10-Q 1 pre.txt PRE10QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 28, 2002 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to __________ Commission file number 33-42701 PREMIER CONCEPTS, INC. (Exact Name of Small Business Issuer as Specified in its Charter) Colorado 84-1186026 -------------------- ----------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification Number) 3801 William D Tate Avenue, Suite 100, Grapevine, TX 76051 (Address of principal executive offices) (Zip Code) 3033 South Parker Road, Suite 120, Aurora, CO 80014 (Former address of principal executive offices) (Zip Code) (817) 421-0057 ------------------------------------------ (Issuer's telephone number, including area code) Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 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 [ ] As of July 28, 2002, the Registrant had 3,715,158 shares of its $.002 par value Common Stock outstanding. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] INDEX

2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements The method of financial reporting is a fifty-two - fifty-three (52-53) week fiscal year ending on the last Sunday in January of each year. The accompanying condensed balance sheet at July 28, 2002, condensed statements of operations for the three and six months ended July 28, 2002, and July 29, 2001, and condensed statements of cash flows for the six months ended July 28, 2002, and July 29, 2001 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation. These financial statements have not been audited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report for the period ended January 27, 2002, which is included in the Company's Form 10-KSB/A-1 dated January 27, 2002. The financial data for the interim periods presented may not necessarily reflect the results to be anticipated for the complete year. Certain reclassifications of the amounts presented for the comparative period have been made to conform to the current presentation. Forward-Looking Statements In addition to historical information, this Quarterly Report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and are thus prospective. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, competitive pressures, changing economic conditions, those discussed in the Section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," and other factors, some of which will be outside the control of Premier Concepts. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Premier Concepts undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should refer to and carefully review the information in future documents Premier Concepts files with the Securities and Exchange Commission. 3 PREMIER CONCEPTS, INC. CONDENSED BALANCE SHEET As of July 28, 2002 (Unaudited) ASSETS: Current assets: Cash and cash equivalents .................................... $ 448,480 Merchandise inventories ...................................... 1,097,873 Prepaid expenses and other current assets .................... 157,890 ----------- Total current assets ..................................... 1,704,243 Property and equipment, net ................................... 1,281,709 Other assets: Marketable equity securities ................................. 497,900 Trademarks, net .............................................. 19,634 Website development costs, net ............................... 130,316 Other ........................................................ 53,925 ----------- Total assets ............................................. $ 3,687,727 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable ................................................ $ 429,045 Accounts payable ............................................. 537,026 Accrued expenses ............................................. 587,092 ----------- Total current liabilities ................................ 1,553,163 Deferred rent ................................................. 265,123 ----------- Total liabilities ........................................ 1,818,286 ----------- Stockholders' equity: Preferred stock, $.10 par value, 20,000,000 shares authorized; -- no shares issued and outstanding Common stock, $.002 par value; 850,000,000 shares authorized; 7,430 3,715,158 shares issued and outstanding at July 28, 2002 Additional paid-in capital ................................... 9,398,558 Subscribed, unissued common stock ............................ 133,057 Deferred compensation ........................................ (182,599) Accumulated deficit .......................................... (7,487,005) ----------- Total stockholders' equity ................................. 1,869,441 ----------- Total liabilities and stockholders' equity ............... $ 3,687,727 =========== See accompanying notes to condensed financial statements. 4

7 PREMIER CONCEPTS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS July 28, 2002 (UNAUDITED) Stockholders' Equity On March 18, 2002, we completed a $150,000 private placement with an investor for the sale of 300,000 shares of our $.002 par value common stock at a price of $0.50 per share. In addition, the investor received stock purchase warrants to purchase a total of 100,000 shares of common stock at $1.50 per share, and an additional 100,000 shares of common stock at $2.00 per share. In April 2002, we completed an exchange of common stock with a group of investors. In a series of transactions we acquired 200,000 shares of IVAT Industries, Inc. ("IVAT"), and 400,000 shares of Beechport Capital Corp.("Beechport"), in exchange for 500,000 shares of Premier Concepts, Inc. common stock. The recorded fair value of the securities at April 28, 2002 was $250,000. On July 18, Premier exchanged all of its IVAT and Beechport investment for 100,000 shares of Lifestyle Innovations, Inc. ("Innovations"). The transaction was valued at $375,000, based upon the closing price for Innovations on July 18, 2002 and the $125,000 difference between the value of Innovations and the recorded value of IVAT and Beechport was recorded as additional paid-in capital. The investment in Innovations is restricted from sale in the open market under Section 144. In addition, due to the limited trading volume of Innovations common stock, it is likely that only limited quantities of the stock will be able to be sold in the open market, accordingly, we believe the fair value of the investment is less than the recorded value under FAS No. 115. Due to the size of the investment and its limited trading volume, there can be no assurance that we will realize the recorded value of this investment. During the three months ended April 28, 2002, 850,000 options to purchase shares of common stock were issued to certain consultants in connection with various consulting agreements to provide accounting, legal, marketing, and general business advisory services. The terms of the agreements vary from one to three years. The option exercise prices were determined by the closing price of our common stock on the date of grant and range from $.58 to $.65 per share. The fair value of the options granted were determined by the Black-Scholes pricing model, using volatility indexes ranging from 161.6% to 166.1%, and risk-free interest rates ranging from 3.52% to 4.16%. All options granted are fully vested at issuance and have a term of three years. The fair value of these options is $419,000 and was charged to operations as professional fees during the quarter ended April 28, 2002. On June 14, 2002 Premier issued 20,000 shares of its common stock to its former principal accounting officer who did not relocate with the Company to Grapevine, Texas. The common stock was valued at $1.00 per share for services rendered. On July 11, 2002, Premier executed an agreement with a company to modify and enhance its existing web site. The agreement required Premier to issue 100,000 shares of its restricted common stock and make a cash payment of $5,000, plus any applicable sales taxes. The transaction was recorded based upon the closing price of Premier's common stock on July 11, 2002 of $.85 per share. Since the shares were not issued at July 28, 2002, Premier 8 recorded its additional $90,000 investment in its website by recording $85,000 as subscribed, unissued common stock and recorded the remaining $5,000 as accrued expenses. During the quarter ended July 28, 2002 Premier received $48,057 for exercise of common stock options. The shares had not been issued at July 28, 2002, accordingly the Company recorded the proceeds as subscribed, unissued common shares. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this report. Retail Fiscal Year The method of financial reporting is a fifty-two to fifty-three (52-53) week fiscal year ending on the last Sunday in January of each year. Likewise, reporting quarters end on the Sunday closest to the calendar end of April, July and October. Each reporting quarter contains 13 weeks of operations. Seasonality and Quarterly Fluctuations Our faux jewelry chain, operating under the trade names Impostors, Elegant Pretenders and Joli Joli, historically has realized lower sales during the first three quarters which has resulted in incurring operating losses during those quarters. To this end, we have generated an operating loss during the three and six months ended July 28, 2002 of $435,495 and $1,232,620, as compared to an operating loss of $313,061 and $681,385 for the three and six months ended July 29, 2001, respectively. Our retail business is highly seasonal with our mall locations generating approximately 20% of revenues during the December holiday season. Our 11 tourist locations experience fluctuations, based upon such factors as seasonality, economic conditions and other factors affecting tourism in their particular locations. Liquidity and Capital Resources - July 28, 2002 Compared to January 27, 2002 At July 28, 2002 our operating cash balance of $448,480 was approximately 23% less than the cash balance of $578,778 at January 27, 2002. On March 18, 2002, we completed a $150,000 private placement with an investor for the sale of 300,000 shares of our $.002 par value common stock at a price of $0.50 per share. In addition, the investor received stock purchase warrants to purchase a total of 100,000 shares of common stock at $1.50 per share, and an additional 100,000 shares of common stock at $2.00 per share. During the six months ended July 28, 2002, merchandise inventories decreased $272,467. As a result of the relocation of the Company's corporate office and its distribution center to Grapevine, Texas, we discontinued ordering inventory during the latter part of May 2002 and did not commence reordering inventory until July 2002. It is our intention to attempt to maintain a lower inventory than we previously did. Prepaid expenses and other current assets, which generally include prepaid operating expenses and accounts receivable, increased $2,206, principally due to renewal of insurance for the coming year. 10 Included in prepaid expenses and other current assets is a $25,000 insurance claim receivable resulting from a theft of jewelry in one of our tourist stores in Florida, which occurred in the fourth quarter of the fiscal year ended January 27, 2002. On January 17, 2002, we executed private placement agreements with two investors for the sale of 300,000 shares of our $.002 par value common stock at a price of $0.50 per share. In addition, the investors received stock purchase warrants to purchase a total of 100,000 shares of common stock at $1.50 per share, and 100,000 shares of common stock at $2.00 per share. The proceeds of $150,000 were received on January 28, 2002 and as such, were classified as stock subscriptions at January 27, 2002. As a result of the foregoing, current assets decreased by $539,452 from $2,243,695 at January 27, 2002 to $1,704,243 at July 28, 2002. For the six months ended July 28, 2002, accounts payable and accrued expenses decreased $191,240, or approximately 14.5%, and is attributed primarily to merchandise acquired for the 2001 holiday shopping season and paid for during the first quarter and the reduced inventory ordered during the last quarter, as discussed above. Accounts payable and accrued expenses primarily include amounts payable to merchandise vendors and other suppliers of products and services used in the ordinary course of business. Notes payable decreased by $48,233. This decrease is the result of regularly scheduled payments made of $112,898. In February, a short-term note in the amount of $19,522 was issued to finance a portion of our commercial liability insurance package. The note bears interest at 6.84%, requires monthly principal and interest payments of $2,498, and matures on September 19, 2002. On July 24, 2002 the Company executed a $28,000 note to finance a portion of its directors and officers insurance. The note bears interest at 11%, requires monthly payments of $3,256 and matures on April 17, 2003. Included in notes payable is a bank note with a principal balance of $200,360 at July 28, 2002. The note requires monthly principal and interest payments of $8,000. The note bears interest at the bank's prime lending rate plus 3%, and matures on January 5, 2003 at which time all unpaid principal and interest are due. Also included in notes payable is a $100,000 note payable to a vendor. The note requires monthly 4% interest only payments and matures on January 27, 2003, at which time all unpaid principal and interest is due. The note is convertible at our option to shares of common stock on a dollar-for-dollar basis to the market value of our common stock at the time of conversion discounted by 20%. Also included in notes payable is a $67,134 note payable to a vendor. The note requires monthly 5% interest only payments. The note matures on January 10, 2003, at which time all unpaid principal and interest is due. As a result of the foregoing, current liabilities decreased $239,473 from $1,792,636 at January 27, 2002, to $1,553,163 at July 28, 2002. Working capital decreased $299,979 from $451,059 at January 27, 2002 to $151,080 at July 28, 2002. Property and equipment, net of accumulated depreciation, decreased $255,196, from $1,536,905 at January 27, 2002, to $1,281,709 at July 28, 2002, which consisted of depreciation of $259,096 less property additions of $3,900. 11 On July 29, 2001, we completed an exchange of common stock with SGD Holdings, Ltd. ("SGDD"). The non-cash transaction resulted in the exchange of 355,000 shares of our common stock for 965,000 shares of SGDD common stock. We valued the transaction based on the closing market price of our common stock on July 27, 2001, as quoted on the Nasdaq Stock Market. FAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," requires that all applicable investments be classified as trading securities, available-for-sale securities or held-to-maturity securities. As of July 28, 2002, we have classified the investment at fair value and as trading securities as a result of our intention to not hold the securities indefinitely. Fair value is defined to be the last closing price for the listed securities. Unrealized gains and losses based on fluctuations in the market value of the investment securities are recorded as other income or expenses in the period the fluctuation occurs. For the three and six month periods ended July 28, 2002, we recorded a loss in the market value of this investment of $202,650 and $86,850, respectively. Until July 29, 2002 this investment was restricted from sale in the open market under Section 144. In addition, due to the limited trading volume of SGDD common stock, it is likely that only limited quantities of the stock will be able to be sold in the open market, accordingly, we believe the fair value of the investment is less than the recorded value under FAS No. 115. Due to the size of the investment and its limited trading volume, there can be no assurance that we will realize the recorded value of this investment. In April 2002, we completed an exchange of common stock with a group of investors. In a series of transactions we acquired 200,000 shares of IVAT Industries, Inc., and 400,000 shares of Beechport Capital Corp., in exchange for 500,000 shares of Premier Concepts, Inc. common stock. The recorded fair value of the securities at April 28, 2002 was $250,000. On July 18, Premier exchanged all of its IVAT and Beechport investment for 100,000 shares of Lifestyle Innovations, Inc. ("Innovations"). The transaction was valued at $375,000, based upon the closing price for Innovations on July 18, 2002 and the $125,000 difference between the value of Innovations and the recorded value of IVAT and Beechport was recorded as contributed capital. The investment in Innovations is restricted from sale in the open market under Section 144. In addition, due to the limited trading volume of Innovations common stock, it is likely that only limited quantities of the stock will be able to be sold in the open market, accordingly, we believe the fair value of the investment is less than the recorded value under FAS No. 115. Due to the size of the investment and its limited trading volume, there can be no assurance that we will realize the recorded value of this investment. Our trademark assets, representing the goodwill of the Impostors trademark and other intellectual property, was acquired as part of the acquisition of Impostors in 1994. This asset is being amortized over a 10-year period, and had an amortized book value of $19,634 at July 28, 2002. In October 1996, we developed and launched our first e-commerce website "impostors.com" which provided our initial Internet presence. While the website had the capability to generate sales of our product, we realized only modest revenue generated directly from the 12 website. In July 1999, we started the process of developing a new e-commerce platform from which we showcase existing and new product concepts. The new site was launched on May 30, 2000. In January 2002, we temporarily disabled certain aspects of the site including the product sales links. The website is currently being evaluated for possible modifications to enhance customer and investor experience. We expect the website to be re-launched prior to the 2002 holiday shopping season. At July 28, 2002, we had a net investment of $130,316 in the impostors.com website. The investment is being amortized over three years. On July 11, 2002, Premier executed an agreement with a company to modify and enhance its existing web site.The agreement required Premier to issue 100,000 shares of its restricted common stock and make a cash payment of $5,000, plus any applicable sales taxes. The transaction was recorded based upon the closing price of Premier's common stock on July 11, 2002 of $.85 per share. Since the shares were not issued at July 28, 2002, Premier recorded its additional $90,000 investment in its website by recording $85,000 as subscribed, unissued common stock and recorded the remaining $5,000 as accrued expenses. Other non-current assets primarily include security deposits made to landlords and utility service providers. The balance of $53,925 at July 28, 2002 is 11,107 less than the January 27, 2002 balance of $65,032, and primarily is the result of the write-off of a security deposit forfeited as part of an early termination agreement associated with our former store in Bellevue, Washington. The store was closed on March 25, 2002, due to continued poor performance. Deferred rent decreased $36,425 from $301,548 at January 27, 2002, to $265,123 at July 28, 2002, resulting from the recognition of rental expense on a straight line basis on leases that contain predetermined fixed escalations of the minimum rents during the initial term of the lease. As discussed above, in March 2002, we completed a private placement of 300,000 shares of our common stock for $150,000. Also as discussed above, we completed a series of exchanges of common stock in which we issued 500,000 shares of our common stock in exchange for 200,000 shares of IVAT Industries, Inc. common stock, and 400,000 shares of Beechport Capital Corp. common stock. On July 18, the Company exchanged all of their IVAT and Beechport investment in exchange for 100,000 shares of Lifestyle Innovations, Inc. ("Innovations"). The transaction was valued at $375,000, based upon the closing price for Innovations on July 18, 2002 and the $125,000 difference between the value of Innovations and the recorded value of IVAT and Beechport was recorded as additional paid-in capital. The investment in Innovations is restricted from sale in the open market under Section 144. In addition, due to the limited trading volume of Innovations common stock, it is likely that only limited quantities of the stock will be able to be sold in the open market, accordingly, we believe the fair value of the investment is less than the recorded value under FAS No. 115. Due to the size of the investment and its limited trading volume, there can be no assurance that we will realize the recorded value of this investment. On June 14, 2002 the Company issued 20,000 shares of its common stock to its former principal accounting officer who did not relocate with the Company to Grapevine, Texas. The common stock was valued at $1.00 per share for services rendered. As a result of the foregoing, common stock increased $1,640, from $5,790 (2,895,158 shares outstanding) at January 27, 2002, to $7,430 (3,715,158 shares outstanding) at July 28, 2002. 13 On January 28, 2002, the Board of Directors approved the 2002 nonstatutory Stock Option Plan which provides for the granting of options to purchase up to 1,500,000 shares of the Company's common stock to selected key employees and consultants. The Plan is administered by the Board of Directors. During the first quarter, 850,000 options were issued in connection with various consulting agreements to provide accounting, legal, marketing, and general business advisory services. The terms of the agreements vary from one to three years. The option exercise prices were determined by the closing price of our common stock on the date of grant and range from $.58 to $.65 per share. The fair value of the options granted were determined by the Black-Scholes pricing model using volatility indexes ranging from 161.6% to 166.1%, and risk-free interest rates ranging from 3.52% to 4.16%. All options granted are fully vested at issuance and have a term of three years. The fair value of the options of $418,764 was charged to operations as professional fees on the date of grant. As a result of the foregoing, additional paid in capital increased $962,125 from $8,436,433 at January 27, 2002 to $9,398,558 at July 28, 2002. On July 11, 2002, Premier executed an agreement with a company to modify and enhance its existing web site. The agreement required Premier to issue 100,000 shares of its restricted common stock and make a cash payment of $5,000, plus any applicable sales taxes. The transaction was recorded based upon the closing price of Premier's common stock on July 11, 2002 of $.85 per share. Since the shares were not issued at July 28, 2002, Premier recorded its additional $90,000 investment in its website by recording $85,000 as subscribed, unissued common stock and recorded the remaining $5,000 as accrued expenses. During the quarter ended July 28, 2002 Premier received $48,057 for exercise of common stock options. The shares had not been issued at July 28, 2002, accordingly the Company recorded the proceeds as subscribed, unissued common shares. As a result of the foregoing, subscribed, unissued common stock had a balance of $133,057 at July 28, 2002. In December 2001, Mr. Terry Washburn was awarded 400,000 shares of the Company's common stock as inducement to enter into a two-year commitment to serve as President and Chief Executive Officer. While the total 400,000 shares were issued to Mr. Washburn, the agreement stipulates that should he voluntarily terminate or be terminated for cause, the shares would be subject to pro-rata forfeiture on a proportional basis over the twenty-four month period beginning December 17, 2001. Mr. Washburn would be relieved from any risk of forfeiture in the event his employment would be terminated without cause prior to the expiration of the twenty-four month period. If Mr. Washburn voluntarily terminates his employment within the first 15 months of his employment, we will have the option of purchasing the shares earned on a pro-rata basis for $.10 per share. The total value of the shares awarded was $265,600. The unearned portion of the shares is classified as deferred compensation and is being charged to operations on a pro-rata monthly basis. For the six months ended July 28, 2002, 100,000 shares were earned under the award at a value of $66,401. As a result of the net loss for the six months ended July 28, 2002 of $1,279,530, the accumulated deficit increased from $6,207,475 at January 27, 2002 to $7,487,005 at July 28, 2002. Considering the net loss and the equity transactions as discussed above, total 14 stockholders' equity decreased $116,307 from $1,985,748 at January 27, 2002 to $1,869,441 at July 28, 2002. Net cash used by operating activities was $421,222 for the six months ended July 28, 2002, compared with $395,597 for the six months ended July 29, 2001, an increase of $25,625. The current year loss exceeded the prior year amount by $592,102, which was partially offset by an increase of $483,966 in amortization of stock and warrants issued for services, resulting in a remaining difference in cash used by operating activities of $108,136. The majority of the remaining difference is a result of the reduction in inventory levels coupled with the reduction in accounts payable, accrued expenses and other liabilities. Fluctuations in other accounts accounted for the remainer of the difference. Net cash used by investing activities was $8,900 for the six months ended July 28, 2002 compared with $10,265 for the six months ended July 29, 2001, which is the result of lower capital expenditures in the current year period. Net cash provided by financing activities for the six months ended July 28, 2002 was $299,824, and represents proceeds from private placements of our common stock in January and March of 2002, as well as the financing of a portion of our insurance policies together with regularly scheduled debt payments. This compares to net cash used by financing activities of $48,050 for the six months ended July 29, 2001, which represented the issuance of a note payable to finance a portion of our commercial liability insurance package, and regularly scheduled payments on other notes payable. The foregoing resulted in a decrease of $130,298 in our operating cash position from $578,778 at January 27, 2002 to $448,480 at July 28, 2002. This compares with a decrease in cash of $453,912 from $691,693 at January 28, 2001, to $237,781 at July 29, 2001. As of the date of this report, no additional leases to open retail locations have been executed. However, possible new locations are evaluated on an ongoing basis. Depending on location and size, the opening of a new retail location represents an aggregate capital requirement of approximately $60,000-$200,000, including the lease build-outs, fixtures, equipment and inventory. Additional sources of capital are currently being evaluated to meet plans for future capital investment and working capital needs. However, there can be no assurance that such financing will be secured. We are currently developing a free-standing kiosk model which will allow us to enter markets with an investment of approximately $60,000 as compared to the $100,000 to $200,000 normally experienced with an in-line store. Advantages of the kiosk include shorter lease terms and a less expensive method of testing a location to determine if a traditional in-line store should be added in the future. 15 Results of Operations - Three Months Ended July 28, 2002 Compared to Three Months Ended July 29, 2001 Set forth below is selected summary financial data derived from the financial statements and financial records.

Total revenues for the three months ended July 28, 2002 were $2,313,898 as compared to $2,524,643 for the comparable period ended July 29, 2001, a decrease of $210,745, or 8.3%. Comparable same store sales (28 stores) were $2,313,427 for the three months ended July 28, 2002 as compared to $2,308,835 for the comparable period ended July 29, 2001, an increase of $4,592, or 0.2%. Comparable same store sales include only those revenues from stores operating continuously during both of the entire periods being compared. Following is a schedule of store closings since January 28, 2001: Tucson Mall, Tucson, AZ - closed January 28, 2001 due to sale of our lease; Hillsdale Mall, San Mateo, CA - closed August 31, 2001 upon expiration of lease; San Francisco Center, San Francisco, CA - closed December 26, 2001 upon expiration of lease; and, Bellevue Square, Bellevue, WA - closed March 25, 2002 upon early termination agreement. 16 Also included in total revenues are $471 and $7,645 for the quarters ended July 28, 2002 and July 29, 2001, respectively. These revenues generally represent sales to corporate employees and sales generated from our website. For the three months ended July 28, 2002, cost of goods sold was $744,501 and the gross margin was $1,569,397, or 67.8%. For the three months ended July 29, 2001, cost of goods sold was $770,890 and the gross margin was $1,753,753, or 69.5%. The decrease in gross margin percentage is partially attributed to a moving sale conducted at our store in Sunrise, Florida in which we liquidated old merchandise carried over from the 2001 holiday shopping season. Total operating expenses were $2,004,892 for the quarter ended July 28, 2002, compared to $2,066,814 for the quarter ended July 29, 2001, or 86.6% and 81.9% of revenues, respectively. The largest category of these expenses were comprised of store and corporate office personnel expenses, which amounted to $763,130, or 33.0% of revenues, and $855,543, or 33.9% of revenues for the quarters ended July 28, 2002, and July 29, 2001, respectively, a decrease of $92,413. This decrease is attributed primarily to operating fewer stores during the quarter ended July 28, 2002 than during the comparable prior year quarter. Total personnel costs for our corporate personnel were $213,667 and $214,807 for the quarters ended July 28, 2002, and July 29, 2001, respectively. Included in corporate personnel costs is $33,200 representing the amortization of deferred compensation costs associated with the December 2001 stock award to our President and Chief Executive Officer, as discussed above in Liquidity and Capital Resources. The decrease in other corporate personnel costs of $34,340 is attributed to staff reductions and the departure of our Chief Operating Officer in February 2002. Occupancy costs of $680,827, and $681,657, are included in total operating expenses for the three months ended July 28, 2002 and July 29, 2001, respectively. The decrease of $59,442 resulting from operating fewer stores during the quarter ended July 28, 2002 is offset by an increase in current store occupancy costs of $34,583 and an increase in corporate occupancy cost of $23,070 due to having rent at both the current and the former corporate offices. This is expected to be settled for an amount less than the full rental otherwise due through the end of the lease term, January 2003. Other selling, general and administrative expenses of $409,795 and $392,515 are included in total operating expenses for the quarters ended July 28, 2002 and July 29, 2001, respectively. Following is a comparative summary of costs included in other selling, general and administrative expenses, and their relationship to total revenues for the periods:

17 Professional and service fees are $41,638 higher in the current period principally due to higher legal fees of $16,409 and higher other professional fees of $23,182. All other costs are relatively consistent with the prior period. Also included in total operating expenses are depreciation and amortization expenses that were $151,140 and $137,099 for the quarters ended July 28, 2002 and July 29, 2001, respectively. As a result of the foregoing, the loss from operations for the quarter ended July 28, 2002 was $435,495, as compared with a loss from operations for the quarter ended July 29, 2001 of $313,061, an increase of $122,434. Interest income was $876 and $3,180 for the quarters ended July 28, 2002, and July 29, 2001, respectively, and results from the daily investing of available cash balances. The decline is due primarily to lower interest rates on invested balances during the current period. Interest expense was $6,009 and $8,143 for the quarters ended July 28, 2002, and July 29, 2001, respectively, and is comprised primarily of interest charged on the notes discussed above. The Company recognized an unrealized loss from marketable securities of $137,650 which included a loss of $202,650 from their investment in SGDD net of a gain of $65,000 from their investment in Innovations. Other income (expense) consisted of a net expense of $14,838 during the quarter ended July 28, 2002 as compared to net income of $699 during the quarter ended July 29, 2001. The net expense in the current period consists primarily of a litigation settlement of $18,000 offset by license fee income of $3,750. Based on the foregoing, the net loss for the three months ended July 28, 2002 was $593,116 ($.16 per share). This compares with a net loss for the three months ended July 29, 2001 of $317,325 ($.21 per share). 18 Results of Operations - Six Months Ended July 28, 2002 Compared to Six Months Ended July 29, 2001 Set forth below is selected summary financial data derived from the financial statements and financial records.

Total revenues for the six months ended July 28, 2002 were $4,793,503 as compared to $4,946,446 for the comparable period ended July 29, 2001, a decrease of $152,943 (3.1%). Comparable same store sales (27 stores) were $4,628,485 for the six months ended July 28, 2002 as compared to $4,384,383 for the comparable period ended July 29, 2001, an increase of $244,102, or 5.6%. Comparable same store sales include only those revenues from stores operating continuously during both of the entire periods being compared Non-same store sales of $163,675 and $547,981 for the six months ended July 28, 2002, and July 29, 2001, respectively, are attributed to stores closed since January 28, 2001, and our outlet store in Sunrise, Florida which was moved to a new location during the quarter ended April 28, 2002. Following is a schedule of store closings since January 28, 2001: Tucson Mall, Tucson, AZ - closed January 28, 2001 due to sale of our lease; Hillsdale Mall, San Mateo, CA - closed August 31, 2001 upon expiration of lease; San Francisco Center, San Francisco, CA - closed December 26, 2001 upon expiration of lease; and, Bellevue Square, Bellevue, WA - closed March 25, 2002 upon early termination agreement. Also included in total revenues are approximately $1,343 and $14,082 for the six-month periods ended July 28, 2002 and July 29, 2001, respectively. These revenues generally represent sales to corporate employees and sales generated from our website. 19 For the six-month period ended July 28, 2002, cost of goods sold was $1,548,627 and the gross margin was $3,244,876, or 67.7%. For the six-month period ended July 29, 2001, cost of goods sold was $1,516,555 and the gross margin was $3,429,891 , or 69.3%. The decrease in gross margin percentage is partially attributed to a moving sale conducted at our store in Sunrise, Florida in which we liquidated old merchandise carried over from the 2001 holiday shopping season. Total operating expenses were $4,477,496 for the six-month period ended July 28, 2002, compared to $4,111,276 for the six-month period ended July 29, 2001, or 93.4% and 83.1% of revenues, respectively. The largest category of these expenses is comprised of store and corporate office personnel expenses, which amounted to $1,616,941, or 33.7% of revenues, and $1,722,981, or 34.8% of revenues for the six-month periods ended July 28, 2002, and July 29, 2001, respectively, a decrease of $106,040 (6.2%). This decrease is attributed primarily to operating fewer stores during the six-month period ended April 28, 2002, than during the comparable period ended April 29, 2001. Total personnel costs for our corporate personnel were $425,846 and $448,909 for the six-month periods ended July 28, 2002, and July 29, 2001, respectively. Included in corporate personnel costs is $66,401 representing the amortization of deferred compensation costs associated with the December 2001 stock award to our President and Chief Executive Officer, as discussed above in Liquidity and Capital Resources. The net decrease in corporate personnel costs of $23,063 ($89,464 gross) is attributed to staff reductions and the departure of our Chief Operating Officer in February 2002. Occupancy costs of $1,357,873, and $1,376,839, are included in total operating expenses for the six-month periods ended July 28, 2002 and July 29, 2001, respectively. The decrease of $18,966 reflects reduced rent expenses resulting from operating fewer stores during the six-month period ended July 28, 2002 partially offset by higher corporate occupancy costs of $35,877 due to the duplication of facilities during the transition period from the former to the current corporate office location. 20 Other selling, general and administrative expenses of $1,213,986 and $734,833 are included in total operating expenses for the six-month periods ended July 28, 2002 and July 29, 2001, respectively. Following is a comparative summary of costs included in other selling, general and administrative expenses, and their relationship to total revenues for the periods:

Included in advertising and promotion costs is approximately $40,000 associated with a promotion conducted in March and April 2002, in which customers received a $10 coupon for each $50 they spent in our stores. The cost of the promotion represents customer coupons redeemed during the promotion period. Included in professional and service fees for the six months ended July 28, 2002 is approximately $419,000 associated with certain professional service consulting agreements. During the three months ended April 28, 2002, 850,000 options to purchase shares of common stock were issued to these consultants in connection with various consulting agreements to provide accounting, legal, marketing, and general business advisory services. The terms of the agreements vary from one to three years. The option exercise prices were determined by the closing price of our common stock on the date of grant and range from $.58 to $.65 per share. The fair value of the options granted were determined by the Black-Scholes pricing model, using volatility indexes ranging from 161.6% to 166.1%, and risk-free interest rates ranging from 3.52% to 4.16%. All options granted are fully vested at issuance and have a term of three years. Also included in total operating expenses are depreciation and amortization expenses that were $288,696 and $276,623 for the six-month periods ended July 28, 2002 and July 29, 2001, respectively. As a result of the foregoing, the loss from operations for the six-month period ended July 28, 2002 was $1,232,620, as compared with a loss from operations for the six-month period ended July 29, 2001 of $681,385, an increase of $551,235. Interest income was $2,846 and $8,744 for the six-month periods ended July 28, 2002, and July 29, 2001, respectively, and 21 results from the daily investing of available cash balances. The decline is due primarily to lower interest rates on invested balances. Interest expense was $13,068 and $17,776 for the six-month periods ended July 28, 2002, and July 29, 2001, respectively, and is comprised primarily of interest charged on the notes discussed above. The Company recognized an unrealized loss from marketable securities of $21,850 which included a loss of $86,850 from their investment in SGDD net of a gain of $65,000 from their investment in Innovations. Other income (expense) consisted of a net expense of $14,838 during the six-month period ended July 28, 2002 as compared to net income of $2,989 for the corresponding prior year period. The net expense in the current period consists primarily of a litigation settlement of $18,000 offset by license fee income of $3,750. Based on the foregoing, the net loss for the six-month period ended July 28, 2002 was $1,279,530 ($.38 per share). This compares with a net loss for the six-month period ended July 29, 2001 of $687,428 ($.45 per share). Item 3. Controls and Procedures Terry Washburn, Chief Executive Officer of Premier established and is currently maintaining disclosure controls and procedures for the Company. The disclosure controls and procedures have been designed to ensure that material information relating to the Company is made known to him as soon as it is known by others within the Company. During the period immediatedly after the end of the quarter, Mr. Washburn conducts an update and a review and evaluation of the effectiveness of the Company's disclosure controls and procedures. It is Mr. Washburn's opinion, based upon the evaluation he completed by August 23, 2002, that the controls and procedures currently being utilized by the Company are sufficiently effective to ensure that any material information relating to the Company would become known to him within a reasonable time. PART II. OTHER INFORMATION Item 1. Legal Proceedings From time to time we are involved in commercial disputes in the ordinary course of business with vendors, landlords and other parties, which on occasion become the subject matter of litigation. At the present time, except as set forth below, we are not a party to any legal proceedings outside of the ordinary course of business or which would have a material adverse impact upon our operations or properties. On May 21, 1999, we were named as a defendant in a civil action filed in the Supreme Court of the State of New York, County of Onondaga. The lawsuit was brought by EkleCo as plaintiff, and asserts claims against us for rent and other sums due under the commercial lease for its retail store located in the Palisades Center in West Nyack, New York in an aggregate amount of approximately $140,000. We have denied liability, and on July 27, 1999 we filed a counter claim against the landlord asserting breach of contract, false representation and fraud in inducing us to enter into the lease. We are seeking damages in excess of $300,000. Due to poor performance of the store, it was closed in January 2000. We intend to vigorously defend the action and prosecute our counterclaims. Based upon our assessment of the facts and consultations with legal counsel, we believe that the likelihood of a material adverse outcome in the matter is unlikely. 22 On April 5, 2001, Aladdin Bazaar, LLC, the landlord for our store located in the Aladdin Hotel and Casino in Las Vegas, Nevada, filed an Application for Summary Eviction and a complaint against us asserting breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing, and unlawful detainer/summary eviction. The Aladdin was claiming past due rents of approximately $85,000. On April 15, 2001, we filed an Answer and Counterclaim asserting fraud, intentional misrepresentation, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. On April 23, 2001 the court denied Aladdin's Application for Summary Eviction finding that we had put forth evidence to establish a sufficient legal defense to the unlawful detainer and ordered that all further proceedings would be conducted through the pending litigation. In addition, the court ordered we pay approximately $35,000 of the Aladdin's $85,000 claim for past due rent, and to pay 50 percent of $11,812 minimum monthly rent and 100 percent of the additional rent (approximately $2,500) per month during the pendency of the litigation. In August 2002, the landlord offered a settlement which was favorable to Premier and was essentially the same terms of settlement proposed by Premier in December 2001. Premier has signed a summary of amendments to be made to the existing lease and is currently awaiting final amended lease documents from the landlord. The settlement forgives all previously accrued additional rents, requires the payment by Premier of approximately $3,000 in disputed pre-opening expense and reduces future initial lease payments to the amount currently being paid. Premier will realize an expense reduction when the final lease amendment is executed of approximately $30,000 as a result of reversing its current accrued rent. On June 20, 2000, Yurman Design, Inc. filed a civil action in the U.S. District Court for the Southern District of New York in which it asserted claims against us for copyright infringement, trademark infringement, trade dress infringement and unfair competition. We filed an answer denying any liability. As a result of a court-supervised settlement conference, conducted in April 2002, we reached an agreement in principle to settle the case. Under the terms of the agreement in principle, the case will be dismissed in exchange for our agreement to eliminate certain jewelry items from our inventory, agree to certain restrictions concerning our future sale of certain jewelry items and our agreement to pay Yurman Designs a cash settlement beginning January 2003. As of the date of this report, settlement documents are being prepared for circulation and review, which we anticipate may be subject to a covenant of confidentiality. Based upon the current status of the matter, we believe that the case will be settled substantially in accordance with the foregoing terms and as a result there does not exist a risk of a materially adverse outcome. On August 16, 2002, LaSalle U.S. Realty Income Growth Fund, Inc. filed a civil action in U.S. District Court in Colorado to recover the seven months remaining on the lease for the former corporate offices of the Company. Premier's counsel is currently in negotiations with the landlord's counsel to reach a settlement. Management of the Company is of the opinion that the accrual which they have made will cover any remaining liability under the lease. Item 2. Changes in Securities 1. On March 18, 2002, we completed a $150,000 private placement with an investor for the sale of 300,000 shares of our $.002 par value common stock at a price of $0.50 per share. In addition, the investor received stock purchase warrants to purchase a total of 100,000 shares of common stock at $1.50 per share, and an additional 100,000 shares of common stock at $2.00 per share. 23 2. In April 2002, we completed an exchange of common stock with four (4) investors. In a series of transactions we acquired 200,000 shares of IVAT Industries, Inc., and 400,000 shares of Beechport Capital Corp., in exchange for 500,000 shares of Premier Concepts, Inc. common stock. 3. During the three months ended April 28, 2002, 850,000 options to purchase shares of common stock were issued to six consultants in connection with various consulting agreements to provide accounting, legal, marketing, and general business advisory services. The terms of the agreements vary from one to three years. The option exercise prices were determined by the closing price of our common stock on the date of grant and range from $.58 to $.65 per share. 4. On June 14, 2002 the Company issued 20,000 shares of its common stock to its former principal accounting officer who did not relocate with the Company to Grapevine, Texas. The common stock was valued at $1.00 per share for services rendered. In each of the foregoing issuances, the acquired securityholder represented that he, she or it qualified as a "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the "Securities Act") or the Company otherwise had a reasonable basis to believe that each satisfied certain other suitability requirements. The securities, which were taken for investment and were subject to appropriate transfer restrictions, were issued without registration under the Securities Act, in reliance upon the exemption provided in Section 4(2) of the Securities Act. Item 3. Default Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the quarter ended July 28, 2002. Item 5. Other Information The Company currently does not have a Chief Financial Officer. Item 6. Exhibits and Reports on Form 8-K Exhibits: Exhibit 99.1 Certification by Terry Washburn, Chief Executive Officer. Reports on Form 8-K: None 24 SIGNATURE 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 hereunto duly authorized. PREMIER CONCEPTS, INC. September 16, 2002 By: /s/Terry Washburn Terry Washburn, Chief Executive Officer September 16, 2002 By: /s/Mark Henderson Mark Henderson, Controller 25 EXHIBIT 99.1 CERTIFICATION I, Terry Washburn, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Premier Concepts, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as, and for the periods presented in this quarterly report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to me by others within the Company, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; 6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. September 16, 2002 /s/ Terry Washburn ----------------------------------- Terry Washburn Chief Executive Officer

PREMIER CONCEPTS INC /CO/ 10-Q