----------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
_ TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-21738
ON-POINT TECHNOLOGY SYSTEMS, INC.
(Name of small business issuer in its charter)
Nevada 33-0423037
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1370 W. SAN MARCOS BLVD., SUITE 100, SAN MARCOS, CALIFORNIA 92069
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (760) 510-4900
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding twelve months, and (2) has
been subject to such filing requirements for the past 90 days. Yes x No_
As of April 12, 1999, 10,158,921 shares of Common Stock ($.01 par value) were
outstanding.
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<PAGE>
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1999 (Unaudited) and December 31, 1998 3
Condensed Consolidated Statements of Operations (Unaudited)
Three months ended March 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II. Other Information 8
<PAGE>
<TABLE>
<CAPTION>
On-Point Technology Systems, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, 1999 December 31, 1998
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Assets Thousands of Dollars, except share amounts (Unaudited)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $47 $129
Accounts receivable, net 2,333 2,744
Inventories 2,811 3,143
Net investment in sales-type leases 1,700 1,586
Other current assets 173 122
- ------------------------------------------------------------------------------------------------------
Total current assets 7,064 7,724
- ------------------------------------------------------------------------------------------------------
Plant, property and equipment, net 449 422
Net investment in sales-type leases 9,369 8,911
Property held for operating leases, net 1,887 2,013
Other assets 1,061 502
- ------------------------------------------------------------------------------------------------------
Total assets $19,830 $19,572
=====================================================================================================
Liabilities and shareholders' equity
- ------------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable $1,617 $1,190
Current portion of long-term debt 60 104
Accrued expenses 1,564 2,301
- ------------------------------------------------------------------------------------------------------
Total current liabilities 3,241 3,595
- ------------------------------------------------------------------------------------------------------
Other liabilities 100 100
- -------------------------------------------------------------------------------------------------------
Long-term debt 3,686 3,872
- -------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock, no par value, 2,000,000 shares
authorized, no shares issued or outstanding - -
Common stock, $.01 par value, 20,000,000 shares
authorized, 10,158,921 and 10,094,826
shares issued and outstanding, respectively 102 101
Additional paid-in capital 31,062 30,939
Accumulated deficit (18,361) (19,035)
- -------------------------------------------------------------------------------------------------------
Total shareholders' equity 12,803 12,005
- -------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $19,830 $19,572
======================================================================================================
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
On-Point Technology Systems, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended March 31,
-----------------------------
Thousands of dollars/shares, except per share amounts 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $5,294 $4,278
Cost of revenues 3,606 2,974
- ----------------------------------------------------------------------------------------------------
Gross profit 1,688 1,304
- ----------------------------------------------------------------------------------------------------
Operating expenses:
Selling, general and administrative 719 670
Research and development 266 189
- ----------------------------------------------------------------------------------------------------
Total operating expenses 985 859
- ----------------------------------------------------------------------------------------------------
Income from operations 703 445
- ----------------------------------------------------------------------------------------------------
Other income (expenses):
Interest income 70 258
Interest expense (84) (148)
Other (15) (2)
- -----------------------------------------------------------------------------------------------------
Total other income (expense) (29) 108
- ----------------------------------------------------------------------------------------------------
Net income $674 $553
=====================================================================================================
Earnings per share:
Basic:
Earnings per share $0.07 $0.06
====================================================================================================
Weighted average shares 10,108 9,475
====================================================================================================
Diluted:
Earnings per share $0.06 $0.05
====================================================================================================
Weighted average shares 11,922 11,816
====================================================================================================
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
On-Point Technology Systems, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three months ended March 31,
- -----------------------------------------------------------------------------------------------------
Thousand of dollars 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> >C>
Cash flows from operating activities:
Net income $674 $553
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation and amortization 357 329
Non-cash charges, primarily changes in reserves - (17)
Changes in assets and liabilities:
Accounts receivable 411 (597)
Inventories 332 400
Accounts payable 427 (113)
Accrued expenses (737) (111)
Other (628) 378
Net cash provided by operating activities 836 822
- -----------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of plant, property and equipment (126) (82)
Net investment in sales-type leases (572) (724)
Investment in property held for operating leases (139) (1)
Fixed asset disposals 25 9
- -----------------------------------------------------------------------------------------------------
Net cash used for investing activities (812) (798)
- ------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from exercise of stock warrants and options 124 514
Reduction of line of credit, net (186) (689)
Repayment of notes payable (44) (114)
- ------------------------------------------------------------------------------------------------------
Net cash (used) for financing activities (106) (289)
- ------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (82) (265)
- ------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 129 273
- -----------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $47 $8
=====================================================================================================
Supplemental cash flow information:
Cash paid during the period for interest $85 $78
Cash paid during the period for income taxes $(1) $91
=====================================================================================================
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
ON-POINT TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
--------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED
-------------------------------
FINANCIAL STATEMENTS
--------------------
(Unaudited)
1. BASIS OF PRESENTATION The accounting and reporting policies of On-Point
Technology Systems, Inc. and subsidiaries (collectively referred to as the
"Company") conform to generally accepted accounting principles. The condensed
consolidated financial statements for the three months ended March 31, 1999 and
1998 are unaudited and do not include all information or footnotes necessary for
a complete presentation of financial condition, results of operations and cash
flows. The interim financial statements include all adjustments, consisting
only of normal recurring accruals, which in the opinion of management are
necessary in order to make the financial statements not misleading. These
financial statements should be read in conjunction with the Company's December
31, 1998 audited financial statements which are included in the Company's Annual
Report on Form 10-KSB dated December 31, 1998. The results of operations for
the three months ended March 31, 1999 are not necessarily indicative of the
results to be expected for the entire year ending December 31, 1999.
2. CONTINGENCIES Reference is made to the legal proceedings section of the
Note 9 of Notes to Consolidated Financial Statements in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1998. With respect to the
Company's legal action for breach of contract brought against Solutioneering,
Inc. on March 25, 1999 Solutioneering, Inc. filed an objection to the action on
the grounds that the causes of action failed to state facts sufficient to
constitute such causes of action. A hearing on the matter has been scheduled
for April 30, 1999. No other material developments occurred during the
Company's quarter ended March 31, 1999 with respect to such matters other than
as previously disclosed.
3. PROVISIONS FOR INCOME TAXES No provisions for federal or state income
taxes have been made for the three month period ended March 31, 1999. At
December 31, 1998, the Company had $14.2 million of operating loss carryforwards
and net deferred income tax assets consisting of current federal income tax loss
carryforwards of approximately $9 million available to offset future federal
taxable income which expire during the years 2011 through 2018 and net deferred
income tax assets of approximately $5.2 million.
4. PER SHARE INFORMATION In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS") No.
128 "Earnings per Share" establishing standards for computing and presenting
Basic Earnings Per Share ("Basic EPS") and Diluted Earnings Per Share ("Diluted
EPS"). Basic EPS is computed on the basis of the weighted average shares of
common stock outstanding plus contingently issuable shares. Diluted EPS is
computed on the basis of weighted average shares outstanding plus contingently
issuable shares and the additional common shares that would have been
outstanding if dilutive potential common shares had been issued, using the
treasury stock method.
5. SHAREHOLDERS' EQUITY The $798,000 increase in shareholders' equity
from $12,005,000 at December 31, 1998 to $12,803,000 at March 31, 1999 was
comprised of $674,000 of net income and $124,000 of exercised stock warrants
and options.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL The Company's revenues through March 31, 1999 have been
generated from (i) sales of vending terminals (ii) leases of vending terminals
(iii) performance of service on vending terminals, and (iv) sales of associated
parts.
<PAGE>
The Company's products are sold or leased to a limited number of
customers worldwide. As a result, the Company has experienced fluctuations in
its financial results and capital expenditures because of the timing of
significant individual contract awards and customer orders as well as associated
product delivery schedules. The Company's sales cycle can, at times, be
relatively long due to the lead time required for business opportunities to
result in signed sales or lease agreements. Operating results may be affected
by such lead time as well as working capital requirements associated with
manufacturing vending terminals pursuant to new orders, increased competition,
and the extended time which may elapse between the customer's firm order and the
receipt of revenue from the sale or lease of the applicable vending terminals.
In addition, there has been an accelerating trend by customers to lease rather
than purchase vending terminal equipment. Leasing vending terminals requires
the Company to invest capital or otherwise finance the manufacture of the
vending terminals. The Company has obtained the resources necessary to finance
its expanding base of leased terminals over the past two years through its line
of credit, as well as through its existing cash flow and equity financing.
RESULTS OF OPERATIONS Revenues for the three months ended March 31, 1999
increased by approximately $1 million or 24% from the prior year. The increase
was comprised entirely of higher volume. The increase in revenue was primarily
due to greater vending terminal sales and sales-type lease arrangements, rather
than operating lease arrangements, with lottery customers. In total, the
Company installed or shipped approximately 725 units in the first quarter of
1999 versus approximately 470 units in the first quarter of 1998.
Cost of revenues, as a percentage of sales, improved from 70% in 1998
to 68% in 1999 reflecting favorable gross margins combined with favorable
manufacturing variances generated by higher vending terminal production volume.
Operating expenses, which includes selling, general and administrative
costs and research and development costs, increased by $126 thousand in 1999, or
15%. Selling, general and administrative costs increased by $49 thousand as a
result of increased marketing efforts. Research and development costs increased
by $77 thousand as a result of increased new product development activities. As
a percentage to sales, operating expenses declined from 20% in 1998 to 19% in
1999.
As a result of the above factors, the 1999 first quarter generated
income from operations of $703 thousand, which represents an improvement of
$258 thousand from the 1998 first quarter operating profit of $445 thousand.
Total other income and expense declined by $137 thousand from the
prior year primarily reflecting lower amortization of unearned income on sales-
type leases partially offset by lower interest cost reflecting reduced
borrowing.
The net income for the three months ended March 31, 1999 of $674
thousand represents a $121 thousand or 22% improvement from the 1998 first
quarter net profit of $553 thousand.
LIQUIDITY AND CAPITAL RESOURCES During the three months ended March 31,
1999 and 1998, respectively, the Company used the $836 thousand and $822
thousand, respectively, of net cash provided by operating activities principally
for investing activities. The principal investing activity was the net payment
of costs associated with the equipment underlying long-term lease agreements,
both sales-type and operating, which totaled $711 thousand in 1999 and $725
thousand in 1998. Additionally, in the first quarter of 1998 debt was reduced
by $803 thousand. As a net result of the above cash activities, cash and cash
equivalents declined by $82 thousand in the quarter ended March 31, 1999 while
working capital declined by $306 thousand but remains at over $3.8 million at
March 31, 1999.
Management believes the Company has sufficient liquidity, because of
its existing stream of contractual lease payments, its current working capital,
and its available borrowings under its $5 million debt financing (which matures
on April 30, 2000) to maintain its current level of operations. However, in
order to accommodate recent contract awards, totaling approximately $27 million,
together with other growth related opportunities in 1999 and beyond, the Company
plans to seek additional financing during 1999.
<PAGE>
YEAR 2000 COMPLIANCE As is the case with most other companies using
computers in their operations, the Company is in the process of addressing the
year 2000 problem. In 1997 the Company set up a committee to review its
computer software and hardware, fax machines and telephone systems for year 2000
compliance.
The Company's primary accounting and operational software provider has
received year 2000 certification from the Information Technology Association of
America. During 1998 the Company tested its central network system hardware and
software as well as the hardware and software of each of its computer
workstations. As a result, minor expenditures, under $25 thousand total cost,
have been made to upgrade certain computer hardware, PC software and fax
equipment to make them year 2000 compliant. The Company believes that it is now
year 2000 compliant with respect to its existing computer hardware, software and
fax equipment and, therefore, believes that potential risks, including any
potential third party risks, relating to year 2000 issues to be minimal. The
Company's telephone system was not year 2000 compliant at December 31, 1998 and
was upgraded in March 1999 at a cost of $13 thousand.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 in the Registrant's Form 10-KSB for the year
ended December 31, 1998 for a description of its legal proceedings. With
respect to the Company's legal action for breach of contract brought against
Solutioneering, Inc. on March 25, 1999 Solutioneering, Inc. filed an objection
to the action on the grounds that the causes of action failed to state facts
sufficient to constitute such causes of action. A hearing on the matter has
been scheduled for April 30, 1999. No other material developments occurred
during the Registrants' quarter ended March 31, 1999 other than as previously
disclosed.
ITEM 2. CHANGES IN SECURITIES
(a) None
(b) None
(c) None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.27 Settlement Agreement with Interlott Technologies, Inc.
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
In accordance with the requirements of the exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
ON-POINT TECHNOLOGY SYSTEMS, INC.
Date: April 29, 1999 /s/ Kenneth Hoitt
------------------------------------
As Chief Financial Officer on behalf
of Registrant and as Registrant's
Principal Financial & Accounting Officer
SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT ("Agreement") made and entered into this 4th
day of March 1999 by and between INTERNATIONAL LOTTERY, INC., now known as
INTERLOTT TECHNOLOGIES, INC., a Delaware corporation ("Interlott") and LOTTERY
ENTERPRISES, INC., now known as ON-POINT TECHNOLOGY SYSTEMS, INC., a Nevada
corporation ("LEI").
WITNESSETH:
WHEREAS, in or about February, 1995 Interlott and LEI began to discuss a
potential merger of the two companies ("the Negotiations"); and
WHEREAS , on March 23, 1995 Interlott and LEI signed an Agreement in
Principle (the "Agreement in Principle") that described their understanding with
respect to the potential merger; and
WHEREAS, following the execution of the Agreement in Principle, Interlott
and LEI conducted further negotiations and discussions, and exchanged documents
and other information regarding their business, operations, results of
operations, financial condition, assets, liabilities and prospects (the "Due
Diligence Process"); and
WHEREAS, Interlott and LEI never agreed upon the final terms of the
merger, no merger transaction was ever consummated and the parties disagree
over who was responsible for the failure to complete a merger transaction (the
"Termination of Discussions"); and
WHEREAS, Interlott filed an action styled International Lottery, Inc,. v.
Lottery Enterprises Inc., Civil Action No. C-1-96-205 in the United States
District Court for the Southern District of Ohio (the "Action") in which
Interlott and LEI asserted claims against each other relating to the Agreement
in Principle, the Due Diligence Process and the Termination of Discussion, and
LEI asserted counterclaims against Interlott relating to and allegedly arising
from Interlott's competition against LEI (the "Competition Claims"); and
WHEREAS, the parties wish to fully and finally settle and compromise their
disputes and avoid the costs and expenses that will be incurred in the Action,
upon the terms and conditions set forth herein.
NOW, THEREFORE, Interlott and LEI agree as follows:
(1) Settlement Payment. LEI shall pay Interlott the sum of Six
------------------
Hundred Twenty-Five Thousand Dollars ($625,000) in immediately available funds,
in full and final settlement of all claims which were asserted in the Action.
The amount provided for herein shall be paid on or before March 15, 1999, unless
LEI and Interlott otherwise agree in writing to an alternate date, each
reserving absolute discretion whether to agree to such an alternate date.
(2) Mutual Releases. Interlott, for and on behalf of its
---------------
current and former employees, agents, directors, officers, shareholders,
consultants, advisors, predecessors, successors, parents, subsidiaries,
affiliates, assigns, attorneys, accountants, and insurers in exchange for its
receipt of the payment described in paragraph 1 and the release made by LEI as
described herein, and LEI, for and on behalf of its current and former
employees, agents, directors, officers, shareholders, consultants, advisors,
predecessors, successors, parents, subsidiaries, affiliates, assigns, attorneys,
accountants, and insurers, in consideration of the releases made by Interlott as
described herein, do hereby release and forever discharge each other and their
respective employees, agents, directors, officers, shareholders, consultants,
advisors, predecessors, successors, parents, subsidiaries, affiliates, assigns,
attorneys, accountants and insurers from all claims which were asserted in the
Action and from any and all debts, claims, demands, damages, losses,
liabilities, rights, actions, causes of action, expenses, contracts, judgments,
awards and suits of any kind whatsoever, both known and unknown, fixed and
contingent, liquidated and unliquidated as of the date hereof which either party
has asserted or could have asserted against the other arising from or relating
to the Negotiations, the Agreement in Principle, the Due Diligence Process, the
<PAGE>
Termination of Discussions and/or the Competition Claims (herein the "Claims")
provided, however, that nothing contained herein shall release, discharge,
- --------
impair or modify in any manner whatsoever the respective rights and obligations
of the parties under this Agreement; and provided, further, that nothing
-------- -------
contained herein shall release, discharge, impair, or modify in any manner
whatsoever any claims which LEI has asserted, could assert or may assert against
the Commonwealth of Pennsylvania based on the acts or actions of the
Commonwealth.
The parties hereto, jointly and severally, further represent and warrant
to each other that they have not heretofore assigned or transferred to any
person, firm, corporation or other legal entity any Claim herein released and
discharged. By execution of this Agreement, the parties hereto further agree to
indemnify and hold the other parties harmless from any and all Claims and
reasonable attorneys' fees that may be incurred as a result of any breach or
non-performance of this Agreement or as a result of the assertion of any claim
herein released.
(3) Confidentiality. The terms and provisions of this
---------------
Agreement are expressly agreed to be confidential and no party to his Agreement
shall disclose or communicate in any manner the settlement terms provided for in
this Agreement, without the prior consent of the other party hereto, except to
the extent such disclosure may be required by applicable law, Judicial or
administrative process, or in response to the inquiry of any governmental or
quasi-governmental entity or agency thereof and only then to the extent
necessary. LEI and Interlott further agree that they will not make any
competitive use of the terms of the settlement provided for herein except to
indicate that the action was resolved by agreement of the parties on
satisfactory terms.
(4) Governing Law Forum. This Agreement shall be construed under
-------------------
the laws of the State of Ohio and all legal proceedings instituted in connection
with the performance of this Agreement shall be brought in the United States
District Court for the Southern District of Ohio, Western Division. LEI further
agrees that the Court will continue to have jurisdiction over it in the Action
until LEI fully has performed its obligations under paragraph 1.
(5) Entire Agreement. All parties hereto declare and represent
----------------
that no promises, inducements or agreements not expressly stated in this
Agreement have been made. This Agreement constitutes the entire agreement
between them with respect to the subject matter hereof and any and all prior
discussions, negotiations, commitments and understandings relating hereto are
superseded and merged herein. The terms and provision of this Agreement shall
not be changed, amended, waived, modified or terminated in any respect
whatsoever except by written instrument executed by all parties hereto.
(6) No Admission. The parties stipulate and agree that the
------------
settlement provided for herein is not and shall not be construed to be evidence
of or any admission by any of the parties hereto concerning the validity or
invalidity of any of the claims asserted by any of the parties. The parties
have entered into this Agreement in an effort to compromise disputed claims and
to avoid the cost and expense of protracted, complex litigation. Nothing
contained herein shall constitute an admission of any liability whatsoever, nor
shall the payment provided herein be so construed.
(7) Counterparts. This Agreement may be executed in one or
-------------
more counterparts, each of which shall constitute a separate original agreement
and all of which, taken together, shall constitute one agreement, binding all
parties hereto, notwithstanding the fact that not all parties have signed the
same counterpart.
(8) Within three business days after Interlott has received full
payment of the amount LEI is required to pay under paragraph (1) above and each
party has delivered to the other a fully-executed original of this Settlement
Agreement, the parties will file in the Action a stipulation that the Complaint,
the Counterclaim, and all claims in the Action have been dismissed with
prejudice.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and
caused this Agreement to be executed as of the date and year
first above written.
INTERNATIONAL LOTTERY, INC. n/k/a
INTERLOTT TECHNOLOGIES, INC.
By:/s/ David F. Nichols
--------------------------------------
ITS: President
--------------------------------------
LOTTERY ENTERPRISES, INC. n/k/a
ON-POINT TECHNOLOGY SYSTEMS, INC.
BY:/s/ Brian J. Roberts
--------------------------------------
ITS: Sr. Vice President
--------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 47
<SECURITIES> 0
<RECEIVABLES> 2,485
<ALLOWANCES> 152
<INVENTORY> 2,811
<CURRENT-ASSETS> 7,064
<PP&E> 1,921
<DEPRECIATION> 1,472
<TOTAL-ASSETS> 19,830
<CURRENT-LIABILITIES> 3,240
<BONDS> 0
0
0
<COMMON> 102
<OTHER-SE> 12,701
<TOTAL-LIABILITY-AND-EQUITY> 19,830
<SALES> 5,294
<TOTAL-REVENUES> 5,294
<CGS> 3,606
<TOTAL-COSTS> 3,606
<OTHER-EXPENSES> 930
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84
<INCOME-PRETAX> 674
<INCOME-TAX> 0
<INCOME-CONTINUING> 674
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 674
<EPS-PRIMARY> .07
<EPS-DILUTED> .06
