SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2001

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-20743

OPEN PLAN SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)

Virginia 54-1515256
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)

4299 Carolina Avenue, Building C
Richmond, Virginia 23222
(Address of Principal Executive Offices) (Zip Code)

(804) 228-5600
(Registrant's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Act: None.

Securities registered under Section 12(g) of the Act:

Common Stock, no par value

Indicate by check mark whether the registrant: (1) has 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 such filing requirements for the past
90 days. Yes X No____
---

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Based on the average of the bid and asked prices of $0.10 per share for the
Common Stock as quoted on the OTC Bulletin Board on March 28, 2002, the
aggregate market value of the Common Stock held by non-affiliates of the
registrant was $280,453.

The number of shares of Common Stock outstanding as of March 28, 2002 was
4,337,391 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the 2002 Annual Meeting of
Shareholders (to be filed) may be incorporated by reference into Part III
hereof. In the alternative, the Part III information will be provided by an
amendment to this Form 10-K.

TABLE OF CONTENTS

PART I

Page
----
Item 1. Business....................................................... 1

Item 2. Properties..................................................... 8

Item 3. Legal Proceedings.............................................. 9

Item 4. Submission of Matters to a Vote of Security Holders............ 10

Executive Officers of the Registrant........................... 11

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters....................................................... 12

Item 6. Selected Financial Data........................................ 14

Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 15

Item 7A. Quantitative and Qualitative Disclosures About Market Risk..... 31

Item 8. Financial Statements and Supplementary Data.................... 32

Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........................ 54

PART III

Item 10. Directors and Executive Officers of the Registrant............. 55

Item 11. Executive Compensation......................................... 55

Item 12. Security Ownership of Certain Beneficial Owners and Management. 55

Item 13. Certain Relationships and Related Transactions................. 55

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 56

PART I

ITEM 1. BUSINESS

Open Plan Systems, Inc. (the "Company") was incorporated under the laws of
the Commonwealth of Virginia on September 11, 1989. The Company remanufactures
and markets modular office Work Stations. The Company operates a
remanufacturing facility in Richmond, Virginia. The Company also markets new
office chairs, desks and other office furniture products.

RESTRUCTURING OF OPERATIONS

During the years ended December 31, 2001 and 2000, the Company experienced
significant losses from operations, declining margins, loan covenant defaults,
management turnover and significant expenses to correct accounting deficiencies
from fiscal year 2000. In an effort to address these issues, the Company took
significant steps during 2001 to restructure its operations. On June 20, 2001,
the Company began the implementation of a restructuring plan that closed its
remanufacturing facility in Lansing, Michigan and consolidated remanufacturing
operations in Richmond, Virginia, closed five under-performing sales offices
located in Cincinnati, Indianapolis, Nashville, Lansing and Boston, reduced the
size of sales offices in Philadelphia, Atlanta and Washington, D.C., and
restructured back office operations at the Company's headquarters in Richmond,
Virginia. This restructuring plan also shifted the Company's focus to the
remanufacturing of Herman Miller, Inc. ("Herman Miller") products, and
discontinued the Haworth, Inc. ("Haworth") and Steelcase, Inc. ("Steelcase")
remanufactured product lines. In connection with its restructuring plan, the
Company terminated the employment of approximately 65 employees, primarily sales
personnel in offices being closed or production personnel associated with the
remanufacturing facility in Michigan. The goal of the restructuring plan was to
enhance profitability by downsizing the Company to a smaller business platform
and improving gross margins.

As part of the restructuring plan, the Company sought to dispose of its
remanufacturing facilities in Michigan. Pursuant to this initiative, the
Company disposed of its existing leased Michigan remanufacturing facility and
related assets, sold the new 70,000 square foot remanufacturing facility that
was under construction in Michigan and retired the $2,500,000 Variable Rate
Limited Obligation Revenue Bonds (Open Plan Systems, Inc. Project), Series 2000
of the Michigan Strategic Fund, issued to finance the construction of the new
facility (the "Industrial Revenue Bonds").

On November 26, 2001, the Company implemented additional restructuring
initiatives consisting of the elimination of approximately 25 sales, production
and administrative positions. The purpose of the restructuring was to further
reduce costs in recognition of the Company's decreased sales following the
September 11th terrorist attacks and related economic downturn and the uncertain
future impact on the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Restructuring" as to the impact
of the restructuring plans on the Company's results of operations.

MEXICAN JOINT VENTURE

In January 2000, the Company entered into a joint venture agreement with
Servicios de Instalacion de Mobiliario y Alfombra, S.A. de C.V., a Mexican
entity, to open a new sales office in Mexico City, Mexico, as part of the
Company's plan to capitalize on expected opportunities in the Mexican market.
The joint venture agreement created two new companies, Open Plan Systems, S. de
R.L. de C.V. and Open Plan Servicios, S. de R.L. de C.V. Both Mexican
subsidiaries are jointly owned by the

Company and its Mexican partner. The Company holds an 80% ownership interest
and its Mexican partner holds a 20% ownership interest in each Mexican
subsidiary.

During the third quarter of 2001, the Company determined that it would be
in its best interests to discontinue the Mexico operations due primarily to
issues relating to the profitability of the Mexican subsidiaries and its lack of
control over the subsidiaries' operations. The Company recorded a restructuring
expense of $733,000 in the third quarter of 2001 related to the Mexican
operations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidation of Mexican Subsidiaries" as to further
details regarding the restructuring expense. Upon the completion of
negotiations on February 18, 2002, the Company entered into an agreement with
its Mexican joint venture partner to liquidate the Company's two Mexican
subsidiaries pursuant to Mexican law. The liquidation agreement names an
independent Mexican accountant who will liquidate the Mexican subsidiaries and,
upon the completion of the liquidation, distribute to the Company and its
Mexican partner any residual assets or funds of the Mexican subsidiaries.
Residual assets, if any, will be distributed to the Company and the joint
venture partner in accordance with their respective ownership interests in the
Mexican subsidiaries.

The Company has been advised by its Mexican legal counsel that, should the
subsidiaries' liabilities exceed their assets, the Company would be liable to
the extent of its initial capital contribution of approximately $50,000. In
addition, the Company could be liable for Mexican taxes and any wages and
severance obligations owed by the subsidiaries which remain unpaid. The
liquidator is not aware of any unpaid wages or severance obligations and has
preliminarily determined that there could be $40,000 of unpaid taxes
attributable to the subsidiaries. Further, under the liquidation agreement, the
Company's joint venture partner assumed full responsibility for unpaid wages and
severance obligations owed by the Mexican subsidiaries, and is obligated to hold
the Company harmless against such liabilities.

The Company guaranteed obligations owed by the subsidiaries to certain
vendors. At the time the Company recorded its restructuring charge in the third
quarter of 2001 with respect to the Mexican operations, the Company included all
known payment guarantees to such vendors. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidation of
Mexican Subsidiaries" for a more detailed discussion of the third quarter 2001
restructuring charge. The Company is not aware of any other vendor obligations
arising before or since the third quarter restructuring charge that were
guaranteed by the Company.

As of April 12, 2002, the liquidation has not been completed and it is not
certain how long the liquidation process will continue. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidation of Mexican Subsidiaries" as to the impact of the liquidation on the
Company, and see "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Forward Looking Statements - Potential Expenses
Related to Liquidation of Mexican Subsidiaries" as to other potential expenses
the Company may incur in connection with the liquidation process.

THE OFFICE FURNITURE INDUSTRY

The Company competes in the office furniture industry with national and
regional manufacturers of new office furniture and with local and regional
remanufacturers of used office furniture. Steelcase, Herman Miller and Haworth
constitute the dominant manufacturers, collectively representing approximately
two-thirds of the installed base of Work Stations. With respect to independent
remanufacturers of used Work Stations, the Company believes that the vast
majority of such remanufacturers are local operations serving a single city or
metropolitan area from a single sales office.

The business of remanufacturing Work Stations grew steadily during the
1990's and is expected by the Company to continue to grow in the 2000's despite
the economic downturn experienced in 2001. The Company believes this growth is
principally due to the greater availability of high quality remanufactured Work
Stations at prices below manufacturers' retail list prices for new Work
Stations, thereby providing end-users with substantial value. The adoption of
recycling programs or policies by businesses has also been a major factor
leading to increased demand for remanufactured Work Stations.

OVERVIEW OF THE COMPANY'S OPERATIONS

The Company's primary business is the remanufacture of modular office Work
Stations. The Company purchases used Work Stations from end-users, brokers and
dealers, and accepts trade-ins for used Work Stations from customers (see "-
Sales and Marketing - Asset Banking"). The Work Stations are disassembled,
inventoried by usable component parts and stored. The used Work Stations are
restored through the remanufacturing process to meet specific customer needs.
Remanufacturing typically includes sanding, painting, laminating, reupholstering
and updating electrical components.

The Company's design staff works with customers to optimize the use of
available office space through customized space plans. Customers are able to
choose from among several colors of paint, over 300 unique laminates and over
1,000 different fabrics. The Company has the ability to generate proposals at
the customer's site using a personal computer or, in the case of complex
designs, proposals are developed by the Company with its group of in-house
designers.

The Work Stations are installed at the customer's offices by the Company's
employees or by approved outside installers providing the Company with control
over the entire production and installation process. The Company generally is
able to remanufacture and ship within two to four weeks of receiving a purchase
order, depending on the product and the selected fabrics. The Company's
Richmond, Virginia production facility includes all of the equipment required to
remanufacture Work Stations, including closed and open painting and drying
booths as well as sanding, woodworking and reupholstering equipment.

The Company sells Work Stations primarily through nine Company-owned direct
sales offices located in large east coast, southern and mid-western cities.
Additionally, the Company sells products through certain authorized dealers
throughout the country. In marketing its products, the Company utilizes several
innovative programs, including its Asset Banking program, which allows customers
to trade-in used Work Stations in exchange for a credit towards future
purchases.

The Company believes that its ability to provide high quality and
environmentally friendly Work Stations at competitive prices, coupled with its
emphasis on superior customer service through its sales and design staff and
Company trained or approved installers, provides it with a competitive advantage
over manufacturers and other remanufacturers of Work Stations.

The Company believes that short-term revenue growth can be obtained by
achieving a larger market share in the markets where the Company currently has
sales offices, more effective motivation and management of the sales
organization, improvement of sales personnel skills, improvement of the
Company's marketing programs and the addition of quality furniture systems
brokers in geographic locations other than where the Company currently has
direct sales offices. The Company also believes that long-term revenue growth
may be obtained through controlled geographic expansion of the Company's sales
offices, addition of profitable new product lines and judicious acquisitions of
remanufacturing competitors in appropriate geographical locations. The Company
believes that each of the 50 largest metropolitan areas of the United States
could support a sales office.

PRODUCTS

The Company's principal products during the first six months of 2001 were
remanufactured Herman Miller, Haworth and Steelcase Work Stations. However, as
part of the Company's restructuring plan implemented in June 2001, the Company
shifted its focus exclusively to the remanufacturing of Herman Miller products
and discontinued the Haworth and Steelcase product lines. The Haworth product
line was produced primarily in the Lansing facility prior to the closing of that
facility. Because of the small percentage of sales attributable to the Haworth
product line, the Company determined that it would not be profitable to move the
Haworth production line to the Richmond facility following the closing of the
Lansing facility. Steelcase products were also discontinued due to the costs of
carrying inventories and training production employees compared to the amount of
sales attributable to this product line. By focusing on the Herman Miller
product line, the Company expects to strengthen its sales efforts and reduce
production costs by decreasing the parts, equipment and inventory necessary to
support multiple product lines and eliminating production inefficiencies.

The Company believes that its Work Stations offer significant advantages
over the traditional desk, free-standing file and permanent drywall office
layout. Work Stations enable businesses to house more people in a given area,
while still providing adequate amounts of space per person. The end result is
less square feet of office space per worker and, therefore, lower facility costs
per employee.

The Company customizes its Work Stations to accommodate specific job
functions. The Company offers its Work Stations with or without power access in
a variety of panel heights, widths, paint colors and fabrics. Work surfaces,
drawer and file pedestals, storage components and accessories are offered with
various size and finish options.

In addition to Work Stations, the Company also sells new office chairs,
desks and other office furniture products purchased from pre-selected strategic
partners. These products typically are drop shipped directly from the vendor to
the Company's customer, with the Company rarely taking physical possession of
these products. The Company continues to develop relationships and partnerships
with its vendors to enhance the quality and cost-effectiveness of these
products.

The Company also provides value-added services, such as design and project
management, in addition to its other product offerings.

INVENTORY

The Company continuously seeks opportunities to purchase used Work Stations
throughout the United States through competitive bids or private negotiations
with end-users, brokers and dealers. At the time the Company purchases
inventory, it disassembles the Work Stations and ships the disassembled Work
Stations to its Richmond facility where the Company determines whether the
specific parts should be cleaned and sold as part of its "As Is" sales program
or stored as inventory and subsequently remanufactured and sold. The Company
also has the ability to purchase certain strategic new parts and accessories
which are in short supply in the used furniture market, thereby eliminating the
need to purchase additional Work Stations for these specific parts.

The Company maintains an inventory of disassembled Work Stations and
component parts at its remanufacturing facility in Richmond, Virginia so that it
can ship most customers' orders within four weeks or less. The Company
constantly monitors and adjusts its inventory to meet anticipated sales levels
and customer preferences or to take advantage of attractively priced used Work
Stations. The Company's decision to discontinue Haworth and Steelcase products
simplified inventory acquisition and permitted

the Company to reduce its inventory levels. Although the Company experienced
liquidity and cash flow difficulties during 2001, the Company continued to be
able to adequately fund sufficient levels of inventory to meet existing sales
requirements.

DISTRIBUTION

Sales Offices. The Company currently operates nine sales offices, located
in the metropolitan areas of Richmond, Washington D.C., Atlanta, Chicago, New
York, Philadelphia, Raleigh, Norfolk and Detroit. As part of its restructuring
efforts in 2001, the Company closed five under-performing sales offices located
in Cincinnati, Indianapolis, Nashville, Lansing and Boston. See "-
Restructuring of Operations." In addition, on February 18, 2002, the Company
entered into an agreement with its Mexican joint venture partner to liquidate
the Company's two Mexican subsidiaries pursuant to Mexican law. Pursuant to the
terms of the agreement, neither Mexican subsidiary will engage in any further
sales or operations activities. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidation of Mexican
Subsidiaries."

The Company believes that marketing and distributing its Work Stations
primarily through a direct sales force rather than through intermediaries is
advantageous because it eliminates the costs and additional price mark-up
associated with wholesale distribution, it enables the Company to retain direct
control and oversight of its products and the selling process, and it permits
the Company to control the delivery of quality design and installation services
to each customer.

Dealer Network. In addition to its own sales staff, the Company maintains
a dealer network in certain of those markets that are not sufficiently developed
to support a sales office or in larger markets to supplement the efforts of the
direct sales force.

"As Is" Sales. A small portion of the Company's sales is made to brokers,
end-users and others who buy used Work Stations from the Company on an "as is"
basis. The Company's "As Is" program involves the selective purchase of used
Work Stations in good condition that do not require substantial repair or other
alteration. The "As Is" program appeals to customers seeking sizable quantities
of quality Work Stations at "budget" prices.

SALES AND MARKETING

General. The Company's sales and marketing strategy relies primarily upon
offering quality products at competitive prices and providing superior customer
service. The Company's sales organization markets the Company's products and
services directly to various business and governmental customers. The Company's
sales offices advertise through a variety of print mediums, including direct
mail, newspapers, business magazines and journals. The Company also uses booth
displays at various trade shows for national organizations of commercial and
governmental purchasing managers, facility managers, interior designers,
architects and local business groups.

The Company's marketing also emphasizes its commitment to the environment.
Through its remanufacturing process, the Company reuses or recycles several
million pounds of office systems furniture each year that might otherwise be
discarded in landfills. Some companies and governmental entities have adopted
recycling policies or programs that require those organizations to purchase
recycled products in varying quantities. Because the Company's remanufactured
Work Stations are a recycled product, the Company may have a marketing advantage
over manufacturers of new Work Stations.

Asset Banking. The Company's Asset Banking program allows customers to
trade-in used Work Stations by "depositing" them with the Company in exchange
for a "credit" toward future purchases of

the Company's remanufactured Work Stations. Work Stations "deposited" by
customers become part of the Company's inventory of used Work Stations that can
be remanufactured. When a business with a "credit" chooses to purchase Work
Stations at then-prevailing prices, the customer can make a complete or partial
"withdrawal" from its account to pay for the Work Stations. The effect of the
program is to make a customer's used Work Stations renewable assets. The program
eliminates the customer's inventory, storage and maintenance costs for Work
Stations not in use, while at the same time positioning the Company for a future
sale and increasing the Company's inventory which can be immediately
remanufactured and sold. The liability related to asset banking "credits" was
not considered to be significant at December 31, 2001 or 2000.

Government Services Administration. The United States Government Services
Administration ("GSA") in 1996 approved the Company's inclusion on the New
Introductory Schedule as a distributor of Work Stations and other related
products and services to the federal government. This has enabled the Company
to sell its remanufactured Work Stations to the federal government as well as
develop a previously untapped source of supply through trade-ins and "asset
banking." The Company believes that it is the only remanufacturer with such
governmental approval and may have a marketing advantage over other
remanufacturers.

Rental Program. The Company's rental program, while not significant,
offers an alternative to ownership of Work Stations. Under the rental program,
the Company rents Work Stations for a minimum term of six months. Upon
expiration of the term of the rental, the Work Stations are returned to the
Company and can be rented again or remanufactured and sold. The rental program
is an attractive alternative for those customers with capital spending
constraints. In addition, customers who wish to evaluate long-term furniture
requirements are able to defer a commitment to purchase Work Stations while
meeting their short-term requirements for office furniture. The rental program
has not contributed significantly to the Company's past revenues due to the
limited number of rentals which have occurred to date under the program.

CUSTOMERS

The Company's commercial customers range from small businesses to Fortune
500 companies. Additionally, the Company's governmental customers include
various federal, state and local agencies and other governmental entities. The
Company is not dependent upon any single customer or any single group of
customers for a significant portion of its sales. In 2001, the largest customer
accounted for less than 5% of sales. The loss of any one customer would not
have a material adverse effect on the Company.

COMPETITION

The Company experiences intense competition in the sale of its
remanufactured and "As Is" Work Stations. The Company competes with
manufacturers, dealers, brokers and other remanufacturers in the geographic
markets where the Company's sales offices or dealers are located. Competition
is primarily based upon price, delivery time, design, quality and customer
service. Certain manufacturers are able to offer both new and remanufactured
Work Stations to customers. The Company believes it has a competitive advantage
over such manufacturers and other remanufacturers due to its direct sales force,
pricing, customer service and commitment to reusing product. However,
manufacturers and dealers of new Work Stations have certain competitive
advantages including established distribution channels and marketing programs,
substantial financial strength, long-term customers and ready access to
component parts. Manufacturers also can sell new Work Stations at very
substantial discounts which reduces the Company's pricing advantage. The
Company's products, although typically less expensive than new products, may not
be competitive with the products of local remanufacturers in certain markets due
to the

costs of shipping the Company's products from Richmond, Virginia to the
customer's offices. This may be particularly so relative to markets previously
serviced by the Company's former Lansing facility that now are serviced by the
Richmond facility.

In addition, the Company competes with dealers, brokers and other
remanufacturers in purchasing used Work Stations. See "- Inventory."

The Company believes it is one of the largest independent remanufacturers
of Work Stations in the United States based on gross revenues. Unlike most
independent remanufacturers, which are typically local operations serving a
single city or metropolitan area from a single sales office, the Company is able
to compete effectively in many markets through its distribution channels. The
Company also believes that its remanufacturing services are significantly more
comprehensive than the services provided by most other remanufacturers, who may
lack the personnel, equipment and facilities necessary to remanufacture Work
Stations completely.

INTELLECTUAL PROPERTY

The Company is the owner of a service mark for "Open Plan Systems"
registered with the United States Patent and Trademark Office. The Company has
applied for trademarks on "Sustainable Office Systems," "Sustainable Office
Services" and "Common Sense at Work."

Original equipment manufacturers have obtained United States' patents on
certain component parts and design and manufacturing processes associated with
their own Work Stations. Management of the Company believes its remanufacturing
of Work Stations does not infringe any patents held by these manufacturers.
However, there can be no assurance that infringement claims will not be asserted
against the Company. If such claims were asserted, the Company could incur
significant costs and diversion of resources defending such claims and, in the
event the Company did not prevail in its defense, the Company could incur
substantial damages that could have a material adverse effect on the Company's
financial condition and results of operations.

SEASONALITY AND BACKLOG

The Company has no discernable pattern of seasonality. Because the Company
typically ships Work Stations within four weeks of an order, a substantial
portion of the Company's revenue in each quarter results from orders placed by
customers during that quarter. As a result, the Company's revenues and profits
are difficult to predict and may fluctuate from quarter to quarter. The Company
typically does not have any significant backlog of customer orders because it
generally ships products within four weeks of receipt of an order.

EMPLOYEES

As of December 31, 2001, the Company had 114 full time employees and two
part-time employees. As part of its restructuring efforts in 2001, the Company
eliminated approximately 90 sales, production and administrative positions in
connection with the closing of certain under-performing sales offices, the
closing of its Lansing, Michigan manufacturing facility and the consolidation
and restructuring of the Company's operations in Richmond, Virginia. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Restructuring." In addition, the Company experienced extensive
management turnover during the first half of 2001. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Changes in
Senior Management."

The Company believes that its continued success depends on its ability to
attract and retain highly qualified personnel. None of the Company's employees
are covered by a collective bargaining agreement. Despite the elimination of
positions in 2001 pursuant to the Company's restructuring efforts, the Company
considers its relations with employees to be good.

GOVERNMENT REGULATION

The Company's operations are subject to a variety of federal, state and
local environmental laws and regulations including those which limit the
discharge, storage, handling and disposal of hazardous materials. The Company's
principal environmental concerns relate to the handling and disposal of paints
and solvents. Management believes that the Company is in material compliance
with applicable federal, state and local environmental regulations. Compliance
with these regulations has not in the past had any material effect on the
Company's earnings, capital expenditures or competitive position; however, the
effect of such compliance in the future cannot be determined. Regulations
recently proposed by the Environmental Protection Agency ("EPA") implementing
the federal Clean Air Act, as amended in 1990, may require reduced emissions of
volatile organic compounds and hazardous air pollutants, including certain
emissions resulting from the Company's use of paints and solvents in the
remanufacturing process. As a result, the Company may be required to install
emission controls or to institute changes in its remanufacturing processes in
order to comply with these reduced emission standards. The Company is evaluating
the applicability and impact such proposed regulations would have if promulgated
by the EPA as proposed. The furniture industry and its suppliers are attempting
to develop water-based paint and finishing materials to replace commonly-used
organic-based paints and finishes which are a major source of regulated
emissions. The Company cannot at this time estimate the impact of these new
standards on the Company's operations and future capital expenditure
requirements or estimate the cost of compliance.

The Company's operations are also governed by laws and regulations relating
to work-place safety and worker health, principally the Occupational Safety and
Health Act and accompanying regulations and various state laws and regulations.
The Company does not believe that future compliance with current laws and
regulations will have a material adverse effect on its financial condition or
results of operations.

INSURANCE

The Company maintains liability insurance policies covering a number of
risks, including business interruption, property, commercial crime,
comprehensive general liability and workers compensation and employer's
liability insurance. The Company believes that its insurance coverage is
adequate.

ITEM 2. PROPERTIES

The Company leases 180,000 square feet of space at its facility in
Richmond, Virginia. The Richmond lease expires in July 2002. The Company
subleases approximately 36,000 square feet at its Richmond facility. Management
is currently evaluating the extension of the Company's lease and available
alternatives. Management believes that alternative space suitable to its
production and office needs is available in the Richmond, Virginia area.

In 2001, the Company implemented a restructuring plan that, among other
things, closed the Company's leased remanufacturing facility in Lansing,
Michigan, consolidated remanufacturing operations in Richmond, Virginia and
closed five under-performing sales offices located in Cincinnati, Indianapolis,
Nashville, Lansing and Boston. In connection with the closing of its
remanufacturing

operations in Lansing, Michigan, the restructuring plan included (i) the
disposal of the leased Michigan remanufacturing facility and related assets,
(ii) the sale of the new 70,000 square foot remanufacturing facility that was
under construction in Michigan and (iii) the retirement of the $2,500,000
Industrial Revenue Bonds.

The Company leases its sales offices throughout the geographic areas in
which it operates. The Company owns substantially all of its equipment,
including office and manufacturing equipment. The Company believes that its
properties are maintained in good operating condition and are suitable for their
purposes.

ITEM 3. LEGAL PROCEEDINGS

Servicios de Instalacion de Mobiliario y Alfombra, S.A. de C.V. v. Open
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Plan Systems Inc. et al. In January 2000, the Company entered into a joint
- -----------------------
venture agreement with Servicios de Instalacion de Mobiliario y Alfombra, S.A.
de C.V., a Mexican entity, to open a new sales office in Mexico City, Mexico.
The joint venture agreement created two new companies, Open Plan Systems, S. de
R.L. de C.V. and Open Plan Servicios, S. de R.L. de C.V. Both Mexican
subsidiaries are jointly owned by the Company and its Mexican partner. The
Company holds an 80% ownership interest and its Mexican partner holds a 20%
ownership interest in each Mexican subsidiary.

In 2001, the Company requested that its Mexican partner produce financial
information on the operations of the Mexican subsidiaries for the third and
fourth quarters of 2001. The Mexican partner refused, and the Company was
unable to obtain such financial information on its own. Certain actions taken
by the Mexican partner blocked the Company's access to the Mexican subsidiaries'
books and records. In response, the Company initiated certain legal proceedings
in Mexico seeking to obtain the requested information from the Mexican partner.
On November 27, 2001, the Mexican partner filed its own judicial proceeding in
Mexico before the 47th Judge in the Civil Court of Mexico City in a matter
styled Servicios de Instalacion de Mobiliario y Alfombra, S.A. de C.V. v. Open
-----------------------------------------------------------------------
Plan Systems Inc. et al. In that proceeding, the Mexican partner alleged that
- -----------------------
the Company, certain of its officers and other agents of the Company in Mexico,
breached the joint venture agreement and violated Mexican corporate law in
connection with the Company's legal proceedings initiated in Mexico. The
Mexican partner specifically alleged, in part, that the Company improperly
served notice on the Mexican partner and failed to provide information required
under the joint venture agreement. The Mexican partner sought unspecified
amounts for damages and an order from the Mexican judge vacating actions
previously taken by the Company in 2001 with respect to appointing new members
to the Board of Managers for the Mexican subsidiaries, obtaining financial
information regarding the Mexican subsidiaries from the Mexican partner and
gaining access to the Mexican subsidiaries' books and records. As of April 12,
2002, the Company has not been formally served in the proceeding.

On February 18, 2002, the Company entered into an agreement with its
Mexican partner to liquidate the two Mexican subsidiaries pursuant to Mexican
law. The liquidation agreement names an independent Mexican accountant who will
liquidate the Mexican subsidiaries and, upon the completion of the liquidation,
distribute to the Company and its Mexican partner any residual assets or funds
of the Mexican subsidiaries. Residual assets, if any, will be distributed to
the Company and the joint venture partner in accordance with their ownership
interests in the Mexican subsidiaries. The liquidator will have full access to,
and will maintain control over, the books, records and checking accounts of the
Mexican subsidiaries during the liquidation process. As part of the liquidation
agreement, the parties agreed to stay all existing judicial proceedings between
them, including the proceedings described above, and to refrain from filing any
further actions or proceedings during the liquidation process except as provided
in the liquidation agreement. The liquidation agreement further provides that
the Company's joint venture

partner assume full responsibility for, and hold the Company harmless against,
any unpaid wages or severance obligations owed by the Mexican subsidiaries to
its employees. As of April 12, 2002, the liquidation has not been completed and
it is not certain how long the liquidation process will continue.

Alethea D. Clark v. Open Plan Systems. Inc., et al. Alethea D. Clark, a
--------------------------------------------------
citizen of the state of New Jersey, filed a suit against the Company, Furniture
Solutions, Inc. and certain unnamed "John Doe" defendants on November 16, 2001,
in the Superior Court of New Jersey, Burlington County, styled Alethea D. Clark
----------------
v. Open Plan Systems, Inc., et al. Ms. Clark alleges that on December 6, 1999,
- ---------------------------------
a Work Station supplied and serviced by the Company collapsed and caused her to
suffer personal injury. Ms. Clark seeks an unspecified amount in damages. The
Company believes that the Work Station in question was sold to and installed by
an independant installation contractor. The Company intends to vigorously defend
Ms. Clark's suit. The suit is still in its initial stages, and at this time no
estimate of the amount or range of loss that could result from an unfavorable
outcome can be made.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.

EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below are the persons who serve as executive officers of the
Company, their ages and positions as of March 31, 2002, and their business
experience during the prior five years. There are no family relationships
between any such persons and any director, executive officer or person nominated
to become a director or executive officer.

Anthony F. Markel, age 60, has been a director of the Company since 1989
and Chairman of the Board of the Company since 1998. Mr. Markel has been
President of Markel Corporation, an insurance brokerage company, since 1992.
Mr. Markel is a director of Markel Corporation and Hilb, Rogal & Hamilton
Company. He is Chairman of the Executive Committee and a member of the
Compensation Committee.

Thomas M. Mishoe, Jr., age 49, has served as President and Chief Executive
Officer of the Company since October 1, 2001. Prior to that time, he had served
since May 25, 2001 as a member of the Company's interim Operating Committee.
From March 19, 2001 to September 30, 2001, Mr. Mishoe's firm, FinOpStrat
Consulting, Inc., was engaged by the Company as a financial, operational and
strategic consultant. From March 1996 until October 2000, Mr. Mishoe served as
chief financial officer of Eskimo Pie Corporation, a marketer and manufacturer
of ice cream and related products. Mr. Mishoe has been a director of the Company
since October 15, 2001, at which time he was appointed by the Board of Directors
to fill a Board vacancy.

Kathryn L. Tyler, age 31, has been Chief Financial Officer, Treasurer and
Secretary of the Company since October 1, 2001. From March 2001 until the time
she was appointed Chief Financial Officer of the Company, Ms. Tyler assisted the
Company as an independent consultant with Mr. Mishoe, providing financial,
operating and strategic advice. Prior to March 2001, Ms. Tyler was employed
with Eskimo Pie Corporation in various capacities over a five year period
including Senior Accountant, Manager of Financial Analysis and Reporting and
Controller.

David E. Green, age 42, has been Senior Vice President of Sales and
Marketing of the Company since December 1, 2001. Mr. Green had served previously
as Senior Vice President of Operations from October 1, 2001 until his current
appointment, and as a member of the Company's Operating Committee from May 25,
2001 to October 1, 2001. From August 1994 until he began serving on the
Operating Committee, Mr. Green was employed by the Company in a variety of
operational and sales management roles.

John H. Bryson III, age 37, has been Vice President of Plant Operations
since October 1, 2001. From 1997 until the time he was appointed Vice President
of Plant Operations, Mr. Bryson served as the Company's Director of Operations.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market for Common Stock. The Company's Common Stock has been quoted on
the OTC Bulletin Board with the symbol "PLAN" since July 16, 2001. Prior to
that time, the Common Stock was listed on the Nasdaq National Market under the
symbol "PLANE" from April 26, 2001 to June 8, 2001, and under the symbol "PLAN"
prior to April 26, 2001.

On April 24, 2001, the Company received a Nasdaq Staff Determination
notifying the Company that the Common Stock would be delisted from The Nasdaq
Stock Market. The Nasdaq Staff Determination was based on the Company's
failure to file its Annual Report on Form 10-K for the year ended December 31,
2000 in a timely manner, as required by Nasdaq's continued listing
requirements. As a result, Nasdaq appended an "E" to the Company's trading
symbol, indicating a lack of compliance with Securities and Exchange Commission
requirements. The Company was subsequently notified by the Nasdaq Staff that
its Common Stock had failed to maintain a minimum market value of public float
of $5,000,000 over the previous 30 consecutive trading days, and that its
Common Stock had failed to maintain a minimum bid price of $1.00 per share over
the previous 30 consecutive trading days, both of which are required by
Nasdaq's continued listing requirements. While the Company subsequently filed
its Annual Report on Form 10-K as required by the Nasdaq Staff, the Company was
unable to rectify the remaining public float and share price deficiencies noted
by the Nasdaq Staff within the time required. Consequently, on June 8, 2001,
the Company's Common Stock was delisted from The Nasdaq Stock Market. The OTC
Bulletin Board began quoting the Company's Common Stock on July 16, 2001.

The Company's Common Stock is eligible for quotation on the OTC Bulletin
Board for as long as the Company is current with respect to its filings with
the Securities and Exchange Commission. In the event the Company and the
Company's Common Stock meet the listing requirements of The Nasdaq Stock
Market, the Company can apply with The Nasdaq Stock Market to have its Common
Stock relisted.

The following table shows, for the periods indicated, the high and low
closing sales prices per share for the Common Stock as reported by the Nasdaq
National Market. The table ends with June 7, 2001, which was the last day the
Common Stock was traded on the Nasdaq National Market.

Closing Sales Prices
--------------------
Calendar Year High Low
- ------------- ---- ---

2000
First Quarter............................................$ 2.88 $ 1.28
Second Quarter...........................................$ 2.19 $ 1.63
Third Quarter............................................$ 2.13 $ 1.50
Fourth Quarter...........................................$ 2.00 $ 1.50

2001
First Quarter............................................$ 1.88 $ 0.75
Second Quarter (April 1 through June 7)..................$ 0.88 $ 0.09

The following table shows, for the periods indicated, the high and low bid
information per share for the Common Stock as reported on the OTC Bulletin
Board. The table begins with July 16, 2001, which was the first day the Common
Stock was quoted on the OTC Bulletin Board. The over-the-counter

market quotations set forth below reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.

Bid Information
---------------
Calendar Year High Low
- ------------- ---- ---

2001
Third Quarter (July 16 through September 30).............$ 0.34 $ 0.02
Fourth Quarter...........................................$ 0.55 $ 0.16

There was no public market for the Common Stock between June 8, 2001 and
July 15, 2001. As of March 28, 2002, there were approximately 78 holders of
record of the Company's Common Stock.

Dividend Policy. Since the Company's initial public offering in 1996, the
Company has not declared or paid any cash dividends or distributions on its
Common Stock. The Company currently intends to retain earnings of the Company
to support operations and therefore does not anticipate paying cash dividends
on the Common Stock in the foreseeable future. In addition, terms and
conditions of the Company's bank line of credit prohibit the payment of
dividends without the consent of the bank. The payment of cash dividends in
the future will depend upon such factors as earnings levels, capital
requirements, the Company's financial condition and other factors deemed
relevant by the Board of Directors. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources."

Recent Sales of Unregistered Securities. On November 5, 2001, the Company
granted options to its then-current directors to purchase Common Stock in lieu
of receiving cash payments for their service as directors during 2001. The
directors who received grants of options were Theodore L. Chandler, Jr., J.
Wesley Hall, Anthony F. Markel, Robert F. Mizell, Edwin W. Mugford, Troy A.
Peery, Jr. and William Sydnor Settle. The options granted to the directors
entitled them to an aggregate of 155,081 shares of Common Stock. The options
became immediately exercisable upon the date of grant at an exercise price of
$0.60 per share, which price reflected a premium of $0.40 per share to the then
prevailing bid price of $0.20 per share on the OTC Bulletin Board. The options
granted on November 5, 2001 will expire if not exercised prior to November 5,
2011. Other than the acceptance of the stock options in lieu of cash payments,
there was no consideration provided by the directors to the Company for the
stock options. The stock option grants were not registered based on the
exemption available under Section 4(2) of the Securities Act of 1933, as
amended.

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected financial data for the Company for
each of the five years in the period ended December 31, 2001. All of the
selected financial data are extracted from the Company's audited financial
statements and should be read in conjunction with the financial statements and
the notes thereto included under "Item 8. Financial Statements and Supplementary
Data" of this Form 10-K.

Year Ended December 31 2001 2000 1999 1998 1997
- ---------------------- ---- ---- ---- ---- ----
(in thousands, except per share amounts)

Statement of Operations Data
Net sales ...................................... $31,057 $42,675 $35,058 $33,676 $31,968
Cost of sales................................... 24,807 33,158 24,332 25,765 23,593
-------------------------------------------------------------
Gross profit ................................... 6,250 9,517 10,726 7,911 8,375
Operating expenses:.............................
Amortization of intangibles .................... 114 274 213 275 275
Selling and marketing........................... 6,906 8,144 7,336 7,220 6,524
General and administrative...................... 3,245 3,395 2,529 2,811 2,607
Arbitration costs .............................. - 142 1,067 - -
Operational restructuring....................... 5,651 - - 1,290 -
-------------------------------------------------------------
Total operating expenses ....................... 15,916 11,955 11,145 11,596 9,406
-------------------------------------------------------------
Operating loss.................................. (9,666) (2,438) (419) (3,685) (1,031)
Interest expense................................ 481 446 201 236 70
Gain on disposal of fixed assets ............... (260) - - - -
Other (income) expense, net .................... (10) 52 (24) 12 (84)
-------------------------------------------------------------
Loss before income taxes ....................... (9,877) (2,936) (596) (3,933) (1,017)
(Benefit) expense for income taxes /(1)/........ 45 1,571 (1,378) - (269)
-------------------------------------------------------------
Net (loss) income /(2)(3)(4)/................... (9,922) $(4,507) $ 782 $(3,933) $ (748)
=============================================================

Income (loss) per share......................... $ (2.29) $ (1.03) $ .17 $ (.86) $ (.17)
=============================================================
Diluted weighted average shares outstanding..... 4,338 4,395 4,594 4,582 4,472
=============================================================

Balance Sheet Data
Working capital (deficit)....................... (146) 4,722 8,229 9,517 11,765
Total assets ................................... 7,985 23,332 23,619 20,005 26,314
Long-term debt ................................. 138 227 163 - -
Shareholders' equity............................ 872 10,803 15,455 15,346 20,043

_______________

/(1)/ The effect of establishing a valuation allowance against net deferred tax
assets in the fourth quarter of 2000 resulted in a net expense for income
taxes of approximately $1.6 million. See Note 8 of the Notes to
Consolidated Financial Statements. For information on fourth quarter 2000
adjustments relating to inventory and other items, see Note 14 of the
Notes to Consolidated Financial Statements.

/(2)/ Net income for 1999 includes the impact of arbitration costs of $1.1
million in connection with a dispute with former officers of the Company.

/(3)/ Net income for 1999 includes the effect of the reversal of the valuation
allowance against net deferred tax assets of $1.3 million.

/(4)/ Net loss for 2001 includes the impact of restructuring charges of
approximately $5.7 million. In addition, it includes a write-down of
inventories of approximately $1.7 million related to the

Company's restructuring plan, charged to cost of goods sold. See Note 13
of the Notes to Consolidated Financial Statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The Company weathered a difficult year in 2001, experiencing significant
financial losses, loan defaults, accounting deficiencies, the delisting of the
Company's Common Stock from the Nasdaq National Market, two significant
corporate restructurings, significant personnel reductions, a dispute with its
Mexican joint venture partner with respect to access to the books and records
of the Mexican subsidiaries and the liquidation of the Mexican subsidiaries and
significant changes in the Company's senior management team. In response, the
Company initiated a turn-around process with the goal of positioning the
Company to achieve profitable operations and to create future shareholder
value. The following discussion describes the most critical issues that faced
the Company in 2001, their impact on the Company and its financial results and
their current status, as applicable.

VIOLATIONS OF LOAN COVENANTS

As of December 31, 2000, the Company maintained two bank credit facilities
consisting of a letter of credit facility associated with the issuance of
Industrial Revenue Bonds in the amount of $2.5 million to finance the
construction of a new remanufacturing facility in Lansing, Michigan and a
revolving line of credit. At December 31, 2000, the revolving line of credit
provided for a maximum borrowing amount of $5.25 million at a floating interest
rate based on LIBOR. The letter of credit facility and revolving line of credit
agreements required the Company to meet various restrictive covenants,
including a defined tangible net worth and an interest coverage ratio. At
December 31, 2000 and thereafter, the Company was not in compliance with
certain of the loan covenants. As a result of the covenant violations as well
as the significant net losses in fiscal years 2001 and 2000, the Company's
auditors, in its reports filed as part of the Annual Reports on Form 10-K for
2001 and 2000, expressed substantial doubt as to the Company's ability to
continue as a going concern. See "- Forward Looking Statements - Accounting
Deficiencies and Remedial Action."

In May 2001, the Company entered into a temporary forbearance agreement
with the bank in which the bank agreed to waive, through June 30, 2001, its
existing right to declare defaults relating to the Company's failure to comply
with certain loan covenants. Under the forbearance agreement, the line of
credit was reduced from $5.25 million to $4.65 million. Thereafter, on August
10, 2001, the Company and the bank entered into a new short-term forbearance
agreement that extended until October 30, 2001. This latter forbearance
agreement provided that the bank would refrain from exercising any rights or
remedies based on existing or continuing defaults, including accelerating the
maturity of the loans under the two credit facilities, until after October 30,
2001. Under the forbearance agreement, the line of credit was reduced from
$4.65 million to $4.25 million. In addition, the interest rate on the line of
credit was increased to LIBOR plus 6.0%. Finally, the Company paid the bank a
forbearance fee of $50,000. Pursuant to the forbearance agreement, the bank
reserved the right to declare a default and accelerate the loans under the two
facilities after October 30, 2001 if the parties had not entered into
amendments to the existing loan arrangements or a subsequent forbearance
agreement.

The forbearance agreement also prohibited the Company from utilizing the
approximately $2.1 million of remaining cash proceeds from the Company's
Industrial Revenue Bonds to complete the new Lansing remanufacturing facility
without the prior approval of the bank. Under the prior May 2001 forbearance
agreement, the Company was unable to make two progress payments totaling
approximately $940,000 due on the project in May and June 2001. Subsequently,
the contractor ceased construction on

the project and filed a construction lien suit against the Company alleging,
among other things, a breach of the construction agreement. With the consent
of the bank, on September 20, 2001 the Company redeemed the Industrial Revenue
Bonds and paid off the outstanding debt of $2.4 million using in part the
remaining cash bond proceeds that were held in escrow and additional cash of
the Company approximating $286,000. As a result, the letter of credit facility
with the bank was terminated. On October 4, 2001, the Company completed the
sale of its remanufacturing facility under construction in Lansing, Michigan.
The sale resulted in cash proceeds to the Company of approximately $395,000
after payment of amounts due to the contractor engaged to construct the
facility and certain expenses related to the sale. In connection with the sale
closing, the contractor's suit against the Company for amounts owed under the
construction contract was dismissed.

On November 2, 2001, the Company entered into an agreement, effective
October 30, 2001, with the bank to extend the August 10, 2001 short term
forbearance agreement. Under the terms of the agreement, the bank agreed to
refrain from exercising any rights or remedies with respect to existing defaults
under the Company's loan documents until after January 31, 2002. The November 2,
2001 extension of the forbearance agreement did not differ materially from the
terms of the August 10, 2001 forbearance agreement.

Although the forbearance agreement expired on January 31, 2002, the Company
and the bank continued to engage in discussions regarding a further extension of
the forbearance agreement with revised terms. However, on March 5, 2002, the
bank gave the Company written demand for the immediate payment of all amounts
outstanding under the line of credit. The Company responded to the demand for
payment by continuing discussions with the bank regarding the terms of a new
forbearance agreement. Since March 5, 2002, the bank has not sought to exercise
any of its rights or remedies under the line of credit arrangements and the
parties continue to negotiate the terms of the forbearance agreement. As of
April 12, 2002, the amount due and owing under the line of credit was $3.2
million. Although the Company and the bank continue to negotiate, there can be
no assurances that the bank will refrain from exercising any rights or remedies
it may have under the line of credit arrangements or that the bank will agree to
further extend the forbearance agreement or that the terms (including borrowing
limitations, term of the agreement or other restrictions on the Company and its
use of cash collateral) of any such forbearance will be acceptable to the
Company.

RESTRUCTURING

During the years ended December 31, 2001 and 2000, the Company experienced
significant losses from operations, declining margins, loan covenant defaults,
management turnover and significant expenses to correct accounting deficiencies
from fiscal year 2000. In an effort to address these issues, the Company took
steps during 2001 to restructure its operations. On June 20, 2001, the Company
began the implementation of a restructuring plan that closed its
remanufacturing facility in Lansing, Michigan and consolidated remanufacturing
operations in Richmond, Virginia, closed five under-performing sales offices
located in Cincinnati, Indianapolis, Nashville, Lansing and Boston, reduced the
size of sales offices in Philadelphia, Atlanta and Washington, D.C., and
restructured back office operations at the Company's headquarters in Richmond,
Virginia. This plan also shifted the Company's focus to the remanufacturing of
Herman Miller products, and discontinued the Haworth and Steelcase product
lines. The goal of the restructuring plan was to enhance profitability by
downsizing the Company to a smaller business platform and restoring gross
margins.

In the second quarter of 2001, the Company recorded a restructuring charge
of approximately $4.7 million which included an estimate for the disposal of
the existing leased remanufacturing facility in Michigan and related assets, as
well as the new remanufacturing facility that was under construction. The
largest component of the charge was approximately $3.6 million related to the
write-off of remaining goodwill associated with the purchase of the Michigan
operations in 1996. Other significant components

of the operational restructuring were estimated losses of $404,000 related to
the disposal of property and equipment, $105,000 for severance costs, $125,000
related to expected costs under lease arrangements, $119,000 for shortening the
amortization period of debt issuance costs related to Industrial Revenue Bond
proceeds associated with the new facility under construction to be repaid as
part of the operational restructuring, and $156,000 for professional fees
associated with the restructuring plan. In connection with this plan, the
Company terminated the employment of approximately 65 employees, primarily sales
personnel in offices being closed or production personnel associated with the
remanufacturing facility in Michigan. Prior to the end of the second quarter,
the employment of most of the affected employees had been terminated.

During the third quarter, the Company disposed of the leased
remanufacturing facility in Michigan and the related assets, and completed the
sale of its remanufacturing facility under construction in Lansing, Michigan.
As a result of the sale, the Company incurred an additional $91,000 of
restructuring expenses. These expenses primarily consisted of interest and
legal fees due to the contractor in accordance with the construction agreement,
and customary closing costs associated with the sale of the property. In
addition, the Company repaid bondholders for Industrial Revenue Bond debt that
was incurred to build the new facility.

The Company will seek to achieve annual decreases in expenses of
approximately $3.5 million as a result of the restructuring. The improvements
are expected to come in the way of decreased plant manufacturing expenses of
approximately $1.8 million, and decreased selling, general and administrative
costs of approximately $1.7 million. The Company does expect to see a decrease
in sales due to the closing of under-performing sales offices, but expects this
decrease to be offset by an increase in gross margin as a result of the reduced
remanufacturing expenses. The closed sales offices generated approximately
$7.0 million in sales for the year ended December 31, 2000, and approximately
$3.0 million in sales for the six months ended June 30, 2001.

Along with the operational restructuring, the Company recorded
approximately $1.7 million for losses on inventory write-downs during the
second quarter of 2001, which has been classified as a component of cost of
goods sold. These losses relate to inventory sold in July 2001 associated with
the existing leased manufacturing facility in Michigan and showroom inventory
located at closed sales offices.

During November of 2001, the Company implemented a restructuring plan to
more appropriately align the Company's infrastructure with anticipated sales
levels. The restructuring included the elimination of approximately 25 sales,
production and administrative positions. Severance was provided to employees
affected by the restructuring initiatives. The Company recorded a
restructuring charge of approximately $102,000 consisting of severance and
professional services. The restructuring plan is anticipated to provide annual
savings of approximately $1.1 million and monthly savings of approximately
$90,000.

The Company anticipates that the sale of some of the remaining assets and
the Company's lease termination costs will extend into the year 2002. At
December 31, 2001, approximately $315,000 remained accrued in other liabilities
relating to the Company's restructuring and is expected to approximate the
remaining costs to be incurred, which are principally lease termination costs,
professional fees and severance payments.

Also see "- Liquidation of Mexican Subsidiaries" below for further
information on restructuring charges recorded during 2001.

LIQUIDATION OF MEXICAN SUBSIDIARIES

During the third quarter of 2001, the Company determined that it would be
in its best interests to discontinue Mexico operations due primarily to issues
relating to the profitability of the Mexican subsidiaries and its lack of
control over the subsidiaries' operations. In 2001, the Company requested that
its Mexican partner produce financial information on the operations of the
Mexican subsidiaries for the third and fourth quarters of 2001. The Mexican
joint venture partner refused, and the Company was unable to obtain such
financial information on its own. Certain actions taken by the Mexican joint
venture partner blocked the Company's access to the Mexican subsidiaries' books
and records. In response, the Company initiated certain legal proceedings in
Mexico seeking to obtain the requested information from the Mexican joint
venture partner. Upon the completion of negotiations with the Mexican joint
venture partner on February 18, 2002, the Company entered into an agreement
with its Mexican joint venture partner to liquidate the Company's two Mexican
subsidiaries pursuant to Mexican law. The liquidation agreement names an
independent Mexican accountant who will liquidate the Mexican subsidiaries and,
upon the completion of the liquidation, distribute to the Company and its
Mexican partner any residual assets or funds of the Mexican subsidiaries.
Residual assets, if any, will be distributed to the Company and the joint
venture partner in accordance with their respective ownership interests in the
Mexican subsidiaries.

The Company has been advised by its Mexican legal counsel that, should the
subsidiaries' liabilities exceed their assets, the Company would be liable to
the extent of its initial capital contribution of approximately $50,000. In
addition, the Company could be liable for Mexican taxes and any wages and
severance obligations owed by the subsidiaries which remain unpaid. The
liquidator is not aware of any unpaid wages or severance obligations and has
preliminarily determined that there could be approximately $40,000 of unpaid
taxes attributable to the subsidiaries. Further, under the liquidation
agreement, the Company's joint venture partner assumed full responsibility for
unpaid wages and severance obligations owed by the Mexican subsidiaries, and is
obligated to hold the Company harmless against such liabilities.

As of April 12, 2002, the liquidation has not been completed and it is not
certain how long the liquidation process will continue. See "- Forward Looking
Statements - Potential Expenses Related to Liquidation of Mexican Subsidiaries"
as to other potential expenses the Company may incur in connection with the
liquidation process.

assets (which included the accrual of liability for obligations to vendors
guaranteed by the Company), $168,000 related to the write-down of property and
equipment and $100,000 in accrued professional fees incurred or expected to be
incurred in connection with gaining access to financial information about the
Mexican subsidiaries and completing any sale or liquidation of the Company's
interest in the Mexican subsidiaries. The amount of the restructuring charge
relating to the net current assets and property and equipment was determined
based on information known by the Company and was intended to be a complete
write off of such assets as of September 30, 2001. Sales and operating income,
respectively, for the Mexican operations were $2.0 million and $54,000 in the
prior year, and $1.4 million and ($19,000) for the first six months of 2001.
During the third quarter of 2001, the Company determined to discontinue the
operations of the Mexican subsidiaries and limit its future exposure for losses
relative to the Mexican operations due to the Company's concerns regarding the
profitability of the subsidiaries and its lack of control over the subsidiaries'
operations.

CHANGES IN SENIOR MANAGEMENT

During 2000 and 2001, the Company experienced significant management
turnover and reorganization. On July 1, 2000, the Company's Chief Financial
Officer, William F. Crabtree, left employment with the Company. He was
replaced as Chief Financial Officer by Neil F. Suffa, who was the Company's
Controller. In December 2000, Mr. Suffa resigned unexpectedly. In March 2001,
the Company's Assistant Controller, Michael Lee, also left the Company. These
departures complicated and delayed the fiscal 2000 year end closing process and
the subsequent task of reconciling certain of the Company's balance sheet
accounts, which in turn led to the delayed filing of the Form 10-K for 2000 and
the Form 10-Q for the first quarter of 2001 after their respective filing due
dates. As an interim measure, in March 2001, Thomas M. Mishoe, Jr., currently
President and Chief Executive Officer, and Kathryn L. Tyler, currently Chief
Financial Officer, were engaged as consultants to, among other things, provide
financial expertise and assist the Company in completing financial statements
for the 2000 fiscal year and filing the required reports with the SEC.

In the second quarter of 2001, the Company's Board of Directors accepted
the resignation of John L. Hobey as Chief Executive Officer and a director of
the Company effective May 25, 2001. Following Mr. Hobey's resignation, the
Board appointed an interim Operating Committee to develop a turn-around plan
and to manage the day-to-day operations of the Company until a replacement
could be found. The Operating Committee included David E. Green, Vice
President, Stephen P. Hindle, Vice President of Sales and Marketing, Robert E.
O'Neil Jr., Vice President of National Accounts and Thomas M. Mishoe, Jr., the
former Chief Financial Officer of Eskimo Pie Corporation, who was then a
consultant to the Company. Mr. O'Neil left the Company in July 2001.

Effective October 1, 2001, the Board of Directors appointed Thomas M.
Mishoe, Jr. as the Company's President and Chief Executive Officer and
appointed Kathryn L. Tyler, the former Controller of Eskimo Pie Corporation and
who was then a consultant to the Company, as Chief Financial Officer, Treasurer
and Secretary. In addition, David E. Green was appointed Senior Vice President
of Operations, Stephen P. Hindle was appointed Senior Vice President of Sales
and Marketing and John H. Bryson, III was appointed Vice President of Plant
Operations. On October 15, 2001, Mr. Mishoe was appointed to serve as a member
of the Board of Directors. On November 26, 2001, Mr. Hindle left the Company
and Mr. Green was appointed Senior Vice President of Sales and Marketing on
December 1, 2001.

The new management team has made significant progress in its efforts to
improve financial performance by implementing the restructuring plans,
enhancing operational processes and procedures (including inventory and cash
management), reestablishing appropriate internal accounting controls,
reorganizing the Company's sales force and redirecting its efforts toward
higher margin business, reducing expenses and emphasizing product quality and
customer service.

ACCOUNTING DEFICIENCIES AND REMEDIAL ACTION

In the first quarter of 2001, the Company's senior management and the
Audit Committee of the Board of Directors were advised by the Company's
independent auditors that, because of the lack of experienced financial and
accounting personnel as a result of the turnover at the Company and the
Company's inability to reconcile certain key accounts in a timely manner, there
existed a material weakness in the Company's internal controls and procedures
during 2000 and for the quarter ended March 31, 2001. Certain weaknesses in
the Company's inventory cost accounting and management information systems and
related inventory procedures also contributed to the accounting difficulties.
No evidence of misappropriation of funds or other malfeasance was discovered by
senior management or financial consultants retained by the Company.

During the fourth quarter of 2000, the Company recorded charges (on a
pretax basis) of approximately $3.0 million. The largest of these charges
relates to inventory adjustments (recorded in cost of sales) of approximately
$2.4 million caused by book to physical variances resulting from physical
inventory observations as well as the write-off of certain obsolete and
slow-moving inventory items. The remainder of these charges related to
increases in the allowance for doubtful accounts of $220,000 as well as various
adjustments required by year-end accounting reconciliations and other matters.
The Company recorded these charges in the fourth quarter of 2000, as it could
not determine the amount of charges applicable to preceding interim periods.

The Board of Directors of the Company took remedial action to assure that
the accounting difficulties encountered were resolved. The Board hired Mr.
Mishoe and Ms. Tyler in March 2001 as financial consultants to complete the
fiscal 2000 audit and to assist in the preparation of the Company's Form 10-K
for the 2000 fiscal year. The Board authorized an additional physical
inventory account at March 31, 2001 to assist in determining year end inventory
balances and directed that the Company complete certain account reconciliations.

During 2001, under the direction of the Audit Committee, Mr. Mishoe and
Ms. Tyler instituted significant enhancements to the Company's internal
accounting controls, accelerated the internal financial closing and reporting
processes, instituted timely quarterly inventory counting and reconciliation
processes, instituted cost center and budget variance reporting and instituted
a daily expense review and control process. In addition, the Company evaluated
its inventory systems and related procedures, including the Company's inventory
cost accounting and management information systems, and determined that no
upgrades or replacements were necessary or feasible. Through these efforts,
the Company believes that the accounting deficiencies experienced in 2000 have
been corrected.

RESULTS OF OPERATIONS

Comparison of Years Ended December 31, 2001 and 2000

Net Sales. Net sales for the year ended December 31, 2001 were $31.1
million as compared to $42.7 million for the same period in 2000. This
decrease in sales can be attributed to a decline in sales generated by the
under-performing sales offices that were closed and sales personnel whose
employment was terminated in June of 2001 as part of the Company's
restructuring efforts; a decrease in National Accounts sales compared to the
prior year; and a general softening of the economy, particularly following the
terrorist attacks on September 11, 2001 and related economic downturn. In
addition, sales by the joint venture in Mexico have not been consolidated into
the Company's Statement of Operations since June 30, 2001, as the Company
determined to discontinue the operations of the Mexican subsidiaries due to the
Company's concerns regarding the profitability of the subsidiaries and its lack
of control over the

subsidiaries' operations. The Company's sales strategy remains focused on a
direct sales force in those markets of sufficient potential to justify the
investment required, supplemented by dealer sales in other markets.

Gross Margin. The Company's gross margin decreased to $6.3 million or
20.1% for the year ended December 31, 2001 from $9.5 million or 22.3% for the
year ended December 31, 2000. Exclusive of the $1.7 million write-down of
inventory in the second quarter of 2001 related to the discontinuation of
production in Lansing, Michigan, gross margin was $8.0 million or 25.6%, a
gross margin percentage increase of 14.8%. This increase in gross margin
excluding the $1.7 million inventory write-down is primarily the result of the
implementation of the restructuring plan initiated in June of 2001, which in
part sought to reduce production inefficiencies by closing the remanufacturing
facility in Lansing, Michigan and consolidating all production in one location
in Richmond, Virginia. In order to further improve its gross margin, the
Company continues to work to optimize the economic trade-off in utilizing
remanufacturing versus new components in its Work Stations. Additionally, the
Company is continuing to focus on its quality management process to reduce
costs associated with nonconformance to customer requirements.

Selling and Marketing Expenses. Selling and marketing expenses decreased
by 15.2% to $6.9 million for the year ended December 31, 2001 from $8.1 million
for the year ended December 31, 2000. This decrease was due to the closing of
under-performing sales offices in June of 2001, the termination of certain
sales personnel in offices that remained open, and management's efforts to
tightly control marketing and advertising spending beginning in May of 2001.

General and Administrative Expenses. General and administrative expenses
decreased by $150,000 to $3.2 million for the year ended December 31, 2001 from
$3.4 million in the year ended December 31, 2000. The Company incurred
significantly higher legal, computer consulting and accounting fees during 2001
associated with the delay in filing the Company's Form 10-K for 2000 and Form
10-Q for the first quarter of 2001 as discussed in Part I, Item 7 of those
documents. In addition, professional fees were incurred in resolving the
Company's delisting from the Nasdaq National Market and subsequent acceptance
on the OTC Bulletin Board. Legal, computer consulting and accounting fees
incurred during 2001 were $1.1 million versus $360,000 during 2000. These
increases were offset by decreases in other general and administrative expenses
resulting from the Company's restructuring efforts.

Operational Restructuring. In June 2001 the Company began the
implementation of a restructuring plan. See "- Restructuring". As a result,
the Company recorded restructuring charges of $4.7 million, $824,000, and
$102,000 during the second, third and fourth quarters, respectively, for a
total of $5.7 million for the year ended December 31, 2001.

Other Income and Expense. Net other expense decreased to $211,000 for the
year ended December 31, 2001 from $498,000 for the year ended December 31,
2000. This decrease was primarily due to the recognition of a gain on the
disposal of fixed assets of $260,000 resulting from the sale of leasehold
improvements by the Mexico City, Mexico sales office upon relocating their
facility. Interest expense for the year ended 2001 includes payments of
forbearance fees to the Company's financial institution of approximately
$140,000.

Income Taxes. For the year-ended December 31, 2001, the Company did not
record any tax benefit associated with the loss before income taxes due to the
uncertainty of the realization of potential tax benefits of future deductions.
During the fourth quarter of 2000, as a result of operating losses and the
uncertainty of the realization of potential tax benefits of future deductions,
the Company offset potential income tax benefits of approximately $2.5 million
with a valuation allowance resulting in a net expense

for income taxes of approximately $1.6 million. The Company will reevaluate the
potential realizability of net deferred tax assets in future periods. (See Note
8 of the Notes to Consolidated Financial Statements for additional information.)

Net Loss. The net loss for the year ended December 31, 2001 was $9.9
million versus a net loss of $4.5 million for the year ended December 31, 2000.
Exclusive of the restructuring charges, the net loss for 2001 was $4.2 million.
This net loss in 2001 was due to several factors, including an inventory
valuation charge of $1.7 million related to discontinuing production at the
remanufacturing facility in Lansing, Michigan; an increase in legal, accounting
and other professional fees of approximately $735,000; decreased sales due to
under-performing sales offices which were subsequently closed as part of the
Company's restructuring plan; decreased margins due to under-utilized
manufacturing facilities and decreased sales as a result of a soft economy,
particularly following the terrorist attacks on September 11, 2001 and related
economic downturn.

Comparison of Years Ended December 31, 2000 and 1999

Net Sales. Net sales for the year ended December 31, 2000 increased to
$42.7 million from $35.1 million for the year ended December 31, 1999, an
increase of 21.7%. The increased volume was the result of continuing demand
for remanufactured office systems, increased sales at nine of the Company's 12
sales offices open more than one year and sales contributions from offices
opened during 2000 in Indianapolis and Mexico City, Mexico. Sales to the
Company's GSA and National Accounts customers also contributed to the increased
2000 sales. The Company's sales office in Boston was not opened until the
first quarter of 2001 and, accordingly, did not contribute to sales in 2000.

Gross Margin. The Company's gross margin decreased to 22.3%, or $9.5
million, for the year ended December 31, 2000 from 30.6%, or $10.7 million, for
the year ended December 31, 1999. The lower gross margin in 2000 was caused by
book to physical inventory variances resulting from physical inventory
observations as well as the write-off of certain obsolete and slow-moving
inventory items totaling approximately $2.4 million in the fourth quarter (see
Note 14 of the Notes to Consolidated Financial Statements included under Item 8
of this Form 10-K) and production inefficiencies as production was quickly
ramped up during the summer of 2000 to support the Company's new sales offices.

Selling and Marketing Expenses. Selling and marketing expenses increased
by 11.0% to $8.1 million for the year ended December 31, 2000 from $7.3 million
for the year ended December 31, 1999. This increase was largely due to the
opening of new sales offices in Indianapolis and Mexico City, Mexico and
additions to the sales staff in the Company's sales offices existing in 2000.
Selling and marketing expenses as a percentage of sales decreased to 19.2% in
2000 from 20.9% in 1999.

General and Administrative Expenses. General and administrative expenses
increased by 36.0% to $3.4 million for the year ended December 31, 2000 from
$2.5 in the year ended December 31, 1999. This increase was primarily due to
the start-up of the Mexico City, Mexico operation and the opening of new sales
offices during the year. General and administrative expenses as a percentage
of sales increased to 8.0% in 2000 from 7.2% in 1999.

Other Income and Expenses. Total other expenses increased to $498,000 for
the year ended December 31, 2000 from $177,000 for the year ended December
31,1999. This increase was due to an increase in outstanding borrowings on the
Company's line of credit, fees related to changing banking relationships from
the Company's former bank to the Company's current bank and increased interest
expense associated with the issuance of the Industrial Revenue Bonds to fund
the construction of the

Company's Lansing, Michigan production facility (see Note 6 of the Notes to
Consolidated Financial Statements included in Item 8 of this Form 10-K).

Income Taxes. Prior to 1999, as a result of operating losses and the
uncertainty of the realization of the potential tax benefits of future
deductions, the Company did not recognize potential income tax benefits of
approximately $1.3 million. During the last quarter of 1999, the Company
determined that it was more probable than not that these tax benefits would be
realized and reversed the valuation allowance associated with the income tax
benefits. However, during the fourth quarter of 2000, as a result of operating
losses and the uncertainty of the realization of potential tax benefits of
future deductions, the Company offset potential income tax benefits of
approximately $2.5 million with a valuation allowance resulting in a net
expense for income taxes of approximately $1.6 million.

Net Income (Loss). The net loss for the year ended December 31, 2000 was
$4.5 million versus net income of $782,000 for the year ended December 31,
1999. The net loss in 2000 was due principally to losses associated with the
opening of new sales offices, $3.0 million in fourth quarter charges (see Note
14 of the Notes to Consolidated Financial Statements included in Item 8 of this
Form 10-K) and the establishment in the fourth quarter of a $2.5 million
valuation allowance related to deferred tax assets associated with potential
income tax benefits resulting in a net expense for income taxes of
approximately $1.6 million.

LIQUIDITY AND CAPITAL RESOURCES

Violations of Loan Covenants. As noted above in this Item 7 under
"Violations of Loan Covenants," the Company is not in compliance with certain of
the bank covenants associated with the Company's revolving line of credit. The
Company entered into an agreement with the bank to extend a short term
forbearance agreement in which the bank agreed to refrain from exercising any
rights or remedies with respect to existing defaults under the Company's loan
documents until after January 31, 2002. The forbearance agreement expired on
January 31, 2002 and the Company and the bank continue to engage in discussions
regarding a further extension of the forbearance agreement with revised terms;
however, the bank has not agreed to extend the forbearance agreement beyond
January 31, 2002.

On March 5, 2002, the bank gave the Company written demand for the
immediate payment of all amounts outstanding under the line of credit. The
Company responded to the demand for payment by continuing discussions with the
bank regarding the terms of a new forbearance agreement. Since March 5, 2002,
the bank has not sought to exercise any of its rights or remedies under the line
of credit arrangements and the parties continue to negotiate the terms of the
forbearance agreement. As of April 12, 2002, the amount due and owing under the
line of credit was $3.2 million and the Company has not received a further
extension of the forbearance agreement, a permanent waiver of the Company's loan
covenant violations or revised loan covenants relating to the revolving line of
credit. Any agreement reached with the bank could result in new terms which are
less favorable than current terms under existing agreements and could involve a
reduction in availability of funds, an increase in interest rates and shorter
maturities, among other things. If the Company is not successful in securing a
further extension of the forbearance agreement or permanent waivers and loan
covenant amendments, it will need to seek new financing arrangements from other
lenders. Such alternative financing arrangements may be unavailable to the
Company or available on terms substantially less favorable to the Company than
its existing line of credit facility. If the Company is unable to either procure
a further extension of the forbearance agreement, permanent covenant violation
waivers and covenant amendments with respect to the existing line of credit
facility or acceptable alternative financing, such failures could have a
material adverse effect on the Company's financial condition and results of
operations. Although the Company and the bank continue to negotiate, no
assurances can be given that the bank will refrain from exercising any rights or
remedies it may have under the line of credit arrangements or that the Company
will be able

to obtain an extension of the forbearance agreement, permanent covenant
violation waivers and revised loan covenants or refinance its existing
obligations. There also can be no assurances that the terms (including borrowing
limitations, term of the agreement or other restrictions on the Company and its
use of cash collateral) of any forbearance offered by the bank will be
acceptable to the Company.

Working Capital. To be able to meet supply forecasts and unexpected orders,
the Company maintains an inventory of Work Station components at its Richmond
facility. The Company was able to decrease its inventory with the decision to
discontinue the Haworth and Steelcase product lines. Additionally, inventory has
decreased as a result of the new management team's improvement in inventory
management and control processes.

Cash Flows from Operating Activities. Net cash provided by operations was
$545,000 for the year ended December 31, 2001 versus net cash used in
operations of $7,000 for the year ended December 31, 2000. Despite the
significant loss recorded in 2001, the Company was able to effectively collect
trade receivables and manage inventory and accounts payable levels in order to
generate cash from operating activities.

Cash Flows from Investing Activities. Net cash provided by investing
activities was $2.3 million in 2001 versus net cash used in investing
activities of $3.2 million in 2000. At December 31, 2000, the Company had
approximately $2.2 million in cash and cash equivalents restricted as to use
under the agreements relating to the Industrial Revenue Bonds that were issued
during 2000 with respect to the construction of a new production facility in
Michigan. These bonds were redeemed during 2001 in part using the $2.2 million
of cash that was previously restricted.

Cash Flows from Financing Activities. Net cash used in financing
activities was $2.8 million in 2001 versus net cash provided by financing
activities of $3.5 million in 2000. The use of cash in 2001 related primarily
to the repayment of borrowings of $2.5 million in connection with the issuance
and sale of Industrial Revenue Bonds and repayment of debt on the Company's
revolving line of credit.

Expected Future Cash Flows. The Company can give no assurance that its
current cash balances plus cash flows from operations and any potential
borrowings available under its line of credit, if any, will be adequate to fund
its expected operating and capital needs for the next twelve months. (See Note
6 of Notes to the Consolidated Financial Statements for further discussion
regarding available borrowings.) The adequacy of the Company's cash resources
over the next twelve months is primarily dependent on the Company's sales,
operating results and its ability to renegotiate its credit arrangements with
its existing bank or procure alternate financing, all of which are subject to
substantial uncertainties. Cash flow from operations for the 2002 year will be
dependent, among other things, upon the effect of the current economic slowdown
on the Company's sales, the impact of the restructuring plans and new
management's ability to control expenses and improve the Company's operating
performance and financial position.

Contractual Cash Obligations. At December 31, 2001, the contractual cash
obligations of the Company were as follows:

CONTRACTUAL OBLIGATIONS (IN
THOUSANDS):

Less than 1 1 - 2 2 - 3 After 3
Total year years years years
---------------------------------------------------------------------------

Revolving line of credit $ 3,217 $ 3,217 - - -
Long-term debt 233 95 69 38 31
Operating leases 791 556 175 57 3

---------------------------------------------------------------------------
Total Contractual
Cash Obligations $ 4,241 $ 3,868 $ 244 $ 95 $34
===========================================================================

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements of the Company are prepared in
accordance with accounting principles generally accepted in the United States,
which require the Company to make certain estimates and assumptions. The
Company believes that of its significant accounting policies (see Note 1 of
Notes to Consolidated Financial Statements), the following may involve a higher
degree of subjectivity, judgment and complexity.

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts, based upon
historical experience and management's analysis of receivables, for estimated
losses resulting from the inability of customers to make required payments. If
the financial condition of the Company's customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.

Deferred Taxes

As a result of the Company's operating losses and the uncertainty of the
realization of potential tax benefits of future deductions, the Company has
offset potential income tax benefits of approximately $4.7 million with a
valuation allowance. Should the Company change its determination in future
periods as to the probability of the realization of these tax benefits, the
amount of income tax expense or benefit recognized by the Company could vary
substantially.

Inventory Reserves

The Company reduces the value of its inventories for estimated
obsolescence or unmarketable inventory based upon assumptions related to future
demand and market conditions. If actual future demand or market conditions are
less favorable that those projected by management, additional reductions in
inventory values may be required.

Restructuring

During the year, the Company established restructuring reserves for both
its U.S. and Mexican operations. These reserves, for both severance and exit
costs, required the use of estimates. While the

Company believes that these estimates properly reflect the costs of these plans,
actual results may be different. See "- Restructuring" and "- Liquidation of
Mexican Subsidiaries" for further detail.

While the discussion above sets forth the Company's critical accounting
policies, there are numerous factors upon which the Company's ability to
continue its operations depends. See "- Forward Looking Statements" below.

SEASONALITY AND IMPACT OF INFLATION

Inflation has not had a material impact on the Company's net sales or
income to date. However, there can be no assurances that the Company's
business will not be affected in the future by inflation.

MARKET RISK

In 2001, the Company was exposed to changes in interest rates primarily
from its revolving line of credit arrangement and from the letter of credit
facility related to the Industrial Revenue Bonds issued to fund the
construction of the new remanufacturing facility in Lansing, Michigan. In
September 2001, the Industrial Revenue Bonds were redeemed and the letter of
credit facility was terminated. However, the Company's interest expense
continues to be affected by changes in short-term interest on the debt
outstanding under the revolving line of credit. These borrowings bear interest
at a variable rate based on LIBOR (the "Borrowing Rate"). Assuming: (i) the
Borrowing Rate varies by 100 basis points from its current level in any given
month and (ii) the Company maintains an aggregate outstanding debt balance
subject to this Borrowing Rate of $3.2 million during the month of variance,
interest expense would vary by approximately $3,000 for that month. The
Company's current borrowing rate is LIBOR plus 6.0%. The Company does not use
derivative instruments.

FORWARD-LOOKING STATEMENTS

The foregoing discussion and the description of the Company's business set
forth in Part I, Item 1 of this Annual Report on Form 10-K contains certain
forward-looking statements, which may be identified by phrases such as the
Company "expects," "anticipates," "estimates," "projects" or words of similar
effect. In addition, from time to time, the Company may make forward-looking
statements relating to the Company's anticipated financial performance,
business prospects and similar matters.

The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. Forward-looking statements are subject
to significant risks and uncertainties, many of which are beyond the Company's
control. Although the Company believes that the assumptions underlying its
forward-looking statements are reasonable, any of the assumptions could prove
to be inaccurate. The following important factors, among other things, in some
cases have affected, and in the future could affect, the Company's actual
results and could cause the Company's actual results for fiscal year 2002 and
any interim period to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company. The Company
assumes no duty to update any of the statements in this report.

Ability to Continue as a Going Concern. The reports of the Company's
independent auditors in connection with the Company's financial statements as
of and for the years ended December 31, 2001 and

2000 both contain an explanatory paragraph as to the Company's ability to
continue as a going concern. Among the factors contributing to the substantial
doubt expressed by the Company's independent auditors about the Company's
ability to continue as a going concern are significant losses for the years
ended December 31, 2001 and 2000 and the Company's violation of covenants with
respect to its debt obligations. For the year ended December 31, 2001, the
Company had a loss before income taxes and a net loss of $9.9 million. For the
year ended December 31, 2000, the Company had a loss before income taxes of $2.9
million and a net loss of $4.5 million. The Company expects additional losses to
be reported for the first quarter of 2002. As a result of these operating losses
and other factors, including the Company's violation of loan covenants, the
Company cannot give assurances that it can continue operations as a going
concern.

Violations of Loan Covenants. As of December 31, 2001, the Company
classified $3.2 million outstanding on its revolving line of credit as a current
liability because of its failure to meet requirements contained in the documents
governing its debt obligation. On March 5, 2002, the Company's bank gave the
Company written demand for the immediate payment of all amounts outstanding
under the line of credit. The Company responded to the demand for payment by
continuing discussions with the bank regarding the terms of a new forbearance
agreement. Since March 5, 2002, the bank has not sought to exercise any of its
rights or remedies under the line of credit arrangements and the parties
continue to negotiate the terms of the forbearance agreement. As of April 12,
2002, the amount due and owing under the line of credit was $3.2 million.

Although negotiations with the bank are continuing, as of April 12, 2002,
the Company has not received a further extension of the forbearance agreement, a
permanent waiver of the Company's loan covenant violations or revised loan
covenants relating to the revolving line of credit. Although the Company and the
bank continue to negotiate, there can be no assurances that the bank will
refrain from exercising any rights or remedies it may have under the line of
credit arrangements or that the bank will agree to further extend the
forbearance agreement. Any agreement reached with the bank could result in new
terms which are less favorable than current terms under existing agreements and
could involve a reduction in availability of funds, an increase in interest
rates and shorter maturities, among other things. If the Company is not
successful in securing a further extension of the forbearance agreement or
permanent waivers and loan covenant amendments, it will need to seek new
financing arrangements from other lenders. Such alternative financing
arrangements may be unavailable to the Company or available on terms
substantially less favorable to the Company than its existing line of credit
facility. If the Company is unable to either procure a further extension of the
forbearance agreement, permanent covenant violation waivers and covenant
amendments with respect to the existing line of credit facility or acceptable
alternative financing, such failures could have a material adverse effect on the
Company's financial condition and results of operations. No assurance can be
given that the Company will be able to obtain an extension of the forbearance
agreement, permanent covenant violation waivers and revised loan covenants or
refinance its existing obligations. As a result of the operational losses
described above and other factors, including the Company's violation of
covenants with respect to significant debt obligations and the Company's failure
to obtain extensions or waivers with respect to such obligations, the Company
can give no assurances that it will be able to continue operations as a going
concern.

Liquidity and Cash Flow. During 2001, the Company suffered an operating
loss of $9.7 million. The significant 2001 loss was preceded by operating
losses in each of the previous four fiscal years. These successive losses,
combined with the inability of the Company to fully utilize or expand its bank
credit facility due to loan defaults, has placed severe pressure on the
Company's capital resources and liquidity position. Further deterioration of
the Company's operating performance or the inability of the Company to access
additional capital from either its existing lender or other sources, could
materially and adversely affect its ability to meet its current financial
obligations on a timely basis. No assurance can be given that the Company will
possess adequate liquidity, as a result of cash generated from operations or

outside sources, to meet its financial obligations as they become due and
continue operations as a going concern.

Soft Market and Current Sales Difficulties for Office Furniture. The
Company's sales decreased significantly at the end of 2001 as a result of the
continuing poor economy and the impact of the terrorist attacks on September
11, 2001 and related economic downturn. Although sales activity, including
both booked orders and invoiced sales, has increased in 2002, the level of
sales through the first quarter of 2002 has remained below that which is
necessary to return the Company to profitability. At this time, management is
unable to predict the length of time or the extent to which the soft market for
office furniture will affect the Company. However, continued sales at current
levels would have a material adverse effect on the ability of the Company to
continue as a going concern.

Dependence on Sales Office Profitability. The Company depends heavily on
its sales offices to provide revenues. The Company closed five
under-performing offices during 2001 and is liquidating its Mexico City sales
office. In addition, the Company's experience indicates that it takes several
months for a sales office to develop adequate sales volumes to generate
expected returns. Until that time, the Company's selling expenses increase
faster than the gross profit generated from those sales. The decrease in the
number of sales offices and an inability to increase revenues of new and
existing sales offices to levels that would offset the continuing expenses of
such sales offices may adversely affect the future profitability of the
Company's business.

Plans for Future Growth. During 2001, the Company closed its
remanufacturing facility in Lansing, Michigan, consolidated remanufacturing
operations in Richmond, Virginia, closed five unprofitable sales offices,
reduced the size of three sales offices and restructured back office operations
at the Company's headquarters in Richmond in an attempt to reduce costs and
obtain profitable sales margins. Any growth in operations in the future will
be dependent in part on the Company's ability to obtain profitable sales,
manage such sales growth effectively, including the improvement of the
Company's financial and management information systems, the expansion of the
Company's manufacturing and remanufacturing operations and the recruitment and
retention of executive staff and key sales operational and administrative
employees. The Company also will be required to manage working capital and
generate cash flow from operations to meet the needs of an expanding business.
There can be no assurances that the Company's ability to expand will not be
limited by insufficient cash flow or the lack of adequate bank financing
required to fund such growth.

Ability to Attract and Retain Employees. As a remanufacturer and seller
of Work Stations, the Company depends significantly on the efforts of its
personnel. The Company's future success will depend in part on the ability to
retain and attract quality personnel. The Company, however, has experienced
significant reductions in its sales employees. The causes of sales personnel
losses are the inability or unwillingness of some employees to comply with a
new focus on obtaining profitable sales transactions, a new sales compensation
program, the continuing impact of the September 11th terrorist attacks, and the
difficulty of sales in light of the Company's current financial situation and
the state of the national economy. While the Company's management continues to
focus on sales and sales organization changes in order to remedy these employee
retention issues, there can be no assurance that the Company can successfully
address them. The failure to attract and retain quality sales personnel may
have a material adverse effect on the Company's operations.

In addition to the reduction of sales personnel through the closing of
sales offices, the Company's sales force was also reduced through additional
restructuring initiatives and other employee resignations and terminations. The
sales force of the Company at December 31, 2001 was approximately 30 employees
as compared to approximately 75 employees at December 31, 2000, a 60% decline
in the Company's sales force. By March 31, 2002, the number of sales personnel
further declined to 22

employees. In 2002, the Company intends to continue its focus on evaluating and
improving the performance of its existing sales offices and personnel and the
hiring and training of new sales personnel. As a result of the reduced sales
force, the Company expects sales in 2002 to be below 2001 levels.

Turnover in Management; Uncertainties Regarding Management Recruitment and
Retention. During the second half of 2000 and the first half of 2001, the
Company lost its Chief Executive Officer, two Chief Financial Officers and its
Assistant Controller. The positions of Chief Executive Officer and Chief
Financial Officer were only recently filled by the Board of Directors during
the fourth quarter of 2001, and there can be no assurances that the Company can
successfully retain the executive management talent and other qualified
personnel appointed by the Board of Directors and by the Chief Executive
Officer. In addition, the Company cannot predict the effect that any further
problems with recruitment or retention of management would have on customers,
suppliers, employees or the public perception of the Company.

Potential Expenses Related to Liquidation of Mexican Subsidiaries. The
Company initiated the process to discontinue the joint operations and activities
of its Mexican subsidiaries and initiated the legal process in Mexico to
liquidate the Mexican subsidiaries. In the third quarter of 2001, the Company
recorded a restructuring expense of $733,000 based on the Company's expectation
that it will sell or liquidate its interest in the joint venture subsidiaries.
This expense included amounts related to the write down of net current assets,
property and equipment and was intended to be a complete write-off of the joint
venture subsidiaries' assets as of September 30, 2001.

Although the Company has taken steps to discontinue the operations of its
Mexican subsidiaries and limit its future exposure to expenses related to the
Mexican operations, it is possible that the Company may incur additional legal,
accounting and other liquidation and professional expenses in order to complete
the liquidation process.

No Assurance of Expansion of Product Lines and Business. The Company has
concentrated its business on remanufacturing Work Stations manufactured by
Herman Miller and the Company has recently discontinued its Haworth and
Steelcase product lines. Due to the differences in and lack of
interchangeability of the various Work Stations and certain component parts
produced by the major manufacturers, any future expansion of the Company's
product line will require additional training of production personnel, the
establishment of additional sources of supply of used Work Stations and
component parts and, in some cases, the establishment of different
remanufacturing processes. As a result of these factors, there can be no
assurance that the Company will be able to expand successfully its product line
or maintain its gross margins.

Dependence Upon Supply of Herman Miller Work Stations and Component Parts.
The Company presently purchases or accepts trade-ins of only used Herman Miller
Work Stations in its remanufacturing operations. The Company does not have any
binding agreements relating to the purchase of used Herman Miller Work Stations
for remanufacturing and generally purchases them from end-users, brokers and
dealers through competitive bids or directly negotiated transactions. Although
the Company in the past has not experienced a shortage of used Herman Miller
Work Stations at competitive prices, the success of the Company in the future
will depend in part upon its continued ability to obtain used Herman Miller
Work Stations for remanufacturing in sufficient quantities and at competitive
prices. While the Company believes that the general availability of used Work
Stations for remanufacturing will increase as the installed base of Work
Stations increases and ages, there may be periods of tight supply as the demand
for used Work Stations increases and there could be periods of tight supply
specifically with respect to used Herman Miller Work Stations. Either
situation could have a material adverse effect on the Company's business and
profitability.

The Company also purchases new and used component parts for use in the
remanufacture of Work Stations. Although the Company can obtain certain of the
component parts needed to remanufacture Work Stations, there can be no
assurances that shortages of certain component parts or higher prices for such
parts will not occur in the future. An inability to obtain necessary component
parts in adequate quantities and at competitive prices could have a material
adverse effect on the Company's results of operations and financial condition.

Impact of Customer Preferences and Technological Advances on Sales.
Certain potential customers may prefer new Work Stations to the Company's
remanufactured Work Stations due to various factors, including the more
developed and better financed marketing efforts of new Work Station
manufacturers and such potential customers' reluctance to purchase
remanufactured products because of image, perceived questions of quality or
other factors. In addition, technological advances are frequently incorporated
into new Work Stations by the leading manufacturers, particularly with respect
to electrical circuits necessary for more advanced computer and
telecommunications features. Although the Company has the ability to
incorporate these technological advances in its remanufactured Work Stations,
any such incorporation may increase remanufacturing costs and may reduce the
price advantage of remanufactured Work Stations over newly manufactured Work
Stations.

Dependence Upon Single Remanufacturing Facility. The Company
remanufactures its Work Stations at its facility in Richmond, Virginia.
Although the Company presently maintains $8,000,000 of business interruption
insurance on the Richmond facility, a lengthy interruption of its
remanufacturing operations at the Richmond facility would have a material
adverse effect on the Company's results of operations and financial condition.

Potential Fluctuations in Quarterly Results. Because the Company
typically ships Work Stations within four weeks of an order, a substantial
portion of the Company's revenue in each quarter results from orders placed by
customers in that quarter. Accordingly, quarterly revenue levels are subject
to substantial fluctuations and are often difficult to predict. Fluctuations
in operating results could result in volatility in the price of the Company's
Common Stock. If revenue levels are below expectations, operating results will
be adversely affected.

Competition. Competition in the Work Station segment of the office
furniture industry is intense. The Company competes with many other companies
in the sale of its new and remanufactured products as well as in the purchase
of "as is" Work Stations and component parts for use in the Company's
remanufactured Work Stations. In the sale of remanufactured Work Stations, the
Company competes with manufacturers of new Work Stations and their
remanufacturing subsidiaries, other independent remanufacturers and dealers of
"as is" Work Stations. In the purchase of used Work Stations that are the
primary source of the Company's supply for its remanufacturing operations, the
Company competes with the manufacturers of new Work Stations and their
remanufacturing subsidiaries, both of which sometimes provide a trade-in
allowance to purchasers of their products, other independent remanufacturers
and Work Station brokers and dealers. In addition, local remanufacturers may
have a competitive advantage over the Company in pricing due to the cost of
shipping Work Stations from the Company's production facility in Richmond,
Virginia to out-of-state customers.

Sales of the Company's remanufactured Work Stations depend on maintaining
a successful balance between price and quality so that its Work Stations are
positioned in the marketplace to provide a product that is (i) comparable or
superior in quality, design and appearance to higher cost new Work Stations and
(ii) superior in quality, features and appearance to lower cost "as is" Work
Stations. Failure by the Company to maintain this balance due to increased
competition in either the purchase or sale of Work Stations could adversely
affect the Company's business. Additionally, certain of the Company's

competitors have greater financial, technical, manufacturing, marketing, sales
and other resources than the Company.

Environmental Regulations. The Company is subject to a variety of federal,
state and local governmental regulations related to the storage, use, discharge
and disposal of toxic, volatile or otherwise hazardous chemicals used in its
manufacturing processes. Regulations recently proposed by the EPA implementing
the federal Clean Air Act, as amended in 1990, may require reduced emissions of
volatile organic compounds and hazardous air pollutants, including certain
emissions resulting from the Company's use of paints and solvents in the
remanufacturing process. As a result, the Company may be required to install
emission controls or to institute changes in its remanufacturing processes in
order to comply with these reduced emission standards. The Company is evaluating
the applicability and impact such proposed regulations would have if promulgated
by the EPA as proposed. There can be no assurance that these and other changes
in environmental regulations in the future will not result in the need for
capital expenditures or otherwise impose financial burdens on the Company.
Further, such regulations could restrict the Company's ability to expand its
operations. Any failure by the Company to obtain required permits for, control
the use of, or adequately restrict the discharge of, hazardous substances under
present or future regulations could subject the Company to substantial liability
or could cause its manufacturing operations to be suspended. Such liability or
suspension of manufacturing operations could have a material adverse effect on
the Company's results of operations and financial condition.

Risk of Patent Infringement Claims. Newly manufactured Work Stations
contain numerous patented component parts. Although the Company is not aware
of any existing or threatened patent infringement claims asserted against it
and does not believe that its remanufacturing of Work Stations infringes the
proprietary rights of any third parties, there can be no assurance that
infringement claims will not be asserted against the Company. In addition, the
Company manufactures or purchases certain new and used component parts included
in its remanufactured Work Stations. To the extent that such activities
involve purchasing or manufacturing component parts similar to patented
component parts, the Company could become subject to claims of patent
infringement if the manufacture or use of such component parts infringed the
proprietary rights of third parties. In addition, the existence of third party
proprietary rights could limit the Company's ability to produce or use certain
component parts. Damages for violation of third party proprietary rights could
be substantial and could have a material adverse effect on the Company's
financial condition and results of operations. Regardless of the validity or
the successful assertion of such claims, the Company could incur significant
costs and diversion of resources with respect to the defense thereof.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information with respect to this Item is included under "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Market Risk" of this Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following audited consolidated financial statements of the Company are
included in this report:

Report of Independent Auditors

Consolidated Balance Sheets at December 31, 2001 and 2000

Consolidated Statements of Operations for the Years Ended
December 31, 2001, 2000 and 1999

Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 2001, 2000 and 1999

Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001, 2000 and 1999

Notes to consolidated financial statements

Report of Independent Auditors

Board of Directors and Shareholders
Open Plan Systems, Inc.

We have audited the accompany consolidated balance sheets of Open Plan Systems,
Inc. (the "Company") as of December 31, 2001 and 2000 and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Open Plan
Systems, Inc. at December 31, 2001 and 2000, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, during 2001 and 2000 the Company had
significant losses from operations. In addition, the Company has not complied
with certain covenants of its loan agreements with its lender. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are described in
Note 1 to the consolidated financial statements. The consolidated financial
statements do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of these
uncertainties.

The selected quarterly financial data included in Note 16 for the years ended
December 31, 2001 and 2000 contains information that we did not audit, and,
accordingly, we do not express an opinion on that data. We did not complete a
review of the quarterly data during the year ended December 31, 2000 in
accordance with standards established by the American Institute of Certified
Public Accountants due to inadequacies in the Company's internal control for the
preparation of interim financial information.

/s/ ERNST & YOUNG LLP

Richmond, Virginia
March 5, 2002

OPEN PLAN SYSTEMS, INC.
Consolidated Balance Sheets
(amounts in thousands)

December 31,
2001 2000
---------------------------------------

ASSETS
Current assets:
Cash and cash equivalents $ 324 $ 244
Cash and cash equivalents externally restricted under - 2,190
Bond indenture agreement
Accounts receivable, net 3,400 7,834
Assets held for sale 88 -
Inventories 2,558 6,278
Prepaids and other 414 458
---------------------------------------
TOTAL CURRENT ASSETS 6,784 17,004

Property and equipment, net 1,115 2,393
Goodwill, net - 3,664
Other 86 271
---------------------------------------
TOTAL ASSETS $ 7,985 $ 23,332
=======================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving line of credit $ 3,217 $ 3,366
Trade accounts payable 2,058 3,709
Accrued compensation and related costs 282 1,121
Other accrued liabilities 657 631
Customer deposits 351 860
Current portion of long-term debt 95 2,595
Restructuring liabilities 315 -
---------------------------------------
TOTAL CURRENT LIABILITIES 6,975 12,282

Long-term debt 138 227
Other long-term liabilities - 20
---------------------------------------
TOTAL LIABILITIES 7,113 12,529

Shareholders' equity:
Common stock, no par value:
Authorized shares - 50,000
Issued and outstanding shares - 4,337 - 2001 18,537 18,561
- 4,352 - 2000
Additional capital 137 137
Accumulated deficit (17,762) (7,840)
Accumulated other comprehensive income - 4
Notes receivable from employees for sale of stock (40) (59)
---------------------------------------
TOTAL SHAREHOLDERS' EQUITY 872 10,803
---------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,985 $ 23,332
=======================================

See accompanying notes to consolidated financial statements.

OPEN PLAN SYSTEMS, INC.
Consolidated Statements of Operations
(amounts in thousands, except per share amounts)

Years Ended December 31,
2001 2000 1999
---------------------------------------

Net sales $31,057 $42,675 $35,058

Cost of sales 24,807 33,158 24,332
---------------------------------------
Gross profit 6,250 9,517 10,726

Operating expenses:
Amortization of intangibles 114 274 213
Selling and marketing 6,906 8,144 7,336
General and administrative 3,245 3,395 2,529
Arbitration costs - 142 1,067
Operational restructuring 5,651 - -
---------------------------------------
15,916 11,955 11,145
---------------------------------------
Operating loss (9,666) (2,438) (419)

Other (income) expense:
Interest expense 481 446 201
(Gain) on disposal of fixed assets (260) - -
Other, net (10) 52 (24)
---------------------------------------
211 498 177
---------------------------------------
Loss before income taxes (9,877) (2,936) (596)

Expense (benefit) for income taxes 45 1,571 (1,378)
---------------------------------------
Net (loss) income $(9,922) $(4,507) $ 782
=======================================

Basic and diluted (loss) income per share $ (2.29) $ (1.03) $ .17
=======================================
Diluted weighted average common shares outstanding 4,338 4,395 4,594
=======================================
Basic weighted average common shares outstanding 4,338 4,395 4,593
=======================================

See accompanying notes to consolidated financial statements.

OPEN PLAN SYSTEMS, INC.
Consolidated Statements of Shareholders' Equity
Years ended December 31, 2001, 2000 and 1999
(amounts in thousands)

Accumulated Notes Receivable
Other - Employees
Common Additional Accumulated Comprehensive from Sale of
Stock Capital Deficit Income Stock Total
----------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1998 $ 19,324 $ 137 $ (4,115) - - $15,346

Issuance of common stock 400 - - - - 400

Purchase of common stock (1,073) - - - - (1,073)

Net income for 1999 - - 782 - - 782
----------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 1999 18,651 137 (3,333) - - 15,455

Purchase of common stock (90) - - - - (90)

Net loss for 2000 - - (4,507) - - (4,507)

Foreign currency translation
adjustments - - - 4 - 4

Net increase in notes receivable from
employees for sale of stock - - - - (59) (59)
----------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 2000 18,561 137 (7,840) 4 (59) 10,803

Purchase of common stock (24) - - - - (24)

Net loss for 2001 - - (9,922) - (9,922)

Foreign currency translation (4)
adjustments - - - (4) -

Net decrease in notes receivable
from employees for sale of stock - - - - 19 19
----------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 2001 $ 18,537 $ 137 $(17,762) - $(40) $ 872
========================================================================================

See accompanying notes to consolidated financial statements.

OPEN PLAN SYSTEMS, INC.
Consolidated Statements of Cash Flows
(amounts in thousands)

Year Ended December 31,
2001 2000 1999
-------------------------------------------

Operating activities
Net (loss) income $ (9,922) $ (4,507) $ 782
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
Provision for losses on receivables 80 469 57
Depreciation expense 606 808 760
Amortization expense 114 274 213
Operational restructuring 5,651 - -
Write-down of inventory 1,722 - -
(Gain) loss on disposal of property and equipment (260) 38 10
Deferred income taxes - 1,478 (1,478)
Changes in operating assets and liabilities:
Accounts receivable 3,792 (1,159) (912)
Inventories 1,872 1,584 (954)
Prepaids and other current assets (359) 180 34
Income taxes 45 188 117
Other non-current assets 54 (185) 300
Trade accounts payable (1,328) 245 1,469
Customer deposits (364) (145) 5
Accrued liabilities and other (1,158) 725 359
-------------------------------------------
Net cash provided by (used in) operating activities 545 (7) 762

Investing activities
Net decrease (increase) in cash and cash equivalents restricted
under bond indenture agreement 2,190 (2,190) -
Proceeds from sale of property and equipment 695 16 33
Arbitration payment for 1996 acquisition - - (996)
Purchases of property and equipment (607) (983) (787)
Net decrease (increase) in notes receivable from employees for
sale of stock 19 (59) -
-------------------------------------------
Net cash provided by (used in) investing activities 2,297 (3,216) (1,750)

Financing activities
Net borrowings (repayments) on revolving line of credit (149) 947 1,467
Proceeds from borrowings on long-term debt - 2,671 247
Principal payments on long-term debt (2,589) (74) (42)
Purchase of common stock (24) (90) (1,073)
Proceeds from sale of common stock - - 400
-------------------------------------------
Net cash (used in) provided by financing activities (2,762) 3,454 999
-------------------------------------------

Change in cash and cash equivalents 80 231 11
-------------------------------------------
Cash and cash equivalents at beginning of year 244 13 2
-------------------------------------------
Cash and cash equivalents at end of year $ 324 $ 244 $ 13
===========================================

Supplemental disclosures
Interest paid 549 500 $ 179
===========================================
Income taxes paid $ 79 $ 24 $ -
===========================================

See accompanying notes to consolidated financial statements.

OPEN PLAN SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Open Plan Systems, Inc. (the "Company") is a remanufacturer and marketer of
modular office Work Stations. The Company remanufactures Herman Miller Work
Stations and markets these products through Company sales offices located in the
East Coast and Mid-West regions of the United States. In addition, the Company
also sells new chairs, desks, and other office furniture products purchased from
other manufacturers. The following is a description of the Company's more
significant accounting policies.

Going Concern Matters

The accompanying consolidated financial statements have been prepared on a
going concern basis that contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
accompanying consolidated financial statements, for the years ended December 31,
2001 and 2000, the Company had a net loss of $9.9 million and $4.5 million,
respectively. In addition, as of December 31, 2001 and 2000, the Company was not
in compliance with certain debt covenants, which required the Company's debt to
be classified as a current liability. (See Note 6.) These factors raise
substantial doubt about the Company's ability to continue as a going concern.

The primary factors contributing to the Company's net loss of $9,877,000
for the year ended December 31, 2001 were a restructuring charge of $5.7 million
(see Note 13), an inventory valuation charge of $1.7 million (see Note 13), an
increase in legal, accounting and other professional fees, decreased sales due
to under-performing sales offices and decreased margins due to under-utilized
manufacturing facilities. The primary factors contributing to the Company's net
loss of $4,507,000 for the year ended December 31, 2000 were losses associated
with the opening of new sales offices, $3.0 million in fourth quarter charges
(see Note 14) and the establishment in the fourth quarter of a $2.5 million
valuation allowance for deferred tax assets associated with potential income tax
benefits resulting in a net expense for income taxes of approximately $1.6
million. (See Note 8.)

As of March 5, 2002 the Company has been unable to negotiate a permanent
waiver of the Company's loan covenant violations, or revised loan covenants with
its bank. Although negotiations are continuing, the bank has not agreed to
extend the forbearance agreement beyond January 31, 2002. On March 5, 2002, the
bank gave the Company written demand for the immediate payment of all amounts
outstanding under the line of credit. As of March 5, 2002, the amount due and
owing under the line of credit was $3.2 million. As of March 5, 2002, the bank
has not exercised any rights or remedies and has not provided the Company with
any further notifications regarding the line of credit, nor has the Company
received a further extension of the forbearance agreement. These negotiations
could result in new terms which are less favorable than current terms under
existing loan agreements and could involve a reduction in availability of funds,
an increase in interest rates and shorter maturities, among other things. If the
Company is not successful in securing these waivers and loan covenant
amendments, it may have to seek new financing from other lenders. Such
alternative financing arrangements could likewise be less favorable to the
Company than its existing credit facilities. If the Company is unable to either
procure permanent covenant violation waivers and covenant amendments with
respect to its existing credit facility or acceptable alternative financing,
such failures could have a material adverse effect on the Company's financial
condition and results of operations. No assurance can be given that the Company
will be able to

obtain such permanent covenant violation waivers and revised loan covenants or
refinance its existing credit obligation or that the Company will be able to
continue operations as a going concern.

Principles of Consolidation

The accompanying consolidated financial statements include all of the
accounts of the Company, its wholly-owned subsidiary (which was merged into the
Company in May 1999) and its majority-owned joint venture. All significant
intercompany balances and transactions have been eliminated in consolidation.
The consolidated financial statements include the accounts of the Company's
Mexican subsidiaries through June 30, 2001. During the third quarter of 2001,
the Company determined to discontinue the operations of its Mexican subsidiaries
due to the Company's concerns regarding the profitability of the subsidiaries
and its lack of control over the subsidiaries' operations. (See Note 2.)

Inventories

Inventories are stated at the lower of average cost or market. Jobs in
process and finished goods include both the direct and indirect costs of
manufacturing such products.

Property and Equipment

Property and equipment is stated on the basis of cost. Depreciation of
equipment and vehicles is provided by straight-line or accelerated methods over
the estimated useful lives of the related assets, generally three to seven
years. Improvements to leased properties are amortized on a straight-line basis
over the shorter of the term of the respective lease or the estimated useful
lives of the related assets.

Goodwill

Goodwill represented the excess of the purchase price of acquired
businesses over the fair value of net assets acquired and was amortized on the
straight-line method over a period of 20 years. The carrying value of goodwill
was periodically evaluated by management based on expectations of undiscounted
cash flows of the related business units to determine if there was impairment in
value. As a result of the Company's restructuring, all goodwill was written off
during 2001 (see Note 13). Accumulated amortization was $938,000 at December 31,
2000.

Revenue Recognition

Revenues from product sales and related cost of sales (including shipping
costs) are recognized upon shipment of products. Title and risk of loss pass to
the customer upon shipment. Revenue from installation is recognized when
installation is complete.

Advertising

Production costs associated with advertising are expensed as incurred.
Communication costs associated with advertising are reported as advertising
expense as the related space is used. Prepaid advertising costs were $17,000 and
$77,000 at December 31, 2001 and 2000, respectively. Advertising costs charged
to expense totaled $686,000 in 2001, $1,018,000 in 2000 and $918,000 in 1999.

Income Taxes

Deferred income taxes are determined based on the differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect in the years the differences are expected to reverse.

Cash Equivalents

The Company considers all highly liquid investments with original
maturities of three months or less when purchased to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Earnings Per Share

Basic and diluted earnings per share are calculated in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share." For 2001, 2000 and 1999, there was no difference between basic and
diluted earnings per share. Stock options of 918,000 for 2001, 889,750 for 2000
and 866,000 for 1999 have been excluded from the calculation of earnings per
share in 2001, 2000 and 1999, respectively, as their impact would have been
anti-dilutive.

Comprehensive Income and Foreign Currency Translation

Foreign currency transactions and financial statements were translated into
U.S. dollars in accordance with SFAS No. 52, "Foreign Currency Translation."

Accounting Pronouncements

The Company adopted the provisions of SFAS No. 133, "Accounting for
Derivative Financial Instruments and Hedging Activities," as amended, effective
January 1, 2001. The implementation of this new standard did not have a material
effect on the Company's results of operations or financial position.

Reclassifications

Certain prior year amounts have been reclassified to conform to current
year presentation.

NOTE 2. MEXICAN SUBSIDIARIES

During the third quarter of 2001, the Company determined that it would be
in its best interests to discontinue the Mexico operations due primarily to
issues relating to the profitability of the Mexican subsidiaries and its lack of
control over the subsidiaries' operations. In 2001, the Company requested that
its Mexican partner produce financial information on the operations of the
Mexican subsidiaries for the third and fourth quarters of 2001. The Mexican
joint venture partner refused, and the Company was unable to obtain such
financial information on its own. Certain actions taken by the Mexican joint
venture partner blocked the Company's access to the Mexican subsidiaries' books
and records. In response, the Company initiated certain legal proceedings in
Mexico seeking to obtain the requested information from the Mexican joint
venture partner. Upon completion of negotiations with its joint venture partner
on February 18, 2002, the Company entered into an agreement with its Mexican
joint venture partner to liquidate the Company's two Mexican subsidiaries
pursuant to Mexican law. The liquidation agreement names an independent Mexican
accountant who will liquidate the Mexican subsidiaries and, upon the completion
of the liquidation, distribute to the Company and its Mexican partner any
residual assets or funds of the Mexican subsidiaries. Residual assets, if any,
will be distributed to the Company and the joint venture partner in accordance
with their respective ownership interests in the Mexican subsidiaries.

The Company has been advised by its Mexican legal counsel that, should the
subsidiaries' liabilities exceed their assets, the Company would be liable to
the extent of its initial capital contribution of approximately $50,000. In
addition, the Company could be liable for Mexican taxes and any wages and
severance obligations owed by the subsidiaries which remain unpaid. The
liquidator is not aware of any unpaid wages or severance obligations and has
preliminarily determined that there could be approximately $40,000 of unpaid
taxes attributable to the subsidiaries. Further, under the liquidation
agreement, the Company's joint venture partner assumed full responsibility for
unpaid wages and severance obligations owed by the Mexican subsidiaries, and is
obligated to hold the Company harmless against such liabilities.

The liquidation has not been completed and it is not certain how long the
liquidation process will continue. Although the Company has taken steps to
discontinue the operations of its Mexican subsidiaries and limit its future
exposure to expenses related to the Mexican operations, it is possible that the
Company may incur additional legal, accounting and other liquidation and
professional expenses in order to complete the liquidation process.

Due to the Company's expectation that it would sell or liquidate its
interest in the Mexican subsidiaries, the Company recorded a restructuring
expense of $733,000 in the third quarter of 2001 related to the Mexican
operations. This charge included $465,000 related to the write-down of net
current assets, $168,000 related to the write-down of property and equipment and
$100,000 in accrued professional fees incurred or expected to be incurred in
connection with gaining access to financial information about the Mexican
subsidiaries and completing any sale or liquidation of the Company's interest in
the Mexican subsidiaries. The amount of the restructuring charge relating to the
net current assets and property and equipment was determined based on
information available to the Company and was intended to be a complete write-off
of such assets as of September 30, 2001. Sales and operating income,
respectively, for the Mexican operations were $2.0 million and $54,000 in the
prior year, and $1.4 million and ($19,000) for the first six months of 2001.

NOTE 3. INVENTORIES

Inventories are in two main stages of completion and consisted of the
following (in thousands $):

December 31,
2001 2000
---------------------------

Components and fabric $ 1,552 $ 4,494
Jobs in process and finished goods 1,006 1,784
---------------------------
$ 2,558 $ 6,278
===========================

NOTE 4. ACCOUNTS RECEIVABLE

Accounts receivable are shown net of the allowance for doubtful accounts in
the amounts of $254,000 and $499,000 at December 31, 2001 and 2000,
respectively.

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment by major classification was as follows (in
thousands $):

December 31,
2001 2000
---------------------------

Production and warehouse equipment $ 2,253 $ 2,526
Office equipment 1,077 1,355
Vehicles 414 697
Leasehold improvements 511 667
Construction-in-process - 345
---------------------------
4,255 5,590
Accumulated depreciation and amortization (3,140) (3,197)
---------------------------
$ 1,115 $ 2,393
===========================

The Company also has assets held for sale at December 31, 2001 in the
amount of $88,000, primarily consisting of vehicles that the Company plans to
dispose of during 2002.

NOTE 6. INDEBTEDNESS

As of December 31, 2001, long-term debt includes notes payable related to
vehicle purchases. As of December 31, 2000, long-term debt also included the
Industrial Revenue Bonds, discussed below. Future scheduled maturities of
long-term debt are as follows: $95,000 in 2002; $69,000 in 2003; $38,000 in
2004; and $31,000 in 2005.

As of December 31, 2000 the Company maintained two bank credit facilities
consisting of a letter of credit facility associated with the issuance of $2.5
million of Industrial Revenue Bonds to finance the construction of a new
remanufacturing facility in Lansing, Michigan and a revolving line of credit. At

December 31, 2000, the revolving line of credit provided for a maximum borrowing
amount of $5.25 million at variable interest rates (5.05% at December 31, 2000).
The letter of credit facility and revolving line of credit agreements required
the Company to meet various restrictive covenants, including a defined tangible
net worth, an interest coverage ratio and certain other covenants. At December
31, 2000 and thereafter, the Company was not in compliance with certain of the
covenants contained in the letter of credit facility and the revolving line of
credit agreements. The obligations are secured by substantially all of the
assets of the Company.

In May 2001, the Company entered into a temporary forbearance agreement
with the bank in which the bank agreed to waive its existing right to declare
defaults relating to the Company's failure to comply with certain loan covenants
through June 30, 2001. Under the forbearance agreement, the line of credit was
reduced from $5.25 million to $4.65 million. Thereafter, on August 10, 2001, the
Company and the bank entered into a new short-term forbearance agreement that
expired on October 30, 2001, which was later amended to extend the expiration
date to January 31, 2002. The new forbearance agreement provided that the bank
would refrain from exercising any rights or remedies based on existing or
continuing defaults, including accelerating the maturity of the loans under the
two credit facilities, until after the January 31, 2002 expiration date. Under
the August forbearance agreement, the line of credit was reduced from $4.65
million to $4.25 million. In addition, the interest rate on the line of credit
was increased to LIBOR plus 6.0%. Finally, the Company was required to pay the
bank a forbearance fee of $50,000. Pursuant to the forbearance agreement, the
bank reserved the right to declare a default and accelerate the loans under the
revolving line of credit after January 31, 2002 if the parties had not entered
into amendments to the existing loan arrangements or a subsequent forbearance
agreement. As of December 31, 2001, approximately $3.2 million was outstanding
under the line of credit. No additional borrowing was available based on the
Company's borrowing base formula under the line of credit as of December 31,
2001. The forbearance agreement expired on January 31, 2002, and the Company is
currently engaged in discussions regarding an extension of the forbearance
agreement.

In June 2000, the Company borrowed $2.5 million from the Michigan Strategic
Fund following the issuance and sale by the Fund of certain Industrial Revenue
Bonds ("Industrial Revenue Bonds") for construction of a new remanufacturing
facility in Lansing, Michigan. The proceeds were placed into an escrow account
with the trustee for use in connection with the building of the facility. At the
same time, the Company entered into a letter of credit facility with a bank to
support the financing on the facility. In accordance with the Company's
previously announced restructuring plan, on September 20, 2001, the Company
redeemed the Industrial Revenue Bonds and paid off the outstanding debt of $2.4
million using in part the remaining cash that was held in escrow. Shortly
thereafter, the Company sold the partially constructed remanufacturing facility
in Lansing, Michigan. As a result, the letter of credit facility with the bank
terminated. The bond indenture and related agreements required the Company to
meet certain restrictive covenants, including defined tangible net worth, an
interest coverage ratio and certain other covenants. The Company was not in
compliance at December 31, 2000 and thereafter with certain of the covenants,
and therefore this debt was included in the current portion of long-term debt in
the accompanying balance sheet as of December 31, 2000.

Although negotiations with the bank are continuing, the bank has not agreed
to extend the forbearance agreement beyond January 31, 2002. On March 5, 2002,
the bank gave the Company written demand for the immediate payment of all
amounts outstanding under the line of credit. As of March 5, 2002, the amount
due and owing under the line of credit was $3.2 million. As of March 5, 2002,
the bank has not exercised any rights or remedies and has not provided the
Company with any further notifications regarding the line of credit, nor has the
Company received a further extension of the forbearance agreement, a permanent
waiver of the Company's loan covenant violations or revised loan covenants
relating to the revolving line of credit. Any agreement reached with the bank
could result in new terms which are less favorable than current terms under
existing agreements

and could involve a reduction in availability of funds, an increase in interest
rates and shorter maturities, among other things. If the Company is not
successful in securing an extension of the forbearance agreement or permanent
waivers and loan covenant amendments, it will need to seek new financing
arrangements from other lenders. Such alternative financing arrangements may be
unavailable to the Company or available on terms substantially less favorable to
the Company than its existing line of credit facility. If the Company is unable
to either procure an extension of the forbearance agreement, permanent covenant
violation waivers and covenant amendments with respect to the existing line of
credit facility or acceptable alternative financing, such failures could have a
material adverse effect on the Company's financial condition and results of
operations. No assurance can be given that the Company will be able to obtain an
extension of the forbearance agreement, permanent covenant violation waivers and
revised loan covenants or refinance its existing obligations.

During 2001, 2000 and 1999, interest of $537,000, $505,000 and $201,000,
respectively, was incurred on debt balances. Interest expense of $56,000 and
$59,000 was capitalized relative to the construction of the new remanufacturing
facility in Lansing, Michigan in 2001 and 2000, respectively; none was
capitalized in 1999.

NOTE 7. SHAREHOLDERS' EQUITY

The Company currently maintains two stock option plans: the 1996 Stock
Incentive Plan (the "Incentive Plan") and the 2000 Stock Option Plan for
Non-Employee Directors (the "2000 Outside Director's Plan"). During 2000, but
prior to the annual meeting of shareholders in 2000, the Company also maintained
a 1996 Option Plan for Non-Employee Directors (the "1996 Outside Director's
Plan"). The Company's 1996 Outside Director's Plan terminated, pursuant to its
terms, following the annual meeting of shareholders in 2000, and was replaced by
the 2000 Outside Director's Plan; however, options granted under the 1996
Outside Director's Plan remained outstanding in accordance with their terms.

The maximum aggregate number of shares of common stock that may be issued
pursuant to the Incentive Plan is 400,000. The Incentive Plan provides for
grants of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, and/or phantom stock to any officer,
director, or key employee of the Company. The Incentive Plan will terminate in
March 2006.

The exercise price of non-qualified stock options granted under the
Incentive Plan must be equal to at least the fair market value of the common
stock on the date of grant. The aggregate fair market value of common stock
(determined as of the date of the option grant) for which a non-qualified stock
option, or related stock appreciation rights (no stock appreciation rights have
been issued) may for the first time become exercisable in any calendar year may
not exceed $100,000. These options have a term of seven years. Transactions
involving the Incentive Plan are as follows:

Average
Exercise
Shares Price
-------------------------
Outstanding at December 31, 1999 252,000 $4.35
Issued 47,500 $1.88
Cancelled (35,750) $3.30
-------------------------
Outstanding at December 31, 2000 263,750 $4.04
Issued 55,000 $0.18
Cancelled (186,750) $3.90
=========================
Outstanding at December 31, 2001 132,000 $2.60
=========================

The options outstanding at December 31, 2001 and 2000 had a weighted
average remaining contractual life of five and four years, respectively. For
options outstanding at December 31, 2001, 37,500 options had exercise prices
between $5.97 and $9.88, 39,500 options had exercise prices between $1.88 and
$2.81 and 55,000 options had an exercise price of $0.18. For options outstanding
at December 31, 2000, 78,125 options had exercise prices between $5.97 and $9.88
and 185,625 options had exercise prices between $1.88 and $3.88. At December 31,
2001, there were 37,500 and 35,000 options that were exercisable with weighted
average exercise prices of $7.60 and $2.72, respectively. At December 31, 2000,
there were 67,188 and 117,375 options that were exercisable with weighted
average exercise prices of $7.92 and $2.61, respectively. The options granted in
2001 and 2000 had a weighted average fair value at grant date of $0.10 and $0.82
per share, respectively.

On March 15, 2000, the Company's Board of Directors approved the 2000
Outside Director's Plan. The 2000 Outside Director's Plan was approved by a vote
of the Company's shareholders at the 2000 annual meeting of shareholders. The
maximum aggregate number of shares of common stock that may be issued pursuant
to the 2000 Outside Director's Plan is 25,000. The 2000 Outside Director's Plan
is scheduled to terminate following the annual meeting of shareholders in 2005.
Under the 2000 Outside Director's Plan, each non-employee director of the
Company serving on the Board of Directors on May 15, 2000 was granted an option
to purchase 1,000 shares of common stock of the Company. Thereafter, each
non-employee director serving on the Board of Directors shall receive an option
to purchase 1,000 shares of common stock on the first business day following
each annual meeting of shareholders. The exercise price of stock options granted
under the 2000 Outside Director's Plan must be equal to the fair market value of
the common stock on the date of grant. Each option is first exercisable on the
date, which is six months from the date of grant of the option and shall
continue to be exercisable for a term of ten years, subject to certain
exceptions. At December 31, 2001, the Company had 169,081 options outstanding,
of which 162,081 were exercisable. At December 31, 2000, the Company had 7,000
options outstanding and exercisable. These options had weighted average
remaining contractual lives of 10 and nine years for 2001 and 2000,
respectively. For options outstanding at December 31, 2001, 162,081 options had
exercise prices between $0.23 and $0.60 and 7,000 had an exercise price of
$2.00. For options outstanding at December 31, 2000, 7,000 had an exercise price
of $2.00. At December 31, 2001, the options outstanding and the options
outstanding and exercisable had a weighted average exercise price of $0.64 and
$0.66, respectively. In 2001 and 2000, the Company granted 162,081 and 7,000
options under the 2000 Outside Director's Plan with exercise prices between
$0.23 and $0.60 and of $2.00 respectively. The weighted average fair value of
the 7,000 and 155,081 options granted in 2001 were $0.11 and $0.03 per share
respectively. The weighted average fair value of the 2000 options at grant date
was $0.88 per share.

The 1996 Outside Directors' Plan terminated in 2000 following the annual
meeting of shareholders. Under the 1996 Outside Directors' Plan, each
non-employee director of the Company serving on the Board of Directors on July
1, 1996 was granted an option to purchase 1,000 shares of common stock of the
Company. Thereafter, each non-employee director serving on the Board of
Directors received an option to purchase 1,000 shares of common stock on the
first business day following each annual meeting of shareholders. The exercise
price of stock options granted under the 1996 Outside Directors' Plan must be
equal to the fair market value of the common stock on the date of grant. Each
option is first exercisable on the date, which is six months from the date of
grant of the option and shall continue to be exercisable for a term of ten
years, subject to certain exceptions. At December 31, 2001 and 2000,
respectively, the Company had 17,000 and 19,000 options outstanding and
exercisable. These options outstanding at December 31, 2001 and 2000 had
weighted average remaining contractual lives of six and seven years,
respectively. The exercise prices for these options were 4,000 at

$11.75; 4,000 at $5.97; 4,000 at $2.14; and 5,000 at $2.81 for 2001 and 4,000 at
$11.75; 4,000 at $5.97; 5,000 at $2.14; and 6,000 at $2.81 for 2000.

The Company has elected to recognize expense for stock-based compensation
under these plans based upon the intrinsic value based method as prescribed by
Accounting Principles Board Opinion No. 25. If the Company had accounted for its
stock options based upon fair values at the date of grant, consistent with FASB
Statement No. 123, the net loss would have increased by $8,000 or less than one
cent per share, for the year ended December 31, 2001, the net loss would have
increased by $59,000, or $0.01 per share, for the year ended December 31, 2000
and the net income would have decreased by $92,000, or $0.02 per share for the
year ended December 31, 1999. These amounts are not indicative of future effects
of applying the fair value based method since the vesting period was used to
measure compensation expense. The fair value for these options was estimated at
the date of grant using a Black-Scholes option pricing model assuming a
risk-free interest rate of 5.7%, 5.6% and 5.6% and a dividend yield of 0.0% for
2001, 2000 and 1999 respectively. The options had a weighted average expected
life of 5 years for 2001, 2000 and 1999 and a volatility factor of .442 for
2001, .403 for 2000 and .461 for 1999.

In 2000, the Company established the Loan Program (the "Program") to
facilitate purchase of shares of the Company's common stock pursuant to the
Company's Employee Stock Purchase and Bonus Plan (the "Stock Purchase Plan").
Under the Program an eligible participant may borrow an amount equal to the full
purchase price of shares (at fair market value) of common stock purchased under
the Plan. A total of 150,000 shares have been authorized for acquisition under
the Program, subject to adjustment as a result of various changes in the
capitalization of the Company. Any shares authorized but not acquired under the
Program will remain available under the Plan for acquisition outside this
Program. This Program was only offered through June 15, 2000. At December 31,
2001 and December 31, 2000, respectively, loans to employees totaling
approximately $40,000 and $59,000 were outstanding under the Program.

In June 1998, the Company sold 200,000 shares of common stock to Great
Lakes Capital, LLC ("GLC") for $2.175 per share and granted nonqualified stock
options to GLC as follows:

Number of Exercise
Shares Price
--------------------------
150,000 $3.00
150,000 $4.50
150,000 $6.00
150,000 $7.50

The GLC options were not granted under the Incentive Plan. All of the
options are exercisable and expire June 30, 2003. These options had a weighted
average fair value at grant date of $0.76 per share.

Additionally, the Company and GLC entered into a Voting and Standstill
Agreement whereby GLC will beneficially own no more than 21% of the issued and
outstanding shares of the Company on a fully diluted basis (as described in the
Agreement), provided that the shares GLC and its affiliates may acquire pursuant
to the Incentive Plan and Outside Directors Plan shall not be deemed to be
additional shares. The Voting and Standstill Agreement was later amended,
pursuant to an amendment dated July 21, 2000, to increase the beneficial
ownership limitation to 25%.

In 2000, the Company's Board of Directors approved the repurchase of up to
100,000 shares of the Company's common stock. For the year ended December 31,
2001, the Company repurchased 15,000

shares of its common stock at an aggregate cost of approximately $24,000. For
the year ended December 31, 2000, the Company repurchased 50,500 shares of its
common stock at an aggregate cost of $90,000.

On September 15, 1999, the Company and certain investors purchased 993,542
shares of Common Stock held by the Company's founder at a price of $2.50 per
share. The transaction resulted in the Company purchasing approximately 430,000
shares of stock. In an event related to this transaction, the Company then
immediately resold 160,000 shares of Common Stock to affiliates of GLC for $2.50
per share. This resulted in a net redemption by the Company of approximately
270,000 shares.

The Company has not declared dividends for any of the three years in the
period ended December 31, 2001.

NOTE 8. INCOME TAXES

The expense (benefit) for income taxes is comprised of the following (in
thousands $):

2001 2000 1999
------------------------------------------------
Current:
Federal $ - $ - $ 89
State and foreign 45 93 11
------------------------------------------------
45 93 100
Deferred:
Federal - 1,322 (1,322)
State and foreign - 156 (156)
------------------------------------------------
- 1,478 (1,478)

------------------------------------------------
$ 45 $ 1,571 $ (1,378)
================================================

A reconciliation of the expense (benefit) from income taxes for the years
ended December 31, 2001, 2000 and 1999 and the amount computed by applying the
U.S. statutory federal income tax rate of 34% to loss before income taxes is as
follows (in thousands $):

2001 2000 1999
--------------------------------------------------

Income tax expense (benefit) at U.S. statutory rates $ (3,358) $ (998) $ (203)
State taxes, net of federal benefit (163) (117) (14)
Goodwill write-off 1,256 - -
Other permanent differences 92 93 73
Other, net 7 105 78
Change in valuation allowance 2,211 2,488 (1,312)
--------------------------------------------------
Total income tax expense (benefit) $ 45 $ 1,571 $ (1,378)
==================================================

The deferred income tax balances at December 31, 2001 and December 31, 2000
consisted of the following (in thousands $):

2001 2000
----------------------------------

Deferred tax assets
Accounts receivable allowances $ 96 $ 190
Accrued liabilities 139 19
Net operating losses 4,208 2,235
Inventory reserve 107 51
Other 149 (7)
Valuation allowance (4,699) (2,488)
----------------------------------
$ - $ -
==================================

Prior to 1999, as a result of operating losses and the uncertainty of the
realization of the potential tax benefits of future deductions, the Company did
not recognize potential income tax benefits of approximately $1.3 million.
During the last quarter of 1999, the Company determined that it was more
probable than not that these tax benefits would be realized and reversed the
valuation allowance associated with the income tax benefits. However, during the
fourth quarter of 2000, as a result of operating losses and the uncertainty of
the realization of potential tax benefits of future deductions, the Company
offset potential income tax benefits of approximately $2.5 million with a
valuation allowance resulting in a net expense for income taxes of approximately
$1.6 million. The Company will reevaluate the potential realizability of net
deferred tax assets in future periods.

Net operating loss carryforwards of approximately $11.0 million begin to
expire in 2013.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Lease Agreements

The Company leases office and production space in Richmond, Virginia. In
addition, the Company leases its sales offices under operating lease agreements
expiring in various periods through February 2005. Certain automobiles are also
leased under terms not exceeding three years. All of these leases are accounted
for as operating leases.

Future minimum lease payments were as follows at December 31, 2001 (in
thousands $):

Year Lease Payments
---------- --------------------
2002 $ 556
2003 175
2004 57
2005 3
2006 -
--------------------
$ 791
====================

Rent expense amounted to $1,014,000 in 2001, $1,177,000 in 2000 and
$875,000 in 1999.

Legal Matters

A portion of the potential consideration for the 1996 acquisition of
Immaculate Eagle, Inc. (d/b/a TFM Remanufactured Office Furniture) ("TFM") was
87,500 shares of common stock of the Company, which was placed in escrow, with
an agreed upon value of $1.3 million, as security for indemnification
obligations of the former shareholders of TFM. In addition, under the terms of
the TFM purchase agreement, if the closing sales price of the Company's common
stock on October 1, 1998 was less than $15 per share, the Company was to make a
cash payment to the former shareholders of TFM equal to the difference between
the closing sales price on that date and $15, multiplied by the 87,500 shares of
common stock (subject to certain adjustments, including claims by the Company
for indemnification). The Company's common stock traded at $2.25 per share on
October 1, 1998 and, accordingly, the amount potentially payable to the former
TFM shareholders was $1,115,625.

Prior to October 1, 1998, former management of the Company reviewed the
circumstances of the TFM acquisition and concluded the indemnification
obligations of the former TFM shareholders exceeded the $1.3 million agreed
value of the stock in escrow. The Company served notice of the indemnification
claims to the former TFM shareholders. The former shareholders of TFM disputed
the indemnification claims and pursuant to the purchase agreement, the matter
went to arbitration. Based on the indemnification claims, the aggregate
$1,115,625 difference between the stock's market price on October 1, 1998 and
the $15 value assumed in the TFM purchase agreement was recorded as a reduction
in goodwill and shareholders' equity.

In December 1999, the arbitration panel ruled that the former TFM
shareholders had breached their warranties in three instances and awarded the
Company $120,000. As a result, the Company paid approximately $1 million to
the former TFM shareholders, which was recorded as an increase in goodwill. The
former TFM shareholders were also awarded reimbursement of certain legal fees
and other costs and those amounts are included in the arbitration costs of
$1,067,000 reflected in the consolidated statements of operations.

In June 2000, the Company received the final results of certain arbitration
matters related to the finalization of the purchase price for TFM. The final
arbitration award required the Company to pay $564,000 in fees and expenses to
the former shareholders of TFM and the arbitrators. As a result, the Company
took additional expense of $142,000 in the second quarter of 2000 to record the
final results of these proceedings in the financial statements. The Company
paid all amounts to these parties in July 2000.

NOTE 10. EMPLOYEE BENEFIT PLAN

THE Company has a defined contribution plan covering substantially all
employees meeting eligibility requirements. Under the plan, participants may
elect to contribute a specified portion of their compensation to the plan on a
tax deferred basis. The Company will match one-half of the participant's
contributions up to six percent of compensation. The Company may make
additional contributions at its discretion.

The Company recorded total expense related to the plan of $124,000 in 2001,
$166,000 in 2000 and $147,000 in 1999.

NOTE 11. RELATED PARTY TRANSACTIONS

The Company incurred legal fees of $136,000 in 2000 and $594,000 in 1999 to
a law firm in which one of the Company's directors was a principal during 1999
and through February 1, 2000.

The Company purchased and leased a total of 8 and 12 vehicles in 2000 and
1999, respectively, from a company whose Chairman is a director of the Company.
The Company purchases directors and officers insurance from a company whose
President is a director of the Company.

NOTE 12. CONCENTRATIONS OF CREDIT RISK AND FINANCIAL INSTRUMENTS

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of accounts receivable. The
Company markets its products and services to customers located primarily in the
Eastern and Mid-West regions of the United States. Production is primarily in
response to specific customer orders and larger jobs typically require advance
deposits. The Company performs credit evaluations of its customers prior to
commencement of production, delivery or commencement of services and normally
does not require collateral. Payments are typically due within 30 days of
billing. The Company maintains an allowance for doubtful accounts and losses
have historically been within management's expectations.

The carrying values of amounts classified as current assets, current
liabilities, cash and cash equivalents externally restricted under a bond
indenture agreement, and long-term debt approximate fair value.

NOTE 13. OPERATIONAL RESTRUCTURING

On June 20, 2001, the Company began the implementation of a restructuring
plan that closed its remanufacturing facility in Lansing, Michigan and
consolidated remanufacturing operations in Richmond, Virginia; closed five
under-performing sales offices located in Cincinnati, Indianapolis, Nashville,
Lansing and Boston; reduced the size of sales offices in Philadelphia, Atlanta
and Washington, D.C.; and restructured back office operations at the Company's
headquarters in Richmond, Virginia. This plan returns the Company's focus to
the remanufacturing of Herman Miller products and discontinues the Haworth and
Steelcase product lines. In the second quarter of 2001, the Company recorded a
restructuring charge of approximately $4.7 million which included an estimate
for the disposal of the existing leased remanufacturing facility in Michigan
and related assets, as well as the new facility that was under construction.
The largest component of the charge was $3,580,000 related to the write-off of
remaining goodwill associated with the purchase of the Michigan operations in
1996. Other significant components of the operational restructuring were
estimated losses of $404,000 related to the disposal of property and equipment,
$105,000 for severance costs, $125,000 related to expected costs under lease
arrangements, $119,000 for shortening the amortization period of debt issuance
costs related to Industrial Revenue Bond proceeds associated with the new
facility under construction to be repaid as part of the operational
restructuring, and $156,000 for professional fees associated with the
restructuring plan. In connection with this plan, the Company terminated the
employment of approximately 65 employees, primarily sales personnel in offices
being closed or production personnel associated with the remanufacturing
facility in Michigan. Prior to the end of the second quarter, most of the
affected employees had been terminated.

During the third quarter of 2001, the Company disposed of the leased
remanufacturing facility in Michigan and the related assets, and completed the
sale of its remanufacturing facility under construction

in Lansing, Michigan. As a result of the sale, the Company incurred an
additional $91,000 of restructuring expenses. These expenses primarily consisted
of interest and legal fees due to the contractor in accordance with the
construction agreement, and closing costs associated with the sale of the
property. In addition, the Company repaid bondholders for Industrial Revenue
Bond debt that was incurred to build the new facility.

Along with the operational restructuring, the Company recorded
approximately $1.7 million for losses on inventory write-downs during the
second quarter of 2001, which has been classified as a component of cost of
goods sold. These losses relate to inventory sold in July 2001 associated with
the existing leased manufacturing facility in Michigan, and showroom inventory
located at closed sales offices.

During the third quarter of 2001, the Company determined that it would be
in its best interests to discontinue the Mexico operations due primarily to
issues relating to the profitability of the Mexican subsidiaries and its lack of
control over the subsidiaries' operations. The Company recorded restructuring
expense of $733,000 in the third quarter of 2001 related to the Mexican
operations. This charge included $465,000 related to the write down of net
current assets, $168,000 related to the write-down of property and equipment and
$100,000 in professional fees incurred or expected to be incurred in connection
with gaining access to financial information about the Mexican subsidiaries and
completing any sale or liquidation of the Company's interest in the Mexican
subsidiaries. The amount of the restructuring charge relating to the net current
assets and property and equipment was determined based on information known by
the Company at that time and was intended to be a complete write off of such
assets as of September 30, 2001. Sales and operating income, respectively, for
the Mexican operations were $2.0 million and $54,000 in the prior year, and $1.4
million and ($19,000) for the first six months of 2001. Since the second quarter
of 2001, the Company has determined to discontinue the operations of its Mexican
subsidiaries and limit its future exposure for losses relative to the Mexican
operations due to the Company's concerns regarding the profitability of the
subsidiaries and its lack of control over the subsidiaries operations.

Also during November of 2001, the Company implemented a restructuring plan
to more appropriately align the Company's infrastructure with anticipated sales
levels. The restructuring included the elimination of approximately 25 sales,
production and administrative positions. Severance was provided to employees
affected by the restructuring initiatives. The Company recorded a
restructuring charge of approximately $102,000 consisting of severance and
professional services.

The Company anticipates that the sale of any of the remaining assets
(assets held for sale at December 31, 2001 approximated $88,000) and the lease
termination costs associated with the Company's restructuring plans will extend
into the year 2002. At December 31, 2001, approximately $315,000 remains
accrued in other liabilities relating to the Company's restructuring and is
expected to approximate the remaining costs to be incurred, which are
principally lease termination costs, professional fees and severance.

NOTE 14. SIGNIFICANT FOURTH QUARTER 2000 ADJUSTMENTS

During the fourth quarter of 2000, the Company recorded charges (on a
pretax basis) of approximately $3.0 million. The largest of these charges
relates to inventory adjustments (recorded in cost of sales) of approximately
$2.4 million caused by book to physical variances resulting from physical
inventory observations as well as the write-off of certain obsolete and
slow-moving inventory items. The remainder of these charges relates to
increases in the allowance for doubtful accounts of $220,000 as well as various
adjustments required by year-end accounting reconciliations and other matters.
The Company

has recorded these charges in the fourth quarter of 2000, as it cannot determine
the amount of charges applicable to preceding interim periods. See Note 8 for
information on income taxes.

NOTE 15. VALUATION AND QUALIFYING ACCOUNTS

Activity related to valuation and qualifying accounts is as follows (in
thousands):

Allowance for Inventory
Doubtful Obsolescence
Accounts Reserve
-------- -------

Balance December 31, 1998 275 314
Charges to expense 57 -
Deductions - net write-off of uncollectible accounts or (126) (88)
obsolete inventory, as applicable

Balance December 31, 1999 206 226
Charges to expense 480 (55)
Deductions - net write-off of uncollectible accounts or (187) (36)
obsolete inventory, as applicable /(1)/

Balance December 31, 2000 499 135
Charges to expense 210 125
Deductions - net write-off of uncollectible accounts or (456) (88)
obsolete inventory, as applicable

Balance December 31, 2001 253 172

________________

/(1)/ This does not include the write-off of obsolete and slow-moving inventory
in the fourth quarter of 2000 in conjunction with the physical counts of
inventory.

NOTE 16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Results of operations for each of the quarters during the years ended
December 31, 2001 and 2000 are as follows (in thousands, except per share data):

Quarter Ended
----------------------------------------------------------------
March June September December
31st 30th /(1)/ 30th /(2)/ 31st /(3),(4)/

Year ended December 31, 2001

Net sales $ 9,962 $ 8,040 $ 7,663 $ 5392
Gross Profit $ 2,513 $ (74) $ 2,265 $ 1,546
Operating income (loss) $ (867) $ (8,458) $ (511) $ 170
Income (loss) before income taxes $ (981) $ (8,333) $ (614) $ 51

Net income (loss) $ (981) $ (8,333) $ (614) $ 6
Earnings (loss) per common share $ (0.23) $ (1.92) $ (0.14) $ 0.00

Year ended December 31, 2000

Net sales $ 9,333 $ 10,459 $ 10,398 $ 12,485
Gross Profit $ 2,913 $ 2,771 $ 3,013 $ 820
Operating income (loss) $ 324 $ (342) $ 324 $ (2,744)
Income (loss) before income taxes $ 228 $ (466) $ 201 $ (2,899)
Net income (loss) $ 124 $ (267) $ 120 $ (4,484)
Earnings (loss) per common share $ .03 $ (.06) $ .03 $ (1.03)

___________

/(1)/ During the second quarter of 2001, the Company recorded a restructuring
charge of approximately $4.7 million. Related to the restructuring, the
Company also recorded approximately $1.7 million for losses on inventory
write-downs, which has been classified as a component of cost of goods
sold. See Note 13 for additional information.

/(2)/ During the third quarter of 2001, the Company recorded a restructuring
charge of approximately $824,000, most of which was related to the
Company's determination to discontinue the operations of the Mexican
subsidiaries due to the Company's concerns regarding the profitability of
the subsidiaries and its lack of control over the subsidiaries'
operations. See Note 13 for additional information.

/(3)/ During the fourth quarter of 2001, the Company recorded a restructuring
charge of approximately $102,000. See Note 13 for additional information.

/(4)/ Net loss for the fourth quarter of 2000 includes the effect of
establishing a valuation allowance against net deferred tax assets
resulting in a net expense for income taxes of approximately $1.6
million. See Notes 8 and 14 for additional information on fourth quarter
2000 adjustments relating to inventory and other items.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There have been no changes in the Company's independent accountants and no
disagreements on accounting and financial disclosure that are required to be
reported hereunder.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Except as to certain information regarding executive officers included in
Part I, the information required by this item will be provided by being
incorporated herein by reference to the Company's definitive proxy statement for
the 2002 Annual Meeting of Shareholders, or by an amendment to this Form 10-K,
to be filed within 120 days after the end of the last fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be provided by being
incorporated herein by reference to the Company's definitive proxy statement for
the 2002 Annual Meeting of Shareholders (except for the information set forth
under the captions "Report of the Compensation Committee" and "Stock Performance
Graph"), or by an amendment to this Form 10-K, to be filed within 120 days after
the end of the last fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Financial statements, financial statement schedules and reports
included in this Annual Report on Form 10-K

(1) Financial Statements

The response to this portion of Item 14 is submitted as a separate
section of this report.

(2) Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts, for each of the
three years in the period ending December 31, 2001, is included in
Note 15 of the Notes to consolidated financial statements set
forth in this Annual Report on Form 10-K. Schedules other than
that listed above have been omitted because such schedules are not
required or are not applicable.

(3) The exhibits that are required to be filed or incorporated by
reference herein are as follows:

Exhibit No. Document
- ---------- --------

2.1 Purchase Agreement between Company and Ena Drive, L.L.C. dated
August 17, 2001, incorporated by reference to Exhibit 2(a) of the
Company's Form 8-K dated October 4, 2001, File No. 0-20743.

2.2 Addendum to the Purchase Agreement between Company and Ena Drive,
L.L.C., dated September 19, 2001, incorporated by reference to
Exhibit 2(b) of the Company's Form 8-K dated October 4, 2001,
File No. 0-20743.

2.3 Settlement and Liquidation Agreement between the Company and
Servicios de Instalacion de Mobiliario y Alfombra, S.A. de C.V.
dated February 18, 2002.*

3.1 Amended and Restated Articles of Incorporation, incorporated by
reference to Exhibit 3(i) of the Company's Registration Statement
on Form SB-2, as amended, File No. 333-3188 (the "Form SB-2").

3.2 Amended and Restated Bylaws, incorporated by reference to Exhibit
3.2 of the Company's Form 10-K for the fiscal year ended December
31, 1999, as amended by Form 10-K/A (Amendment No. 1), File No.
0-20743.

4 Form of Stock Certificate, incorporated by reference to Exhibit 4
of the Form SB-2.

10.1 Buy-Sell Agreement, dated May 15, 1996, between the Company and
Gregory P. Campbell, incorporated by reference to Exhibit 10.8 of
the Form SB-2.

10.2 Form of Employee Non-Qualified Stock Option Agreement,
incorporated by reference to Exhibit 10.10 of the Company's
Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996, File No. 0-20743.

10.3 Form of Non-Employee Director Non-Qualified Stock Option
Agreement, incorporated by reference to Exhibit 10.11 of the
Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996, File No. 0-20743.

10.4 Management and Consulting Agreement, dated June 17, 1998, between
the Company and Great Lakes Capital, LLC, incorporated by
reference to Exhibit 10 of the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998, File No. 0-20743.

10.5 Voting and Standstill Agreement, dated June 17, 1998, between the
Company, Great Lakes Capital, LLC and Great Lakes Capital, Inc.,
incorporated by reference to Exhibit 10 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, File No. 0-20743.

10.6 Registration Rights Agreement, dated June 17, 1998, between the
Company and Great Lakes Capital, LLC, incorporated by reference
to Exhibit 10 of the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998, File No. 0-20743.

10.7 Amendment No. 1 to Voting and Standstill Agreement, dated as of
July 21, 2000, between the Company, Great Lakes Capital, LLC and
Great Lakes Capital, Inc., incorporated by reference to Exhibit
10.1 of the Company's Form 8-K dated July 21, 2000, File No.
0-20743.

10.8 Amendment No. 1 to Registration Rights Agreement, dated as of
July 21, 2000, between the Company and Great Lakes Capital,
LLC, incorporated by reference to Exhibit 10.2 of the Company's
Form 8-K dated July 21, 2000, File No. 0-20743.

10.9 Stock Purchase Agreement, dated as of August 31, 1999, by and
between Stan A. Fischer, the Company and A.G. Bertozzi, J.
Cullather, J. Wesley Hall, Anthony F. Markel, Gary L. Markel,
Robert F. Mizell, E.W. Mugford and Troy A. Peery, Jr.
incorporated by reference to Exhibit 99.2 of the Company's Form
8-K filed September 30, 1999, File No. 0-20743.

10.10 Stock Redemption and Sale Agreement, made effective as August 31,
1999, by and between the Company and Thomas H. Carson, William F.
Crabtree, John L. Hobey, Charles Kaufmann and W. Sydnor Settle,
incorporated by reference to Exhibit 99.3 of the Company's Form
8-K filed September 30, 1999, File No. 0-20743.

10.11 Commercial Lease Contract, dated May 1, 1998, between Liberty
Property Limited Partnership and the Company, incorporated by
reference to Exhibit 10.14 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, as amended by
Form 10-K/A (Amendment No. 1), File 0-20743.

10.12 Open Plan Systems, Inc. 1996 Stock Incentive Plan, as amended on
May 12, 2000, incorporated by reference to Exhibit 10.13 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, File No. 0-20743.

10.13 Open Plan Systems, Inc. 1996 Stock Option Plan For Non-Employee
Directors, as amended May 12, 2000, incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2000, File No. 0-20743.

10.14 Open Plan Systems, Inc. 2000 Stock Option Plan for Non-Employee
Directors, as amended May 12, 2000, incorporated by reference to
Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2000, File No. 0-20743.

10.15 Open Plan Systems, Inc. Employee Stock Purchase and Bonus Plan
and Prospectus, incorporated by reference to Exhibit 4.3 of the
Company's Registration Statement on Form S-8, File No. 333-38588.

10.16 Form of Non-Employee Director Non-Qualified Stock Option
Agreement with respect to options granted August 8, 2001.*

10.17 Form of Employee Non-Qualified Stock Option Agreement with
respect to options granted October 15, 2001.*

10.18 Form of Non-Employee Director Non-Qualified Stock Option
Agreement with respect to options granted November 1, 2001.*

10.19 Change of Control Employment Agreement, dated November 5,
2001, between the Company and Thomas M. Mishoe, Jr.*

10.20 Severance and Release Agreement, dated July 1, 2000, between the
Company and William F. Crabtree, incorporated by reference to
Exhibit 10.1 of the Company's Form 8-K dated July 1, 2000, File
No. 0-20743.

10.21 Severance and Release Agreement, executed August 13, 2001,
between the Company and Robert E. O'Neil Jr.*

10.22 Severance and Release Agreement, dated November 26, 2001, between
the Company and Stephen P. Hindle.*

10.23 Reimbursement and Security Agreement between the Company and
Wachovia Bank, N.A., dated June 1, 2000, incorporated by
reference to Exhibit 10.19 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2000, File No.
0-20743.

10.24 Commitment Letter between the Company and Wachovia Bank, dated
March 15, 2000, incorporated by reference to Exhibit 10.20 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, File No. 0-20743.

10.25 Amendment to Commitment Letter between the Company and Wachovia
Bank, dated August 1, 2000, incorporated by reference to Exhibit
10.21 of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, File No. 0-20743.

10.26 Waiver letter between the Company and Wachovia Bank, N.A., dated
May 23, 2001, incorporated by reference to Exhibit 10.22 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, File No. 0-20743.

10.27 Forbearance Agreement dated August 10, 2001, between the Company
and Wachovia Bank, N.A., incorporated by reference to Exhibit
10.1 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001, File No. 0-20743.

10.28 Forbearance Agreement dated October 30, 2001, between the Company
and Wachovia Bank, N.A.*

21 Subsidiaries of the Company.*

23 Consent of Ernst & Young LLP.*

___________________________
* Filed herewith

(b) Reports on Form 8-K.

The Company filed a Current Report on Form 8-K on October 3, 2001
reporting under Items 5 and 7 that the Company had issued a press
release dated October 1, 2001 that announced the appointment of
Thomas M. Mishoe, Jr. as the President and Chief Executive Officer of
the Company, and the appointment of Kathryn L. Tyler, David E. Green,
John H. Bryson III and Stephen P. Hindle as executive officers of the
Company.

The Company filed a Current Report on Form 8-K on October 19, 2001
reporting under Items 2, 5 and 7 that (i) the Company had closed its
Lansing, Michigan remanufacturing facility and various sales offices
and sold other related assets, including a facility under
construction in Michigan and (ii) the Company had issued a press
release dated October 5, 2001 announcing the sale of the Company's
unfinished remanufacturing facility in Michigan. The Current Report
on Form 8-K also included pro forma financial information for the
fiscal year ended December 31, 2000 and for the first six months of
2001 to reflect the effect the Company's restructuring plan would
have had on the Company had it been implemented as of January 1, 2000.

The Company filed a Current Report on Form 8-K on November 30, 2001
reporting under Items 5 and 7 that the Company had issued a press
release press dated November

26, 2001 that announced the implementation of a restructuring plan
which included the elimination of various sales, production and
administrative positions.

The response to this portion of Item 14 is submitted as a separate
section of this report.

(d) Financial Statement Schedules

The response to this portion of Item 14 is submitted as a separate
section of this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

OPEN PLAN SYSTEMS, INC.

Dated: April 15, 2002 By: /s/ Thomas M. Mishoe, Jr.
----------------------------------
Thomas M. Mishoe, Jr.
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Thomas M. Mishoe, Jr. President, Chief Executive Officer April 15, 2002
- ------------------------------- And Director
Thomas M. Mishoe, Jr. (Principal Executive Officer)

/s/ Kathryn L. Tyler Chief Financial Officer and Secretary April 15, 2002
- ------------------------------- (Principal Financial and Accounting
Kathryn L. Tyler Officer)

/s/Anthony F. Markel
- ------------------------------- Chairman of the Board and Director April 15, 2002
Anthony F. Markel

/s/ Theodore L. Chandler, Jr.
- --------------------------------- Director April 15, 2002
Theodore L. Chandler, Jr.

_______________________________ Director April __, 2002
J. Wesley Hall

/s/ Robert F. Mizell
- ------------------------------- Director April 15, 2002
Robert F. Mizell

/s/ Edwin W. Mugford
- ------------------------------- Director April 15, 2002
Edwin W. Mugford

/s/ Troy A. Peery, Jr.
- ------------------------------- Director April 15, 2002
Troy A. Peery, Jr.

_______________________________ Director April __, 2002
W. Sydnor Settle

EXHIBIT INDEX

Exhibit No. Document
- ----------- --------

2.1 Purchase Agreement between Company and Ena Drive, L.L.C. dated
August 17, 2001, incorporated by reference to Exhibit 2(a) of
the Company's Form 8-K dated October 4, 2001, File No. 0-20743.

2.3 Settlement and Liquidation Agreement between the Company and
Servicios de Instalacion de Mobiliario y Alfombra, S.A. de C.V.
dated February 18, 2002.*

3.1 Amended and Restated Articles of Incorporation, incorporated by
reference to Exhibit 3(i) of the Company's Registration Statement
on Form SB-2, as amended, File No. 333-3188 (the "Form SB-2").

3.2 Amended and Restated Bylaws, incorporated by reference to Exhibit
3.2 of the Company's Form 10-K for the fiscal year ended
December 31, 1999, as amended by Form 10-K/A (Amendment No. 1),
File No. 0-20743.

4 Form of Stock Certificate, incorporated by reference to Exhibit 4
of the Form SB-2.

10.1 Buy-Sell Agreement, dated May 15, 1996, between the Company and
Gregory P. Campbell, incorporated by reference to Exhibit 10.8 of
the Form SB-2.

10.4 Management and Consulting Agreement, dated June 17, 1998, between
the Company and Great Lakes Capital, LLC, incorporated by
reference to Exhibit 10 of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998, File No. 0-20743.

10.8 Amendment No. 1 to Registration Rights Agreement, dated as of
July 21, 2000, between the Company and Great Lakes Capital, LLC,
incorporated by reference to Exhibit 10.2 of the Company's Form
8-K dated July 21, 2000, File No. 0-20743.

10.10 Stock Redemption and Sale Agreement, made effective as August 31,
1999, by and between the Company and Thomas H. Carson, William
F. Crabtree, John L. Hobey, Charles Kaufmann and W. Sydnor
Settle, incorporated by reference to Exhibit 99.3 of the
Company's Form 8-K filed September 30, 1999, File No. 0-20743.

10.15 Open Plan Systems, Inc. Employee Stock Purchase and Bonus Plan
and Prospectus, incorporated by reference to Exhibit 4.3 of the
Company's Registration Statement on Form S-8, File No. 333-38588.

10.16 Form of Non-Employee Director Non-Qualified Stock Option
Agreement with respect to options granted August 8, 2001.*

10.17 Form of Employee Non-Qualified Stock Option Agreement with
respect to options granted October 15, 2001.*

10.18 Form of Non-Employee Director Non-Qualified Stock Option
Agreement with respect to options granted November 1, 2001.*

10.19 Change of Control Employment Agreement, dated November 5, 2001,
between the Company and Thomas M. Mishoe, Jr.*

10.21 Severance and Release Agreement, executed August 13, 2001,
between the Company and Robert E. O'Neil Jr.*

10.22 Severance and Release Agreement, dated November 26, 2001, between
the Company and Stephen P. Hindle.*

10.23 Reimbursement and Security Agreement between the Company and
Wachovia Bank, N.A., dated June 1, 2000, incorporated by
reference to Exhibit 10.19 of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, File No.
0-20743.

10.24 Commitment Letter between the Company and Wachovia Bank, dated
March 15, 2000, incorporated by reference to Exhibit 10.20 of
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, File No. 0-20743.

10.28 Forbearance Agreement dated October 30, 2001, between the Company
and Wachovia Bank, N.A.*

21 Subsidiaries of the Company.*

23 Consent of Ernst & Young LLP.*

______________________

* Filed herewith