035,848 ------------ ------------ $ 14,708,905 $ 12,861,921 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS 1 RETROSPETTIVA, INC. AND SUBSIDIARY STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 ----------- ----------- ------------ ------------ SALES $ 4,031,020 $ 2,633,181 $ 10,460,671 $ 10,852,294 ----------- ----------- ------------ ------------ Total Sales 4,031,020 2,633,181 10,460,671 10,852,294 COST OF SALES 3,550,413 2,244,244 9,061,367 9,495,970 ----------- ----------- ------------ ------------ GROSS PROFIT 480,607 388,937 1,399,304 1,356,324 OPERATING EXPENSES Selling expenses 149,492 164,504 327,872 293,167 General and administrative 484,135 376,104 1,090,580 872,835 Loss on product development costs 349,457 -- 349,457 -- ----------- ----------- ------------ ------------ Total Operating Expenses 983,084 540,608 1,767,909 1,166,002 ----------- ----------- ------------ ------------ INCOME (LOSS) FROM OPERATIONS (502,477) (151,671) (368,605) 190,322 OTHER INCOME (EXPENSE) Interest income 84 1,567 281 4,140 Interest income, related party -- 7,856 -- 15,788 Interest expense (119,149) (52,402) (224,517) (93,755) Other income -- 34,755 1,320 70,252 ----------- ----------- ------------ ------------ Net Other Income (Expense) (119,065) (8,224) (222,916) (3,575) ----------- ----------- ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES (621,542) (159,895) (591,521) 186,747 PROVISION (BENEFIT) FOR INCOME TAXES (211,000) (75,000) (201,000) 59,000 ----------- ----------- ------------ ------------ NET INCOME (LOSS) $ (410,542) $ (84,895) $ (390,521) $ 127,747 ----------- ----------- ------------ ------------ NET INCOME (LOSS) PER SHARE, BASIC $ (0.13) $ (0.03) $ (0.12) $ 0.04 =========== =========== ============ ============ Weighted Average Numbers of Shares Outstanding, Basic 3,177,916 3,121,323 3,177,916 3,050,999 =========== =========== ============ ============ NET INCOME PER SHARE, DILUTED $ 0.04 ============ Weighted Average Number of Shares Outstanding, Diluted 3,281,863 ============
SEE NOTES TO FINANCIAL STATEMENTS 2 RETROSPETTIVA, INC. AND SUBSIDIARY STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended June 30, 1999 2000 --------- ----------- CASH FLOWS FROM (TO) OPERATING ACTIVITIES Net income (loss) $ 127,748 $ (390,521) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 13,740 68,660 Loss on product development costs -- 349,457 Changes in: Accounts receivable 24,905 (266,978) Prepaid income taxes 15,125 (12,058) Due from factor (189,023) 439,854 Accrued interest receivable, shareholder (15,789) -- Product development cost -- (169,736) Advances to vendor (73,883) 124,362 Inventories 590,551 1,582,088 Other 6,523 (550) Deferred tax assets -- (201,000) Accounts payable and accrued expenses (707,775) (1,757,334) Accrued payroll taxes -- 8,091 --------- ----------- Cash flows (used) by operating activities (207,878) (225,665) --------- ----------- CASH FLOWS FROM (TO) INVESTING ACTIVITIES: Purchase of fixed assets (12,276) (36,307) Loans to stockholder (22,517) 193,913 Payments on notes receivable (26,580) 18,000 --------- ----------- Cash flows provided (used) by investing activities (61,373) 175,606 --------- ----------- CASH FLOWS FROM (TO) FINANCING ACTIVITIES: (Payments) proceeds from line of credit (125,718) 188,193 Due to vendor 104,588 Proceeds from issuance of common stock 316,500 -- --------- ----------- Cash flows provided by financing activities 190,782 292,781 --------- ----------- NET INCREASE (DECREASE) IN CASH (78,469) 242,722 CASH IN BANK, beginning of period 115,890 85,857 --------- ----------- CASH IN BANK, end of period $ 37,421 $ 328,579 ========= =========== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 224,517 $ 93,755 ========= ===========
SEE NOTES TO FINANCIAL STATEMENTS 3 RETROSPETTIVA, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented. The results for the six months ended June 30, 2000 are not necessarily indicative of the results of operations for the full year. These consolidated financial statements and related footnotes should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Form 10-KSB filed with the Securities and Exchange Commission for the year ended December 31, 1999. NOTE 2 - LOSS ON PRODUCT DEVELOPMENT COSTS During 1999, the Company's subsidiary, Hamilton Toys, LLC, entered into a license agreement to produce dolls based upon the movie, "The Adventures of Rocky and Bullwinkle". The Company incurred development costs of $349,457 during 1999 and 2000. The Company received purchase orders for the dolls from numerous specialty retail stores during 2000. The Company placed orders for the production based upon these purchase orders with a production company. The production company did not produce the dolls as required by its agreement. The Company had all financing and distribution channels in place for the production and sale of the dolls and intends to seek financial recovery of its costs from the production company by legal means. Management believes that it will prevail and recover at a minimum its costs incurred to date. However, due to the uncertainty of collection as of June 30, 2000, the Company has elected to record an allowance against the costs, until it is assured of collection. NOTE 3 - INVENTORY Inventories at June 30, 2000 consisted of the following: Raw materials $2,859,479 Work-in-process 3,660,838 Finished goods 2,151,544 ---------- Total $8,671,861 ==========
4 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company contracts for the manufacture of a variety of garments, primarily basic women's sportswear which includes suits, skirts, blouses, blazers, pants, shorts, vests and dresses, using assorted fabrics including rayons, linens, cotton and wool. The Company arranges for the manufacture of garments for customers under private labels selected by its customers. It markets its products exclusively in the United States directly to large wholesalers directly and indirectly to national retailers and buying organizations, and directly to women's chain clothing stores and catalogues. Substantially, all of the Company's garments are sold on a "package" basis pursuant to which the Company markets at fixed prices finished garments to the customer's specifications and quantity requirements, arranges for production of the garments and delivers the garments directly to the customer at the port of entry. In its marketing, the Company emphasizes these package arrangements and what it believes to be the better quality and lower prices of garments produced by skilled Macedonian workers as compared to lower paid workers in certain other regions. As a package provider, the Company sources and purchases fabrics and trims, arranges for cutting and sewing, and coordinates any other services required to provide a finished garment. Since the Company manufactures its finished products only upon receipt of purchase orders from its wholesale and retail customers, it therefore does not maintain an inventory of finished products. The Company believes that in this way it minimizes the marketing and fashion risk generally associated with the apparel industry. Fabrics and trims are purchased from suppliers in China, India, Russia, Romania, Italy and the United States. After dying the fabric, if necessary, the fabric and trim are shipped to factories selected by the Company (primarily located in Macedonia) where they are manufactured into finished garments under the Company's management and quality control guidance. The finished products are then shipped directly to New York City where the Company's customers claim the goods either at the port in New York City or at the Company's warehouse in Astoria, New York. Except for historical information contained herein, the matters set forth may include forward-looking statements that are subject to risks and uncertainty that may cause actual results to differ materially. Such forward-looking statements that may be contained in this document could include in particular statements concerning business back-logs, operating efficiencies and capacities, capital spending, and other expenses. Among other factors that could cause actual results to differ materially are the following; dependence upon unaffiliated manufacturers and fabric suppliers, dependence on certain customers, foreign operations, competition, risks associated with significant growth, uncertainties in apparel industry, general economic conditions, seasonality, political instability, concentration of accounts receivable and possible fluctuations in operating results 5 The following table sets forth, for the periods indicated, the percentage relationship to net revenues of certain items in the Company's statements:
June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- Revenues 100.0 % 100.0 % 100.0 % 100.0% Cost of goods sold 88.1 % 85.2 % 86.6 % 87.5% Gross profit 11.9 % 14.8 % 13.4 % 12.5% Selling, General and Administrative 15.7 % 20.5 % 13.6 % 10.7% Loss on product development costs 8.7 % 0.0 % 3.3 % 0.0% Operating income (12.5)% (5.8)% (3.5)% 1.8%
THREE MONTHS ENDED JUNE 30, 2000 ("2000") COMPARED TO THREE MONTHS ENDED JUNE 30, 1999 ("1999") SALES Sales for 2000 were $4,031,020, which represented an increase of $1,397,839 or 53.1% over 1999 net sales of $2,633,181. The growth in sales was primarily attributable to increased purchases by existing customers and from new customers. Generally, the Company receives relatively small initial orders from new customers. As the relationship with the customer continues, the purchase orders often increase substantially. During 1999 the Company sold many of its products through a third party distributor, which in turn sold those products to national chains. Beginning in the fourth quarter of 1999, the Company began selling directly to the distributor's national customers. COST OF GOODS SOLD Cost of goods sold in 2000 was $3,550,413 or 88.1% of sales, an increase of $1,306,169 from $2,244,244 or 85.2% of sales in 1999. The increase in cost of goods sold was primarily attributable to the increase in sales. The increase in the percentage of cost of goods sold was primarily attributable to increases in cost of materials and shipping expenses. The Company successfully implemented the special shipping and distributing requirements of the Company's new customers and anticipates higher margins due to the direct sales to national chains, rather than through a distributor. The procedures necessary to meet these requirements were put in place during the end of the second and beginning of the third quarter. During 2000 the Company had small sales at or below cost to remove excess inventory. These sales affected the cost of goods sold. GROSS PROFIT Gross profit was $480,607 for 2000, an increase of $91,670 from $388,937 for 1999. The gross profit percentage was 11.9% in 2000, a decrease from 14.8% in 1999. The decrease in the gross profit percentage was primarily attributable to small sales at or below cost and the Company's implementation of special shipping and distributing requirements of its new customers. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative ("SG&A") expenses were $633,627 or 15.7% of sales for 2000, an increase of $93,019 from $540,608 or 20.5% of sales for 1999. The increase in SG&A expense was primarily attributable to payments related to sales commissions, salaries, factor 6 charges and rent. As a percentage of sales, SG&A expense decreased because of increased sales relative to the Company's fixed costs. LOSS ON PRODUCT DEVELOPMENT COSTS The loss on product development costs during 2000 was $349,457 as compared to $0 for 1999 and is attributable to the New York manufacturing firm's failure to produce goods as required by the Company's purchase order. The Company contracted for the production of dolls based upon the movie, "The Adventures of Rocky and Bullwinkle" during 2000. The Company is seeking legal remedies for its loss. INTEREST EXPENSE Interest expense for 2000 was $119,149 compared to $52,402 for 1999. The increase in interest was primarily attributable to the increase in the utilization of the line of credit. BENEFIT FROM INCOME TAXES The benefit from income taxes was $211,000 and $75,000 for 2000 and 1999, respectively. The increase in the benefit from income taxes for 2000 was primarily attributable to a greater tax loss for the three months ended June 30, 2000. SIX MONTHS ENDED JUNE 30, 2000 ("2000") COMPARED TO SIX MONTHS ENDED JUNE 30, 1999 ("1999") SALES Sales for 2000 were $10,460,671, which represented a decrease of $391,623 or 3.6% under 1999 sales of $10,852,294. During 1999, the Company sold many of its products through a third party distributor, which in turn sold those products to national chains. Beginning in the fourth quarter of 1999, the Company began selling directly to the distributor's national customers. Although the process of direct sales to these new customers have, in the short term, caused a slight decrease in sales, management believes that sales for the year will remain steady or increase as compared to 1999. COST OF GOODS SOLD Cost of goods sold in 2000 was $9,061,367 or 86.6% of sales, a decrease of $434,603 from $9,495,970 or 87.5% of sales in 1999. The decrease in cost of goods sold was primarily attributable to the decrease in sales and the Company's successful implementation of the special shipping and distributing requirements of the Company's new customers and the higher margins inherent in direct sales to national chains, rather than through a distributor. The procedures necessary to meet these requirements were put in place during the end of the second and beginning of the third quarter. The Company anticipates that cost of goods sold as a percentage of sales will either remain steady or decrease for the year as compared to 1999. Additionally, the Company made a few small sales at or below cost of excess inventory during the second quarter to recover its costs. The Company does not anticipate any additional sales of excess inventory during the remainder of the year. GROSS PROFIT Gross profit was $1,399,304 for 2000, an increase of $42,980 from $1,356,324 for 1999. The gross profit percentage was 13.4% in 2000, an increase from 12.5% in 1999. The increase in the gross profit percentage was primarily attributable to the Company's successful implementation of 7 the special shipping and distributing requirements of the Company's new customers and the higher margins inherent in direct sales to national chains, rather than through a distributor. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative ("SG&A") expenses were $1,418,452 or 13.6% of sales for 2000, an increase of $252,450 from $1,166,002 or 21.7%. The increase in SG&A expense levels was primarily attributable to payments related to factor finance charges and increased sales commissions. The Company anticipates these costs to remain consistent for the remainder of the year. LOSS ON PRODUCT DEVELOPMENT COSTS The loss on product development costs during 2000 was $349,457 as compared to $0 for 1999 and is attributable to the New York manufacturing firm's failure to produce goods as required by the Company's purchase order. The Company contracted for the production of dolls based upon the movie, "The Adventures of Rocky and Bullwinkle" during 2000. The Company is seeking legal remedies for its loss. INTEREST EXPENSE Interest expense for 2000 was $224,517 compared to $93,755 for 1999. The increase in interest expense was primarily attributable to the increase in the utilization of the Company's line of credit. PROVISION (BENEFIT) FOR INCOME TAXES The provision (benefit) for income taxes were ($201,000) and $59,000 for 2000 and 1999, respectively. The change in the provision (benefit) for income taxes for 2000 is due to a tax loss for the six months ended June 30, 2000. LIQUIDITY The Company has 575,000 warrants outstanding with an exercise price of $7.50 per warrant expiring September 23, 2002. The Company has 50,000 underwriter warrants outstanding with an exercise price of $14.40 per unit. Each unit consists of two shares of the Company's common stock and one warrant as described above. The Company does not know whether the warrants will be exercised in 2000. Without exercise of those warrants, the Company may be required to utilize its other financing vehicles to continue its growth and fund operations. It is the Company's intention to utilize its existing line of credit with a major lending institution and its credit facility arrangement with a New York factoring company. The Company increased its line of credit during the second quarter of 2000 and placed $300,000 in a short-term certificate of deposit as collateral for the increased available funds. CAPITAL RESOURCES Since its formation, the Company has financed its operations and met its capital requirements primarily through cash flows from operations, customer advances, from principals, credit facilities, bridge loans, a private placement and its IPO. The initial use of IPO funds was to repay certain debt and to purchase raw materials, for working capital and the eventual purchase of wool manufacturing equipment. The Company's primary need for cash is for working capital purposes. The Company may raise capital through the issuance of long-term or short-term debt, or the issuance of securities in private or public 8 transactions to fund future expansion of its business. There can be no assurance that acceptable financing for future transactions can be obtained. INFLATION The Company does not anticipate a significant increase in inflation in the United States over the short-term. All of the Company's transactions worldwide are conducted on a dollar-denominated basis which is intended to mitigate the possible impact of volatile currencies that may arise as a result of global corporations crowding emerging markets in search of growth. SEASONALITY The Company's revenues and operating results have exhibited some degree of seasonality in past periods. 9 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS CHANGES IN SECURITIES Not applicable USE OF PROCEEDS Not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable ITEM 5. OTHER INFORMATION Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Not applicable 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 thereto duly authorized. Date: August 14, 2000 RETROSPETTIVA, INC. ------------------- (Registrant) ------------------------------ Hamid Vaghar Chief Financial Officer (Principal Accounting Officer) 10 EX-27 2 ex-27.txt EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RETROSPETTIVA, INC. 10-QSB FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 328,579 0 0 0 8,671,861 11,692,461 1,052,764 0 12,861,921 3,826,073 0 0 0 6,765,480 2,270,368 12,861,921 10,460,671 10,460,671 9,061,367 10,829,276 0 0 224,517 281 0 0 0 0 0 (390,521) (.12) (.12)
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