-----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, EQzGPcZQqZaouBDMIiOjnr4XmsN/LDWqI/Y/5hzLfkK+4TBLhhNAFQONF6de52Ff qtjKFVkkBLRHLRVgxBYZTw== 0000912057-99-005272.txt : 19991115 0000912057-99-005272.hdr.sgml : 19991115 ACCESSION NUMBER: 0000912057-99-005272 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RETROSPETTIVA INC CENTRAL INDEX KEY: 0001015383 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', AND JUNIORS OUTERWEAR [2330] IRS NUMBER: 954298051 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13101 FILM NUMBER: 99749441 BUSINESS ADDRESS: STREET 1: 8825 WEST OLYMPIC BLVD CITY: BEVERLY HILLS STATE: CA ZIP: 90211 10QSB 1 FORM 10-QSB 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 September 30, 1999 [ ] 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 November 9, 1999. Transitional Small Business Disclosure Format: Yes [ ] No [ X ] RETROSPETTIVA, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited 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 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 three and nine months ended September 30, 1999 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the 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, 1998. NOTE 2 - COMMON STOCK OUTSTANDING On January 15, March 12, April 6 and September 24, 1999, 85,000, 42,916, 100,000, 50,000 common stock options were exercised, respectively by an employee of the Company. The total issued and outstanding no par value common stock as of November 9, 1999 was 3,177,916. 2 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 a consolidating warehouse in Astoria, New York. The Company has entered in to a joint venture agreement with Hamilton Design System to acquire licenses from major film studios to manufacture dolls portraying certain movie characters. The Company will provide financing, warehousing, shipping, billing, collections as well as administration to the joint venture while Hamilton Design System will design, oversee production and administer the sales force, 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 RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the percentage relationship to net revenues of certain items in the Company's statements: 3
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1999 1998 1999 1998 --------------------------------------------- Revenues 100.0% 100.0% 100.0% 100.0% Cost of goods sold 87.6% 90.2% 87.6% 87.7% Gross profit 12.4% 9.8% 12.4% 12.3% Selling, General and Administrative 6.6% 5.3% 9.2% 6.0% Operating income 5.8% 4.6% 3.3% 6.3%
NINE MONTHS ENDED SEPTEMBER 30, 1999 ("1999") COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1998 ("1998") SALES Sales for 1999 were $17,380,934 which represented a decrease of $7,338,389 or 29.7% under 1998 net sales of $24,719,323. The decline in sales was primarily attributable to decreased purchases by existing customers Net sales decreases during the period reflected these decreased customer orders. COST OF GOODS SOLD Cost of goods sold in 1999 was $15,215,862 or 87.6% of sales, a decrease of $6,456,283 from $21,672,145 or 87.7% of sales in 1998. The decrease in cost of goods sold was primarily attributable to the decrease in sales. GROSS PROFIT Gross profit was $2,165,072 for 1999, a decrease of $882,106 from $3,047,178 for 1998. The gross profit percentage was 12.4% in 1999, an increase from 12.3% in 1998. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative ("SG&A") expenses were $1,599,057 or 9.2% of sales for 1999, an increase of $112,495 or 7.6% from $1,486,562. The increase in SG&A expense levels was primarily attributable to payments related to sales commissions, salaries, factor charges and rent. INTEREST EXPENSE Interest expense for 1999 was $153,149 compared to $70,277 for 1998. The increase in interest was primarily attributable to the increase in the utilization of existing financing facilities. OTHER INCOME Other income for 1999 was $70,691 compared to none in 1998. The increase in other income was primarily attributed to the warehousing services rendered to one customer. PROVISION FOR INCOME TAXES The provision for income taxes was $188,000 and $695,250 for 1999 and 1998, respectively. The decrease in the provision for income taxes for the 1999 was primarily attributable to decreased earnings. 4 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 1999. Without exercise of those warrants, the Company may need to limit its growth in order to more efficiently manage its available funds and funds generated by operations. It is the Company's intention, however, to utilize more fully and possibly increase its existing line of credit with a major lending institution and its credit facility arrangement with a New York factoring company. These measures are required due to the significant cash requirements related to increases in revenues. The Company does not expect its historical rate of increase in sales growth to continue and further expects its rate of growth to be lower in the future as it begins to reach its full operating capacity constraints and utilization of its existing capital resources. In the event the Company is able to obtain additional equity capital through the exercise, if any, of its outstanding warrants or other increases in potential working capital as mentioned above, however, the Company believes that this new working capital may allow it to grow more quickly. 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 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. YEAR 2000 ISSUES Many computer systems in use today were designed and developed using two digits, rather than four, to specify the year. As a result, such systems will recognize the year 2000 as "00". This could cause many computer applications to fail completely or to create erroneous results unless corrective measures are taken. The Company currently uses software and related computer technologies essential to its operations that the Company believes will not be affected by the year 2000 issue. 5 The Company, however, can not determine the extent to which its vendors and customers may or may not be affected by the year 2000 issue. The Company is in the process of implementing a plan to obtain information from its external service providers, significant suppliers and customers, and financial institutions to confirm their plans and readiness to become Year 2000 compliant, in order to better understand and evaluate how their Year 2000 issues may affect the Company's operations. The Company currently is not in a position to assess this aspect of the Year 2000 issue. The Company intends over the next 2 years to establish relationships with customers that may require the use of EDI (electronic data interchange) whereby all invoicing and payments will take place electronically over the internet through computers. The Company believes that since these prospective customers already utilize EDI, that they either have in place now, or will have successfully taken whatever steps are necessary to solve the year 2000 issue. While the Company believes that its own internal assessment and planning efforts with respect to external service providers, suppliers, customers and financial institutions are and will be adequate to address its Year 2000 concerns there can be no assurance that these efforts will be successful or will not have a material adverse affect on the Company's operations. 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 6 RETROSPETTIVA, INC. BALANCE SHEETS (UNAUDITED) ASSETS
DECEMBER 31, SEPTEMBER 30, 1998 1999 ------------------------------- CURRENT ASSETS Cash $ 115,890 $ 72,205 Accounts receivable, net, pledged 1,716,697 1,831,705 Due from factor 333,053 2,091,887 Note receivable 100,333 100,333 Note receivable, stockholder 291,738 295,667 Loans receivable-Jiont ventue - 82,669 Inventories, pledged 8,470,702 7,502,320 Prepaid income taxes 82,016 - Accrued interest receivable, stockholder 55,370 78,551 Due from vendors 1,540,791 1,571,730 Other 74,520 67,812 ------------------------------- Total Current Assets 12,781,110 13,694,879 PROPERTY AND EQUIPMENT, at cost, net 70,256 67,041 DEFERRED TAX ASSETS 41,000 41,000 OTHER ASSETS 19,110 18,295 ------------------------------- $12,911,476 $13,821,215 =============================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable, trade $ 2,024,580 $ 1,529,465 Line of credit 1,507,216 2,304,622 Note payable 26,580 - Accrued expenses 97,723 13,712 Income tax payable - 63,051 Payroll tax payable - 6,780 Customer advances 267,454 250,000 ------------------------------- Total Current Liabilities 3,923,553 4,167,630 ------------------------------- 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; issued and outstanding 2,900,000 and 3,177,916 shares, respectively 6,258,190 6,765,480 Due from stockholder - (164,790) Additional paid-in capital 230,000 230,000 Retained earnings 2,499,733 2,822,895 ------------------------------- Total Stockholders Equity 8,987,923 9,653,585 ------------------------------- $12,911,476 $13,821,215 ===============================
7 RETROSPETTIVA, INC. STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1999 1998 1999 1998 ----------------------------------------------------------- SALES $6,528,640 $9,941,330 $17,380,934 $24,719,323 - COST OF SALES 5,719,893 8,961,476 15,215,862 21,672,145 ----------------------------------------------------------- GROSS PROFIT 808,747 979,854 2,165,072 3,047,178 OPERATING EXPENSES Selling expenses 124,345 208,615 417,512 402,952 General and administrative 308,271 312,411 1,181,545 1,083,610 ----------------------------------------------------------- Total Operating Expenses 432,616 521,026 1,599,057 1,486,562 ----------------------------------------------------------- INCOME FROM OPERATIONS 376,131 458,828 566,015 1,560,616 OTHER INCOME (EXPENSES) Interest income 7,678 36,539 27,606 78,872 Interest income, related party - - - 23,446 Other income - - 70,691 Interest expense (59,394) (32,246) (153,149) (70,277) ----------------------------------------------------------- Net Other Income (Expenses) (51,716) 4,293 (54,852) 32,041 ----------------------------------------------------------- INCOME BEFORE INCOME TAXES 324,415 463,121 511,163 1,592,657 PROVISION FOR INCOME TAXES 129,000 185,250 188,000 695,250 ----------------------------------------------------------- NET INCOME $ 195,415 $ 277,871 $ 323,163 $ 897,407 =========================================================== NET INCOME PER SHARE, BASIC $ 0.06 $ 0.10 $0.10 $ 0.31 =========================================================== WEIGHTED AVERAGE NUMBERS OF SHARES OUTSTANDING, BASIC 3,131,177 2,900,000 3,078,018 2,900,000 =========================================================== NET INCOME PER SHARE, DILUTED $ 0.05 $ 0.09 $ 0.09 $ 0.28 =========================================================== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, DILUTED 3,648,422 3,141,359 3,595,264 3,174,317 ===========================================================
8 RETROSPETTIVA, INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30 1998 1999 --------------------------------- CASH FLOWS FROM (TO) OPERATING ACTIVITIES Net income $ 897,407 $ 323,163 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 52,577 20,610 Services provided to reduce note receivable - - Changes in: Accounts receivable (332,351) (115,008) Prepaid income taxes - 82,016 Due from factor (1,027,947) (1,758,834) Prepaid license fees 30,333 - Accounts receivable Mfr agent 103,330 - Accounts receivable Partnership (160,989) - Loans receivable Joint venture (82,669) Prepaid expenses 5,024 Insurance receivable (6,708) - Accrued interest receivable, shareholder (36,046) (23,181) Advances to vendor (350,000) (30,939) Advances for sales commissiosn - - Inventories (159,010) 968,382 Other (9,691) 7,523 Accounts payable and accrued expenses 19,654 (579,127) Accrued income taxes 45,544 63,051 Accrued payroll taxes 34,668 6,780 Customer advances 112,615 (17,454) --------------------------------- Cash flows provided (used) by operating activities (781,590) (1,135,687) --------------------------------- CASH FLOWS FROM (TO) INVESTING ACTIVITIES: Notes receivable 40,675 - Purchase of fixed assets (500,279) (17,395) Payments on notes receivable - (26,580) --------------------------------- Cash flows provided (used) by investing activities (459,604) (43,975) --------------------------------- CASH FLOWS FROM (TO) FINANCING ACTIVITIES: Loans to stockholder (194,047) (3,929) Payments from stockholder - - Proceeds from line of credit, net 1,252,632 797,406 Due to factor (7,369) - Proceeds from issuance of common stock - 342,500 --------------------------------- Cash flows provided (used) by financing activities 1,051,216 1,135,977 --------------------------------- NET INCREASE (DECREASE) IN CASH (189,975) (43,685) CASH IN BANK, beginning of period 1,569,905 115,890 --------------------------------- CASH IN BANK, end of period $ 1,379,930 $ 72,205 =================================
9 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: November 11, 1999 RETROSPETTIVA, INC. --------------------------------- (Registrant) /s/ Hamid Vaghar ------------------------ Hamid Vaghar Chief Financial Officer (Principal Accounting Officer) 10 EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RETROSPETTIVA, INC. 10-QSB FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 72,205 0 1,831,705 0 7,502,320 13,694,879 67,041 0 13,821,215 4,167,630 0 0 0 6,765,480 3,217,685 13,821,215 17,380,934 17,380,934 15,215,862 16,814,919 0 0 153,149 511,163 188,000 0 0 0 0 323,163 .10 .09
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