UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 1-14168
Bell Technology Group Ltd.
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
13-3781263
(IRS Employer Identification No.)
295 Lafayette Street, 3rd. Floor, New York, NY 10012
(Address of principal executive offices)
(212) 334-8500
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes or common
equity, as of the latest practicable date:
** 3,448,450 shares of Common Stock as of February 13, 1998
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [x]
<PAGE>
Bell Technology Group Ltd.
and Subsidiaries
Table of Contents
Page No.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheet as of December 31, 1997 and
September 30, 1997 2
Consolidated Statements of Operations
For the Three Months Ended December 31, 1997 and 1996 3
Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 1997 and 1996 4
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of Financial Condition 7-12
and Results of Operations
PART II - OTHER INFORMATION 13
<PAGE>
Bell Technology Group Ltd. and Subsidiaries
Consolidated Balance Sheets
December 31, Sept 30,
Assets 1997 1997
(Unaudited)
Current assets:
Cash and cash equivalents $ 1,561,516 $ 2,401,446
Accounts receivable, net of allowance for
doubtful accounts of $214,684
as of December 31, 1997 and $194,684 as of
September 30, 1997, respectively 3,586,243 3,259,548
Inventories 494,526 487,542
Prepaid expenses and other current assets 185,039 727,765
----------- -----------
Total current assets 5,827,324 6,876,301
Property and equipment, net 4,135,739 3,548,838
Long-term investment 325,000 325,000
Loan to stockholder 145,408 145,408
Other assets 212,559 129,441
----------- -----------
Total assets $10,646,030 $11,024,988
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings $ 1,910,352 $ 2,001,157
Current portion of notes payable 330,869 335,021
Accounts payable 2,550,770 2,010,507
Accrued expenses 34,624 425,852
Deferred revenues 87,599 123,046
------------ ------------
Total current liabilities 4,914,214 4,895,583
Notes payable, less current portion 825,900 923,217
Other long term liabilities 230,907 191,928
------------ ------------
Total liabilities 5,971,021 6,010,728
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $.01 par value; 500,000
shares authorized; no shares issued and
outstanding -- --
Common Stock, $.01 par value; 10,000,000
shares authorized; 3,448,450
shares issued and outstanding 34,485 34,485
Additional paid-in capital 10,011,836 10,069,474
Accumulated deficit (5,371,312) (5,089,699)
------------ ------------
Total stockholders' equity 4,675,009 5,014,260
------------ ------------
Total liabilities and stockholders'
equity $ 10,646,030 $ 11,024,988
============ ============
The accompanying notes are an integral part of these consolidated balance
sheets.
-2-
<PAGE>
Bell Technology Group Ltd.
and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
December 31,
1997 1996
Revenue $ 4,739,567 $ 3,696,399
Costs and expenses:
Cost of revenues (exclusive of
depreciation expense shown below) 3,113,899 2,790,300
Selling, general and administrative 1,609,438 1,444,795
Depreciation and amortization 241,860 156,466
----------- -----------
Total costs and expenses 4,965,197 4,391,561
----------- -----------
Loss from operations (225,630) (695,162)
Interest income (expense), net (55,984) 14,356
----------- -----------
Net loss $ (281,614) $ (680,806)
=========== ===========
Basic net loss per common share $ (0.08) $ (0.22)
=========== ===========
Basic weighted average
shares outstanding 3,448,450 3,084,339
The accompanying notes are an integral part of these consolidated
statements.
-3-
<PAGE>
Bell Technology Group Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
December 31,
1997 1996
Cash flows from operating activities:
Net loss $ (281,614) $ (680,806)
Adjustments to reconcile net (loss)
to net cash used in operating activities
Depreciation and amortization 241,860 156,466
Provision for bad debts 20,000 --
Changes in operating assets and liabilities:
(Increase) in accounts receivable (306,695) (1,277,477)
(Increase)in inventories (6,984) (247,228)
Decrease in prepaid expenses
and other current assets 542,726 67,779
Decrease (increase) in other assets (83,118) 43,897
Increase in accounts payable 540,743 520,397
(Decrease)increase in accrued expenses (391,228) 29,803
(Decrease)increase in deferred revenues (35,447) 32,726
----------- -----------
Net cash provided by (used in) operations 240,243 (1,354,443)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment,
net of landlord reimbursement (828,761) (691,270)
----------- -----------
Net cash used in investing activities (828,761) (691,270)
----------- -----------
Cash flows from financing activities:
Net proceeds from short term borrowings (90,805) 779,392
Net repayments of notes payable (101,469) (11,801)
Additional costs incurred with private
placement from September 1997 (59,138) --
----------- -----------
Net cash provided by financing activities (251,412) 767,591
----------- -----------
Net (decrease)increase in cash and
cash equivalents (839,930) (1,278,122)
Cash and cash equivalents,
beginning of period 2,401,446 2,342,011
----------- -----------
Cash and cash equivalents,
end of period $ 1,561,516 $ 1,063,889
=========== ===========
The accompanying notes are an integral part of these consolidated
statements
-4-
<PAGE>
BELL TECHNOLOGY GROUP LTD.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheets as of December 31, 1997, statements of
operations for the three months ended December 31, 1997 and 1996 and the
statements of cash flows for the three months ended December 31, 1997 and 1996
have been prepared by Bell Technology Group Ltd. (the "Company") without audit.
All material inter-company accounts and transactions have been eliminated. The
consolidated results should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Form 10KSB on file with
the Securities and Exchange Commission. Results of operations for the
three-month period are not necessarily indicative of the operating results for
the full year. Interim statements are prepared on a basis consistent with
year-end statements.
In the opinion of management, the unaudited interim financial statements
furnished herein include all adjustments necessary for a fair presentation of
the results of operations of the Company. All such adjustments are of a normal
recurring nature.
2. REVOLVING CREDIT AGREEMENT
The Company (through its subsidiary NAFT International Ltd.) presently has $3.0
million available to it pursuant to a Revolving Credit Agreement with
NationsCredit ("Nations") which may be used to finance its accounts receivable
and inventory. The availability of credit is based upon the balance of
collateral available which is 80% of its current qualifying accounts receivable
and 100% of its inventory. As of December 31, 1997, the Company had both
available and outstanding a balance of approximately $1.9 million. Such
obligation is secured by a continuing security interest in the accounts
receivable and inventory of NAFT, and guaranties and cross guaranties of the
Company and its other subsidiaries. The borrowings bear interest at the prime
rate plus 1.75%. Pursuant to the terms of these agreements, NAFT is required to
maintain certain liquidity ratios. NAFT is in compliance with this agreement.
While the Credit Agreement gives Nations the right to demand repayment if it
deems itself "insecure," Nations has given the Company no indication that it is
considering utilizing this provision. Furthermore, incurring losses as the
Company builds its new businesses was anticipated in setting its covenants with
Nations in October 1996. The Company deems its relationship with Nations to be
normal.
-5-
<PAGE>
3. NOTES AND MORTGAGES PAYABLE
The Company has entered into leases for various items of its office furniture
and equipment as well as for its telephone system accounted for as capital
leases. The terms on these leases vary from 36 to 60 month terms.
The Company financed certain of its furniture and computer equipment in April
1997 in the amount of approximately $874,000 with FINOVA Capital Corporation.
Such loan is for a term of three years, bears interest at 12.19% per annum and
is self-liquidating over its term.
4. COMMITMENTS AND CONTINGENCIES
In February 1996, the Company entered into a lease for its corporate
headquarters effective July 1996. The lease is for eleven years and six months
starting with an initial annual base rental of $309,250 escalating to $563,547
in the final year. Under the lease, the landlord reimbursed the Company $500,000
for leasehold improvements. The Company is required by the terms of the lease to
maintain a security deposit in the form of a letter of credit in the amount of
$400,000. In order to obtain a standby letter of credit, the Company maintains a
restricted certificate of deposit presently in the amount of $400,000. As of
March 1998, this amount is to be reduced to $325,000 if the Company is not in
default under the terms of the lease. Therefore $75,000 of this deposit is
classified as other current assets and $325,000 is included in "Long-term
Investment" of the Company's consolidated balance sheets as of December 31, 1997
and September 30, 1997, respectively.
5. DEPRECIATION AND AMORTIZATION
Depreciation expense relating to cost of revenues is $63,266 and $45,016 for the
three months ended December 31, 1997 and 1996, respectively.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
In the first quarter of fiscal 1998, the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share," which requires
the presentation of both basic and diluted earnings per share on the face of the
Consolidated Statements of Operations. Options and warrants are not included in
the calculation of diluted earnings per share if the effect would be
antidilutive. Accordingly, basic and diluted net loss per share do not differ
for any period presented.
Net loss per share under the provisions of SFAS 128 for periods prior to the
first quarter of fiscal 1998 did not differ from the net loss per share as
reported in those prior periods.
The following table summarizes securities that were outstanding as of December
31, 1997 and 1996, but not included in the calculation of diluted net loss per
share because such shares are antidilutive.
December 31,
---------------------
1997 1996
---- ----
Options 341,064 214,564
Warrants 695,933 661,250
-6-
<PAGE>
PART I MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Bell Technology Group Ltd. (the "Company"), is a diversified computer
products and service company which focuses its operation on providing
sophisticated computer/Internet business solutions to larger companies which are
engaged primarily in the graphics arts, advertising, publishing, entertainment
and financial industries. The Company advises clients on the various computer
solutions available, provide, install and service such solutions and then assist
the client in properly utilizing the benefits to be gained from using the World
Wide Web (the "Internet"). The Company has authorizations to sell and service
equipment from hardware manufacturers such as Silicon Graphics, Inc., Sun
Microsystems, Inc. and Cisco Systems, Inc. and software manufacturers such as
Microsoft Corporation, Netscape Corporation, Alias/Wavefront Inc. and Checkpoint
Software Corp. As a result of its growing experience in the use of the Internet
in commercial applications, the Company has done substantial work in the areas
of video/audio streaming, security in credit card transactions, and the creation
of "shopping carts" for catalog sales companies
The Company operates through two principal "Operating Segments" consisting
of:
a) A Computer Product Sales & Services Division engaged in the sale
of computer hardware, software, networking (LAN and WAN),
computer hardware and software repairs and maintenance and other
product and service sales.
b) An Internet and Media Development Division engaged in the
businesses of Web design, web hosting, training, CD ROM design
and preparation, 3-D and motion capture animation, consulting and
sales of related products and services
Computer Product Sales and Services
The Company has continued to narrow its focus as to the types of hardware
and software products which it offers for sale and expects the percentage of
revenues from the sale of computer hardware to decline in relation to total
sales and probably in absolute dollar terms. Its primary focus now are products
that: (a) are related to its Internet services operation; (b) generate higher
profit margins; (c) are of a type which require greater after market support,
(d) experience little price competition from mail order houses and other
resellers, and (e) which brings the Company into contact with companies of the
type which can use a broad range of the services offered by the Company.
When requested by the client, the Company will prepare all equipment it
sells by loading customer programs, connecting equipment to a network, and
servicing the client's hardware and software. The Company is authorized to carry
out warranty and other repairs on many of the products it sells. However, the
Company does not consider its repair and service activity to be a mainstream
activity but rather a service, which is maintained for the convenience of its
clients.
-7-
<PAGE>
Internet and Media Development
With its staff of Internet engineers and systems administrators, the
Company offers multiple platforms for World Wide Web hosting and development,
and is continually working on new and unique approaches to the use of the
Internet for business solutions. The Company's network operations center
provides sophisticated Internet connectivity available for direct, high-speed
Internet connections and World Wide Web hosting and co-location facilities. The
Company operates this aspect of its business on a highly personalized level as
opposed to using a mass-market approach, paying particular attention to the
particular needs of its clients. It is believed that facilities-based Internet
services are the future of the industry. Major corporations, which have web
hosting and/or co-location services, such as MSNBC Desktop Video and General
Media International, work closely with the Company at its facility.
Among the services and products offered to its clients is video streaming -
a process whereby a user can view video transmissions while downloading the
video file. This allows companies like MSNBC Desktop Video to distribute live
video feeds to its customers. The Company is also working with a major
international magazine publisher to stream multiple channels of video, each
carrying its own content, to the Internet using public. In effect, this enables
the magazine publisher to produce its own "cable-like TV experience" without
regard to geographic boundaries.
Basic Internet Access: The Company provides dedicated Internet access to
corporations and other commercial entities. The Company offers four commercial
connection bandwidths: 56 Kbps, 128 Kbps, T-1, and T-3, and the hardware
necessary for basic Internet access, including routers and CSU/DSUs. The
bandwidth or capacity of a physical network to carry traffic, of a dedicated
digital line is far greater than that possible through use of a conventional
modem. Greater bandwidth allows faster connection and downloading capabilities
for subscribers. Businesses with medium to large LANs and WANs often require the
bandwidth offered by dedicated digital lines.
A direct link between a commercial subscriber's LAN or WAN and the Internet
through the Company gives a subscriber the ability to use all the tools
available on the Internet. A direct link involves a leased line, provided by a
local telephone service provider, between the subscriber's location and the
Company's multi-path (or "redundant") backbone connection to the Internet. The
Company derives Basic Internet Access revenues from initial connection charges
and monthly service fees, both of which vary directly with the bandwidth chosen.
Each commercial subscriber receives a numerical Internet address, a descriptive
domain name, and 24-hour access to the Internet.
The Company has embarked on a program of expanding and up-dating its
Internet operations. To this end, it has increased the amount of its existing
space at its 295 Lafayette Street which is devoted to Internet operations,
including web hosting and co-location facilities and services. In the first
quarter it spend approximately $800,000 on such expansion.
Training
The Company maintains several classrooms at its headquarters facility,
which it rents out to corporations for the training of their professional staff.
The Company also provides training at the client's site on a national basis.
Some instructors are on staff and others are hired on a freelance basis, as
needs dictate.
-8-
<PAGE>
The Company is a training center for Alias/Wavefront for the New York City
Metropolitan area. Alias programs are used for high-end (e.g. broadcast and
film) animation, 3-D modeling, and rendering. The Company is also an authorized
training provider for Macromedia Authorware/ Director. Training is provided on a
wide range of platforms, including PC, IRIX and MacOs.
Interactive Development
The Company's graphic arts capabilities include creating and assembling
World Wide Web sites, interactive applications such as computer based training
and promotional sales material. The Company works with content providers such as
marketing and advertising firms to provide the technical and design aspects of a
project for large-scale multimedia projects including sites to be used on the
Internet.
The Company designs internal communications products used by businesses for
computer based in-house training and Intranet development. In addition, the
Company provides front-end interfaces and graphics for database driven web
sites.
The Company's main areas of digital design development include animation,
interactive and web production. The Company's Authorware division is responsible
for creating computer-based training and computer-based sales tools for major
corporations. Most recently, the Company has leveraged its Internet knowledge
and instructional design expertise to develop interactive training applications
with rich multi-media content for delivery over corporate Intranets.
The Company provides consulting and project management services for
companies making the transition from print to electronic to Internet
presentations and is currently doing a project for the largest and oldest
industrial directory of products and services in the world.
Results of Operations
Three Months Ended December 31, 1997 Compared With Three Months Ended December
31, 1996
Revenues. Consolidated revenues for the three months ended December 31, 1997
compared to the same period in 1996, increased approximately 28.2% from
approximately $3.7 million to approximately $4.7 million. This increase was due
primarily to a increase in sales from the Internet and Media Development segment
which increased sales from approximately $409,000 for the three months ended
December 31, 1996 to approximately $1,328,000 for the three months ended
December 31, 1997 for an increase of 224.7% over the prior period. Sales in the
Computer Products Sales and Service segment increased 3.7% from approximately
$3,287,000 for the three months ended December 31, 1996 to approximately
$3,408,000 for the three months ended December 31, 1997. The Company is
de-emphasizing hardware sales in favor of software and Internet related sales
which tend to produce better profit margins. It intends to focus its future
operations primarily in the areas of Internet related activities, sales of
high-end computer products and systems, training, interactive development and
web site development.
-9-
<PAGE>
Cost of Revenues. Cost of Revenues for the three months ended December 31, 1997
were approximately $3.1 million, or approximately 65.7% of revenues, as compared
to approximately $2.8 million or approximately 74.1% of revenues for the
comparable period in fiscal 1996. The increase in gross profit margin was due to
the fact that an increased percentage of sales came from sales of services
(including Internet services)that generate higher profit margins, rather than
sales of products. In addition, sales of more sophisticated computer systems
that required greater pre-sales and after market customer assistance generated
higher gross profit margins.
Selling, General and Administrative. For the three months ended December 31,
1997, Selling, General and Administrative expenses increased from approximately
$1.4 million to approximately $1.6 million. However, such increase was actually
a decrease in such expense as a percentage of revenues from 39.1% for the three
month period ended December 31, 1996 to 33.9% of revenues for the three month
period ended December 31, 1997. The growth in the sales of the Internet and
Media Development segment resulted in the lower percentage of selling, general
and administrative in comparison to revenues. The Company intends to further
increase the number of sales people involved in Internet operations order to
increase revenues in its Internet and Media Development division.
Net Loss. For the three month period ended December 31, 1997, the Company
incurred a net loss of approximately $282,000 or $0.08 per share as compared to
a net loss of approximately $681,000 or $0.22 for the corresponding three month
period ending December 31, 1996. The Company feels that it has achieved a
leveling of its fixed operating expenses and that variable expenses will
fluctuate in response to changes in revenue. However, it is reasonable to
believe that in the transition of product mix the Company could incur further
losses.
Liquidity and Capital Resources
The Company (through its subsidiary NAFT International Ltd.) presently has $3.0
million available to it pursuant to a Revolving Credit Agreement with
NationsCredit ("Nations") which may be used to finance its accounts receivable
and inventory. The availability of credit is based upon the balance of
collateral available that is 80% of its current qualifying accounts receivable
from sales of hardware and software and 100% of its inventory. As of December
31, 1997, the Company had both available and outstanding a balance of
approximately $1.9 million. Such obligation is secured by a continuing security
interest in the accounts receivable and inventory of NAFT, and guaranties and
cross guaranties of the Company and its other subsidiaries. The borrowings bear
interest at the prime rate plus 1.75%. Pursuant to the terms of these
agreements, NAFT is required to maintain certain liquidity ratios. NAFT is in
compliance with this agreement. While the Credit Agreement gives Nations the
right to demand repayment if it deems itself "insecure," Nations has given the
Company no indication that it is considering utilizing this provision.
Furthermore, incurring losses as the Company builds its new businesses was
anticipated in setting its covenants with Nations in October 1996. The Company
deems its relationship with Nations to be normal.
-10-
<PAGE>
In December 1997, the Company received a $1,000,000 credit line from Cisco
Systems Capital Corporation ("CSC") to lease Cisco Systems products and
associated peripherals. The credit line is available to the Company for a period
of 180 days, is to be repaid over a 36 month period and is subject to quarterly
financial review by CSC. The Company may not purchase more than $500,000 on the
credit line during any three month period. At the end of the lease term, the
Company has the option of purchasing the equipment for fair market value, renew
the lease of the equipment for the then fair rental value or return the
equipment.
The Company had a negative cash flow of approximately $840,000 for the three
months ended December 31, 1997. This resulted in part from cash provided by
operations of approximately $240,000 which represents the net loss of
approximately $282,000, the increase in accounts receivable of approximately
$307,000 million (offset by the increase in accounts payable of approximately
$543,000 and the decrease of accrued expenses of $391,000). In addition, the
Company purchased property and equipment in the amount of approximately $829,000
million. The negative cash flow and purchases of property and equipment has
caused a decrease in working capital from approximately $1,981,000 at September
30, 1997 to approximately $913,000 at December 31, 1997 and a decrease in the
current ratio from 1.4 to 1 at September 30, 1997 to 1.2 to 1 at December 31,
1997. The decrease in prepaid expenses and other current assets is mainly the
result of the Company's private placement in September 1997 of which $600,000
which was included as of September 30, 1997 as a receivable which was received
in October 1997.
The variances in the Statements of Cash Flows between the three months ended
December 31, 1997 and the three months ended December 31, 1996 are a reflection
of the development of the Company during 1997, which is discussed above, and the
aggressive expansion program which followed. The significant increase in capital
expenditures is due to the Company's continuing focus on the development of its
Internet related activities which included the purchase of servers, routers,
cabinets, monitors and other equipment necessary to create and expand the
equipment used to host web sites. While the Company does not anticipate failing
to comply with the financial covenants discussed above, it must either increase
its borrowings under its Nations line of credit, and/or raise additional equity
or loan capital from outside sources. There can be no assurance that the Company
could successfully raise such additional capital.
Recently Issued Accounting Standards
In the first quarter of fiscal 1998, the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share," which requires
the presentation of both basic and diluted earnings per share on the face of the
Consolidated Statements of Operations. Options and warrants are not included in
the calculation of diluted earnings per share if the effect would be
antidilutive. Accordingly, basic and diluted net loss per share do not differ
for any period presented.
Net loss per share under the provisions of SFAS 128 for periods prior to the
first quarter of fiscal 1998 did not differ from the net loss per share as
reported in those prior periods.
-11-
<PAGE>
The following table summarizes securities that were outstanding as of December
31, 1997 and 1996, but not included in the calculation of diluted net loss per
share because such shares are antidilutive.
December 31,
-------------------
1997 1996
---- ----
Options 341,064 214,564
Warrants 695,933 661,250
Forward Looking Statements
The foregoing management discussion and analysis contains certain
forward-looking statements. Due to the fact that the Company faces intense
competition in a business characterized by rapidly changing technology, and must
raise additional capital in order to continue with its existing capital
expenditure program, actual results and outcomes may differ materially from any
such forward looking statements. Future results of operations are, in general,
difficult to forecast due to the fast moving pace of the industry. Additional
information concerning factors that could cause actual results to differ
materially from those in the forward looking statements is contained under the
heading "Risk Factors" listed from time to time in the Company's filings with
the Securities and Exchange Commission.
-12-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on form 8-K
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Bell Technology Group Ltd.
Date: February 13, 1998 By: /s/ Marc H. Bell
-------------------------------------
Marc H. Bell, President & CEO
Date: February 13, 1998 By: /s/ Robert B. Bell
-------------------------------------
Robert B. Bell, Exec. Vice President & CFO
Date: February 13, 1998 By: /s/ Alan Levy
-------------------------------------
Alan Levy, Treasurer and Chief Accounting Officer
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1998
<CASH> 1,561,516
<SECURITIES> 0
<RECEIVABLES> 3,586,243
<ALLOWANCES> 214,684
<INVENTORY> 494,526
<CURRENT-ASSETS> 5,827,324
<PP&E> 5,478,082
<DEPRECIATION> 1,342,343
<TOTAL-ASSETS> 10,646,030
<CURRENT-LIABILITIES> 4,914,214
<BONDS> 0
0
0
<COMMON> 34,485
<OTHER-SE> 4,640,524
<TOTAL-LIABILITY-AND-EQUITY> 10,646,030
<SALES> 4,739,567
<TOTAL-REVENUES> 4,739,567
<CGS> 3,113,899
<TOTAL-COSTS> 4,965,197
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,984
<INCOME-PRETAX> (281,614)
<INCOME-TAX> 0
<INCOME-CONTINUING> (281,614)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (281,614)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
