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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 0-15374
PENTECH INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2259391
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
195 Carter Drive, Edison, New Jersey 08817
(Address of principal executive offices)
(Zip Code)
(908) 287-6640
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of March 31, 1997;
12,496,758 shares of common stock, par value $.01 per share.
Page 1 of 18
There is no Exhibit Index.
INDEX
Part I. Financial Information:
Item 1. Financial Statements Page
Condensed Consolidated Balance Sheets as of
March 31, 1997 and September 30, 1996 3-4
Condensed Consolidated Statements of Operations for the
three and six months ended March 31, 1997 and 1996 5
Condensed Consolidated Statements of Cash Flows
for the three and six months ended March 31,
1997 and 1996 6-7
Notes to Condensed Consolidated Financial Statements 8-13
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 14-16
Part II. Other Information:
Item 2. Changes in Securities 17
Item 4. Submission of Matters to a Vote of
Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(000's omitted)
(Substantially all pledged or assigned)
March 31, 1997 September 30, 1996
(unaudited)
<S> <C> <C>
Current Assets:
Cash $ - $ 7,064
Accounts receivable, net of
allowances for doubtful
accounts of $15 at
March 31, 1997 and
$403 at September 30,
1996 10,743 14,538
Inventories (Note 1) 18,256 18,728
Income taxes receivable 1,390 1,146
Prepaid expenses and other 1,535 1,042
Deferred tax asset 173 619
Total current assets 32,097 43,137
Furniture and equipment (Note 1) 8,335 8,030
Less accumulated depreciation 4,429 3,662
3,906 4,368
Other assets:
Deferred tax assets, long-term - 306
Trademarks, net of amortization
(Note 1) 276 268
Due from officer 142 110
418 684
$36,421 $48,189
See notes to condensed consolidated financial statements.
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont.)
LIABILITIES AND SHAREHOLDERS' EQUITY
(000's omitted)
March 31, 1997 September 30, 1996
(unaudited)
<S> <C> <C>
Current liabilities:
Notes payable, banks
(Note 2) $ 13,405 $ 21,352
Bankers' acceptances
payable (Note 2) - 1,489
Accounts payable 1,616 1,593
Accrued expenses 1,871 3,827
Settlement payable - 500
Settlement note payable 300 700
Total current liabilities 17,192 29,461
Other liabilities:
Deferred tax liability,
long term 145 -
Royalty payable, long-term 400 400
Settlement note payable,
long-term 2,300 2,300
2,845 2,700
Commitments and contingencies
(Notes 4 and 5)
Shareholders' equity (Note 3):
Preferred stock, par value $.10
per share; authorized 500,000
shares; issued and outstanding
none
Common stock, par value $.01
per share; authorized 20,000,000
shares; 12,496,758 shares issued
and outstanding at March 31, 1997
and 10,496,758 shares issued
and outstanding at September 30,
1996 125 105
Capital in excess of par 6,789 5,846
Retained earnings 9,470 10,077
16,384 16,028
$36,421 $48,189
See notes to condensed consolidated financial statements.
<CAPTION>
<PAGE>
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted except for per share amounts)
Three Months Ended Six Months Ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $10,852 $10,410 $23,392 $22,302
Cost of sales 7,118 6,952 15,165 14,608
Gross profit 3,734 3,458 8,227 7,694
Selling, general and
administrative expenses 3,809 4,292 7,853 8,005
Loss from Cosmetics
operation (Note 5) 687 - 687 -
Interest expense 340 312 707 636
Interest (income) (1) (12) (9) (23)
4,835 4,592 9,238 8,618
(Loss) before taxes (1,101) (1,134) (1,011) (924)
Income tax (benefit) (440) (431) (404) (351)
Net (loss) $ (661) (703) $ (607) $ (573)
Net (loss) per share $ (.05) $ (.07) $ (.05) $ (.05)
primary and fully
diluted
See notes to condensed consolidated financial statements.
<PAGE>
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted)
Six Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (607) $ (573)
Adjustments to reconcile net
income to net cash provided for
(used in) operating activities:
Depreciation and amortization 767 513
(Increase) decrease in:
Accounts receivable 3,795 4,090
Inventories 472 (3,100)
Prepaid expenses and other (493) (41)
Income taxes receivable/payable (244) 725
Due from officer (32) -
Deferred tax asset 752 143
Increase (decrease) in:
Bankers' acceptances payable (1,489) 295
Accounts payable 23 (555)
Accrued expenses (1,956) (1,807)
Deferred income taxes payable 145 34
Settlement payables (900) -
Total adjustments 840 297
Net cash provided by (used in)
operating activities 233 (276)
Cash flows (used in) investing activities:
(Purchase) of furniture/equipment (305) (284)
(Increase) in trademarks (8) (19)
Net cash (used in) investing
activities (313) (303)
See notes to condensed consolidated financial statements.
<PAGE>
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(000's omitted)
Six Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from financing activities:
Net (decrease) increase in notes
payable $(7,947) $ 1,701
Issuance of Common Stock 20 -
Increase in additional paid in
capital 943 -
Net cash (used in) provided
by financing activities (6,984) 1,701
Net (decrease) increase in
cash and cash equivalents (7,064) 1,122
Cash and cash equivalents,
beginning of period 7,064 -
Cash and cash equivalents, end of period $ - $ 1,122
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 834 $ 574
Income taxes $ - $ 140
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three and six months ended March 31,
1997 and 1996 is unaudited.)
1. Summary of significant accounting policies:
Organization:
Pentech International, Inc. (the "Company") was formed in
April 1984. A wholly-owned subsidiary, Sawdust Pencil Co.
("Sawdust") was formed in November 1989 and commenced operations in
January 1991. The Company and its subsidiary are engaged in the
production, design and marketing of writing and drawing
instruments. In October 1993, the Company formed a wholly-owned
subsidiary, Pentech Cosmetics, Inc. ("Cosmetics"), to manufacture
and distribute cosmetic pencils. The Company primarily operates in
one business segment: the manufacture and marketing of pens,
markers, pencils and other writing instruments and related products
to major mass market retailers located in the United States, under
the "Pentech" name or licensed trademark brand. The Company's
fiscal year ends September 30.
Principles of consolidation:
The consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.
Cash Equivalents:
The Company considers all time deposits with a maturity of
three months or less to be cash equivalents.
Unaudited financial statements:
All unaudited financial information includes all adjustments
(consisting of normal recurring adjustments) which the Company
considers necessary for a fair presentation of financial position
at March 31, 1997, the results of operations for the three and six
month periods ended March 31, 1997 and 1996 and cash flows for the
six month periods ended March 31, 1997 and 1996.
Inventory and Cost of Sales:
Inventory is stated at the lower cost or market (first-in,
first-out). Interim inventories are based on an estimated gross
profit percentage by product, calculated monthly. Cost of Sales
for imported products includes the invoice cost, duty, freight in,
display and packaging costs. Cost of domestically manufactured
products includes raw materials, labor, overhead and packaging
costs.
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Cont.)
Equipment and depreciation:
Equipment is stated at cost. Depreciation is provided by the
straight-line method over the estimated useful lives of the assets,
which range from five to ten years. Major improvements to existing
equipment are capitalized. Expenditures for maintenance and
repairs which do not extend the life of the assets are charged to
expense as incurred.
Trademarks:
The costs thereof are being amortized over a five-year period
on a straight-line basis.
2. Notes payable, bank:
Rate March 31, 1997 Rate September 30, 1996
Notes payable(a)8.0% $10,000,000 8.25% $11,725,000
8.75% $ 3,405,512 $ 9,627,498
Total $13,405,512 $21,352,498
Bankers' acceptances
payable(a) $ - None $ 1,488,757
(a) Notes and bankers' acceptances payable as of September 30,
1996 were initially advanced under a $34,000,000 line of
credit which was available at the banks' discretion and
subject to limitations based upon eligible inventory and
accounts receivable as defined by that agreement.
As a result of the events leading to the Paradise Settlement
(defined below), the Company's original line of credit was
restructured by the banks for a period ending January 31,
1997.
In January, 1997, the Company entered into a new three year
$30,000,000 Revolving Credit Agreement with BankAmerica
Business Credit, Inc. (the "New Credit Agreement").
Borrowings under the New Credit Agreement are subject to
limitations based upon eligible inventory and accounts
receivable as defined in the New Credit Agreement.
The Credit Agreement is collateralized by a security interest
in substantially all of the assets of the Company. In
connection with the Credit Agreement, the Company has agreed,
among other things, to the maintenance of certain minimum
amounts of tangible net worth and interest coverage ratios.
<PAGE>
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (cont.)
3. Contingency:
At March 31, 1997 the Company was contingently liable for
outstanding letters of credit of $800,004.
4. Income taxes:
Three Months Ended Six Months Ended
March 31, 1997 March 31, 1997
Federal:
Current $ (106,000) $ (97,000)
Deferred (235,000) (216,000)
State:
Current (33,000) (30,000)
Deferred (66,000) (61,000)
$ (440,000) $ (404,000)
Income tax at Federal statutory
rate applied to income before
taxes $ (374,000) $ (344,000)
Add: state income taxes (99,000) (91,000)
Less: effect of deduction of
state income taxes for
Federal purposes 33,000 31,000
Income tax (benefit) $ (440,000) $ (404,000)
<PAGE>
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (cont.)
Significant components of the Company's deferred tax liability as of
March 31, 1997 and September 30, 1996 are as follows:
March 31, September 30,
1997 1996
Current deferred tax liability:
State taxes on deferred
federal items $ (224,935) $ (224,935)
------- -------
Current deferred tax assets:
Bad debts 49,817 231,392
Inventory reserve 375,820 595,980
Reserve for returns and
allowances 453,644 369,017
Unicap 33,110 33,110
Reserve for restructuring - 129,000
--------- --------
Total current deferred
tax assets 912,391 1,358,499
Valuation allowance on current
deferred tax assets (514,635) (514,635)
--------- ---------
397,756 843,864
--------- ---------
Net current deferred tax assets 172,821 618,929
========= =========
Long-term deferred tax liability:
Depreciation (909,950) (888,450)
--------- ---------
Long-term deferred tax assets:
Reserve for litigation 1,290,000 1,720,000
State net operating loss
carryforwards 203,191 203,191
--------- ---------
Total long-term deferred
tax assets 1,493,191 1,923,191
Valuation allowance on
long-term deferred
tax assets (728,556) (728,556)
--------- ---------
764,635 1,194,635
--------- ---------
Net long-term deferred tax
(liability) assets $ (145,315) $ 306,185
========= =========
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (cont.)
5. Loss from Cosmetics operation:
During the second quarter of 1997, the Board of Directors
determined to discontinue its Cosmetics subsidiary and focus its
efforts primarily on its writing instruments business. The Company
is still considering several options on how to dispose of the
operations. The loss from Cosmetics operation included in the
accompanying financial statements reflects the write down of
certain assets of the operation to their estimated net realizable
value.
6. New authoritative accounting pronouncements:
The Financial Accounting Standards Board has issued Financial
Accounting Standard No. 123 "Accounting for Stock-Based
Compensation" ("FAS 123"). FAS 123 will take effect for
transactions entered into during the fiscal year beginning October
1, 1996; with respect to disclosures required for entities that
elect to continue to measure compensation cost using a prior
permitted accounting method, such disclosures must include the
effects of all awards granted in the fiscal year beginning October
1, 1995. The Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related interpretations in accounting for its employee
stock options. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is
recognized.
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings Per Share, which is required to
be adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the
dilutive effect of stock options will be excluded. There is no
impact on primary earnings per share for the second quarter ended
March 31, 1997 and March 31, 1996, respectively. The impact of
Statement 128 on the calculation of fully diluted earnings per
share for these quarters is not expected to be material.
7. Paradise Settlement:
In October 1987, the Company commenced an action against Leon
Hayduchok, All-Mark Corporation and Paradise Creations, Inc.,
(collectively, "Paradise") in the United States District Court for
the Southern District of New York which resulted in an adverse
multi-million dollar judgment against Pentech. In December 1996,
the parties to such litigation entered into a settlement agreement
providing, among other things, for Pentech to pay $500,000, deliver
PENTECH INTERNATIONAL, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (con't.)
a $3,000,000 promissory note plus interest at the rate of 7% per
annum and enter into a five year non-exclusive license to sell such
products for a 10% royalty, with a minimum royalty of $500,000 (the
"Paradise Settlement"). The Company paid Paradise $400,000 in
February 1997, $500,000 in January 1997, and $100,000 of the
minimum royalty in December 1996.
8. Private Placement:
In January 1997, the Company completed a private offering of
20 Units, each Unit consisting of 100,000 shares of Common Stock of
the Company for $50,000 per Unit (the "Private Offering"). The
Company received net proceeds of $963,000 from the Private
Offering. Officers and directors of the Company acquired 52.5% of
the Units sold in the Private Offering and participated on the same
terms as the other investors in the Private Offering. The terms of
the Private Offering were established by a Special Committee of the
Board of Directors who did not participate in the Private Offering.
The Company was required by its banks (at that time) to raise funds
in the Private Offering in order to fund the $500,000 payment
referred to in Note 6 and to enable the Company to fund its
requirements for capital expenditures.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
This report on Form 10-Q may contain forward-looking
statements, within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward looking statements are subject
to the business and economic risks faced by the Company and the
Company's actual results could differ materially from those
anticipated in these forward looking statements as a result of
certain factors, including those set forth in this "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" below.
(1) Material Changes in Results of Operations
Net sales increased in the three and six months ended March
31, 1997 4% and 5% respectively as compared to the same periods a
year ago. The three month and six month increases were primarily
due to the success of the Company's licensed products and holiday
programs.
Gross profit as a percentage of net sales increased in the
three months ended March 31, 1997 to 34.4% from 33.2% in the same
1996 period, and to 35.2% in the six months ended March 31, 1997
from 34.5% in the same 1996 period, primarily due to better product
mix.
Selling, general and administrative (SG&A) expenses as a
percentage of net sales decreased during the three months ended
March 31, 1997 to 35.1% from 41.2% in the prior year. This
decrease was primarily related to the legal fees incurred in the
prior year associated with the Paradise litigation as well as an
increase in the reserve for the loss associated with this matter.
SGA expenses decreased for the six months ended March 31, 1997 to
33.6% from 35.9% of sales compared to the same prior period. This
decrease was primarily related to the costs incurred in the second
quarter ended March 31, 1996 discussed above as well as the cost
associated with the Company moving and establishing a new
distribution center in the first quarter ended December 31, 1995.
There was an increase in interest expense for the three and
six months ended March 31, 1997 due to interest payments made
regarding the Paradise settlement as compared to the year ago
periods.
(2) Material Changes in Financial Condition
During Fiscal 1996, the Company maintained a line of credit
with European American Bank ("EAB") and Chase Manhattan Bank
(collectively referred to as "the Banks"), which permitted maximum
availability of $34,000,000 subject to the Banks' discretion. As
a result of the events leading up to the Paradise Settlement, this
line of credit was restructured by the Banks to provide a maximum
amount of $22,000,000 for the period ending January 31, 1997.
In January 1997, the Company entered into a three year
$30,000,000 revolving credit facility with BankAmerica Business
Credit Inc. (the "New Credit Agreement"). The amount of drawings
under the facility is subject to limitations based upon eligible
inventory and accounts receivable as described in the New Credit
Agreement. The New Credit Agreement is collateralized by a
security interest in substantially all of the assets of the
Company. In addition, in accordance with the New Credit Agreement,
the Company has agreed, among other things, to the maintenance of
certain minimum amounts of tangible net worth and interest coverage
ratios.
The $3,000,000 note (the "Note") issued in connection with the
Paradise Settlement requires $100,000 quarterly principal payments
commencing January 1, 1998. The Note also requires prepayment
under certain conditions related to when the Company obtains tax
benefits. The Company does not anticipate any difficulty meeting
this payment schedule.
The Company initiated several actions to increase its
liquidity. It established a policy obtaining thirty to sixty day
vendor credit to finance a majority of its purchases that
historically have been financed pursuant to letters of credit.
In January 1997, the Company completed a private offering of
securities raising net proceeds of approximately $963,000.
During the second quarter of 1997, the Company decided to
discontinue its Cosmetics line of product to concentrate its cash
flow on its core stationery line of products. The Company is
considering several options on how to dispose of the business. The
Company has decided to write down assets of approximately $687,000
to their estimated net realizable value.
Finally, the Company has been aggressively reducing its
inventory levels over the last several months.
Working capital increased $1,229,000 to $14,905,000 for the
six months ended March 31, 1997. Net cash provided by operating
activities was $233,000 during the six months ended March 31, 1997
as compared to $276,000 used in operating activities in the
corresponding period last year. This was primarily due to a
decrease in accounts receivable, less inventory build-up and lower
accrued expenses, partially offset by the net loss during the
current period. Net cash used in investing activities during the
six months ended March 31, 1997 was $313,000 as compared to
$303,000 during the corresponding year ago period. Net cash used
in financing activities during the six months ended March 31, 1997
was $6,984,000 as compared to $701,000 provided by financing
activities during the year ago period. Notes payable decreased a
substantial amount because the Company continued with its inventory
reduction program and reduced its cash balance at September 30,
1996.
<PAGE>
The Company anticipates the New Credit Agreement together with
anticipated cash from operations should be sufficient to provide
liquidity on both a short-term and long-term basis to finance its
future operations. The Company believes these resources are
sufficient to support its operating expenses.
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities
(c) In January 1997, the Company completed a private offering
of 20 Units, each Unit consisting of 100,000 shares of Common Stock
of the Company for $50,000 per Unit (the "Private Offering"). The
Company received net proceeds of $963,000 from the Private
Offering. Officers and directors of the Company acquired 52.5% of
the Units sold in the Private Offering and participated on the same
terms as the other investors in the Private Offering. The terms of
the Private Offering were established by a Special Committee of the
Board of Directors who did not participate in the Private Offering.
The Private Offering was completed by the Company, without
registration under the Securities Act of 1933, as amended (the
"Act"), in reliance on the private offering exemptions contained in
Sections 3(b), 4(2) and/or 4(6) of the Act and/or in Regulation D
of the General Rules and Regulations under the Act.
Item 4. Submission of Matters to a Vote of Security Holders
On March 19, 1997, at the Company's Annual Meeting of
Shareholders, the Company's shareholders elected management's slate
of directors, which included Messrs. Norman Melnick, John W.
Linster, David Melnick, Richard S. Kalin, John F. Kuypers, Roy L.
Boe, Jerry Della Femina and Robert K. Semel. Mr. Norman Melnick
received 10,882,547 votes for and 124,950 votes against. Mr.
Linster received 10,888,547 votes for and 118,950 votes against.
Mr. David Melnick received 10,880,447 votes for and 127,050 votes
against. Mr. Kalin received 10,888,547 votes for and 118,950 votes
against. Mr. Kuypers received 10,888,647 votes for and 118,850
votes against. Mr. Boe received 10,887,647 votes for and 119,850
votes against. Mr. Della Femina received 10,884,647 votes for and
122,850 votes against. Mr. Semel received 10,888,642 votes for and
118,850 votes against. Finally, the Company's shareholders
approved the motion to authorize the Company to sell its Cosmetics
Division to a company controlled by affiliates of the Company on
the terms set forth in the Proxy Statement dated February 10, 1997,
subject to reasonable modification by the proper officers of the
Company, by a vote of 7,958,370 votes for and 941,168 against.
Item 6. Exhibits and Reports on Form 8-K
(b) None.
<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.
PENTECH INTERNATIONAL, INC.
Dated: May 12, 1997 By: s/William Visone
William Visone, Treasurer
(Duly authorized officer and
Chief Financial Officer)
ptk\10q-mar.97
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 10,743
<ALLOWANCES> 15
<INVENTORY> 18,256
<CURRENT-ASSETS> 32,097
<PP&E> 8,335
<DEPRECIATION> 4,429
<TOTAL-ASSETS> 36,421
<CURRENT-LIABILITIES> 17,192
<BONDS> 0
0
0
<COMMON> 125
<OTHER-SE> 16,259
<TOTAL-LIABILITY-AND-EQUITY> 36,421
<SALES> 10,852
<TOTAL-REVENUES> 10,852
<CGS> 7,118
<TOTAL-COSTS> 3,809
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,101
<INTEREST-EXPENSE> 340
<INCOME-PRETAX> (1,101)
<INCOME-TAX> (440)
<INCOME-CONTINUING> (661)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (661)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
