<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| Quarterly Report Pursuant to Section 13 or 15(D) of The Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1998 or
| | Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the transition period from ________ to _______
Commission file number 000-21813
Texas Equipment Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 62-1459870
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1305 Hobbs Hwy, Seminole, Texas 79360
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (915) 758-3643
Securities registered under Section 12(b) of the Exchange Act:
Title of each Class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered under Section 12(g) of the Exchange Act:
Title of each class
-------------------
Common Stock, $.001 par value
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
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[ ]
The number of shares outstanding of the registrant's Common Stock, as of
May 11, 1998, was 24,674,808.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements:
Consolidated Balance Sheets at March 31, 1998 and December 31, 1997.................................... 4
Consolidated Statements of Operation for the Three Months Ended March 31, 1998 and 1997................ 6
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997............... 7
Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations............ 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................................................................. 14
Signatures................................................................................................ 15
</TABLE>
2
<PAGE> 3
CAUTIONARY STATEMENT REGARDING
FUTURE RESULTS AND FORWARD-LOOKING STATEMENTS
The future results of the Company, including results reflected in any
forward-looking statement made by or on behalf of the Company, will be impacted
by a number of important factors. The factors identified below in the section
entitled "Part 1. Item 2. - Management's Discussion And Analysis Of Financial
Condition And Results Of Operations - Certain Important Factors" are important
factors (but not necessarily all important factors) that could cause the
Company's actual future results to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company. Words such as
"may," "will," "expect," "believe," "anticipate," "estimate," or "continue" or
comparable terminology is intended to identify forward-looking statements.
Forward-looking statements, by their nature, involve substantial risks or
uncertainties.
3
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS.
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
-------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 81,463 $ 104,750
Accounts receivable (less allowance for
doubtful accounts of $76,000 in 1998 and 1997) 1,941,880 1,965,714
Other receivables 125,785 185,821
Inventories 23,326,937 21,039,882
-------------- --------------
TOTAL CURRENT ASSETS 25,476,065 23,296,167
PROPERTY AND EQUIPMENT, NET 4,027,030 4,027,731
FINANCE RECEIVABLES 919,400 836,967
RECEIVABLES FROM OFFICER 91,851 92,618
GOODWILL, net of accumulated
amortization of $69,921 in 1998 and
$66,743 in 1997 120,777 123,955
OTHER ASSETS 150,150 151,147
-------------- --------------
$ 30,785,273 $ 28,528,585
============== ==============
</TABLE>
4
See Notes to Condensed Financial Statements
<PAGE> 5
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Floor plan payables $14,749,793 $15,235,375
Accounts payable 1,154,079 810,254
Accrued liabilities -- 317,377
Customer deposits 192,907 137,019
Income tax liability 478,951 422,503
Current maturities of
long-term debt 4,254,637 2,807,181
----------- -----------
TOTAL CURRENT LIABILITIES 20,830,367 19,729,709
LONG-TERM DEBT, net of
current maturities 2,447,698 1,819,835
DEFERRED TAX LIABILITY 233,074 233,074
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.001 par value
authorized 50,000,000; issued
and outstanding: 24,674,808 in 1998
and 24,549,808 in 1997 24,673 24,548
Paid in capital 2,861,697 2,823,320
Retained earnings 4,387,764 3,898,099
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 7,274,134 6,745,967
----------- -----------
$30,785,273 $28,528,585
=========== ===========
</TABLE>
5
See Notes to Condensed Financial Statements
<PAGE> 6
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
REVENUES $ 15,879,826 $ 9,885,086
COST OF SALES 13,471,487 8,496,751
-------------- --------------
GROSS PROFIT 2,408,339 1,388,335
SELLING,GENERAL AND
ADMINISTRATIVE EXPENSES 1,653,239 1,025,424
-------------- --------------
INCOME FROM OPERATIONS 755,100 362,911
OTHER INCOME (EXPENSE)
Interest (23,208) 122
Non-cash guarantee fee (38,501) --
Other income 23,639 12,550
-------------- --------------
INCOME FROM CONTINUING
OPERATIONS BEFORE TAXES 717,030 375,583
INCOME TAX EXPENSE 256,448 127,740
-------------- --------------
INCOME FROM CONTINUING OPERATIONS 460,582 247,843
DISCONTINUED OPERATIONS
Loss on discontinued operations (less applicable income
tax benefit of $ 70,636) -- (150,662)
-------------- --------------
NET INCOME $ 460,582 $ 97,181
============== ==============
NET INCOME (LOSS) PER SHARE
Basic
- Continuing operations $ 0.0187 $ 0.010
- Discontinued operations -- (0.006)
-------------- --------------
Total $ 0.0187 $ 0.004
============== ==============
Diluted
- Continuing operations $ 0.0185 $ 0.010
- Discontinued operations -- (0.006)
-------------- --------------
Total $ 0.0185 $ 0.004
============== ==============
NUMBER OF SHARES USED IN COMPUTATION
Basic 24,585,919 24,704,886
============== ==============
Diluted 24,804,459 24,704,886
============== ==============
</TABLE>
6
See Notes to Condensed Financial Statements
<PAGE> 7
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM CONTINUING OPERATIONS
Net income $ 460,582 $ 247,843
Adjustment to reconcile net income to net cash
Amortization & depreciation 96,155 39,255
Gain on disposal of assets 3,502
ESOP earned compensation 29,085 --
Valuation of stock options issued - guaranty 38,501 --
fee
CHANGES IN ASSETS AND LIABILITIES:
(Increase) decrease in accounts receivable 23,834 (146,721)
(Increase) decrease in receivables from affiliates 60,036 76,259
(Increase) decrease in inventories (2,287,056) (6,192,985)
Increase (decrease) in floor plan payable (485,582) 5,038,206
Increase (decrease) in accounts payable 343,825 334,456
Increase (decrease) in accrued liabilities (317,377) 139,580
(Increase) decrease in finance receivable (82,433) (60,172)
Increase (decrease) in income tax liability 56,448 32,040
Increase (decrease) in other liabilities 55,888 205,815
----------- -----------
CASH PROVIDED BY (USED IN)
CONTINUING OPERATIONS (2,008,094) (282,922)
----------- -----------
CASH PROVIDED BY (USED IN) DISCONTINUED
OPERATIONS -- (866,876)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of land, buildings and equipment (92,277) (1,722,495)
Proceeds from sale of equipment -- 28,000
(Increase) decrease in other assets 997 8,861
(Increase) decrease in stockholders' receivables 767 23,716
----------- -----------
NET CASH FLOWS PROVIDED BY
(USED IN) INVESTING ACTIVITIES (90,513) (1,661,918)
----------- -----------
</TABLE>
7
See Notes to Condensed Financial Statements
<PAGE> 8
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from note borrowings $ 3,354,785 $ 1,242,101
Repayments of note borrowings (1,279,465) (424,809)
------------ ------------
NET CASH FLOW PROVIDED BY (USED IN)
FINANCING ACTIVITIES 2,075,320 817,292
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (23,287) (1,994,424)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 104,750 2,661,058
------------ ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 81,463 $ 666,634
============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Interest expense $ 77,603 $ 53,571
============ ============
Income taxes $ 200,000 $ 50,000
============ ============
</TABLE>
8
See Notes to Condensed Financial Statements
<PAGE> 9
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PREPARATION:
The condensed consolidated financial statements of Texas Equipment
Corporation (the "Company") ("TEC") include wholly-owned subsidiaries Texas
Equipment Co., Inc., ("TECI") and New Mexico Implement Company, Inc. ("NMIC").
Unless the context otherwise indicates, the "Company" refers to TEC, TECI and
NMIC.
The condensed balance sheets as of March 31, 1998 and December 31, 1997
and the condensed statements of operation and condensed statements of cash flows
for the three months ended March 31, 1998 and 1997 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto contained in the Company's
Annual Report on Form 10-K/A for the fiscal year ended December 31, 1997. The
results of operations for the three months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the full year.
Certain reclassifications have been made in the condensed consolidated
balance sheet and statements of cash flows to 1997 to be in conformity with
1998.
2. DISCONTINUED OPERATIONS.
In the second quarter of 1997, the Company implemented a plan to
discontinue the operations of Marinex, a New York corporation, engaged in the
business of the creation of digital content including a CD-ROM magazine and
entertainment sites on the Worldwide Web. Accordingly, all such financial data
related to Marinex has been presented as discontinued operations. At March 31,
1997 the net assets of the discontinued company were $762,453, which were
expensed in the second and third quarters of 1997.
3. INVENTORIES:
All inventories are valued at the lower of cost or market. Cost is
determined using the specific identification method for new and used equipment
and average cost for parts.
Inventories consisted of the following at:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
<S> <C> <C>
New equipment $12,503,940 $12,019,361
Used equipment 5,989,733 4,629,958
Parts and other 4,833,264 4,390,563
----------- -----------
Total $23,326,937 $21,039,882
=========== ===========
</TABLE>
9
<PAGE> 10
TEXAS EQUIPMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. INCOME FROM CONTINUING OPERATIONS PER SHARE
The following is a reconciliation of the numerator and denominator underlying
the income from continuing operations per share calculations:
<TABLE>
<CAPTION>
Three Months ended March 31, 1998
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Income from continuing operations available to common
stockholders' $ 460,582 24,585,919 $ 0.0187
============= ==============
Effect of dilutive securities:
Incremental shares of assumed conversions of
options 218,540
Diluted income from continuing operations
available to common shareholders' and
assumed conversions $ 460,582 24,804,459 $ 0.0185
============= =========== ==============
</TABLE>
<TABLE>
<CAPTION>
Three Months ended March 31, 1997
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Income from continuing operations available to common
stockholders' $ 247,843 24,704,886 $ 0.01
============= =========== ==============
Diluted income from continuing operations
available to common shareholders' and
assumed conversions $ 247,843 24,704,886 $ 0.01
============= =========== ==============
</TABLE>
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
RESULTS OF OPERATIONS
Three Months ended March 31, 1998 compared to Three Months ended March 31, 1997
REVENUES
Revenues increased approximately $5,994,740, or 61%, from $9,885,086 for
first quarter of 1997 to $15,879,826 for first quarter of 1998. Of this increase
in revenues, "Base-line Stores" (stores acquired before 1997) accounted for
approximately $3,678,000 of the increase. This increase was due primarily to an
increase in wholegoods sales at the Company's Seminole, Texas store. The
Company's three John Deere dealerships in the Northern Panhandle of Texas
acquired in January 1997 accounted for $284,000 of the increase and the July
1997 acquisition of a dealership in Artesia, New Mexico accounted for
approximately $2,033,000.
Sales of wholegoods increased approximately $4,669,600, or 57%, from
$8,226,381 for first quarter of 1997 to $12,896,003 for the first quarter of
1998. Approximately $3,400,000 of this increase was due primarily to strong
tractor sales at the Company's Seminole, Texas store. The Artesia, New Mexico
store, which was acquired in July 1997, accounted for the remainder of the
increase, approximately $1,555,200. Wholegoods sales in the Company's Northern
Panhandle stores were down slightly.
Parts and service revenue increased approximately $1,325,100, or 80%, from
$1,658,705 for the first quarter of 1997 to $2,983,814 for the first quarter of
1998. The Artesia, New Mexico store, which was acquired in July 1997, accounted
for approximately $480,000 of this increase. The Northern Panhandle stores,
which were acquired in January 1997, accounted for $556,000 of this increase.
Base-line Stores accounted for approximately $289,400 of this increase. These
increases reflect the Company's success in implementing its marketing strategy,
which focuses on increasing market share and giving close attention to the needs
of its customers.
GROSS PROFIT
Gross profit increased approximately $1,020,000, or 73%, from $1,388,335
for the first quarter of 1997 to $2,408,339 for the first quarter of 1998. Gross
profit as a percentage of total revenues increased from 14% for the first
quarter of 1997 to 15.2% for the first quarter of 1998. The Company's highest
gross margin is derived from its parts and service revenues. For these periods,
the shift in revenue mix between wholegoods sales (83.2% of total revenues in
the first quarter of 1997 compared to 81.2% of total revenues in the first
quarter of 1998) and parts and service revenues (16.8% of total revenues in the
first quarter of 1997 compared to 18.8% of total revenues in the first quarter
of 1998) was the primary contributor to this increase in margins.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE
Selling, general, and administrative expense as a percentage of total
revenues remained flat at 10.4% for the first quarter of 1998 compared to the
first quarter of 1997. Total selling, general, and administrative expense
increased approximately $627,800, from $1,025,424 for the first quarter of 1997
to $1,653,239 for the first quarter of
11
<PAGE> 12
1998. Approximately $180,000 of the increase was due to the Artesia, New Mexico
store, which was acquired in July 1997 and approximately $100,000 of the
increase was due to the stores acquired in January 1997. In addition,
approximately $320,000 was due to the increase in sales commissions and other
operating costs associated with the increase in revenue.
INTEREST EXPENSE/INCOME
Interest expense increased approximately $24,000, from $53,571 for the
first quarter of 1997 to $77,603, for the first quarter of 1998. The increase
was due primarily to the increased levels of floor plan payables associated
with higher inventory levels and the acquisition debt associated with the stores
acquired in the Texas Panhandle and Eastern New Mexico in 1997.
Interest income remained flat for the quarter, $54,395 for the first
quarter of 1998 compared to $53,693 for the first quarter of 1997. Interest
income was earned in connection with the financing of customer purchases. The
amount the Company will earn depends on the interest rates charged by
competitors, lending policies of Deere Credit and Agricredit and prevailing
market conditions. In the first quarter of 1998, interest rates continued to
remain competitive, which resulted in a relatively smaller increase in interest
income compared to the increase in equipment sales.
NON-CASH GUARANTEE FEE
In connection with the personal guarantee by the majority shareholders
of the Company, of approximately $16,450,000 of accounts payable to Deere &
Company and the credit facility with the Company's bank, the Company recorded a
non-cash charge of $38,501 in the first quarter of 1998. These required
guarantee fees were paid in the form of five-year options to acquire up to
493,605 shares of the Company's Common Stock at an option price of $0.375.
NET INCOME
Net income from continuing operations increased approximately $212,740,
or 85.8%, from $247,843 for the first quarter of 1997 to $460,582 for the first
quarter of 1998. This increase was primarily the result of the increase in gross
profit of approximately $1,000,000, which was offset by the increase in
operating expenses and other costs, and the increase in the provision for income
taxes for a total increase of approximately $780,000.
Earnings per share from continuing operations increased from $0.010
(both basic and diluted) to $0.0187 basic and to $0.0185 diluted from the first
quarter of 1997 to the first quarter of 1998, primarily as the result of the
increase in net income, for the reasons described above.
The Company recognized a loss on the discontinuation of its Marinex
business operations of $150,662 in the first quarter of 1997, net of income tax
benefit of $70,636. Accordingly, net income for first quarter of 1997 was
$97,181 (resulting in earnings per share of $0.004 on both a basic and diluted
basis) compared to net income of $460,582 in first quarter of 1998 (resulting in
basic earnings per share of $0.0187 and diluted earning per share of $0.0185).
LIQUIDITY AND CAPITAL RESOURCES
The Company requires cash primarily for financing its inventories of
wholegoods and replacement parts, acquisitions of additional dealerships and
capital expenditures. Historically, the Company has met these liquidity
requirements primarily through cash flow generated from operations, floor plan
financing, and
12
<PAGE> 13
borrowings under credit agreements with Deere, Deere Credit Services, Inc.
("Deere Credit"), Agricredit Acceptance Company ("Agricredit"), and commercial
banks. Floor plan financing from Deere and Deere Credit represents the primary
source of financing for wholegoods inventories, particularly for equipment
supplied by Deere. All lenders receive a security interest in the inventory
financed. Deere and Deere Credit offer floor plan financing to Deere dealers for
extended periods and with varying interest-free periods, depending on the type
of equipment and to encourage the purchase of wholegoods by dealers in advance
of seasonal retail demand. Down payments are not required and interest may not
be charged for a portion of the period for which inventories are financed.
Variable market rates of interest, based on the prime rate, are charged on
balances outstanding following any interest-free periods, which range from six
to twelve months. Deere also provides financing to dealers on used equipment
accepted in trade and approved equipment from other manufacturers. Agricredit
provides financing for new and used equipment using variable market rates of
interest based on the prime rate.
The Company annually reviews the terms of its financing arrangements with
its lenders, including the interest rate. For the first quarter of 1998 the
interest rate charged by Deere and Agricredit was prime plus 50 basis points and
prime plus 150 basis points, respectively. As of March 31, 1998, the Company had
floor plan payables outstanding of approximately $14,500,000, of which
approximately $4,900,000 was then interest bearing.
Cash and cash equivalents decreased from $104,750 at December 31, 1997 to
$81,463 at March 31, 1998. During the first three months of 1998, continuing
operations used net cash of $2,008,094 primarily because of the increase in
inventory. Investing activities used cash of $90,513 primarily for capital
expenditures. The Company's capital expenditures are expected to increase as it
implements its business plan to acquire additional John Deere dealerships in
1998, subject to the availability of debt or equity financing, of which there
can be no assurance. The increase in inventory of $2,287,056 was funded with
proceeds from note borrowings.
SEASONALITY
The Company generally experiences a higher volume of wholegoods sales
in the second and fourth quarters of each year. Typically, farmers purchase
agricultural equipment immediately prior to planting or harvesting crops, which
occurs primarily during the Company's second and fourth quarters. As a result,
sales of agricultural equipment generally are lower in the first and third
quarters. If the Company acquires operations in geographical areas other than
where it currently has operations, it may be affected by other seasonal or
equipment buying trends.
CERTAIN IMPORTANT FACTORS
In addition to the matters discussed above, there are several important
factors that could cause the Company's future results to differ materially from
those anticipated by the Company or which are reflected in any forward-looking
statement which may be made by or on behalf of the Company. Some of these
important factors (but not necessarily all such important factors) include the
following:
o The overall success of Deere and the Company's other suppliers;
o The availability and terms of floor plan financing and customer
financing;
o The incentive and discount programs provided by Deere and the
Company's other suppliers, and their promotional and marketing
efforts;
13
<PAGE> 14
o The introduction of new and innovative products by the Company's
suppliers;
o The manufacture and delivery of competitively-priced, high
quality equipment and parts by the Company's suppliers in
quantities sufficient to meet the requirements of the Company's
customers on a timely basis;
o General economic conditions, including agricultural industry
cycles, interest rate fluctuations, economic recessions,
customer business cycles, and customer confidence in the
economy;
o The length of the crop growing season and winter and spring
weather conditions in West Texas and Eastern New Mexico, and the
confidence of the Company's agricultural customers in the farm
economy;
o Risks associated with expansion, including the management of
growth; and
o Continued availability of key personnel.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
None
(b) Reports on form 8-K
None
14
<PAGE> 15
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.
Date: May 14, 1998
TEXAS EQUIPMENT CORPORATION
By: /s/ Paul J. Condit
-------------------------------------
Paul J. Condit
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Paul J. Condit Chairman of the Board, President, Chief May 14, 1998
- ------------------------ Executive Officer and Director (principal
Paul J. Condit executive officer)
/s/ John T. Condit Director and Secretary May 14, 1998
- ------------------------
John T. Condit
/s/ E.A. Milo Mattorano Vice President, Chief Financial Officer, May 14 , 1998
- ------------------------ and Chief Accounting Officer (principal
E.A. Milo Mattorano financial and accounting officer)
</TABLE>
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 81,463
<SECURITIES> 0
<RECEIVABLES> 1,991,665
<ALLOWANCES> 76,000
<INVENTORY> 23,326,937
<CURRENT-ASSETS> 25,476,065
<PP&E> 4,027,030
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,785,273
<CURRENT-LIABILITIES> 20,830,367
<BONDS> 2,058,599
0
0
<COMMON> 24,673
<OTHER-SE> 7,249,461
<TOTAL-LIABILITY-AND-EQUITY> 30,785,273
<SALES> 15,879,826
<TOTAL-REVENUES> 15,879,826
<CGS> 13,471,487
<TOTAL-COSTS> 13,471,487
<OTHER-EXPENSES> 1,691,740
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,208
<INCOME-PRETAX> 717,030
<INCOME-TAX> 256,448
<INCOME-CONTINUING> 460,582
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 460,582
<EPS-PRIMARY> .018
<EPS-DILUTED> .018
</TABLE>
