10-Q 1 yes63001.txt YES CLOTHING 10-Q, 6-30-01 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarter Ended June 30, 2001 Commission File Number 0 - 18064 YES CLOTHING CO. (Exact name of registrant as specified in its charter) California ------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) 95-376867 ------------------------------------------------------------------------------- (I.R.S. Employer I.D. No.) 4695 MacArthur Court, Suite 1450, Newport Beach, California 92660 ------------------------------------------------------------------------------- (Address of principal executive offices, including zip code) (949) 833-2094 ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) N/A ------------------------------------------------------------------------------- (Former Address, if changed since last report) N/A ------------------------------------------------------------------------------- (Former telephone number, if changed since last report) Indicate by check mark whether the Registrant [1] has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the Company 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: Indicate the number of shares outstanding of each of the issuer's classes of capital stock, as of the latest practicable date. Class Outstanding at July 23, 2001 ---------------------------- ---------------------------------- Common Stock, $.01 par value 37,044,158 YES CLOTHING CO. INDEX Page PART I Item 1. Financial Information Balance Sheet....................................................3 Statements of Operations.........................................4 Statements of Cash Flows.........................................5 Notes to Financial Statements....................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...........................8 Item 3. Quantitative and Qualitative Disclosures about Market Risk.......8 PART II. OTHER INFORMATION Item 1. Legal Proceedings................................................9 Item 2. Changes in Securities............................................9 Item 3. Defaults Upon Senior Securities .................................9 Item 4. Submission of Matters to a Vote of Security Holders..............9 Item 5. Other Information................................................9 Item 6. Exhibits and Reports on Form 8-K.................................9 Signatures......................................................10 2 YES CLOTHING CO. Consolidated Condensed Balance Sheet As of June 30, 2001 (Unaudited)
June 30, 2001 ------------- ASSETS Current Assets - Prepaid Taxes $ 800 ------------ Total current assets $ 800 ============ LIABILITIES AND SHAREHOLDERS' DEFICIT Current Liabilities - Accounts payable $ 1,193,300 Accrued expenses 482,300 Due to affiliates 366,100 ------------ Total current liabilities 2,041,700 ------------ Shareholder's Deficit - Common stock, $.001 par; 75,000,000 shares authorized; 37,044,158 issued and outstanding 37,000 Additional paid in capital 13,438,900 Accumulated deficit (15,516,800) ------------ Total shareholders' deficit (2,040,900) ------------ $ 800 ============
See accompanying notes to these condensed financial statements. 3 YES CLOTHING CO. CONDENSED STATEMENTS OF OPERATIONS For the Three Months Ended June 30, 2001 and 2000 (Unaudited)
2001 2000 --------- --------- Net sales $ - $ - Cost of sales - - --------- --------- Gross loss - - General and administrative 32,300 20,000 --------- --------- Net loss $ (32,300) $ (20,000) ========= ========= Basic and diluted loss per share: $ (.00) $ (.16) ========= ========= Basic and diluted weighted average common shares outstanding 9,791,863 127,865 ========= =========
See accompanying notes to these condensed financial statements. 4 YES CLOTHING CO. Condensed Statements of Cash Flows For the Three Months Ended June 30, 2001 and 2000 (Unaudited)
2001 2000 ---------- ---------- Cash Flows from Operating Activities: Net loss $ (32,300) $ (20,000) Reconciliation of net loss to net cash used by operating activities: Changes in operating assets and liabilities: Decrease in accounts payable (4,000) - Increase in accrued expenses - 20,000 --------- --------- Net cash used by operating activities (36,300) - --------- --------- Cash Flows from Financing Activities: Increase in due to affiliates 36,300 - --------- --------- Net cash provided by financing activities 36,300 - --------- --------- Net change in cash - - Cash and cash equivalents, beginning of period - - --------- --------- Cash and cash equivalents, end of period $ - $ - ========= ========= Non-cash Financing Activities: Stock issued in satisfaction of accounts payable $ 87,900 $ - ========= ========= Stock issued in satisfaction of amounts due to affiliates $ 30,000 $ - ========= =========
See accompanying notes to these condensed financial statements 5 YES CLOTHING CO. NOTES TO CONDENSED FINANCIAL STATEMENTS June 30, 2001 Note 1. Organization Yes Clothing Co. (the "Company") was incorporated on July 1, 1982, in the State of California. Through July 1997, the Company designed, manufactured and marketed a diversified line of apparel primarily for women and young men. The Company sold its garments throughout the United States and Canada to retail department stores, specialty chains and specialty stores. In June 1996, the Company's principal shareholder sold approximately 50% of the Company's outstanding shares to an individual who assumed the position of Chairman and Chief Executive Officer of the Company. In July 1997, due to a lack of trade credit and working capital, the Company temporarily suspended its operations pending receipt of additional capital or third party credit. In December 1997, the Company filed for protection from its creditors pursuant to Chapter 11 of the United States Bankruptcy Code. In March 1998, the Bankruptcy Court dismissed the Company's bankruptcy proceedings. In April 1998, the Company relinquished its rights to the YES(R) trademarks in connection with a purchase and sale agreement whereby an affiliate of the Company satisfied certain senior secured debt on behalf of the Company . In March 2001, the affiliate sold the license to an unrelated third party. On November 13, 2000, Yes California was merged into Yes Clothing Company, Inc. ("Yes Nevada" or "the Company"), a Nevada corporation formed by it on July 31, 2000. At that time, Yes Nevada exchanged one (1) share for every one hundred (100) shares of Yes California. The merger was recorded at historical costs since the companies were under common control, and all amounts, including share information, have been retroactively restated for the periods presented. In October 2000, NewBridge Captial, Inc. ("NBRG") converted 177,005 shares of the Company's Series A Preferred into 5,779,213 shares of common stock. These shares reverted to 57,792 after the reverse split in November, 2000. Upon issuance of the common shares, NBRG owned approximately 50% of the outstanding common shares of the Company. On May 8, 2001, the Company issued 943,472 shares of its common stock to various consultants and directors for their services rendered through March 31, 2001 valued at $117,934. The related expenses were accrued in the fourth quarter of fiscal year 2001. On June 7, 2001, the holders of the remaining 1,100,000 shares of the Preferred Stock converted their shares at the conversion rate of 32 65/100th shares into 35,915,000 shares of the Company's common stock. As a result of the exchange, NewBridge increased its holdings to 32,742,940 shares of common stock or 88.4% of the outstanding common shares and NuVen Limited Partnership increased its holdings to 3,265,000 shares of common stock or 8.8% of the outstanding common shares. 6 YES CLOTHING CO. NOTES TO CONDENSED FINANCIAL STATEMENTS June 30, 2001 Note 2. Summary Of Significant Accounting Policies Going Concern The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplates continuation of the Company as a going concern. The Company has experienced recurring losses since 1992. At June 30, 2001, the Company has liabilities in excess of assets totaling approximately $2.0 million, as well as a shareholders' deficit of $2.0 million. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management intends to satisfy or restructure its debt, which contemplates that the Company will satisfy substantially all its obligations through the issuance of common stock, among other things. There are no assurances that the Company will be successful in satisfying or restructuring its debt and/or seeking capital to resume operations. No adjustments have been made to the accompanying financial statements as a result of these uncertainties. Unaudited Interim Financial Statements In the opinion of management, the unaudited financial statements include all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company's results of operation for the three months ended June 30, 2001 and 2000 and cash flows for the three months ended June 30, 2001 and 2000. These results are not necessarily indicative of the results expected for the year ending March 31, 2002. Restatement of Shares Outstanding All historical share and per share amounts have been restated to reflect the one for one hundred exchange of shares resulting from the Company reincorporating in Nevada and effecting the merger on November 13, 2000 (Note 1). 7 Item 2: Management's Discussion and Analysis of Financial Condition And Results of Operations Results of Operations Quarter Ended June 30, 2001 versus June 30 2000 In July 1997, due to a lack of trade credit and working capital, we temporarily suspended our operations pending receipt of additional capital or third party credit. We began liquidating our inventory and other assets at below cost. On December 17, 1997, we filed for protection from our creditors pursuant to Chapter 11 of the United States Bankruptcy Code. In March 1998, we were dismissed from our bankruptcy proceedings. There were no operations during first quarter of fiscal 2001, and 2000. As a result, there were no revenues or cost of revenues. Total general and administrative expenses increased $12,300 from $20,000 in fiscal 2000 to $32,300 in fiscal 2001. The increase is attributed to accrued expenses for services rendered to the company. Capital Resources and Liquidity We have incurred net losses and negative cash flows from operating activities since inception. At June 30, 2001, through the date of this filing, our liabilities exceed our assets by approximately $2.0 million. We currently receive financial support from NewBridge. Our future depends on our ability to execute a plan of reorganization which consists of the satisfaction of our obligations primarily through the issuance of shares of common stock, among other things. There are no assurances that the Company will be successful in satisfying or restructuring its debt and/or seeking capital to resume operations. Item 3. Quantitative and Qualitative Disclosures about Market Risk N/A 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings No change from that which was reported in the Form 10K for the year ended March 31, 2001. 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 None. Item 6. Exhibits and Reports on Form 8-K None. 9 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. YES CLOTHING CO. Dated: August 6, 2001 By: /s/ Fred G. Luke --------------------- Fred G. Luke President 10