<PAGE>
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
December 31, 1999
ENVIRONMENTAL ELEMENTS CORPORATION
(Exact name of registrant as specified in its charter)
1-10955
(Commission File Number)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 52-1303748
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
3700 Koppers St., Baltimore, Maryland 21227
(Address of Principal Executive Offices) (Zip Code)
410 - 368 - 7000
(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:
7,113,595 shares of common stock, $.01 par value per share, as of February 9,
2000.
<PAGE>
Environmental Elements Corporation
form 10-Q
For the Quarterly Period Ended
December 31, 1999
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
December 31, 1999 and March 31, 1999.................. 3
Consolidated Statements of Operations for
the Periods Ended December 31, 1999 and 1998......... 4
Consolidated Statements of Cash Flows for
the Nine Months Ended December 31, 1999 and 1998...... 5
Notes to Consolidated Financial Statements.............. 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......... 8 - 12
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................ 13
Signatures........................................................ 14
_______________________________________
Certain of the statements included in this Form 10-Q are forward-looking
statements. These statements involve risks and uncertainties that could cause
the actual results to differ from those expressed or implied by such statements.
These factors include loss of new orders, increased competition, changes in
environmental regulations, and other factors, including but not limited to,
operating losses, declines in markets for the Company's products and services,
and insufficient capital resources. Information on factors that could affect the
Company's financial results are set forth in the Company's filings with the
Securities and Exchange Commission including the report on Form 10-K for the
Company's fiscal year ended March 31, 1999
2
<PAGE>
ENVIRONMENTAL ELEMENTS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 1999 and March 31, 1999
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
- ---------------------------------------------------------------------------------------------------------------------------
1999 1999
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................... $ 542,000 $ 1,619,000
Accounts and retainage receivable, net of allowance for doubtful
accounts of $299,000 and $221,000, respectively......................... 10,481,000 9,441,000
Unbilled contract costs and fees............................................ 16,123,000 12,315,000
Inventories................................................................. 1,296,000 1,407,000
Prepaid expenses and other current assets................................... 1,250,000 1,814,000
------------ -----------
Total Current Assets.................................................... 29,692,000 26,596,000
------------ -----------
PROPERTY AND EQUIPMENT:
Capital lease, building and improvements.................................... 7,291,000 7,293,000
Machinery, equipment, furniture and fixtures................................ 2,914,000 3,120,000
------------ -----------
10,205,000 10,413,000
Less - Accumulated depreciation and amortization............................ 4,975,000 4,827,000
------------ -----------
Property and equipment,net.............................................. 5,230,000 5,586,000
NON-CURRENT RETAINAGE RECEIVABLE................................................ - 277,000
OTHER ASSETS.................................................................... 1,002,000 721,000
------------ -----------
Total Assets............................................................ $ 35,924,000 $33,180,000
------------ -----------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable............................................................ $ 12,734,000 $13,110,000
Billings in excess of contract costs and fees............................... 761,000 824,000
Accrued payroll and related expenses........................................ 662,000 1,044,000
Accrued and other current liabilities....................................... 2,428,000 2,056,000
------------ -----------
Total Current Liabilities............................................... 16,585,000 17,034,000
LONG-TERM CAPITAL LEASE OBLIGATION.............................................. 1,828,000 1,963,000
LONG-TERM LINE OF CREDIT........................................................ 10,400,000 6,100,000
OTHER NON-CURRENT LIABILITIES................................................... 494,000 475,000
------------ -----------
Total Liabilities....................................................... 29,307,000 25,572,000
------------ -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' INVESTMENT:
Common stock, par value $.01 per share; 20,000,000 shares authorized;
7,093,705 and 7,090,705 shares issued and outstanding, respectively.. 71,000 71,000
Paid-in capital............................................................. 28,228,000 28,222,000
Cumulative translation adjustment........................................... (206,000) (196,000)
Retained deficit .......................................................... (21,476,000) (20,489,000)
------------ -----------
Total Stockholders' Investment.......................................... 6,617,000 7,608,000
------------ -----------
Total Liabilities and Stockholders' Investment.......................... $ 35,924,000 $33,180,000
------------ -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
<PAGE>
ENVIRONMENTAL ELEMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
- ------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales.................................................... $13,924,000 $16,998,000 $39,287,000 $54,299,000
COST OF SALES............................................ 12,314,000 14,723,000 34,533,000 47,653,000
-------------------------------------------------------------------
Gross Profit..................................... 1,610,000 2,275,000 4,754,000 6,646,000
-------------------------------------------------------------------
Selling, general and administrative expenses............. 1,241,000 1,793,000 4,980,000 5,300,000
-------------------------------------------------------------------
Operating Income (Loss) ........................ 369,000 482,000 (226,000) 1,346,000
INTEREST AND OTHER EXPENSE, NET.......................... (284,000) (131,000) (763,000) (442,000)
-------------------------------------------------------------------
Income (Loss) before Income Taxes................ 85,000 351,000 (989,000) 904,000
PROVISION FOR INCOME TAXES............................... -- -- -- --
-------------------------------------------------------------------
Net Income (Loss)................................ $ 85,000 $ 351,000 $ (989,000) $ 904,000
-------------------------------------------------------------------
Earnings (Loss) per share:
BASIC................................................ $ 0.01 $ 0.05 $ (0.14) $ 0.13
-------------------------------------------------------------------
DILUTED.............................................. $ 0.01 $ 0.05 $ (0.14) $ 0.13
-------------------------------------------------------------------
Weighted average common shares outstanding:
BASIC................................................ 7,093,705 7,052,832 7,093,116 7,045,241
DILUTED.............................................. 7,117,492 7,180,011 7,093,116 7,151,111
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE>
ENVIRONMENTAL ELEMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income ......................................................... $ (989,000) $ 904,000
Non-cash items:
Depreciation and amortization.......................................... 668,000 612,000
Stock contributions to savings plan.................................... -- 76,000
Stock-based compensation............................................... 6,000 --
Changes in operating assets and liabilities:
Increase in accounts and retainages receivable, net.................... (763,000) (1,883,000)
(Increase) decrease in unbilled contract costs and fees................ (3,808,000) 4,757,000
Decrease (increase) in inventories..................................... 111,000 (116,000)
Decrease in prepaid expenses and other current assets.................. 564,000 943,000
Decrease in accounts payable........................................... (376,000) (1,726,000)
(Decrease) increase in billing in excess of contract costs and fees..... (63,000) 2,373,000
(Decrease) increase in accrued payroll and related expenses............. (382,000) 43,000
Increase in accrued and other current liabilities....................... 372,000 17,000
Decrease in net liabilities of discontinued operations.................. -- (10,000)
Increase in other non-current liabilities............................... 19,000 19,000
----------- -----------
Net Cash Flows (Used in) Provided by Operating Activities............ (4,641,000) 6,009,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........................................ (224,000) (134,000)
(Increase) decrease in other assets........................................ (367,000) 137,000
----------- -----------
Net Cash Flows (Used in) Provided by Investing Activities............ (591,000) 3,000
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in borrowings under line of credit..................... 4,300,000 (4,200,000)
Payments under capital lease obligation.................................... (135,000) (124,000)
Change in cumulative translation adjustment................................ (10,000) (88,000)
----------- -----------
Net Cash Flows Provided by (Used in) Financing Activities ........... 4,155,000 (4,412,000)
----------- -----------
Net (Decrease) Increase in Cash and Cash Equivalents................. (1,077,000) 1,600,000
Cash and Cash Equivalents, beginning of period................................. 1,619,000 958,000
----------- -----------
Cash and Cash Equivalents, end of period....................................... $ 542,000 $ 2,558,000
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
5
<PAGE>
ENVIRONMENTAL ELEMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL INFORMATION:
The interim consolidated financial statements included herein for Environmental
Elements Corporation and Subsidiaries (the Company) have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. In management's opinion, the interim financial data
presented herein include all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation. Certain information and
footnote disclosures normally included in the consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Results for
interim periods are not necessarily indicative of results to be expected for
the full year.
2. PER SHARE DATA:
During the fiscal year ended March 31, 1998, the Company adopted SFAS No. 128,
"Earnings Per Share." Basic earnings per common share is computed by dividing
net earnings by the weighted average number of shares of common stock
outstanding during the period. Diluted earnings per common share is computed
assuming the terms and conditions for the common stock options were met and
converted. The difference between the basic and diluted earnings per share is
the dilutive effect of stock options outstanding.
3. INVENTORIES:
Inventories are stated at the lower of cost (first-in, first-out) or market.
Inventories consist principally of purchased parts held for use in contracts
and as spare parts.
4. SUPPLEMENTAL CASH FLOW INFORMATION:
There were no non-cash stock transactions during the nine months ended December
31, 1999 with regards to the issuance of common stock as matching contributions
under the 401K savings plan. In non-cash stock transactions during the nine
months ended December 31, 1998, the Company issued 20,974 shares of its common
stock as matching contributions under its 401k savings plan.
Amounts paid in cash for interest during the nine months ended December 31,
1999 and 1998 were $635,000 and $444,000, respectively. Amounts paid for taxes
during the nine months ended December 31, 1999 and 1998 were $105,000 and
$10,000, respectively.
6
<PAGE>
5. SEGMENT INFORMATION:
The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," during fiscal year 1999. The Company does not
allocate resources and assess performance based on separate operating segments.
Therefore, the Company has determined that it currently does not have
reportable segments. Rather, the Company's resources are allocated based on
specific project needs. Sales by geographic area for the nine months ended
December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(in thousands) 12/31/99 12/31/98
- ------------------------------------------- --------- ---------
GEOGRAPHIC AREA:
United States $ 28,118 $ 49,664
- ------------------------------------------- --------- ---------
Canada 5,373 2,927
- ------------------------------------------- --------- ---------
Other International 5,796 1,707
- ------------------------------------------- --------- ---------
Total $ 39,287 $ 54,299
- ------------------------------------------- --------- ---------
</TABLE>
6. COMPREHENSIVE (LOSS) INCOME:
Comprehensive (loss) income is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. The Company's comprehensive (loss) income for the
periods presented is listed below:
<TABLE>
<CAPTION>
For the Nine Months Ended December 31,
---------------------------------------
1999 1998
---------- ---------
<S> <C> <C>
Net (Loss) Income as Reported $(989,000) $904,000
Effect of Foreign Currency Translation Loss (10,000) (88,000)
--------- --------
Comprehensive Net (Loss) Income $(999,000) $816,000
========= ========
</TABLE>
7
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
The following information should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in this
Quarterly Report and the audited Financial Statements and Management's
Discussion and Analysis contained in the Company's Form 10-K for the fiscal
year ended March 31, 1999.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationships to sales of
selected items in the Company's consolidated statements of income (unaudited)
for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended December 31, Nine Months Ended December 31,
1999 1998 1999 1998
------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Sales.................................................... 100.0% 100.0% 100.0% 100.0%
Cost of Sales............................................ 88.4 86.6 87.9 87.8
----- ----- ----- -----
Gross Profit............................................. 11.6 13.4 12.1 12.2
Selling, general and administrative expenses............. 8.9 10.5 12.7 9.7
----- ----- ----- -----
Operating Income (Loss)............................ 2.7% 2.8% (0.6%) 2.5%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO
THREE MONTHS ENDED DECEMBER 31, 1998
Sales decreased 18.1% or $3,074,000 to $13,924,000 from $16,998,000. The
decrease in sales for the three-month period is primarily related to lower
sales from the Company's power industry customers, and lower activity in repair
and rebuild projects, offset in part by growth in maintenance and field service
revenues, and by higher revenues from the Company's industrial customers.
Cost of sales decreased 16.4% or $2,409,000 to $12,314,000 from $14,723,000.
The decrease in dollars resulted from the decrease in sales volume for the
current year quarter. As a percentage of sales, cost of sales increased to
88.4% from 86.6%. The increase in percentage of sales is primarily due to a
difference in sales mix for the quarter.
Selling, general and administrative expenses decreased 30.8% or $552,000 to
$1,241,000 from $1,793,000. The decrease in dollars was primarily due to
decreased selling expense.
8
<PAGE>
As a percentage of sales, selling, general and administrative expenses
decreased to 8.9% from 10.5% in the prior year period. The decrease in
percentage was primarily a result of the above referenced decrease in selling
expense, offset in part by the effect of the decrease in sales volume.
For the reasons set forth above, operating income decreased 23.4%, or $113,000,
to $369,000, or 2.7% of sales, for the quarter, versus operating income of
$482,000, or 2.8% of sales, in the prior year quarter.
Interest and other expense, net of interest and other income, increased 116.8%,
or $153,000, to $284,000 from $131,000. The increase is primarily due to
increased borrowing during the quarter.
Income before income taxes was $85,000, or 0.6% of sales, in the current year
quarter, compared to income before income taxes of $351,000, or 2.1% of sales,
for the prior year period.
There was no provision for income taxes in either quarter reported because the
effects of the Company's net operating loss carryforwards from prior years
substantially eliminated taxes on current year income.
NINE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO
NINE MONTHS ENDED DECEMBER 31, 1998
Sales decreased 27.6% or $15,012,000 to $39,287,000 from $54,299,000. The
decrease in sales for the nine-month period are primarily related to lower
sales from the Company's power industry repair and rebuild customers, offset in
part by growth in maintenance and field service revenues, and by higher
revenues from the Company's industrial and international customers.
Cost of sales decreased 27.5% or $13,120,000 to $34,533,000 from $47,653,000.
The decrease in dollars resulted from the decrease in sales volume for the
current year period. As a percentage of sales, cost of sales was essentially
level, at 87.9%, vs. 87.8% in the prior year period.
Selling, general and administrative expenses decreased 6.0% or $320,000 to
$4,980,000 from $5,300,000. The decrease in dollars was primarily due to
decreased selling expense. As a percentage of sales, selling, general and
administrative expenses increased to 12.7% from 9.8%. The increase in
percentage was primarily a result of the above referenced decrease in sales
volume.
For the reasons set forth above, there was an operating loss of $226,000, or
0.6% of sales, for the nine month period, versus operating income of
$1,346,000, or 2.5% of sales, in the prior year period.
9
<PAGE>
Interest and other expense, net of interest and other income, increased 72.6%,
or $321,000, to $763,000 from $442,000. The increase is primarily due to
increased borrowing during the nine-month period.
Loss before income taxes was $989,000, or 2.5% of sales, in the current year
period, compared to income before income taxes of $904,000, or 1.7% of sales,
for the prior year period.
There was no provision for income taxes in either period reported because the
effects of the Company's net operating loss carryforwards from prior years
substantially eliminated taxes on current year income.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $1,077,000 and borrowings under the
Company's line of credit increased by $4.3 million during the nine months ended
December 31, 1999. This was caused principally by the $4.6 million in cash
used by operating activity during the nine months ended December 31, 1999.
Historically the Company has required minimal investment in net working capital
in contracts, but it does experience fluctuations in these amounts depending
upon the stage of completion of its various contracts and upon the payment
terms negotiated as a part of the overall original contract terms and
conditions. ("Net working capital invested in contracts" consists of accounts
and retainages receivable plus unbilled contract costs and fees, minus accounts
payable and minus billings in excess of contract costs and fees. These net
amounts were $13.1 million and $7.8 million at December 31, 1999 and March 31,
1999, respectively). The Company seeks to manage project cash flows in its
payment terms negotiations with customers and suppliers, and in adherence to
project budgets and schedules.
The Company and its bank agreed during the prior fiscal year ended March 31,
1999 to increase the Company's secured open line of credit from $10 million to
$12 million. During the nine months ended December 31, 1999, the Company and
its bank agreed to expand the line of credit to $15 million for a two-year
term.
On November 1, 1999, the Company moved the trading venue and listing of its
common shares from the New York Stock Exchange to the American Stock Exchange,
continuing to trade under the stock symbol "EEC".
The Company's backlog of unfilled orders at December 31, 1999 increased 33.1%
to $71.9 million from $54.0 million at December 31, 1998. New orders received
during the nine months ended December 31, 1999 increased 0.7% from the same
period last year, to $38.7 million. The new orders total was offset by the
cancellation in September 1999 of the construction phase of one contract
totaling $4.7 million, resulting in net orders booked totaling $34.0 million
for the nine month period. The Company believes that there has been evidence
of improvement over the past three years in the market for its products,
technologies and services, but also believes that, in the short term, the
market is exceptionally difficult to predict accurately due to regulatory and
other factors, both domestic and international in nature. The Company has
attempted to adjust its organization so that it can operate and be profitable
on highly variable business levels at or above those experienced in the current
and prior fiscal year. However, there can be no assurance that such business
levels will occur, that the Company's actions will be successful, or that
future losses would not adversely affect the Company's liquidity and capital
resource position. The Company believes it has liquidity and capital resources
sufficient to maintain its business at its current level of activity due to the
following: no significant capital expenditures are expected; historically the
Company has required little investment in operating working capital; and its
banking arrangements, i.e. those currently available and those which could be
obtained, would be adequate to maintain its ongoing business at its current
level of activity during the next year.
11
<PAGE>
YEAR 2000
The Company's process to ensure Year 2000 compliance of all software and
hardware that are date dependent, consisted of four phases:
PHASE I - SYSTEMS REVIEW. This phase involved a review of date dependent
systems and was completed in 1997. This phase included the determination that
one system no longer met the needs of the corporation and therefore should be
replaced regardless of Year 2000 concerns.
PHASE II - COMPLIANCE ASSURANCE. Completed in 1998, this phase involved
obtaining certification from principal system providers that the Company's
enterprise systems are Year 2000 compliant. The Company does not intend on
testing these systems.
PHASE III - SYSTEM REPLACEMENT. Also completed in 1998, this phase involved
bringing on line a Year 2000 compliant system to replace the system discussed
above that no longer met the needs of the corporation.
PHASE IV - HARDWARE AUDIT. Completed in early 1999, this phase tested personal
computers for Year 2000 compliance. The few non-compliant systems found are in
non-date sensitive service.
The Company has no knowledge that any of its systems, major or minor, have been
impacted since December 31, 1999. In addition, no significant expenditures
were required to achieve Year 2000 compliance that would not have been required
in the normal course of operation. The Company is not aware of any future non-
compliance that will have a material effect on its operations or result in
material remedial costs, including the risk and potential impact of non-
compliance by the Company's suppliers, subcontractors and customers. However,
there can be no absolute assurance that unanticipated non-compliance will not
occur, or that such non-compliance would not require material costs to remedy
or that it would not result in significant disruption if not remedied.
The Company has not and does not intend to develop any contingency plans to
address possible system failures related to Year 2000 compliance.
The Company provides software based control systems to its customers that are
Year 2000 compliant.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1999.
13
<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.
ENVIRONMENTAL ELEMENTS CORPORATION
(Registrant)
/s/
----------------------------------
James B. Sinclair
Senior Vice President and
Chief Financial Officer
Date: February 11, 2000
14
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
27.1 Financial Data Schedule
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 542,000
<SECURITIES> 0
<RECEIVABLES> 26,604,000
<ALLOWANCES> 299,000
<INVENTORY> 1,296,000
<CURRENT-ASSETS> 29,692,000
<PP&E> 10,205,000
<DEPRECIATION> 5,230,000
<TOTAL-ASSETS> 35,924,000
<CURRENT-LIABILITIES> 16,585,000
<BONDS> 0
0
0
<COMMON> 71,000
<OTHER-SE> 6,546,000
<TOTAL-LIABILITY-AND-EQUITY> 35,924,000
<SALES> 39,287,000
<TOTAL-REVENUES> 39,287,000
<CGS> 34,533,000
<TOTAL-COSTS> 4,980,000
<OTHER-EXPENSES> (4,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 767,000
<INCOME-PRETAX> (989,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (989,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (989,000)
<EPS-BASIC> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>