<PAGE>
FORM 10-Q. QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the period ended March 31, 1996
--------------
Commission File Number: 0-19409
-------
KRANTOR CORPORATION
(Exact name of registrant as it appears in its charter)
Delaware 22-2993066
------------------------ -------------------
(State of incorporation) (I.R.S. Employer
identification no.)
120 East Industry Ct. Deer Park, N.Y. 11729
---------------------------------------- ----------
(Address of principal executive offices) (zip code)
516-586-7500
----------------------------------------------------
(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.
[x] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. On May 5, 1996 there
were 5,017,730 shares outstanding of the registrant's common stock.
<PAGE>
KRANTOR CORPORATION
FORM 10-Q
March 31, 1995
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION Page
Balance sheets as of March 31, 1996
(Unaudited) and December 31, 1995 2 - 3
Statements of Operations for the three
months ended March 31, 1996 (Unaudited) 4
Statements of Cash Flows for the three month
period ended March 31, 1995 (Unaudited) 5 - 6
Notes to Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operation 8 - 12
PART II: OTHER INFORMATION
Item VI: Exhibits and Reports on Form 8-K 13
<PAGE>
KRANTOR CORPORATION
BALANCE SHEETS
AS OF MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 671 $ 370,000
Marketable Securities (Note 2) 13,871 13,871
Accounts Receivable - Net of allowance for doubtful accounts
of $214,620 and $313,000, respectively 6,462,813 9,465,511
Inventory 4,212,471 6,432,981
Due From officers, employees and shareholders 140,447 111,305
Other Current Assets 910,714 552,816
------------ -------------
Total Current Assets 11,740,987 16,946,484
------------ -------------
Property and Equipment - Net 952,244 834,118
------------ -------------
Advances to related party 228,718 228,718
Deferred Taxes 264,973 166,103
Other assets 168,130 143,051
------------ -------------
Total Other Assets 661,821 537,872
------------ -------------
Total Assets $ 13,355,052 $ 18,318,474
============ ==============
</TABLE>
See Accompanying Notes to Consolidated Financial Statments
2
<PAGE>
KRANTOR CORPORATION
BALANCE SHEETS
AS OF MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable (Note 4) $ 4,816,701 $ 4,621,248
Accounts payable and accrued expenses 1,507,051 6,390,375
Income taxes payable 242,215 307,854
------------ ------------
Total Current Liabilities 6,565,967 11,319,477
Notes payable due after one year 50,000 50,000
Commitments and contingencies
Stockholders' equity (Note 5):
Class A $2.20 cumulative preferred
stock - $.001 par value;
100,000 shares authorized 100 100
Common stock - $.001 par value;
14,900,000 shares authorized 4,990 4,950
Additional paid-in capital 8,591,902 8,591,758
Deficit (1,690,407) (1,480,311)
------------ ------------
6,906,585 7,116,497
Less treasury stock at cost,
35,000 shares (167,500) (167,500)
------------ ------------
Total stockholders' equity 6,739,085 6,948,997
Total Liabilities & Shareholder's Equity $ 13,355,052 $ 18,318,474
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
KRANTOR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Sales $ 13,317,057 $10,230,352
Cost of Sales 11,543,894 9,078,653
------------ -----------
Gross Profit 1,773,163 1,151,699
Selling General and Administrative Expenses 1,653,559 670,755
Depreciation and Amortization 55,488 34,872
------------ -----------
Operating Income 64,116 446,072
------------ -----------
Other Income (Expense)
Miscellaneous Income (Expense) ( 1,009) 50,084
Interest Expense (133,035) (74,265)
Financing Costs (239,042) (23,763)
------------ -----------
Total Other Expense (373,086) (47,944)
------------ -----------
Income Before Income Taxes ( 308,970) 398,128
Income Taxes ( 98,870) 130,000
------------ -----------
Net Income (Loss) $ ( 210,100) $ 268,128
============ ===========
Income Applicable to Common Stock $ (265,100) $ 263,128
============ ===========
Earnings Per Common Share $ (.05) $ .06
============ ===========
Weighted Average Number of Shares Outstanding 4,982,546 4,726,663
</TABLE>
See Accompanying Notes To Consolidated Financial Statements
4
<PAGE>
KRANTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) ($ 210,100) $ 268,128
Adjustments to Reconcile Net Income to Net Cash
Flows From Operating Activities:
Depreciation and Amortization 55,488 34,872
Amortization of Financing Costs 23,763
Non-Cash Expenses 6,000
Provision for Bad Debts (98,380) -
Changes in Operating Assets and Liabilities:
Purchase of Marketable Securities ( 238,581)
Sales of Marketable Securities 302,331
Accounts Receivable 3,101,078 (1,464,609)
Inventory 2,220,510 ( 297,985)
Prepaid Expenses
Deferred Taxes ( 98,870) 130,000
Other Current Assets ( 357,898) (64,870)
Other Assets ( 25,079) 9,726
Accounts Payable & Accrued Expenses (4,883,320) 727,053
Income Taxes Payable ( 65,639) -
------------ -----------
Net Cash Flows Used In
Operating Activities ( 362,210) ( 564,172)
Cash Flows From Investing Activities:
Purchase of Furniture and Equipment ( 13,197)
Advances - to Related Parties (173,614) ( 43,333)
Due From Officers and Shareholders (29,142) ( 750)
------------ -----------
Net Cash Flows Used In
Investing Activities (202,756) ( 57,280)
Cash Flows From Financing Activities:
Net Borrowings (Payments) on Notes Payable 195,453 569,031
Proceeds from Insurance of Common Stock 55,184 -
Cash Dividends on Preferred Stock ( 55,000) ( 5,000)
Deferred Costs -
------------ -----------
Net Cash Flows Provided by
Financing Activities 195,637 564,031
------------ -----------
Net Decrease in Cash (369,329) ( 57,421)
Cash - Beginning of Period 370,000 502,797
------------ -----------
Cash - End of Period $ 671 $ 445,376
========= ==========
</TABLE>
Unaudited - See Notes to Financial Statements
5
<PAGE>
KRANTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONT PERIODS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Period for:
Interest $ 133,035 $ 74,265
========= =========
Income Taxes Paid $ 65,639 $
========= =========
Supplemental Disclosure of Non-Cash Operating,
Investing and Financing Activities:
Prepaid Expenses paid via the distribution of registered
shares of the Company's Common Stock
through it's Compensation and Services Plan 36,000
--------- ---------
Total Non-Cash Operating, Investing and
Financing Activities $ 36,000
========= =========
</TABLE>
Unaudited - See Notes to Financial Statements
6
<PAGE>
KRANTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 1996
Note 1 - Basis of Presentation:
The December 31, 1995 balance sheet represents the prior year's audited
balance sheet and is presented for comparative purposes. In the opinion of
management, all adjustments which include only normal recurring adjustments
necessary to present fairly the financial position, results of operations and
cash flows for all periods presented have been made to the unaudited interim
financial statements. The results of operations for interim periods are not
necessarily indicative of the operating results for the full year. Footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting practices have been omitted in accordance
with the published rules and regulations of the Securities and Exchange
Commission. These consolidated financial statements should be read in
conjunction with the financial statements and notes thereto for the most recent
year end.
Note 2 - Summary of Significant Accounting Policies:
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company, Island Wholesale Grocers, Inc. ("Island"),
its wholly owned subsidiary, formed in April, 1994 and Island Frozen & Dairy
formed in May, 1995. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Net Income Per Common Share - Net income per common share is based on
the weighted average number of common shares outstanding during the periods.
When losses are incurred, warrants and options are not included since the effect
would dilute loss per share. When net income is reported, warrants and options
are included using the treasury stock method, when exercise prices are less than
the average market price.
Inventory - Inventory, consisting entirely of finished goods is stated
at the lower of cost or market determined by the first in, first-out method.
Note 3 - Preferred Dividends:
Dividends on the preferred stock in the amount of $55,000 for the three
months ending March 31, 1996 were declared and caused to be paid.
Note 4 - Revolving Line of Credit:
Pursuant to a two year loan and security agreement dated November 4,
1994, the Company is financing its accounts receivable. Under the terms of
agreement, the Company receives cash advances of up to eighty percent of its
eligible accounts receivable, as defined. The aggregate amount of outstanding
advances shall not exceed $5,000,000. The proceeds from collections of the
eligible accounts receivable are used to reduce the loan balance. On May 14th
the Company amended a loan in agreement with the Lender to include financing
Island Frozen & Dairy, increased its line to $8,000,000 and extended the
maturity to November 14, 1997.
Effective March 11, 1996 Island Frozen & Dairy entered into a financing
agreement to sell up to $5,000,000 of eligible accounts receivable. This
agreement is expected to terminate and be satisfied through the Company's
increased credit facility mentioned above.
Note 5- Shareholders Equity:
In the first quarter of 1996, the Company issued 20,000 shares of the
Company's common stock pursuant to the terms of the 1994 Services and Consulting
Compensation Plan.
Note 6 - Related Party Transactions:
There were no sales to related parties during the first three months of
1996 and 1995. Purchases from related parties during the first three months of
1996 and 1995 were approximately $307,000 and $526,000 respectively.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company is a distributor of promotional brand-name grocery, general
merchandise, Kosher Foods, Specialty Foods, and health and beauty aid products.
The Company's current assets consist primarily of accounts receivable, inventory
and cash. The Company's liabilities consist of accounts payable and short term
debt used to finance accounts receivable.
Revenues increased for the quarter ended March 31, 1996 to $13,317,057
a (30.1%) increase as compared to the prior quarter. This increase was primarily
due to the Company's expansion into the wholesale distribution of Kosher foods
and Specialty foods through its formation of Island Frozen & Dairy in May, 1995.
Cost of sales increased for the quarter ended March 31, 1996 to
$11,543,894, a $2,465,241 or (27.2%) increase as compared to the prior year.
This increase was primarily attributable to the increase in the Company's
revenues. The gross profit increased from 11.3% in 1995 to 13.3% in 1996 as a
result of the increased percentage of sales derived from the Company's wholesale
business conducted through Island Frozen & Dairy and Island Wholesale Grocers.
Selling general and administrative expenses increased for the quarter
ended March 31, 1996 to $1,653,559, a $982,804 (146.5%) increase as compared to
the prior quarter. This increase is primarily attributable to two factors: (i)
the start-up expenses associated with the recent entry of the Company into the
Kosher food and Specialty food business, and (ii) the increase of the expenses
associated with direct store distribution are much higher than warehouse
distribution costs, thereby increasing the operating expenses of the Company.
The Company had net loss of $210,100 for the first quarter of 1996 as
compared with a net profit of $268,128 in 1995. The loss is attributable to
start-up expenses that were realized in the formation of Island Frozen & Dairy.
As previously indicated, operating expenses increased by 146.5% from the prior
quarter while revenues only increased 30.1% and gross profit increased by 54.0%.
The Company's financing costs increased by $215,279 as compared to the prior
quarter. Most of the financing costs for the first quarter were one time charges
in connection with the financing of Island Frozen & Dairy. Finally, warehousing
and freight expenses for the quarter were $740,911 or 5.6% of sales as compared
to $190,000 or 1.9% of sales for the prior period. Most of the increase in costs
reflects start-up expenses in establishing the distribution system for Island
Frozen & Dairy. The distribution expenses for Island Frozen & Dairy in the first
quarter totaled $554,427 or 74.8% of total warehousing expenses. Therefore the
increased operating costs resulting from the formation and expansion of Island
Frozen & Dairy caused the losses in the first quarter.
8
<PAGE>
Liquidity and Capital Resources
As a result of the Company's recent expansion into the wholesale
segment of the food distribution industry and the high levels of inventory
needed to operate successfully in that segment, the Company has been
experiencing cash flow shortages. In particular, the Company has incurred
significant start-up costs for operations in connection with the formation of
Island Frozen & Dairy. Moreover, the wholesale business in which the Company
operates is one which is highly competitive and is characterized by the need to
maintain certain levels of inventory so that retail customers can have their
product orders filled without delay. The Company's inventory levels decreased by
34.5% from $6,432,981 at March 31, 1995 to $4,212,471 at March 31, 1996. The
decreased inventory was needed to finance Island Frozen and Dairy's working
capital needs and primarily reflects a reduction in Krantor and Island Wholesale
Grocers inventory levels.
Another reason for the Company's cash flow shortages is the manner in
which its inventory is currently converted into realized sales and final
payment. Although most of its customers are required to pay within thirty days
of product delivery, the Company, for competitive reasons, makes advance
purchases of inventory in order to quickly meet retail demand and take advantage
of promotional buying opportunities. Additionally, certain customer accounts are
not always paid up during the thirty day period. These factors extend the time
between the original purchase of goods from manufacturers and the eventual cash
collection from its retail customers to a period which is sometimes well beyond
thirty days. The Company is taking steps to shorten its collection cycle, but
there can be no assurance that these steps will be successful.
The Company's receivables for the first quarter decreased by 31.7% to
$6,462,813. The reduction in receivables is primarily attributable to a decrease
in revenues by Krantor Corporation and Island Wholesale Grocers in order to
finance the start-up and working capital requirements of Island Frozen & Dairy.
The Company believes that it can successfully operate its Island Frozen
and Dairy business at its current working capital levels. It will continue to
experience cash shortages on its Island Wholesale Grocers and Krantor business
until it is able to secure additional financing to expand this segment of the
business. The Company has successfully dealt with this problem in the past by
securing temporary loans or short-term extensions of payments from creditors,
though there can be no assurances that the Company will be able to continue to
do so in the future. The Company's creditors are, in many instances, suppliers
of products and the cash shortages experienced by the Company have on occasion
adversely impacted the credit terms these suppliers have been willing to extend
to the Company.
The Company believes it will need additional financing in the form of
subordinated debt or equity to finance its expansion plans and to alleviate the
cash shortages it continues to experience. If the Company fails to obtain such
financing, it may have to reduce the volume of its existing business and may not
be able to further implement its expansion plans. See "Forward-Looking
Information and Cautionary Statements."
The Company has consolidated its agreements with two lending
institutions through a single agreement with one of those institutions. The
current consolidated lending facility provides for a total of $8 million from
Fidelity Funding of California, Inc. ("Fidelity"). Under the facility, the
Company may borrow up to the lesser of $8 million or 80% of eligible accounts
receivables. This line funds sales activities for Krantor Corporation and its
wholly owned subsidiary, Island Wholesale Grocers, Inc. And Island Frozen &
Dairy.
As of March 31, 1996, the Company had approximately $3,859,000
available under the facility for additional borrowing. The facility, which
expires in November 1996, was extended on May 11, 1996 through November 11, 1997
by Fidelity.
9
<PAGE>
Liquidity and Capital Resources (cont'd)
In March 1996, AIG entered into a financing agreement with Allstate
Financial Corporation ("Allstate"), pursuant to which AIG secured a $5 million
credit facility to facilitate the growth of its Kosher food and Specialty food
business. This credit facility permits AIG to sell its eligible accounts
receivable to Allstate against an advance of 75-80%. Interest is charged from
the sale of the eligible account at the rate of 2% for the first thirty days and
1% every 15 days thereafter. This facility is expected to terminate and be
satisfied by Fidelity pursuant to the May 11, 1996 Loan and Security Agreement.
Management is not aware of negative trends in the Company's area of business or
other economic factors which may cause a significant change in the Company's
viability or financial stability, except as specified herein and in
"Forward-Looking Information and Cautionary Statements." Management has no plans
to alter the nature of its business, other than by the continued expansion of
its wholesale operations. The Company anticipates spending on capital
expenditures in connection with its Island Frozen and Dairy expansion.
Subject to available financing, the Company intends to further expand its
business by purchasing and maintaining short-term inventories of well accepted,
readily marketable brand-name products. The Company believes that by warehousing
these products it will be able to make larger purchases during manufacturers'
promotional periods, gain better access to some product promotions ordinarily
reserved for higher volume purchasers, increase sales by having more inventory
available for shipment on demand, and thereby expand its customers and supplier
base. However, there can be no assurance that the Company's proposed expansion
plan will be successful. The Company needs to enhance its leverage so that it
can expand. Additional working capital is required beyond the current available
financing in order for the Company to continue its expansion.
Seasonality
Seasonality affects the demand for certain products sold by the
Company, such as juice drinks in the summer months or hot cereals in fall and
winter months; however, all these products are available to the Company
throughout the year. Manufacturers also tend to promote more heavily towards the
close of the fiscal quarters and during the spring and early summer months.
Accordingly, the Company is able to purchase more product and increase sales
during these periods and reduce its product cost due to these promotions. The
Company generally experiences lower sales volume in the fourth quarter due to
the reduced number of selling days resulting from the concentration of holidays
in the quarter.
Seasonality also affects the demand for certain of the Kosher food
products sold by Island Frozen and Dairy. In particular, the Kosher food
industry is characterized by three peak sale periods in which sales of Kosher
food increases rather substantially. The three seasonal sales peaks are in
March/April (Passover), September/October (Rosh Hashannah/Yom Kippur) and
December (Hanukkah).
Inflation
The Company believes that inflation, under certain circumstances, could
be beneficial to the Company's business. When inflationary pressures drive
product costs up, the Company's customers sometimes purchase greater quantities
of product to expand their inventories to protect against further pricing
increases. This enables the Company to sell greater quantities of products that
are sensitive to inflationary pressures. However, this will be beneficial to the
Company only if it is able to pass on to its customers the increase in prices it
must pay to suppliers.
Additionally, inflationary pressures frequently increase interest
rates. Since the Company is dependent on sustantial debt, any increase in
interest rates will increase the Company's credit costs, thereby reducing its
profits unless these additional credit costs can also be passed on to the
Company's customers.
10
<PAGE>
Forwarding-Looking Information and Cautionary Statements
Other than the factual matters set forth herein, the matters and items
set forth in this report are forward- looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, the following:
1. Termination or Alteration of Supplier or Customer
Relationships.
The Company does not have any written agreements with any of
its suppliers or customers. These companies could terminate
their relationship or substantially reduce the volume of
business with the Company at any time. Although the Company
does not have any customers which represent more than 10% of
its gross revenues, the Company has one supplier, Empire,
which represents a significant portion of its business and
which could not be easily replaced if the relationship were
terminated or purchases from this supplier were substantially
reduced.
2. Cash Flow.
The Company has experienced cash shortages which have
adversely affected its business recently. See "Liquidity and
Capital Resources" above.
3. Dependence on Public Trends.
The Company's business is subject to the effects of changing
customer preferences and the economy, both of which are
difficult to predict and over which the Company has no
control. A change in either consumer preferences or a
down-turn in the economy may affect the Company's business
prospects.
4. Potential Product Liability.
As a participant in the distribution chain between the
manufacturer and consumer, the Company would likely be named
as a defendant in any products liability action brought by a
consumer. To date, no claims have been asserted against the
Company for products liability; there can be no assurance,
however, that such claims will not arise in the future.
Accordingly, the Company maintains a products liability of
$10,000,000 per occurrence. In the event that any products
liability claim is not fully funded by insurance, and if the
Company is unable to recover damages from the manufacturer or
supplier of the product that caused such injury, the Company
may be required to pay some or all of such claim from its own
funds. Any such payment could have a material adverse impact
on the Company.
5. Reliance on Common Carriers.
The Company does not utilize its own trucks in its business
and is dependent, for shipping of product purchases, on common
carriers in the trucking industry. Although the Company uses
several hundred common carriers, the trucking industry is
subject to strikes from time to time, which could have
material adverse effect on the Company's operations if
alternative modes of shipping are not then available.
Additionally the trucking industry is susceptible to various
natural disasters which can close transportation lanes in any
given region of the country. To the extent common carriers are
prevented from or delayed in utilizing local transportation
lanes, the Company will likely incur higher freight costs due
to the limited availability of trucks during any such period
that transportation lanes are restricted.
11
<PAGE>
Forwarding-Looking Information and Cautionary Statements
6. Competition.
The Company is subject to competition in both its promotional
and wholesale businesses. While the promotional industry is
highly fragmented, with no one distributor dominating the
industry, the Company is subject to competitive pressures from
other promotional distributors based on price and service.
In the Kosher foods segment of its wholesale business, the
Company is the largest national distributor of Empire Kosher
Poultry, Inc. ("Empire") frozen chicken products. Its
principal competitor in this area is Hebrew National Poultry
Products ("Hebrew National"). A concerted effort by Hebrew
National to compete more vigorously in the Northeast region
with Empire could have a material adverse effect on the
Company so long as the Company is subject to competition from
other smaller distributors in the remaining areas of its
wholesale delivery business principally based on price and
service.
12
Part II-Other Information
Item 6-Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) There were no reports filed on Form 8-K for the relevant period
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000870228
<NAME> KRANTOR CORPORATION
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 671
<SECURITIES> 13,871
<RECEIVABLES> 6,462,813
<ALLOWANCES> 0
<INVENTORY> 4,212,471
<CURRENT-ASSETS> 11,740,987
<PP&E> 952,244
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,355,052
<CURRENT-LIABILITIES> 6,565,967
<BONDS> 0
0
100
<COMMON> 4,999
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,355,052
<SALES> 13,317,057
<TOTAL-REVENUES> 13,317,057
<CGS> (11,543,894)
<TOTAL-COSTS> (1,709,047)
<OTHER-EXPENSES> (373,086)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (133,035)
<INCOME-PRETAX> (308,970)
<INCOME-TAX> (98,870)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (210,100)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
