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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2000.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from .................... to ....................
COMMISSION FILE NUMBER 0-13102
THE NOSTALGIA NETWORK, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 84-0923659
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
650 MASSACHUSETTS AVENUE NW, WASHINGTON, DC 20001
(Address of principal executive office) (Zip Code)
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(202) 289-6633
(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 [ ]
The number of shares of the Registrant's Common Stock, $.04 par value as of the
close of the period covered by this Report was 20,275,370.
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TABLE OF CONTENTS
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Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of
March 31, 2000 and December 31, 1999 3
Statements of Operations
For the Three Months Ended March 31, 2000 and 1999 4
Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7 - 12
Item 3. Quantitative and Qualitative Disclosure about Market Risk
PART II. OTHER INFORMATION 12
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Default upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Report on Form 8-K 12
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE NOSTALGIA NETWORK, INC.
BALANCE SHEETS
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(Unaudited) December 31,
March 31, 2000 1999
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,070,601 $674,177
Accounts receivable, less allowance of $139,800
and $161,000, respectively 669,882 826,588
Prepaid expenses 68,002 114,096
Programming and cablecast rights 5,524,589 7,105,280
------------- -------------
Total current assets 7,333,074 8,720,141
Programming and cablecast rights, net 3,078,689 2,981,416
Property and equipment, net 913,387 972,107
Deposits 49,431 49,430
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Total assets $11,374,580 $12,723,094
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT:
CURRENT LIABILITIES
Current maturities of programming and cablecast fees $3,957,117 $4,810,822
Accounts payable -- Trade 1,097,010 1,172,475
-- Related parties 35,142 32,191
Accrued expenses and other liabilities 396,367 531,341
Unearned income 207,444 221,016
------------- -------------
Total current liabilities 5,693,080 6,767,845
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LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES:
Programming and cablecast fees 1,405,787 2,135,164
Notes payable to related parties 89,835,900 86,085,900
Accrued interest payable - Related parties 2,022,256 330,463
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Total Long-term liabilities 93,296,943 88,551,527
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Total liabilities 98,957,023 95,319,372
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COMMITMENTS AND CONTINGENCIES:
STOCKHOLDERS' DEFICIT
Preferred stock, convertible: $2 par value, 125,000 shares,
Authorized, 3,250 issued and outstanding 6,500 6,500
Common stock: $0.04 par value, 30,000,000 shares
authorized, 20,275,370 shares issued
and outstanding 811,015 811,015
Additional paid-in capital 30,213,584 30,213,584
Deficit (118,613,542) (113,627,377)
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Total stockholders' deficit: (87,582,443) (82,596,278)
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Total liabilities and stockholders' deficit: $11,374,580 $12,723,094
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THE NOSTALGIA NETWORK, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
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For the Three Months
Ended March 31,
---------------------------------
2000 1999
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OPERATING REVENUES:
Affiliate revenues $551,305 $548,215
Advertising sales revenues 830,207 791,421
Other 203,084 -
------------ ------------
Total operating revenues 1,584,596 1,339,636
------------ ------------
OPERATING EXPENSES:
Programming, production and transmission 1,181,283 1,201,507
Programming amortization 2,158,000 2,119,020
Sales and marketing 524,142 989,667
Finance, general and administration 875,552 1,061,575
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Total operating expenses 4,738,977 5,371,769
------------ ------------
LOSS FROM OPERATIONS: (3,154,381) (4,032,133)
------------ ------------
OTHER (EXPENSE) INCOME:
Interest and other, net (1,831,784) (1,340,305)
------------ ------------
LOSS BEFORE PROVISION FOR
FEDERAL INCOME TAXES (4,986,165) (5,372,438)
PROVISION FOR FEDERAL INCOME TAXES - -
------------ ------------
NET LOSS $(4,986,165) $(5,372,438)
============ ============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $(0.25) $(0.26)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 20,275,370 20,274,371
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THE NOSTALGIA NETWORK, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
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For the Three Months
Ended March 31,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(4,986,165) $(5,372,439)
Adjustments to reconcile net loss to net cash
Used in operating activities:
Depreciation and amortization 2,227,315 2,190,419
Provision for losses on accounts receivable 122,020 174,000
Loss on disposal of property and equipment 450 -
Net change in operating assets and liabilities:
Decrease (Increase) in accounts receivable 34,686 (206,758)
Decrease in prepaid expenses & other assets 46,094 40,082
Decrease in accounts payable (72,514) (661,356)
Increase in accrued expenses
and other liabilities 1,543,247 1,177,945
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Net cash used in operating activities (1,084,867) (2,658,107)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of programming and cablecast rights (674,582) (280,164)
Purchases of property and other assets (11,045) -
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Net cash used in investing activities (685,627) (280,164)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term obligations (1,583,082) (1,316,714)
Proceeds from notes payable - related parties 3,750,000 8,000,000
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Net cash provided by financing activities 2,166,918 6,683,286
----------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 396,424 3,745,015
CASH AND CASH EQUIVALENTS - BEGINNING 674,177 539,371
----------- -----------
CASH AND CASH EQUIVALENTS - ENDING $1,070,601 $4,284,386
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The Nostalgia Network, Inc.
NOTES TO FINANCIAL STATEMENTS
1. The financial information included herein is submitted pursuant to the
requirements of Form 10-Q and does not include all disclosures required
by generally accepted accounting principles. It is suggested that these
unaudited financial statements be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K
for the fiscal year ended December 31, 1999 of the Nostalgia Network,
Inc. (the "Company") filed with the Securities and Exchange Commission on
March 30, 2000, which are incorporated herein by reference. The
accompanying interim financial statements reflect all adjustments
(consisting of normal recurring accruals only) which are, in the opinion
of management, necessary for a fair statement of the results for the
interim periods presented. The results of operations for interim periods
are not necessarily indicative of the results to be obtained for the
entire year.
2. Certain reclassifications have been made to the financial statements for
the comparative period of the prior fiscal year for consistency with the
presentation for the current period.
3. Cash and cash equivalents include highly liquid debt instruments with a
maturity of three months or less.
4. On December 31, 1999, the Company issued two substitution and replacement
notes to Crown Communications Corporation ("Crown") and Concept
Communications, Inc. ("Concept" and, together with Crown, the "Majority
Stockholders") in the amount of $63,997,292 and $21,783,608,
respectively, at an interest rate of 8.5%, each due January 1, 2001.
These notes require minimum monthly interest payments aggregating to
$60,000 and replace previously issued notes in the principal amounts of
$61,071,503 and $20,598,036 plus $2,925,789 and $1,185,572 in accrued
and unpaid interest, respectively. On January 31, 2000, March 09, 2000
and March 21, 2000, the Company issued three promissory notes to Crown in
the principal amounts of $1,250,000 each, at an interest rate of 8.5%,
each due January 1, 2001. These notes are secured by substantially all of
the Company's assets pursuant to certain security agreements between the
Majority Stockholders and the Company.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This Form 10-Q contains certain "forward-looking
statements" which represent expectations or beliefs of the Company, including,
but not limited to, statements concerning the Company's operations, performance,
financial condition, plans, growth and strategies. Any statements contained in
this Form 10-Q that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may," "will," "expect," "anticipate," "intend," "could,"
"estimate," or "continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties,
including, but not limited to, those relating to development of the Company's
network, the impact of internal and external problems caused by the Year 2000
computer problem, and dependence on existing management; leverage and debt
service (including sensitivity to fluctuations in interest rates). Certain of
these risks and uncertainties are beyond the Company's control, and actual
results may differ materially depending on a variety of important factors,
including those described in this Form 10-Q.
For a discussion of the risks that may have an impact on the Company's results,
see the Company's Annual Report on Form 10-K for the year ended December 31,
1999, filed with the Securities and Exchange Commission on March 30, 2000.
Results of Operations
Total revenues increased by $244,960, or 18.3% (from $1,339,636 to $1,584,596)
for the three months ended March 31, 2000 (the "2000 Quarter") compared to the
three months ended March 31, 1999 (the "1999 Quarter"). The increase resulted
principally from the sale of available radio spot airtime, which originally
were acquired in 1999.
Overall advertising sales revenues increased $38,786, or 4.9% (from $791,421 to
$830,207). Infomercial sales decreased $217,828, or 55.1% (from $395,278 to
$177,450). The decrease in infomercial revenue was due to the Company's decision
to shift from selling infomercial time during the overnight block to selling
Nested programs, which combine all of the available time during the overnights
and allow the Company to sell it as a block of time which has been designated as
Nested programs. Nested programs amounted to $325,350, for the 2000 Quarter.
Revenues from national spot ads decreased $157,463 or 100.0% (from $157,463 to
$0). This was primarily as a result of the Company's decision to discontinue the
sale of national spot advertising and expand the inventory of advertising hours
for Infomercial and direct response advertising. Other revenue increased by
$203,084, or 100.0% (from $0 to $203,084) primarily as a result of the sale of
available radio spot airtime, which originally were acquired in 1999.
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Affiliate revenues increased by $3,090, or .6% (from $548,215 to $551,305),
primarily as a result of some c-band customers that became billable during the
2000 Quarter. The length of each contract varies, but generally ranges from
three to five years. Certain of the Company's affiliate contracts have expired
and carriage is currently provided on a month-to-month basis. Many of these
affiliates have declined to enter into new contracts until their plans for
channel expansion are completed. As a result of intense competition among cable
networks for this reduced number of channels, the Company's per subscriber fees
from affiliates may decline.
The Company believes that baby boomer and older adults are a valuable market,
which currently is not being served by any other network. Government statistics
show that this demographic is the fastest growing demographic segment and will
account for 30.0% of the population in 2000. As the technological front
continues to change, the Company believes that its best approach is to further
brand the Company's television programming service, GoodLife TV Network (the
"Network"), and build consumer awareness of the Network. In furtherance of this
goal, the Company is actively pursuing development of new original programming
specifically targeted to Boomers and over which will be unique to the Network.
The Company believes that investment in the Network programming and consumer
awareness will provide a greater long-term benefit than diverting funds for
short-term launch opportunities.
Operating expenses, net of $674,582 in capitalized programming costs in the 2000
Quarter, compared to $280,164 in the 1999 Quarter, decreased by $632,808, or
11.8% (from $5,371,769 to $4,738,961). This decrease was primarily a result of a
decrease of $465,525, or 47.0% (from $989,667 to $524,142) in sales and
marketing costs, a decrease of $186,023, or 17.5% (from $1,061,575 to $875,552)
in finance, general and administrative costs, a decreases of $20,224, or 1.7%
(from $1,201,507 to $1,181,283) in programming, production and transmission
costs, offset by an increase in programming amortization of $38,980, or 1.8%
(from $2,119,020 to $2,158,000).
Sales and marketing costs decreased by $465,525, or 47.0% (from $989,667 to
$524,142). Salaries and wages decreased by $179,928, or 46.9% (from $383,447 to
$203,519). Travel and entertainment expenses decreased by $15,705, or 31.4%
(from $50,055 to $34,350). These decreases were primarily due to the departure
of personnel from positions, which have not yet been replaced. Convention
expenses increased by $38,538, or 287.9% (from $13,387 to $51,925). Advertising
expenditures increased by $2,972, or 21.8% (from $13,638 to $16,610). Both of
these increases were due to the Company's efforts to build consumer awareness of
the Network. Professional fees decreased by $82,935 or 56.7% (from $146,385 to
$63,450) primarily as a result of reduced expenditures on the Network's affinity
and new media efforts, as well as bringing the Network's public relations
operations in house.
Programming, production and transmission costs, net of $674,582 in capitalized
programming costs in the 2000 Quarter compared to $280,164 in the 1999 Quarter,
decreased by $20,224, or 1.7% (from $1,201,507 to $1,181,283) primarily as a
result of a combination of decreased costs in net programming costs of $53,212,
or 20.7% (from $256,235 to $203,023), decreased programming, production and
traffic costs of $11,340 or 9.0% (from $126,132 to $114,792), offset by
increased transmission costs of $44,329 or 5.4% (from $819,139 to $863,468).
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Programming amortization costs increased by $38,980, or 1.8% (from $2,119,020 to
$2,158,000) primarily as a result of higher overall accumulated costs for
original programming incurred in prior years. The Company expects to incur
additional increases in future programming and studio production costs as a
consequence of upgrading the Network's programming and the creation of new
original programs. These additional future expenditures will adversely impact
the Company's results of operations in the short-term, but management believes
they are critical to the Company's long-term survival and growth.
The Company continues its schedule of new and original productions in 2000,
including: GTV DanceSport, which spotlights the rapidly growing trend of
ballroom and performance dancing, which is slated to become a recognized Olympic
sport; American Couples, hosted by esteemed television journalist Nancy Glass,
which is an hour long show celebrating the family values, love, commitment and
partnership of famous couples; Heroes & Sheroes, which profiles ordinary men and
women who have performed heroic tasks for the benefit of their fellow man;
American Families hosted by Nancy Glass, which juxtaposes members of
contemporary families against the classic TV families of The Adventures of Ozzie
and Harriet and Make Room for Daddy; Flea Market Movie, where collectibles
aficionado, Christopher Kent, appraises viewer's attic treasures during movie
breaks; The Cookbook Show which features the Network's Flea Market Movie host,
Christopher Kent, who also is an accomplished chef, preparing dishes from famous
cookbooks, More Money with the Dolans, starring Ken and Daria Dolan, the "first
family of finance," which provides an entertaining program on money issues; The
Bull and the Bear, in which a "Siskel and Ebert" type pair of hosts, Llewellyn
King and Linda Gasparello, provide stock market reports; The Real Me
Autobiographies, which recounts true stories of famous people in their own
words; and American Soldier, which features interviews with World War II
veterans as wraparounds to the dramatic series, Combat!, Garrison's Gorillas and
12 O'clock High.
Finance, general and administrative costs decreased by $186,023, or 17.5% (from
$1,061,575 to $875,552). This decrease primarily was a result of decreases in
legal and professional fees of $54,421, or 37.3% (from $145,915 to $91,494),
decreases in bad debt expenses of $51,980, or 29.9% (from $174,000 to $122,020),
decreases in consolidation and retention costs of $106,861, or 55.2% (from
$193,762 to $86,901) and decreases in travel and entertainment costs of $4,383,
or 20.3% (from $21,547 to $25,930). These decreases were partially offset by
increases in rent and lease expense of $14,850, or 26.8% (from $55,290 to
$70,140), and salaries, taxes and benefits of $34,655, or 14.9% (from $232,614
to $267,269). These decreases resulted from the Company's decision in March 1999
to more closely align its sales and marketing activities by consolidating these
efforts at the Company's headquarters in Washington, D.C.
As a result of increased revenues, decreased programming, production, and
transmission costs, decreased sales and marketing costs, decreased finance,
general and administration costs, offset partially by increased programming
amortization costs, the Company's loss from operations decreased $632,792, or
11.8% (from $5,371,769 to $4,738,977).
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Other income (expense) increased $491,479, or 36.7% (from ($1,340,305) to
($1,831,784)) primarily as a result of interest on additional borrowings. As a
result of decreased loss from operations and increased other expense, net loss
decreased by $386,373, or 7.2% (from $5,372,438 to $4,986,165).
Liquidity and Capital Resources
Cash increased from $674,177 at December 31, 1999 to $1,070,601 at March 31,
2000, principally due to $3,750,000 in financing received in the 2000 Quarter,
offset by cash outlays to cover increased operating losses and repayments of
certain debts. Working capital decreased from $1,952,296 at December 31, 1999 to
$1,639,994 at March 31, 2000, principally as a result of a decrease in current
programming and cablecast rights. Cablecast rights have decreased by $1,483,418,
or 14.7%, since December 31, 1999 as a result of amortization of the Network's
investment in its primetime line-up. Total liabilities increased primarily due
to $3,750,000 in additional financing.
Cash used in operating activities decreased $1,573,240, or 59.2% (from
$2,658,107 to $1,084,867) for the 2000 Quarter compared to the 1999 Quarter,
principally as a result of decreases in accounts payable and improved
collections on accounts receivable.
Cash used in investing activities increased $405,463, or 144.7% (from $280,164
to $685,627) principally due to an increase in the purchase of programming and
cablecast rights of $394,418.
Cash flows from financing activities decreased $4,516,368, or 67.6% (from
$6,683,286 to $2,166,918) due principally to decreased financing of $4,250,000,
or 53.1% (from $8,000,000 to $3,750,000), offset by increased repayment of
long-term obligations of $266,368, or 20.2% (from $1,316,714 to $1,583,082).
In light of the Company's recurring losses, management is actively monitoring
expenses and examining operating methods to increase efficiencies. These
measures may provide short-term improvement, but do not address the more
critical long-term growth needs for the Network. In order to grow, the Network
needs to increase its affiliate base which, in turn, will increase the
subscriber base and should allow the Network to increase its advertising rates
as well as affiliate revenues. To provide for necessary future growth,
management continued its focus on an aggressive affiliate marketing campaign,
including consumer awareness advertising and events, prominent presence at major
trade shows and new trade advertising.
Since 1990, Crown and Concept have been the principal source of the Company's
capital. Crown and Concept have invested $2,300,000 and provided $85,781,000 in
financing since 1994, including $15,000,000 loaned by Crown to the Company in
1999. Additionally, between January 1, 2000 and May 5, 2000, Crown has provided
$5,000,000 in debt financing to the Company, and has committed to advance, as
needed, an additional $10,000,000 in debt or equity
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financing during the balance of the calendar year. The Company believes that
these funds will be sufficient to satisfy its operating needs for 2000. In
connection with the borrowings, the Company has entered into a security
agreement pledging substantially all the Company's assets as security for its
indebtedness to Crown and Concept.
On October 8, 1999, Crown delivered to the Company the terms of a proposed
merger (the "Merger"), which, if consummated, would result in the elimination of
the Company's publicly-held shares of common stock and constitute a
going-private transaction within the meaning of Section 13(e)(3) of the
Securities Exchange Act of 1934. Upon receipt, Crown's offer was referred to and
reviewed by a committee of the Company's independent directors, which, after
reviewing the offer, recommended to the Company's Board of Directors that the
offer be accepted.
On October 21, 1999, the Board of Directors determined that the proposed Merger
was fair to, and in the best interests of, the Company and its stockholders and
approved the Merger proposal subject to the negotiation of mutually satisfactory
definitive documentation. A merger agreement was executed by the Company on
January 7, 2000 and by NNI Acquisition Corporation ("Acquisition"), a Delaware
corporation wholly-owned by Crown and Concept, on January 11, 2000. Consummation
of the merger remains contingent upon, among other things, approval of the
Merger by the Company's stockholders.
In January 2000, Crown and Concept transferred their respective shares of the
Company's common stock and preferred stock to Acquisition, which was formed to
facilitate the merger. Crown and Concept retain beneficial control of the
transferred shares, as Acquisition is wholly-owned by Crown and Concept. Crown
and Concept have indicated that they will cause the shares held by Acquisition
to be voted in favor of the Merger.
It is anticipated that following the Merger, the business and operations of the
Company will be continued substantially as currently conducted for the immediate
future, including the Company's continuing analysis of and efforts to seek a
strategic alliance. The Company has had contact with several possible strategic
partners, but no serious discussions have occurred. There can be no assurance
that the Company will be able to obtain a strategic partner, or that any
strategic partner will be willing to invest the sums required by the Company in
order to continue to grow the Network's subscriber base. Crown and Concept have
informed the Company that they intend to reevaluate the business and operations
of the Company following the merger and take such actions with respect to the
future business and operations of the Company as they deem appropriate. Although
there are no definitive plans or agreements in place, Crown and Concept may
cause the Company to enter into joint ventures or other agreements with other
business entities after the Merger.
Because of the unpredictable factors involved in the search for a strategic
alliance and the dynamic changes taking place in the industry, there is
considerable uncertainty about the Company's future needs. There can be no
assurance that the Company will be able to locate
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sufficient financing in excess of that committed from Crown, nor that it will be
able to achieve a strategic alliance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. None.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Marlin Entertainment Group, Ltd. v. The Nostalgia Network, Inc. and
Jay Garfinkel. On February 8, 2000, a complaint was filed in the United States
District Court for the Southern District of New York making claims against the
Company for breach of contract, interference with contractual relations,
business disparagement and injurious falsehood. The Company believes the
allegations of the complaint are without merit, intends to defend vigorously all
claims and has filed a counterclaim for damages against the plaintiff. The
Company does not believe that this matter will have a material adverse effect on
the Company's financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES. None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
ITEM 5. OTHER INFORMATION. None
ITEM 6. EXHIBIT AND REPORT ON FORM 8-K.
(a) Exhibits
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<CAPTION>
Exhibit
No. Description
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3.1 Certificate of Incorporation, as amended (filed as Exhibit 3.1 to
the Registrant's Report on Form 10-K for the Year Ended December
31, 1994, and incorporated herein by reference thereto)
3.2 Amended and Restated Bylaws (filed as Exhibit 3.2 to the
Registrant's Report on Form 10-K for the Year Ended December 31,
1994, and incorporated herein by reference thereto)
27 Financial Data Schedule as required by Item 601 (c) of Regulation S-K
</TABLE>
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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 15, 2000
THE NOSTALGIA NETWORK, INC.
By: /s/SQuire D. Rushnell
---------------------------------------
SQuire D. Rushnell, President and
Chief Executive Officer
By: /s/ Diane C. Fuller
---------------------------------------
Diane C. Fuller, Chief Financial Officer
and Treasurer
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<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from Form 10-Q
for the quarter ended March 31, 2000, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 1,070,601
<SECURITIES> 0
<RECEIVABLES> 809,682
<ALLOWANCES> 139,800
<INVENTORY> 8,603,278
<CURRENT-ASSETS> 7,333,074
<PP&E> 3,277,814
<DEPRECIATION> 2,364,427
<TOTAL-ASSETS> 11,374,580
<CURRENT-LIABILITIES> 5,693,080
<BONDS> 91,858,156
0
6,500
<COMMON> 810,015
<OTHER-SE> (88,399,958)
<TOTAL-LIABILITY-AND-EQUITY> 11,374,580
<SALES> 0
<TOTAL-REVENUES> 1,584,596
<CGS> 0
<TOTAL-COSTS> 4,616,957
<OTHER-EXPENSES> 0
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</TABLE>
