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International Energy Ltd, Inc. – ‘10QSB’ for 3/31/97

As of: Wednesday, 5/14/97 · For: 3/31/97 · Accession #: 912057-97-17594 · File #: 0-28760

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/14/97  International Energy Ltd, Inc.    10QSB       3/31/97    2:19K                                    Merrill Corp/FA

Quarterly Report — Small Business — Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB       Quarterly Report -- Small Business                    12     40K 
 2: EX-27       Financial Data Schedule                                2      6K

10QSB — Quarterly Report — Small Business
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits and Reports on Form 8-K Financial Statements Management's Discussion and Analysis or Plan of Operation
1	1st Page - Filing Submission
2	Item 1. Financial Statements
9	Item 2. Management's Discussion and Analysis or Plan of Operation
11	Item 6. Exhibits and Reports on Form 8-K

10QSB 1st Page of 12 TOC ↑Top Previous Next ↓Bottom Just 1st
 
      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 AND  
      EXCHANGE ACT OF 1934
     For the quarterly period ended MARCH 31, 1997

      OR

/   /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE               
      SECURITIES EXCHANGE ACT OF 1934.

Commission file number 0-28760                                                  

     PACIFIC COAST APPAREL COMPANY, INC.
      (Exact name of registrant as specified in its charter)

CALIFORNIA                                95-4536683

(State or other Jurisdiction of            (I.R.S. Employer Identification No.) 
incorporation or organization)                                                

11828 Teale St.                                     
CULVER CITY, CA                               90230   
(Address of principal office)                     (Zip Code)      

Registrant's telephone number,                                                  
including area code                                    (310) 636-8432           

      INAPPLICABLE
    (Former name, former address and former fiscal year,
       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 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 /    /        
Number of shares of common stock                                        
outstanding as of March 31, 1997                  2,954,000             

Transactional Small Business Disclosure Format   Yes /     /        No /  X  /  

10QSB 2nd Page of 12 TOC 1st Previous Next ↓Bottom Just 2nd
FORWARD-LOOKING INFORMATION                                                     

In addition to historical information, this Report contains             
forward-looking statements, such as those pertaining to the Company's future    
sales and revenues, return on investment, profitability, and cash               
requirements.  Forward-looking statements involve numerous risks and            
uncertainties.  The following factors, among others, could cause actual         
results and future events to differ materially from those set forth or          
contemplated in the forward-looking statements: economic conditions,            
competitive products and pricing, new product development, the Company's lack   
of operating history and the prolonged absence of ACA JOE products from the     
market place, the need for additional capital, changes in fashion trends,       
dependence on key customers and personnel, and consumer response to the         
Company's products and advertising.  Readers are cautioned not to place undue   
reliance on forward-looking statements, which reflect management's analysis     
only as of the date hereof.  The Company assumes no obligation to update        
forward-looking statements.  See also the Company's annual report on Form       
10-KSB and other reports filed from time to time with the Securities and        
Exchange Commission pursuant to the Securities Exchange Act of 1934.            

PART I   FINANCIAL INFORMATION                                                  

ITEM 1.  FINANCIAL STATEMENTS                                                   

1 

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   PACIFIC COAST APPAREL COMPANY, INC. dba ACA JOE
   CONDENSED BALANCE SHEET

                                                        [Enlarge/Download Table]

                                                 MARCH 31, 1997    SEPTEMBER 30, 1996
                                               ------------------  ------------------
                                                                                     
         ASSETS                                                                      

CURRENT ASSETS                                                                       
    Cash                                           $    52,027         $   109,977   
    Short-term investments                           1,961,897           3,699,551   
    Due from factors                                   129,547                   -   
    Inventories                                        846,593             257,083   
    Prepaid expenses and other current assets          108,509              30,000   
                                                   -----------         -----------   

Total Current Assets                                 3,098,573           4,096,611   

PROPERTY AND EQUIPMENT, at cost, net of                                              
accumulated depreciation                               166,162               8,514   

OTHER ASSETS                                            77,248              13,782   
                                                   -----------         -----------   
                                                   $ 3,341,983         $ 4,118,907   
                                                   -----------         -----------   
                                                   -----------         -----------   
         LIABILITIES AND STOCKHOLDERS' EQUITY                                        

CURRENT LIABILITIES                                                                  
    Due to factors                                 $         -         $     5,000   
    Accounts Payable                                   276,289              44,240   
    Other current liabilities                          177,726             114,909   
    Loan payable, officer/stockholder                    6,899               6,899   
                                                   -----------         -----------   
Total Current Liabilities                              460,914             171,048   

LONG-TERM DEBT                                           2,049               2,049   

STOCKHOLDER'S EQUITY                                                                 
Preferred stock                                                                      
Authorized, 600,000 shares                                                           
    No shares outstanding                                    -                   -   
Common stock, no par value                                                           
     Authorized, 10,000,000 shares                                                   
     issued and outstanding 2,954,000                                                
     and 3,070,000 shares                            5,775,152           5,920,118   
  Additional paid-in capital                           162,500             162,500   
Deficit                                             (3,058,632)         (2,136,808)  
                                                   -----------         -----------   
Total Stockholders' Equity                           2,879,020           3,945,810   
                                                   -----------         -----------   
                                                   $ 3,341,983         $ 4,118,907   
                                                   -----------         -----------   
                                                   -----------         -----------   


Page 2  

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PACIFIC COAST APPAREL COMPANY, INC. dba ACA JOE   
STATEMENT OF OPERATIONS 

                                  SIX MONTHS ENDED
                                  MARCH 31
                                 1997             1996
                                 ----             ----
NET SALES                                 $  407,606       $  55,876            

COST OF GOODS SOLD                           284,404          33,546            
                              ----------       ---------
GROSS PROFIT                                 123,202          22,330            

OPERATING EXPENSES                                                              
Design and Production                    87,799         116,541       
Selling                                 159,212          70,431       
Advertising                             104,027               -       
Shipping                                  8,509           5,374       
General and administrative              710,033         304,508       
Interest expense  ( income )            (25,354)         (2,630)      
                              ----------       ---------
                               1,044,226         494,224
                              ----------       ---------

LOSS BEFORE INCOME TAXES                    (921,024)       (471,894)           

PROVISION FOR INCOME TAXES                      (800)         (1,100)           
                              ----------       ---------

NET LOSS                                 $  (921,824)    $  (472,994)           
                              ----------       ---------
                              ----------       ---------

NET LOSS PER SHARE                            (0.31)          (0.34)          

WEIGHTED AVERAGE NUMBER OF COMMON                                               
SHARES OUTSTANDING                    3,012,000       1,400,000       

Page 3  

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PACIFIC COAST APPAREL COMPANY, INC. dba ACA JOE   
STATEMENT OF OPERATIONS 

                                  THREE MONTHS ENDED
                                  MARCH 31
                                  1997            1996
                                  ----            ----
NET SALES                                  $  351,971       $  55,876           

COST OF GOODS SOLD                            263,656          33,546           
                                ----------       ---------

GROSS PROFIT                                   88,315          22,330           

OPERATING EXPENSES                                                              
Design and Production                     67,295          93,162      
Selling                                  126,737          70,431      
Advertising                               97,562               -      
Shipping                                   6,318           5,374      
General and administrative               374,330         180,676      
Interest expense  ( income )             (14,967)           (748)     
                                ----------       ---------
                                   657,275         348,895
                                ----------       ---------
                                ----------       ---------

LOSS BEFORE INCOME TAXES                     (568,960)       (326,565)          

PROVISION FOR INCOME TAXES                       (800)           (300)          
                                ----------       ---------

NET LOSS                                   $ (569,760)     $ (326,865)          
                                ----------       ---------
                                ----------       ---------

NET LOSS PER SHARE                             (0.19)          (0.23)         

WEIGHTED AVERAGE NUMBER OF COMMON                                               
SHARES OUTSTANDING                     2,954,000       1,400,000      

Page 4  

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PACIFIC COAST APPAREL COMPANY, INC. dba ACA JOE 
STATEMENT OF CASH FLOW

 INCREASE (DECREASE) IN CASH

                                          SIX MONTHS ENDED
                                                       (UNAUDITED)
                                           MARCH 31, 1997     MARCH 31, 1996
                                           --------------     --------------
CASH FLOW FROM OPERATION ACTIVITIES                                             

Net loss                                       $ (921,824)         $ (472,994)  

Adjustment to reconcile net loss to                                             
Cash used by operating activities:                                        
Depreciation                                    13,038               1,187
Amortization of deferred income                      -                   -
Changes in assets and liabilities                                         
 Increase in due from factors                 (129,547)             25,960
  Increase in inventories                      (589,510)           (129,462)
Increase in prepaid expenses                                            
    and other current assets                   (141,975)             (3,490)
 Increase in accounts payable                  227,048             115,754
 Increase in other current liabilities          62,817                   -
                                           -----------           ---------
Total Adjustments                                (558,129)              9,949   
                                           -----------           ---------
Net cash used by operating Activities          (1,479,953)           (463,045)  

CASH FLOW FROM INVESTING ACTIVITIES                                             
Purchase of property and equipment             (170,685)                  - 
Proceeds from receipts of deferred income             -             (10,000)
Decrease in short-term investments            1,737,654                   - 
                                           -----------           ---------
Net Cash Provided by Investing Activities       1,566,969             (10,000)  

CASH FLOW FROM FINANCING ACTIVITIES                                             
Increase in loan receivable,                                                
 officer/stockholder                                 -              42,307
Reacquisition of common stock                  (144,966)                  - 
Proceeds from issuance of long-term debt              -             101,153 
Proceeds from issuance of stock                       -             150,650 
                                           -----------           ---------
Net Cash (Used) Provided                                          
      by Financing Activities                 (144,966)            294,110
                                           -----------           ---------
NET INCREASE IN CASH                              (57,950)           (178,935)  
                                           -----------           ---------
CASH, BEGINNING                                   109,977             233,407   

CASH, ENDING                                   $   52,027           $  54,472   
                                           -----------           ---------
                                           -----------           ---------

Page 5  

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   PACIFIC COAST APPAREL COMPANY, INC. dba ACA JOE
    CONDENSED STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

                                            SIX MONTHS ENDED
                                                           (UNAUDITED)
                                             MARCH 31, 1997       MARCH 31, 1996
                                             --------------       --------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW                                            
INFORMATION                                                                 
CASH PAID DURING THE PERIOD FOR:                            

                 Interest                       10,921              11,764
                 Income Taxes                      800               1,100

Page 6  

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     PACIFIC COAST APPAREL COMPANY, INC. dba ACA JOE
     CONDENSED STATEMENT OF STOCKHOLDER'S EQUITY

   YEAR ENDED SEPTEMBER 30, 1996
   AND SIX MONTHS ENDED MARCH 31, 1997

                                                        [Enlarge/Download Table]


                                                                    CONVERTIBLE                                        TOTAL      
                                            COMMON STOCK          PREFERRED STOCK        ADDITIONAL                 STOCKHOLDERS' 
                                       ----------------------   ----------------------   PAID - IN                     EQUITY     
                                          SHARES     AMOUNT      SHARES      AMOUNT       CAPITAL      DEFICIT      (DEFICIENCY)  
                                       ----------  ----------   ----------  ----------  -----------  -----------   -------------- 
                                                                                                                                  

Balance, October 1, 1995                1,400,000  $   20,610      170,000   $ 425,000    $       -  $  (258,235)    $   187,375  

Issuance of stock for services             23,000      57,500            -           -            -            -          57,500  

Sale of stock                               2,000          20       60,000     150,000            -            -         150,020  

Value of warrants issued in connection                                                                                            
  with a loan                                   -           -            -           -     162,500             -         162,500  

Exercise of warrants                       65,000         650            -           -            -            -             650  

Conversion of preferred stock to                                                                                                  
  common stock                            230,000     575,000     (230,000)   (575,000)           -            -               -  

Issuance of stock in public offering    1,350,000   5,266,338            -           -            -            -       5,266,338  

Dividends on preferred stock                    -           -            -           -            -      (51,645)        (51,645) 

Net loss for the year ended                                                                                                       
September 30, 1996                              -           -            -           -            -   (1,826,928)      (1,826,928)
                                       ----------  ----------   ----------  ----------  -----------  -----------    ------------- 

Balance, September 30, 1996             3,070,000   5,920,118            -           -      162,500   (2,136,808)       3,945,810 

Reacquisition of common stock            (116,000)   (144,966)           -           -            -            -         (144,966)

Net loss for the six months ended                                                                                                 
  March 31, 1997                                -           -            -           -            -     (921,824)        (921,824)
                                       ----------  ----------   ----------  ----------  -----------  -----------    ------------- 

Balance, March 31, 1997                 2,954,000   5,775,152            -           -      162,500   (3,058,632)       2,879,020 
                                       ----------  ----------   ----------  ----------  -----------  -----------    ------------- 
                                       ----------  ----------   ----------  ----------  -----------  -----------    ------------- 


Page 7  

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ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION             

INTRODUCTION                                                                    

The Company was formed in April 1995 for the purpose of designing,    
sourcing and marketing the ACA JOE brand of men's casual sportswear, pursuant   
to an exclusive U.S. trademark license.  The Company sources and designs the    
ACA JOE products through the use of sub-contractors and independent agents,     
which allows the Company to avoid the fixed overhead cost of maintaining its    
own production facilities.  The business strategy of the Company is primarily   
focused on reintroducing the ACA JOE products in the United States through      
national and regional advertising, marketing and customer service programs      
designed to promote the ACA JOE name and products.  Specifically, the Company   
is focusing its efforts on:  (1) expanding its distribution in the department   
store and retail men's specialty store categories; (2) developing targeted      
licensees in the accessories categories; (3) further developing its Quick       
Response Program for the basic apparel collection for better customers; and     
(4) developing alternative marketing techniques.  The Company is using the      
net proceeds of its August 1996 initial public offering (approximately          
$5,267,000) to implement its business strategy.                                 

During the development stage of the Company, the Company's primary    
activities have included product development and design, organizing the sales   
force, marketing, arranging for production sources, and the opening of a        
retail outlet store.  The cost of products sold includes design, selling,       
shipping, and general and administrative expenses.  To date, the Company has    
not capitalized development costs associated with the development of the ACA    
JOE products and has instead expensed all payroll and related costs for such    
development.  Design expenses consist of payments to sub-contractors for        
design and development of new product lines.  Selling expenses consist          
primarily of salaries, commissions and administrative costs associated with     
the Company's payroll and marketing personnel.  General and administrative      
expenses include the costs of consultants and other administrative functions    
of the Company.                                                                 

RESULTS OF OPERATIONS                                                           

SIX MONTHS ENDED MARCH 31, 1997                                                 

  The Company's operating expenses for the six months ended March 31, 1997
were $1,044,226.  The $550,002 increase over the prior year period reflects     
an increase in selling, design and general and administrative expenses          
incident to the commencement of operations, specifically the selling and        
shipping of its ACA JOE products and the company's first major production       
introduction.  During the six months ended March 31, 1997, net sales were       
$407,606, and cost of goods sold was $284,404.  While operating expenses were   
disproportionally large in relation to sales, management believes that if       
sales increase, design and general and administrative expenses will decline     
substantially                                                                   

8 

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as a percentage of sales. There can be no assurance, however, that the          
Company will operate profitably in the future.                                  

The advertising expense in the period reflects primarily a monthly    
retainer paid to an advertising firm from December 1996 to March 1997.  This    
program has been discontinued for the present, in favor of co-operative         
advertising with retailers.  The $405,525 increase in general and               
administrative expenses over the prior period resulted primarily from           
expenses related to increased production and quality control, and increased     
administrative expenses due to the change in status from a private to a         
publicly-held company.                                                          

SIX MONTHS ENDED MARCH 31, 1996                                                 

The Company began conducting business in August of 1995.  The Company's first   
shipment of product took place in February 1996.  Design expenses were          
incurred primarily to design the Company's initial line of ACA JOE products.    
The general and administrative expenses relate primarily to accounting, legal   
and consulting fees associated with the start-up expenditures of the Company.   

LIQUIDITY AND CAPITAL RESOURCES                                                 

In September 1996, the Company realized net proceeds of approximately 
$5,267,000 from an initial public offering of common stock and warrants to      
purchase common stock.  A portion of these proceeds was used to repay all of    
the indebtedness then outstanding.                                              

The Company experienced losses from operations of $258,335 for the    
period from April 28, 1995 (inception) to September 30, 1995 and $1,826,928     
for the year ended September 30, 1996.  The cumulative loss through March 31,   
1997 is $3,206,987, excluding a one-time preferred stock dividend of $51,645.   
Approximately $2,637,659 of working capital was available at March 31, 1997.    

Sales of the Company's initial, Spring 1997 product line did not meet 
expectations.  To remedy this, the Company retained a new designer to create    
its Fall 1997 line, and retained an advertising firm to develop and implement   
a marketing program.  The Fall 1997 line is experiencing a degree of retailer   
acceptance to date.  At March 31, 1997, the Company had obtained orders from    
approximately 150 stores.  Sell through of products (i.e., consumer             
acceptance) is not yet known, however.  If sales of the Fall 1997 line do not   
meet expectations, the Company would likely require additional capital.  The    
Company is also considering a strategic combination with a branded apparel      
company, in order to provide more critical mass and to provide economies of     
sale. However, there can be no assurance that any such strategic combination    
will be consummated.                                                            

 In the event of unanticipated developments or to satisfy future funding
requirements, the Company may seek to fund its operations through public or     
private offerings of securities, with collaborative or other arrangements       
with corporate partners or from other sources.  Additional financing may not    
be available when needed or on                                                  

9 

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terms acceptable to the Company.  If adequate financing is not available, the   
Company may be required to delay, scale back or eliminate certain of its        
development programs, to relinquish rights to certain of its products, or to    
license to third parties the right to commercialize products the Company        
would otherwise seek to develop itself.                                         

In November 1996, following a decline in the market price of the      
Company's common stock, the Board authorized the Company's purchase of up to    
150,000 shares of its common stock.  From December 1996 to March 1997, the      
Company purchased a total of 116,000 shares of its common stock in the open     
market at an average price of $1.25 per share (a total of $144,966).            
Management believes these purchases at current price levels were in the         
interests of the Company and its shareholders, and will not affect the          
Company's ability to fund its business plan for the remainder of the current    
fiscal year.  This program has now been discontinued.                           

PART II   OTHER INFORMATION                                                     

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                      

(a)  Exhibits                                               

27.  Financial Data Schedule                      

(b)  Reports on Form 8-K.                                   

None.                                   

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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.                                          

                                   Pacific Coast Apparel Company, Inc.

                            By  /s/ TERRENCE L. McGOVERN
                                     ---------------------------------
                              Terrence L. McGovern
                                     Chief Executive Officer and
                                     Chief Financial Officer

May 13, 1997                                                                    

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Dates Referenced Herein

		Referenced-On Page
This ‘10QSB’ Filing	Date	First	Last	Other Filings

Filed on:	5/14/97			None on these Dates
	5/13/97	12
For Period End:	3/31/97	1	10
	9/30/96	3	10
	3/31/96	6	10
	9/30/95	10
	4/28/95	10
				List all Filings

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Filing Submission 0000912057-97-017594 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

International Energy Ltd, Inc. – ‘10QSB’ for 3/31/97

As of: Wednesday, 5/14/97 · For: 3/31/97 · Accession #: 912057-97-17594 · File #: 0-28760

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Quarterly Report — Small Business — Form 10-QSBFiling Table of Contents

10QSB — Quarterly Report — Small BusinessDocument Table of Contents

Dates Referenced Herein

Quarterly Report — Small Business — Form 10-QSB
Filing Table of Contents

10QSB — Quarterly Report — Small Business
Document Table of Contents