<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended December 31, 1999
Commission File Number 0-10832
AFP Imaging Corporation
(Exact name of registrant as specified in its charter)
New York 13-2956272
------------------------------- ---------------------
(State or Other Jurisdiction of (IRS Employer ID No.)
Incorporation or Organization)
250 Clearbrook Road, Elmsford, New York 10523
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (914) 592-6100
--------------
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
--- ---
The registrant had 9,271,054 shares of Common Stock outstanding as of
February 1, 2000.
1
<PAGE>
PART I. FINANCIAL INFORMATION
The consolidated financial statements included herein have been prepared by AFP
Imaging Corporation (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. While certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, the Company believes that the
disclosures made herein are adequate to make the information presented not
misleading. It is recommended that these consolidated financial statements be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999.
In the opinion of the Company, all adjustments necessary to present fairly the
financial position of AFP Imaging Corporation as of December 31, 1999 and June
30, 1999, and the results of its operations for the three and six month periods
ended December 31, 1999 and 1998, and its cash flows for the six months periods
then ended, have been included.
2
<PAGE>
ITEM 1: FINANCIAL STATEMENTS
AFP IMAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1999 AND JUNE 30, 1999
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1999 1999
- ------ ------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 482,323 $ 249,053
Accounts receivable, less allowance
for doubtful accounts of $438,000
and $427,000 respectively 3,063,536 3,923,514
Inventories 4,695,552 5,494,828
Prepaid expenses and other 150,477 89,958
------------ ------------
Total current assets 8,391,888 9,757,353
------------ ------------
PROPERTY AND EQUIPMENT, (AT COST) 8,081,731 8,035,982
Less accumulated depreciation (6,988,706) (6,810,006)
------------ ------------
1,093,025 1,225,976
------------ ------------
INTANGIBLE ASSETS,
net of accumulated amortization 2,684,264 2,804,822
------------ ------------
OTHER ASSETS 351,109 197,933
------------ ------------
$ 12,520,286 $ 13,986,084
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 3,460,032 $ 427,958
Accounts payable 1,201,223 965,945
Accrued expenses 811,888 1,409,666
------------ ------------
Total current liabilities 5,473,143 2,803,569
------------ ------------
LONG TERM DEBT 1,771,665 5,974,216
------------ ------------
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value, 30,000,000
shares authorized, 9,271,054
shares issued and outstanding
at December 31, 1999 and
June 30, 1999 92,710 92,710
Paid-in capital in excess of par 11,545,882 11,491,001
Accumulated deficit (6,348,442) (6,360,831)
Accumulated other comprehensive loss (14,672) (14,581)
------------ ------------
Total shareholders' equity 5,275,478 5,208,299
------------ ------------
$ 12,520,286 $ 13,986,084
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated balance sheets.
3
<PAGE>
AFP IMAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 6,470,746 $ 7,797,716 $ 12,870,939 $ 15,128,825
Cost of Sales 4,305,990 5,615,428 8,422,826 10,617,078
------------ ------------ ------------ ------------
Gross Profit 2,164,756 2,182,288 4,448,113 4,511,747
------------ ------------ ------------ ------------
Selling, General and
Administrative Expenses 1,889,922 2,353,233 3,921,014 4,386,458
Research and Development 146,298 294,706 283,518 592,915
------------ ------------ ------------ ------------
2,036,220 2,647,939 4,204,532 4,979,373
------------ ------------ ------------ ------------
Operating Income (loss) 128,536 (465,651) 243,581 (467,626)
------------ ------------ ------------ ------------
Interest, net 113,182 163,014 229,392 322,483
------------ ------------ ------------ ------------
Income (loss) before provision for taxes 15,354 (628,665) 14,189 (790,109)
Provision for Income Taxes 4,960 12,000 1,800 24,000
------------ ------------ ------------ ------------
Net Income (Loss) $ 10,394 $ (640,665) 12,389 $ (814,109)
------------ ============ ------------- ============
NET (LOSS) PER SHARE
Basic $-- $(.07) $-- $(.09)
===== =====
Diluted $-- $(.07) $-- $(.09)
===== =====
Weighted average outstanding
Basic 9,271,054 9,271,054 9,271,054 9,519,502
------------ ------------ ------------ ------------
Diluted 9,297,172 9,271,054 9,280,933 9,519,502
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
4
<PAGE>
AFP IMAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Accumulated
Paid-in Other
Comprehensive Common Capital In Accumulated Comprehensive
Loss Stock Excess of Par Deficit Loss Total
------------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE JUNE 30, 1998 $ -- $ 97,679 $ 11,858,704 $ (4,153,889) $ (8,509) $ 7,793,985
Retirement of 496,895 shares of
Common stock at $.75 per share -- (4,969) (367,703) -- -- (372,672)
Foreign currency translation
adjustment (4,945) -- -- -- (4,945) (4,945)
Net loss for six months
ended December 31, 1998 (814,109) -- -- (814,109) -- (814,109)
------------
Comprehensive Loss $ (819,054) -- -- -- --
============ ------------ ------------ ------------ ---------- ------------
BALANCE DECEMBER 31, 1998 $ 92,710 $ 11,491,001 $ (4,967,998) $ (13,454) $ 6,602,259
============ ============ ============ ========== ============
BALANCE JUNE 30, 1999 $ -- $ 92,710 $ 11,491,001 $ (6,360,831) $ (14,581) $ 5,208,299
Issuance of 580,000 Employee
Stock Options at $.31 per share -- -- 54,881 -- -- 54,881
Foreign currency translation
Adjustment (91) -- -- -- (91) (91)
Net income for six months
ended December 31, 1999 $ 12,389 -- -- 12,389 -- 12,389
------------
Comprehensive Income $ 12,298 -- -- -- -- --
============ ------------ ------------ ------------ ---------- ------------
BALANCE DECEMBER 31, 1999 $ 92,710 $ 11,545,882 $ (6,348,442) $ (14,672) $ 5,275,478
============ ============ ============ ========== ============
</TABLE>
The accompanying notes to conslidated financial statements are an integral
part of these consolidated statements.
5
<PAGE>
AFP IMAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 12,389 $ (814,109)
Adjustments to reconcile net loss to net cash (used by) provided
by operating activities-
Accretion of Imputed interest on note payable -- 77,466
Depreciation and amortization 364,678 426,747
Change in assets and liabilities:
Decrease in accounts receivable 859,978 252,294
Decrease (Increase) in inventories 799,276 (384,114)
(Increase) Decrease in prepaid expenses and other assets (189,627) 199,159
Increase in accounts payable 235,278 467,941
(Decrease) in accrued expenses (597,778) (428,675)
----------- -----------
Total adjustments 1,471,805 610,818
----------- -----------
Net cash provided by (used in) operating activities 1,484,194 (203,291)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (80,356) (131,854)
----------- -----------
Net cash used by investing activities (80,356) (131,854)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowing of debt -- 796,115
Repayment of debt (1,170,477) (171,620)
Retirement of Company stock -- (372,672)
----------- -----------
Net cash (used by) provided by financing activities (1,170,477) 251,823
----------- -----------
EXCHANGE RATE EFFECTS ON CASH AND CASH EQUIVALENTS (91) (4,945)
----------- -----------
Net increase (decrease) in cash and cash equivalents 233,270 (88,267)
CASH AND CASH EQUIVALENTS, at beginning of period 249,053 594,992
----------- -----------
CASH AND CASH EQUIVALENTS, at end of period $ 482,323 $ 506,725
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
6
<PAGE>
AFP IMAGING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(1) GENERAL:
The accounting policies followed during the interim periods reported on herein
are in conformity with generally accepted accounting principles and are
consistent with those applied for annual periods, as described in the Company's
financial statements included in the Company's Annual Report on Form 10-K for
the year ended June 30, 1999.
(2) NET EARNINGS PER COMMON SHARE:
The diluted weighted average number of shares outstanding include 9,879 shares
of common stock issuable upon exercise of outstanding stock options in fiscal
2000. It does not include 37,738 shares of common stock issuable upon exercise
of outstanding stock options in fiscal 1999, as such amounts are anti-dilutive
when there is a loss.
(3) LONG AND SHORT TERM DEBT:
As of December 31, 1999, the Company had a senior credit facility consisting of
$8.4 million revolver and a $1.45 million term loan (together the "Credit
Facility") at an interest rate of 3/4% above prime. The Credit Facility is
collateralized by accounts receivable, eligible inventory, equipment, life
insurance policies and proceeds thereof, trademarks, licenses, patents, and
general intangibles. The arrangement provides for restrictions on borrowings,
requires certain financial ratios related to total debt, unsubordinated debt to
tangible net worth and current assets to current liabilities be maintained and
requires minimum levels of working capital, net worth and cash flow. The Company
is currently in compliance with all the terms and conditions of the credit
facility, as amended on November 30, 1999.
On August 11, 1999, the Company renegotiated and significantly reduced the $2.5
million Subordinated Promissory Note issued in December 1997. This Note had been
in dispute and no payments had been made. The Company paid $150,000 to the note
holder and a new six year Subordinated Note for $850,000 was issued; interest
only (fixed at 7.75%) will be paid for the first three years, then the Company
is required to make thirty-six equal monthly payments of $23,611.11 plus
interest on the unpaid balance.
On August 11, 1999, the Company renegotiated and reduced the $1.0 million
Subordinated Promissory Note issued in April 1997. The Company paid $100,000 to
the note holder plus accrued interest from April 17, 1999 to August 10, 1999,
and the principal amount of the amended Subordinated Note was reduced to
$800,000 in total, to be paid over a six year period. Interest only must be paid
quarterly for the first three years, followed by thirty-six equal monthly
payments of $22,222.22 plus interest, paid quarterly, on the unpaid balance.
Interest will remain at LIBOR + 2% for the six year period.
(4) INVENTORY:
The Company uses the gross margin method related to labor and overhead costs
during interim periods for inventory valuation.
(5) INCOME TAXES:
The Company's income tax provision for fiscal 2000 and 1999 relates to state and
foreign income or capital taxes net of any refunds received. No income tax
benefits related to the losses reported in fiscal 1999 have been recorded, in
accordance with SFAS No. 109.
7
<PAGE>
(6) SEGMENT INFORMATION:
The segment information for the three and six months ended December 31, 1999 and
1998 are shown below. Segment information related to operating income (loss)
include costs directly attributable to each segment's operations.
<TABLE>
<CAPTION>
Operating Depreciation Net
Income & Capital Interest
Net Sales (Loss) Assets Amortization Expenditures Expense
--------- --------- ---------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
For the three months ended
December 31, 1999
Medical/Dental $5,457,130 $91,309 $10,843,133 $179,799 $68,689 $83,182
Graphic Arts 1,013,616 37,227 1,677,153 2,100 -- 30,000
---------- -------- ----------- -------- ------- -------
Consolidated $6,470,746 $128,536 $12,520,286 $181,899 $68,689 $113,182
---------- -------- ----------- -------- ------- -------
For the three months ended
December 31, 1998
Medical/Dental $6,373,806 $(426,254) $16,008,082 $209,274 $51,772 $130,182
Graphic Arts 1,423,910 (39,397) 2,202,328 3,600 -- 32,832
---------- ------- ----------- -------- ------- -------
Consolidated $7,797,716 $(465,651) $18,210,410 $212,874 $51,772 $163,014
---------- ------- ----------- -------- ------- -------
Operating Depreciation Net
Income & Capital Interest
Net Sales (Loss) Assets Amortization Expenditures Expense
--------- --------- ---------- ------------ ------------ -------
For the six months ended
December 31, 1999
Medical/Dental $11,004,383 $159,752 $10,843,133 $360,478 $80,356 $169,392
Graphic Arts 1,866,556 83,829 1,677,153 4,200 -- 60,000
----------- -------- ----------- -------- ------- -------
Consolidated $12,870,939 $243,581 $12,520,286 $364,678 $80,356 $229,392
----------- -------- ----------- -------- ------- -------
For the six months ended
December 31, 1998
Medical/Dental $12,415,589 $(452,186) $16,008,082 $419,547 $131,854 $257,609
Graphic Arts 2,713,236 (15,440) 2,202,328 7,200 --- 64,874
----------- -------- ----------- -------- ------- -------
Consolidated $15,128,825 $(467,626) $18,210,410 $426,747 $131,854 $322,483
----------- -------- ----------- -------- ------- -------
</TABLE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FISCAL 2000 FINANCIAL CONDITION
AND RESULTS OF OPERATION
CAPITAL RESOURCES, LIQUIDITY AND RESULTS OF OPERATIONS
The Company's working capital at December 31, 1999, decreased approximately
$4,035,000 from June 30, 1999. Approximately $4,161,000 is due to the
reclassification of the Company's credit facility from long-term debt to
short-term debt as the facility expires in July 2000. The Company expects to
renew this facility with similar terms and conditions prior to its expiration,
however, pursuant to Generally Accepted Accounting Principles such debt is
classified as a current liability. There was approximately $240,000 of net
working capital generated from operations. The Company reduced its borrowings on
this credit facility by approximately $1.2 million in the past six months.
The Company has a senior credit facility consisting of a $9.85 million revolver
and term facility. This credit line is sufficient to finance ongoing working
capital requirements assuming that the Company does not have significant losses
from operations for a material period of time. The revolver loan is secured by
available and eligible inventory, accounts receivable, and specific intangibles.
This facility requires that certain financial ratios and net worth amounts be
maintained. The Company is currently in compliance with all of the covenants and
terms, under the credit facility, as amended November 30, 1999. This facility
was renewed in July 1997 and expires in July 2000. The Company is dependent upon
its existing credit facilities to finance its overall operations. At December
31, 1999, the Company currently had available $979,000 of unused lines of credit
for short-term financing needs plus cash and cash equivalents of $482,000.
8
<PAGE>
Capital expenditures for the first six months of Fiscal 2000 were $80,356 and
included production tooling costs to upgrade and enhance the Company's dental
product lines. Capital expenditures for the balance of Fiscal 2000 will consist
of computer workstation upgrades and production tooling and other appropriate
replacements in the normal course of operations. Management has approved
significant production tooling enhancements for its digital dental product line
for the second half of Fiscal 2000. The Company's historical operating cash
flows have been positive; however, the Company is dependent upon its existing
credit facilities to finance its ongoing working capital requirements.
The Company expects its need for working capital will continue to be financed by
operations and from borrowings on its credit facility. The Company is presently
unaware of any other trends, demands, commitments or contingencies which are
reasonably likely to result in a material increase or decrease in its liquidity
or capital resources in the foreseeable future, except for any ongoing losses
from its operations. No assurances can be given that the Company will have
favorable cash flow in the near term, that the senior lender will grant further
waivers to the Company, or that the Company will successfully renegotiate its
credit facility.
YEAR 2000 RISK
The Company experienced no material problems with its information systems or
with its customers, suppliers or the financial institutions and government
entities with which it deals, as a result of the date change to the Year 2000.
There was no material affect on the Company's results of operations as a result
of the Year 2000 issue. No significant information technology projects or
capital spending were deferred as a result of the Company's Year 2000 program.
The Company does not expect to incur any additional Year 2000 related expenses
in the current fiscal year.
EURO CONVERSION
A single currency called the euro was introduced in Europe on January 1, 1999.
Eleven of the fifteen member countries of the European Union agreed to adopt the
euro as their common legal currency on that date. Fixed conversion rates between
these participating countries' existing currencies and the euro were established
as of that date, to remain legal tender as denominations until at least January
1, 2002. Beginning in January 2002, new euro-denominated bills and coins will be
issued. The Company has addressed the issues raised by the euro currency
conversion. All third-party computer and financial systems have the ability to
process euro-denominated transactions. The Company has also addressed the issue
of the impact of one common currency on pricing.
COMPARISON OF SIX MONTHS FISCAL 2000 VERSUS SIX MONTHS FISCAL 1999
Sales decreased $2,257,900 or 15% between the two periods. The Company's product
lines, other than dental, experienced a general decrease in sales volume, with
the graphic arts business the most significant. Fluctuating world markets,
combined with currency changes, continue to adversely effect the Company's
export sales. The Company continues to explore and develop potential
distribution channels and new products through engineering efforts, aggressive
marketing, as well as repositioning its product pricing in the marketplace. The
Company has increased its efforts in the dental imaging sector by adding
products for redistribution. The result is the dental products have shown growth
in sales. Dental sales were adversely affected in the second quarter by a recent
import restriction by the FDA on the manufacturer of the Company's intraoral
x-ray unit. The Company has selected a new unit for distribution which should be
available during the later part of the third quarter Fiscal 2000.
Gross profit as a percent of sales increased 4.74 percentage points. Material
costs improved by 1 percent, and, manufacturing overheads were significantly
reduced through management's restructuring efforts and cost-cutting programs,
including discontinuance of non-profitable product lines, closing of facilities,
and the elimination of redundancies.
Selling, general and administrative costs decreased $465,400 or 10.6% between
the two periods. Management's cost restructuring programs included the
continuance of its worldwide marketing and sales efforts to preserve and
increase customer share and the reduction of costs in other ancillary
departments.
Research and development costs decreased approximately $309,400 or 52%. The
Company closed its engineering facility in Vancouver, Washington, effective June
30, 1999. The work has been relocated to the Elmsford, NY facility. The Company
has focused on the continued refinement of its digital dental products in order
to reduce costs and maintain market share. Additionally, the Company continues
to invest in sustaining engineering and related costs for its analog products.
Where applicable, the Company is acting as a master import distributor for
products developed by others.
Interest expense net, decreased approximately $93,100, or 29% between the two
periods. Corporate debt was reduced approximately $1,170,500 since June 30,
1999. Additionally, two subordinated notes payable were significantly reduced
and restructured of as of August 1999 (See footnote 2 to Consolidated Financial
Statements for further discussion).
9
<PAGE>
COMPARISON OF SECOND QUARTER FISCAL 2000 VERSUS SECOND QUARTER FISCAL 1999
Net sales decreased $1,327,000 or 17%. All product lines experienced a decline
in volume as discussed above. Gross profit as a percent of sales increased 6
percentage points due to a shift in the product mix to more manufactured items,
and the reduction of Company overheads. The aggregate of the expense items
decreased $611,700 or 23.1%. As explained previously, all cost centers reflect
management's efforts to reduce all non-essential costs. Interest expense, net
decreased $49,800 or 31% as corporate debt was significantly reduced during the
second quarter Fiscal 2000.
OTHER
On March 19, 1999, the Company's Common Stock was de-listed from the NASDAQ
SmallCap Exchange as the Company's shares did not maintain a closing bid price
greater than $1.00 for 30 consecutive days. The Company is now listed on the
NASDAQ Over the Counter Bulletin Board.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative and Hedging
Activities. SFAS No. 133 establishes a comprehensive standard on accounting for
derivative and hedging activities and is effective for periods beginning after
January 15, 2001. Management does not believe that the future adoption of SFAS
No. 133 will have a material effect on the Company's financial position and
results of operations.
This Quarterly Report on Form 10-Q contains certain forward-looking statements
within the meaning of the Private Securities Reform Act of 1995. These
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those in any such forward-looking
statements. Such factors include, but are not limited to, adverse changes in
general economic conditions, the ability of the Company to repay its loans,
including changes in the specific markets for the Company's services, the
ability of the Company to successfully design, develop, manufacture and sell new
products, adverse business conditions, increased competition, pricing pressures,
risk associated with foreign operations, the ability to attract and retain key
personnel, difficulties in obtaining adequate long-term financing to meet the
Company's obligations, various regulatory requirements throughout the world, and
other factors.
PART II OTHER INFORMATION
ITEM 4:
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.
(a) None
(b) Reports on Form 8-K
None
10
<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.
AFP IMAGING CORPORATION
/s/ David Vozick
-------------------------
DAVID VOZICK
Chairman of the Board
Secretary, Treasurer
Date: February 11, 2000
/s/ Donald Rabinovitch
-------------------------
DONALD RABINOVITCH
President and Director
Date: February 11, 2000
/s/ Elise Nissen
-------------------------
ELISE NISSEN
Chief Financial Officer
Date: February 11, 2000
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 482,323
<SECURITIES> 0
<RECEIVABLES> 3,501,536
<ALLOWANCES> 438,000
<INVENTORY> 4,695,552
<CURRENT-ASSETS> 8,391,888
<PP&E> 8,081,731
<DEPRECIATION> 6,988,706
<TOTAL-ASSETS> 12,520,286
<CURRENT-LIABILITIES> 5,473,143
<BONDS> 0
0
0
<COMMON> 92,710
<OTHER-SE> 5,182,768
<TOTAL-LIABILITY-AND-EQUITY> 12,520,286
<SALES> 12,870,939
<TOTAL-REVENUES> 12,870,939
<CGS> 8,422,826
<TOTAL-COSTS> 4,204,532
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 229,392
<INCOME-PRETAX> 14,189
<INCOME-TAX> 1,800
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,389
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
