FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: September 30, 1997
Commission File Number: 0-15754
CREATIVE TECHNOLOGIES CORP.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2721083
(State or other jurisdiction of(IRS Employer Identification Number)
incorporation of organization)
170 53rd Street, Brooklyn, New York 11232
(Address of principal executive offices) (Zip Code)
(718) 492-8400
(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 the latest practicable date.
Common Stock, Par Value $.09
2,997,444
(Title of each class)
(Outstanding at September 30, 1997)
CREATIVE TECHNOLOGIES CORP.
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Condensed Financial Statements
(Unaudited)
Balance Sheet as at September 30, 1997 3
Statements of Operations
for the Three Months and Nine Months ended
September 30, 1997 and September 30, 1996 4
Statement of Stockholders' (Deficit)
for the Nine Months ended September 30, 1997 5
Statements of Cash Flows
for the Nine Months ended
September 30, 1997 and September 30, 1996 6
Notes to Condensed Financial Statements 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
PART II - OTHER INFORMATION
Item 4.Submission of Matters to a Vote of Securities Holders
14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibit 27
Financial Data Schedule 16
<TABLE>
CREATIVE TECHNOLOGIES CORP.
CONDENSED BALANCE SHEET
AS AT SEPTEMBER 30, 1997
(Unaudited)
<CAPTION>
Assets
<S>
<C>
Current assets:
Cash $ 34,000
Accounts receivable-net
1,269,000
Inventories 1,680,000
Prepaid expenses and other assets
143,000
Total Current Assets
3,126,000
Fixed assets - at cost (less accumulated depreciation
and amortization of $1,289,000)
188,000
Intangible and other assets
___6,000
Total $ 3,320,000
Liabilities
Current liabilities:
Note payable - Century Business Credit Corp. $ 483,000
Notes payable 3,888,000
Accounts payable and accrued expenses 3,799,000
Customer claims payable
388,000
Note payable - Fleet Capital Corporation 200,000
Total Current Liabilities 8,758,000
Stockholders' (Deficit)
Preferred stock - $.01 par value; 5,000,000 shares authorized
Preferred stock- 1996- (12% cumulative)
10,000 shares designated; issued and outstanding 600 shares
at redemption value of $1,000 per share 600,000
Preferred stock- 1996-A- (12% cumulative)
10,000 shares designated; issued and outstanding 1,170 shares
at redemption value of $1,000 per share 1,170,000
Common stock - $.09 par value; authorized
20,000,000 shares; issued and outstanding
2,997,000 shares 270,000
Additional paid - in capital
9,058,000
Deficit (16,536,000)
Total Stockholders' (Deficit) (5,438,000)
Total $3,320,000
See notes to condensed financial statements.
</TABLE>
<TABLE>
CREATIVE TECHNOLOGIES CORP.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 19971996
<S> <C>
<C> <C> <C>
Net Sales $2,001,000 $1,227,000$6,422,000$3,998,000
Cost of Sales 1,470,000 784,000 4,355,0002,235,000
Gross Profit 531,000 443,000 2,067,0001,763,000
Operating Expenses:
Selling, general and administrative expenses541,000 972,0001,728,000
2,880,000
Warehousing expense 220,000 302,000 729,000 937,000
Restructuring Costs 442,000 0 442,000 0
Interest expense 331,000 133,000 611,000 563,000
1,534,000 1,407,000 3,510,0004,380,000
Loss before provision for income taxes and
extraordinary item (1,003,000) (964,000)(1,443,000)(2,617,000)
(Benefit) provision for income taxes
Current 0 36,000 (22,000) 36,000
Deferred _______0 0 0 400,000
Loss before extraordinary item (1,003,000)(1,000,000)(1,421,000)(3,053,000)
Extraordinary item
Gain-debt settlement 0 0 ________01,550,000
Net Loss
$(1,003,000) $(1,000,000) $(1,421,000) $(1,503,000)
Loss attributable to
common shareholders $(1,057,000)$(1,025,000) $(1,581,000)
$(1,534,000)
Loss before extraordinary item per common share $ (.39) $
(.39) $ (.59) $ (1.19)
Extraordinary item per common share
$ 0 $ .60
Fully diluted extraordinary item per common share
$ 0 $ .60
Primary loss per common share $ (.39)
$ (.39) $ (.59) $ (.59)
See notes to condensed financial statements.
</TABLE>
<TABLE>
CREATIVE TECHNOLOGIES CORP.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1997
(Unaudited)
<CAPTION>
Preferred Stock Common Stock
Additional
Number of Number of Par Paid-in
Shares Value Shares Value Capital Deficit
<S> <C> <C> <C> <C>
<C> <C>
1996 Preferred Stock 600 $600,000
1996 - A Preferred Stock1,1701,170,000
Balance December 31, 1996 1,770 $1,770,000 2,611,000
$235,000 $8,900,000 $(15,115,000)
Common Stock Issued 386,000 35,000
158,000
Net loss (1,421,000)
_____ _________
________ ________ _________ ___________
Balance September 30, 1997 1,770 $1,770,000 2,997,000
$270,000 $9,058,000 $(16,536,000)
See notes to condensed financial statements.
</TABLE>
<TABLE>
CREATIVE TECHNOLOGIES CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1997 1996
<S> <C>
<C>
Net cash (used in) provided by operating activities $(584,000)$117,000
Cash flows from investing activities:
Acquisition of fixed assets (12,000) (97,000)
Cash flows from financing activities:
Net proceeds from credit facility 441,000 0
Net repayment of credit facility 0 (2,658,000)
Proceeds from notes payable 560,000 2,858,000
Repayment of notes payable (471,000) (2,054,000)
Proceeds from sale of common stock 0
50,000
Proceeds from sale of preferred stock 0
1,050,000
Net cash provided by (used in) financing activities 530,000 (754,000)
Net decrease in cash (66,000) (734,000)
Cash at beginning end of period 100,000 771,000
Cash at end of period $ 34,000$ 37,000
Supplemental disclosures of cash flow information
Interest paid $273,000 $ 603,000
Taxes paid 0
0
The Company issued 386,000 shares of common stock for $193,000 of accrued
expenses during August 1997.
The Company issued 720 shares of the 1996-A preferred stock for $720,000 of
debt.
See notes to condensed financial statements.
</TABLE>
CREATIVE TECHNOLOGIES CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01
of Regulation S-X. Accordingly they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine
month periods ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997. For
further information, refer to the financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB for the year ended
December 31, 1996.
Note B - Inventories
Inventories consist of finished goods stated at the lower of cost or market
using the first - in, first out method.
Note C - Notes Payable and Related Party Transaction
1. In December 1996 the Company and Companies owned by the Company's
principal stockholders entered into a two-year loan and security agreement
with a lender whereby the Company and the related party are required to
maintain an outstanding combined loan balance of not less than $1,500,000,
but no more than $3,000,000. The loan is collateralized by substantially all
of the assets of the Company and is guaranteed by the Company, the related
party and an officer of the Company. Under the agreement, the Company and
the related party receive revolving credit advances based on accounts
receivable and inventory available and are required to pay interest at a rate
of prime plus 2.75% plus all of the lenders out-of-pocket costs and expenses.
The agreement, among other matters, restricts the Company with respect to (i)
incurring any lien or encumbrance on its property or assets, (ii) entering
into new indebtedness (iii) incurring capital expenditures in any fiscal
year in an amount in excess of $100,000 and requires an officer of the
Company to maintain certain ownership percentages.
At September 30, 1997, the Company had $483,000 outstanding under this
facility.
2. At September 30, 1997 the Company had outstanding notes payable
totaling $3,888,000. Of this amount, $2,963,000 bears interest at 12%,
$750,000 bears interest at 18% and $175,000 is currently non interest
bearing. These notes are all due on demand and include $1,000,000 due to an
entity whose principal is a director of the Company. The remaining
$2,888,000 is payable to various individuals, the majority of whom, are
stockholders of the Company. These notes payable are personally guaranteed
by certain stockholders of the Company and are secured by substantially all
the assets of the Company subject to the security interest of the lender
described in the previous paragraph.
CREATIVE TECHNOLOGIES CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note D - Note Payable - Fleet Capital Corporation
In March of 1996, the Company entered into an agreement with its former bank
to pay off its indebtedness and release both the Company and the bank from
any future obligations. The Company borrowed additional funds to pay off the
indebtedness. The resulting settlement, which occurred in March 1996, is
summarized as follows:
Loan balance subject to settlement $3,583,000
Paid by the Company (1,500,000)
Note payable - non-interest bearing issued by
the company due not later than March 11, 1998 (200,000)
Debt assumed by a stockholder of the Company
during March 1996 in exchange for 111,000
shares of common stock(333,000)
Gain on debt settlement $1,550,000
NOTE E - Preferred Stock:
[1] 1996 Preferred Stock:
In June 1996 the Board of Directors designated 10,000 shares of preferred
stock as "1996 Preferred Stock" valued at $1,000 per share. The holders of
1996 Preferred Stock are entitled to:
(i) receive cumulative dividends at the rate of $120 per annum
payable quarterly in cash or common stock at the option of the
Company,
(ii) convert each share of preferred stock into approximately 333
shares of common stock subject to adjustment, as defined,
(iii) redemption of their preferred shares on June 1, 1998 at
$1,000 per share payable in cash or shares of common stock
at the option of the Company,
(iv) liquidation preferences of $1,000 per preferred share and
(v) no voting rights.
The Company, at its option, has the right to redeem all or any portion of the
1996 Preferred Stock at $1,100 per share plus accrued and unpaid dividends
prior to June 1, 1998.
Cumulative undeclared 1996 preferred stock dividends aggregated $96,000 at
September 30, 1997.
CREATIVE TECHNOLOGIES CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
[2] 1996 - A Preferred Stock:
On September 30, 1996 the Board of Directors designated 10,000
shares of preferred stock as "1996 - A Preferred Stock" valued at $1,000 per
share. The holders of 1996 - A Preferred Stock are entitled to:
(i) receive cumulative dividends at the rate of $120 per annum
payable quarterly in cash or common stock at the option of
the Company,
(ii) convert each share of preferred stock into approximately
1,600 shares of common stock subject to adjustment, as
defined,
(iii) redemption of their preferred shares on October 1, 1998 at
$1,000 per share payable in cash or shares of common stock
at the option of the Company,
(iv) liquidation preferences of $1,000 per preferred share and
(v) no voting rights.
The Company, at its option, has the right to redeem all or any portion of the
1996 - A Preferred Stock at $1,100 per share plus accrued and unpaid
dividends prior to October 1, 1998.
Cumulative undeclared 1996-A preferred stock dividends aggregated $148,000 at
September 30, 1997.
Note F - Common Stock
On September 4, 1996 the Board of Directors approved a three for one reverse
stock split effective September 5, 1996. All references in these financial
statements to numbers of common shares, and earnings per share amounts have
been restated to give retroactive effect to the reverse stock split.
Note G - Restructuring Costs
During 1997 the Company announced its intention to stop selling its electric
goods domestically and has sharply reduced the export of these products. As
a result of these transactions the Company incurred restructuring charges of
approximately $442,000 representing the write - off of molds and facilities
used in the manufacturing of its electric household appliances.
Note H - Income Taxes
The Company's net operating loss carryforwards for income tax reporting
purposes aggregated approximately $14,324,000 as of December 31, 1996.
$178,000 expires in year 2007, $7,017,000 expires in year 2010 and the
remaining balance of $7,129,000 expires in year 2011.
CREATIVE TECHNOLOGIES CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note I - Product Liability and Litigation
The Company has received notice that several consumers claim to have suffered
finger injuries while using one of the Company's appliance products. The
claims are covered by the Company's product liability insurance carrier. The
Company redesigned the appliance in August 1992, and believes that the
modification made should minimize the possibility of such injury. The
Consumer Product Safety Commission (the "CPSC") has made a preliminary
determination that the Company's appliance product represents a "substantial
product hazard" as that term is defined in the Consumer Product Safety Act.
The Company proposed and the CPSC accepted a voluntary corrective action plan
to be implemented during 1997, whereby the Company would replace certain
parts of the appliances manufactured prior to August 1992. Management has
estimated that the costs of implementing this plan will be approximately
$50,000 and the Company accordingly continues to maintain a reserve for this
amount as of September 30, 1997.
The Company believes that the ultimate resolution of these matters will not
have a material effect on its financial condition.
Note J - Subsequent Event
During October 1997, Ace Surgical Supply Co., Inc., Consolidated Disposables
Inc. and Universal Medical Products Inc., entities owned by principal
shareholders of the Company were merged with and into a newly created wholly
owned subsidiary of the Company. See Form 8-K filed by the Company on
October 27, 1997 containing the terms of the merger. The condensed financial
statements contained in this Form 10-QSB do not reflect this merger.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
Creative Technologies Corp. (the "Company"), through its wholly
owned subsidiary IHW, Inc., is the distributor of certain non-electric
houseware products for two European manufacturers. In addition, Creative
sells electric motor-driven pasta machines under the name "Pasta Express" and
"Takka Pasta and Dough Machine" and a food griller under the name "Grill
Express". The Company has announced its intention to stop selling pasta
machines and grills domestically. IHW, Inc. is the exclusive distributor of
Brabantia International (Brabantia) products in North America. Brabantia,
headquartered in the Netherlands, is a leading manufacturer of top of the
line non-electric houseware products in Europe. Its products are sold in 68
countries throughout the world. In addition, IHW, Inc. is the exclusive
distributor in the United States and Canada of bathroom scales, manufactured
by Soehnle-Waagen GmbH & Co., headquartered in Murrhardt, Germany. The
Company would consider becoming a distributor of other products that it
believes would complement the products that they are currently selling. The
Company has not identified any other products at this time.
For the nine month period ended September 30, 1997, cash used in operating
activities was $584,000, $12,000 was used in investing activities and cash of
$530,000 was provided by financing activities. As a result, at September 30,
1997 cash decreased by $66,000 to $34,000 compared to $100,000 at December
31, 1996. The Company had a negative working capital of $5,632,000 at
September 30, 1997.
Accounts payable and accrued expenses increased to $3,799,000 at September
30, 1997 from $2,810,000 at December 31, 1996 primarily due to the losses
sustained during the nine month period, a build up of inventory for sale
during the fourth quarter of 1997 and reduced collections because of modest
sales during the second and a portion of the third quarter. Collections were
further reduced because customer advances of $300,000 at December 31, 1996
were fully shipped by September 30, 1997.
At September 30, 1997 the Company had outstanding notes payable totaling
$3,888,000. Of this amount, $2,963,000 bears interest at 12%, $750,000 bears
interest at 18% and $175,000 is currently non interest bearing. These notes
are all due on demand and include $1,000,000 due to an entity whose principal
is a director of the Company. The remaining $2,888,000 is payable to various
individuals, the majority of whom, are stockholders of the Company. These
notes payable are personally guaranteed by certain stockholders of the
Company and are secured by substantially all the assets of the Company
subject to the security interest of Century Business Credit Corporation.
During the first nine months of 1997 the Company borrowed $560,000 from
various individuals and an entity who are either related or known to the
principal shareholders of the Company and repaid $471,000 to various
individuals and entities described above. In addition the Company increased
its borrowings under its credit facility by $441,000.
In 1996 the Company amended its Certificate of Incorporation to designate a
new class of 10,000 shares of 1996 preferred stock $.01 par value and a new
class of 10,000 shares of 1996-A preferred stock $.01 par value, from
5,000,000 shares of preferred stock previously authorized. During June 1996,
the Company issued 600 shares of the 1996 preferred stock for $600,000 of
debt owed to David Guttmann and related entities. During September 1996,
the Company issued 720 shares of the 1996-A preferred stock for $720,000 of
debt owed to a company owned by David Guttmann and Barry Septimus, the
husband of a principal stockholder of the Company and sold 450 shares of the
1996-A preferred stock for $450,000 to various Common stockholders of the
Company including David Guttmann and Barry Septimus' wife. Each share of
1996 and 1996-A preferred stock is subject to mandatory redemption two years
from the date of issuance at $1,000 per share plus unpaid dividends payable
in cash, common stock or any combination thereof at the option of the
Company. At any time prior to redemption, the preferred stockholders can at
their option convert their 1996 preferred stock into 333 shares of common
stock and their 1996-A preferred stock into approximately 1,600 shares of
common stock for each share of preferred stock held. The 1996 and 1996-A
preferred stock are each entitled to a cumulative dividend of $120 per share
per annum and shall be payable in quarterly installments on the first day of
January, April, July and October commencing January 1, 1997. At September
30, 1997 $244,000 of preferred stock dividends were in arrears and
undeclared.
On December 20, 1996, the Company obtained a two year credit facility from
Century Business Credit Corporation (Century) in the total amount of up to
$500,000. Loans on the revolving credit facility are available up to (i) the
lesser of $200,000 or 40% of the Company's eligible inventory (as defined in
the Agreement), plus (ii) the lesser of $300,000 or 40% of the eligible
accounts receivables (as defined in the Agreement).
The Company pays interest at the greater of 9% or the prime rate plus 2.75%.
The Company also pays a minimum loan fee in the event that the closing daily
unpaid balance is less than a certain amount. The Company paid a facility
fee to obtain the line of credit and pays certain administrative fees.
Century obtained a security interest in all the assets of the Company.
David Guttmann and Ace Surgical Supply Co., Inc., Consolidated Disposables
Inc. and Universal Medical Products Inc., entities that David Guttmann is a
principal of, guaranteed the obligations of the Company to Century and in
return, the Company guaranteed the obligations of Ace and Consolidated under
a loan from Century to these entities. These entities were merged with and
into a newly created wholly owned subsidiary of the Company in October 1997.
See Form 8-K filed by the Company on October 27, 1997 containing the terms of
the merger. The condensed financial statements contained in this Form 10-QSB
do not reflect this merger.
Results of Operations
The Company had net sales of $2,001,000 and $6,422,000 respectively for the
three and nine month periods ended September 30, 1997 compared to net sales
of $1,227,000 and $3,998,000 respectively for the three and nine month
periods ended September 30, 1996. The increase in sales for the comparative
three and nine month periods is attributable to increased sales of Brabantia,
initial sales of Soehnle, export grill express business, and lower returns.
Gross profit margins for the three month periods ended September 30, 1997 and
1996 were 26.5% and 36.1% and for the nine month periods ended September 30,
1997 and 1996 were 32.2% and 44.1%. The decrease in gross profit margins is
attributable to margins being lower on the imported Brabantia and Soehnle
product lines where the Company acts as a distributor as opposed to higher
gross profit margins on its own manufactured products. The gross profit on
electric export sales is also much lower than domestic retail sales.
Selling, general and administrative expenses were $541,000 and $972,000 or
27% and 79.2% respectively for the three month periods ended September 30,
1997 and 1996 and were $1,728,000 and $2,880,000 or 26.9% and 72.0% for the
nine month periods ended September 30, 1997 and 1996. The decrease in both
the amounts incurred and as a percentage of sales reflects the effect of
management's continuing cost cutting program. Advertising expenses included
above were $3,000 and $4,000 for the three month periods ended September 30,
1997 and 1996 and were $10,000 and $229,000 for the nine month periods ended
September 30, 1997 and 1996.
During 1997 the Company announced its intention to stop selling its electric
goods domestically and has sharply reduced the export of these products. As
a result of these transactions the Company incurred restructuring charges of
approximately $442,000 representing the write - off of molds and facilities
used in the manufacturing of its electric household appliances.
Interest expense for the three month periods ended September 30, 1997 and
1996 were $331,000 and $133,000 respectively and for the nine month periods
ended September 30, 1997 and 1996 were $611,000 and $563,000. The increase
in interest in both the three and nine month periods is entirely attributable
to interest not being previously accrued on notes payable to certain note
holders who agreed to a reduction in the interest rate on their loans.
During July 1997 these note holders agreed not to call their loans in
exchange for the difference in interest they would have received at the old
rate vs. the new rate being converted into common stock of the Company at the
current market price of the Company's stock. This resulted in the issuance
of 386,000 shares of the Company's common stock.
The settlement of the Fleet debt during March 1996 resulted in an
extraordinary gain to the Company of $1,550,000 as reflected in the nine
month period ended September 30, 1996.
Due to the foregoing, the Company reported loss before extraordinary item of
$1,003,000 and $1,000,000 for the three month periods ended September 30,
1997 and 1996 respectively and $1,421,000 and $3,053,000 for the nine month
periods ended September 30, 1997 and 1996. For the three month periods ended
September 30, 1997 and 1996 net loss was $1,003,000 and $1,000,000 and for
the nine month periods ended September 30, 1997 and 1996 was $1,421,000 and
$1,503,000.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders
The annual meeting of the shareholders of the Company was held on September
23, 1997. David Guttmann, David Refson and Richard Helfman were each elected
directors of the Company.
Item 6. a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
The Registrant did file reports on Form
8-K during the nine months ended September 30, 1997.
A report on Form 8-K was filed October 27, 1997.
CREATIVE TECHNOLOGIES CORP.
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.
CREATIVE TECHNOLOGIES CORP.
Registrant
Dated : November 13, 1997 By: S/Richard Helfman
Richard Helfman, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<CASH> $34,000
<SECURITIES> 0
<RECEIVABLES> 1,285,000
<ALLOWANCES> 16,000
<INVENTORY> 1,680,000
<CURRENT-ASSETS> 3,126,000
<PP&E> 1,477,000
<DEPRECIATION> 1,289,000
<TOTAL-ASSETS> 3,320,000
<CURRENT-LIABILITIES> 8,758,000
<BONDS> 0
<COMMON> 270,000
1,770,000
0
<OTHER-SE> (7,478,000)
<TOTAL-LIABILITY-AND-EQUITY> 3,320,000
<SALES> 6,422,000
<TOTAL-REVENUES> 6,422,000
<CGS> 4,355,000
<TOTAL-COSTS> 4,355,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 611,000
<INCOME-PRETAX> (1,443,000)
<INCOME-TAX> (22,000)
<INCOME-CONTINUING> (1,421,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,421,000)
<EPS-PRIMARY> (.59)
<EPS-DILUTED> 0
</TABLE>
