(Filed Under Financial and General Interest News). Peekay Boutiques lost $2.27 million on sales of $9.68 million in its third quarter. Last year the company lost $1.29 million on sales of $9.34 million in the quarter ended September 30, 2014.
The 48 store chain, which sells adult products and some lingerie, also effectuated a one-for-six reverse stock split of its authorized, issued and outstanding common stock which became effective after the close of trading on October 28, 2015.
In announcing its third quarter results, Peekay acknowledged in a “Going Concern” clause that in 2013 and 2014 it “incurred net losses of $2,577,263 and $4,150,367, respectively, largely as a result of interest expense on its outstanding debt of $6.6 million annually, which exceeds the operating profits generated through the operations of its business. Approximately $38.2 million in senior secured debt matures on December 31, 2015, and the company does not have the resourced necessary to pay this debt as it comes due. The ability of the company to continue its operations and execute its business plan is dependent on its ability to refinance this debt and/or to raise sufficient capital to pay this debt and other obligations as they come due (or are extended through a refinancing) and to provide sufficient capital to operate its business as contemplated.”
Peekay repeated it previously-announced plans to “sell 3,125,000 shares of common stock at an estimated price of $8 to $10 per share, and plans to use the proceeds to reduce its senior debt facility to approximately $22 million and extend the facility for three additional years, and use the remaining proceeds for general corporate purposes. Simultaneously with the closing of the IPO, the subordinated debt holders would convert their outstanding principal and accrued interest of approximately $15.6 million to common stock. Management believes that the going concern clause will no longer be necessary, if these transactions are completed.”
However, since Peekay first filed for its IPO in May 2015, it has not named an underwriter and its stock has not been publicly traded.
In earlier filings Peekay had discussed its program of private label products. Now the company complained, “Sales of our private label products declined $0.3 million for the three months ended September 30, 2015, as compared to the comparable period in 2014, as we finish selling through the remaining products imported in 2013 and early 2014. We have not replenished this stock since the beginning of 2014, as we are in the process of changing manufacturers and planning to relaunch the private label program in 2016 with a higher quality, improved assortment.”
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