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 December 31, 1999
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)
(732) 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 February 9, 2000:
12,571,258 shares of common stock, par value $.01 per share.
INDEX
Part I. Financial Information:
Item 1. Financial Statements (Unaudited). Page
Condensed Consolidated Balance Sheets as of
December 31, 1999 and September 30, 1999 3-4
Condensed Consolidated Statements of Operations for the
three months ended December 31, 1999 and 1998 5
Condensed Consolidated Statements of Cash Flows
for the three months ended December 31,
1999 and 1998 6-7
Notes to Condensed Consolidated Financial Statements 8-17
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 18-20
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
<PAGE>
PART I. FINANCIAL INFORMATION
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(000's omitted)
(Substantially all pledged or assigned)
December 31, 1999 September 30, 1999
(unaudited)
Current Assets:
Cash $ 263 $ -
Accounts receivable, net of
allowances for doubtful
accounts of $56 at
December 31, 1999 and $36
at September 30,
1999, respectively 10,631 15,301
Inventories (Note 1) 14,757 15,415
Prepaid expenses and other 1,667 1,633
Joint venture receivable (Note 7) 217 -
Available-for-Sale Security
(Note 6) 55 181
Total current assets 27,590 32,530
Furniture and equipment (Note 1) 9,334 9,472
Less accumulated depreciation (6,412) (6,318)
2,922 3,154
Other assets:
Trademarks, net of amortization
of $787 at December 31, 1999
and $762 at September 30, 1999
(Note 1)
Due from officer 224 236
174 174
398 410
$30,910 $36,094
See notes to condensed consolidated financial statements.
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(000's omitted)
December 31, 1999 September 30, 1999
(unaudited)
Current liabilities:
Notes payable, bank
(Note 2) $12,686 $13,882
Accounts payable 1,792 3,322
Accrued expenses 1,660 3,056
Settlement note payable (Note 5) 300 300
Deferred income from joint venture
(Note 7) 84 -
Total current liabilities 16,522 20,560
Other liabilities:
Royalty payable, long-term (Note 5) 50 50
Settlement note payable,
long-term (Note 5) 1,500 1,500
1,550 1,550
Commitments and contingencies
(Note 3)
Shareholders' equity:
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; 12,571,258 shares issued
and outstanding at December 31, 1999
and September 30, 1999, respectively 125 125
Capital in excess of par 6,839 6,839
Retained earnings 5,819 6,839
Accumulated other comprehensive
income (Note 7) 55 181
12,838 13,984
$30,910 $36,094
See notes to condensed consolidated financial statements.
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted)
(Unaudited)
Three Months Ended
December 31,
1999 1998
Net sales $10,285 $10,568
Cost of sales 7,060 7,297
Gross profit 3,225 3,271
Selling, general and
administrative expenses 3,735 3,538
Plant move expense 213 -
Interest expense 297 376
Interest (income) - (2)
4,245 3,912
(Loss) before taxes (1,020) (641)
Income taxes - -
Net (loss) $(1,020) $ (641)
Net (loss) per
share-basic and diluted
(Note 1) $ (.08) $ (.05)
See notes to condensed consolidated financial statements.
<PAGE>
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted)
(Unaudited)
Three Months Ended
December 31,
1999 1998
Cash flows from operating activities:
Net (loss) $(1,020) $ (641)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 261 246
(Increase) decrease in:
Accounts receivable 4,670 4,701
Joint venture receivable (217) -
Inventories 658 713
Prepaid expenses and other (34) (106)
Income taxes receivable/
payable - 448
Increase (decrease) in:
Accounts payable (1,530) (696)
Accrued expenses (1,396) (1,369)
Deferred income from
joint venture 171 -
Settlement payable - (100)
Total adjustments
2,583 3,837
Net cash provided by
operating activities 1,563 3,196
Cash flows from investing activities:
(Purchase) of furniture/equipment (91) (46)
(Increase) Decrease in trademarks (13) 4
Net cash (used in)
investing activities (104) (42)
See notes to condensed consolidated financial statements.
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(000's omitted)
(Unaudited)
Three Months Ended
December 31,
1999 1998
Cash flows from financing activities:
Net (decrease) in notes
payable $(1,196) $(3,568)
Net cash (used in)
financing activities (1,196) (3,568)
Net increase (decrease) in cash
and cash equivalents 263 (414)
Cash and cash equivalents,
beginning of period - 759
Cash and cash equivalents, end of period $ 263 $ 345
Supplemental disclosures of cash flow
information and non-cash financing activities:
Cash paid during the period for:
Interest $ 283 $ 456
See notes to condensed consolidated financial statements.
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 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
Company ("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. 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 the financial position at December 31,
1999 and the results of operations and the statements of
cash flows for the three month period ended December 31,
1999 and 1998.
<PAGE>
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 is unaudited.)
1. Summary of significant accounting policies (Cont'd):
Inventory and Cost of Sales:
Inventory is stated at the lower of 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.
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:
Costs related to trademarks are being amortized over a
five year period on a straight-line basis.
Revenue recognition:
Revenue is recognized upon shipment of product to the
customer.
Fair Value of Financial Instruments:
The fair value for cash and accounts receivable
approximate carrying amounts due to the short maturity of
these instruments. The fair value amounts for notes
payable approximate carrying amounts due to the variable
interest rates.
Use of Estimates:
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 is unaudited.)
1. Summary of significant accounting policies (Cont'd):
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Stock Based Compensation:
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation," encourages,
but does not require companies to record compensation
cost for stock-based employee compensation plans at fair
value. 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.
<PAGE>
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 is unaudited.)
1. Summary of significant accounting policies (Cont'd):
(Loss) per share:
The following table sets forth the computation of basic and
diluted (loss) per share:
Three months ended December 31,
1999 1998
Numerator:
Net (loss) $(1,020,000) $ (641,000)
Numerator for basic and
diluted (loss) per share $(1,020,000) $ (641,000)
Denominator:
Denominator for basic
earnings per share -
weighted average
shares 12,571,258 12,570,258
Effect of dilutive
securities:
Employee stock options 0 0
Denominator for diluted
earnings per share -
adjusted weighted average
shares and assumed
conversions: 12,571,258 12,570,258
Basic and diluted (loss)
per share $ (.08) $ (.05)
<PAGE>
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 is unaudited.)
1. Summary of significant accounting policies (Cont'd):
Other Recently Issued Accounting Standard:
In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
133 "Accounting for Derivative Instruments and Hedging
Activities" which is effective for years beginning after
June 15, 2000. The Company has completed its review of
SFAS 133 and has concluded that the adoption of this
statement would not have any effect on the Company and
its reporting.
<PAGE>
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 is unaudited.)
December 31, September 30,
1999 1999
2. Notes Payable bank:
Revolving line of credit,
interest payable monthly
at prime plus .5% (9%
at December 31, 1999 and
8.75% at September 30, 1999) $ 686,000 $ 1,882,000
Revolving line of credit,
interest payable at maturity
at libor plus 2.5% (ranging
from 8.09% to 8.10% at
December 31, 1999 and 7.76%
to 7.87% at September 30,
1999) 12,000,000 12,000,000
$12,686,000 $13,882,000
In January 1997, the Company entered into a three year
Revolving Credit Agreement with BankAmerica Business
Credit, Inc. now known as Bank of America, N.A. (BABC)
(the "Credit Agreement"). Borrowings under the Credit
Agreement are subject to limitations based upon eligible
inventory and accounts receivable as defined in the
Credit Agreement. Borrowing under the Credit Agreement
accrue interest, at the Company's option, at either prime
plus .5% or libor plus 2.5%.
In December 1999, the Company and BABC entered into an
agreement to renew the Credit Agreement for an additional
three years (the "Renewal"). The Renewal, among other
things, waives compliance with certain financial
covenants violated at September 30, 1999, modifies the
financial covenants for the next three fiscal years,
increases the maximum inventory advance and allows for a
seasonal over-advance.
The Renewal is collateralized by a security interest in
substantially all of the assets of the Company. In
connection with the Renewal, the Company has agreed to
the maintenance of certain financial covenants and cannot
declare a cash divided without the consent of BABC.
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended December 31,
1999 and 1998 is unaudited.)
3. Contingency:
At December 31, 1999, the Company was contingently liable for
outstanding letters of credit of $259,931.
4. Income taxes:
Three Months Ended
December 31
1999 1998
Federal:
Current $ - $ -
Deferred - -
State:
Current - -
Deferred - -
$ - $ -
Income tax at Federal
statutory rate applied to
income before taxes $ (347,000) $ (218,000)
Add: state income taxes (92,000) (58,000)
Less: effect of deduction of
state income taxes for
Federal purposes (32,000) 32,000
Less: effect of increase in
valuation allowance 407,000 244,000
Income taxes provided $ - $ -
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 is unaudited.)
4. Income taxes (Cont'd):
Significant components of the Company's deferred tax assets
and liability as of December 31, 1999 and September 30, 1999 are as
follows:
December 31, September 30,
1999 1999
Current deferred tax asset
(liability):
State taxes on deferred
federal items $ 160,314 $ (51,957)
Current deferred tax assets:
Bad debts 24,360 15,331
Inventory reserve 385,710 475,580
Reserve for returns and
allowances 135,588 267,018
Unicap 8,364 8,364
Total current deferred
tax assets 554,022 766,293
Valuation allowance on current
deferred tax assets (714,336) (714,336)
(160,314) 51,957
Net current deferred tax assets $ - $ -
Long-term deferred tax liabilities:
Depreciation $ (853,163) $ (853,163)
Long-term deferred tax assets:
Reserve for litigation 817,000 817,000
State net operating loss
carryforwards 644,210 552,210
Federal net operating loss
carry forward 1,755,331 1,440,331
Total long-term deferred
tax assets 3,216,541 2,809,541
Valuation allowance on
long-term deferred tax assets (2,363,378) (1,956,378)
853,163 853,163
Net long-term deferred tax
assets $ - $ -
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 is unaudited.)
5. Paradise Settlement
In Fiscal 1997, the Company entered into a settlement
agreement with Leon Hayduchok, All-Mark Corporation and Paradise
Creations, Inc., (collectively, "Paradise") providing, among other
things, for Pentech to pay $500,000, deliver a $3,000,000
promissory note plus interest at the rate of 7% per annum (the
"Note") and enter into a five year non-exclusive license to sell
such products for a 10% royalty, with an aggregate minimum royalty
of $500,000 (the "Paradise Settlement"). The Company paid $500,000
at the date of signing in January 1997 and a required payment
against the Note of 400,000 in February 1997. In addition, the
Note required $100,000 quarterly principal payments commencing
January 1, 1998. Quarterly principal payments have been made
through January 2000. The Company also paid $400,000 against the
minimum royalty.
6. Available-for-Sale Security
The value of Fun Cosmetics, Inc. stock (based on quoted market
prices) as of December 31, 1999 was $.275 a share. The Company has
the right to begin selling its shares in Fun. However, due to the
historically low level of trading activity, the number of shares
the Company owns and the fact that the shares are unregistered,
there is no assurance the Company will realize the current market
value.
Accumulated Other Comprehensive Income
Beginning balance $181,400
Less: Net unrealized loss (126,400)
Ending balance $ 55,000
7. Joint Venture
During the quarter ended December 31, 1999, the Company formed
a strategic partnership with a manufacturer in Shanghai, China with
the purpose of developing and manufacturing both existing products
and many of the Company's new products in development. The terms
PENTECH INTERNATIONAL INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(The information for the three months ended
December 31, 1999 and 1998 is unaudited.)
7. Joint Venture (cont'd):
of the joint venture provide for Pentech to receive cash for some
of its manufacturing equipment and obtain a 50% ownership in the
new entity being formed in China. In addition, once the
transaction is complete, there will be costs associated with the
relocation of the Company's domestic manufacturing facility. As of
December 31, 1999, the Company has shipped approximately $217,000
worth of equipment and inventory and incurred relocating costs of
approximately $213,000. The Company is in the process of
finalizing this transaction. There is no assurance it will be
finalized, or if finalized, it will not be on terms different than
set forth above.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
(1) Material Changes in Results of Operations
Net sales decreased in the three months ended December 31,
1999 2.7% from the same period a year ago primarily due to a
decrease in sales of licensed products. This was offset by an
increase in the children's activity product line.
Gross profit as a percentage of net sales increased for the
three months ended December 31, 1999 to 31.3% from 30.9% in the
same period a year ago. A higher percentage of sales this quarter
came from the children's activity line which generate higher gross
profit margins.
Selling, general and administrative ("SG&A") expenses as a
percentage of sales for the three months ended December 31, 1999
increased to 36.3% from 33.5% in the same period a year ago. This
was primarily due to an increase in our sales force. In addition,
a similar level of fixed costs were incurred over a lower sales
volume.
For the three months ended December 31, 1999, interest expense
decreased as compared to the same period a year ago. This was due
to a higher outstanding loan balance in the prior year.
For the three months ended December 31, 1999, the net loss was
$1,020,000 or $.08 per share as compared to a net loss of $641,000
or $.05 for the same prior period. The decrease in income was
primarily due to the lower sales volume as well as the plant move
expenses.
(2) Material Changes in Financial Condition
In January 1997, the Company entered into a three year
$30,000,000 (subsequently amended to $25,000,000) revolving credit
facility with BankAmerica Business Credit Inc., now known as Bank
of America, N.A. ("BABC") (the "Credit Agreement"). The amount of
drawings under the facility is subject to limitations based upon
eligible inventory and accounts receivable as described in the
Credit Agreement. The Credit Agreement is collateralized by a
security interest in substantially all of the assets of the
Company. In addition, in accordance with the Credit Agreement, the
Company has agreed, among other things, to the maintenance of
certain financial covenants.
In December 1999, the Company and BABC entered into an
agreement to renew the Credit Agreement for an additional three
years (the "Renewal"). The Renewal, among other things, waives
compliance with certain financial covenants violated at September
30, 1999, modifies the financial covenants for the next three
fiscal years, increases the maximum inventory advance and allows
for a seasonal over-advance.
The $3,000,000 note (the "Note") issued in connection with the
Paradise Settlement requires $100,000 quarterly principal payments
that commenced January 1, 1998 thru April 1, 2004. Quarterly
principal payments were made through January 2000. The Company
does not anticipate any difficulty meeting this payment schedule.
During the quarter ended December 31, 1999, the Company formed
a strategic partnership with a manufacturer in Shanghai, China with
the purpose of developing and manufacturing both existing products
and many of the Company's new products in development. The terms
of the joint venture provide for Pentech to receive cash for some
of its manufacturing equipment and obtain a 50% ownership in the
new entity being formed in China. In addition, once the
transaction is complete, there will be costs associated with the
relocation of the Company's domestic manufacturing facility. As of
December 31, 1999, the Company has shipped approximately $217,000
worth of equipment and inventory and incurred relocating costs of
approximately $213,000. The Company is in the process of
finalizing this transaction. There is no assurance it will be
finalized, or if finalized, it will not be on terms different than
set forth above.
The Company continued several actions to increase its
liquidity. It continued a policy of obtaining thirty to sixty day
open credit to finance a majority of its purchases that
historically have been financed pursuant to letters of credit. It
continues to reduce the number of items held in inventory and has
reduced the level of capital expenditures.
Working capital decreased $902,000 to $11,068,000 at December
31, 1998. As a result of the seasonal nature of the Company's
business, the Company's use of its credit facility increases
significantly in the months of May, June, July and August as the
Company finances its inventory and receivables, and declines in
September and October after the collections of receivables from its
Back-to-School sales. The change in financial position during the
quarter ended December 31, 1999 reflects primarily this seasonality
due to the decrease in receivables from the collection of its Back-
to-School sales and a decline in inventory.
The Company anticipates that its revolving credit line under
the Credit Agreement together with anticipated revenues from
operations, will 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.
(3) Safe Harbor Statement
Statements which are not historical facts, including
statements about the Company's confidence and strategies and its
expectations about new and existing products, technologies and
opportunities, market and industry segment growth, demand and
acceptance of new and existing products are forward looking
statements that involve risks and uncertainties. there include,
but are not limited to, product demand and market acceptance risks;
the impact of competitive products and pricing; the results of
financing efforts; the loss of any significant customers of any
business; the effect of the Company's accounting policies; the
effects of economic conditions and trade, legal, social, and
economic risks, such as import, licensing, and trade restrictions;
the results of the Company's business plan and the impact on the
Company of its relationship with its lenders.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Certificate of Incorporation of the Company, as
amended, incorporated by reference to Exhibit 3.1
to Registration Statement. Statement No. 2-95102-NY of
the Company.
3.2 The Company's By-Laws incorporated by reference to
Exhibit 3.2 to Form S-18.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
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: February 22, 2000 By:/s/ William Visone
William Visone,
Treasurer and Chief Financial
Officer
N:\RSKLAW\PTK\10Q-DEC.99
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<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 263
<SECURITIES> 0
<RECEIVABLES> 10,687
<ALLOWANCES> (56)
<INVENTORY> 14,757
<CURRENT-ASSETS> 27,590
<PP&E> 9,334
<DEPRECIATION> (6,412)
<TOTAL-ASSETS> 30,910
<CURRENT-LIABILITIES> 16,522
<BONDS> 0
0
0
<COMMON> 125
<OTHER-SE> 12,713
<TOTAL-LIABILITY-AND-EQUITY> 30,910
<SALES> 10,285
<TOTAL-REVENUES> 10,285
<CGS> 7,060
<TOTAL-COSTS> 7,060
<OTHER-EXPENSES> 3,948
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 297
<INCOME-PRETAX> (1,020)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,020)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,020)
<EPS-BASIC> (.08)
<EPS-DILUTED> (.08)
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