U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A
Amendment Number 1
[X] Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of
1934 For The Quarterly Period Ended March 31, 1998.
[ ] Transition Report Under Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the Transition Period from ________ to ________
Commission File Number 1-14478
ROOM PLUS, INC.
(Exact name of small business issuer as specified in its charter)
New York 11-2622051
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
91 Michigan Avenue
Paterson, NJ 07503
(Address of principal executive offices)
(973) 523-4600
(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 Securities Exchange Act of 1934 during the past 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
--- ---
The number of shares outstanding of the Issuer's Common Stock $.00133 par value,
as of May 11, 1998 was 4,385,000.
The number of the Issuer's Common Stock Purchase Warrants outstanding as of May
11, 1998 was 2,530,000.
Transitional small business disclosure format:
Yes No X
--- ---
<PAGE>
ROOM PLUS, INC.
Form 10-QSB/A
This Form 10-QSB/A amends the following items of the Company's Quarterly Report
on Form 10-QSB previously filed with the Securities and Exchange Commission on
May 15, 1998.
INDEX
Part I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets as of March 31, 1998 and December 31, 1997 3
Statements of Operations for the three months ended
March 31, 1998 and 1997 4
Statements of Cash Flows for the three months ended
March 31, 1998 5
Notes to Financial Statements 6
Item 2. Management's Discussions and Analysis of
Financial Condition and Results of Operations 7
Part II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index 9
Signatures 11
-2-
<PAGE>
ROOM PLUS, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31 December 31
1998 1997
------------ ------------
ASSETS (Restated)
<S> <C> <C>
Current Assets
Cash and cash equivalents ................................................... $ 72,640 $ 185,843
Accounts receivable ......................................................... 106,250 67,685
Inventories ................................................................. 2,061,739 1,904,326
Notes receivable, officers .................................................. 12,000 12,400
Prepaid expenses ............................................................ 369,158 492,555
Deferred income taxes ....................................................... 133,500 134,500
---------- ----------
Total Current Assets ..................................................... 2,755,287 2,797,309
---------- ----------
Property and Equipment, net .................................................... 1,758,165 1,804,303
---------- ----------
Other Assets
Security deposits and deferred charges ...................................... 225,759 249,474
Deferred income taxes ....................................................... 1,084,500 1,038,500
Notes receivable, officers .................................................. 175,445 177,965
---------- ----------
1,485,704 1,465,939
---------- ----------
$5,999,156 $6,067,551
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt ........................................... $ 195,192 $ 212,791
Notes payable ............................................................... 499,123 400,070
Due to related companies .................................................... 297,872 258,770
Accounts payable and accrued expenses ....................................... 1,678,887 1,604,047
Sales taxes payable ......................................................... 110,361 108,475
Customer deposits and other advances ........................................ 533,865 528,517
---------- -----------
Total Current Liabilities ............................................... 3,315,300 3,112,670
---------- -----------
Long-Term Debt, less current portion ........................................... 405,538 447,857
---------- -----------
Stockholders' Equity
Common stock; authorized, 10,000,000 shares; $.00133 par value;
4,385,000 shares issued and outstanding ................................... 5,832 5,832
Additional paid-in capital .................................................. 6,512,645 6,512,645
Deficit ..................................................................... (4,240,159) (4,011,453)
---------- ----------
2,278,318 2,507,024
---------- ----------
$5,999,156 $6,067,551
========== ==========
</TABLE>
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<PAGE>
ROOM PLUS, INC.
STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------
1998 1997
----------- -----------
(Restated)
<S> <C> <C>
Revenues ......................................................... $ 4,559,934 $3,426,026
Cost of goods sold ............................................... 2,007,331 1,455,207
----------- -----------
Gross profit ..................................................... 2,552,603 1,970,819
----------- -----------
Expenses
Selling ....................................................... 2,290,545 2,259,096
General and administrative ................................... 508,075 635,637
----------- -----------
2,798,620 2,894,733
----------- -----------
Loss from operations ............................................. (246,017) (923,914)
----------- -----------
Other income (expenses)
Interest income .................................................. -- 28,579
Interest expense ................................................. (29,546) (22,615)
Miscellaneous income ............................................. 1,857 1,200
----------- -----------
(27,689) 7,164
----------- -----------
Loss before income tax benefits .................................. (273,706) (916,750)
Income tax benefits .............................................. (45,000) (434,241)
----------- -----------
Net loss ......................................................... (228,706) (482,509)
Deficit, beginning of period ..................................... (4,011,453) (2,111,402)
----------- -----------
Deficit, end of period ........................................... $(4,240,159) $(2,593,911)
=========== ===========
Weighted average common shares outstanding ....................... 4,385,000 4,385,000
=========== ===========
Basic and diluted loss per share ................................. $ (.05) $ (.11)
=========== ===========
</TABLE>
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<PAGE>
ROOM PLUS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------
1998 1997
---------- ------------
(Restated)
<S> <C> <C>
Cash Flows from Operating Activities
Net loss.......................................................... $(228,706) $ (482,509)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation...................................................... 66,524 51,561
Deferred income taxes ............................................ (45,000) (435,623)
(Increase) decrease in operating assets
Accounts receivable........................................... (38,565) (32,259)
Inventories................................................... (157,413) (323,022)
Prepaid expenses.............................................. 123,397 (36,994)
Deferred charges.............................................. 25,215 33,108
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses......................... 119,290 205,133
Sales taxes payable........................................... 1,886 4,537
--------- ----------
Net cash used in operating activities......................... (133,372) (1,016,068)
--------- ----------
Cash Flows from Investing Activities
Purchases of property and equipment............................... (20,386) (488,325)
Net loans from certain shareholders............................... 2,920 36,878
Increase in security deposits..................................... (1,500) (5,883)
--------- ----------
Net cash used in investing activities......................... (18,966) (457,330)
--------- ----------
Cash Flows from Financing Activities
Net proceeds (repayment) of short-term debt....................... 99,053 (75,000)
Net repayment of long-term debt................................... (59,918) (66,339)
--------- ----------
Net cash provided by (used in) financing activities........... 39,135 (141,339)
--------- ----------
Net Decrease in Cash.......................................... (113,203) (1,614,737)
Cash, beginning of period......................................... 185,843 3,178,088
--------- ----------
Cash, end of period............................................... $ 72,640 $1,563,351
========= ==========
</TABLE>
-5-
<PAGE>
ROOM PLUS, INC.
Notes to Financial Statements
Note 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements, which are for
interim periods, do not include all disclosures provided in the
annual financial statements. These unaudited financial statements
should be read in conjunction with the financial statements and
footnotes thereto contained in the Annual Report on Form 10-KSB for
the year ended December 31, 1997 of Room Plus, Inc. (the
"Company"), as filed with the Securities and Exchange Commission.
In the opinion of management of the Company, the accompanying
unaudited financial statements contain all adjustments (which
include only normal recurring adjustments) necessary in order to
make the balance sheets, statements of operations and deficit and
statements of cash flow not misleading.
The results of operations for the three-month period ended March
31, 1998, are not necessarily indicative of the operating results
to be expected for the full year.
Note 2: INVENTORIES
Inventories are stated at the lower of cost determined by the
first-in, first-out method or market and consist of the following:
<TABLE>
<CAPTION>
March 31 December 31
------------------------- ----------
1998 1997 1997
---------- ------------ ----------
<S> <C> <C> <C>
Finished goods $1,551,559 $1,362,025 $1,451,814
Work in process 38,802 95,041 25,258
Raw materials 471,378 316,362 427,254
---------- ---------- ----------
$2,061,739 $1,773,428 $1,904,326
========== ========== ==========
</TABLE>
Note 3: SUBSEQUENT EVENT
In April 1998, the Company obtained bridge loans totaling $200,000
from certain unaffiliated individuals. The loans are due in June
1998. In consideration for these loans, the Company issued the
lenders options to acquire an aggregate 500,000 shares of the
Company's common stock at $2.125 per share.
-6-
<PAGE>
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Company is a fully-integrated manufacturer and retailer of mica-laminated
furniture for residential uses, primarily bedroom furniture targeted at children
ages three to 16 years old. The Company's products are of a modular design and
are intended to be multi-functional, interchangeable and space-saving.
Three Months Ended March 31, 1998 and 1997
Revenues for the three months ended March 31, 1998 totaled $4,559,934 as
compared to 3,426,026 for the three months ended March 31, 1997, an increase of
$1,133,908, or 33.1%. The increase is attributable to existing store revenues
increasing $470,556, or 13.7%, as compared to March 31, 1997, while revenues of
new stores were $663,352 during the same period. The increase in existing store
revenues is the result of the maturation and stabilization of the Company's
sales personnel.
Cost of goods sold totaled $2,007,331 for the first three months of 1998 as
compared to $1,455,207 for the first three months of 1997, an increase of
$552,124, or 37.9%, which was primarily the result of the costs associated with
the increase in production. The cost of goods sold did increase as a percentage
of revenues from 42.5% to 44.0% principally due to a change in the product mix.
Selling, general and administrative expenses totaled $2,798,620, or 61.4% of
revenues, for the first three months of 1998 as compared to $2,894,733, or 84.5%
of revenues, for the first three months of 1997. The net decrease of $96,113, or
3.3%, was primarily the result of significant decreases in professional fees and
advertising expense partially offset by increases in commissions and delivery
costs.
Operating loss for the period ended March 31, 1998 was $246,017, or 5.4% of
revenues, as compared to an operating loss of $923,914, or 27.0% of revenues,
during the period ended March 31, 1997, an improvement of $677,897.
Other expenses for the period ended March 31, 1998 were $27,689 as compared to
income of $7,164 for the three months ended March 31, 1997. The decrease in
other income of $34,853 is primarily due to a decrease in interest income of
approximately $29,000 and an increase in interest expense of $8,000. These
changes result from the Company's utilization of its cash reserves and increased
use of its borrowing facility.
For the first three months of 1998, the Company recorded net deferred income tax
benefit of $45,000, as compared to a net deferred income tax benefit of $434,241
in the three months ended March 31, 1997.
Due to the combination of the preceding factors, the Company realized a net loss
of $228,706, or 5.0% of revenues, during the three months ended March 31, 1998
as compared to a net loss of $482,509, or 14.1% of revenues, during the three
months ended March 31, 1997.
Liquidity and Capital Resources
The Company had a working capital deficit of $560,013 at March 31, 1998, which
represented an increase in the working capital deficit of $244,652 from $315,361
at December 31, 1997. The increase in the working capital deficit was primarily
the result of increased debt.
The Company's operating activities used cash of $133,372 and $1,016,068 for the
three months ended March 31, 1998 and 1997, respectively. For the three months
ended March 31, 1998, cash was used primarily to fund inventory. In the three
months ended March 31, 1997, cash was used to primarily finance inventory and
selling expenses for six new retail showrooms.
The Company's investing activities used cash of $18,966 and $457,330 for the
three months ended March 31, 1998 and 1997, respectively. The cash used by the
Company's investing activities for the three months ended March 31, 1998 was not
material. The cash used for the three months ended March 31, 1997 was primarily
the result of the purchase of computerized manufacturing machinery and
equipment.
-7-
<PAGE>
Item 2. (Continued)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
(Continued)
The Company's financing activities provided (used) cash of $39,135 and
$(141,339) for the three months ended March 31, 1998 and 1997, respectively. The
cash provided by financing activities for the three months ended March 31, 1998,
was the result of further utilization of the Company's short-term line of credit
offset by the repayment of long-term debt. The cash used for the three months
ended March 31, 1997, was the result of the repayment of debt.
The Company had substantially depleted its cash reserves at March 31, 1998. The
Company obtained a $200,000 bridge loan in April 1998, which is due in June
1998. The Company has received several financing proposals and is currently
considering such proposals and other possible financing alternatives. While
there can be no assurances as to the ultimate availability or terms of such
additional financing, the Company believes that sufficient financing will be
available to fund its operations for at least the next twelve months.
Historically, demand for the Company's products has been seasonal, with demand
increasing in the third and fourth quarters, corresponding to the beginning of
the school year and the holiday season. The Company generally realizes 60% of
its annual revenues during those quarters.
The Company's operations have not been materially affected by the impact of
inflation.
"Safe Harbor" Statement
Forward-looking statements made herein are based on current expectations of the
Company that involve a number of risks and uncertainties and such forward
looking statements should not be considered guarantees of future performance.
These statements are made under the "Safe Harbor Provisions" of the Private
Securities Litigation Reform Act of 1995. The factors that could cause actual
results to differ materially from the forward looking statements include the
impact of competitive products and pricing, product demand and market acceptance
risks, the presence of competitors with greater financial resources than the
Company and an inability to arrange additional debt or equity financing.
-8-
<PAGE>
Part II.
Other Information
Item 1. - Legal Proceedings
Not applicable
Item 2. - Changes in Securities
Not applicable
Item 3. - Defaults upon Senior Securities
Not applicable
Item 4. - Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. - Other Information
Not applicable
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibits description
4.5 Letter dated April 24, 1998 confirming terms and
conditions to lend the Company $200,000 (*)
4.6 Promissory Note in the amount of $100,000 due June
11, 1998, between the Company and Finbar O'Neill (*)
4.7 Stock Purchase Option dated April 24, 1998 for
250,000 shares of common stock issued to Finbar
O'Neill (*)
4.8 Promissory Note in the amount of $100,000 due June
11, 1998, between the Company and Mark Rubin (*)
4.9 Stock Purchase Option dated April 24, 1998 for
250,000 shares of common stock issued to Mark Rubin
(*)
11 Calculation of net earnings per common share
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K on February 18,
1998, disclosing the issuance of a press release
announcing that its agreement in principle to acquire
The Baby's Room, Inc. and Baby's Room USA, Inc. had
been terminated.
(*) Previously filed with the Securities and Exchange Commission on May
15, 1998 with original Form 10-QSB.
-9-
<PAGE>
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: December 14, 1998 ROOM PLUS, INC.
By: /s/ Jay H. Goldberg
-------------------------------
Name: Jay H. Goldberg
Title: Chief Financial Officer
(Principal Accounting and
Financial Officer)
-10-
Exhibit No. 11
ROOM PLUS, INC.
Computation of Earnings (Loss) per Common Share
(See Note 1 of Notes to Financial Statements)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Basic and Diluted
Net loss applicable to common stock $ (228,706) $(482,509)
========== ==========
Shares
Weighted average common shares outstanding 4,385,000 4,385,000
Basic and diluted loss per common share $ (.05) $ (.11)
========== ==========
</TABLE>
Assumed exercise of options and warrants which could have been purchased with
the proceeds from the exercise of such options and warrants would have an
anti-dilutive effect on earnings per share.
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001009773
<NAME> Room Plus, Inc.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 72,640
<SECURITIES> 0
<RECEIVABLES> 106,250
<ALLOWANCES> 0
<INVENTORY> 2,061,739
<CURRENT-ASSETS> 2,755,287
<PP&E> 3,765,582
<DEPRECIATION> 2,007,417
<TOTAL-ASSETS> 5,999,156
<CURRENT-LIABILITIES> 3,315,300
<BONDS> 0
0
0
<COMMON> 5,832
<OTHER-SE> 6,512,645
<TOTAL-LIABILITY-AND-EQUITY> 5,999,156
<SALES> 4,559,934
<TOTAL-REVENUES> 4,559,934
<CGS> 2,007,331
<TOTAL-COSTS> 2,798,620
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,546
<INCOME-PRETAX> (273,706)
<INCOME-TAX> (45,000)
<INCOME-CONTINUING> (228,706)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (228,706)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
