<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 June 30, 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 June 30, 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) 4-5
Consolidated Statement of Changes in Stockholders'
(Deficit) (Unaudited) 6
Consolidated Statements of Cash Flows (Unaudited) 7
Notes to Consolidated Financial Statements (Unaudited) 8-9
Item 2. Management's Discussion and Analysis of 10-12
Financial Condition and Results
of Operations
Part 2. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CRP HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
CURRENT ASSETS:
Cash $ 17,635
Accounts receivable, less allowance for doubtful accounts
of $12,000 1,736,897
Inventories 509,759
Prepaid expenses and other 46,287
Deferred income taxes 29,000
-----------
TOTAL CURRENT ASSETS 2,339,578
PROPERTY AND EQUIPMENT, less accumulated
depreciation and amortization 2,036,245
DUE FROM STOCKHOLDER 230,315
DEPOSITS AND OTHER ASSETS 56,669
-----------
$ 4,662,807
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 2,252,987
Accrued expenses 741,582
Loans payable-other 887,986
Promissory notes payable-vendors 271,218
Note payable-stockholders 207,940
Billings in excess of costs and estimated earnings on
uncompleted contracts 363,160
Current portion of obligations under capital leases 1,569,416
Employee benefit obligations 47,752
-----------
TOTAL CURRENT LIABILITIES 6,342,041
DEFERRED INCOME TAXES PAYABLE 218,000
OBLIGATIONS UNDER CAPITAL LEASES, less current portion 342,892
EMPLOYEE BENEFIT OBLIGATIONS, less current portion 124,873
-----------
TOTAL LIABILITIES 7,027,806
-----------
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 (3,139,625)
-----------
TOTAL STOCKHOLDERS' (DEFICIT) (2,364,999)
$ 4,662,807
===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
For The Six Months Ended
June 30,
----------------------------------
1998 1997
----------- -----------
<S> <C> <C>
NET SALES $ 5,972,412 $ 5,754,994
COST OF SALES 4,278,344 4,539,257
----------- -----------
GROSS PROFIT 1,694,068 1,215,737
----------- -----------
OPERATING EXPENSES:
Selling and shipping 687,728 614,753
General and administrative 970,288 1,070,847
----------- -----------
TOTAL OPERATING EXPENSES 1,658,016 1,685,600
----------- -----------
OPERATING INCOME (LOSS) 36,052 (469,863)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (218,935) (249,366)
Interest income 9,001 8,312
Other 53,056 44,311
----------- -----------
TOTAL OTHER INCOME (EXPENSE) (156,878) (196,743)
----------- -----------
NET LOSS $ (120,826) $ (666,606)
=========== ===========
BASIC AND FULLY DILUTED
NET LOSS PER SHARE ($0.02) ($0.12)
=========== ===========
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 STATEMENTS OF OPERATIONS
===============================================================================
<TABLE>
<CAPTION>
For The Three Months Ended
June 30,
----------------------------------
1998 1997
----------- -----------
<S> <C> <C>
NET SALES $ 3,075,268 $ 2,553,256
COST OF SALES 2,138,605 1,978,054
----------- -----------
GROSS PROFIT 936,663 575,202
----------- -----------
OPERATING EXPENSES:
Selling and shipping 347,705 298,978
General and administrative 509,444 469,634
----------- -----------
TOTAL OPERATING EXPENSES 857,149 768,612
----------- -----------
OPERATING INCOME (LOSS) 79,514 (193,410)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (123,895) (122,180)
Interest income 4,545 4,198
Other 52,856 47,906
----------- -----------
TOTAL OTHER INCOME (EXPENSE) (66,494) (70,076)
----------- -----------
NET INCOME (LOSS) $ 13,020 $ (263,486)
=========== ===========
BASIC AND FULLY DILUTED
NET INCOME (LOSS) PER SHARE ($0.00) ($0.05)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,676,351 5,626,350
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Additional Accumulated
Common Stock Paid-in Capital Deficit Total
----------------------------- --------------- ----------- ------------
Shares Amount
------ ------
Balance,
<S> <C> <C> <C> <C> <C>
December 31, 1997 6,676,351 $ 6,676 $ 767,950 $(3,018,799) $(2,244,173)
Net loss -- -- -- (120,826) (120,826)
----------- ----------- ----------- ----------- -----------
Balance,
June 30, 1998 6,676,351 $ 6,676 $ 767,950 $(3,139,625) $(2,364,999)
=========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
6
<PAGE>
CRP HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
For The Six Months Ended
June 30,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(120,826) $(666,606)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 200,473 236,488
Recovery of bad debt 27,250
Changes in operating assets and liabilities
Decrease (increase) in:
Accounts receivable 21,484 279,070
Inventories 161,760 184,258
Prepaid expenses and other 47,331 (82,394)
Accrued interest net from stockholders (6,501) (4,200)
Other assets -- (17,143)
Increase (decrease) in:
Accounts payable 210,309 105,577
Accrued expenses 34,181 (41,053)
Billings in excess of costs and estimated earnings
on uncompleted contracts (435,774) 36,4
Employee benefit obligations (41,813) --
--------- ---------
Net cash provided by operating activities 70,624 57,677
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment -- (34,063)
--------- ---------
Net cash used in investing activities -- (34,063)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) from loans payable (213,681) (367,892)
Repayments on capital lease obligations (91,205) (151,016)
Net borrowings (payments) from stockholders 16,107 200,000
Financing costs -- (20,000)
--------- ---------
Net cash used in financing activities (288,779) (338,908)
--------- ---------
NET DECREASE IN CASH (218,155) (315,294)
CASH, BEGINNING OF PERIOD 235,790 319,520
--------- ---------
CASH, END OF PERIOD $ 17,635 $ 4,226
========= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
7
<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 cancelled. As of
June 30, 1998, the shares held in escrow have not been cancelled. 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 six and three
months ended June 30, 1998 and 1997, reflect those of CRP for the
entire six and 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 May, 1998, the Company reorganized its 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.
8
<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
June 30, 1998 and for all period presents 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 $364,097
Work-in-process 23,422
Finished goods 122,240
$509,759
9
<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 $2.26 million as of June 30,
1998 with net losses of approximately $121,000 and $667,000 for the six months
ended June 30, 1998 and 1997, respectively. A net profit of approximately
$13,000 for the second quarter ended June 30, 1998 offsets in part the first
quarter net loss of approximately $134,000. Subsequent to June 30, 1998, CRP
anticipates maintaining a break even position from its operations through the
next quarter. CRP has experienced negative cash flow which has prevented it from
meeting normal payment terms on some 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 contained an explanatory paragraph to the
effect that CRP's recurring losses from operations and its deficiency in working
capital raised 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 M.
Buysse a Director of the Board has assumed the title and duties of Chief
Financial Officer on an interim basis.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1998 and 1997
- ---------------------------------------
Net Sales
Net sales of approximately $5.9 million for the six months ended June 30, 1998
increased by approximately 4% over the same period 1997. The net increase in
sales of approximately $217,000 represents an improvement in sales volume for
the period of approximately 8.2% company wide or $488,000 offset by the planned
phasing out of the jobbing division in 1997 which had generated sales of
approximately $271,000 in the first six months of 1997.
Gross Profit
The gross profit represented 28.4 % and 21.1 % of net sales for the six months
ended June 30, 1998 and 1997, respectively. The increase in the gross profit of
$478,000 reflects departmental increases in profitability of approximately
$250,000 for the engineering department and $383,000 for the manufacturing
department. A decrease in gross profit of $160, 000 for the film department
resulted from a softening of price structures in the resins market.
10
<PAGE>
Selling and Shipping Expenses
Selling and shipping expenses represented approximately 11.5% and 10.7%
respectively, of net sales for the six months ended June 30, 1998 and 1997,
respectively. These expenses include personnel, advertising, and other costs in
support of CRP's sales efforts. The increase in selling and shipping costs is
directly attributable to the increase in the period's sales volume.
General and Administrative Expenses
General and administrative expenses represented approximately 16.3% and 18.6% of
net sales for the six months ended June 30, 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
continued, where possible, instituting cost reductions throughout the period.
The reduction in general and administrative expenses of approximately $100,000
is primarily due to reduction in administrative salaries, payroll taxes and
depreciation.
Interest Expense
Interest expense decreased in the six months ended June 30, 1998 by
approximately 12.3% over the six months ended June 30, 1997. The decrease was
primarily due to lower average borrowings of the loans payable during 1998 as
compared to 1997.
Other Income
Other income primarily represents settlements of accounts receivable credit
balances for the six months ended June 30, 1998.
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 $71,000 and
$58,000 for the six months ended June 30, 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 accounts receivable, a
decrease in inventories, and an increase in accounts payable offset in the 1998
period by decreases in billings in excess of costs and estimated earnings on
uncompleted contracts.
Net Cash Used in Financing Activities
Financing activities used approximately $289,000 and $339,000 of cash flow for
the six months ended June 30, 1998 and 1997, respectively. The net use of cash
for 1998 and 1997 resulted primarily from repayments on loans payable and
capital lease obligations. During the period ending June 30, 1998, the Company
repaid a stockholder's loan of $75,000. In the same period, 1998, the company
received proceeds from stockholders and other third parties of approximately
$106,000.
Guarantee of Industrial Development Revenue Bond
The Company has guaranteed an Industrial Development Revenue Bond which has an
unpaid balance of approximately $1,039,000 at June 30, 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.
11
<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 June 30, 1998 and 1997, 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 required 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.
Management is currently in the process of extending or securing new borrowing to
satisfy its indebtedness when it becomes due. Management is currently
negotiating with vendors to extend terms. 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.
12
<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.
13
<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 August, 1998.
CRP HOLDING CORP.
by:/s/ Kenneth Gross
----------------------------
Kenneth Gross, Secretary,
Chairman of the Board and
Principal Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 18
<SECURITIES> 0
<RECEIVABLES> 1,737
<ALLOWANCES> 12
<INVENTORY> 510
<CURRENT-ASSETS> 2,340
<PP&E> 2,036
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,663
<CURRENT-LIABILITIES> 6,342
<BONDS> 0
0
0
<COMMON> 7
<OTHER-SE> (2,365)
<TOTAL-LIABILITY-AND-EQUITY> 4,663
<SALES> 5,972
<TOTAL-REVENUES> 6,034
<CGS> 4,278
<TOTAL-COSTS> 5,936
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 219
<INCOME-PRETAX> (121)
<INCOME-TAX> (121)
<INCOME-CONTINUING> (121)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (121)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
