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 July 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 December
6, 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
July December
2, 1995 31, 1994
ASSETS (unaudited)
----------- ----------
CURRENT ASSETS:
Cash $ 25,599 $ 42,391
Restricted cash --- 100,000
Accounts receivable, net of allowances of
$62,000 and $50,000, respectively
for uncollectible accounts 25,875 24,630
Notes Receivable-current portion 2,481 3,560
Inventories 1,086,579 1,440,792
Prepaid expenses and other 81,368 135,977
---------- ----------
TOTAL CURRENT ASSETS 1,221,902 1,747,350
FIXED ASSETS:
Property, Plant and equipment, net of accumulated
depreciation and amortization 690,110 548,432
OTHER ASSETS
Notes Receivable-net of current portion 46,440 46,440
Loans receivable - officers 298,931 159,000
Other assets 19,306 13,496
---------- ----------
$ 2,276,689 $ 2,514,718
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Due to factor $1,127,532 $ 399,033
Current portion of long-term debt 99,711 40,673
Accounts payable 752,776 1,080,213
Accrued liabilities 77,435 133,401
Income taxes payable 88,950 79,440
---------- ----------
TOTAL CURRENT LIABILITIES: 2,146,404 1,732,760
---------- ----------
LONG-TERM DEBT - NET OF CURRENT PORTION 131,227 37,831
STOCKHOLDERS' EQUITY
Common stock, par value $.0001-Authorized,
10,000,000 shares; Issued, 8,548,400 and
4,675,900 shares 855 468
Additional paid-in capital 7,185,945 7,686,150
Retained earnings (deficit) (6,987,742) (6,017,464)
Treasury stock, at cost, 522,500 shares -- (925,027)
---------- ----------
199,058 744,127
Less: Subscriptions receivable (200,000) -
---------- ----------
Total stockholders' equity (942) 744,127
---------- ----------
$ 2,276,689 $ 2,514,718
========== ==========
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ROCKY MOUNT UNDERGARMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
---------------- ------------------
July July July July
2, 1995 3, 1994 2, 1995 3, 1994
-------- -------- -------- --------
REVENUES:
Net sales $4,018,799 $4,611,636 $2,246,359 $2,651,229
Other income, net 46,615 26,207 1,173 10,877
--------- --------- --------- ---------
4,065,414 4,637,843 2,247,532 2,662,106
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of sales 3,757,846 3,802,556 1,993,824 2,208,675
Selling, general and
administrative expenses 1,077,096 1,081,978 598,055 560,050
Financing costs 200,750 169,100 102,508 86,018
--------- --------- --------- ---------
5,035,692 5,053,634 2,694,387 2,854,743
--------- --------- --------- ---------
LOSS BEFORE EXTRAORDINARY ITEMS AND
PROVISION FOR INCOME TAXES (970,278) (415,791) (446,855) (192,637)
Provision for income taxes --- --- --- ---
--------- --------- --------- ---------
LOSS BEFORE EXTRAORDINARY
ITEMS (970,278) (415,791) (446,855) (192,637)
--------- --------- --------- ---------
REORGANIZATION ITEMS -
Professional fees (67,435)
Gain on extinguish-
ment of debt --- 1,695,093 --- 363,093
--------- --------- --------- ---------
NET INCOME (LOSS) $(970,278) $1,211,867 $(446,855) $ 170,456
========= ========= ========= =========
INCOME (LOSS) PER SHARE:
Loss before
extraordinary items (0.13) (0.10) (0.05) (0.05)
Extraordinary items 0.00 0.39 0.00 0.09
--------- --------- --------- ---------
$ (0.13) $ 0.29 $ (0.05) $ 0.04
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING 7,531,908 4,153,400 8,441,697 4,001,622
========= ========= ========= =========
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ROCKY MOUNT UNDERGARMENT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
---------------------
July July
2, 1995 3, 1994
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (970,278) $ 1,211,867
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in)
operating activities:
Depreciation 69,600 30,558
Stock issued as finder's fee - 30,300
Stock issued for services 11,574 -
Allowance for doubtful accounts 12,000 -
Gain on extinguishment of debt - (1,695,093)
Gain on sale/abandon of PP&E (38,806) -
Changes in assets and liabilities:
Accounts receivable (13,245) (14,198)
Inventories 354,213 22,861
Prepaid expenses 54,609 12,692
Other assets (5,810) 3,500
Accounts payable (327,437) 281,638
Accrued liabilities (55,966) (263,526)
Liabilities subject to compromise - (492,426)
Income taxes payable 9,510 -
---------- ----------
Net cash provided by (used in)
operating activities (900,036) (871,827)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of PP&E 46,550 -
Loans made (139,931) -
Capital expenditures (219,022) (1,357)
Proceeds from repayment of loans - (9,800)
Disposal of Assets - 528,709
---------- ----------
Net cash provided by (used in)
investing activities (312,403) 517,552
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in amount due to factor 728,499 410,323
Principal payments on long-term debt (28,491) (519,960)
Payments of liabilities subject to compromise - 156,227
Payments of notes receivable 1,079 -
Increase in long-term debt 180,925 25,000
Issuance of stock 213,635 350,000
---------- ----------
Net cash provided by (used in)
financing activities 1,095,647 421,590
---------- ----------
NET (DECREASE) INCREASE IN CASH (116,792) 67,315
CASH, BEGINNING OF PERIOD 142,391 48,138
---------- ----------
CASH, END OF PERIOD $ 25,599 $ 115,453
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes $ - $ -
Cash paid during the period for interest 61,991 136,137
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ROCKY MOUNT UNDERGARMENT CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED
July 2, 1995 AND July 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.
Note 2: On May 4, 1995, the Company issued 650,000 shares of Common
Stock in error. These shares are held in escrow at Blodnick, Abramowitz &
Blodnick, Attorney at Law.
<PAGE>
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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
output.
Net sales of the Company's women's and children's intimate apparel
business decreased in the second quarter of 1995 to $2,246,000 from
$2,651,000 in the second quarter of 1994.
Gross margins were 11.2% in the second three months of 1995 compared to
16.7% for the second quarter of 1994.
Selling, general and administrative expenses increased approximately
$38,000 during the second quarter of 1995 as compared to the second quarter
of 1994 resulting directly from higher legal expenses and commission fees.
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 mid July the Company ceased domestic sewing operations and laid
off over 100 employees to avoid incurring further losses in manufacturing
operations in North Carolina.
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LIQUIDITY AND CAPITAL RESOURCES
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 July 2, 1995,
the Company does not have any money available 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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