U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
|X| Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the Quarterly Period Ended September 30, 1998
|_| Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the Transition Period from ________________ to_______________
Commission file number: 0-19503
BENTLEY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MEGACARDS, INC.
(Former name of registrant)
Missouri 43-1325291
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
9719 Conway Road 63124
St. Louis, Missouri (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (314) 569-1659
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 |_|.
On October 23, 1998, the registrant had 2,963,285 outstanding shares of Common
Stock, $.18 par value.
Transitional Small Business Disclosure Format (Mark one): Yes |_| No|X|.
<PAGE>
BENTLEY INTERNATIONAL, INC.
FORM 10-QSB
INDEX
Page
PART I -- CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements..................................1
Consolidated Balance Sheets -- September 30, 1998
and December 31, 1997..............................................1
Consolidated Statements of Operations -- Three Months
Ended September 30, 1998 and 1997 and Nine Months
Ended September 30, 1998 and 1997..................................2
Consolidated Statements of Cash Flows -- Nine Months Ended
September 30, 1998 and 1997........................................3
Notes to Consolidated Financial Statements.........................4
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation...........................................7
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings..................................................9
ITEM 2. Changes in Securities and Use of Proceeds..........................9
ITEM 4. Submission of Matters to a Vote of Security Holders...............10
ITEM 6. Exhibits and Reports on Form 8-K..................................10
SIGNATURE....................................................................12
FINANCIAL DATE SCHEDULE
<PAGE>
PART I -- CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
<TABLE>
BENTLEY INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEET
Assets
<CAPTION>
September 30,
1998 December 31,
(Unaudited) 1997
----------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 4,918,118 $ 9,332
Accounts receivable 8,079 --
Note receivable 1,500,000 --
Investment in common stock 905,000 --
Other current assets 43,867 --
Net assets from discontinued segment
(Note 3) -- 2,182,370
- -------------------------------------------------------------------------
Total Current Assets 7,375,064 2,191,702
Equipment And Leasehold Improvements 24,603 --
Other Assets 133,523 69,800
- -------------------------------------------------------------------------
$ 7,533,190 $ 2,261,502
=========================================================================
Liabilities And Stockholders' Equity
Current Liabilities
Accounts payable and accrued
expenses $ 971,084 $ 343,393
Notes payable -- 320,005
Income taxes payable 818,500 --
- -------------------------------------------------------------------------
Total Current Liabilities 1,789,584 663,398
- -------------------------------------------------------------------------
Shareholders' Equity
Preferred stock, $0.01 par value;
1,000,000 shares authorized, none
issued or outstanding -- --
Common stock, $0.18 par value;
10,000,000 shares authorized,
2,963,285 and 2,813,285 shares
issued and outstanding at September
30, 1998 and December 31, 1997,
respectively 533,391 506,391
Additional paid-in capital 2,378,178 1,500,178
Retained earnings (deficit) 2,832,037 (408,465)
- --------------------------------------------------------------------------
Total Shareholders' Equity 5,743,606 1,598,104
- --------------------------------------------------------------------------
$ 7,533,190 $ 2,261,502
================================================================================
See accompanying Notes to Financial Statements
</TABLE>
Page 1
<PAGE>
<TABLE>
BENTLEY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
For The Three Months For The Nine Months
Ended September 30, Ended September 30,
---------------------- ---------------------
1998 1997 1998 1997
----------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 20,995 $ -- $ 26,857 $ --
Cost Of Sales -- -- -- --
- --------------------------------------------------------------------------------
Gross Margin 20,995 -- 26,857 --
Selling, General And
Administrative Expenses 133,206 65,319 282,503 262,373
- --------------------------------------------------------------------------------
Operating Loss (112,211) (65,319) (255,646) (262,373)
Interest Expense (2,449) (9,999) (10,906) (43,339)
Other Income 103,776 -- 235,167 57,026
- --------------------------------------------------------------------------------
Loss From Continuing
Operations (10,884) (75,318) (31,385) (248,686)
Discontinued Operations
(Note 3)
Income from discontinued
Operations 241,076 404,944 1,121,688 1,148,543
Gain on sale of
discontinued segment(net
of tax of $818,500) 2,150,196 -- 2,150,196 --
- --------------------------------------------------------------------------------
Net Income $2,380,388 329,626 $3,240,499 899,857
================================================================================
Earnings (Loss)Per Common
Share -
Basic
Continuing operations $ (0.00) $ (0.03) $ (0.01)$ (0.09)
Discontinued operations 0.81 0.15 1.12 0.41
- --------------------------------------------------------------------------------
$ 0.81 $ 0.12 $ 1.11 $ 0.32
================================================================================
Earnings(Loss) Per Common
Share -
Assuming Dilution
Continuing operations $ (0.00) $ (0.03) $ (0.00)$ (0.09)
Discontinued operations 0.78 0.15 1.07 0.41
- --------------------------------------------------------------------------------
$ 0.78 $ 0.12 $ 1.07 $ 0.32
================================================================================
See accompanying Notes to Financial Statements
</TABLE>
Page 2
<PAGE>
<TABLE>
BENTLEY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For The Nine Months
Ended September 30,
------------------------
1998 1997
------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 3,240,499 $ 899,857
Adjustments to reconcile net income
to net cash provided by operating
activities of continuing operations:
Income from discontinued operations (1,121,688) (1,148,543)
Gain on sale of discontinued s (2,150,196) --
Depreciation and amortization 5,959 --
Net change in assets and liabilities:
(Increase) decrease in accounts
receivable (8,079) 48,175
(Increase)decrease in other assets (43,867) 21,000
Increase (decrease) in accounts
payable and other liabilities (203,808) 83,370
- -------------------------------------------------------------------------
Net Cash Used In Operating Activities Of
Operations (281,180) (96,141)
Net cash provided by discontinued
Operations 503,264 1,278,583
- -------------------------------------------------------------------------
Net Cash Provided By Operating Activities 222,084 1,182,442
- -------------------------------------------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of discontinued
segment 4,946,000 --
Net cash used in investing activities
of operations (114,545) (87,017)
Capital expenditures (13,511) --
Proceeds from notes receivable -- 110,000
Acquisition of subsidiary (80,772) --
- -------------------------------------------------------------------------
Net Cash Provided By Investing Activities 4,737,172 22,983
- -------------------------------------------------------------------------
Cash Flows From Financing Activities
Net proceeds from (payments on) line of
credit
discontinued operations 269,535 (1,280,194)
Payments on long-term debt
- discontinued -- (66,867)
Payments on notes payable (320,005) --
- --------------------------------------------------------------------------
Net Cash Used In Financing Activities (50,470) (1,347,061)
- --------------------------------------------------------------------------
Net Increase (Decrease) In Cash 4,908,786 (141,636)
Cash - Beginning Of Period 9,332 239,017
- --------------------------------------------------------------------------
Cash - End Of Period $ 4,918,118 $ 97,381
==========================================================================
See accompanying Notes to Financial Statements
</TABLE>
Page 3
<PAGE>
BENTLEY INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
The accompanying interim financial statements are unaudited, but, in the opinion
of management, reflect all adjustments (consisting only of normal recurring
accruals) necessary for this presentation. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
Reference is hereby made to the consolidated financial statements, including the
notes thereto, contained in the Company's annual Report on Form 10-KSB for the
year ended December 31, 1997. The results of operations for the nine-month
period ended September 30, 1998 are not necessarily indicative of the results to
be expected for the year ending December 31, 1998.
1. Basis Of Consolidation
The consolidated financial statements include the accounts of Bentley
International, Inc. (the "Company") and its wholly-owned subsidiaries, Windsor
Art, Inc. ("Windsor") (see Note 3), Janco Design, Inc. ("Janco") (see Note 3),
Bentley Information Services, Inc. ("BIS") and Alnick Realty Company, Inc.
("Alnick"). All significant intercompany transactions have been eliminated
from the consolidated financial statements.
2. Nature Of Operations
Bentley International, Inc. ("Bentley"), formerly Megacards, Inc., designed,
repackaged and marketed sports picture cards produced by major sports picture
card manufacturers and marketed sports picture card accessories. Megacards,
Inc. became Bentley in June 1996 as the Board of Directors believed that the
change of the corporate name would better reflect the broadening of the scope
of the business of the Company. Windsor manufactures and distributes
decorative mirrors and framed prints to furniture stores, mass merchants,
hotels and designers throughout the United States. During 1996, Bentley
discontinued its Janco product line of framed prints and mirrors and sold its
sports picture card business segment in order to reduce costs and to improve
its liquidity position. On July 30, 1998, the Company sold all of the
outstanding shares of stock of Windsor Art, Inc. (see Note 3).
In May 1998, the Company purchased certain assets of a credit bureau company
for $75,000 and formed Bentley Information Services, Inc. The acquisition was
accounted for as a purchase.
3. Discontinued Operations
On July 30, 1998, the Company sold its Windsor Art subsidiary. The Company
sold all of the outstanding common stock of Windsor to Interiors, Inc.
("Interiors"). The consideration for the stock of Windsor was: a) $1,700,000
in cash, b) a $2,000,000 secured promissory note payable over four years
with interest at 8% per annum, and a discount of $500,000 if paid by September
30, 1998, and c) a $3,300,000 secured, short-term promissory note, due
September 30, 1998 with interest at 8% per annum. The short-term note required
a $300,000 payment on July 30, 1998. The short-term note was repaid as
scheduled on September 30, 1998.
In connection with the purchase of Windsor, Interiors also purchased 150,000
shares of common stock of the Company for 750,000 shares of its common stock
and purchased a warrant to purchase 300,000 shares of common stock of the
Company for an additional 750,000 shares of its common stock. If certain
events occur prior to December 31, 1998, Interiors has the option, but not the
obligation, to reacquire its shares from the Company for $1,625,000 by
December 31, 1998. In addition, if prior to December 31, 1998, Interiors
consummates an underwritten public offering of Interiors stock pursuant to a
registration statement declared effective under the Securities Act of 1933, as
amended, in which the aggregate gross proceeds (before underwriting fees,
commissions and discounts) are at least $15,000,000, then Interiors has the
obligation, and not the option, to repurchase the shares of Interiors for
$1,625,000.
Page 4
<PAGE>
In connection with the sale of Windsor, Bentley entered into agreements with
certain key employees of Windsor providing for their receipt of a portion of
the Interiors' stock received by Bentley, plus a participation in payments
received on the Interiors' notes. Since a substantial portion of the
consideration received by Bentley in connection with the sale of Windsor was
in the form of notes and Interiors' stock, Bentley's management deemed it in
the company's interest to provide key Windsor employees an economic incentive
to remain employed by Windsor, and endeavor to preserve Windsor's value, which
serves as Bentley's security for the Interiors' notes. To receive the
Interiors' stock and the note participation payments, the key Windsor
employees must remain employed by Windsor through July of 1999 or through the
date of the note payments. A portion of the note participation has been paid,
or is owed to such employees, as a result of Interiors' repayment of the
$3,300,000 note as scheduled on September 30, 1998. All amounts paid or owed
to such employees are reflected in the financial statements contained herein.
On December 27, 1996, Janco discontinued its operations due to historical
losses in an effort to reduce costs and improve overall liquidity of the
Company. Certain assets of Janco consisting of inventory and equipment were
sold to a third party prior to December 31, 1996.
On January 24, 1997, an involuntary bankruptcy case was filed against Janco,
and on February 18, 1997, Janco consented to the involuntary filing, as a
Chapter 7 debtor. As reported on Form 8-K, filed by the Company January 26,
1998, the Bankruptcy Trustee, Bentley, certain shareholders who held
promissory notes of which Janco was the maker and Bentley and Windsor were the
guarantors ("Noteholders") and other parties related to such shareholders
entered into a stipulation for settlement agreement pursuant to which Bentley
agreed to pay, subject to court approval of the stipulation agreement to the
bankruptcy estate, $85,000 in exchange for a full release of Bentley, Windsor,
certain of Bentley's shareholders and certain present and past officers and
directors from all claims of the Trustee. In addition, the bankruptcy estate
agreed to pay to the noteholders one-half of the proceeds from the liquidation
of certain assets of Janco, approximately $45,000. The court approved the
stipulation agreement on February 27, 1998. The release of liability of the
Company by the Trustee resulted in a $1,258,838 reduction of the Company's
general liabilities. As a result of the reduction in liabilities and the
elimination of the reserves established to cover potential liability resulting
from the termination of Janco, an extraordinary gain was recognized at
December 31, 1997.
Windsor revenues were $1,321,689 and $3,293,785 for the three months ended
September 30, 1998 and 1997, respectively, and $8,262,934 and $9,433,692 for
the nine months ended September 30, 1998 and 1997, respectively. Revenues for
Windsor for three months and nine months ended September 30, 1998 include
activity through the date of sale of July 30, 1998. Janco had no operating
activity in the aforementioned periods. The net assets of Windsor in the
accompanying consolidated balance sheet at December 31, 1997 consisted of the
following:
<TABLE>
<S> <C>
Cash $ 91,197
Receivables, net 1,886,527
Inventories 1,824,908
Other current assets 83,621
-------------
3,886,253
Equipment and leasehold
improvements 190,381
-------------
4,076,634
-------------
Current liabilities 1,596,137
Other long-term liabilities 298,127
-------------
1,894,264
-------------
Net assets from
discontinued operations $ 2,182,370
=============
</TABLE>
The net operating activity of Windsor after the measurement date through July
30, 1998 was not significant.
Windsor Art and Janco (decorative mirror and framed art business segment) are
accounted for as discontinued operations in the accompanying consolidated
financial statements.
Page 5
<PAGE>
4. Earnings Per Common Share
For the nine months ended September 30, 1998 and 1997, the computation of
basic and diluted earnings per common share is as follows:
<TABLE>
1998 1997
----------------------------
<S> <C> <C>
Numerator for basic and diluted
per share - income available to
shareholders $ 3,240,499 $ 899,857
==============================================================================
Denominator:
Weighted average number of
common shares used in basic EPS 2,930,318 2,813,285
Effect of dilutive securities:
Common stock options 136,160 --
- ------------------------------------------------------------------------------
Weighted number of common shares
and potential common stock
used in diluted EPS 3,066,478 2,813,285
==============================================================================
</TABLE>
For the nine months ended September 30, 1997, common stock options were
not included in diluted EPS because their effect was antidilutive.
5. Legal Proceedings
A shareholder of the Company filed a lawsuit against the Company on
September 29, 1998 in the Circuit Court of St. Louis County, Missouri,
asking for a judgment in his favor against the Company in the amount of
the "fair value" as of July 1, 1998, of 30,420 shares allegedly owned
individually and 423,500 shares allegedly held in the name of a Voting
Trust Agreement dated July 17, 1995 (the "Voting Trust"). The shareholder
alleges that he is entitled to such a judgment pursuant to Mo. Rev. Stat.
Sec.351.405 in connection with the sale of the Company's subsidiary,
Windsor Art, Inc. ("Windsor"), which represented substantially all of the
assets of the Company. The sale of Windsor was approved at the annual
meeting of the Company's shareholders on July 2, 1998. Section 351.405
requires a company to purchase the shares of any shareholder who at or
prior to the meeting at which the sale of substantially all of the assets
of the company was approved filed with the company written objection
thereto, who did not vote in favor of such sale and who subsequently makes
a timely demand for purchase of such shares by the company. Management of
the Company believes that the Company is not required to purchase the
423,500 shares allegedly held in the Voting Trust because such shares were
voted in favor of the sale. The Company will defend vigorously the
Company's position in court.
Two other shareholders also filed suit on September 29, 1998 in the
Circuit Court of St. Louis County, Missouri, contending that the Company
is required to purchase their shares for the "fair value" of the shares in
connection with the sale of Windsor under Sec. 351.405, alleging that they
own 98,115 and 86,335 shares, respectively. The Company believes that the
respective claims of the two shareholders are separate and distinct. The
notice required by Sec. 351.405 objecting to the sale with respect to one
shareholder's alleged 98,115 shares was not received until after the
meeting at which the vote on the sale of Windsor was held. Therefore,
management believes that the Company is not required to repurchase these
shares and will defend vigorously the Company's position in court.
As part of the same suit, the shareholders also brought a shareholders'
derivative suit against the three directors of the Company. The plaintiffs
claim that the Directors breached their fiduciary obligations to the
shareholders, including the plaintiffs, by causing the Company to repay
notes of Janco Designs, Inc., a subsidiary of the Company, in the amount
of $450,000 to certain trusts of which one Director and others are
trustees. The plaintiffs also claim that the trusts were unjustly enriched
by the repayment of the notes and that it would be inequitable for the
trusts to retain the $450,000 repaid to them. Management of the Company
Page 6
<PAGE>
believes that the notes were properly repaid because they were secured by
Windsor's assets and guaranteed by Windsor and the Company. The Company
will defend vigorously the Company's position in court.
The suit also alleges a derivative claim that the president of the Company
breached a fiduciary duty to the shareholders in connection with the sale
of the Company's wholly-owned subsidiary, Windsor, to Interiors, Inc.
("Interiors") by entering into a consulting agreement with Windsor and
Interiors. Management believes that the consideration the president is
entitled to receive pursuant to the terms of the consulting agreement is
appropriate in exchange for the services which he has agreed to provide to
both Windsor and Interiors and for the covenants regarding noncompetition
and other matters made by him in the agreement. The Company will defend
vigorously the Company's position in court.
The ultimate resolutions of the lawsuits are not within the Company's
control. The court's decision with regard to the validity of the claims
made by the three shareholders and the valuation of their claims could
cause materially different results from those believed likely by
management.
6. Subsequent Events
Bentley's management became concerned about the preservation of the
security for the repayment of the Interiors $2,000,000 note and the future
value of the Interiors' stock held by the Company when such stock can be
sold by the Company in August of 1999, as a result of the relocation of
Windsor, the commingling of certain operations of Windsor's business with
other divisions of Interiors, Interiors' failure to enter into employment
agreements with key employees of Windsor, and the financial condition of
Interiors. Therefore, on November 2, 1998, the Company accepted a proposal
from Interiors to exchange $2,565,000 in cash, plus the 150,000 shares of
Bentley and the warrants for 300,000 shares of Bentley owned by Interiors
in exchange for 1,400,000 shares of Interiors' stock, satisfaction of
Interiors' obligation on the $2,000,000 note, and Windsor's and Interiors'
release from their obligations under the consulting agreement with Lloyd
Abrams. Closing of the transaction is conditioned upon Interiors tendering
the consideration on or before December 2, 1998. The Company had engaged
the services of a consultant to advise the Company regarding the Interiors
proposal, and the consultant is also performing an analysis to advise the
Company regarding the value of Mr. Abrams' consulting agreement.
On November 12, 1998, the Company acquired all of the outstanding common
stock of Residential Mortgage Credit Reporting, Inc. ("RMCR"), a credit
reporting agency, for $300,000 in cash, plus 120,000 shares of common
stock of the Company. Pursuant to the terms of the acquisition agreement
the former owner of RMCR has the right to require the Company to
repurchase the 120,000 shares for $300,000 if the value of Bentley common
stock does not exceed two dollars and fifty cents ($2.50) per share on the
twelve month anniversary of the acquisition closing date. The acquisition
will be accounted for as a purchase.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company's notification of approximately 2,000 privately owned credit
reporting agencies throughout the United States of its interest to acquire such
businesses produced over 100 responses and has resulted in Bentley's acquisition
of two credit reporting agencies, consistent with Bentley's plan to change its
business from the framed art and mirror business of its former subsidiary,
Windsor Art, Inc. ("Windsor"), which represented substantially all of its
assets, to the information services businesses of its two new subsidiaries. In
May of 1998, Bentley formed a new operating subsidiary, Bentley Information
Services, Inc. ("BIS"), which acquired certain assets of a credit reporting
agency situated in Florida. BIS commenced operations on May 27, 1998. In a
subsequent event, on November 12, 1998, Bentley acquired all of the outstanding
common stock of Residential Mortgage Credit Reporting, Inc. ("RMCR"). RMCR
currently operates in California, Arizona, New Mexico and Colorado, and BIS
operates in Missouri, Illinois and Florida. Management plans to expand these
businesses in the states where they are operating and on a nation-wide
Page 7
<PAGE>
basis, while continuing to explore other acquisition opportunities in the
specialty marketing and information services businesses. Management expects
these acquisitions and the expansion of their current businesses to produce a
trend toward increased net sales, revenue and income and that there will be a
high return on the Company's capital, resulting in a continued strong liquidity
position. While management believes that this business plan has a high
likelihood of success, there can be no assurance that management's plan will
have the desired results given economic conditions, product and service demands,
competitive pricing and other factors.
The $3,300,000 short term note received in the sale of Windsor on July 30,
1998, pursuant to a Stock Purchase Agreement executed on July 7, 1998 with
Interiors, Inc., has been repaid on schedule. The transaction and anticipated
use of proceeds were described in more detail in Bentley's Form 10-QSB for June
30, 1998 as a subsequent event, which is incorporated herein by reference.
On September 29, 1998, Bentley was sued by three shareholders. The
litigation is described in more detail in footnote 5 to the financial statements
and in Part II, Item 1 regarding litigation. It is currently not possible to
give a reasonable estimate of the Company's exposure in these lawsuits.
Management does not believe, however, that the litigation will significantly
interfere with its plans to expand the credit reporting business or with its
liquidity, net sales, revenue or income. The ultimate resolutions of the
lawsuits, however, are not within the Company's control. The court's decision
with regard to the validity of the claims made by the three shareholders and the
valuation of their claims could cause materially different results from those
believed likely by management.
Results of Operations
On July 30, 1998 the Company sold its main operating subsidiary Windsor Art,
Inc., which represented substantially all of the operations of the Company. All
of Windsor's operations have been presented as discontinued operations for all
periods presented in the accompanying condensed consolidated financial
statements.
Continuing operations
Continuing operations consists of the activities of the credit reporting
business segment and income and expenses of the holding company.
BIS was formed on May 26, 1998 and revenues for the three months ended September
30, 1998 were $20,995. For the period May 26, 1998 through September 30, 1998
revenues were $26,857. BIS was not part of the Company in the comparable periods
of 1997.
Operating expenses increased from $65,319 to $133,206 for the three months ended
September 30, 1998 and from $262,373 to $282,503 for the nine months ended
September 30, 1998 as compared to the same periods in 1997. This increase was
due to increases in professional fees and costs associated with the potential
acquisitions of businesses.
Other income increased for both the three months ended and nine months ended
September 30, 1998 as compared to the same periods in 1997 due to investment
earnings from the proceeds of the sale of Windsor and the reduction of
liabilities related to a canceled lease obligation.
Discontinued Operations
Income from discontinued operations decreased for both the three and nine months
ended September 30, 1998 as compared to the same periods in 1997. This decrease
was caused since 1998 activity ended on July 30, 1998, the date of the sale of
Windsor. Discontinued operations also include, for 1998, a gain on the sale of
Windsor after expenses and income taxes of $2,150,196.
Liquidity and Capital Resources
As a result of the sale of Windsor, the Company's cash and cash equivalents at
September 30, 1998 was $4,918,118. Also as part of the sale the Company took
back a note receivable valued at $1,500,000 which is expected to be paid in the
near future. Cash generated from the sale of Windsor was $4,946,000. In
addition, cash generated from all operations decreased from $1,182,442 to
$222,084 for the nine months ended September 30, 1998 as compared to the
Page 8
<PAGE>
same period in 1997. This decrease was caused by significant increases in
inventories and accounts receivable of the Company's discontinued operations at
July 30, 1998 as compared to December 31, 1997.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Leo M. Rodgers, III, a shareholder of the Company, filed a lawsuit against
the Company on September 29, 1998 in the Circuit Court of St. Louis County,
Missouri, asking for a judgement in his favor against the Company in the amount
of the "fair value" as of July 1, 1998, of 30,420 shares allegedly owned
individually by Mr. Rodgers and 423,500 shares allegedly held in the name of
Lloyd R. Abrams, Trustee under a Voting Trust Agreement dated July 17, 1995 (the
"Voting Trust"), of which Mr. Rodgers alleges he is the beneficial owner. Mr.
Rodgers alleges that he is entitled to such a judgement pursuant to Mo. Rev.
Stat. Sec. 351.405 in connection with the sale of the Company's subsidiary,
Windsor Art, Inc. ("Windsor"), which represented substantially all of the assets
of the Company. The sale of Windsor was approved at the annual meeting of the
Company's shareholders on July 2, 1998. Section 351.405 requires a company to
purchase the shares of any shareholder who at or prior to the meeting at which
the sale of substantially all of the assets of the company was approved filed
with the company written objection thereto, who did not vote in favor of such
sale and who subsequently makes a timely demand for purchase of such shares by
the company. Management of the Company believes that the Company is not required
to purchase the 423,500 shares allegedly held in the Voting Trust because such
shares were voted in favor of the sale. The Company will defend vigorously the
Company's position in court.
Two other shareholders, Andrew Wolfson and Stephan Juskewycz, also filed
suit on September 29, 1998 in the Circuit Court of St. Louis County, Missouri,
to require the Company to purchase their shares for the "fair value" of the
shares in connection with the sale of Windsor under Sec. 351.405, alleging that
they own 98,115 and 86,335 shares, respectively. The Company believes that the
respective claims of the two shareholders are separate and distinct. The notice
required by Sec. 351.405 objecting to the sale with respect to Mr. Wolfson's
alleged 98,115 shares was not received until after the meeting at which the vote
on the sale of Windsor was held. Therefore, management believes that the Company
is not required to repurchase Mr. Wolfson's shares and will defend vigorously
the Company's position in court.
As part of the same suit, Messrs. Wolfson and Juskewycz also brought a
shareholders' derivative suit against the three directors of the Company, Mr.
Abrams, Ramakant Agarwal and Janet L. Salk. The plaintiffs claim that the
Directors breached their fiduciary obligations to the shareholders, including
the plaintiffs, by causing the Company to repay notes of Janco Designs, Inc., a
subsidiary of the Company, in the amount of $450,000 to certain trusts of which
Mr. Abrams, Richard B. Rothman and Patricia Rothman are trustees. The plaintiffs
also claim that the trusts were unjustly enriched by the repayment of the notes
and that it would be inequitable for the trusts to retain the $450,000 repaid to
them. Management of the Company believes that the notes were properly repaid
because they were secured by Windsor's assets and guaranteed by Windsor and the
Company. The Company will defend vigorously the Company's position in court.
Messrs. Wolfson and Juskewyez's suit also alleges a derivative claim that
Mr. Abrams breached a fiduciary duty to the shareholders in connection with the
sale of the Company's wholly owned subsidiary, Windsor, to Interiors, Inc.
("Interiors") by entering into a consulting agreement with Windsor and
Interiors. The consulting agreement is described in detail in the Company's Form
8-K dated July 30, 1998 which is hereby incorporated by reference. Management
believes that the consideration Mr. Abrams is entitled to receive pursuant to
the terms of the consulting agreement is appropriate in exchange for the
services which Mr. Abrams has agreed to provide to both Windsor and Interiors
and for the covenants regarding noncompetition and other matters made by Mr.
Abrams in the agreement. The Company will defend vigorously the Company's
position in court.
The ultimate resolutions of the lawsuits are not within Bentley's control.
The court's decision with regard to the validity of the claims made by the three
shareholders and the valuation of their claims could cause materially different
results from those believed likely by management.
Item. 2 Changes in Securities and Use of Proceeds
Page 9
<PAGE>
On November 12, 1998, the Company acquired all of the outstanding common
stock of Residential Mortgage Credit Reporting, Inc. ("RMCR"), a credit
reporting agency, from its sole owner, for $300,000 in cash, plus 120,000 shares
of common stock of the Company. Pursuant to the terms of the acquisition
agreement the former owner of RMCR has the right to require the Company to
repurchase the 120,000 shares for $300,000 if the value of Bentley common stock
does not exceed two dollars and fifty cents ($2.50) per share on the twelve
month anniversary of the acquisition closing date. The transaction was exempt
from registration under Securities Act Section 4(2) because the seller has
general financial and business sophistication, adequate information about
Bentley, whose operating business is the same as that of the seller (the credit
reporting business) and which is a reporting company, and special knowledge of
Bentley's credit reporting business.
In connection with the sale of Windsor, Bentley's former operating
subsidiary, bonus agreements were entered into in June of 1998 with certain key
employees of Windsor, including Pauline Raschella, the President of Windsor, and
Ramakant Agarwal,the Vice President, Chief Financial Officer and Secretary of
Windsor, who is also the Vice President, Secretary, Chief Financial Officer and
a Director of Bentley. The bonus agreements were made as compensation for prior
services and as an inducement to encourage these key employees to remain in the
employ of Windsor, since the stock of Windsor secures the obligation of
Interiors, Inc. to repay that certain note executed by Interiors as part of the
consideration for the purchase of Windsor, which note is described in Exhibit
10.1 hereto and is valued at $1,500,000 (the "Note").
The agreement with Ms. Raschella was reduced to writing on October 26,
1998, and is attached hereto as Exhibit 10.12 (the "Bonus Agreement"). In
connection with the Bonus Agreement Bentley is to pay Ms. Raschella: (i)
$200,000 in cash; (ii) 110,000 shares of Bentley common stock; (iii) 5% of all
payments received by the Company from Interiors, Inc. with respect to the Note;
and (iv) 100,000 shares of Interiors, Inc. Class A Common Stock. Payment of the
Interiors Common Stock and percentage payments with respect to the Note are
conditioned upon Ms. Raschella's continued employment with Windsor. The issuance
of the Bentley common stock is exempt from registration under the Securities Act
Section 4(2) because Ms. Raschella has general financial and business
sophistication and access to public information about Bentley. The sale of the
Interiors, Inc. securities are exempt from registration under Rule 144 due to
restrictions on their resale and access to information about Interiors, Inc,
which is a reporting company. None of the rights under the Bonus Agreement are
assignable by Ms. Raschella without the Company's consent, pursuant to Section 7
of the Bonus Agreement. The Interiors stock is futher restricted pursuant to the
provisions of Section 5 of the Bonus Agreement to sales only after a
registration or pursuant to an exemption from the Securities Act and applicable
state securities laws.
The bonus agreement with Ramakant Agarwal has not been reduced to writing.
A summary of the agreement with Mr. Agarwal is attached hereto as Exhibit 10.13.
The Comnpany has agreed to pay to Mr. Agarwal: (i) 100,000 shares of Interiors,
Inc. Class A Common Stock; (ii) 4.5% of all payments received by the Company
from Interiors, Inc. with respect to the Note; and (iii) $100,000 in cash. The
payment of Interiors, Inc. securities is exempt from registration under Rule 144
because none of the rights under the agreement are assignable by Mr. Agarwal
without the Company's consent, the stock is further restricted and Mr. Agarwal
has access to the public information regarding Interiors, Inc., a reporting
company. When this agreement is reduced to writing, it will contain provisions
substantially similar to those of Section 5 and Section 7 of the Bonus
Agreement.
The Company reported the transactions involving the sale of its Windsor
subsidiary in the Company's Form 10-QSB for June 30, 1998, which is hereby
incorporated by reference.
Item. 4 Submission of Matters to a Vote of Security Holders
The Company reported the shareholders' vote at its July 2, 1998 annual
meeting in the Company's Form 10- QSB for June 30, 1998, which is hereby
incorporated by reference.
Item. 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No.
Description
2.1 Stock Purchase Agreement between Bentley International, Inc. and
Interiors, Inc. dated July 7, 1998, incorporated by reference from the
Form 8-K of Bentley International, Inc. dated effective July 30, 1998.
2.2 Securities Purchase and Registration Rights Agreement between Bentley
International, Inc. and Interiors, Inc. dated July 30, 1998, incorporated
by reference from the Form 8-K of Bentley International, Inc. dated
effective July 30, 1998.
4.1 Warrant to Purchase 300,000 shares of Common Stock of Bentley
International, Inc., $0.18 par value, issued to Interiors, Inc., dated
July 30, 1998, incorporated by reference from the Form 8-K of Bentley
International, Inc. dated effective July 30, 1998.
4.2 Amendment to the Articles of Incorporation of Bentley International, Inc.,
dated July 2, 1998, incorporated by reference from the Form 8-K of Bentley
International, Inc. dated effective July 30, 1998.
10 Annexes 10.1 through 10.11 below are contracts or addenda to contracts
dated July 30, 1998, to the Stock Purchase Agreement between Bentley
International, Inc. and Interiors, Inc., which were listed on the Form 8-K
of Bentley dated effective July 30, 1998, and are incorporated by reference
from the Form 10-QSB of Bentley International, Inc. dated June 30, 1998.
Certificates of Authority from officers of Bentley and Interiors which were
also addenda to the Stock Purchase Agreement are omitted. Annexes 10.1
through 10.11 listed below are contracts between Bentley International,
Inc. and Interiors, Inc. except where noted:
10.1 Annex A-1 -- $2,000,000 Promissory Note
10.2 Annex A-2 -- $3,300,000 Promissory Note
10.3 Annex B -- Escrow Agreement between U.S. Bank Trust, Bentley
International, Inc. and Interiors, Inc.
10.4 Annex F -- Non-Competition Agreement between Windsor Art, Inc. and
Lloyd R. Abrams
10.5 Annex I -- Consulting Agreement between Windsor Art, Inc., Interiors,
Inc. and Lloyd R. Abrams
10.6 Annex J -- Pledge Agreement
10.7 Annex K -- Continuing Guaranty between Max and Laurie Munn and Bentley
International, Inc.
10.8 Annex M -- Subordination Language
10.9 Annex N -- Windsor Voting Trust Agreement between Lloyd R. Abrams and
Max Munn as Voting Trustees, Interiors, Inc. and Bentley
International, Inc.
10.10 Annex O -- Bentley Voting Trust Agreement between Lloyd R.Abrams as
Voting Trustee, Interiors, Inc.and BentleyInternational,Inc.
10.11 Annex P -- Interiors Voting Trust Agreement between Max Munn as Voting
Trustee, Interiors, Inc. and Bentley International, Inc.
10.12 -- Bonus Agreement with Pauline Raschella dated October 26,
1998
10.13 -- Summary of unwritten bonus agreement with Ramakant Agarwal
19 Information Statement of Bentley International, Inc. on Schedule 14C,
dated June 11, 1998, which is hereby incorporated by reference.
Page 10
<PAGE>
27 Financial Data Schedule
(b) Reports on Form 8-K: Forms 8-K regarding the settlement of bankruptcy
proceedings of a subsidiary, Janco Designs, Inc., were filed effective
January 26, 1998 and March 9, 1998 and a Form 8-K regarding the sale of
the Windsor subsidiary to Interiors, Inc. was filed effective July 30,
1998.
Page 11
<PAGE>
NOTE: THIS REPORT CONTAINS CERTAIN FORWARD LOOKING STATEMENTS OF THE TYPE
DESCRIBED IN THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THE RESULTS OF MANAGEMENT'S PLANS ARE
BEYOND THE ABILITY OF THE COMPANY TO CONTROL. ECONOMIC CONDITIONS, PRODUCT
AND SERVICE DEMAND, COMPETITIVE PRICING AND OTHER FACTORS COULD CAUSE
MATERIALLY DIFFERENT RESULTS FROM THOSE PLANNED BY MANAGEMENT.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
BENTLEY INTERNATIONAL, INC.
(Registrant)
November 23, 1998 By: /s/Lloyd R. Abrams
Lloyd R. Abrams, President
and Chief Executive Officer
Page 12
BONUS AGREEMENT
THIS BONUS AGREEMENT ("Agreement") is made and entered into effective as of
the ______ day of ______________, 1998, by and between Bentley International,
Inc. ("Bentley"), a Missouri corporation, and Pauline Raschella ("Raschella").
WHEREAS, Raschella is the President and Chief Operating Officer of and
chief designer for Bentley's former subsidiary, Windsor Art, Inc. ("Windsor")
and contributed substantially to the profitability of Windsor while it was owned
by Bentley;
WHEREAS, Bentley has sold Windsor to Interiors, Inc. ("Interiors") for cash
and notes;
WHEREAS, Bentley holds stock in and a note from Interiors, Windsor
represents a substantial asset of Interiors and secures said note and Bentley
thus has a substantial stake in the future success of Windsor;
WHEREAS, providing a bonus to Raschella will not only award Raschella for
past performance but will also serve as an inducement for Raschella to work to
increase the profitability of Windsor and Interiors and to continue her
employment with Windsor, improving the probability that Bentley will be repaid
on the note outstanding and that the stock in Interiors owned by Bentley will
appreciate;
NOW THEREFORE, in consideration of the material promises and covenants
hereinafter set forth in this Agreement and other good and valuable
consideration, the receipt of which is hereby acknowledged, Bentley and
Raschella agree as follows:
1. Bonus. Bentley shall pay Raschella a bonus, subject to the terms hereof,
of:
A. Two Hundred Thousand Dollars ($200,000) in cash on the date hereof;
B.110,000 shares of Common Stock of Bentley (the "Bentley Shares'),
subject0 to the conditions and restrictions recited below, a
certificate(s)representing such shares to be delivered within 10
business days of the date hereof;
C. 100,000 shares of Class A Common Stock of Interiors (the "Interiors
Stock") payable to Raschella upon termination of the Escrow Agreement
between Interiors and Bentley dated as of July 30, 1998 (the "Escrow
Agreement"), subject to the provisions thereof, the following conditions,
the provisions of that certain Stock Purchase Agreement between Bentley and
Interiors dated as of July 30, 1998, and the provisions of that certain
Securities Purchase and Registration Rights Agreement between Bentley and
Interiors dated as of July 30, 1998, along with any securities or cash
payments paid as dividends or stock splits in respect of such Interiors
Stock; provided, however, that if Interiors exercises its option to buy
back the 1,500,000 shares of Interiors Stock owned Bentley and subject to
the Escrow Agreement, then in lieu of the 100,000 shares of Interiors
Stock, Bentley shall pay to Raschella, upon termination of the Escrow
Agreement, a pro rata share (100,000/1,500,000) of the payment received
by Bentley in connection with Interiors' exercise of its option to buy back
the 1,500,000 shares of Interiors Stock, which based on the option price
for said 1,500,000 shares of Interiors Stock, namely One Million Six
Hundred Twenty-Five Thousand Dollars ($1,625,000), is One Hundred Eight
Thousand, Three Hundred Thirty-Three and 33/100 Dollars ($108,333.33);
provided further, however, that the payment to Raschella of Interiors
Stock, or cash in the event Interiors executes Interiors' option, as
recited above, shall be subject to the condition that Raschella either
continue to be employed by Windsor through the termination of the Escrow
Agreement, or that her employment with Windsor shall have been terminated
without cause by Windsor prior to such termination of the Escrow Agreement
(such condition hereinafter referred to as the "Employment Condition"); and
D. a 5% participation in all payments made under the $2,000,000 note made
by Interiors in favor of Bentley dated July 30, 1998 (the "Note"), to be
paid over from Bentley to Raschella forthwith upon receipt by
Bentley, provided that the Employment Condition has been satisfied,
and, provided, further however, that if Interiors defaults on the Note,
Raschella shall be entitled to a 5% participation in all cash amounts
subsequently collected on the Note, after any expenses of collection, but
Raschella shall have no interest in or other right with respect to any
collateral now pledged as security for the Note acquired by Bentley as
a result of any such default.
2. Tax Withholding. All bonuses and payments hereunder shall be subject to
any and all required federal, state and local tax withholding.
3. Termination of Prior Options. Raschella hereby agrees that all stock
options previously granted by Bentley to her have been or are hereby
terminated.
4. Alternative Sale of Interiors Stock. Bentley shall have the right to
assign 100,000 shares of Class A Common Stock of Interiors to Raschella
at any time and upon such assignment Bentley's obligations pursuant to
Section 1.C above and the rights of Raschella pursuant to said Section
1.C shall terminate. In no event shall Bentley have any obligation or
duty to sell or obtain payment from Interiors for any Class A Common
Stock of Interiors which Bentley transfers to Raschella pursuant to
Section 1.C above or this Section 4.
5. Restrictions on Transfer of Shares Under Securities Laws.
A. Raschella understands and agrees that the Bentley Shares and
any Class A Common Stock of Interiors have not been registered
under the Securities Act and that, accordingly, they will not
be fully transferable except as permitted under various
exemptions contained in the Securities Act and applicable
state securities laws or upon satisfaction of the registration
and prospectus delivery requirements of the Securities Act and
applicable state securities laws. Raschella acknowledges that
she must bear the economic risk of her investment in such
securities for an indefinite period of time since they have
not been registered under the Securities Act and therefore
cannot be sold unless they are subsequently registered or an
exemption from registration is available.
B. Raschella hereby represents and warrants that she is acquiring
the Bentley Shares and the Class A Common Stock of Interiors
for investment purposes only, for her own account, and not as
nominee or agent for any other person, and not with the view
to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act.
C. Raschella hereby agrees with Bentley as follows:
(i) The certificates evidencing the Bentley Shares and
the Class A Common Stock of Interiors and each
instrument or certificate issued in transfer thereof,
will bear substantially the following legend:
"The securities evidenced by this certificate have
not been registered under the Securities Act of 1933
and have been taken for investment purposes only and
not with a view to the distribution thereof, and such
securities may not be sold or transferred unless
there is an effective registration statement under
such Act covering such securities or the issuer
corporation receives an opinion of counsel (which may
be counsel for the issuer corporation) stating that
such sale or transfer is exempt from the registration
and prospectus delivery requirements of such Act."
(ii) The certificates representing the Bentley Shares and
the Class A Common Stock of Interiors and each
instrument or certificate issued in transfer thereof,
will also bear any legend required under any
applicable state securities law.
(iii) Absent an effective registration statement under the
Securities Act, and any necessary state securities
laws, covering the disposition of the Bentley Shares
and/or the Class A Common Stock of Interiors,
Raschella will not sell, transfer, assign, pledge,
hypothecate or otherwise dispose of any or all of the
Bentley Shares without first providing issuer with an
opinion of counsel (which may be counsel for the
issuer) to the effect that such sale, transfer,
assignment, pledge, hypothecation or other
disposition will be exempt from the registration and
the prospectus delivery requirements of the
Securities Act and the registration or qualification
requirements of any applicable state securities laws.
(iv) Raschella consents to Bentley's and Interiors making
notations on their respective records or giving
instructions to any transfer agent of the their
respective shares in order to implement the
restrictions on transfer set forth in this subsection
5.C.
6. Release. Raschella for herself and her heirs, executors, administrators,
successors and assigns, releases and discharges Bentley and each of Bentley's
current and former directors and officers from all actions, causes of action,
suits, debts, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims and demands
whatsoever, known or unknown, fixed, contingent or conditional in law or in
equity (the foregoing being collectively referred to as "Claims"), which
Raschella and/or her heirs, executors, administrators, successors and assigns,
ever had, now have or hereafter can, shall or may have for, upon, or by reason
of any matter, cause or thing whatsoever from the beginning of the world to the
date hereof, other than any Claim which may arise pursuant to the terms of this
Agreement.
7. Assignment; Agreement Binding; Severability; Non-Waiver. Raschella may
not assign or delegate any of Raschella's rights or obligations
hereunder without the prior written consent of Bentley. This Agreement
shall be binding upon, and shall inure to the benefit of, the parties
and their respective heirs, legal representatives, successors and
permitted assigns. The invalidity or unenforceability of any term or
condition hereof shall in no way affect the validity or enforceability
of the remaining terms or provisions of this Agreement. A party's
failure to exercise any of such party's rights in the event of a breach
of this Agreement by the other party hereto shall not be construed as a
waiver of any breach.
8. Amendments; Governing Law; Litigation. No amendments to this Agreement
shall be binding unless in writing and signed by Raschella and Bentley.
This Agreement shall be interpreted, construed and in all respects
governed in accordance with the laws of the State of Missouri, without
regard to the laws of conflicts. If any litigation is instituted with
respect to this Agreement, the prevailing party in that litigation
shall be paid by the non-prevailing party all expenses of such
litigation, including reasonable attorneys' fees.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement
effective as of the date first stated above.
Bentley International, Inc.
By: ______________________________ ___________________________
Title:____________________ Pauline Raschella
The Company has entered into an agreement not yet reduced to writing
with Ramakant Agarwal, Director, Chief Financial Officer, Vice President and
Secretary of the Company and Vice President, Chief Financial Officer and
Secretary of Windsor in consideration of his past services to Windsor and as an
inducement to remain in the employ of Windsor, since the stock of Windsor is
security for the Note referred to in Exhibit 10.2. Pursuant to the agreement the
Company has agreed to pay Mr. Agarwal the following:
(a) $100,000 cash;
(b) 4.5% of all payments made by Interiors, Inc. to the Company with
respect to the Note described in Exhibit 10.2, which Note is valued at
$1,500,000; and,
(c) 100,000 shares of Interiors, Inc. Class A Common Stock.
When the agreement is reduced to writing, transfer of the Interiors Class A
Common Stock will be restricted and none of the rights under the agreement will
be assignable without the Company's consent. The restriction and non-assignment
provisions will be substantially similar to those of Sections 5 and 7 of the
Bonus Agreement with Pauline Raschella, which is attached as Exhibit 10.12.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1998, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,918,118
<SECURITIES> 0
<RECEIVABLES> 8,079
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,375,064
<PP&E> 26,011
<DEPRECIATION> 1,408
<TOTAL-ASSETS> 7,533,190
<CURRENT-LIABILITIES> 1,789,584
<BONDS> 0
0
0
<COMMON> 533,391
<OTHER-SE> 2,378,178
<TOTAL-LIABILITY-AND-EQUITY> 7,533,190
<SALES> 26,857
<TOTAL-REVENUES> 262,024
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,906
<INCOME-PRETAX> (31,385)
<INCOME-TAX> 0
<INCOME-CONTINUING> (31,385)
<DISCONTINUED> 3,271,884
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,240,499
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.07
</TABLE>
