UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: September 30, 1999
Commission file Number: 0-18259
AG-BAG INTERNATIONAL LIMITED
(Exact name of registrant as specified in its charter)
Delaware 93-1143627
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2320 SE Ag-Bag Lane, Warrenton OR 97146
(Address of principal executive offices) (Zip Code)
(503)861-1644
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $.01 par value per share - 12,061,991 shares outstanding as of
October 12, 1999
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
AG-BAG INTERNATIONAL LIMITED
CONDENSED BALANCE SHEETS
ASSETS
September 30 December 31
(Unaudited)
1999 1998 1998
---------- ---------- ----------
Current assets:
Cash and cash equivalents $ 656 $ 656 $ 361,614
Accounts receivable 5,986,006 5,961,768 2,333,912
Inventories 6,805,406 5,900,008 5,940,289
Other current assets 803,296 433,183 754,692
---------- ----------- ----------
Total current assets 13,595,364 12,295,615 9,390,507
Deferred income tax 41,000 638,666 41,000
Intangible assets, less
accumulated amortization 40,358 86,536 54,954
Property, plant and equipment
less accumulated depreciation 3,974,357 4,017,744 3,934,382
Other assets 488,968 363,383 399,425
--------- ---------- ----------
Total assets $18,140,047 $17,401,944 $13,820,268
========== ========== ==========
(Continued)
2
<PAGE>
AG-BAG INTERNATIONAL LIMITED
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30 December 31
(Unaudited)
1999 1998 1998
---------- ---------- ----------
Current liabilities:
Notes payable to bank $1,162,824 $ 1,290,035 $ -
Current portion of long term
debt and capital lease
obligations 378,217 365,394 365,688
Current portion of notes
payable to shareholders' 11,085 15,876 15,876
Accounts payable 1,948,741 1,453,722 831,922
Accrued expenses and other
current liabilities 1,359,725 1,560,358 1,320,010
Income tax payable 888,352 860,379 39,636
---------- ----------- -----------
Total current liabilities 5,748,944 5,545,764 2,573,132
Long term debt and capital
lease obligation, less
current portion 2,041,635 2,289,005 2,201,388
Notes payable to shareholders'
less current portion - 12,329 8,219
--------- ---------- ----------
Total liabilities 7,790,579 7,847,098 4,782,739
--------- ---------- ----------
Commitments
Shareholders' equity:
Preferred stock, $4LV 8 1/2%
nonvoting 696,000 696,000 696,000
Common stock, $.01 par value 120,619 120,619 120,619
Additional paid-in capital 9,210,211 9,210,211 9,210,211
Retained earnings(deficit) 322,638 ( 471,984) ( 989,301)
---------- --------- ---------
Total shareholders' equity 10,349,468 9,554,846 9,037,529
--------- ---------- ----------
Total liabilities and
shareholders' equity $18,140,047 $17,401,944 $13,820,268
========== ========== ==========
See Notes to Condensed Financial Information
3
<PAGE>
<TABLE>
AG-BAG INTERNATIONAL LIMITED
CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
Accumulated
Other
Preferred Stock Common Stock Paid-In Retained Comprehensive
Shares Amount Shares Amount Capital Earnings Income Total
------ ------ ------ ------ ------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1998 174,000 $696,000 12,061,991 $120,619 $9,210,211 $ ( 989,301) $ - $9,037,529
Preferred stock dividends (14,790) (14,790)
Net loss ( 180,083) ( 180,083)
Other comprehensive income,
Net of tax - -
------- ------- ---------- ------- --------- --------- ---------- ----------
Balance March 31, 1999 174,000 696,000 12,061,991 120,619 9,210,211 (1,184,174) - 8,842,656
Preferred stock dividends (14,790) (14,790)
Net income 666,547 666,547
Other comprehensive income,
Net of tax - -
------- ------- ---------- ------- --------- --------- ---------- ----------
Balance June 30, 1999 174,000 $696,000 12,061,991 $120,619 $9,210,211 $( 532,417) $ - $9,494,413
Preferred stock dividends (14,790) ( 14,790)
Net income 869,845 869,845
Other comprehensive income,
Net of tax - -
------- ------- ---------- ------- --------- --------- ---------- ----------
Balance September 30, 1999 174,000 $696,000 12,061,991 $120,619 $9,210,211 $ 322,638 $ - $10,349,468
======= ======= ========== ======= ========= ========= ========== ==========
</TABLE>
See Notes to Condensed Financial Information
4
<PAGE>
AG-BAG INTERNATIONAL LIMITED
CONDENSED STATEMENTS OF OPERATIONS
Three Months
Ended September 30
(Unaudited)
----------------------
1999 1998
---- ----
Net sales $12,846,414 $ 9,678,591
Cost of sales 9,616,580 7,148,347
--------- ---------
Gross profit from operations 3,229,834 2,530,244
Selling expenses 977,154 888,644
Administrative expenses 739,604 681,267
Research and development expenses 82,432 64,175
--------- ---------
Income from operations 1,430,644 896,158
Other income (expense):
Interest income 8,186 12,232
Interest expense (105,649) (117,070)
Miscellaneous 113,664 68,299
--------- ---------
Income before provision for
income taxes 1,446,845 859,619
Provision for income taxes 577,000 344,000
--------- ---------
Net income $ 869,845 $ 515,619
Other comprehensive income, net of tax: - -
--------- ---------
Total comprehensive income $ 869,845 $ 515,619
========= =========
Basic and diluted net income
per common share $ .07 $ .04
========= =========
Basic and diluted weighted average
number of common shares outstanding 12,061,991 12,061,991
========== ==========
See Notes to Condensed Financial Information
5
<PAGE>
AG-BAG INTERNATIONAL LIMITED
CONDENSED STATEMENTS OF OPERATIONS
Nine Months
Ended September 30
(Unaudited)
----------------------
1999 1998
---- ----
Net sales $28,382,079 $24,172,073
Cost of sales 21,316,274 17,814,256
--------- ---------
Gross profit from operations 7,065,805 6,357,817
Selling expenses 2,596,309 2,338,666
Administrative expenses 2,035,038 1,721,057
Research and development expenses 180,837 111,110
--------- ---------
Income from operations 2,253,621 2,186,984
Other income (expense):
Interest income 10,225 59,101
Interest expense (264,592) (350,989)
Miscellaneous 225,055 238,030
--------- ---------
Income before provision for
income taxes 2,224,309 2,133,126
Provision for income taxes 868,000 826,200
--------- ---------
Net income $ 1,356,309 $ 1,306,926
Other Comprehensive Income, net of tax: - -
--------- ---------
Total Comprehensive Income $ 1,356,309 $ 1,306,926
========= =========
Basic and diluted net income
per common share $ .11 $ .10
========= =========
Basic and diluted weighted average
number of common shares outstanding 12,061,991 12,061,991
========== ==========
See Notes to Condensed Financial Information
6
<PAGE>
AG-BAG INTERNATIONAL LIMITED
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months
Ended September 30
(Unaudited)
--------------------------
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 1,356,309 $ 1,306,926
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 418,954 430,382
Inventory obsolescence reserves 338,500 75,000
Loss on disposition of fixed assets 1,394 769
Changes in assets and liabilities:
Accounts receivable (3,652,094) (3,770,086)
Inventories (1,426,947) (252,024)
Other current assets (48,604) 1,734,940
Accounts payable 1,116,819 504,349
Accrued expenses and other current
liabilities 39,715 519,887
Income tax payable 848,716 820,743
Other assets (89,543) (183,410)
---------- ----------
Net cash provided(used)in operating
activities (1,096,781) 1,187,476
---------- ----------
Cash flows from investing activities:
Capital expenditures (230,397) (257,185)
Proceeds from disposition of fixed assets 8,000 10,000
---------- ----------
Net cash used in investing activities (222,397) (247,185)
---------- ----------
Cash flows from financing activities:
Net proceeds from line of credit 1,162,824 (427,228)
Principal payments on debt (283,976) (486,655)
Proceeds from issuance of debt 136,752 29,517
Payment of shareholders' notes (13,010) (11,555)
Payment of preferred dividends (44,370) (44,370)
---------- ----------
Net cash provided(used)in financing
activities 958,220 (940,291)
---------- ----------
Net decrease in cash (360,958) - 0 -
Cash and cash equivalents at beginning
of period 361,614 656
---------- -----------
Cash and cash equivalents at end of period $ 656 $ 656
========= ==========
See Notes to Condensed Financial Information
7
<PAGE>
AG-BAG INTERNATIONAL LIMITED
Notes to Condensed Financial Information
(Unaudited)
Note 1 - Description of Business and Summary of Significant
Accounting Policies
- --------------------------------------------------------------------------------
The Company's financial statements reflect all adjustments which, in the
opinion of management, are necessary for a fair statement of the results of
operations for the periods presented. Due to the seasonal nature of the
business, the operating results of the Company's quarterly financial information
should not be taken as indicative of the results of its operations for a full
year. The financial statements presented for the nine-month period should be
read in conjunction with the financial statements and notes thereto for the year
ended December 31, 1998 included in the Company's annual report on Form 10-K
filed with the Securities and Exchange Commission on March 31, 1999.
Reclassifications
- -----------------
Certain reclassifications have been made to the financial statements for the
periods presented from amounts previously reported to conform with
classifications currently adopted. Such reclassifications had no effect on
previously reported shareholders' equity or results of operations.
8
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition
And Results Of Operations.
The information set forth below relating to matters that are not
historical facts are "forward-looking statements" within the meaning of Section
21E of the Securities Exchange Act of 1934 and involve risks and uncertainties
which could cause actual results to differ materially from those set forth
below. Such risks and uncertainties include, but are not limited to, the
following:
o The economic health of the U.S. dairy industry including milk and
grain feed prices and the ability of the dairy farmers to make
capital expenditures
o Adverse weather conditions which affect farmers' crops and reduce
demand for the Company's products
o Market acceptance of the Company's composting system and technology
o Consolidations within the farming sector and reduction in the
number of dairy cows
Reference is made to Item 7 of "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in the Company's annual
report on Form 10-K for the year ended December 31, 1998, on file with the
Securities and Exchange Commission. The following discussion and analysis
pertains to the Company's results of operations for the three-month period ended
September 30, 1999, compared to the results of operations for the three-month
period ended September 30, 1998, and to the results of operations for the
nine-month period ended September 30, 1999, compared to the results of
operations for the nine-month period ended September 30, 1998, and to changes in
the Company's financial condition from December 31, 1998 to September 30, 1999.
The core business of the Company is historically seasonal due to the
harvest seasons in North America and Europe. The Company's machinery tends to be
purchased in anticipation of the next harvest season, so most of the sales of
machinery occur in the spring and summer. This requires the Company to carry
significant amounts of inventory to meet rapid delivery requirements of
customers. Bag sales tend to occur as the harvest season approaches in the
summer, and during the harvest season in the fall.
9
<PAGE>
Approximately 95% of the Company's business is concentrated in the
Northern Hemisphere resulting in between 66-75% of the Company's revenue being
generated during the spring and summer (2nd and 3rd Quarters). The following
table outlines the percentage of revenue over the past three years by quarter:
Quarter 1996 1997* 1998
------- ---- ---- ----
1st 17% 14% 17%
2nd 30% 40% 35%
3rd 36% 35% 35%
4th 17% 11% 13%
* In addition to seasonal factors, revenues which normally would have occurred
in the first quarter of 1997 were not earned until the second quarter due to the
delay in the start up of the Company's new production facility in Blair,
Nebraska.
Sales for the quarter ended September 30, 1999 increased 32.73% to
$12,846,414 compared to $9,678,591 for the quarter ended September 30, 1998.
Sales for the nine-month period ended September 30, 1999 increased 17.42% to
$28,382,079 compared to $24,172,073 for the nine-month period ended September
30, 1998. Sales for the quarter and nine month period ended September 30, 1999
were up as a result of the slightly higher U.S. BFP (Basic Formula Price) for
milk over the first quarter's sharp decline in BFP. In addition, continued low
supplemental feed costs (grain) have spurred capital expenditures for machinery
and equipment. Recent university research articles published on the benefits of
bagging over the use of bunkers and silos continued to help increase sales, as
farmers are realizing the benefits of bagging their feed instead of storing it
in bunkers or silos.
Machine sales for the third quarter were up over 54% and bag sales were
up over 24% compared to the third quarter of 1998. Machine sales for the
nine-month period were up over 24% and bag sales for the nine-month period were
up over 18% compared to the same period in 1998. Machine sales of the Company
are directly tied to farmers' income and therefore their ability to purchase new
equipment. The Company's bag and parts sales are driven by the total number of
bagging machines that are in the marketplace. However, there is not a perfect
correlation between the Company's bag sales and machine sales, as the Company's
and competitors' bags are interchangeable on all bagging machinery in the
industry.
10
<PAGE>
Gross profit as a percentage of sales declined for the quarter and
nine-month period ended September 30, 1999 compared to the same periods in 1998.
The decline resulted from lower margins on bags in certain geographic, highly
competitive, volume areas of the U.S. market during the first nine months of
1999 compared to 1998. The decline was also the result of lower margins on
machinery during the first quarter of 1999 which were offset by improving
margins on machinery due to production efficiencies being realized on the
seasonal machine production ramp-up during the second and third quarters of
1999.
Selling expenses for the quarter ended September 30, 1999 increased
9.96% to $977,154 compared to $888,644 for the quarter ended September 30, 1998.
Selling expenses for the nine-month period ended September 30, 1999 increased
11.02% to $2,596,309 compared to $2,338,666 for the nine-month period ended
September 30, 1998. The increase for the quarter and nine-month period was the
result of increased sales personnel costs, commissions and related benefits and
volume discounts resulting from higher sales volumes.
Administrative expenses for the quarter ended September 30, 1999
increased 8.56% to $739,604 compared to $681,267 for the period ended September
30, 1998. Administrative expenses for the nine-month period ended September 30,
1999 increased 18.24% to $2,035,038 in comparison to $1,721,057 for the
nine-month period ended September 30, 1998. The increase for the quarter and
nine-month period was the result of increased general and administrative
operating overhead and benefits coupled with higher professional fees relating
to ongoing litigation.
Research and development expenses for the quarter ended September 30,
1999 increased 28.45% to $82,432 compared to $64,175 for the quarter ended
September 30, 1998. Research and development expenses for the nine-month period
ended September 30, 1999 increased 62.75% to $180,837 compared to $111,110 for
the nine-month period ended September 30, 1998. The increase for the quarter and
nine-month period was the result of increased research costs related to new
silage and environmental machine development, coupled with new silage and
nutritional studies of bagged feed and their effects on animal production.
11
<PAGE>
Interest expense for the quarter ended September 30, 1999 decreased
9.75% to $105,649 in comparison to $117,070 for the period ended September 30,
1998. Interest expense for the nine-month period ended September 30, 1999
decreased 24.62% to $264,592 compared to $350,989 for the nine-month period
ended September 30, 1998. The decrease for the quarter and nine-month period was
the result of the Company utilizing a smaller portion of its credit facilities
due to accelerated collections of accounts receivable.
Net income for the quarter ended September 30, 1999 increased 68.70% to
$869,845 compared to $515,619 for the period ended September 30, 1998. Net
income for the nine-month period ended September 30, 1999 increased 3.78% to
$1,356,309 compared to $1,306,926 for the nine-month period ended September 30,
1998. The increase for the quarter was the result of increased sales volumes,
improved machine margins and lower interest costs, which were partially offset
by lower bag margins in certain high volume areas coupled with increased
selling, administrative and research expenses. The increase for the nine-month
period was the result of the above mentioned factors, coupled with lower machine
margins and volume during the first quarter caused by the sharp decline in the
U.S. BFP for milk, which improved during the 2nd and 3rd quarters.
Year 2000
- ---------
The Year 2000 issue exists because many computer programs use two digit
date fields to define the applicable year rather than four digit date fields.
Because of this, computer equipment and software (sometimes referred to as
"information technology" or "IT") and devices with embedded technology
(sometimes referred to as "non-IT") that are time-sensitive may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, production delays or breakdowns, a temporary inability to
process transactions, send invoices, or engage in other normal business
activity. Incomplete or untimely resolution of the Year 2000 issue by the
Company or important suppliers or customers of the Company could have a
materially adverse effect on the Company's business, financial condition or
results of operations.
The Company's approach to the Year 2000 issue is discussed below. In discussing
the Year 2000 issue, the Company necessarily makes certain forward looking
statements. There can be no assurance that actual results will not differ
materially from the projections contained in the forward looking statements.
Factors which may cause actual results to differ materially include, but are not
limited to:
o failure of Company personnel and outside consultants to properly
assess and address the Company's Year 2000 issues,
o inaccurate or incomplete responses to questionnaires sent to third
parties or inaccurate disclosure by third parties regarding the
Year 2000 issue,
12
<PAGE>
o failure to address the Year 2000 issue with all vendors, including
utility vendors, and customers,
o infrastructure failures, such as disruptions in the supply of
electricity, gas, water or communications services, or major
institutions, such as the government and banking systems, and
o failure of the Company to accurately predict the costs to address
the Year 2000 issue or the lost revenues related to interruption in
the Company's or its customers' businesses.
State of Readiness. The Company, in conjunction with outside consultants, has
made an assessment of the effect of the Year 2000 issue on its IT and non-IT
systems. The Company has identified certain modifications to its IT systems
which are necessary to address the Year 2000 issue and has fully implemented
those modifications. The Company has determined there are no necessary
modifications to its non-IT systems. Based on this assessment and implementation
of the modifications discussed above, the Company believes its IT systems and
non-IT systems will properly recognize calendar dates beginning in the year
2000.
In addition, the Company has evaluated, through conversations and questionnaires
sent to its critical vendors and customers, the IT systems of most of its
outside vendors and customers. The Company has not evaluated its vendors and
customers non-IT systems. The Company has received responses from approximately
95% of its vendors and 90% of its customers. The Company has, however, received
replies from what the Company considers to be its critical vendors and
customers. Based on the responses received to date, the Company does not believe
the Year 2000 issue will have a material adverse effect.
Costs to Address Year 2000 Issue. To date, the Company has incurred costs of
approximately $45,000 and the Company estimates its total cost to become Year
2000 compliant will be approximately $50,000. Accordingly, the Company expects
the costs to address the Year 2000 issue will not have a material adverse
financial impact on the Company's financial condition or results of operations.
However, there can be no assurance that additional remediation and costs will
not be identified, especially since the Company has not received responses from
all third parties.
Risks of the Company's Year 2000 Issue. The most reasonably likely worst case
scenario for the Company would involve an extended shutdown in production and/or
lost revenue caused by interruption in the Company's customers' businesses. The
Company is unable to quantify the effect of such a scenario. However, the
Company has identified its critical vendors and customers and does not believe
that any such vendors or customers represent a significant risk. In addition,
the first month of the fiscal year is not a critical production period or period
of customer demand and therefore the Company believes it would be able to
recover from a temporary interruption without a material adverse effect on the
Company's operations.
13
<PAGE>
Company's Contingency Plan. Based on the Company's assessment of the Year 2000
issue, the Company has not developed and does not intend to develop a
contingency plan to address the reasonably likely worst case scenario.
Liquidity and Capital Resources
- -------------------------------
The seasonal nature of the northern hemisphere farming industry, the
production time for equipment and the time required to prepare bags for use
requires the Company to manufacture and carry high inventories to meet rapid
delivery requirements. In particular, the Company must maintain a significant
level of bags during the spring and early summer to meet the sales demands
during the harvest season. The Company uses working capital and trade credit to
increase its inventory so that it has sufficient inventory available to meet its
sales demands through the spring and summer months.
The Company relies on its suppliers to provide trade credit to enable
the Company to build its inventory. The Company's suppliers have provided
sufficient trade credit to meet the demand to date and management believes this
will continue. No assurance can be given that suppliers will continue to provide
sufficient trade credit in the future.
Accounts receivable increased less than 1% as of September 30, 1999 to
$5,986,006 from the September 30, 1998 level of $5,961,768. The less than 1%
increase in accounts receivable (with increased sales for the quarter) was the
result of strong collection efforts during the quarter.
14
<PAGE>
Inventory at September 30, 1999 was $6,805,406, which was 15.34% higher
than inventory at September 30, 1998 of $5,900,008. The increase in inventory
was the result of management's decision to carry higher levels of inventory to
meet the late seasonal demands and 4th quarter seasonal ordering and flooring
programs.
Other current assets at September 30, 1999 increased to $803,296
compared to $433,183 at September 30, 1998. The increase was the result of
increased deposits and current deferred taxes.
Intangible assets at September 30, 1999 decreased to $40,358 compared
to $86,536 at September 30, 1998. The decrease was the result the of the
Company's implementation of SOP (Statement of Position) 98-5 requiring
unamortized start-up costs to be written-off at December 31, 1998, coupled with
normal amortization expense for the year.
The Company has a domestic operating line of credit with a limit of
$5,000,000, secured by accounts receivable and inventory. As of September 30,
1999, $1,162,824 had been drawn under the credit line. Management believes that,
along with funds generated from operations and its operating line of credit, it
will be able to meet the Company's cash requirements through 1999.
15
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27, Financial Data Schedule (Edgar Only)
(b) No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1999.
16
<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.
AG-BAG INTERNATIONAL LIMITED,
a Delaware corporation
(Registrant)
Date: October 19, 1999 By: /s/ Michael R. Wallis
--------------------------
Michael R. Wallis
Chief Financial Officer and
Vice President, Finance
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from the Company's report
on Form 10-Q for the period ended September 30,
1999, and is qualified in its entirety by
reference to such financial information.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 656
<RECEIVABLES> 6,294,404
<ALLOWANCES> 308,398
<INVENTORY> 6,805,406
<CURRENT-ASSETS> 13,595,364
<PP&E> 8,282,238
<DEPRECIATION> 4,307,881
<TOTAL-ASSETS> 18,140,047
<CURRENT-LIABILITIES> 5,748,944
<BONDS> 2,041,635
0
696,000
<COMMON> 120,619
<OTHER-SE> 9,532,849
<TOTAL-LIABILITY-AND-EQUITY> 18,140,047
<SALES> 28,382,079
<TOTAL-REVENUES> 28,617,359
<CGS> 21,316,274
<TOTAL-COSTS> 26,128,458
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 264,592
<INCOME-PRETAX> 2,224,309
<INCOME-TAX> 868,000
<INCOME-CONTINUING> 1,356,309
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,356,309
<EPS-BASIC> .11
<EPS-DILUTED> .11
</TABLE>
