<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1998.
--------------
Commission File Number 0-16631
-------
CRP Holding Corp.
-----------------
(Exact name of registrant as specified in its charter)
Delaware 59-2763089
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 Ocean Avenue, Ronkonkoma, NY 11779
---------------------------------------
(Address of Principal Executive Offices) (zip code)
(516) 588-7000
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 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
--- ---
As of March 31, 1998, there were 6,676,351 shares of the Registrant's common
stock outstanding.
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
FORM 10-QSB/A
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION PAGE
- ------ ----
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheet (Unaudited) 3
Consolidated Statements of Operations (Unaudited) 4
Consolidated Statement of Changes in Stockholders'
(Deficit) (Unaudited) 5
Consolidated Statements of Cash Flows (Unaudited) 6
Notes to Consolidated Financial Statements (Unaudited) 7-8
Item 2. Management's Discussion and Analysis of 9-11
Financial Condition and Results
of Operations
Part 2. OTHER INFORMATION
Item 6. Other Information 12
SIGNATURES
<PAGE>
Part 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
CRP HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
ASSETS
------
CURRENT ASSETS:
<S> <C>
Cash $ 112,923
Accounts receivable, less allowance for doubtful accounts
of $17,000 1,680,537
Inventories 579,658
Prepaid expenses and other 74,471
Deferred income taxes 29,000
-----------
TOTAL CURRENT ASSETS 2,476,589
PROPERTY AND EQUIPMENT, less accumulated
depreciation and amortization 2,139,597
DUE FROM STOCKHOLDER 225,770
DEPOSITS AND OTHER ASSETS 41,669
-----------
$ 4,883,625
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 2,225,421
Accrued expenses 629,440
Loans payable 1,099,087
Promissory notes payable-vendors 281,449
Note payable-stockholders 116,833
Billings in excess of costs and estimated earnings on
uncompleted contracts 552,983
Current portion of obligations under capital leases 1,464,862
Employee benefit obligations 59,454
-----------
TOTAL CURRENT LIABILITIES 6,429,529
DEFERRED INCOME TAXES PAYABLE 218,000
OBLIGATIONS UNDER CAPITAL LEASES, less current portion 479,846
EMPLOYEE BENEFIT OBLIGATIONS, less current portion 134,269
-----------
TOTAL LIABILITIES 7,261,644
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' (DEFICIT):
Preferred stock; $1.00 par value; 5,000,000 shares authorized; no shares
outstanding
Common stock; $.001 par value; 40,000,000 shares
authorized; 6,676,351 shares issued and outstanding 6,676
Additional paid-in capital 767,950
Accumulated deficit (3,152,645)
-----------
TOTAL STOCKHOLDERS' (DEFICIT) (2,378,019)
-----------
$ 4,883,625
===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
For The Three Months Ended
March 31,
----------------------------------
1998 1997
----------- -----------
<S> <C> <C>
NET SALES $ 2,897,144 $ 3,201,738
COST OF SALES 2,139,739 2,561,203
----------- -----------
GROSS PROFIT 757,405 640,535
----------- -----------
OPERATING EXPENSES:
Selling and shipping 287,856 308,637
General and administrative 513,011 608,351
----------- -----------
TOTAL OPERATING EXPENSES 800,867 916,988
----------- -----------
OPERATING LOSS (43,462) (276,453)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (95,040) (127,186)
Interest income 4,456 4,114
Other 200 (3,595)
----------- -----------
TOTAL OTHER INCOME (EXPENSE) (90,384) (126,667)
----------- -----------
NET LOSS $ (133,846) $ (403,120)
=========== ===========
BASIC AND FULLY DILUTED
NET LOSS PER SHARE .02 (.07)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,676,351 5,626,350
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Additional Accumulated
Common Stock Paid-in Capital Deficit Total
---------------------------- --------------- ------------ -----------
Shares Amount
------ ------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1997 6,676,351 $ 6,676 $ 767,950 $(3,018,799) $(2,244,173)
Net loss -- -- -- (133,846) (133,846)
----------- ----------- ----------- ----------- -----------
Balance,
March 31, 1998 6,676,351 $ 6,676 $ 767,950 $(3,152,645) $(2,378,019)
=========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
For The Three Months Ended
March 31,
--------------------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(133,846) $(403,120)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 97,121 117,255
Changes in operating assets and liabilities
Decrease (increase) in:
Accounts receivable 77,844 (3,578)
Inventories 91,860 42,469
Prepaid expenses and other 19,147 (67,812)
Accrued interest net from stockholders (1,956) (4,114)
Other assets 15,000 (20,000)
Increase (decrease) in:
Accounts payable 192,974 423,232
Accrued expenses (77,960) 140,796
Billings in excess of costs and estimated earnings
on uncompleted contracts (245,951) (161,053)
Employee benefit obligations (20,715) --
--------- ---------
Net cash provided by operating activities 13,518 64,075
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment -- (27,582)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) from loans payable (2,580) (240,656)
Repayments on capital lease obligations (58,805) (96,910)
Repayments of stockholder's loan (75,000) --
--------- ---------
Net cash used in financing activities (136,385) (337,566)
--------- ---------
NET (DECREASE) INCREASE IN CASH (122,867) (301,073)
CASH, BEGINNING OF PERIOD 235,790 319,520
--------- ---------
CASH, END OF PERIOD $ 112,923 $ 18,447
========= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
6
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------------------
Nature of Business
------------------
Boca Raton Capital Corporation. ("BOCA"), was a non-diversified,
closed-end investment company, which had elected and was granted the
status as a Business Development Company ("BDC") under the Investment
Company Act of 1940. During 1995, the Board of Directors of BOCA were
of the opinion that the shareholders' return on assets was not
sufficient to continue operations as a BDC. As such, BOCA's election to
withdraw from its status as a BDC was filed with the Securities and
Exchange Commission and became effective as of December 22, 1995. BOCA
had no substantive operations in 1996 and 1997.
On October 24, 1997, BOCA completed a merger (the "Merger") with Clean
Room Products, Inc.("CRP"), a privately held company incorporated in
the state of New York in 1965. Under the terms of the Merger each
outstanding share of CRP was exchanged for approximately 270,010 shares
of BOCA common stock. In connection with the Merger, BOCA issued
4,501,080 shares of its common stock in exchange for all of the issued
and outstanding shares of CRP. Pursuant to the terms of the Merger, the
CRP shareholders deposited 1,875,750 shares of the BOCA common shares
that they had received, in escrow, until the earlier of; April 24, 1998
or; the consummation of a long term financing which results in at least
$1,500,000 in net proceeds. These shares will be released from escrow
upon consummation of the financing; if such financing has not occurred
by April 24, 1998 the shares held in escrow will be canceled. As a
result of the Merger, CRP became a wholly owned subsidiary of BOCA.
Subsequent to the Merger, BOCA changed its name to CRP Holding Corp.
All references to the " Company" shall be deemed to include CRP and
BOCA.
The Merger has been treated for accounting purposes as a capital
transaction of CRP, equivalent to the issuance of common stock by CRP
for the net monetary assets of BOCA, accompanied by a recapitalization
of CRP. Accordingly, the results of operations for the three months
ended March 31, 1998 and 1997, reflect those of CRP for the entire
three month periods and the results of operations of BOCA from the date
of the Merger. All share and per share amounts have been restated to
reflect the Merger.
CRP Holding Corp. and Subsidiaries manufactures and distributes
products for critical environment facilities and designs and constructs
clean rooms throughout the United States.
Basis of Presentation
---------------------
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant
intercompany transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company
has experienced recurring losses from operations, has a deficiency in
its working capital, and is in violation of its debt covenants. These
factors raise substantial doubt about the Company's ability to continue
as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
In 1997, the Company commenced a restructuring program. This program
included the reorganization of the Company's senior management with the
appointment of a new chief executive officer. The Company has embarked
upon a substantial cost cutting program together with obtaining
additional financing. Additionally, the Company is refocusing its sales
efforts on higher margin products. Management believes that these
actions, will enable the Company to continue as a going concern. The
Company's continued existence is dependent upon its ability to achieve
and maintain positive cash flow and to satisfy its indebtedness when it
becomes due.
7
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
===============================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------------------
Interim Financial Statements
----------------------------
The accompanying financial statements have been prepared by the
Company, without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows at
March 31, 1998 and for all periods presented have been made. The
results of operations for the periods presented are not necessarily
indicative of the operating results for a full year.
Certain information and footnote disclosures prepared in accordance
with general accepted accounting principles and normally included in
the financial statements have been condensed or omitted. It is
suggested that these financial statements be read in conjunction with
the financial statements and notes included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997.
Inventories
-----------
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method (FIFO).
Financial Statement Classifications
-----------------------------------
Certain amounts in the 1997 financial statements have been reclassified
to conform with the current period presentation.
NOTE 2 - INVENTORIES
- ----------------------
Inventories consist of the following:
Raw materials $421,445
Work-in-process 24,222
Finished goods 133,991
--------
$579,658
========
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------ RESULTS OF OPERATIONS
General
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere herein.
The following discussion contains predictions, estimates and other
forward-looking statements that involve a number of risks and uncertainties.
While this outlook represents the Company's current judgment on the future
direction of the business, such risks and uncertainties could cause actual
results to differ materially from any future performance suggested herein.
CRP has a stockholders' deficit of approximately $2.4 million as of March 31,
1998 with net losses of approximately $134,000 and $403,000 for the three months
ended March 31, 1998 and 1997, respectively. Subsequent to March 31, 1998, CRP
has continued to generate losses. CRP has experienced negative cash flow which
has prevented it from meeting normal payment terms on many of its accounts
payable. The report of independent public auditors of CRP on its financial
statements for the fiscal years ended December 31, 1997 and 1996 contains an
explanatory paragraph to the effect that CRP's recurring losses from operations
and its deficiency in working capital raise substantial doubt about its ability
to continue as a going concern.
Change in Management
Effective May 8, 1997, Charles Chenes Chief Executive Officer and President
resigned and Kenneth Gross Chairman of the Board has assumed the title and
duties of the Chief Executive Officer and President. Effective May 7, 1998
Ernest Jurdana resigned his position as Chief Financial Officer and Donald
Buysse has assumed the title and duties of Chief Financial Officer on an interim
basis.
Results of Operations
Three Months Ended March 31, 1998 and 1997
- ------------------------------------------
Net Sales
Net sales decreased by approximately 10% for the three months ended March 31,
1998 over 1997. The decrease in sales was primarily associated with phasing out
the jobbing division which generated sales of approximately $227,000 in 1997.
The balance of the decrease is attributable to the reduction in the selling
prices of the Company's products due to competitive pricing in the market place.
Two customers accounted for 22% of the net sales for the three months ended
March 31, 1998. There were no customers that exceeded 10%of net sales for the
three months ended March 31, 1997.
Gross Profit
The gross profit represented 26.1 % and 20.01 % of net sales for the three
months ended March 31, 1998 and 1997, respectively. The increase in the gross
profit percentage is due to phasing out the jobbing division in 1998 and an
increase in gross profits on certain major engineering contracts in 1998 over
1997.
9
<PAGE>
Selling and Shipping Expenses
Selling and shipping expenses represented approximately 9.9% and 9.6%
respectively, of net sales for the three months ended March 31, 1998 and 1997,
respectively. These expenses include personnel, advertising, and other costs in
support of CRP's sales efforts.
General and Administrative Expenses
General and administrative expenses represented approximately 17.7% and 18.9% of
net sales for the three months ended March 31, 1998 and 1997, respectively.
These expenses include salaries, payroll taxes, professional fees and corporate
expenses. Although many of these expenses are fixed in nature, management has,
where possible, initiated cost reduction increases and policies in the second
quarter of fiscal 1997. The reduction in general and administrative expenses of
approximately $95,000 is primarily due to reduction in administrative salaries,
payroll taxes, professional fees and depreciation.
Interest expense
Interest expense decreased by approximately 25.3% over the three months ended
March 31, 1997 primarily due to lower average borrowings of the loans payable
during 1998 as compared to 1997.
Liquidity and Capital Resources
The Company has been able to generate cash to carry on its operations through a
combination of secured borrowings from financial institutions and marginal cash
flow from its operations.
Net Cash Provided by Operating Activities
Net cash provided through operating activities was approximately $14,000 and
$64,000 for the three month ended March 31, 1998 and 1997, respectively. The
positive cash flow for the 1998 and 1997 period was primarily due to non-cash
expenses for depreciation and amortization, a decrease in inventories, and an
increase in accounts payable offset by decreases in billings in excess of costs
and estimated earnings on uncompleted contracts.
Net Cash Used in Investing Activities
Cash used for investing activities was approximately $28,000 for the three
months ended March 31, 1997. These amounts primarily reflect the purchase of
property and equipment.
Net Cash Used in Financing Activities
Financing activities used approximately $136,000 and $338,000 of cash flow for
the three months ended March 31, 1998 and 1997, respectively. The net use of
cash for 1998 and 1997 resulted primarily from repayments on loans payable and
capital lease obligations. In 1998, the Company repaid a stockholder's loan of
$75,000.
Guarantee of Industrial Development Revenue Bond
The Company has guaranteed an Industrial Development Revenue Bond which has an
unpaid balance of approximately $1,093,000 at March 31, 1998. At that date, the
bond was in default with an action brought against the Company by the holder of
the bond to enforce the guarantee. Legal counsel is unable to conclude the
likely outcome of this litigation. This could result in the Company incurring an
expense to relocate to a new facility.
10
<PAGE>
Credit Facility
The Company's credit facility provides for maximum borrowings of $1,500,000
which would be available for advances against eligible accounts receivable, as
defined, at a level of 80%. Advances bear interest at 3.5% above the prime rate
plus an administrative fee of .4% on the average daily outstanding balance for
the immediately preceding month, with a minimum monthly fee of $10,000. The
agreement provides for, among other things, a security interest in substantially
all of the Company's assets, limitations on loans to officers, stockholders,
directors or affiliates, payments of cash dividends, and is guaranteed by
certain of the Company's stockholders. At March 31, 1998, the Company was in
violation of certain of these covenants.
The same financial institution provides the Company with a $275,000 credit
facility based on eligible inventory, as defined, and $275,000 under an
accommodation note secured by operating equipment. The facility bears interest
at 3.5% above the prime rate plus administrative fees. The note requires monthly
principal payments of $5,500 commencing July 1, 1997, with a balloon payment for
the residual amount in December 1997. The credit facilities and loans provided
by the financial institution expired in December 1997.
The Company and the financial institution extended the credit facility to June
22, 1998 with an amendment that limits the maximum amount of available credit to
$1,500,000, institutes a net deficit requirement of not more than $2,550,000,
and requires an infusion of $1,500,000 from investors by no later than April 30,
1998.
The Company was unable to raise the $1,500,000 in capital as of April 30, 1998.
New Management is currently in the process of extending or securing new
borrowing to satisfy its indebtedness when it becomes due. There can be no
assurance that the existing funds will remain available should the Company
continue to be in violation of its loan covenants. If the Company is unable to
obtain sufficient capital or borrowings this could materially adversely affect
the Company's operations.
11
<PAGE>
Part 2. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits 27. Financial Data Schedule
(b) Reports on Form 8-K
The Registrant has not filed any reports on Form 8-K during the
quarter for which this report is filed.
12
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
executed on this 20th day of May, 1996.
CRP HOLDING CORP.
by:/s/ Kenneth Gross
----------------------------
Kenneth Gross, Secretary,
Chairman of the Board and
Principal Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 113
<SECURITIES> 0
<RECEIVABLES> 1,698
<ALLOWANCES> 17
<INVENTORY> 579
<CURRENT-ASSETS> 2,477
<PP&E> 2,140
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,884
<CURRENT-LIABILITIES> 6,430
<BONDS> 0
0
0
<COMMON> 7
<OTHER-SE> (2,378)
<TOTAL-LIABILITY-AND-EQUITY> 4,884
<SALES> 2,897
<TOTAL-REVENUES> 2,897
<CGS> 2,140
<TOTAL-COSTS> 2,941
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90
<INCOME-PRETAX> (134)
<INCOME-TAX> (134)
<INCOME-CONTINUING> (134)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (134)
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
