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 March 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the
transition period from __________________ to ____________________
Commission File Number 1-13856
SEL-LEB MARKETING, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
NEW YORK 11-3180295
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
495 River Street, Paterson, NJ 07524
(Address of principal executive offices)
973-225-9880
(Issuer's telephone number)
Check whether the issuer (1) 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 report(s)), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding for each of the issuer's classes of
common equity, as of the latest practicable date: 2,261,018 shares of common
stock as of May 13, 2002.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
SEL-LEB MARKETING, INC. AND SUBSIDIARY
PAGE
----
Part I -- Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2002
(Unaudited) and December 31, 2001 2
Condensed Consolidated Statements of Income
Three Months Ended March 31, 2002 and 2001 (Unaudited) 3
Condensed Consolidated Statement of Changes in Stockholders' Equity
Three Months Ended March 31, 2002 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2002 and 2001 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis or Plan of Operation 10-13
Part II -- Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
1
SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2002 AND DECEMBER 31, 2001
March 31, December 31,
ASSETS 2002 2001
------------ ------------
(Unaudited) (Note 1)
Current assets:
Cash and cash equivalents $ 56,370 $ 60,300
Accounts receivable, less allowance for doubtful
accounts of $328,520 and $266,120 8,609,964 9,163,755
Inventories 8,651,304 8,297,918
Deferred tax assets, net 321,309 297,545
Prepaid expenses and other current assets 857,420 832,460
------------ ------------
Total current assets 18,496,367 18,651,978
Property and equipment, at cost, net of accumulated
depreciation and amortization of $1,173,151
and $1,153,237 148,451 164,130
Other assets 213,740 214,203
------------ ------------
Totals $ 18,858,558 $ 19,030,311
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable under line of credit $ 3,704,753 $ 2,622,390
Current portion of long-term debt 257,510 307,080
Accounts payable 1,648,406 4,626,583
Accrued expenses and other liabilities 3,708,667 2,080,918
------------ ------------
Total current liabilities 9,319,336 9,636,971
Long-term debt, net of current portion 625,733 690,274
------------ ------------
Total liabilities 9,945,069 10,327,245
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares
authorized; none issued -- --
Common stock, $.01 par value; 40,000,000 shares
authorized; 2,261,018 shares issued and outstanding 22,611 22,611
Additional paid-in capital 6,496,359 6,496,359
Retained earnings 2,433,519 2,223,096
Less receivable in connection with equity transactions (39,000) (39,000)
------------ ------------
Total stockholders' equity 8,913,489 8,703,066
------------ ------------
Totals $ 18,858,558 $ 19,030,311
============ ============
See Notes to Condensed Consolidated Financial Statements.
2
SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Unaudited)
2002 2001
---------- ----------
Net sales $5,707,857 $5,013,797
---------- ----------
Operating expenses:
Cost of sales 3,895,216 3,518,719
Selling, general and administrative expenses 1,412,567 1,179,805
---------- ----------
Totals 5,307,783 4,698,524
---------- ----------
Operating income 400,074 315,273
Interest expense, net of interest income of $672 and $673 60,651 121,779
---------- ----------
Income before provision for income taxes 339,423 193,494
Provision for income taxes 129,000 77,500
---------- ----------
Net income $ 210,423 $ 115,994
========== ==========
Net earnings per share:
Basic $ .09 $ .05
========== ==========
Diluted $ .09 $ .05
========== ==========
Weighted average shares outstanding:
Basic 2,261,018 2,261,018
========== ==========
Diluted 2,420,056 2,328,333
========== ==========
See Notes to Condensed Consolidated Financial Statements.
3
SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2002
(Unaudited)
Receivable in
Common Stock Additional Connection Total
--------------------- Paid-in Retained With Equity Stockholders'
Shares Amount Capital Earnings Transactions Equity
--------- ------- ---------- ---------- ------------- -----------
Balance, January 1, 2002 2,261,018 $22,611 $6,496,359 $2,223,096 $ (39,000) $8,703,066
Net income 210,423 210,423
--------- ------- ---------- ---------- --------- ----------
Balance, March 31, 2002 2,261,018 $22,611 $6,496,359 $2,433,519 $ (39,000) $8,913,489
========= ======= ========== ========== ========= ==========
See Notes to Condensed Consolidated Financial Statements.
4
SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Unaudited)
2002 2001
----------- ---------
Operating activities:
Net income $ 210,423 $ 115,994
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 19,914 54,989
Provision for doubtful accounts 62,400 32,428
Deferred income taxes (23,764) (21,925)
Changes in operating assets and liabilities:
Accounts receivable 491,391 (480,747)
Inventories (353,386) (426,602)
Prepaid expenses and other current assets (24,960) 10,015
Other assets 463 (26,582)
Accounts payable, accrued expenses and other
liabilities (1,350,428) 67,751
----------- ---------
Net cash used in operating activities (967,947) (674,679)
----------- ---------
Investing activities -- purchases of property and equipment (4,235) (39,970)
----------- ---------
Financing activities:
Proceeds from note payable under line of credit, net of
repayments 1,082,363 821,446
Repayments of long-term debt (114,111) (213,881)
----------- ---------
Net cash provided by financing activities 968,252 607,565
----------- ---------
Net decrease in cash and cash equivalents (3,930) (107,084)
Cash and cash equivalents, beginning of period 60,300 213,920
----------- ---------
Cash and cash equivalents, end of period $ 56,370 $ 106,836
=========== =========
See Notes to Condensed Consolidated Financial Statements.
5
SEL-LEB MARKETING, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 -- Organization and basis of presentation:
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, consisting of normal recurring
accruals, necessary to present fairly the financial position of Sel-Leb
Marketing, Inc. ("Sel-Leb") and its 80%-owned subsidiary, Ales Signature, Ltd.
("Ales"), as of March 31, 2002, their results of operations and cash flows for
the three months ended March 31, 2002 and 2001 and their changes in
stockholders' equity for the three months ended March 31, 2002. Sel-Leb and Ales
are referred to together herein as the "Company." Information included in the
condensed consolidated balance sheet as of December 31, 2001 has been derived
from the audited consolidated balance sheet included in the Company's Form
10-KSB for the year ended December 31, 2001 (the "10-KSB") previously filed with
the Securities and Exchange Commission (the "SEC"). Pursuant to rules and
regulations of the SEC, certain information and disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted from
these consolidated financial statements unless significant changes have taken
place since the end of the most recent fiscal year. Accordingly, these unaudited
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements, notes to consolidated financial
statements and the other information in the 10-KSB.
The consolidated results of operations for the three months ended March 31, 2002
are not necessarily indicative of the results to be expected for the full year
ending December 31, 2002.
Certain accounts in the 2001 condensed consolidated financial statements have
been reclassified to conform with the 2002 presentations.
Note 2 -- Earnings per share:
As further explained in Note 1 in the 10-KSB, the Company has adopted the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings per
Share", which require the presentation of "basic" and, if appropriate, "diluted"
earnings per common share. Basic earnings per share is calculated by dividing
net income by the weighted average number of common shares outstanding during
each period. The calculation of diluted earnings per share is similar to that of
basic earnings per share, except that the denominator is increased to include
the number of additional common shares that would have been outstanding if all
potentially dilutive common shares, such as those issuable upon the exercise of
stock options and warrants, were issued during the period.
6
SEL-LEB MARKETING, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2 -- Earnings per share (concluded):
In computing diluted earnings per share for the three months ended March 31,
2002 and 2001, the assumed exercise of the Company's outstanding stock options
and warrants, adjusted for the application of the treasury stock method, would
have increased the weighted average number of common shares outstanding as shown
in the table below:
2002 2001
---------- ----------
Basic weighted average shares outstanding 2,261,018 2,261,018
Shares arising from assumed exercise of:
Options 135,736 67,215
Warrants (A) 23,302
---------- ----------
Diluted weighted average shares outstanding 2,420,056 2,328,233
========== ==========
(A) The warrants expired on April 15, 2002.
Note 3 -- Note payable under line of credit:
As further explained in Note 3 in the 10-KSB, during December 1998, the Company
entered into a loan agreement pursuant to which Merrill Lynch Business Financial
Services, Inc. ("Merrill Lynch") is providing the Company with a credit facility
(the "Facility"). Based on the latest amendments to the loan agreement, as of
March 31, 2002, the Facility consists of a revolving line of credit, with
maximum borrowings of $3,800,000 against the Company's eligible accounts
receivable and inventories through October 31, 2002, and three term loans (see
Note 4 in the 10-KSB). Borrowings under the revolving line of credit, which
totaled $3,704,753 at March 31, 2002, bear interest, which is payable monthly,
at 2.75% above the 30-day London Interbank Offering Rate (an effective rate of
4.63% as of March 31, 2002). Outstanding borrowings under the Facility are
secured by substantially all of the Company's assets.
Note 4 -- Stock options and warrants:
Descriptions of the Company's stock option plans and other information related
to stock options and warrants are included in Note 5 in the 10-KSB. Certain
information related to options outstanding at March 31, 2002 and changes in
options outstanding during the three months ended March 31, 2002 are summarized
below:
Shares Weighted
or Average
Price Exercise Price
Outstanding at January 1, 2002 650,008 $2.19
Canceled (1,150) 2.50
---------
Outstanding at March 31, 2002 648,858 $2.19
========= =====
Options exercisable at March 31, 2002 536,887
========
7
SEL-LEB MARKETING, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5 -- Goodwill:
As of March 31, 2002, goodwill, which is comprised of costs in excess of net
assets of acquired businesses, had an immaterial carrying value that was
included in other assets. Through December 31, 2001, goodwill was being
amortized on a straight-line basis over periods not exceeding ten years.
Goodwill amortization totaled approximately $8,500 in the three months ended
March 31, 2001. In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"). Under SFAS 142, goodwill and other intangible
assets with indefinite useful lives will no longer be systematically amortized.
Instead such assets will be subject to reduction only when their carrying
amounts exceed their estimated fair values based on impairment tests established
by SFAS 142 that will be made at least annually. The Company was required to
apply the provisions of SFAS 142 and discontinue amortization effective as of
January 1, 2002. The Company will also be required to make its first impairment
tests no later than December 31, 2002. Management expects that these tests will
not have any significant effects on the Company's consolidated financial
position and results of operations.
Note 6 -- Segment information:
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"). Pursuant to the provisions of SFAS 131, the Company
is reporting segment sales and gross margins in the same format reviewed by the
Company's management (the "management approach"). The Company has two reportable
segments: "Opportunity" and "Cosmetics". The Opportunity segment is comprised of
the operations connected with the acquisition, sale and distribution of
name-brand and off-brand products which are purchased from manufacturers,
wholesalers or retailers as a result of close-outs, overstocks and/or changes in
the packaging of brand name items. The Cosmetics segment is comprised of the
acquisition, sale and distribution of all other products, including "celebrity
endorsed" and "tie-in" cosmetics and health and beauty aid products and designer
and all other fragrances.
8
SEL-LEB MARKETING, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6 -- Segment information (concluded):
Net sales, cost of sales and other related segment information for the three
months ended March 31, 2002 and 2001 follows:
2002 2001
----------- -----------
Net sales:
Opportunity $2,344,079 $2,479,160
Cosmetics 3,363,778 2,534,637
----------- -----------
Totals 5,707,857 5,013,797
----------- -----------
Cost of sales:
Opportunity 1,693,664 1,558,731
Cosmetics 2,201,552 1,959,988
----------- -----------
Totals 3,895,216 3,518,719
Selling, general and administrative expenses 1,412,567 1,179,805
----------- -----------
Total operating expenses 5,307,783 4,698,524
----------- -----------
Operating income 400,074 315,273
Interest expense, net 60,651 121,779
------------- ------------
Income before provision for income taxes $ 339,423 $ 193,494
============= ===========
* * *
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of the Company's results of operations,
liquidity and financial condition should be read in conjunction with the
Condensed Consolidated Financial Statements of the Company and related notes
thereto. This Quarterly Report on Form 10-QSB contains certain forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements due to a number of factors, including but not limited
to general trends in the retail industry (both general as well as electronic
outlets), the ability of the Company to extend its financing arrangements (or
obtain satisfactory alternative financing) on favorable terms, or at all, the
ability of the Company to successfully implement its expansion plans, consumer
acceptance of any products developed and sold by the Company, the ability of the
Company to develop its "celebrity" product business, the ability of the Company
to sell its specially purchased merchandise at favorable prices, on a timely
basis or at all, and other factors set forth herein or in reports and other
documents filed by the Company with the SEC. In addition, quarterly results in
the Company's two business segments do not necessarily indicate trends in the
Company's overall business operations, due to the timing of special purchases,
special sales and large sales to any one particular customer.
SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America. The preparation of these consolidated financial statements requires
us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related to accounts receivable, inventories, property and equipment, stock
based compensation, income taxes and contingencies. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Except as described below, relating to Goodwill, the accounting policies and
estimates used as of December 31, 2001 and as outlined in the Company's
previously filed Form 10-KSB, have been applied consistently for the quarter
ended March 31, 2002.
GOODWILL -- Goodwill is comprised of costs in excess of net assets of acquired
businesses that were being amortized on a straight-line basis over periods not
exceeding ten years. In June 2001, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"). Under SFAS 142, goodwill and other intangible
assets with indefinite useful lives will no longer be systematically amortized.
Instead such assets will be subject to reduction only when their carrying
amounts exceed their estimated fair values based on impairment tests established
by SFAS 142 that will be made at least annually. The Company began to apply the
provisions of SFAS 142 effective January 1, 2002, and discontinued amortization
effective as of that date. During the three months ended March 31, 2001,
Goodwill amortization totaled approximately $8,500. The Company will also be
required to make its first impairment tests no later than December 31, 2002. The
effects of these tests on the Company's consolidated financial postiion and
results of operations has not been determined. As of March 31, 2002, goodwill
had an immaterial carrying value that was included in other assets.
10
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS: Three Months Ended March 31, 2002
Compared to the Three Months Ended March 31, 2001
The Company has two principal business segments (see Note 6 to the Company's
Condensed Consolidated Financial Statements - Unaudited) - Opportunity and
Cosmetics.
MARCH 31, 2002 MARCH 31, 2001 $CHANGE
-------------- -------------- -------
Net sales:
Opportunity $2,344,079 $2,479,160 $ (135,081)(A)
Cosmetics $3,363,778 $2,534,637 $ 829,141(B)
---------- ---------- ----------
Total net sales $5,707,857 $5,013,797 $ 694,060
---------- ---------- ----------
Cost of sales:
Opportunity $1,693,664 $1,558,731 $ 134,933(C)
Cosmetics $2,201,552 $1,959,988 $ 241,564(D)
---------- ---------- ----------
Total cost of sales $3,895,216 $3,518,719 $ 376,497
Selling, general and administrative expenses $1,412,567 $1,179,805 $ 232,762(E)
---------- ---------- ----------
Total operating expenses $5,307,783 $4,698,524 $ 609,259
---------- ---------- ----------
Operating income $ 400,074 $ 315,273 $ 84,801
Interest expense, net $ 60,651 $ 121,779 $ (61,128)(F)
---------- ---------- ----------
Income before income taxes $ 339,423 $ 193,494 $ 145,929
========== ========== ==========
11
(A) The net decrease in sales in this segment of our business was
approximately $135,000 and resulted primarily from the decline in sales
of a line of specially purchased merchandise that neared complete
sell-off in the fourth quarter of 2001. As a result, this merchandise
had less availability during the first-quarter of 2002. This was
partially offset during the quarter ended March 31, 2002, by sales of a
product line that was introduced during the third quarter of 2001.
(B) During the three months ended March 31, 2002, as compared to the quarter
ended March 31, 2001, sales for this segment of our business increased
primarily as a result of growth in the electronic media portion of our
business.
(C) Cost of sales for the "Opportunity" segment of our business increased
from approximately 63% of sales in the first three months of 2001 to 72%
of sales in the first three months of 2002. The increased cost resulted
primarily from reduced sales of the line of specially purchased
merchandise that had yielded higher margins.
(D) Cost of sales for the "Cosmetic" segment of our business was
approximately 77% of sales for the three months ended March 31, 2001 as
compared to 65% for the three months ended March 31, 2002. This resulted
primarily from higher sales in the electronic media portion of the
business, which typically yield higher margins.
(E) Selling, general and administrative expenses consist principally of
payroll, rent, commissions, royalties, insurance, professional fees, and
travel and promotional expenses. The increase during the three months
ended March 31, 2002 versus the three months ended March 31, 2001 is
primarily the result of higher costs due to more sales being made
through outside sales agencies and the electronic media, which have
higher associated selling expenses.
(F) The decrease in interest expense during the three month period ended
March 31, 2002 versus the three month period ended March 31, 2001
resulted primarily from less borrowings outstanding, coupled with
reductions in the borrowing rate.
Liquidity and Capital Resources
At March 31, 2002 we had working capital of approximately $9,177,000 including
cash and cash equivalents of approximately $56,000. Cash and cash equivalents
decreased during the three months ended March 31, 2002 from approximately
$60,000 to $56,000 as more fully discussed below.
During the three months ended March 31, 2002 our operating activities used cash
and cash equivalents of approximately $968,000. This consisted primarily of
paying down accounts payable, accrued expenses and other liabilities by
approximately $1,350,000 and the acquisition of additional inventories of
approximately $353,000, offset by approximately $210,000 in net income and
net collections on accounts receivable of approximately $491,000.
In addition, during the three months ended March 31, 2002, our financing
activities provided approximately $968,000 of cash and cash equivalents. The
primary change was an increase in borrowings under our credit line of
approximately $1,082,000, partially offset by payments of principal on long-term
debt of approximately $114,000.
12
In December, 1998 we entered into a credit facility ("Facility") with Merrill
Lynch Business Financial Services, Inc. ("Merrill Lynch"), as more fully
described in Notes 3 and 4 to the annual report which has been previously filed
on Form 10-KSB, and in Note 3 of the Condensed Consolidated Financial Statements
at March 31, 2002. At March 31, 2002, the credit facility provided for the
following:
1) A revolving line of credit through October 31, 2002 with maximum
borrowings of $3,800,000 against the Company's eligible accounts
receivable and inventories through October 31, 2002. At March 31,
2002 we had $3,704,753 outstanding under the revolving line of
credit, representing a net increase in our borrowings under the
revolving line of credit of $1,082,363 from December 31, 2001. As of
May 13, 2002 the outstanding balance under the revolving line of
credit was $3,604,879.
2) A $900,000 term loan originated in December 1998 payable in monthly
installments of $10,714 plus interest through January 2006. This term
loan had an outstanding balance of $492,857 as of March 31, 2002.
3) A $500,000 term loan originated in October 1999 payable in monthly
installments of $8,333 plus interest through November 2004. This term
loan had an outstanding balance of $275,004 as of March 31, 2002.
4) A $600,000 term loan originating in January, 2001 having an
outstanding balance of $50,000 as of December 31, 2001, which was
repaid during January, 2002.
The revolving line of credit with Merrill Lynch requires interest to be paid
monthly at 2.75% above the 30 day London Interbank offering (LIBOR) rate (an
effective rate of 4.63% at March 31, 2002).
The Company intends to engage in discussions with Merrill Lynch with a view to
extending and increasing the Facility and presently believes that it will be
able to reach such an agreement with Merrill Lynch. In the event Merrill Lynch
does not extend the Facility, however, the Company intends to contact other
banks and financing sources and believes that it would then be able to arrange
adequate alternative financing, although there can be no assurance of such. If
the Company is unable to extend the current Facility and cannot obtain adequate
alternative financing, and its cash available from operations is insufficient to
satisfy the Company's obligations then due to Merrill Lynch, Merrill Lynch would
be entitled to exercise all remedies available to it as a secured lender.
In addition to the Merrill Lynch credit facility, on September 26, 1997 and
December 28, 1999, the Company entered into two other 6% term loans in the
amount of $100,000 each. As of March 31, 2002, $41,946 and $73,440 were
outstanding under the 1997 loan and 1999 loan, respectively.
As of May 13, 2002, the outstanding balance under all term loans was $840,447.
The tables below summarize our long term debt and our lease commitments as of
March 31, 2002:
Payments Due by Period
--------------------------------------------------
Long term Obligations Less than 1-3 4-5 After
As of March 31, 2002 Total 1 year years years 5 years
----- --------- ----- ----- -------
Merill Lynch $768,000 $229,000 $539,000 -- --
Other $115,000 $ 29,000 $ 86,000 -- --
Amount of Commitment Expiration Per Period
--------------------------------------------------
Total
Total Lease Commitments Amounts Less than 1-3 4-5 Over
As of March 31, 2002 Committed 1 year years years 5 years
----- --------- ----- ----- -------
495 River Street $573,000 $275,000 $298,000 -- --
The Company anticipates that its working capital, together with anticipated cash
flow from the Company's operations, will be sufficient to satisfy the Company's
cash requirements for at least twelve months assuming that the Company's
Facility is extended or adequate alternative financing arrangements are obtained
by the Company. In the event the Company's plans change, due to unanticipated
expenses or difficulties or otherwise, or if the working capital and projected
cash flow otherwise are insufficient to fund operations, or if the Company's
Facility is not extended on satisfactory terms, or at all, the Company could be
required to seek financing sooner than currently anticipated. Except for the
revolving credit portion of the Facility, which expires on October 31, 2002, and
the various term loans, the Company has no current arrangements with respect to,
or sources of, financing. Accordingly, there can be no assurance that financing
will be available to the Company when needed, on commercially reasonable terms,
or at all. The Company's inability to obtain adequate financing when needed
would have a material adverse effect on the Company. In addition, any equity
financing obtained by the Company could involve substantial dilution to the
interests of the Company's stockholders.
13
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
None
B. Reports on Form 8-K
No reports on Form 8-K were filed by the registrant during the three month
period ended March 31, 2002.
14
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SEL-LEB MARKETING, INC.
/s/ Jack Koegel
----------------------------
Jack Koegel
Vice Chairman and Chief Operating Officer
/s/ George Fischer
----------------------------
George Fischer
Chief Financial Officer (As principal
financial and accounting officer)
May 14, 2002
15