<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
--- Act of 1934 FOR THE PERIOD ENDED MARCH 29, 1997
OR
___ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER: 0-21499
SPECIALTY CATALOG CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3253301
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
21 BRISTOL DRIVE
SOUTH EASTON, MASSACHUSETTS 02375
(Address of principal executive offices)
TELEPHONE NUMBER (508) 238-0199
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
--- ---
As of May 1, 1997, there was 4,967,001 shares of the Registrant's Common
Stock outstanding.
================================================================================
1
<PAGE>
SPECIALTY CATALOG CORP.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL STATEMENTS
<S> <C>
Page No.
ITEM 1.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF
MARCH 29, 1997 AND DECEMBER 28, 1996 AND FOR THE
THREE MONTHS ENDED MARCH 29,1997 AND
MARCH 30, 1996
Condensed Consolidated Statements of Operations 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SPECIALTY CATALOG CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 29, 1997 MARCH 30 , 1996
----------------- -----------------
<S> <C> <C>
Net sales $10,973,253 $ 9,277,568
Cost of sales (including buying, occupancy
and order fulfillment costs) 3,786,447 3,503,255
----------- -----------
Gross profit 7,186,806 5,774,313
----------- -----------
Selling, general and administrative expenses 7,846,595 5,503,257
----------- -----------
Income (loss) from operations (659,789) 271,056
----------- -----------
Interest expense - net 266,772 439,437
----------- -----------
Income (loss) before income taxes and (926,561) (168,381)
extraordinary item
Income tax provision (benefit) (370,625) (65,658)
----------- -----------
Income (loss) before extraordinary item (555,936) (102,723)
Extraordinary item - loss on early
extinguishment of debt (net of income tax
benefit of $107,711) 161,567 ---
----------- -----------
Net income (loss) ($717,503) ($102,723)
----------- -----------
Preferred stock dividends --- 73,094
----------- -----------
Net income (loss) available to common stockholders ($717,503) ($175,817)
=========== ===========
Per common share
Income (loss) before extraordinary item ($0.12) ($0.06)
Income (loss) on extraordinary item ($0.03) ---
Net income (loss) per share ($0.15) ($0.06)
=========== ===========
Weighted average shares outstanding 4,701,666 2,826,666
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
SPECIALTY CATALOG CORP.
CONDENSED CONSOLIDATED BALANCE SHEETs
(unaudited)
<TABLE>
<CAPTION>
ASSETS MARCH 29, 1997 DECEMBER 28, 1996
-------------- -----------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,016,357 $ 1,392,344
Accounts receivable, net 957,447 820,076
Inventories 4,690,190 4,986,293
Prepaid expenses 2,874,540 3,877,533
------------ ------------
Total current assets 9,538,534 11,076,246
------------ ------------
Property and equipment, net 820,677 815,725
------------ ------------
Deferred income taxes 6,648,439 6,170,102
------------ ------------
Other assets 189,565 343,123
------------ ------------
Total Assets $ 17,197,215 $ 18,405,196
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 2,771,006 2,653,534
Line of credit 828,625 ---
Liabilities to customers 1,282,015 691,377
Income taxes 63,628 107,019
Current portion of long-term debt 750,000 2,005,714
------------ ------------
Total current liabilities 5,695,274 5,457,644
------------ ------------
Long-term debt 4,250,000 3,394,286
Subordinated debt-related parties 3,023,958 4,752,325
Commitments and contingencies
Stockholders' Equity (Deficit):
Preferred stock --- ---
Common stock 47,017 47,017
Additional paid in capital 15,199,046 15,199,050
Deferred compensation (78,988) (83,363)
Note receivable -- stockholder --- (140,174)
Accumulated deficit (10,939,092) (10,221,589)
------------ ------------
Total Stockholders' Equity 4,227,983 4,800,941
------------ ------------
Total Liabilities and Stockholders' Equity $ 17,197,215 $ 18,405,196
============ ============
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
SPECIALTY CATALOG CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 29, 1997 MARCH 30 , 1996
------------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($717,503) ($102,723)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 67,666 69,093
Deferred income taxes (478,337) ---
Amortization of deferred compensation 4,375 ---
Changes in operating assets and liabilities:
Accounts receivable (137,371) 113,620
Inventories 296,103 431,236
Prepaid expenses 1,002,993 53,928
Other assets 162,872 24,961
Accounts payable and accrued expenses 123,802 6,263
Liabilities to customers 590,638 (138,541)
Income taxes (43,391) (32,344)
Other long-term liabilities --- 10,519
----------- ----------
Net cash provided by operating activities 871,847 436,012
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (72,332) (98,535)
----------- ----------
Net cash used in investing activities (72,332) (98,535)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances on line of credit 828,625 400,000
Issuance of debt 5,000,000 ---
Repayment of BNP debt (5,400,000) (550,000)
Repayment of subordinated debt (1,604,127) ---
----------- ----------
Net cash used in financing activities (1,175,502) (150,000)
----------- ----------
Increase (decrease) in cash and cash equivalents (375,987) 187,477
Cash and cash equivalents, beginning of year 1,392,344 113,364
----------- ----------
Cash and cash equivalents, end of period $ 1,016,357 $ 300,841
=========== ==========
</TABLE>
SUMMARY OF NONCASH TRANSACTIONS:
In March 1997, $131,146 of note receivable from a stockholder was offset
against the portion of the subordinated notes owed to that stockholder.
See notes to condensed consolidated financial statements
5
<PAGE>
SPECIALTY CATALOG CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
These unaudited condensed consolidated financial statements should be read
in conjunction with Specialty Catalog Corp.'s (the "Company") Annual Report on
Form 10-K for the fiscal year ended December 28, 1996, and the financial
statements and footnotes included therein. Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the Securities and Exchange Commission rules and
regulations. The results of operations for the three months ended March 29,
1997, are not necessarily indicative of the results for the entire fiscal year
ending January 3, 1998.
The financial statements for the three months ended March 29, 1997, and
March 30, 1996, are unaudited but include, in the Company's opinion, all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the results for the periods presented.
2. Accounting Policies
The accounting policies underlying the quarterly financial statements are
those set forth in Note 1 of the financial statements included in the Company's
Annual Report on Form 10-K for the year ended December 28, 1996.
In March 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share" ("SFAS No. 128") which is effective for financial
statements issued for periods ending after December 15, 1997. This statement
requires the disclosure of basic and diluted per share computations. As
required, the Company will adopt SFAS No. 128 in the fourth quarter of 1997.
This statement, if applied, would have no impact to the reported loss per share
for the three months ended March 29, 1997 and March 30, 1996.
3. Long-Term Debt
On March 12, 1997, the Company entered into a new $11 million credit
facility with BankBoston, N.A. (the "BKB Agreement") for the purpose of
refinancing the existing senior and subordinated debt and to provide for capital
expenditures and working capital needs of the Company. The new BKB Agreement
provides a $5 million term loan (the "Term Loan") and a $6 million revolving
line of credit (the "Line of Credit"). The interest rate on the borrowings will
vary according to certain financial ratios and outstanding borrowings. The
Term Loan has a four year repayment schedule with $750,000 due in 1997, $1.25
million due in each of the next
6
<PAGE>
SPECIALTY CATALOG CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
three years, and $500,000 due in 2001. The Company plans on using future cash
receipts to pay down the Line of Credit on a regular basis. The Line of Credit
will be used to fund all of the Company's disbursements, up to the $6 million
limit, subject to certain covenant restrictions.
The BKB Agreement is cross collateralized by a first perfected security interest
in all tangible and intangible assets of the Company. The BKB Agreement is
subject to certain covenants, including but not limited to leverage and debt
service coverage ratios, minimum earnings requirements, and a restriction on the
payment of cash dividends on the Company's common stock.
In March 1997, the Company used the proceeds from the Term Loan and $500,000
under the Line of Credit to pay off its remaining indebtedness to Banque
Nationale de Paris ("BNP"). In conjunction with this repayment, the Company
recorded a $161,567 extraordinary loss on the early extinguishment of debt (net
of income tax benefit of $107,711) for the write off of the remaining deferred
financing costs.
On March 18, 1997, the Company repaid $1,896,913 of principal and accrued
interest on the subordinated debt, with $1,765,767 repaid from proceeds from the
Line of Credit and $131,146 repaid by offsetting a note receivable from a
stockholder.
5. Subsequent Events
In April 1997, the Company repaid the remaining subordinated debt in the
amount of $2,898,854 of principal and accrued interest. The repayment was made
with proceeds from the Line of Credit.
On April 11, 1997, the Company repaid $495,000 of junior subordinated
notes. In connection with the original issuance of these notes, the Company
issued warrants for $5,000 to purchase 265,335 shares of common stock for an
aggregate exercise price of $500,000. The holders of these warrants elected a
cashless exercise of these warrants, pursuant to which the Company issued
265,335 shares of common stock as settlement of the junior subordinated notes
and $5,000 of accrued interest. In conjunction with this transaction, the
Company recorded a pre-tax charge for the early extinguishment of debt of
$98,504 in April 1997.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In addition to the historical information contained herein, this quarterly
Report on Form 10-Q may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including, but not limited to, the Company's expected
future revenues, operations and expenditures, estimates of the potential markets
for the Company's products, assessments of competitors and potential competitors
and projected timetables for the market introduction of the Company's products.
Investors are cautioned that forward-looking statements are inherently
uncertain. Actual performance and results of operations may differ materially
from those projected or suggested in the forward-looking statements due to
certain risks and uncertainties, including, but not limited to, the following
risks and uncertainties: (i) the Company's indebtedness and future capital
requirements, (ii) increasing postal rates, paper prices and media costs, (iii)
limited sources of fiber used to make the Company's products, (iv) the limited
number of suppliers of the Company's products, (v) the Company's dependence upon
foreign suppliers, (vi) the potential development of a cure for hair loss and
cancer treatment improvements, (vii) the effectiveness of the Company's catalogs
and advertising programs and (viii) the Company's competition. Additional
information concerning certain risks and uncertainties that could cause actual
results to differ materially from those projected or suggested in the forward-
looking statements is contained in the Company's filings with the Commission,
including those risks and uncertainties discussed under the caption "Risk
Factors" in the Company's 10-K, dated March 27, 1997. The forward--looking
statements contained herein represent the Company's judgement as of the date of
this Report on Form 10-Q, and the Company cautions readers not to place undue
reliance on such statements.
THREE MONTHS ENDED MARCH 29, 1997 COMPARED TO THREE MONTHS ENDED MARCH 30, 1996
Net sales increased $1.7 million, or 18.3%, from $9.3 million for the three
months ended March 30, 1996 to $11.0 million for the three months ended March
29, 1997. This increase was due to (i) an increase in the number of catalogs
mailed, (ii) expanded promotional pricing on certain products, (iii) a general
increase of base prices, (iv) the introduction of new products such as the Style
Enhancer, and (v) increased sales from new customers in March 1997 as the
Company began to realize the benefit of its first quarter advertising program.
Gross margin increased from 62.2% for the three months ended March 30, 1996
to 65.5% for the three months ended March 29, 1997. This increase resulted from
(i) the continued expansion of the Company's direct import program which
resulted in a larger percentage of product being purchased at lower prices
directly from overseas factories; and (ii) a reduction in the cost of shipping
customer packages weighing less than one pound, which reduced total shipping
costs.
8
<PAGE>
Selling, General and Administrative expenses increased $2.3 million, or
42.6%, from $5.5 million for the three months ended March 30, 1996 to $7.8
million for the three months ended March 29, 1997. This increase is due to an
increase in advertising and catalog expenditures incurred in the first quarter.
Advertising expenses increased $1.7 million, or 188.9%, from $0.9 million for
the three months ended March 30, 1996 to $2.6 million for the three months ended
March 29, 1997 due to the Company's improved liquidity. The Company's
advertising strategy had the anticipated adverse effect on profitability in the
first quarter. However, as the year progresses, the Company believes that the
first quarter advertising program will continue to produce new customers and
additional sales throughout the remainder of the year. Catalog expenses
increased $0.2 million due to an increase in the number of catalogs produced and
mailed in the first quarter of 1997 compared to the first quarter of 1996.
Net interest expense decreased approximately $173,000, or 39.3%, from
$439,000 for the three months ended March 30, 1996 to $267,000 for the three
months ended March 29, 1997, reflecting lower principal amounts outstanding on
the Company's bank loans during the first quarter of 1997 compared to the first
quarter of 1996 and lower interest rates. The Company's bank debt was reduced
in October 1996 by $5.9 million through the use of proceeds from the Company's
initial public offering. In addition, the Company refinanced its existing
senior indebtedness with a new credit agreement on March 12, 1997, which
resulted in a lower interest rate. On March 18, 1997, the Company repaid $1.9
million of its subordinated indebtedness which also reduced total interest
expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated approximately $872,000 of operating cash flow for the
three months ended March 29, 1997. The first quarter's cash flow was caused
primarily by a $1.0 million decrease in prepaid expenses and a $600,000
increase in liabilities to customers, offset by a $717,503 net loss.
On March 12, 1997, the Company entered into a new $11 million credit facility
with BankBoston, N.A. (the "BKB Agreement") for the purpose of refinancing the
existing senior and subordinated debt and to provide for capital expenditures
and working capital needs of the Company. The new BKB Agreement provides a $5
million term loan (the "Term Loan") and a $6 million revolving line of credit
(the "Line of Credit"). The interest rate on the borrowings will vary according
to certain financial ratios and outstanding borrowings. The Term Loan has a
four year repayment schedule with $750,000 due in 1997, $1.25 million due in
each of the next three years and $500,000 due in 2001. The Company believes
this amortization schedule is more favorable than under the Banque Nationale de
Paris ("BNP") agreement, with $1.25 million less payment required in 1997 and
$1.1 million less in 1998. The Company plans on using future cash receipts to
pay down the Line of Credit on a regular basis. The Line of Credit will be used
to fund all of the Company's disbursements, up to the $6 million limit, subject
to certain covenant restrictions.
The BKB Agreement is cross collateralized by a first perfected security interest
in all tangible and intangible assets of the Company. The BKB Agreement is
subject to certain covenants, including
9
<PAGE>
but not limited to leverage and debt service coverage ratios, minimum earnings
requirements, and a restriction on the payment of cash dividends on the
Company's common stock.
In March 1997, the Company used the proceeds from the Term Loan and $500,000
under the Line of Credit to pay off its remaining indebtedness to BNP. In
conjunction with this repayment, the Company recorded a $161,567 extraordinary
loss on the early extinguishment of debt (net of income tax benefit of $107,711)
for the write off of the remaining deferred financing costs.
On March 18, 1997, the Company repaid $1,896,913 of principal and accrued
interest on the subordinated debt, with $1,765,767 repaid from proceeds from the
Line of Credit and $131,146 repaid by offsetting a note receivable from a
stockholder.
In April 1997, the Company repaid the remaining subordinated debt in the amount
of $2,898,854 of principal and accrued interest. The repayment was made with
proceeds from the Line of Credit.
On April 11, 1997, the Company repaid $495,000 of junior subordinated
notes. In connection with the original issuance of these notes, the Company
issued warrants for $5,000 to purchase 265,335 shares of common stock for an
aggregate exercise price of $500,000. The holders of these warrants elected a
cashless exercise of these warrants, pursuant to which the Company issued
265,335 shares of common stock as settlement of the junior subordinated notes
and $5,000 of accrued interest. In conjunction with this transaction, the
Company recorded a pre-tax charge for the early extinguishment of debt of
$98,504 in April 1997.
ACCOUNTING PRONOUNCEMENTS
In March 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings Per Share" ("SFAS No. 128") which is effective for financial
statements issued for periods ending after December 15, 1997. This statement
requires the disclosure of basic and diluted per share computations. As
required, the Company will adopt SFAS No. 128 in the fourth quarter of 1997.
This statement, if applied, would have no impact to the reported loss per share
for the three months ended March 29, 1997 and March 30, 1996.
10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1* Net Building Lease dated March 7, 1997 between Campanelli
Investment Properties and the Registrant for premises located
at 525 Campanelli Industrial Drive, Brockton, MA. Filed as
Exhibit 10.36 to Specialty Catalog Corp.'s 1996 Annual Report
on Form 10-K.
10.2* Credit Agreement dated March 12, 1997 between The First
National Bank of Boston and the Registrant. Filed as Exhibit
10.37 to Specialty Catalog Corp.'s 1996 Annual Report on Form
10-K.
10.3* Amendment No. 2 to Printing Agreement, dated January 1, 1995
between Quebecor Printing (USA) Corp. and the Registrant, as
amended, dated December 31, 1996. Filed as Exhibit 10.38 to
Specialty Catalog Corp.'s 1996 Annual Report on Form 10-K.
11.1 Computation of weighted average shares used in computing
earnings per share amounts. Filed herewith.
27 Financial Data Schedule (for EDGAR filing purposes only). Filed
herewith.
* Indicates exhibit previously filed with the Securities and Exchange
Commission on the Registrant's 1996 Annual Report on Form 10-K and
is hereby incorporated by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended March 29, 1997.
11
<PAGE>
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.
Dated: May 8, 1997
SPECIALTY CATALOG CORP.
/s/ Steven L. Bock
-------------------------
Steven L. Bock
Chairman and Chief Executive Officer
/s/ J. William Heise
-------------------------
J. William Heise
Senior Vice President, Chief Financial Officer
(Principal Accounting and Financial Officer)
12
<PAGE>
EXHIBIT INDEX
10.1* Net Building Lease dated March 7, 1997 between Campanelli
Investment Properties and the Registrant for premises located
at 525 Campanelli Industrial Drive, Brockton, MA. Filed as
Exhibit 10.36 to Specialty Catalog Corp.'s 1996 Annual Report
on Form 10-K.
10.2* Credit Agreement dated March 12, 1997 between The First
National Bank of Boston and the Registrant. Filed as Exhibit
10.37 to Specialty Catalog Corp.'s 1996 Annual Report on Form
10-K.
10.3* Amendment No. 2 to Printing Agreement, dated January 1, 1995
between Quebecor Printing (USA) Corp. and the Registrant, as
amended, dated December 31, 1996. Filed as Exhibit 10.38 to
Specialty Catalog Corp.'s 1996 Annual Report on Form 10-K.
11.1 Computation of weighted average shares used in computing
earnings per share amounts. Filed herewith.
27 Financial Data Schedule (for EDGAR filing purposes only). Filed
herewith.
* Indicates exhibit previously filed with the Securities and Exchange
Commission on the Registrant's 1996 Annual Report on Form 10-K and
is hereby incorporated by reference.
<PAGE>
EXHIBIT 11.1
<TABLE>
<CAPTION>
MARCH 29, 1997 MARCH 30, 1996
PRIMARY AND PRIMARY AND
FULLY DILUTED FULLY DILUTED
--------------- ---------------
<S> <C> <C>
INCOME
Net income (loss) ($717,503) ($102,723)
Preferred Dividends --- 73,094
--------- ---------
Net Income available to Common
Stockholders ($717,503) ($175,817)
========= =========
Primary and Fully Dilutive Earnings
per Share ($0.15) ($0.06)
========= =========
NUMBER OF SHARES
Primary and Fully Dilutive
Weighted Average Shares 4,701,666 2,826,666
========= =========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1997
<CASH> 1,016,357
<SECURITIES> 0
<RECEIVABLES> 957,447
<ALLOWANCES> 72,197
<INVENTORY> 4,690,190
<CURRENT-ASSETS> 9,538,534
<PP&E> 4,186,166
<DEPRECIATION> (3,365,489)
<TOTAL-ASSETS> 17,197,215
<CURRENT-LIABILITIES> 5,695,274
<BONDS> 8,023,958
0
0
<COMMON> 47,017
<OTHER-SE> 4,180,966
<TOTAL-LIABILITY-AND-EQUITY> 17,197,215
<SALES> 10,973,253
<TOTAL-REVENUES> 10,973,253
<CGS> 3,786,447
<TOTAL-COSTS> 3,786,447
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 266,772
<INCOME-PRETAX> (926,561)
<INCOME-TAX> (370,625)
<INCOME-CONTINUING> (555,936)
<DISCONTINUED> 0
<EXTRAORDINARY> 161,567
<CHANGES> 0
<NET-INCOME> (717,503)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
