UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1995
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 0-3772
ROCKY MOUNT UNDERGARMENT CO., INC.
(Exact name of the small business issuer as specified in its charter)
DELAWARE 56-1385522
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1536 Boone Street, Rocky Mount, NC 27803
(Address of principal executive offices)
Registrant's telephone number, including area code: (919) 446-6161
N/A
(Former name, former address, and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act
after the distribution of Securities under a plan confirmed by a court.
Yes X No
The number of shares outstanding of the issuer of common stock as of August 29,
1995 was 9,198,400.
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PART I. FINANCIAL INFORMATION
-----------------------------
Item 1. FINANCIAL STATEMENTS
--------------------
ROCKY MOUNT UNDERGARMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April December
2, 1995 31, 1994
ASSETS (unaudited)
----------- ----------
CURRENT ASSETS:
Cash $ 18,160 $ 42,391
Restricted cash 100,000 100,000
Accounts receivable, net of allowances of
$50,000 for uncollectible accounts 35,090 24,630
Notes Receivable-current portion 3,296 3,560
Inventories 1,183,792 1,440,792
Prepaid expenses and other 141,646 135,977
---------- ----------
TOTAL CURRENT ASSETS 1,481,984 1,747,350
FIXED ASSETS:
Property, Plant and equipment, net of accumulated
depreciation and amortization 506,186 548,432
OTHER ASSETS
Notes Receivable-net of current portion 46,440 46,440
Loans receivable - officers 159,000 159,000
Other assets 13,496 13,496
---------- ----------
$ 2,207,106 $ 2,514,718
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Due to factor $ 727,084 $ 399,033
Current portion of long-term debt 38,663 40,673
Accounts payable 776,919 1,080,213
Accrued liabilities 133,823 133,401
Income taxes payable 78,687 79,440
---------- ----------
TOTAL CURRENT LIABILITIES: 1,755,176 1,732,760
---------- ----------
LONG-TERM DEBT - NET OF CURRENT PORTION 23,651 37,831
STOCKHOLDERS' EQUITY
Common stock, par value $.0001-Authorized,
10,000,000 shares; Issued, 8,428,400 and
4,675,900 shares 843 468
Additional paid-in capital 7,168,323 7,686,150
Retained earnings (deficit) (6,540,887) (6,017,464)
Treasury stock, at cost, 522,500 shares 0 (925,027)
---------- ----------
628,279 744,127
Less: Subscriptions receivable (200,000) -
---------- ----------
Total stockholders' equity 428,279 744,127
---------- ----------
$ 2,207,106 $ 2,514,718
========== ==========
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ROCKY MOUNT UNDERGARMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
------------------
April April
2, 1995 3, 1994
---------- ----------
REVENUES:
Net sales $ 1,772,440 $ 1,960,407
Other income, net 45,442 15,330
---------- ----------
1,817,882 1,975,737
---------- ----------
COSTS AND EXPENSES:
Cost of sales 1,764,022 1,593,881
Selling, general and
administrative expenses 479,041 521,928
Financing costs 98,242 83,082
---------- ----------
2,341,305 2,198,891
---------- ----------
LOSS BEFORE EXTRAORDINARY ITEMS AND (523,423) (223,154)
PROVISION FOR INCOME TAXES
Provision for income taxes - -
---------- ----------
LOSS BEFORE EXTRAORDINARY ITEMS (523,423) (223,154)
---------- ----------
REORGANIZATION ITEMS -
Professional fees - (67,435)
Gain on extinguish-
ment of debt - 1,332,000
---------- ----------
NET INCOME (LOSS) $ (523,423) $ 1,041,411
========== ==========
INCOME (LOSS) PER SHARE:
Loss from operations $ (0.08) $ (0.07)
Extraordinary items 0.00 0.38
---------- ----------
$ (0.08) $ 0.31
========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 6,634,596 3,327,344
========== ==========
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ROCKY MOUNT UNDERGARMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
-----------------------
April April
2, 1995 3, 1994
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (523,423) $ 1,041,411
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in)
operating activities:
Depreciation 34,800 54,000
Stock issued as finder's fee - 30,300
Gain on extinguishment of debt - (1,332,000)
Gain on sale/abandon of PP&E (38,806) -
Changes in assets and liabilities:
Accounts receivable (10,196) (36,691)
Inventories 257,000 (234,698)
Prepaid expenses (5,669) (3,129)
Other assets - 3,500
Accounts payable (303,294) (43,209)
Accrued liabilities 422 (161,262)
Liabilities subject to compromise - 129,755
Income taxes payable (753) -
---------- ----------
Net cash provided by (used in)
operating activities (589,919) (552,023)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of PP&E 46,550 -
Capital expenditures (298) (1,357)
---------- ----------
Net cash provided by (used in)
investing activities 46,252 (1,357)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase(decrease)in amount due to factor 328,051 760,051
Principal payments on long-term debt (16,190) (50,826)
Payments of liabilities subject to compromise - (407,426)
Increase in long-term debt - 25,000
Issuance of stock 207,575 350,000
---------- ----------
Net cash provided by (used in)
financing activities 519,436 676,799
---------- ----------
NET (DECREASE) INCREASE IN (24,231) 123,419
CASH, BEGINNING OF PERIOD 142,391 48,138
---------- ----------
CASH, END OF PERIOD $118,160 $171,557
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes $ - $ -
Cash paid during the period for interest 68,412 50,201
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ROCKY MOUNT UNDERGARMENT CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED
APRIL 2, 1995 AND APRIL 3, 1994
Note 1: The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations; however,
the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these condensed
consolidated financial statements be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's latest annual report on Form 10-KSB.
In the opinion of management, the information contained in this report
reflects all adjustments necessary, which are of a normal recurring nature,
to present fairly the results for the interim periods presented.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The poor results were due to problems in domestic manufacturing and
inadequate continuity of product resulting in a big drop in production out
put.
Net sales of the Company's women's and children's intimate apparel
business decreased in the first quarter of 1995 to $1,772,000 from
$1,960,000 in the first quarter of 1994.
Gross margins were .5% in the first three months of 1995 compared to
18.7% for the first quarter of 1994.
Selling, general and administrative expenses decreased approximately
$43,000 during the first quarter of 1995 as compared to the first quarter
of 1994 resulting directly from cost reductions and lower sales volume.
Financing costs have increased in 1995 due to higher utilization
of the over-advance financing line and adverse movement in interest rates.
General adverse market factors and domestic management problems have
prevented any noticeable benefit coming through in the financial results.
During the last week of June 1995 management posted a notice under the
provisions of the Worker Adjustment and Retraining Notification Act (WARN).
This effectively means the company will cease domestic sewing operations in
late August, layoff over 100 employees and avoid further losses in
manufacturing operations in North Carolina.
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LIQUIDITY AND CAPITAL RESOURCES
The Company had a working capital deficit as of April 2, 1995 of
approximately $273,192 as compared to working capital of approximately
$14,590 as of December 31, 1994.
On March 31, 1995, the Company concluded a new financing agreement
with Finova Capital Corporation (formerly Ambassador Factors). Under the
terms of this agreement, the Company is entitled to receive an 85% advance
on eligible accounts receivable and an over-advance not to exceed $600,000
(based on 50% of certain inventory). The Company is currently dependent
upon its new financing arrangement with Finova Capital Corporation. As of
April 2, 1995, the Company was advanced approximately $1,600,000 on this
financing and had available to it $72,000 for additional borrowing.
Future losses will adversely affect the ability of the Company to
continue in business. The Company is endeavoring to take steps to make
itself profitable.
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PART II: OTHER INFORMATION
None Applicable
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ROCKY MOUNT UNDERGARMENT CO., INC.
By: /s/Joseph Pascal
Joseph Pascal
President
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