U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended November 30, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1939
For the transition period from ___________ to ___________
Commission File Number: 0-21679
HERTZ TECHNOLOGY GROUP, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 13-3896069
- --------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification number)
75 Varick Street 10013
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
212-634-4000
---------------------------
(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 |_|
State the number of shares outstanding of each of the issuer's classes of Common
equity, as of the latest practicable date.
January 5, 1998
Common Stock, par value
$.001 per share 1,065,141
- ----------------------- ------------------
Class Shares Outstanding
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
NOVEMBER 30, 1998
INDEX
Page
----
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
November 30, 1998 and August 31, 1998 3
Consolidated Statements of Operations
for the three months ended
November 30, 1998 and November 30, 1997 4
Consolidated Statements of Cash
Flows for the three months ended
November 30, 1998 and November 30, 1997 5
Consolidated Statements of Stockholders
Equity for year ended August 31, 1998 and
three months ended November 30, 1998 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of financial condition and results of
operations for the three months ended
November 30, 1998 9
PART II. Other Information
Item 2. Changes in securities and use of proceeds 15
SIGNATURES 16
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<PAGE>
PART I
FINANCIAL INFORMATION
HERTZ TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
NOVEMBER 30, AUGUST 31,
------------ ----------
1998 1998
---- ----
Unaudited Audited
--------- -------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 624,314 140,254
Marketable securities 2,099,946 1,759,994
Accounts receivable, less allowance for
doubtful accounts of $97,968 and $130,829 respectively 955,039 2,362,030
Inventories, net 574,165 709,228
Prepaid expenses and other current assets 252,707 205,229
---------------------------
Total current assets 4,506,171 5,176,735
---------------------------
PROPERTY AND EQUIPMENT, net 1,526,916 1,543,277
---------------------------
GOODWILL, net of accumulated amortization of $15,461 and $27,002
respectively. 222,420 237,881
---------------------------
DEFERRED TAXES 209,963 209,963
OTHER ASSETS 152,675 148,490
---------------------------
Total assets $6,618,145 7,316,346
===========================
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
NOVEMBER 30, AUGUST 31,
------------ ----------
1998 1998
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 160,788 616,035
Notes payable 126,667 126,667
Accrued expenses - other current payables 320,569 416,954
---------------------------
Total current liabilities 608,024 1,159,656
---------------------------
NONCURRENT LIABILITIES:
Notes payable to banks and others 259,103 260,473
---------------------------
Total noncurrent liabilities 259,103 260,473
---------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value: 25,000,000 shares authorized
1,128,475 and 1,128,450 shares issued, and 1,065,141 and
1,093,016 shares issued and outstanding as of November 30, 1998
and August 31, 1998, (respectively) 1,128 1,128
Additional paid-in capital 5,773,318 5,773,318
Less:Treasury Stock, 63,333 and 35,434 shares at cost as of
November 30, 1998 and August 31, 1998, (respectively) (183,152) (108,028)
Retained earnings 159,724 229,799
---------------------------
Total stockholders' equity 5,751,018 5,896,217
---------------------------
Total liabilities and stockholders' equity $6,618,145 7,316,346
===========================
</TABLE>
The accompanying notes are an integral part of these consolidated statements
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<PAGE>
HERTZ TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
NOVEMBER 30,
------------
1998 1997
----------- -----------
<S> <C> <C>
NET SALES $ 1,887,434 $ 1,799,712
COST OF GOODS SOLD 1,052,330 1,099,576
----------- -----------
Gross Profit 835,104 700,136
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 962,024 654,936
----------- -----------
Operating (loss) income (126,920) 45,200
OTHER INCOME (EXPENSE):
Other income (expense), net 6,120 1,155
Interest, net of interest expense of $6,913 for 1998 and
$263 for 1997 25,904 57,648
----------- -----------
(Loss) Income before benefit/ provision for income taxes (94,896) 104,003
(BENEFIT) PROVISION FOR INCOME TAXES (24,821) 48,093
----------- -----------
Net (loss) income $ (70,075) $ 55,910
=========== ===========
NET (LOSS) INCOME PER SHARE
Basic $ (0.07) $ 0.05
=========== ===========
Diluted $ (0.07) $ 0.05
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic 1,074,804 1,054,480
Diluted 1,074,804 1,070,782
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements
-4-
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
NOVEMBER 30,
------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (70,075) $ 55,910
Adjustments to reconcile net income to net cash provided by activities-
Depreciation and amortization 78,435 21,661
Allowance for doubtful accounts (32,861) 10,000
Changes in operating assets and liabilities-
Accounts receivable 1,439,852 (138,955)
Inventories 135,063 134,025
Prepaid expenses and other current assets (47,477) (111,514)
Other assets (4,186) (8,165)
Accounts payable and accrued expenses (551,632) 101,237
Capital lease (1,370) (1,347)
----------- -----------
Net cash provided by operating activities 945,749 62,852
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (46,613) (174,324)
(Purchase)/ Sale of Marketable Securities (339,952) 590,354
----------- -----------
Net cash used in investment activities (386,565) 416,030
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (75,124) (18,047)
----------- -----------
Net cash provided by financing activities (75,124) (18,047)
----------- -----------
Net increase in cash and cash equivalents 484,061 460,835
CASH and cash equivalents, beginning of period 140,254 326,121
----------- -----------
CASH and cash equivalents, end of period $ 624,315 $ 786,956
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 6,913 $ 0
Income taxes paid $ 0 $ 59,370
</TABLE>
The accompanying notes are an integral part of these consolidated statements
-5-
<PAGE>
HERTZ TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR YEAR ENDED AUGUST 31,1998 AND THREE MONTHS ENDED NOVEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Additional
Common Paid-in Treasury Retained
Stock Capital Stock Earnings Total
----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, August 31, 1997 1,055 5,593,666 -- 1,040,079 6,634,800
Net Loss -- -- -- (810,280) (810,280)
Issuance of stock to Employees 25 79,700 -- -- 79,725
Issuance of shares to related party in
connection with purchase of Edutec 48 99,952 100,000
Repurchase of Treasury stock -- -- (108,028) -- (108,028)
----------- ----------- ----------- ----------- -----------
BALANCE, August 31, 1998 $ 1,128 $ 5,773,318 $ (108,028) $ 229,799 $ 5,896,217
=========== =========== =========== =========== ===========
Net Income -- -- -- (70,075) (70,075)
Repurchase of Treasury stock -- -- (75,124) -- (75,124)
BALANCE, November 30, 1998 $ 1,128 $ 5,773,318 $ (183,152) $ 159,724 $ 5,751,018
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements
-6-
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
November 30, 1998
1. BASIS OF PRESENTATION AND OPERATIONS
The accompanying consolidated financial statements are unaudited and in
the opinion of management, reflect all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation in
accordance with generally accepted accounting principles and with the
instructions to Form 10-QSB. Operating results for the three-month period ended
November 30, 1998 are not necessarily indicative of the results that may be
expected for the year ended August 31, 1999. For further information, refer to
the financial statements and footnotes thereto included in the Hertz Technology
Group, Inc. ("Hertz" or the "Company") audited financial statements for the year
ended at August 31, 1998.
2. EARNINGS PER SHARE
For the periods ended November 30 , 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". In
Accordance with the requirements of SFAS No. 128, net earnings per common share
Amounts ("basic EPS") were computed by dividing net earnings by the weighted
average number of common shares outstanding and contingently issueable shares
(which satisfy certain conditions) and excluding any potential dilution. Net
earnings per common share amounts - assuming dilution ("diluted EPS") were
computed by reflecting potential dilution from the exercise of stock options.
SFAS No. 128 requires the presentation of both basic EPS and diluted EPS on the
face of the income statement. Earnings per share amounts for the same prior-year
periods have been restated to conform with the provisions of SFAS No. 128.
A reconciliation between the numerators and denominators of the basic and
diluted EPS computations for net earnings is as follows:
<TABLE>
<CAPTION>
Three months ended Three months ended
November 30, 1998 November 30, 1997
----------------- -----------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amounts (Numerator) (Denominator) Amounts
<S> <C> <C> <C> <C> <C> <C>
Net earnings (loss) (70,076) 55,910
BASIC EPS
Net earnings (loss)
attributed to common
stock $ (70,076) 1,074,804 $ (.07) $ 55,910 1,054,480 $ .05
--------- --------- --------- --------- --------- ---------
EFFECT OF DILUTED
SECURITIES
Stock Option
Stock Warrents 16,302
DILUTED EPS
Net earnings (loss)
attributable to common
stock and option
exercises $ (70,076) 1,074,804 $ (.07) $ 55,910 1,070,782 $ .05
--------- --------- --------- --------- --------- ---------
</TABLE>
-7-
<PAGE>
No diluted EPS is presented, for the three months ending on November 30 1998 as
the effect of dilutive securities would be anti-dilutive on loss per common
share.
Options to purchase the following shares of common stock were not included in
the computation of diluted EPS because the exercise price of those options were
greater than the average market price of the common shares. For the three months
ended November 30, 1998 the total is 1,384,260. For the three months ended
November 30, 1997 the total amount is 1,253,333. The options were still
outstanding at the end of the period.
3. REVERSE STOCK SPLIT
At a special meeting held on September 4, 1998, the Board of Directors of the
Company approved a one-for-three reverse split of both the Company's common
stock and Class A Warrants .On November 2, 1998, the holders of a majority of
the common stock of the Company approved by written consent the inverse stock
split which became effective on November 2, 1998. All share and per share data
included in this report and as well as in the annual financial statements have
been restated to reflect this reverse stock split.
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Company sells ergonomically engineered modular support structures and
technical furniture for microcomputers and electronic devices under the "Hergo"
name through its Hergo subsidiary. The Company, through its LAN Metal
subsidiary, provides custom specialty metal manufacturing and fabrication
services and manufactures the line of Hergo products. The Company custom designs
and assembles PC's and related products and provides technical services and
support under the "Hertz" name through its Hertz Computer subsidiary. Through
it's Edutec subsidiary, the Company offers state-of-the-art computerized
training facilities at it's New York City offices that can be used for software,
sales, education, or management training.
Three Months Ended November 30, 1998 compared to Three Months Ended November 30,
1997.
Revenues
Company sales for the three months ended November 30, 1998, were $1.89 million,
compared to $1.80 million for the period ended November 30, 1997, a 5% increase.
Hergo sales increased to $1,136,000 for the three-month period ending November
30, 1998 from $969,000 for the comparable 1997 period, a 17% increase which more
than accounted for the 5% overall increase in the Company's gross sales. The Lan
Metal business, which was acquired in December 1997, subsequent to the prior
quarterly period in 1997, contributed $289,000 of revenue for the three-month
period ended November 30, 1998. Hertz computer sales continue to lag with sales
of $425,00 compared to $831,000 for the same three-month period last year. The
Company believes that currently its Hergo product line offers the greatest
opportunity for future growth and the Company is focusing its marketing efforts
on expanding and developing this line. The Company is also directing efforts in
relation to designing value added services in the technology area, as well as
Internet commerce based solutions. The PC hardware market has become
increasingly competitive and over saturated. Although the Company is still
actively pursuing this business, it is directing its efforts in hardware
primarily in relation to the synergistic benefits that this business can bring
to the Hertz Technology Group.
Gross Profit
Gross profit was $835,000 (44% of net sales) and $700,000 (39% of net sales) for
the three months ended November 30, 1998 compared to the three months ended
November 30, 1997, an increase of $135,000.
Gross profit for Hergo was $636,000 (56% of Hergo sales) for the period ended
November 30, 1998 compared to $565,000 (58% of Hergo sales) for the three months
ended November 30, 1997.
The computer industry continues to experience uncertainty in the cost of
technology related products imported from the Far East. Furthermore, increased
competition has resulted in
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
dwindling profit margins in the PC hardware arena. Consequently, Hertz gross
profit was $49,000(11% of Hertz sales) for the three months ended November 30,
1998 compared to $135,000 (16% of Hertz sales) for the comparable period ended
November 30,1997. LAN Metal (acquired in December 1997) produced gross profit of
$113,000 (39% of LAN Metal sales).
The sharp increase in total profit margin is due to the change of the sales mix
of the Company. Hergo and Lan Metal combined comprised 76% of sales for the
three months ended November 30, 1998. Hergo sales (LAN Metal was not acquired
until the following three-month period) comprised only 54% of total sales for
the three months ended November 30, 1997.
Selling, General and Administrative
Selling, general, and administrative expenses increased by $307,000 for the
three months ended November 30, 1998 compared to the three months ended November
30, 1997. Selling general and administrative expenses were impacted by the
purchase of the LAN Metal division in December 1997 with it's associated
expenses, establishment of a shipping and warehousing facility for the Hergo
line, as well as increases in selling expenses both in Hergo and in Hertz
Computer. Selling Expense increases included increased expenses in operating the
Albany sales office, increased advertising, and sales salaries as well as
increased marketing costs. Administrative expense increases included increased
costs associated with investigating possible business ventures.
-10-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Other Income (Expense):
Other income for the three months ended November 30, 1998 was $6,000 compared to
$1,000 for the comparable period last year.
Net interest income for the three months ended November 30, 1998 decreased by
$32,000 from the preceding year. The decrease in interest income was primarily
due to the reduction of marketable securities balances during the twelve months.
This was further reduced by interest expense generated by the deferred payments
of the purchase price of the LAN Metal acquisition.
Provision for Income Taxes
The tax benefit for the three months ended November 30, 1998 was $25,000. The
tax provision for the three months ended November 30, 1997 was $ 48,000.
Net Income and Earnings Per Share
Operations for the three months ended November 30,1998 resulted in a loss of
approximately $70,000 or ($.07) per share compared to net income of $56,000 or
$.05 per share for the three months ended November 30, 1997.
Increased sales by Hergo and the LAN Metal division, together with greater gross
profit margins attributable to them as compared to the Computer division,
resulted in a gross profit increase of $135,000. This profit was reduced by
increased SG&A costs that resulted in the establishment of the new
infrastructure at LAN Metal, as well as a new warehouse facility for the Hergo
product. Both of these types of costs were incurred for both the LAN Division
and the Hergo division to maximize the production needed and the space required
to ramp up product supply of the Hergo division. By the same token, sales and
marketing efforts to increase sales of Hergo products have resulted in
additional sales and marketing costs.
-11-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
For the three months ended November 30, 1998, the Company had cash from
operations of $946,000, as compared to cash from operations of $63,000, for the
comparable period last year. The collections of the relatively high August 1998
accounts receivable net of the accounts payable that was attributable to the
August 1998 sales was the principal reason for the increase.
Net purchases of fixed assets for the three months ended November 30, 1998, were
$47,000 as compared to $174,000 for the three months ended November 30, 1997.
During the three months ended November 30, 1998, the Company purchased $340,000
in marketable securities. The purchase of these securities was initiated in
order to buy back securities which were sold in the last quarter of fiscal 1998
in order to provide the Company with a temporary cash flow during the period
that the Company had unusually high receivables.
During the three months ended November 30, 1998, the Company purchased on the
open market a total of 27,899 shares of it's stock for a total of $75,000.
Working capital for the three months ended November 30, 1998 was $3,898,000
compared to $4,017,000 for the year ended August 31, 1998, a $119,000 decline.
The Company as of November 30, 1998 had $2,724,000 in cash and marketable
securities, which are available to fund Company's operations and expansion plan.
-12-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
Certain statements under the caption "Management's Discussion and
Analysis" and elsewhere in this Form 10-QSB constitute "forward looking
statements" within the meaning of Section 21E of the Securities and Exchange Act
of 1934. Words "believe", "expect" "future" "intend" "plan" and similar
expressions as they relate to the Company or the Company's management identify
forward - looking statements. Such forward looking statements involve known and
unknown risks, uncertainties, and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward looking statements. Such factors include, among others, the
following: general economic and business conditions, competition, success of new
product development, effect of advertising and promotional efforts, brand
awareness, the existence of or adherence to development schedules, continued
patronage by existing customers, the ability to attract qualified managerial
personnel, the existence or absence of adverse publicity, changes in business
strategy or development plans, quality of management and terms and deployment of
capital, business abilities and judgment of personnel and success in acquiring
businesses.
Year 2000 Compliance
The Company is on schedule with a project that addresses the Year 2000 (Y2K)
issue of computer systems and other equipment with embedded chips or processors
not being able to properly recognize and process date-sensitive information
after December 31, 1999. Many systems use only two digits rather than four to
define the year and these systems will not be able to distinguish between the
year 1900 and the year 2000. This may lead to disruptions in the operations of
business and governmental entities resulting from miscalculations or system
failures. The project is designed to ensure the compliance of all of the
Company's applications, operating systems and hardware platforms, and to address
the compliance of key business partners. Key business partners are those
customers and vendors that have a material impact on the Company's operations.
All phases of the project should be completed by mid 1999 thus minimizing the
impact of the Y2K problem on the Company's operations.
The total estimated cost of the required modifications to become Y2K compliant
should not material to the Company's financial position.
Failure to make all internal business systems Y2K compliant could result in an
interruption in, or a failure of, some of the Company's business activities or
operations. Y2K disruptions in the operations of key vendors could impact the
Company's ability to obtain components necessary for the manufacture of products
and fulfillment of contractual obligations. If one or more of these situations
occur, the Company's results of operations, liquidity and financial condition
could be materially and adversely affected. The Company is unable to determine
the readiness of its key business partners at this time and is therefore unable
to determine whether the consequences of Y2K failures will have a material
impact on the Company's results of operations, liquidity or financial condition.
The Y2K project is expected to significantly reduce the Company's level of
uncertainty about the Y2K problem and reduce the possibility of significant
interruptions of normal business operations.
-13-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
New Accounting Standards
In June 1997, the FASB issued SFAS No. 131, "Disclosure about segments of an
Enterprise and Related Information," which changes the way public companies
report information about operating segments. SFAS No. 131, which is based on the
management approach to segment reporting, establishes requirements to report
selected segment information quarterly and to report entity-wide disclosures
about products and services, major customers, and the material countries in
which the entity holds assets and reports revenue. The Company will adopt SFAS
No. 131 for reporting on the 10K for fiscal year end 1999.
-14-
<PAGE>
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) As a result of the one for three reverse stock split on November 2,
1998, the 2,530,000 outstanding Class A Warrants were reduced to
approximately 843,334. Each Warrant after the split will be
exercisable to purchase one share of Common Stock at $16.50. The
price of the Company's Common Stock at which the Class A Warrant
becomes redeemable by the Company has been adjusted upward from
$8.75 to $26.25.
(b) The Company registered Common Stock and Warrants in an initial
public offering on Form SB-2 which became effective on November 12,
1996. After deducting $1,488,778 in expenses incurred in connection
with the offering, an aggregate of $5,468,721 of net proceeds was
realized by the Company. The use of these net proceeds was reported
on Forms SR filed with the Securities and Exchange Commission on
February 11, 1997 and on August 18, 1997 in the Company's annual
report on Form 10-KSB for the years ended August 31, 1997, and
August 31, 1998 and in its quarterly reports on Form 10-QSB for the
quarters ended February 28, 1998 and May 31, 1998. Updating these
reports, as of November 1, 1998 the disposition of the proceeds was
as follows:
Construction of plant building and facilities $ 360,140
Purchases and installation of machinery and equipment $ 642,933
(a) Acquisition of Landau Metal Products $ 624,190
(b) Improvement to physical facilities $ 52,199
(c) Equipment purchases $ 60,281
(d) Edutec acquisition and initial funding expenses $ 152,000
Repayment of Indebtedness $1,315,058
S Corporation Distribution $ 688,034
Marketing Plan $ 211,842
To be used to fund marketing plan, acquire equipment,
product development and working capital $1,362,044
Grand Total: $5,468,721
-15-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant,
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Hertz Technology Group, Inc
/s/ Eli E. Hertz
Dated: 01/13/98 ----------------------------------
Eli E. Hertz, Chairman, President
And Chief Executive Officer
/s/ Barry J. Goldsammler
Dated: 01/13/98 ----------------------------------
Barry J. Goldsammler, Chief
Financial and Accounting
Officer
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 624,314
<SECURITIES> 2,099,946
<RECEIVABLES> 1,053,007
<ALLOWANCES> 97,968
<INVENTORY> 574,165
<CURRENT-ASSETS> 4,506,171
<PP&E> 2,082,742
<DEPRECIATION> (555,826)
<TOTAL-ASSETS> 6,618,145
<CURRENT-LIABILITIES> 608,024
<BONDS> 0
0
0
<COMMON> 1,128
<OTHER-SE> 5,749,890
<TOTAL-LIABILITY-AND-EQUITY> 6,618,145
<SALES> 1,887,434
<TOTAL-REVENUES> 1,887,434
<CGS> 1,052,330
<TOTAL-COSTS> 1,052,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 17,980
<INTEREST-EXPENSE> 6,913
<INCOME-PRETAX> (94,896)
<INCOME-TAX> (24,821)
<INCOME-CONTINUING> (70,075)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70,075)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
