U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A
Amendment Number 4
[X] Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934 For The Quarterly Period Ended June 30, 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 August 13, 1998 was 4,385,000.
The number of the Issuer's Common Stock Purchase Warrants outstanding as of
August 13, 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 item of the Company's Quarterly Report
on Form 10-QSB/A previously filed with the Securities and Exchange Commission on
February 19, 1999.
INDEX
Part I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets as of June 30, 1998 and December 31, 1997 3
Statements of Operations for the three and six months ended
June 30, 1998 and 1997 4
Statements of Cash Flows for the six months ended
June 30, 1998 and 1997 5
Notes to Financial Statements 6
Signatures 12
2
<PAGE>
ROOM PLUS, INC.
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
----------- -----------
(Restated)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ..................... $ 207,070 $ 185,843
Accounts receivable ........................... 108,928 67,685
Inventories ................................... 2,017,426 1,904,326
Notes receivable, officers .................... 12,000 12,400
Prepaid expenses .............................. 350,413 492,555
Deferred income taxes ......................... 133,500 134,500
----------- -----------
Total Current Assets ....................... 2,829,337 2,797,309
----------- -----------
Property and Equipment, net ...................... 1,569,319 1,804,303
----------- -----------
Other Assets
Security deposits and deferred charges ........ 173,874 249,474
Deferred income taxes ......................... 1,144,500 1,038,500
Notes receivable, officers .................... 175,085 177,965
----------- -----------
1,493,459 1,465,939
----------- -----------
$ 5,892,115 $ 6,067,551
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt ............. $ 179,491 $ 212,791
Notes payable ................................. -- 400,070
Due to related companies ...................... 343,837 258,770
Accounts payable and accrued expenses ......... 1,703,605 1,604,047
Sales taxes payable ........................... 194,551 108,475
Customer deposits and other advances .......... 388,504 528,517
----------- -----------
Total Current Liabilities .................. 2,809,988 3,112,670
----------- -----------
Long-Term Debt, less current portion ............. 1,020,365 447,857
----------- -----------
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 ....................................... (4,456,715) (4,011,453)
----------- -----------
2,061,762 2,507,024
----------- -----------
$ 5,892,115 $ 6,067,551
=========== ===========
</TABLE>
3
<PAGE>
ROOM PLUS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
(Restated) (Restated)
<S> <C> <C> <C> <C>
Revenues ..................................... $ 9,004,211 $ 7,282,992 $ 4,444,277 $ 3,856,966
Cost of goods sold ........................... 3,963,748 3,019,522 1,956,417 1,564,315
----------- ----------- ----------- -----------
Gross profit ................................. 5,040,463 4,263,470 2,487,860 2,292,651
----------- ----------- ----------- -----------
Expenses
Selling ................................... 4,569,048 4,478,822 2,278,503 2,219,726
General and administrative ................ 1,015,798 1,449,349 507,723 813,712
----------- ----------- ----------- -----------
5,584,846 5,928,171 2,786,226 3,033,438
----------- ----------- ----------- -----------
Loss from operations ......................... (544,382) (1,664,701) (298,366) (740,787)
----------- ----------- ----------- -----------
Other income (expenses)
Interest income ........................... 5,562 39,694 5,562 11,115
Interest expense .......................... (61,284) (50,794) (31,738) (28,179)
Miscellaneous income (expense) ............ 49,842 (3,314) 47,985 (4,514)
----------- ----------- ----------- -----------
(5,880) (14,414) 21,809 (21,578)
----------- ----------- ----------- -----------
Loss before income
tax benefits .............................. (550,262) (1,679,115) (276,557) (762,365)
Income tax benefits .......................... (105,000) (746,966) (60,000) (312,725)
----------- ----------- ----------- -----------
Net Loss ..................................... $ (445,262) $ (932,149) $ (216,557) $ (449,640)
=========== =========== =========== ===========
Weighted average common shares outstanding ... 4,385,000 4,385,000 4.385.000 4,385,000
=========== =========== =========== ===========
Basic and diluted loss per share ............. $ (.10) $ (.21) $ (.05) $ (.10)
=========== =========== =========== ===========
</TABLE>
4
<PAGE>
ROOM PLUS, INC.
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
------------------------
1998 1997
--------- -----------
(Restated)
<S> <C> <C>
Cash Flows from Operating Activities
Net loss ........................................ $(445,262) $ (932,149)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation ................................. 133,644 107,513
Deferred income taxes ........................ (105,000) (748,523)
(Increase) decrease in operating assets
Accounts receivable .......................... (41,243) (37,965)
Inventories .................................. (113,100) (334,483)
Prepaid expenses ............................. 142,142 (108,404)
Deferred charges ............................. 62,100 77,909
Increase (decrease) in operating liabilities
Accounts payable, accrued expenses and
other liabilities .......................... 44,612 (65,079)
Sales taxes payable .......................... 86,076 15,795
--------- -----------
Net cash used in operating activities ........ (236,031) (2,025,386)
--------- -----------
Cash Flows from Investing Activities
Purchases of property and equipment ............. (56,693) (853,412)
Disposal of leasehold improvements .............. 158,033 --
Net loans (to) from certain shareholders ........ 3,280 38,422
Increase in investments ......................... -- (100,000)
(Increase) decrease in security deposits
and other assets ............................. 13,500 (5,636)
--------- -----------
Net cash provided by (used in)
investing activities ....................... 118,120 (920,626)
--------- -----------
Cash Flows from Financing Activities
Net proceeds (repayment) of short-term debt ..... 539,208 (43,374)
Net proceeds (repayment) of long-term debt ...... (400,070) 410,088
--------- -----------
Net cash provided by financing activities .... 139,138 366,714
--------- -----------
Net increase (decrease) in cash .................... 21,227 (2,579,298)
Cash, beginning of period .......................... 185,843 3,178,088
--------- -----------
Cash, end of period ................................ $ 207,070 $ 598,790
========= ===========
</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 six-month period ended June 30,
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>
June 30 December 31
1998 1997
---------- ----------
<S> <C> <C>
Finished goods $1,527,001 $1,451,814
Work in process 52,867 25,258
Raw materials 437,558 427,254
---------- ----------
$2,017,426 $1,904,326
========== ==========
</TABLE>
Note 3: Subsequent Events
On June 11, 1998, the Company obtained extensions of two loans from
individuals originally due on that date. The loans were extended to
August 1, 1998 and subsequently to August 4, 1998. On August 4,
1998, those loans were repaid in full.
On July 31, 1998, the Company obtained a $1.5 million loan from an
individual investor. The loan, which matures July 31, 2000, bears
interest at 12% per annum, payable quarterly and is secured by
substantially all of the Company's assets. In addition, the
investor was granted warrants to purchase 2,000,000 shares of the
Company's common stock at an exercise price of $2.00 per share.
On August 4, 1998, the Company repaid its full outstanding balance
on its bank line of credit of approximately $700,000.
In connection with the above, short-term obligations amounting to
$649,123 have been refinanced on a long-term basis. In accordance
with SFAS No. 6, such debt has been reclassified as noncurrent in
the accompanying financial statements.
Note 4: Restatement
During the course of the preparation of the interim financial
statements for the quarter ended September 30, 1998, the Company
determined that the method used to value its inventories at interim
dates was in error. The effect of the correction of this error on
the previously issued three and six month financial statements was
to increase the net loss by $115,167, or $.03 per share, from a
loss of $(101.390) to $(216,557 for the three months
6
<PAGE>
ROOM PLUS, INC.
Notes to Financial Statements
(Continued)
Note 4: Restatement (Continued)
ended June 30, 1998 and to increase the net loss by $376,024, or
$.09 per share, from a loss of $(69,239) to $(445,263 for the six
months ended June 30, 1998. This error was discovered by the
Company's taking certain physical inventory counts as of September
30, 1998 and comparing the valuation of those inventories with the
values computed using the methodology employed as of June 30, 1998
(and as of March 31, 1998). Management did not previously detect
these errors since the results of operations, based on such
methodology, were consistent with projected results.
Management has since implemented a new data processing system that
will more accurately account for inventory quantities and costs.
The Company will employ cycle counts of its finished goods
inventories and is conducting monthly physical counts of its raw
material inventories to ensure a proper accounting. This new system
will also provide the Company with more reliable data as to the
sales product mix, which has a significant impact on gross profits.
7
<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: February 24, 1999 ROOM PLUS, INC.
By: /s/ Jay H. Goldberg
--------------------------------------------
Name: Jay H. Goldberg
Title: Chief Financial Officer
(Principal Accounting and Financial Officer)
12
