<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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For Quarter Ended September 30, 1997 Commission File Number 0-23360
COUNTRY WIDE TRANSPORT SERVICES, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 95-4105996
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
119 Despatch Drive, East Rochester, New York 14445
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(Address of principal executive offices) (Zip Code)
(716) 381-5470
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(Registrant's telephone number, including area code)
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(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 requires for the past 90 days. Yes X No
---- -----
The number of shares of Common Stock outstanding as of November 1, 1997 was
4,248,100.
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COUNTRY WIDE TRANSPORT SERVICES, INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
INDEX
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Part I - Financial Information Page
- ------------------------------ -----
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets--September 30, 1997
and June 30, 1997 3
Condensed Consolidated Statements of Operations--Three
Months Ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows--Three
Months Ended September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
Part II - Other Information
- ---------------------------
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit 11
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COUNTRY WIDE TRANSPORT SERVICES, INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1997 1997*
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<S> <C> <C>
ASSETS (UNAUDITED)
Current assets:
Cash $ 10 $ 10
Accounts receivable, net 5,361 4,009
Accounts receivable - officers and employees 44 47
Driver advances 14 16
Prepaid expenses 52 49
-------- --------
Total current assets 5,481 4,131
Property and equipment, net 108 110
Other assets:
Deposits 8 8
Excess of purchase price over fair value of net
assets acquired, net 2,609 2,638
-------- --------
Total assets $ 8,206 $ 6,887
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-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 88 $ 160
Accounts payable and accrued liabilities 4,970 4,612
Liabilities in excess of assets of discontinued subsidiary 370 404
Liabilities in excess of assets of discontinued operations 109 123
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Total current liabilities 5,537 5,299
Long-term debt, less current portion 2,636 1,748
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Total liabilities 8,173 7,047
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Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized,
issuable in series, none issued -- --
Common stock, $.10 par value, 30,000,000 and 10,000,000
shares authorized, 4,248,000 shares issued and outstanding
at September 30 and June 30, 1997 425 425
Additional paid-in capital 8,110 8,110
Retained earnings (deficit) (8,502) (8,695)
-------- --------
Total stockholders' equity (deficit) 33 (160)
-------- --------
Total liabilities and stockholders' equity $ 8,206 $ 6,887
-------- --------
-------- --------
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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COUNTRY WIDE TRANSPORT SERVICES, INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
(In Thousands, except Per Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1997 1996
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<S> <C> <C>
Transportation revenue $ 8,497 $ 10,547
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Operating costs and expenses:
Purchased transportation 7,493 7,267
Salaries and related expenses 447 1,357
Operating expenses 44 844
Revenue equipment rentals -- 371
General supplies and expenses 214 385
Depreciation and amortization 41 259
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Total operating costs and expenses 8,239 10,483
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Operating income 258 64
Other income (expense):
Interest expense (45) (175)
Interest income -- --
Gain on disposition of assets -- 23
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Net income (loss) from continuing operations before
provision for income taxes, discontinued operations
and extraordinary item 213 (88)
Provision for income tax 20 8
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Net income (loss) from continuing operations $ 193 $ ( 96)
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Net income (loss) $ 193 $ (96)
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---------- --------
Income (loss) per common share:
Continuing operations $ 0.04 $ (.10)
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Net Income (loss) per common share $ 0.04 $ (.10)
---------- --------
---------- --------
Weighted average number of common shares 4,983,173 960,000*
---------- --------
---------- --------
</TABLE>
* Reflects May 15, 1997 one for five reverse stock split
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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COUNTRY WIDE TRANSPORT SERVICES, INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) from continuing operations $ 193 $ (96)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 41 259
(Gain) on disposition of assets -- (23)
Provision for uncollectible accounts receivable -- 8
(Increase) decrease in:
Accounts receivable (1,353) 26
Accounts receivable - miscellaneous 3 34
Driver advance 2 (9)
Inventories -- 3
Prepaid expenses (4) 28
Deposits -- (13)
Increase (decrease) in:
Notes payable - current portion (72) --
Accounts payable and accrued liabilities 358 (60)
Liabilities in excess of discontinued operations (48) (43)
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Net cash provided by (used in) operating
activities from continuing operations (880) 114
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Cash flows from investing activities:
Collections on notes receivable -- 1
Additions to property and equipment (9) (60)
Proceeds from disposal of property and equipment -- 70
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Net cash provided by (used in) investing activities (9) 11
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Cash flows from financing activities:
Principal payments on borrowings $ (7,123) $(11,299)
Net cash borrowings from line of credit 8,012 11,188
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Net cash provided by (used in) financing activities 889 (111)
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Increase (decrease) in cash -- 14
Cash, beginning of period 10 37
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Cash, end of period $ 10 $ 51
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---------- --------
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 45 $ 153
---------- --------
---------- --------
Income Taxes $ 16 $ 1
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---------- --------
Property and equipment sold for receivable $ -- $ 41
---------- --------
---------- --------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
COUNTRY WIDE TRANSPORT SERVICES, INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by the Company are set forth in Note 1
to the Company's consolidated financial statements included in the Company's
Annual Report on form 10K for the year ended June 30, 1997.
2. STATEMENT OF INFORMATION FURNISHED
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of September 30,
1997, the results of operations for the three months ended September 30, 1997
and 1996 and the cash flows for the three months ended September 30, 1997 and
1996. The results of operations for the three month periods ended September 30,
1997 and 1996 are not necessarily indicative of the results to be expected for
the full year. These results have been determined on the basis of generally
accepted accounting principles and practices applied consistently with those
used in the preparation of the Company's audited consolidated financial
statement for the year ended June 30, 1997.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission.
EARNINGS PER COMMON SHARE
Primary earnings per share is computed by subtracting the applicable
periods' required preferred dividends from the net income in order to
determine net income attributable to common shareholders. During the quarter
ended September 30, 1997 and 1996, there were no required preferred dividends
to be subtracted from the net income. Earnings (loss) per share and common
equivalent share are then computed based on the weighted average number of
shares of common stock and, if dilutive, common equivalent shares (preferred
stock, options and warrants) outstanding during the period. Common stock
equivalents as of September 30, 1996 were anti-dilutive and excluded in the
earnings per share computation.
IMPACT OF RECENTLY ISSUED STANDARDS
In February 1997, the Financial Accounting Standards Board issued a new
statement titled "Earnings per Share" ("FAS 128"). The new statement is
effective for both interim and annual periods ending after December 15, 1997.
FAS 128 replaces the presentation of primary and fully diluted earnings per
share with the presentation of basic and diluted earnings per share. Basic
earnings per share excludes dilution and is calculated by dividing income
available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity. Had
this new statement been in effect for the periods presented, the Company
would report basic earnings (loss) per share for the three month periods
ended September 30, 1997 and 1996 of $0.05 and
6
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$(0.10), respectively. Dilutive earnings (loss) per share for the three month
period ended September 30, 1997 and 1996 would be $0.04 and $(0.10),
respectively.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (000 omitted):
September 30, June 30, Estimated
1997 1997 Useful Lives
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Furniture and office equipment $ 153 $ 144 4 to 5 years
Leasehold improvements 72 72 life of lease
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225 216
Less accumulated depreciation
and amortization (117) (106)
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$ 108 $ 110
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4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following (000
omitted):
September 30, June 30,
1997 1997
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Accounts payable $2,684 $2,331
Accrued purchased transportation 1,832 1,448
Other accrued expenses 454 833
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$4,970 $4,612
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5. DISCONTINUED SUBSIDIARY
Having experienced significant losses in the long-haul trucking
operation, Country Wide Truck Service, Inc. discontinued it's operation.
On December 31, 1996, CW Truck made a General Assignment of all its
assets for the pro rata benefit of all its creditors. In conjunction with
the General Assignment, CW Truck sold all of its rolling stock assets for the
outstanding debt on the equipment. Revenues applicable to the discontinued
subsidiary were approximately $7,600,000, $22,700,000 and $29,100,000 for the
years ended June 30, 1997, 1996 and 1995, respectively. Revenue applicable
to the discontinued subsidiary for the three months ended September 30, 1996,
was $4,293,733.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Net income from continuing operations for the quarter ended September 30,
1997 amounted to $193,000 compared to a net loss of $(96,000) for the prior
year period. The improved results were due to the liquidation of a trucking
subsidiary effective December 31, 1996, and improved results from the
Company's logistics subsidiary, Vertex Transportation, Inc.
First quarter operating revenue decreased 19.4% to $8,497,000 from
$10,547,000 for the first quarter of 1996. The reduction in revenue was a
result of the liquidation of the trucking subsidiary effective December 31,
1996 which had revenue in the quarter ended September 30, 1996 of $4,293,733.
Operating revenue for the Company's Vertex Transportation, Inc. subsidiary
increased 16% to $8,497,000 for the period ended September 30, 1997, from
$7,328,000 for the prior year period.
Operating costs for the first quarter decreased by $2,245,000 from the prior
year period. As a percentage of sales, operating costs for the quarter
decreased 2.4% from the prior year period. This change is primarily
attributable to the discontinuance of the trucking subsidiary partially
offset by increased purchase transportation cost due to increased logistics
business.
Depreciation and amortization expense, as well as interest expense, for the
quarter ended September 30, 1997 were $41,000 and $45,000 respectively, as
compared with $259,000 and $175,000, respectively, for the prior year period.
The decrease in depreciation and amortization expense is due to the
liquidation of the trucking subsidiary and sale of the rolling stock. The
decrease in interest is due to reduced borrowings from continuing operations
and an improved lending rate.
Having experienced significant losses in its trucking operation, Country Wide
Truck Service, Inc., a Company subsidiary, discontinued its operation on
December 31, 1996, and began an orderly liquidation process. On December
31, 1996, a General Assignment of all assets of CW Truck was made for the pro
rata benefit of all creditors. In conjunction with the General Assignment,
on December 31, 1996, all of the rolling stock assets were sold for the
outstanding debt on the equipment. The Company maintains a continuing
corporate guarantee on the debt secured by the rolling stock. Results of
operation for CW Truck have been classified as continuing operations in the
Company's financial statement for all periods presented.
The increase in sales for the Company's Vertex Transportation, Inc.
subsidiary for the quarter ended September 30, 1997 of $8,497,000 from
$7,328,000 in the prior year period resulted in an increase in that
subsidiary's net income of 27.4% to $304,148 from $238,687.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On April 29, 1997, the Company, through its Vertex Transportation, Inc.
subsidiary, secured new financing with a commercial bank. The new facility
is a three year contract which allows for borrowing of up to $4,000,000 which
is limited to 80% of eligible accounts receivable. The agreement bears an
interest rate at the bank's prime lending rate plus 2 1/2% and is secured by
essentially all of the Company's assets.
8
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Effective April 29, 1997 the Company's previous revolving credit line in the
amount of $2,173,171 was paid. As of September 30, 1997 the Company had
borrowings of $2,635,909 and unused borrowing capacity of $1,033,413 under
the new credit facility.
At September 30, 1997, the Company's ratio of current assets to current
liabilities and its debt to equity were 1:1 and 247.7:1, respectively, as
compared to 0.9:1 and (44):1, respectively at June 30, 1997.
The Company ended the September 30, 1997 period with $10,000 of cash and
working capital of $423,000. Based upon the Company's expected cash flow from
operations and funds available as of April 29, 1997, from its new credit
facility, management believes that the Company's capital resources are
sufficient to meet its presently anticipated operating needs.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
9
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COUNTRY WIDE TRANSPORT SERVICES, INC.
AND CONSOLIDATED SUBSIDIARY COMPANIES
PART II.
ITEM 5. OTHER INFORMATION
During the fiscal year ended June 30, 1995, the Company discontinued it's
product sales segment which was operated by the Company's wholly-owned
subsidiary, Nationwide Produce Co., since July 1992 when the Company acquired
all of the outstanding stock of Nationwide from Martrade Ltd. The Company's
discontinuance of the product sales segment culminated in the filing of a
General Assignment during September 1995 of all assets of Nationwide Produce
Co. for the pro rata benefit of all creditors of the subsidiary.
During the quarter ended December 31, 1996, the Company discontinued all
operations relating to it's wholly owned subsidiary, CW Truck. On December
31, 1996 the Company made a General Assignment of all the assets of CW Truck
for the pro rata benefit of all creditors of the subsidiary. In conjunction
with the General Assignment the Company, on December 31, 1996, sold all the
rolling stock assets of the Company for all the outstanding debt on the
equipment.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Reports on Form 8-K:
1. None
10
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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.
COUNTRY WIDE TRANSPORT SERVICES, INC.
-------------------------------------
Registrant
DATED: November 14, 1997 /s/ Timothy Lepper
------------------------
Timothy Lepper, President
Chief Executive Officer
Chief Financial Officer
and Principal Accounting Officer
11
<PAGE>
FORM 10-Q
COUNTRY WIDE TRANSPORT SERVICES, INC
EXHIBIT 11
SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
For the Three Months Ended
Primary June 30, 1997 June 30, 1996
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<S> <C> <C>
Net income (loss) $ 193,000 $ (96,000)
Less - preferred stock dividends -- --
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Net income applicable to common shareholders $ 193,000 $ (96,000)
------------- -------------
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Weighted average number of common shares 4,248,100 960,000
Add - common equivalent shares (determined
using the "treasury stock" method) representing
shares issuable upon exercise of options 735,073 --
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Weighted average number of shares used in
calculation of primary income per common share 4,983,173 960,000
------------- -------------
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Primary income per common share $ 0.04 $ (0.10)
------------- -------------
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Fully Diluted
Net income primary income per common share $ 193,000 $ (96,000)
Add:
preferred stock dividend -- --
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Net income for fully diluted net income per share $ 193,000 $ (96,000)
------------- -------------
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Weighted average number of shares used in
calculating primary income per common share 4,983,173 960,000
Add (deduct) incremental shares representing -- --
------------- -------------
Weighted average number of shares used in
calculation of fully diluted income per share 4,983,173 960,000
------------- -------------
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Fully diluted income per common share $ 0.04 $ (0.10)
------------- -------------
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 10
<SECURITIES> 0
<RECEIVABLES> 5,480
<ALLOWANCES> (75)
<INVENTORY> 0
<CURRENT-ASSETS> 5,481
<PP&E> 225
<DEPRECIATION> 117
<TOTAL-ASSETS> 8,206
<CURRENT-LIABILITIES> 5,537
<BONDS> 0
0
0
<COMMON> 425
<OTHER-SE> (392)
<TOTAL-LIABILITY-AND-EQUITY> 8,206
<SALES> 8,497
<TOTAL-REVENUES> 8,497
<CGS> 0
<TOTAL-COSTS> 8,239
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (45)
<INCOME-PRETAX> 213
<INCOME-TAX> 20
<INCOME-CONTINUING> 193
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 193
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
