SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

                 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the Fiscal Year Ended December 31, 1998

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

                         Commission file number 0-20743

                             OPEN PLAN SYSTEMS, INC.
                 (Name of Small Business Issuer 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                                23222
Richmond, Virginia                                            (Zip Code)
(Address of Principal Executive Offices)

                                 (804) 228-5600
                (Issuer'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

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will 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-KSB
or any amendment to this Form 10-KSB.

     The  issuer's  revenues  for the fiscal year ended  December  31, 1998 were
$33,676,000.

     The aggregate  market value of the Common Stock held by  non-affiliates  of
the Company as of March 18, 1999 was $8,909,416.

     The number of shares of Common Stock  outstanding as of March 18, 1999, was
4,672,433.

Transitional Small Business Disclosure Format (check one):  Yes ___   No  X

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Company's  definitive  Proxy  Statement for its 1999 Annual
Meeting of Shareholders (to be filed) is incorporated by reference into Part III
of this Form 10-KSB.
<PAGE>
                                TABLE OF CONTENTS


                                     PART I
 
<TABLE>             
<CAPTION>
                                                                                                           Page
<S>               <C>                                                                                      <C>    
Item 1.           Description of Business.................................................................  1

Item 2.           Description of Property.................................................................  7

Item 3.           Legal Proceedings.......................................................................  7

Item 4.           Submission of Matters to a Vote of Security Holders.....................................  8


                                                      PART II

Item 5.           Market for Common Equity and Related Stockholder Matters................................  9

Item 6.           Management's Discussion and Analysis of Financial Condition and Results of
                  Operations.............................................................................. 10

Item 7.           Financial Statements....................................................................16

Item 8.           Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure..................................................32


                                                     PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act.......................................32

Item 10.          Executive Compensation..................................................................32

Item 11.          Security Ownership of Certain Beneficial Owners and Management..........................32

Item 12.          Certain Relationships and Related Transactions..........................................32

Item 13.          Exhibits, List and Reports on Form 8-K..................................................33
</TABLE>

<PAGE>

                                                      PART I

Item 1.  .........Description of Business

     Open Plan Systems,  Inc. (the "Company") was incorporated under the laws of
the  Commonwealth  of Virginia on  September  11,  1989.  The Company  restores,
remanufactures  and markets modular office Work Stations.  The Company  operates
remanufacturing  facilities in Richmond,  Virginia and Lansing, Michigan. During
1998,  it closed a light  remanufacturing  facility  in  Dallas,  Texas and sold
assets related to new furniture manufacturing at its Richmond, Virginia plant.

The Office Furniture Industry

     The trend in the office furniture  industry for the past twenty-five  years
has been away from a simple desk and file design to a sophisticated Work Station
design because of the  flexibility  and  productivity  advantages that such Work
Stations provide.  Work Stations have become more  sophisticated as the usage of
computers and telecommunications equipment has increased in modern offices.

     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, Inc. ("Steelcase"),  Herman
Miller,  Inc. ("Herman  Miller") and Haworth,  Inc.  ("Haworth")  constitute the
dominant manufacturers,  collectively  representing  approximately two-thirds of
the installed base of Work Stations.  Each of these  manufacturers has created a
unique system for  connecting  panels,  power and  telecommunications  raceways,
resulting  in  virtually  no  interchangeability  between  products of different
manufacturers.  Each  manufacturer's  Work Stations  provide for several hundred
variations.  In  recent  years,  more  sophisticated  telecommunications,  power
distribution  and wire  management  elements have been added to Work Stations as
computer   usage  has  increased  in  offices.   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.

     Since the  mid-1980s,  end-users  with existing Work Stations have had four
primary options when  considering  changes in their existing Work Stations:  (i)
acquire  upgraded  power  components,  new  fabric  and panel trim from the Work
Station  manufacturer  to be retrofitted  on existing Work Stations,  frequently
during  installation  in a new  facility;  (ii) acquire new Work Stations from a
manufacturer or dealer while  disposing of existing  furniture and Work Stations
to a broker  or  remanufacturing  company;  (iii)  acquire  remanufactured  Work
Stations  while  disposing of the old  furniture and Work Stations to brokers or
the remanufacturer; and (iv) acquire "as is" Work Stations.

     The business of remanufacturing Work Stations has grown steadily during the
1990's.  The  Company  believes  this growth is  principally  due to the greater
availability   of  high   quality   remanufactured   Work   Stations  at  prices
substantially  below  manufacturers'  retail list prices for new Work  Stations,
thereby providing  end-users with substantial value. In addition,  the growth of
the remanufacturing  business has been assisted by the increased availability of
used Work  Stations for  remanufacturing.  Used Work  Stations  have become more
readily  available in recent years due to an  increased  base of installed  Work
Stations  and  corporate  events  such as mergers,  acquisitions,  divestitures,
downsizings and relocations.  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 transports the Work Stations to its facilities in Richmond, Virginia
and Lansing,  Michigan.  The Work  Stations  are  disassembled,  inventoried  by
component  parts and stored.  The Company then  restores the used Work  Stations
through the  remanufacturing  process to meet customers' needs.  Remanufacturing
usually includes  sanding,  painting,  laminating,  reupholstering  and updating
electrical components.

     The  Company's  design  staff  works  with  customers  to  optimize  use of
available  office space through  customized  space plans.  Customers are able to
choose from among several colors of laminate and paint and over 1,000  different
fabrics.  After the initial sales call,  the Company  responds to the customer's
needs with a proposal which  includes a computer aided design of the space,  the
number of Work Stations and the cost, typically within 72 hours. Once a purchase
order is received, the fabric selected by the customer is applied to the panels,
and the various components of the Work Stations are assembled for shipping.  The
Work  Stations  sold by the  Company's  direct sales force are  installed at the
customer's offices by the Company's  employees or by approved outside installers
giving  the  Company  control  over the  entire  process.  The  Company's  large
inventory of disassembled  component parts permits shipping generally within one
to four weeks of  receiving  a purchase  order,  depending  on the  product  and
fabrics required.  The Company believes that its ability to provide high quality
Work  Stations  at  discounted  prices,  coupled  with its  emphasis on superior
customer  service  through  its design  staff and  Company  trained or  approved
installers,  gives it a  competitive  advantage  over  manufacturers  and  other
remanufacturers of Work Stations.

     The Company's Richmond,  Virginia and Lansing,  Michigan facilities include
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.  Plant  layout has been  designed to  facilitate  the
efficient flow of materials and streamline the  remanufacturing  process through
disassembly,  storage,  remanufacturing  and shipping.  Quality  control for the
remanufactured  products  occurs at various  stages  during the  remanufacturing
process  including the final quality control  verifications at shipment and upon
installation.

     The Company  sells Work Stations  primarily  through  twelve  Company-owned
direct  sales  offices.  The  Company  believes  that each of the fifty  largest
metropolitan  areas  of the  United  States  will  support  a sales  office.  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.  In addition,
the Company sells products through certain dealers throughout the country.

Products

     The Company's principal product is remanufactured Herman Miller and Haworth
Work  Stations.   During  1996,  the  Company  also  acquired  the  capacity  to
manufacture its own line of new Work Stations. However, during 1998, the Company
sold  the  assets   relating  to  the  manufacture  of  new  Work  Stations  and
discontinued its product line of new Work Stations.

     The Company believes that 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 space because
Work Stations combine moveable panels,  work surfaces,  storage units,  lighting
and electrical  distribution  into a single  integrated  unit. The end result is
less square feet of office space per worker and, therefore, lower facility costs
per employee.

     Work  Stations  often are  acoustically  treated to provide  conversational
privacy  required by closer  quarters.  Because Work Stations  usually are lower
than ceiling height, lighting, heating, ventilation and air conditioning are not
confined to individual  spaces,  allowing  distribution among more workers which
reduces building operating costs. Work Stations incorporate electrical circuitry
necessary to operate computers and telecommunications  equipment.  The Company's
Work   Stations  meet  the  safety   standards   established   by   Underwriters
Laboratories. The Company believes it is one of only a few remanufacturers whose
Work Station components are listed with Underwriters Laboratories.

     Manufacturers  and  remanufacturers  customize Work Stations to accommodate
specific job  functions.  Each  manufacturer  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.

     The core of the Work  Station  is a panel  two  inches  thick  with  widths
varying  from 12 inches to 60 inches.  Heights vary from 34 inches to 96 inches.
The panel  frame may be covered  with a laminated  surface or, most  frequently,
fabric over an acoustical  batting to which removable,  slotted steel side rails
and top caps are  attached to  accommodate  the  customized  interconnection  of
panels and the hanging of work surfaces or other components.  Electrical outlets
and space for telephone and computer  cables are provided by removable  raceways
of metal and plastic attached at the base of the panel.

     In addition to Work  Stations,  the Company  also sells new office  chairs,
desks and other case goods purchased from various manufacturers.

Inventory

     The number of installed Work Stations has increased  steadily over the past
twenty-five years and is now believed to exceed 20 million. The gradual aging of
this installed base of Work Stations has resulted in the increased  availability
of used Work  Stations  for  remanufacturing.  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.

     Manufacturers  of new Work Stations  have  developed  trade-in  programs to
assist their dealers in encouraging their customers to purchase the most current
products.  Trade-ins  also have been used to entice  customers  of  dealers  and
manufacturers  to trade-in a  competitor's  Work Stations for new Work Stations.
While  each  manufacturer  has a slightly  different  approach  to the  trade-in
market, all frequently contact a list of brokers or remanufacturers, such as the
Company, to solicit the highest bid for the entire inventory.

     At the time the  Company  purchases  inventory,  it  disassembles  the Work
Stations and ships the  disassembled  Work Stations to its facilities  where the
Company  determines  whether the parts should be cleaned and sold as part of its
"as is"  sales  program  or  remanufactured  and  stored as  inventory  and sold
thereafter.  The Company  strives to ship all of its  customers'  orders in four
weeks or less. The Company initiated a two week lead time program to accommodate
shorter lead times from customers  that will use a limited  selection of fabrics
and laminates. The Company also has the ability to purchase or produce 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 believes its ability to  opportunistically  acquire used Work
Stations  at  attractive  prices  and  hold  them  for  future  sale  gives it a
competitive advantage over other remanufacturers with less capital.

     The Company utilizes a computerized  inventory  control system which serves
its sales, production, shipping and accounting functions. The system enables the
Company to continually  monitor its inventory of component  parts,  to determine
its needs for additional  purchases of used Work Stations,  to track its work in
process and to facilitate the prompt delivery of remanufactured Work Stations to
its customers.

Distribution

     Sales Offices.  The Company currently  operates twelve sales offices in the
metropolitan areas of Richmond,  Washington D.C., Atlanta,  Nashville,  Chicago,
New York, Philadelphia,  Raleigh, Norfolk, Cincinnati,  Lansing and Detroit. The
Company  believes that marketing and  distributing  its Work Stations  through a
direct sales force located in geographically  dispersed sales offices gives it a
competitive  advantage  over  independent  remanufacturing  competitors  who are
typically local companies with limited sales and  distribution  capacity outside
of  their  immediate  market  area.  Approximately  80% of the  Company's  sales
historically   have  been  made  to  end-users  by  the   Company's   own  sales
representatives. In order to improve profitability and focus, the Company closed
offices in Dallas, Charlotte and Baltimore in 1998. In 1999, the Company intends
to  continue  its focus on  improving  the  performance  of its  existing  sales
offices.

     Marketing and  distributing  its Work Stations  through its own sales staff
allows  the  Company  to  eliminate  the  costs  and  additional  price  mark-up
associated  with  wholesale  distribution,  as well as  enabling  the Company to
retain direct control and oversight of its products and the selling  process.  A
direct sales force also permits the Company to deliver  quality  service to each
customer through its design and installation programs.

     Dealer Network. In addition to its own sales staff, the Company maintains a
dealer network in 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.  The dealer  network  allows the  Company to market  Work  Stations  on a
cost-effective basis to a large number of businesses which may not be reached by
the Company's sales  representatives.  Approximately  20% of the Company's sales
historically  have been made  through  dealers.  The Company  believes  that its
limited dealer network  complements its strategy of expanding  revenues  through
its own sales  offices.  All  dealer  agreements  are  non-exclusive  and may be
terminated at any time.

     "As Is" Sales.  A small but  profitable  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
producing quality products at competitive prices and providing superior customer
service.   Each  sales  office  advertises  through  direct  mail,   billboards,
newspapers,   business  magazines  and  journals.  Direct  mailing  to  targeted
professional  groups as well as mailings prior to and following trade shows have
resulted in large sales to several new  customers.  The Company often uses booth
displays at trade  shows for  national  organizations  of  purchasing  managers,
facility managers, interior designers, architects and local business groups. The
Company is firmly committed to advertising and constantly  re-evaluates the most
efficient means of reaching prospective customers.

     The  Company's  marketing  also  emphasizes  its  commitment  to recycling.
Through its remanufacturing process, the Company recycles several million pounds
of office  systems  furniture  each year that might  otherwise  be  deposited in
landfills.  Some  companies  have adopted  recycling  policies or programs  that
require those businesses 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 developed its asset banking program in 1994 as a
means to offer  additional  services  to larger  middle  market and  Fortune 500
businesses who  reconfigure,  dismantle and warehouse  large  quantities of Work
Stations  as an ongoing  part of their  operations.  The asset  banking  program
allows  businesses to trade-in used Work Stations by "depositing"  them with the
Company in  exchange  for a "credit"  based on current  list  prices of new Work
Stations 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  and are not  expected  to be
returned to the customer.  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 customer
has the option to receive  cash  rather  than a "credit"  toward a Work  Station
purchase. The effect of the program is to make a customer's used Work Stations a
renewable asset. 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 Company also  provides
value-added services,  such as design and project management,  without charge to
the  customer  to enhance  the  attractiveness  of the  program.  The Company is
currently  able to offer both  Herman  Miller and Haworth  Work  Stations in the
program.

     Rental  Program.  The  Company's  rental  program  offers a  cost-effective
alternative to ownership of Work Stations. Under the rental program, the Company
rents Work  Stations  for a minimum  term of six  months.  Rates  charged by the
Company vary with the term of the rental,  with higher  rates being  charged for
terms of less  than one year.  Rent  payments  typically  are due  monthly  from
customers  during the term of the  rental.  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 for an  additional  profit.  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.

     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 GSA program  became a solid  contributor to 1998 sales volumes and
the Company believes that it can continue to expand this program.

Customers

     The  Company's  customers  range  from  small  businesses  to  Fortune  500
companies.  The  typical  size of a  customer  order  is ten  Work  Stations  or
approximately  $25,000.  Profit margins on smaller orders  generally are greater
than on larger orders by Fortune 500 companies due to volume discounts  provided
by  manufacturers  of new Work  Stations on large  orders,  which the Company is
required to meet to compete for such orders.  The Company is not dependent  upon
any single  customer or any single group of customers for a significant  portion
of its sales. In 1998, 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 both the purchase of used
Work  Stations  and the sale of  remanufactured  and "as is" Work  Stations.  In
purchasing used Work Stations, the Company competes with manufacturers, dealers,
brokers and other remanufacturers.  The competition between  remanufacturers and
either  manufacturers  or  dealers  generally  takes  place in  connection  with
trade-ins  by end-users of used Work  Stations  for new Work  Stations.  Brokers
typically  purchase  used Work  Stations for resale to end-users  and  customers
which may include the Company,  while other  remanufacturers  generally purchase
Work Stations for their own remanufacturing activities.

     The  Company  competes  with  manufacturers,  dealers,  brokers  and  other
remanufacturers  in the sale of its  remanufactured  and "as is" Work  Stations.
Competition  is  primarily  based upon  price,  delivery,  design,  quality  and
customer service. Certain manufacturers, such as Steelcase,  remanufacture their
own brand of used Work Stations for resale to customers. These manufacturers and
their  dealers 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  innovative  marketing
programs,  direct sales force,  discount pricing and customer service.  However,
manufacturers and dealers of new and  remanufactured  Work Stations have certain
competitive advantages including established distribution channels and marketing
programs,  substantial financial strength,  long-term customers, ready access to
component  parts,  and  availability  of used Work Stations  through  trade-ins.
Manufacturers  also can sell new Work  Stations  at very  substantial  discounts
which reduces the Company's  pricing  advantage.  Such deeply  discounted sales,
however,  generally  occur  only for  very  large  orders  which  often  provide
remanufacturers  such as the  Company  the  opportunity  to  acquire  used  Work
Stations of such purchasers at very attractive prices.

     The Company believes it is the largest  independent  remanufacturer 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 more  comprehensive  than the
services provided by most other  remanufacturers.  Many remanufacturers  provide
minor  repair  services,  but  lack  the  personnel,  equipment  and  facilities
necessary to completely remanufacture Work Stations. The Company's manufacturing
facilities include all of the equipment required to produce  remanufactured Work
Stations including  sanding,  painting,  drying,  woodworking and reupholstering
equipment.



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
no trademarks or patents.

     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  that  the
remanufacturing of such Work Stations does not constitute an infringement of 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.

     The Company  intends to continue to review existing  patents  applicable to
Work Stations in the ordinary course of manufacturing new component parts.

Seasonality and Backlog

     In prior years, the Company noted a seasonal trend of lower sales volume in
the second and third quarters, but for the past two years the Company has had no
discernable pattern of seasonality. Because the Company recognizes revenues upon
shipment and  typically  ships Work Stations  within three 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 three weeks of receipt of an order.
The Company's backlog at December 31, 1998 was approximately $2,439,000.

Employees

     As of  December  31,  1998,  the  Company  had  212  full  time  employees,
consisting of 81 manufacturing and remanufacturing personnel, 10 sales managers,
45  salespersons,  26  installers,  2 marketing  specialists,  10  designers,  6
customer service,  25  administrative  support and 7 management  employees.  The
Company also had 3 part time employees.  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.  The executive  officers and substantially all of the salespersons of
the  Company  have  agreed  that  they  will not  disclose  certain  proprietary
information of the Company, and upon termination,  will not solicit any customer
of the Company for two years and will not compete with the Company for one year.
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
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 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 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.  In  addition,  the Company has  obtained  "key-man"  insurance in the
amount of $3,500,000 on the life of its former chief executive  officer,  naming
the Company as sole beneficiary.

Item 2.  .........Description of Property
 
     The  Company  leases  180,000  square  feet of  space  at its  facility  in
Richmond,  Virginia and 91,000  square feet of space at its facility in Lansing,
Michigan.  The Richmond lease expires in July 2002. The Company subleases 36,000
square feet at its Richmond  facility.  The Lansing  lease  expires in September
2000,  subject to a one-year renewal option. The Company also has numerous other
leases for its sales  offices  throughout  the states 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 its purposes.

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

     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 has been held 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).  At the valuation date,  October 1, 1998, this amount was
$1,115,625.

     Management  of the  Company  has  reviewed  the  circumstances  of the  TFM
acquisition  and has  determined  that the  indemnification  obligations  of the
former TFM  shareholders  exceed the $1.3  million  agreed value of the stock in
escrow.  Open Plan Systems has  requested  the escrow agent to retain all of the
stock and has  served  notice of the  indemnification  claims to the  former TFM
shareholders. As a result, no cash payment is due on any of the stock in escrow.
The former shareholders of TFM have disputed the indemnification  claims.  Under
the purchase agreement, the disputed indemnification claims must be arbitrated.

     If the Company  prevails on all of its claims in arbitration,  the escrowed
shares will be returned to the Company. Should the Company not prevail on all of
its  claims,  the  Company  may  be  required  to  make  cash  payments  to  the
shareholders in amounts designated by the arbitrator.  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  has been  recorded  as a  reduction  in
goodwill and shareholders' equity.

     On November 6, 1998, two former  officers of the Company filed a lawsuit in
the State of  Michigan,  30th  Judicial  Court,  asserting  among other  things,
non-compliance with the contractual terms of certain employment agreements.  The
plaintiffs  assert  damages of  approximately  $400,000  in the  aggregate.  The
Company  believes that these claims are without merit.  On the November 9, 1998,
the  Company  filed suit  against the two former  officers in the United  States
District  Court for the  Eastern  District  of  Virginia,  claiming  among other
things,  improper  use of  Company  assets.  Due to the  recent  nature of these
actions, the Company is unable to predict the ultimate outcome of these actions.


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.


<PAGE>


                                                      PART II


Item 5.  .........Market for Common Equity and Related Stockholder Matters

     Market for Common Stock. The Company's Common Stock is listed on the Nasdaq
National  Market under the symbol  "PLAN." The  following  table shows,  for the
periods indicated,  the high and low sales prices per share for the Common Stock
as reported by the Nasdaq National Market.
<TABLE>
<CAPTION>

Calendar Year                                                                                High        Low
<S>  <C> <C>                                                                               <C>         <C> 
     1997
         First Quarter ....................................................................$  9.25     $ 5.00
         Second Quarter....................................................................$  5.00     $ 3.50
         Third Quarter.....................................................................$  6.75     $ 3.50
         Fourth Quarter....................................................................$  6.25     $ 2.63
     1998
         First Quarter ....................................................................$  3.50     $ 2.63
         Second Quarter....................................................................$  2.82     $ 1.94
         Third Quarter.....................................................................$  3.13     $ 2.06
         Fourth Quarter....................................................................$  3.00     $ 1.94
     1999
         First Quarter (through March 16, 1999)............................................$  2.92     $ 2.13 
</TABLE>

     As of March 18, 1999, there were  approximately  1,320 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
capital stock. The Company  currently  intends to retain earnings of the Company
to support operations and to finance expansion and therefore does not anticipate
paying cash dividends on the Common Stock in the foreseeable future. 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.
<PAGE>

Item 6. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations

1998 Compared to 1997

     Net Sales.  Net sales for the year ended  December  31, 1998  increased  to
$33.7  million  from $32.0  million for the year ended  December  31,  1997,  an
increase of 5.3%. The increased  volume was the result of continuing  demand for
remanufactured  office  systems and increased  sales at nine of the Company's 12
sales  offices.  Also  contributing  to the improved sales were shipments to the
federal  government which in large part offset a single major $1.4 million order
in 1997. During 1998, three sales offices were closed as part of the operational
restructuring  recorded in the second  quarter and discussed in detail below.  A
key element of the Company's  sales strategy  during the second half of the year
was the return to a focus on the Company's core  remanufacturing  strategy which
includes  the  remanufacture  of Herman  Miller and Haworth Work  Stations.  The
Company's  sales  strategy  remains  focused  on a direct  sales  force in those
markets of sufficient potential to justify the investment required.

     Operational  Restructuring.  The Company recorded a charge of $1,290,000 in
the second quarter of 1998. The  restructuring  charge of $1,290,000  recognizes
the costs related to three  important  strategic  initiatives:  1) A return to a
focus on the core remanufacturing business; 2) streamlining and consolidation of
warehouse  operations;  and 3)  consolidation  of  existing  sales  offices  and
reductions in sales  training  staff.  Pursuant to the  restructuring  plan, the
Company refocused on producing  remanufactured product, reduced excess warehouse
space,   divested   certain  assets   associated   with  the  new  Work  Station
manufacturing  capabilities,  and  streamlined  operations and reduced sales and
administrative staffing by approximately 30 people.

     The restructuring charge recorded included approximately $400,000 for lease
termination costs,  $600,000 for asset writedowns,  and $100,000 for other costs
associated  with  streamlining  operations.  The Company  believes  that it will
achieve annual cost  reductions of  approximately  $1,500,000 as a result of the
restructuring. During the third and fourth quarters, the Company disposed of all
fixed assets included in the restructuring and incurred substantially all of the
severance and lease termination  costs associated with the  restructuring  plan.
Approximately  $100,000 of the reserve remains to complete the lease termination
programs and warehouse consolidations. At this time management believes that the
economic impact of this plan is consistent with what was originally estimated.
 
     Under the restructuring plan, the Company reduced its warehousing  capacity
in Dallas, Atlanta,  Cincinnati and Richmond as well as at its Lansing, Michigan
facility.  The plan called for the  reduction  of 156,000  square feet of leased
warehouse  space.  Additionally,  the Company has divested certain metal working
equipment and has written off its investment in new software acquired to support
new furniture  manufacturing  operations.  This supports the Company's return to
its focus on  remanufacturing.  The Company  believes  that these  programs will
reduce annual  production  costs by  approximately  $450,000 and will help it to
return to gross margins that are more in line with pre-1997 levels.

     As part of the sales office restructuring program implemented at the end of
the second  quarter,  the Company closed its sales offices in Dallas,  Charlotte
and Baltimore and reduced sales  training  staff in certain other  markets.  The
sales offices  closed  contributed  less than $800,000 in sales during 1998. The
thrust of this program was to reduce the number of low production  sales offices
and personnel.  The Charlotte,  Baltimore and Dallas markets will be serviced by
independent sales  representatives  or dealers.  The Company does not anticipate
that these  changes  will have a  material  adverse  impact on sales  volumes in
future periods.


     Gross Margin.  The Company's  gross margin  decreased  from $8.4 million or
26.2% for the year ended December 31, 1997 to $7.9 million or 23.5% for the year
ended December 31, 1998. This was caused by increased  overhead costs during the
early  part of 1998 as well as higher  material  costs  and  lower  productivity
earlier in the year.  During the first half of 1998, the Company's  gross margin
percentage  was 17.5%.  The gross  margin  percentage  improved  to 29.1% in the
second  half  of  1998.  The  effect  of  the  restructuring  actions,  improved
manufacturing  productivity and other cost reduction  activities resulted in the
improved  margins.  In 1998,  the  Company  experienced  less price  discounting
pressure than in 1997.

     The Company is continuing to analyze its  procurement  options with a major
emphasis on determining the best,  most efficient  manner of procuring each item
used in the manufacture and production of its product offerings. The Company has
implemented a three-pronged  approach to product  acquisition.  The Company will
continue to purchase  product on the used furniture market when the cost of such
product does not exceed certain pricing thresholds, it will purchase new product
to meet demand when the purchase price is less than that of  remanufacturing  or
manufacturing the part, and it will manufacture certain component parts where it
is  economically  advantageous  to do so. During 1998, the Company  successfully
refocused  itself  on  reducing  the  cost  of  its   remanufactured   products.
Additionally, the Company believes that it can continue to trim inventory levels
for certain items.


     Operating Expenses. Selling expenses increased by 10.8% to $7.2 million for
the year ended  December 31, 1998 from $6.5 million for the year ended  December
31, 1997. Selling expenses also increased as a percentage of sales. The increase
in  selling  expenses  was  caused by the  Company's  efforts  in early  1998 to
increase  the size of its  sales  force  and  branch  office  network.  As noted
previously,  the Company restructured its sales efforts at the end of the second
quarter of 1998 to bring these costs more in line with expected  revenue  trends
and  provide a more solid base for future  growth.  When the  Company  opens new
sales  offices,  it typically  takes several  years to generate  enough sales to
provide targeted returns.  New sales offices are therefore  initially a drain on
Company  profits and the Company plans to carefully  manage the timing of future
openings of new sales offices.  With the Company's emphasis on its current sales
office structure, it expects to decrease these costs as a percentage of sales in
1999, continuing the positive trend established in the second half of 1998.

     General and  administrative  expenses increased by 7.7% to $2.8 million for
the year ended  December 31, 1998 from $2.6 million for the year ended  December
31, 1997.  This was primarily  related to increases in corporate  management and
personnel  expenses  during the early part of 1998.  During  1998,  the  Company
incurred   significant   expenses  related  to  significant  changes  in  senior
management.  In  1997,  the  Company  dedicated  significant  resources  to  the
evaluation  of  potential  business  combinations  and  acquisitions  that  were
ultimately determined not to be good strategic fits for the Company. The Company
believes  that it has added the  appropriate  resources to manage the  Company's
current  operations and still  aggressively  pursue future  growth.  The Company
significantly  reduced  these  expenses in the latter part of 1998,  with second
half 1998 expenses down $555,000 from the first half of 1998.

     Other  Non-Operating  Income and  Expenses.  Total other income and expense
decreased from income of $14,000 for the year ended December 31, 1997 to expense
of $248,000 for the year ended December 31, 1998.  The primary  reasons are that
the Company drew down its entire cash balance and borrowed on its line of credit
during  1997.  Bank debt  declined  from $2.8  million  at the end of the second
quarter  of 1998 to $1 million  by 1998  year-end.  The  Company  believes  that
non-operating  expenses will decrease in 1999 as the Company continues to reduce
debt balances.

     Income Taxes.  The Company  recorded no tax benefit for the year as opposed
to a benefit of  $269,000  in the prior  year.  As a result of recent  operating
losses and the  uncertainty  of the  realization  of the  potential tax benefits
thereof,  the Company has not  recorded  potential  income tax  benefits of $1.3
million for 1998. The deferred  income tax asset of $1.3 million at December 31,
1998 has been offset by a valuation allowance.

     Net Loss.  The net loss for the year ended December 31, 1998 was $3,933,000
versus a loss of $748,000 for the year ended December 31, 1997. The net loss was
principally caused by higher production costs relative to sales revenue,  higher
selling expenses and the operational restructuring charge.


Liquidity and Capital Resources

     Cash Flows from Operating  Activities.  Net cash provided by operations was
$1.2 million for the year ended December 31, 1998 versus cash used by operations
of $3.5  million for the year ended  December  31,  1997.  The  increase in cash
provided by operations is due primarily to significantly lower inventory levels.
The  decrease  in  inventories  is due to an  aggressive  program  of  inventory
reduction.  The  Company  believes  that it will  continue  to make  progress in
reducing  inventory levels in 1999.  Accounts  receivable  increased,  primarily
related to government accounts.

     Cash Flows from Investing Activities. Net cash used in investing activities
was $.4 million in 1998 versus $1.4  million in 1997.  The decrease in investing
activities  was the result of the Company  reducing its investment in equipment.
The Company  anticipates capital spending in 1999 to be less than $600,000 as it
further  automates  its sales  offices and  marketing  activities  and purchases
production equipment to make products more efficiently.

     Cash Flows from Financing Activities. Net cash used in financing activities
was $.9 million in 1998 versus net cash provided by financing activities of $1.9
million in 1997.  In 1997,  the Company had to borrow from its line of credit to
fund the additions to  inventory.  As inventory  levels  decreased in the latter
half of 1998, the Company used its cash flow to pay down debt.

     Expected Future Cash Flows.  Cash provided by operating  activities  should
increase in 1999 as the Company expects that increases in profitability  will be
coupled with  decreases in inventory and  receivables.  The Company  anticipates
that  current  cash  balances  plus cash flows  from  operating  activities  and
borrowings  under its line of credit will be adequate to fund its short term and
long term  capital  needs.  As  discussed in Item 3, the Company has a potential
obligation to pay cash of up to $1,115,625  to the former  shareholders  of TFM,
pending the results of  arbitration.  If any such  payments  are  required,  the
Company expects there will be adequate  availability under its line of credit to
enable them.

     The Company does not currently  anticipate making business  acquisitions in
1999.

Year 2000 Issues

     Many existing  computer  programs use only two digits to identify a year in
the date field.  These programs were designed and developed without  considering
the  impact  of the  upcoming  change in the  century.  If not  corrected,  many
computer  applications  could fail or create erroneous results by or in the year
2000.  The potential  costs and  uncertainties  to companies in addressing  this
issue (the "Year 2000  issue")  will  depend on a number of  factors,  including
their software and hardware and the nature of their  industries.  Companies must
also  coordinate  with other entities with which they  electronically  interact,
including suppliers, customers, creditors and financial service organizations.

     The Company has  examined the Year 2000 issue and the  potential  costs and
consequences to the Company in addressing this issue. The Company has determined
that its existing  systems are "Year 2000"  compliant  and therefore the Company
will not have to convert any existing  software,  hardware and telephone systems
or manufacturing  equipment,  in order to process transactions in the Year 2000.
As a result, management believes the Year 2000 issue is not expected to material
impact on the Company's operations.

     In assessing  the material  risks to the  Company's  business from the Year
2000 problem,  the Company has  considered the Year 2000 readiness of suppliers,
customers  (including  the federal  government),  financial  service  providers,
public  utilities,  telecommunication  service providers and other third parties
with which it does business.  Although the Company has taken,  and will continue
to take,  reasonable  efforts to gather  information  to determine the Year 2000
readiness of third parties,  such  information may not be provided  voluntarily,
may be otherwise  unavailable,  or may not be reliable. The Year 2000 compliance
of third parties is  substantially  beyond the Company's  knowledge and control,
and there can be no assurances  that the Company will not be adversely  affected
by the failure of a third party to adequately address the Year 2000 problem.

     The Company  will  continue  to assess its  exposure to the Year 2000 issue
with regards to new  technology  acquired or  additional  entities with which it
interacts and, if necessary,  appropriate  contingency  plans will be developed.
Amounts  expended to date  associated  with the Company's Year 2000 efforts have
not been material.  There can be no assurance that the Company's  systems or the
systems of other  companies  on which the Company  relies will not be  adversely
affected by the Year 2000 issue.


Seasonality and Impact of Inflation

     In prior years,  the Company noted a seasonal  trend of lower sales volumes
in the second and third  quarters  but for the past two years the Company has no
discernable pattern of seasonality. Because the Company recognizes revenues upon
shipment and  typically  ships Work Stations  within three weeks of an order,  a
substantial  portion of the  Company's  revenues in each  quarter  results  from
orders  placed by customers  during that  quarter.  As a result,  the  Company's
results may vary from quarter to quarter.

     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.

Forward-Looking Statements

     The foregoing discussion contains certain forward-looking statements, which
may be identified  by phrases such as "the Company  expects" or words of similar
effect. In addition,  from time to time, the Company may publish forward-looking
statements  relating  to such  matters  as  anticipated  financial  performance,
business prospects and similar matters. The Private Securities Litigation Reform
Act of 1995 provides a safe harbor for forward-looking statements. 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 1999 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.
 
     Potential  Limitations  on  Future  Growth.  The  Company  has  experienced
significant  growth  since  it  commenced  operations  in  1989.  The  Company's
continued  growth will be dependent in part on the  Company's  ability to manage
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 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  future growth will not
be limited by insufficient cash flow or the lack of adequate  financing required
to fund such growth.

     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 Supply of Work Stations and Component  Parts.  The Company
presently  purchases  only used Herman  Miller and Haworth Work  Stations in its
remanufacturing  operations.  The Company  does not have any binding  agreements
relating to the  purchase of used Herman  Miller or Haworth  Work  Stations  for
remanufacturing  and generally purchases such used Work Stations 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 Work  Stations  at  competitive  prices,  the success of the Company in the
future will depend in part upon its continued  ability to obtain Herman  Miller,
Haworth and other  manufacturers'  used Work  Stations  for  remanufacturing  in
sufficient quantities and at competitive prices. While the Company believes that
the 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  which 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 manufacture 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  produce  or  purchase
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.

     Dependence on Sales Office  Profitability.  The Company  depends heavily on
its sales offices to provide revenue growth.  The Company has opened several new
offices in the past two years. The Company's  experience indicates that it takes
several years 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.  An  inability  to
increase  revenues  of new  sales  offices  to  levels  that  would  offset  the
continuing expenses of such sales offices may adversely affect the profitability
of the Company's business.

     No Assurance of Expansion of Product  Lines and  Business.  The Company has
concentrated  its business on  remanufacturing  Work  Stations  manufactured  by
Herman Miller and Haworth. The Company has considered expanding its product line
to include Work Stations of other manufacturers (particularly Steelcase) through
the acquisition of companies  specializing in remanufacturing  products of those
manufacturers or the establishment of additional remanufacturing facilities. The
Company has limited experience in remanufacturing Work Stations of manufacturers
other than Herman  Miller and  Haworth.  Due to the  differences  in and lack of
interchangeability  of the various  Work  Stations and certain  component  parts
produced by the major manufacturers, the Company's expansion of its 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  historical  gross
margins.  The failure of the  Company to expand  successfully  its product  line
could have a material  adverse  effect on the  growth and  profitability  of the
Company's business.

     Dependence Upon Primary Remanufacturing  Facilities.  The Company primarily
remanufactures  Herman  Miller  Work  Stations  at  one  facility  in  Richmond,
Virginia,  and  Haworth  Work  Stations at one  facility  in Lansing,  Michigan.
Although the Company  presently  maintains  $3,000,000 of business  interruption
insurance on the Richmond facility and $250,000 of such insurance on the Lansing
facility,  a  lengthy  interruption  of its  remanufacturing  operations  at the
Richmond  or Lansing  facilities  would have a  material  adverse  effect on the
Company's results of operations and financial condition.

     Tax Matters Associated with Prior S Corporation Status. Until May 31, 1996,
the Company had elected to be taxed under  Subchapter S of the Internal  Revenue
Code of 1986, as amended,  as an S Corporation  for federal and state income tax
purposes since its  incorporation in 1989.  Unlike a regular or "C Corporation,"
an S Corporation is generally not subject to income tax at the corporate  level;
instead,  the S Corporation's income is taxed on the personal income tax returns
of its  shareholders.  The Company's  status as an S Corporation  was terminated
upon commencement of its initial public offering. If the Company's S Corporation
status  were  denied for any periods  prior to this  termination  by reason of a
failure to satisfy the S Corporation election or eligibility requirements of the
Code,  the  Company  would be  subject  to tax on its  income  as if it were a C
Corporation for these periods. The payment of any such tax could have a material
adverse effect on the Company's financial condition and results of operations if
the  full  amount  thereof  is not  reimbursed  by  those  individuals  who were
shareholders  of  the  Company  prior  to  the  initial  public  offering.  Such
shareholders  have  agreed to pay  their pro rata  share of any such tax and any
applicable  interest,  penalties  and expenses in the event that the Company's S
Corporation  status  is denied  for any  taxable  periods  up to the date of the
termination of the Company's S Corporation status on May 31, 1996.

     Potential Fluctuations in Quarterly Results. Because the Company recognizes
revenues upon shipment and typically  ships Work Stations  within three 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.

     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 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.  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  the  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 operation.  Regardless of the validity or the successful assertion of
such  claims,  the  Company  would  incur  significant  costs and  diversion  of
resources with respect to the defense thereof.
<PAGE>

Item 7.           Financial Statements

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

         Report of Independent Auditors

         Consolidated Balance Sheets at December 31, 1998 and 1997

         Consolidated Statements of Operations for the Years Ended December 31, 
         1998 and 1997

         Consolidated Statement of Shareholders' Equity for the Years Ended
         December 31, 1998 and 1997

         Consolidated Statements of Cash Flows for the Years Ended December 31,
         1998 and 1997

         Notes to Consolidated Financial Statements

<PAGE>



Report of Independent Auditors


Board of Directors and Shareholders
Open Plan Systems, Inc.

     We have audited the accompanying  consolidated  balance sheets of Open Plan
Systems,  Inc.  as of December  31,  1998 and 1997 and the related  consolidated
statements of  operations,  shareholders'  equity,  and cash flows for the years
then ended.  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  generally  accepted  auditing
standards.  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, 1998 and 1997, and the consolidated results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

/S/ ERNST & YOUNG LLP

Richmond, Virginia
February 12, 1999
<PAGE>
                             OPEN PLAN SYSTEMS, INC.
                          Consolidated Balance Sheets
                             (amounts in thousands)

<TABLE>
<CAPTION>
 
                                                                             December 31
                                                                       1998              1997
                                                                ------------------------------------
<S><C>                                                          <C>                <C>    
Assets
Current assets:
   Cash and cash equivalents                                                        
                                                                $             2    $            73
   Accounts receivable, net                                               6,289              5,486
   Inventories (Note 3)                                                   6,908             10,780
   Prepaids and other                                                       672                686
   Refundable income taxes                                                  305                795
   Deferred income taxes (Note 7)                                             -                106
                                                                ------------------------------------
Total current assets                                                     14,176             17,926

Property and equipment, net (Note 4)                                      2,288              3,493
Goodwill, net  (Note 1)                                                   3,075              4,427
Other                                                                       466                468
                                                                ------------------------------------
Total assets                                                    $        20,005    $        26,314
                                                                ====================================
                                                                

Liabilities and shareholders' equity
Current liabilities:
   Revolving line of credit (Note 5)                            $           952    $         2,110
   Trade accounts payable                                                 1,995              2,411
   Accrued compensation                                                     263                393
   Other accrued liabilities                                                429                280
   Customer deposits                                                      1,000                841
   Notes payable                                                             20                126
                                                                ------------------------------------
Total current liabilities                                                 4,659              6,161

Deferred income taxes (Note 7)                                                -                110
                                                                ------------------------------------
Total liabilities                                                         4,659              6,271

Shareholders' equity (Notes 6 and 8):
    Preferred stock, no par value:                                                  
     Authorized shares - 5,000
     Issued and outstanding shares - none                                     -                  -
   Common stock, no par value:
     Authorized shares - 50,000
     Issued and outstanding shares - 4,672 - 1998                        19,324             20,088
                                   - 4,472 - 1997
   Additional capital                                                       137                137
   Accumulated deficit                                                   (4,115)              (182)
                                                                ------------------------------------
Total shareholders' equity                                               15,346             20,043
                                                                ------------------------------------
Total liabilities and shareholders' equity                      $        20,005    $        26,314
                                                                ====================================
</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>

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

<TABLE>
<CAPTION>
                                                                           Year ended
                                                                          December 31
                                                                     1998            1997
                                                                --------------------------------
<S><C>                                                          <C>                    <C>

Net sales                                                              $33,676         $31,968

Cost of sales                                                           25,765          23,593
                                                                --------------------------------
Gross profit                                                             7,911           8,375

Operating expenses:
   Amortization of intangibles                                             275             275
   Selling and marketing                                                 7,220           6,524
   General and administrative                                            2,811           2,607
   Operational restructuring                                             1,290               -
                                                                --------------------------------
                                                                         11,596           9,406
                                                                --------------------------------
Operating loss                                                          (3,685)         (1,031)

Other (income) expense:
   Interest expense                                                        236              70
   Interest income                                                         (12)            (68)
   Other, net                                                               24             (16)
                                                                --------------------------------
                                                                           248             (14)
                                                                --------------------------------
Loss before income taxes                                                (3,933)         (1,017)

Benefit for income taxes (Note 7)                                            -            (269)
                                                                --------------------------------
Net loss                                                               $(3,933)        $  (748)
                                                                ================================
Basic and diluted loss per share                                     $    (.86)       $   (.17)
                                                                ================================
Weighted average common shares outstanding                               4,582           4,472
                                                                ================================

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                            OPEN PLAN SYSTEMS, INC.
                Consolidated Statements of Shareholders' Equity
                     Years ended December 31, 1998 and 1997
                             (amounts in thousands)

<TABLE>
<CAPTION>

                                                                 Common           Additional         Retained
                                                                  Stock            Capital           Earnings            Total
                                                                                                    (Deficit)
                                                           -------------------------------------------------------------------------
<S>        <C>                                                   <C>                <C>              <C>                 <C>

           Balance at December 31, 1996                          $20,088            $137             $   566             $20,791
                                                                                                        
           Net loss for 1997                                        -                -                  (748)               (748)
                                                           -------------------------------------------------------------------------

           Balance at December 31, 1997                           20,088            137                 (182)             20,043

           Issuance of common stock (Note 6)                         352             -                   -                   352

           Reduction in connection with prior year's
           acquisition                                            (1,116)                                                 (1,116)

           Net loss for 1998                                        -                -                (3,933)             (3,933)
                                                           -------------------------------------------------------------------------

           Balance at December 31, 1998                          $19,324           $137              $(4,115)            $15,346
                                                           =========================================================================
</TABLE>





See accompanying notes to consolidated financial statements.
<PAGE>
                            OPEN PLAN SYSTEMS, INC.
                     Consolidated Statements of Cash Flows
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                                                       Year ended
                                                                                       December 31
                                                                                  1998             1997
                                                                            ----------------------------------
<S>  <C>                                                                      <C>               <C>  
Operating activities
Net loss                                                                      $      (3,933)    $        (748)
Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
     Provision for losses on receivables                                                166                59
     Depreciation expense                                                               788               631
      Amortization expense                                                              275               275
      Operational restructuring                                                       1,290                 -
     Loss on disposal of property and equipment                                          18                23
     Deferred income taxes                                                               (4)              (50)
     Changes in operating assets and liabilities:
       Accounts receivable                                                             (969)             (293)
       Inventories                                                                    3,847            (3,973)
       Prepaids and other current assets                                                  1              (255)
         Refundable income taxes                                                        490              (410)
         Other non-current assets                                                       (60)             (151)
       Trade accounts payable                                                          (416)              954
       Customer deposits                                                                159               186
       Accrued and other liabilities                                                   (458)              276
                                                                            ----------------------------------
Net cash provided by (used in) operating activities                                   1,194            (3,476)

Investing activities
Proceeds from sale of property and equipment                                            131                12
Purchases of property and equipment                                                    (484)           (1,461)
                                                                            ----------------------------------
Net cash used in investing activities                                                  (353)           (1,449)
</TABLE>
<PAGE>
                            OPEN PLAN SYSTEMS, INC.
               Consolidated Statements of Cash Flows (continued)
                             (amounts in thousands)


<TABLE>
<CAPTION>

                                                                                        Year ended
                                                                                        December 31
                                                                                  1998             1997
                                                                            -----------------------------------
<S>                                                                         <C>                     <C>    <C>    <C>    <C>    <C>
Financing activities
Net  (repayments) borrowings on revolving lines of credit                   $        (1,158) $         2,110
Principal payments on notes payable, long-term debt,
   and capital lease obligations                                                       (106)            (178)
Proceeds from sale of common stock net of issuance costs of $83                         352                -
                                                                            -----------------------------------
Net cash (used in) provided by financing activities                                    (912)           1,932
                                                                            -----------------------------------

Decrease in cash and cash equivalents                                                   (71)          (2,993)

Cash and cash equivalents at beginning of year                                           73            3,066
                                                                            ===================================
Cash and cash equivalents at end of year                                    $             2  $            73
                                                                            ===================================


Supplemental disclosures
Interest paid                                                               $           236  $            70
                                                                            ===================================
Income taxes paid                                                           $             -  $           191
                                                                            ===================================

</TABLE>



See accompanying notes to consolidated financial statements.

<PAGE>

OPEN PLAN SYSTEMS, INC.
Notes to Consolidated Financial Statements
December 31, 1998 and 1997


Note 1. Summary of Significant Accounting Policies

Open Plan  Systems,  Inc.  (the  "Company")  was  incorporated  in  Virginia  in
September  1989 and is a  remanufacturer  and  marketer  of modular  office Work
Stations. The Company remanufactures Herman Miller and Haworth product lines and
markets  them  through  Company  sales  offices  located  in the East  Coast and
Mid-West regions of the United States.  In addition,  the Company also sells new
product office workstation components from other manufacturers. The following is
a description of the Company's more significant accounting policies.

Principles of Consolidation

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly-owned  subsidiary.  All significant intercompany balances
and transactions have been eliminated in consolidation.

Inventories

Inventories  are stated at the lower of average cost or market.  Work-in-process
inventories  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 represents the excess of the purchase price of acquired businesses over
the  fair  value  of  net  assets   acquired  and  is  being  amortized  on  the
straight-line  method  over a period  of twenty  years.  The  carrying  value of
goodwill is  periodically  evaluated by management  based on  undiscounted  cash
flows of the related business units to determine if there has been an impairment
in value.  Accumulated  amortization  was  $530,000 and $295,000 at December 31,
1998 and 1997, respectively.

Revenue Recognition

Revenues from product sales are recognized upon shipment. Title and risk of loss
pass to the customer upon shipment.

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 $217,000
and  $326,000 at December  31, 1998 and 1997,  respectively.  Advertising  costs
charged to expense totaled $887,000 in 1998 and $653,000 in 1997.

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.  Note 1.
Summary of Significant Accounting Policies (Continued)

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 generally  accepted
accounting principles 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

In 1997, the Financial  Accounting  Standards Board (FASB) issued  Statement No.
128,  Earnings Per Share.  Statement 128 replaced the calculation of primary and
fully  diluted  earnings  per share with basic and diluted  earnings  per share.
Unlike  primary  earnings  per share,  basic  earnings  per share  excludes  any
dilutive  effects of  options,  warrants  and  convertible  securities.  Diluted
earnings  per share is very similar to the  previously  reported  fully  diluted
earnings per share. For 1998 and 1997, there was no difference between basic and
diluted earnings per share. 799,000 and 172,500 stock options have been excluded
from the  calculation of earnings per share in 1998 and 1997,  respectively,  as
their impact would have been anti-dilutive.

Comprehensive Income

In 1997,  the FASB issued  Statement No. 130,  Reporting  Comprehensive  Income.
Statement  130  requires  that all items that are  recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  The Company had no components of  comprehensive  income for 1997 or
1998,  therefore  the  adoption  of SFAS No. 130 had no impact on the  financial
statements.

Note 2. Operational restructuring

During the second quarter of 1998, the Company  recorded a restructuring  charge
of  $1,290,000  related  to  warehouse  consolidation,  returning  to a focus on
remanufacturing and a sales office consolidation plan. Significant components of
the operational  restructuring  charge were $138,000 for severance pay, $418,000
related to anticipated  payouts under lease  agreements and estimated  losses of
$627,000 on the disposal of certain fixed assets.  In connection with this plan,
the  Company  reduced  sales and  administrative  staffing by  approximately  30
people.

The  Company  has  disposed  of  all  the  fixed  assets   contemplated  in  the
restructuring   and  incurred   substantially  all  costs  associated  with  the
restructuring  plan.  No  adjustment  to the original  charge  recorded has been
necessary.  Approximately  $100,000 remains accrued in other  liabilities and is
expected to closely  approximate the remaining  costs to be incurred,  which are
principally related to lease terminations.
<PAGE>

Note 3. Inventories

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

                                                                        December 31
                                                                   1998             1997
                                                              ---------------- ----------------
<S>                                                              <C>               <C>   
Components and fabric                                            $     4,221       $    7,650
Jobs in process and finished goods                                     2,687            3,130
                                                              ---------------- ----------------
                                                                 $     6,908       $   10,780
                                                              ================ ================
</TABLE>

Note 4. Property and Equipment

Property and equipment by major classification was as follows (in thousands $):
<TABLE>
<CAPTION>

                                                                        December 31
                                                                   1998             1997
                                                              ---------------- ----------------
<S>                                                           <C>              <C>

Production and warehouse equipment                            $        2,123   $        2,725
Office equipment                                                       1,069            1,008
Vehicles                                                                 258              258
Leasehold improvements                                                   538              415
Construction-in-process                                                    -              397
                                                              ---------------- ----------------
                                                                       3,988            4,803
Accumulated depreciation and amortization                             (1,700)          (1,310)
                                                              ---------------- ----------------
                                                              $        2,288   $        3,493
                                                              ================ ================
</TABLE>

Note 5. Indebtedness

During December 1998, the Company negotiated a new revolving line of credit with
a  financial  institution,  and the  prior  line of  credit  was paid off in its
entirety.  The new credit  facility  provides for  borrowings  up to  $5,000,000
through  December  2001.  Borrowings  under the line of credit bear  interest at
variable  rates,  the  determination  of which may vary  depending  on operating
results.  Outstanding borrowings under the line amounted to $952,000 at December
31,  1998 and bore  interest  at a rate of  8.25%.  Advances  under the line are
secured by substantially all assets and are limited to specified  percentages of
accounts receivable.  At December 31, 1998, the Company had $2,048,000 available
under its line of  credit.  Under the terms of the  agreement,  the  Company  is
required to maintain a defined tangible net worth and an interest coverage ratio
beginning in 1999. The Company was in compliance  with all covenants at December
31, 1998.

Note 6. Shareholders' Equity

The Company has an agreement  with a former  officer to purchase  upon his death
all of the  shares  of common  stock  owned at that  time.  In order to fund its
potential purchase obligations under this agreement, the Company owns and is the
beneficiary  of certain life  insurance  policies.  The  purchase  price for the
shares will be the fair market value of the shares on the date of death,  except
that the  Company's  purchase  obligation  under the agreement is limited to the
face amounts of the policies which total $3,500,000.

The Company maintains two stock option plans, the 1996 Stock Incentive Plan (the
"Incentive Plan") and the 1996 Stock Option Plan for Non-Employee Directors (the
"Outside Directors' Plan").
<PAGE>

Note 6. Shareholders' Equity (continued)

     The maximum  aggregate  number of shares of common stock that may be issued
pursuant to the Outside  Directors' Plan is 25,000.  The Outside Directors' Plan
will terminate  following the annual meeting of shareholders in 2000.  Under the
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  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 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, 1998 and
December  31,  1997,  respectively,  the Company  had 14,000 and 10,000  options
outstanding  and  exercisable.  These  options had  weighted  average  remaining
contractual  lives of nine years.  The exercise  prices for these  options were:
4,000 at $11.75; 4,000 at $5.97; and 6,000 at $2.14 for 1998 and 5,000 at $11.75
and 5,000 at $5.97 for 1997. In 1998 and 1997, respectively, the Company granted
6,000 and 5,000 options under the Plan with exercise  prices of $2.14 and $5.97.
The  weighted  average  fair value of these  options at grant date was $1.20 and
$4.03 per share in 1998 and 1997,  respectively.  2,000  options with a weighted
average exercise price of $6.62 were cancelled during 1998.

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 incentive  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 an incentive 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:
<TABLE>
<CAPTION>

                                                                                Average
                                                                                Exercise
                                                                   Shares          Price
                                                                 -------------- -----------
<S>    <C>                                                       <C>              <C>  
Outstanding at December 31, 1996                                  109,375         $9.88
       Issued                                                     109,375         $5.98
       Cancelled                                                  (56,250)        $8.36
                                                                 --------------
Outstanding at December 31, 1997                                  162,500         $7.79
       Issued                                                     177,500         $2.73
       Cancelled                                                 (155,000)        $5.29
                                                                 --------------
Outstanding at December 31, 1998                                  185,000         $4.97
                                                                 ==============

</TABLE>


The options  outstanding  at December  31, 1998 and 1997 had a weighted  average
remaining contractual life of six years. For options outstanding at December 31,
1998, 84,375 options had exercise prices and $5.97 and $9.88 and 100,625 options
had exercise prices between $2.44 and $3.88. For options outstanding at December
31, 1997,  3,125 options had an exercise price of $3.88 and 159,375 had exercise
prices  between  $5.97 and $9.88.  At December 31,  1998,  there were 30,990 and
53,062 options that were  exercisable  with weighted  average exercise prices of
$8.28 and $2.56,  respectively.  At December 31, 1997, there were 18,750 options
exercisable with a weighted average exercise price of $9.83. The options granted
in 1998 and 1997 had a  weighted  average  fair value at grant date of $1.54 and
$4.05 per share, respectively.
<PAGE>

Note 6. Shareholders' Equity (Continued)

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

                                                     Exercise
                                         Shares         Price 
                                         <S>            <C>

                                         150,000        $3.00
                                         150,000        $4.50
                                         150,000        $6.00
                                         150,000        $7.50
</TABLE>

All of the options are exercisable and expire June 30, 2003. These options had a
weighted average fair value at grant date of $.76 per share.

Concurrent  with the sale of stock to GLCC, the Company  entered into agreements
to  employee  two  members  of GLCC as its  chief  executive  officer  and chief
financial  officer  for terms of 18 months.  If the chief  executives  officer's
employment is terminated  prior to June 17, 1999,  the options held by GLCC will
expire one year after the date of such termination.
 
The  Company has elected to account  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 $323,000,  or $.07 per
share for the year ended December 31, 1998 and the net loss would have increased
by  $147,00,  or $.03 per share for the year  ended  December  31,  1997.  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 5.6%,
dividend  yield of 0.0%,  a weighted  average  expected  life of the option of 6
years and a volatility factor of .522 for 1998 and .706 for 1997.

Additionally,  the  Company  and  GLCC  entered  into a  Voting  and  Standstill
Agreement  whereby GLCC will beneficially own no more than 21% of the issued and
outstanding  shares of the Company on a fully diluted  basis,  provided that the
shares GLCC and its affiliates may acquire  pursuant to the 1996 Stock Incentive
Plan and 1996 Stock Option Plan for  Non-Employee  Directors shall not be deemed
to be additional shares.

Note 7. INCOME TAXES



The  provision  (benefit)  for income taxes is comprised  of the  following  (in
thousands $):
<TABLE>
<CAPTION>
                                                                               1998              1997
                                                                     ----------------- ----------------
<S><C>                                                               <C>               <C>
Current:
   Federal                                                           $            3    $         (198)
   State                                                                          1               (21)
                                                                     ----------------- ----------------
                                                                                  4              (219)
Deferred:
   Federal                                                                       (3)              (49)
   State                                                                         (1)               (1)
                                                                     ----------------- ----------------
                                                                                 (4)              (50)

                                                                     ----------------- ----------------
                                                                     $            -    $         (269)
                                                                     ================= ================

</TABLE>

<PAGE>

Note 7. Income Taxes (Continued)

A  reconciliation  of the benefit from income taxes for the year ended  December
31,  1998 and  December  31, 1997 and the amount  computed by applying  the U.S.
statutory  federal  income tax rate of 34% to income  before  income taxes is as
follows (in thousands $):
<TABLE>
<CAPTION>

                                                                                      1998              1997
                                                                           ------------------ -----------------
<S>                                                                        <C>                <C>    
Income tax benefits at U.S. statutory rates                                $       (1,337)    $         (347)
State taxes, net of federal benefit                                                  (157)               (21)
Amortization of goodwill                                                               86                 86
Other, net                                                                             96                 13
Valuation allowance                                                                 1,312                  -
                                                                           ------------------ -----------------
Total income tax benefit                                                   $            -     $         (269)
                                                                           ================== =================
</TABLE>

The  deferred  income tax  balances at December  31, 1998 and  December 31, 1997
consisted of the following (in thousands $):
<TABLE>
<CAPTION>
                                                                                      1998              1997
                                                                           ------------------ -----------------
<S><C>                                                                     <C>                <C>
Deferred tax assets
   Accounts receivable allowances                                          $          104     $           57
   Accrued Liabilities                                                                 75                 22
   Net operating losses                                                             1,113                 38
   Other                                                                              154                 35
   Valuation allowance                                                             (1,312)                 -
Deferred tax liabilities:
   Tax over book depreciation                                                        (134)              (156)
                                                                           ------------------ -----------------
                                                                                     
                                                                           $            -     $           (4)
                                                                           ================== =================
</TABLE>

Net operating loss carryforwards of $2.9 million expire in 2013.

As a result  of  operating  losses in 1998 and 1997 and the  uncertainty  of the
realization  of the  potential  tax  benefits  thereof,  the  Company has offset
potential  income tax benefits of $1.3 million with a valuation  allowance.  The
Company will  reevaluate  the  potential  realizability  of the net deferred tax
assets in future periods.

Note 8. Commitments and Contingencies

Lease Agreements

The Company  leases  office  space and  production  facilities  in Richmond  and
Lansing.  The Richmond  lease expires in July 2002. The Lansing lease expires in
September  2001.  In  addition,  the  Company  leases  its sales  offices  under
operating lease  agreements  expiring in various periods through  December 2002.
Automobiles are also leased under terms not exceeding three years.  All of these
leases are accounted for as operating leases.
<PAGE>

Future minimum lease payments were as follows at December 31, 1998 (in thousands
$):
<TABLE>
<CAPTION>

         Year

<S>      <C>                                                                       <C>

         1999                                                                      $         995
         2000                                                                                810
         2001                                                                                512
         2002                                                                                258
                                                                                   ---------------

                                                                                   $       2,575
                                                                                   ===============

</TABLE>


The above amounts have been reduced by expected  sublease  rentals of $86,000 in
1999 and $50,000 in 2000.

Rent expense amounted to $1,164,000 in 1998 and $977,000 in 1997.

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 has been held 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  stock traded at $2.25 per share on October 1,
1998  and  accordingly  the  amount  potentially   payable  to  the  former  TFM
shareholders would be $1,115,625.

Management of the Company has reviewed the  circumstances of the TFM acquisition
and  determined  that  the   indemnification   obligations  of  the  former  TFM
shareholders  exceed the $1.3 million  agreed value of the stock in escrow.  The
Company has requested the escrow agent retain all of the stock and served notice
of the  indemnification  claims to the former TFM shareholders.  As a result, no
cash payment is due on any of the stock in escrow.  The former  shareholders  of
TFM have  disputed  the  indemnification  claims and  pursuant  to the  purchase
agreement, the matter has gone to arbitration.

If the Company prevails on all of its claims in arbitration, the escrowed shares
will be  returned to the  Company.  Should the Company not prevail on all of its
claims, the Company may be required to make cash payments to the shareholders in
amounts  designated  by the  arbitrator.  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  has been  recorded as a reduction  in goodwill and
shareholders' equity.

Two  former  officers  of the  Company  have  filed  suit  against  the  Company
asserting,  among other things,  non-compliance  with the  contractual  terms of
certain employment agreements,  claiming damages of approximately  $400,000. The
Company believes these claims are without merit and intends to contest them. The
Company filed suit against the two former officers claiming, among other things,
improper use of Company assets.  Due to the recent nature of these actions,  the
Company is unable to predict what the ultimate outcome will be.
<PAGE>

Note 9. Employee Benefit Plan

In January  1995,  the  Company  adopted 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 $126,000 in 1998 and
$86,000 in 1997.

Note 10. Related Party Transactions


The Company  incurred  legal fees of $258,000 in 1998 and  $150,000 in 1997 to a
law firm in which one of the Company's directors is a principal.

A customer whose President is a director of the Company purchased  $1,500,000 of
product in 1997.


Note 11. 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 customer
orders and larger jobs typically require advance deposits.  The Company performs
credit  evaluations  of its  customers  prior to  delivery  or  commencement  of
services and normally  does not require  collateral.  Payments are typically due
within thirty days of billing.  The Company maintains an allowance for potential
credit   losses  and  losses  have   historically   been   within   management's
expectations.

The  carrying  values  of  amounts  classified  as  current  assets  or  current
liabilities  approximate  fair value due to the  short-term  maturities of these
instruments.


<PAGE>
Note 12. Selected Quarterly Financial Data (Unaudited)

Results of operations  for each of the quarters  during the years ended December
31, 1998 and 1997 are as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
                                                                     Quarter Ended
                                              ------------------------------------------------------------
                                               March 31st    June 30th    September 30th   December 31st
                                              ------------   ----------   ---------------  ----------------
<S>                                             <C>          <C>            <C>             <C> 
Year ended December 31, 1998

Net sales                                       $  7,900     $  8,332       $  9,600        $ 7,844
Gross Profit                                    $  1,644     $  1,189       $  2,757        $ 2,321
Operating income (loss)                         $ (1,141)    $ (3,157)*     $    321        $   292
Income (loss) before income taxes               $ (1,207)    $ (3,229)*     $    240        $   263
Net income (loss)                               $ (1,207)    $ (3,229)*     $    240        $   263
Earnings (loss) per common share                $   (.27)    $   (.72)      $    .05        $   .06

Year ended December 31, 1997
                                                                           
Net sales                                       $  6,437     $  7,164       $  9,408        $ 8,959
Gross Profit                                    $  1,461     $  2,154       $  2,544        $ 2,216
Operating income (loss)                         $   (586)    $      8       $    179        $  (632)
Income (loss) before income taxes               $   (549)    $     25       $    180        $  (673)
Net income (loss)                               $   (315)    $     25       $    147        $  (605)
Earnings (loss) per common share                $   (.07)    $    .01       $    .03        $  (.14)

</TABLE>

* Results of  operations  for the quarter ended June 30, 1998 include the impact
  of a restructuring charge of $1.3 million.

<PAGE>


Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

         None.


                                                     PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act

     The information  required by this item is incorporated  herein by reference
to the  Company's  definitive  Proxy  Statement  for its 1999 Annual  Meeting of
Shareholders to be filed within 120 days of the end of the 1998 fiscal year.

Item 10. Executive Compensation

     The information  required by this item is incorporated  herein by reference
to the  Company's  definitive  Proxy  Statement  for its 1999 Annual  Meeting of
Shareholders to be filed within 120 days of the end of the 1998 fiscal year.

Item 11. Security Ownership of Certain Beneficial Owners and Management

     The information  required by this item is incorporated  herein by reference
to the  Company's  definitive  Proxy  Statement  for its 1999 Annual  Meeting of
Shareholders to be filed within 120 days of the end of the 1998 fiscal year.

Item 12. Certain Relationships and Related Transactions

     The information  required by this item is incorporated  herein by reference
to the  Company's  definitive  Proxy  Statement  for its 1999 Annual  Meeting of
Shareholders to be filed within 120 days of the end of the 1998 fiscal year.
<PAGE>
Item 13. Exhibits, List and Reports on Form 8-K
<TABLE>
<CAPTION>

         (a)      Exhibits

                  The following exhibits are filed on behalf of the Company as part of this report:
<S>               <C>      <C> 

                  3(i)     Amended and Restated  Articles of  Incorporation,  incorporated by reference to
                           Exhibit 3(i) of the Registrant's Form SB-2 Registration  Statement, as amended,
                           File No. 333-3188.
                  3(ii)    Amended and Restated Bylaws,  incorporated by reference to Exhibit 3(ii) of the
                           Registrant's Form SB-2 Registration Statement, as amended, File No. 333-3188.
                  4        Form of Stock  Certificate,  incorporated  by  reference  to  Exhibit  4 of the
                           Registrant's Form SB-2 Registration Statement, as amended, File No. 333-3188.
                  10.1     Commercial Lease Contract,  dated May 4, 1993, between M.D. Hodges Enterprises,
                           Inc. and Open Plan Systems, Inc.,  incorporated by reference to Exhibit 10.2 of
                           the  Registrant's  Form  SB-2  Registration  Statement,  as  amended,  File No.
                           333-3188.
                  10.2     Open Plan Systems, Inc. 1996 Stock Incentive Plan, as amended,  incorporated by
                           reference to Exhibit 4.4 of the Registrant's  Form S-8 Registration  Statement,
                           File No. 333-15217.
                  10.3     Open Plan Systems, Inc. 1996 Stock Option Plan For Non-Employee  Directors,  as
                           amended,  incorporated by reference to Exhibit 4.4 of the Registrant's Form S-8
                           Registration Statement, File No. 333-15219.
                  10.4     Buy-Sell  Agreement,  dated  May 24,  1996,  between  the  Company  and Stan A.
                           Fischer,  incorporated  by reference to Exhibit 10.7 of the  Registrant's  Form
                           SB-2 Registration Statement, as amended, File No. 333-3188.
                  10.5     Buy-Sell  Agreement,  dated May 15,  1996,  between  the Company and Gregory P.
                           Campbell,  incorporated by reference to Exhibit 10.8 of the  Registrant's  Form
                           SB-2 Registration Statement, as amended, File No. 333-3188.
                  10.6     Tax Sharing  Agreement,  dated May 1, 1996, between the Company and each of the
                           shareholders  named therein,  incorporated  by reference to Exhibit 10.9 of the
                           Registrant's Form SB-2 Registration Statement, as amended, File No. 333-3188.
                  10.7     Form of Employee Non-Qualified Stock Option Agreement
                  10.8     Form of Non-Employee Director Non-Qualified Stock Option
                  10.9     Stock Purchase Agreement, dated September 24, 1996, between Open Plan Systems, Inc.,         
                           Immaculate  Eagle,  Inc.,  Paul A. Covert,  Todd A.  Thomann and Siimon,  Inc.,
                           incorporated  by  reference to Exhibit 2.1 of the  Registrant's  Form 8-K filed
                           October 16, 1996, File No. 0-20743.
                  10.10    Open Plan Systems, Inc. Bonus Program for Officers
                  10.11    $5,000,000 Line of Credit Agreement with Fleet Bank *
                  10.12    Management and Consulting Agreement between Open Plan Systems, Inc. and Great Lakes Capital, LLC dated
                           June 17, 1998 incorporated by reference to Exhibit 10.17 of the Registrant's Form 10-Q filed August 14,
                           1998
                  10.13    Registration Rights Agreement between Open Plan Systems, Inc. and Great Lakes Capital, LLC dated June
                           17, 1998 incorporated by reference to Exhibit 10.20 of the Registrant's Form 10-Q filed August 14, 1998
                  10.14    Voting and Standstill Agreement between Open Plan Systems, Inc. and Great Lakes Capital, LLC dated June
                           17, 1998 incorporated by reference to Exhibit 10.19 of the Registrant's Form 10-Q filed August 14, 1998
                  10.15    Commercial Lease Contract, dated May 1, 1998, between Liberty Property Limited Partnership. and Open
                           Plan Systems, Inc.
                  10.16    Commercial Lease Contract, dated September 18, 1998, between Quality Dairy Company and Open Plan
                           Systems, Inc.
                  11       Statement re: Computation of Earnings Per Share
                  21       Subsidiaries of the Registrant
                  23.1     Consent of Ernst & Young LLP*
                  23.2     Consent of Ernst & Young LLP*
                  27       Financial Data Schedule   * (filed electronically only)
         ________
         *  Filed herewith

         (b)      Reports on Form 8-K.

                  None.

</TABLE>
<PAGE>

 
                                                    SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                         OPEN PLAN SYSTEMS, INC.


                                                         By: /s/ John L. Hobey 
                                                             John L. Hobey
March 24, 1999                                           Chief Executive Officer


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>

                 Signature                                         Title                          Date
<S>                                            <C>                                          <C>

               /s/ John L. Hobey               Chief Executive Officer                      March 24, 1999
                John L. Hobey

            /s/ William F. Crabtree            Chief Financial Officer (principal           March 24, 1999
            William F. Crabtree                financial officer)

              /s/ Neil F. Suffa                Corporate Controller and Secretary           March 24, 1999
               Neil F. Suffa                   (principal accounting officer)

          
 .           /s/ Troy A. Peery, Jr.
            Troy A. Peery, Jr.                 Director                                     March 24, 1999
                                                            
            /s/ Anthony F. Markel
             Anthony F. Markel                 Director                                     March 24, 1999

       /s/ Theodore L. Chandler, Jr.                                        
         Theodore L. Chandler, Jr.             Director                                     March 24, 1999

           /s/ Robert F. Mizell
             Robert F. Mizell                  Director                                     March 24, 1999

           /s/ W. Sydnor Settle
             W. Sydnor Settle                  Director                                     March 24, 1999

           /s/ Edmund W. Mugford
             Edmund W. Mugford                 Director                                     March 24, 1999

          /s/ Gary M. Farrell
              Gary M. Farrell                   Director                                     March 24, 1999
</TABLE>


<PAGE>



                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit No.                                                  Document
<S>      <C>    


3(i)     Amended and  Restated  Articles of  Incorporation,  incorporated  by reference to Exhibit 3(i) of
         the Registrant's Form SB-2 Registration Statement, as amended, File No. 333-3188.
3(ii)    Amended and Restated  Bylaws,  incorporated  by reference  to Exhibit  3(ii) of the  Registrant's
         Form SB-2 Registration Statement, as amended, File No. 333-3188.
4        Form of Stock  Certificate,  incorporated by reference to Exhibit 4 of the Registrant's Form SB-2
         Registration Statement, as amended, File No. 333-3188.
10.1     Commercial  Lease Contract,  dated May 4, 1993,  between M.D. Hodges  Enterprises,  Inc. and Open
         Plan  Systems,  Inc.,  incorporated  by reference to Exhibit 10.2 of the  Registrant's  Form SB-2
         Registration Statement, as amended, File No. 333-3188.
10.2     Open Plan Systems,  Inc. 1996 Stock  Incentive  Plan,  as amended,  incorporated  by reference to
         Exhibit 4.4 of the Registrant's Form S-8 Registration Statement, File No. 333-15217.
10.3     Open  Plan  Systems,  Inc.  1996  Stock  Option  Plan For  Non-Employee  Directors,  as  amended,
         incorporated by reference to Exhibit 4.4 of the  Registrant's  Form S-8  Registration  Statement,
         File No. 333-15219.
10.4     Buy-Sell  Agreement,  dated May 24, 1996,  between the Company and Stan A. Fischer,  incorporated
         by reference to Exhibit 10.7 of the Registrant's  Form SB-2 Registration  Statement,  as amended,
         File No. 333-3188.
10.5     Buy-Sell  Agreement,   dated  May  15,  1996,  between  the  Company  and  Gregory  P.  Campbell,
         incorporated by reference to Exhibit 10.8 of the Registrant's Form SB-2  Registration  Statement,
         as amended, File No. 333-3188.
10.6     Tax Sharing  Agreement,  dated May 1, 1996,  between  the  Company  and each of the  shareholders
         named  therein,  incorporated  by  reference  to  Exhibit  10.9  of the  Registrant's  Form  SB-2
         Registration Statement, as amended, File No. 333-3188.
10.7     Form of Employee Non-Qualified Stock Option Agreement
10.8     Form of Non-Employee Director Non-Qualified Stock Option Agreement
10.9     Stock Purchase  Agreement,  dated September 24, 1996, between Open Plan Systems,  Inc.,  Immaculate Eagle,
         Inc.,  Paul A. Covert,  Todd A. Thomann and Siimon,  Inc.,  incorporated  by reference to Exhibit
         2.1 of the Registrant's Form 8-K filed October 16, 1996, File No. 0-20743.
10.10    Open Plan Systems, Inc. Bonus Program for Officers
10.11    $5,000,000 Line of Credit Agreement with Fleet Bank *
10.12    Management and Consulting Agreement between Open Plan Systems, Inc. and Great Lakes Capital, LLC dated
         June 17, 1998 incorporated by reference to Exhibit 10.17 of the Registrant's Form 10-Q filed August 14, 1998
10.13    Registration Rights Agreement between Open Plan Systems, Inc. and Great Lakes Capital, LLC dated June
         17, 1998 incorporated by reference to Exhibit 10.20 of the Registrant's Form 10-Q filed August 14, 1998
10.14    Voting and Standstill Agreement between Open Plan Systems, Inc. and Great Lakes Capital, LLC dated June
         17, 1998 incorporated by reference to Exhibit 10.19 of the Registrant's Form 10-Q filed August 14, 1998
10.15    Commercial Lease Contract, dated May 1, 1998, between Liberty Property Limited Partnership. and Open
         Plan Systems, Inc.
10.16    Commercial Lease Contract, dated September 18, 1998, between Quality Dairy Company and Open Plan
         Systems, Inc.
11       Statement re: Computation of Earnings Per Share
21       Subsidiaries of the Registrant
23.1     Consent of Ernst & Young LLP*
23.2     Consent of Ernst & Young LLP*
27       Financial Data Schedule    * (filed electronically only)

*  Filed herewith
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                                                             Year Ended
                                                                                             December 31
                                                                                      1998                1997
                                                                               ----------------------------------------
<S>                                                                            <C>                          <C>    

Weighted average shares outstanding during the period
                                                                                         4,582               4,472
                                                                               ----------------------------------------
Total                                                                                    4,582               4,472
                                                                               ========================================


Net earnings (loss) used in computation                                          $      (3,933)      $        (748)
                                                                               ========================================

Earnings (loss) per common share                                                 $        (.86)      $        (.17)
                                                                               ========================================

</TABLE>
<PAGE>