SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO _____________
COMMISSION FILE NUMBER: 0-31375
MAINTENANCE DEPOT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Florida 65-0329380
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
516 MONCEAUX RD. WEST PALM BEACH, FL 33405
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 659-9006
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of September 30, there were
approximately 2,644,210 common shares outstanding.
1
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
MAINTENANCE DEPOT, INC.
Balance Sheets
ASSETS
------
September 30, December 31,
2000 1999
-------------- -------------
(Unaudited)
CURRENT ASSETS
<S> <C> <C>
Cash $ 4,197 $ 4,505
Accounts receivable, net (Note 1) 1,170,017 1,158,196
Inventory (Note 1) 1,441,024 1,369,092
Prepaids and other current assets 193,906 90,837
-------------- -------------
Total Current Assets 2,809,144 2,622,630
-------------- -------------
FIXED ASSETS (Notes 1 and 2) 2,799,049 373,544
-------------- -------------
TOTAL ASSETS $ 5,608,193 $ 2,996,174
============== =============
</TABLE>
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<TABLE>
<CAPTION>
MAINTENANCE DEPOT, INC.
Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2000 1999
--------------- --------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Cash overdraft $ 77,083 $ 137,201
Line of credit (Note 5) 1,399,821 1,143,708
Accounts payable 944,353 1,480,014
Accrued expenses 56,986 83,103
Notes payable - current portion (Note 3) 9,469 11,388
--------------- --------------
Total Current Liabilities 2,487,712 2,855,414
--------------- --------------
LONG-TERM DEBT
Notes payable - long term (Note 3) 2,105,662 112,414
--------------- --------------
Total Long-Term Debt 2,105,662 112,414
--------------- --------------
Total Liabilities 4,593,374 2,967,828
--------------- --------------
COMMITMENTS (Note 4)
STOCKHOLDERS' EQUITY
Preferred stock: $0.001 par value, 10,000,000 shares
authorized; 700,000 and -0- shares issued and
outstanding, respectively 700 -
Common stock: $0.001 par value, 40,000,000 shares
authorized; 2,644,210 and 2,085,551 shares issued
and outstanding, respectively 2,645 2,086
Additional paid-in capital 2,054,053 1,074,814
Accumulated deficit (1,042,579) (1,048,554)
--------------- --------------
Total Stockholders' Equity 1,014,819 28,346
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,608,193 $ 2,996,174
=============== ==============
</TABLE>
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<TABLE>
<CAPTION>
MAINTENANCE DEPOT, INC.
Statements of Operations
(Unaudited)
For the For the
Nine Months Ended Three Months Ended
September 30, September 30,
----------------------------------------- ------------------------
2000 1999 2000 1999
------------------- -------------------- ----------- -----------
<S> <C> <C> <C> <C>
SALES, NET $ 6,741,771 $ 5,237,418 $2,032,529 $1,990,627
COST OF GOODS SOLD 5,162,821 4,028,472 1,586,366 1,624,890
------------------- -------------------- ----------- -----------
Gross Margin 1,578,950 1,208,946 446,163 365,737
------------------- -------------------- ----------- -----------
OPERATING EXPENSES
General and administrative
expenses 1,284,058 1,151,933 295,933 421,978
Depreciation expense 68,419 69,876 19,648 29,743
------------------- -------------------- ----------- -----------
Total Operating Expenses 1,352,477 1,221,809 315,581 451,721
------------------- -------------------- ----------- -----------
Income (Loss) from Operations 226,473 (12,863) 130,584 (85,984)
------------------- -------------------- ----------- -----------
OTHER INCOME (EXPENSE)
Bad debt expense (968) (51,026) (227) (20,054)
Interest expense (219,530) (151,238) (92,412) (63,344)
------------------- -------------------- ----------- -----------
Total Other Income (Expense) (220,498) (202,264) (92,639) (83,398)
------------------- -------------------- ----------- -----------
INCOME TAX BENEFIT - - - -
------------------- -------------------- ----------- -----------
NET INCOME (LOSS) $ 5,975 $ (215,127) $ 37,943 $ (169,382)
=================== ==================== =========== ===========
BASIC INCOME (LOSS)
PER SHARE $ 0.00 $ (0.11) $ 0.02 $ (0.09)
=================== ==================== =========== ===========
</TABLE>
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<TABLE>
<CAPTION>
MAINTENANCE DEPOT, INC.
Statements of Stockholders' Equity
Preferred Stock Common Stock Additional
------------------------------ ----------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
--------------- ------------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 - $ - 1,870,001 $ 1,870 $ 685,213 $ (637,302)
Net loss for the year ended
December 31, 1998 - - - - - (26,744)
--------------- ------------- --------- ------------ ----------- ------------
Balance, December 31, 1998 - - 1,870,001 1,870 685,213 (664,046)
Conversion of notes payable
and interest to common stock
at $2.00 per share - - 110,550 111 220,989 -
Common stock issued for
cash and services at $2.00
per share - - 105,000 105 209,895 -
Stock offering costs - - - - (41,283) -
Net loss for the year ended
December 31, 1999 - - - - - (384,508)
--------------- ------------- --------- ------------ ----------- ------------
Balance, December 31, 1999 - - 2,085,551 2,086 1,074,814 (1,048,554)
Common stock issued for
cash at $1.79 per share
(unaudited) - - 558,659 559 999,441 -
Preferred stock issued for
cash at $0.015 per share
(unaudited) 700,000 700 - - 9,798 -
Stock offering costs - - - - (30,000) -
Net income for the nine months
ended September 30, 2000
(unaudited) - - - - - 5,975
--------------- ------------- --------- ------------ ----------- ------------
Balance, September 30, 2000
(unaudited) 700,000 $ 700 2,644,210 $ 2,645 $2,054,053 $(1,042,579)
=============== ============= ========= ============ =========== ============
</TABLE>
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<TABLE>
<CAPTION>
MAINTENANCE DEPOT, INC.
Statements of Cash Flows
(Unaudited)
For the For the
Nine Months Ended Three Months Ended
September 30, September 30,
----------------------------------------- ------------------------
2000 1999 2000 1999
------------------- -------------------- ------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net Income (loss) $ 5,975 $ (215,127) $ 37,943 $(169,382)
Adjustments to reconcile net (loss) to net
cash used in operating activities:
Allowance for bad debts - 45,000 - 15,000
Depreciation and amortization 68,419 69,876 19,648 29,743
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (11,821) (207,676) 191,029 (58,721)
(Increase) decrease in inventory (71,932) (386,410) (274,312) (124,970)
(Increase) decrease in prepaids (143,315) (7,971) (135,161) (37,459)
(Increase) decrease in deposits 40,246 (39,751) 36,230 43,362
Increase (decrease) in accounts payable (535,661) 570,271 (349,891) 121,317
Increase (decrease) in accrued expenses (26,117) (64,572) 52,233 823
Increase (decrease) in other current
liabilities - 100,500 - (100,500)
Increase (decrease) in cash overdraft (60,118) 40,099 50,385 (57,226)
------------------- -------------------- ------------ ----------
Net Cash (Used) by Operating Activities (734,324) (95,761) (371,896) (338,013)
------------------- -------------------- ------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (2,493,924) (300,457) (2,441,135) (127,690)
------------------- -------------------- ------------ ----------
Net Cash (Used) by Investing Activities (2,493,924) (300,457) (2,441,135) (127,690)
------------------- -------------------- ------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from cash sale of common stock 970,000 376,564 570,000 376,564
Proceeds from cash sale of preferred stock 10,498 - - -
Proceeds from revolving credit notes payable 256,113 30,121 8,025 91,716
Proceeds from mortgage 2,000,000 - 2,000,000 -
Principal payments on notes payable (8,671) (7,447) (2,660) (1,447)
Payments on revolving credit notes payable - - - -
------------------- -------------------- ------------ ----------
Net Cash Provided by Financing Activities 3,227,940 (399,416) 2,575,365 467,011
------------------- -------------------- ------------ ----------
NET INCREASE (DECREASE) IN CASH (308) 3,198 (237,666) 1,308
CASH AT BEGINNING OF PERIOD 4,505 - 241,863 1,890
------------------- -------------------- ------------ ----------
CASH AT END OF PERIOD $ 4,197 $ 3,198 $ 4,197 $ 3,198
=================== ==================== ============ ==========
CASH PAID FOR:
Interest expense $ 219,530 $ 151,238 $ 92,412 $ 63,344
Income taxes $ - $ - $ - $ -
</TABLE>
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MAINTENANCE DEPOT, INC.
Notes to the Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
PS Industries, Inc. (the Company) was incorporated in the state
of Florida on August 6, 1990 for the primary purpose of
distributing and wholesaling janitorial supplies, paper and
equipment. On July 11, 1991, the Company changed its name to
Maintenance Depot, Inc. In addition to the wholesale distribution
of over, 4,000 nationally recognized brands, the Company also
formulates, packages and distributes over 200 of its own branded
cleaning products and chemicals. The Company also offers a
private labeling program to distributors who wish to purchase
chemicals, powders and aerosols under their own label.
The Company presently houses its manufacturing, warehouse,
laboratory and offices in a 70,000 square foot facility in West
Palm Beach, Florida. The Company's current customer base includes
food service, industrial, janitorial, safety and export
distributors throughout the United States.
b. Cash Equivalents
The Company considers all highly liquid investments and deposits
with a maturity of three months or less when purchased to be cash
equivalents.
c. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has adopted a calender year
end.
Sales revenue is recognized when the product is shipped to the
customer and expenses are recognized as incurred.
d. Inventories
Inventories consisting principally of janitorial supplies, paper
and equipment are stated at the lower of average cost or market
value. Cost is determined by the first-in, first-out (FIFO)
method.
e. Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed using the straight-line method over the estimated useful
life or lease term of the related asset.
Computer equipment 5 years
Equipment 7 years
Furniture and fixtures 7 years
Leasehold improvements 5 years
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f. Basic Net Income (Loss) Per Share
For the Nine Months Ended
June 30, 2000
-----------------------------------------
(Denominator)
Weighted
(Numerator) Average Net
Income Number of Income Per
Amounts Shares Share
------------ ----------- --------------
Net Income $ 5,975 2,195,653 $ 0.00
------------ ----------- --------------
$ 5,975 2,195,653 $ 0.00
============ ============ =============
For the Nine Months Ended
June 30, 1999
-----------------------------------------
(Denominator)
Weighted
(Numerator) Average Net
(Loss) Number of (Loss) Per
Amounts Shares Share
------------ ----------- --------------
Net loss $ (215,127) 1,890,515 $ (0.11)
------------ ----------- --------------
$ (215,127) 1,890,515 $ (0.11)
============ ============ =============
g. Income Taxes
As of September 30, 2000, the Company had a net operating loss
carryforward for federal income tax purposes of approximately
$460,000 that may be used in future years to offset taxable
income. The net operating loss carryforward will begin to expire
in 2020. The tax benefit of the cumulative carryforwards has been
offset by a valuation allowance of the same amount.
h. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful
accounts. The allowance was $100,000 at September 30, 2000.
i. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
j. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
8
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MAINTENANCE DEPOT, INC.
Notes to the Financial statements
September 30, 2000 and December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
k. Unaudited Financial Statements
The accompanying unaudited financial statements include all of
the adjustments which, in the opinion of management, are
necessary for a fair presentation. Such adjustments are of a
normal recurring nature.
NOTE 2 - FIXED ASSETS
Fixed assets at September 30, 2000 and December 31, 1999
consisted of the following:
September 30, December 31,
2000 1999
--------------- --------------
(Unaudited)
Land $ 1,349,100 $ -
Building 1,104,567 -
Computer equipment 209,308 190,734
Equipment 364,545 348,286
Furniture and fixtures 66,703 62,963
Leasehold improvements 41,407 39,723
--------------- --------------
3,135,630 641,706
Less accumulated depreciation
and amortization (336,581) (268,162)
--------------- --------------
Net Property and Equipment $ 2,799,049 $ 373,544
=============== ==============
Depreciation expense for the nine months ended September 30, 2000
and the year ended December 31, 1999 was $68,419 and $77,283,
respectively.
NOTE 3 - LONG-TERM DEBT
Long-term debt at September 30, 2000 and December 31, 1999 consists of the
following:
September 30, December 31,
2000 1999
-------------- -------------
(Unaudited)
Note payable to an individual, payable in
monthly interest only payments at 12%
through March 2002, unsecured. $ 100,000 $ 100,000
Note payable to a bank, payable in monthly
interest only payments at 12.5% through
July 2005, secured by land and building. 2,000,000 -
Note payable to an individual, payable in
monthly installments of $1,000 including
interest at 8% through January 2002,
unsecured. 15,131 23,802
-------------- -------------
Balance Forward $ 2,115,131 $ 123,802
-------------- -------------
9
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MAINTENANCE DEPOT, INC.
Notes to the Financial statements
September 30, 2000 and December 31, 1999
NOTE 3 - LONG-TERM DEBT (Continued)
Balance Forward $2,115,131 $ 123,802
Less current portion (9,469) (11,388)
----------- -----------
$2,105,662 $ 112,414
=========== ===========
Future maturities of long-term debt are as follows:
2001 $ 9,469
2002 105,662
2003 -
2004 -
2005 2,000,000
-----------
Total $2,115,131
===========
NOTE 4 - OPERATING LEASES
The Company is obligated to lease its prior facilities under an
operating lease through 2003. The following is a schedule of
future minimum rental payments under the operating lease at
September 30, 2000.
2000 $ 122,334
2001 176,400
2002 176,400
2003 176,400
-----------
Total $ 651,534
===========
As of December 31, 1999, the Company has sublet certain portions
of its prior facilities to third parties under subleases that
expire in November 2003. The monthly rental income from the
subleases is $12,830.
NOTE 5 - REVOLVING CREDIT NOTE PAYABLE
The Company has a revolving credit note with First Capital
Corporation which provides that it may borrow up to $1,500,000 at
a varying rate of interest which is five and one-half percent
(5.5%) per annum above the higher of seven and one-quarter
percent (7.25%) or the highest prime rate published daily in The
---
Wall Street Journal under "Money Rates". As security for this
--------------------
note, the lender has a security interest in all machinery,
equipment, furniture, fixtures, inventory and accounts
receivable.
As additional provisions of the loan agreement, the Company has
agreed to the following covenants:
1. Maintain an indebtedness to tangible net worth ratio of not
more than 7.5 to 1.
2. Maintain a current assets to current liabilities ratio of at
least 1.2 to 1.
3. Not allow its working capital from the funding date until
the note has been paid in full to be less than $180,000.
4. Not allow its tangible net worth from the funding date until
the note has been paid in all to be less than $115,000.
5. Not allow its cumulative quarterly cash flows to drop below
zero.
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MAINTENANCE DEPOT, INC.
Notes to the Financial Statements
September 30, 2000 and December 31, 1999
NOTE 5 - REVOLVING CREDIT NOTE PAYABLE (Continued)
First Capital Corporation periodically monitors the Company's
compliance with these covenants and financial ratios. This
revolving credit note was executed on April 15, 1999 and as of
September 30, 2000 the loan balance was $1,399,821 and the
Company was in default of various provisions of the loan
covenants.
On February 15, 2000, First Capital Corporation increased the
line of credit from $1,000,000 to $1,500,000 and extended the
term of the credit note to February 14, 2001.
NOTE 6 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the
Company does not have significant cash to cover its current
liabilities, nor have revenues been sufficient to cover its
operating costs on a continuing basis and to allow it to continue
as a going concern. It is the intent of the Company to continue a
limited offering of its common stock.
NOTE 7 - COMMON STOCK TRANSACTIONS
During the year ended December 31, 1999, the Company completed an
offering whereby it sold 105,000 shares of its common stock at
$2.00 per share for cash proceeds of $200,000 and services of
$10,000.
During the year ended December 31, 1999, the Company incurred
cost of $41,283 in connection with the raising of additional
capital. These costs were changed to paid in capital.
During the year ended December 31, 1999, the Company issued
$201,000 of notes payable which, with $20,100 of accrued
interest, were converted to 110,550 shares of the Company's
common stock at $2.00 per share.
During the nine months ended September 30, 2000, the Company
issued 558,659 shares of common stock for cash at $1.79 per share
for a total of $1,000,000.
NOTE 8 - PREFERRED STOCK TRANSACTIONS
During the nine months ended September 30, 2000, the Company
issued 700,000 shares of preferred stock at $0.015 per share for
a total of $10,498.
NOTE 9 - STOCK PURCHASE AGREEMENT
On June 20, 2000, the Company entered into a stock purchase
agreement with an investor. The Company has authorized the sale
and issuance of 1,005,590 shares of common stock at $1.79 per
share for a total of $1,800,000. As of September 30, 2000, the
Company has issued 558,659 shares of common stock and received
$1,000,000 as compensation.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The influx of funds pursuant to the securities purchase agreement with Solano
Venture Group, LP ($1,000,000 to date) has enabled the company to take advantage
of various purchase and prompt payment discounts in addition to being able to
increase purchases to insure inventory availability for our customers needs.
Sales were up approximately 28.8% over that of the same period in the prior year
and gross profits remained strong as sales of goods with marginal profits were
replaced with those yielding larger returns.
These factors, along with the efficiencies of operations we have experienced in
our new facility, have enabled revenues and profits to grow during this period.
In July, the Company purchased our new facility, previously rented by the
company. The purchase price was approximately $2,453,000, which was financed
with a five- (5) year interest only loan of $2,000,000 at an interest rate of
12.5%.
11
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PART II - OTHER INFORMATION
Item 1. Litigation
No material legal proceedings to which the Company (or any officer or director
of the Company, or any affiliate or owner of record or beneficially of more than
five percent of the Common Stock, to management's knowledge) is a party or to
which the property of the Company is subject is pending and no such material
proceeding is known by management of the Company to be contemplated.
Item 2. Change in Securities
On June 20, 2000 the Company and Solana Venture Group, LP entered into a
Securities Purchase Agreement which calls for the sale and purchase of 1,005,590
shares in three installments at a price of $1.79; 558,663 Shares have been
purchased to date. The Company relies on exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended in that the transaction
is a private placement of said securities to an accredited investor who is
acquiring the securities for its own account and not with a view to sale or
resale, distribution or transfer.
Item 3. Defaults Upon Senior Securities
This item is not applicable to the Company for the period covered by this
report.
Item 4. Submission of Matters to a Vote of Security Holders
There were no meetings of security holders during the period covered by this
report; thus, this item is not applicable.
Item 5. Other Information
There is no additional information which the Company is electing to report under
this item at this time.
Item 6. Exhibits and Reports on Form 8-K
This item is not applicable to the Company for the period covered by this
report.
INDEX OF EXHIBITS
(27) Financial Data Schedule
12
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 10th day of November,
2000.
MAINTENANCE DEPOT, INC. (Registrant)
By: /s/ William Mercur
--------------------------
William Mercur, Chief Executive Officer
By: /s/ Philip Seid
--------------------------
Philip Seid, Chief Financial and
Accounting Officer
13
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