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INTERIM FINANCIAL STATEMENTS | 6 Months Ended
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Dec. 30, 2017
Accounting Policies [Abstract] |
INTERIM FINANCIAL STATEMENTS | INTERIM FINANCIAL STATEMENTS The accompanying condensed consolidated balance sheets of the Company as of December 30, 2017 and July 1, 2017, the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended December 30, 2017 and December 31, 2016 and the condensed consolidated statements of cash flows for the six months ended December 30, 2017 and December 31, 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, without audit. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States of America for annual financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position at the balance sheet dates and the results of operations for the periods presented have been included. The condensed consolidated balance sheet at July 1, 2017, presented herein, was derived from the audited balance sheet included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017. Going Concern Considerations As of December 30, 2017, our current liabilities exceeded our current assets by $10.2 million. The current liabilities include a bridge loan of $16.1 million, net of issue discount, used to pay lease termination expenses, which was to mature on May 30, 2018. On January 12, 2018, however, the bridge loan was canceled in its entirety in exchange for common stock in the Company (see Subsequent Events below). Assuming this debt conversion had occurred on December 30, 2017, our current assets would have exceeded our current liabilities by $5.9 million. We continue to hold the LA studio for sale and believe we will eventually sell the building for proceeds in excess of the recorded book value. We expect our operating costs to reduce to an insignificant amount once we have completed our obligations under the transition services agreement. Should we require additional liquidity and in the event that the building is not sold, we believe it can be leveraged. As a result of our improved liquidity position and expectation of available financing, therefore, we have concluded that cash and cash equivalents, cash flows from operating activities and available financing, if necessary, will be sufficient to fund operations and meet our financial obligations through February 28, 2019. Corporate Restructure and Strategic Partnership During the fourth quarter of fiscal 2017, bebe stores, inc. (“bebe” or the “Company”) expanded upon its strategic joint venture arrangement entered into during fiscal 2016, and has closed all retail stores, sold its merchandise, inventory, furnishings, trade fixtures, equipment, improvements in real property, purchase orders related to its website and international wholesale business and is committed to selling its Los Angeles Design Studio. Under this partnership, during fiscal 2016 bebe contributed all of its trademarks, trademark license arrangements and related intellectual property, including domain names, social media accounts and agreements with certain of its international distributors to its joint venture BB Brand Holdings LLC (the “Joint Venture”). The Company's partner in the venture, Bluestar Alliance, LLC (“Bluestar”) continues to leverage its existing brand management organization and infrastructure to develop a wholesale domestic and international lifestyle licensing business for the Joint Venture and will manage its day-to-day operations. Going forward, the Joint Venture will pursue a licensing strategy designed to capitalize on the value of bebe's brand in all categories and channels on a global scale. The Company expects the Joint Venture to generate long-term, committed royalties from prospective licensees of the bebe brand name. The decision to exit its retail operations was the result of continued operating losses. The Company has agreed to provide transition services to Global Brands Group (“GBG”), an unrelated third party on a short-term basis not expected to go beyond November 30, 2018 for which it receives a service fee that is expected to cover the Company's costs of providing the services. GBG has entered into a license agreement with the Joint Venture and beginning May 2, 2017 began to operate the website www.bebe.com as well as the international business formerly operated by the Company. In connection with this arrangement, GBG purchased the remaining finished goods inventory of from the Company on May 2, 2017. The summarized income statement for the three and six month period ended December 30, 2017 for the Joint Venture is as follows:
| Three Months Ended | Six Months Ended
| December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016
| (in thousands) | (in thousands)
Revenue | $ | 5,114 |  | $ | 2,395 |  | $ | 8,008 |  | $ | 3,733 |
Gross Profit | 5,114 |  | 2,395 |  | 8,008 |  | 3,733 |
Net income from continuing operations | 4,281 |  | 2,058 |  | 6,332 |  | 2,958 |
Net Income | $ | 4,281 |  | $ | 2,058 |  | $ | 6,332 |  | $ | 2,958 |
The Company authorized the Joint Venture to administer payments to a former landlord pursuant to a note payable in connection with a store closure. The amount of each payment is deducted from the quarterly distribution made to bebe from the Joint Venture. For the three and six month period ended December 30, 2017, the amount so deducted by the Joint Venture was $228,429 and $456,858, respectively.

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