<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For The Quarter Ended March 31, 1996 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 0-22432
DIPLOMAT CORPORATION
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3727399
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 Kay Fries Drive, Stony Point, New York 10980
- ----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 786-5552
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.0001 par value and Common Stock Purchase Warrants
----------------------------------------------------------------
(Title of Class)
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
-
<PAGE>
DIPLOMAT CORPORATION
INDEX
-----
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheet - March 31, 1996 3
Statements of Operations - For the three months ended
March 31, 1996 and March 31, 1995 4
Statements of Cash Flows - For the three months ended
March 31, 1996 and March 31, 1995 5
Notes to Financial Statements 6-8
Item 2 - Management's Discussion and Analysis of Financial
Conditions and Results of Operations 9-12
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 13
SIGNATURE 13
2
<PAGE>
DIPLOMAT CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
MARCH 31,1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 41,979
Accounts receivable, trade, net 1,926,136
Inventories 6,682,149
Prepaid expenses 940,261
Other current assets 1,055,391
------------
TOTAL CURRENT ASSETS 10,645,916
------------
PROPERTY AND EQUIPMENT
less accumulated depreciation 2,180,790
INTANGIBLE ASSETS 3,645,613
OTHER ASSETS 738,784
------------
$ 17,211,103
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade $ 3,789,344
Loans payable-stockholders 53,961
Loans payable-bank 2,475,529
Loans payable-other 450,000
Accrued expenses 771,192
Current maturities of long term debt 250,479
Subordinated convertible term notes 1,125,000
------------
TOTAL CURRENT LIABILITIES 8,915,505
------------
LONG TERM DEBT,less current maturities 4,507,475
------------
STOCKHOLDERS' EQUITY:
Preferred stock 600,000
Common stock 450
Paid-in capital 5,201,449
Accumulated deficit (2,013,776)
------------
TOTAL SHAREHOLDERS' EQUITY 3,788,123
------------
$ 17,211,103
3
<PAGE>
DIPLOMAT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31, March 31,
1996 1995
---- ----
NET SALES $ 5,152,866 $ 2,697,057
COST OF SALES 2,640,134 1,413,706
----------- -----------
GROSS PROFIT 2,512,732 1,283,351
----------- -----------
OPERATING EXPENSES
SELLING EXPENSES 1,313,568 415,991
GENERAL & ADMINISTRATIVE 1,314,420 425,460
WAREHOUSE & DISTRIBUTION 214,984 206,811
----------- -----------
2,842,972 1,048,262
INCOME (LOSS) FROM OPERATIONS (330,240) 235,089
----------- -----------
OTHER INCOME 2,685 2,754
INTEREST EXPENSE (220,222) (113,324)
----------- -----------
TOTAL OTHER INCOME & EXPENSES (217,537) (110,570)
----------- -----------
INCOME (LOSS) BEFORE TAXES (547,777) 124,519
PROVISION (BENEFIT) FOR TAXES (209,392) 47,000
----------- -----------
NET INCOME (LOSS) $ (338,385) $ 77,519
NET INCOME (LOSS) PER SHARE $ (0.08) $ 0.02
NUMBER OF SHARES USED IN COMPUTATION 4,493,525 3,985,755
4
<PAGE>
DIPLOMAT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31 March 31
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (Loss) ($ 338,385) $ 77,519
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 60,615 29,544
Amortization of goodwill 24,000 0
(Increase) in deferred income taxes (209,392) 0
----------- -----------
(463,162) 107,063
CHANGES IN ASSETS AND LIABILITIES, net of
effects from acquisition of Biobottoms
(Increase) in accounts receivable (812,802) (308,424)
(Increase) in inventories (2,372,184) (1,313,477)
(Increase)decrease in prepaid expenses
and other assets (1,350,807) 97,947
Increase in accounts payable 2,622,152 882,298
Increase in accrued expenses 662,598 1,567
----------- -----------
(1,714,205) (533,026)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (315,897) (5,193)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable 5,055,323 561,886
Repayments of loans payable (45,000) (45,957)
Issuance of preferred stock 600,000 0
Acquisition of Biobottoms (3,669,613) 0
----------- -----------
1,940,710 515,929
----------- -----------
NET INCREASE(DECREASE) IN CASH (89,392) (22,290)
CASH AND CASH EQUIVALENTS-beginning of period 131,371 41,035
----------- -----------
CASH AND CASH EQUIVALENTS-end of period $ 41,979 $ 18,745
5
<PAGE>
DIPLOMAT CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS - MARCH 31, 1996
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
A. The financial statements include the accounts of the Company and its
wholly-owned subsidiary. All significant intercompany balances and transactions
have been eliminated.
B. Inventories are stated at the lower cost or market. Cost is determined
by the first-in, first-out (FIFO) method.
C. Property and equipment are stated at cost. Depreciation is provided
using primarily the straight-line method and accelerated methods (for machinery
and equipment) over the expected useful lives of the assets, which range from
31.5 years for the building and real property, to between 5 and 10 years for
machinery, furniture and equipment.
D. During the year ended January 1, 1994, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS 109"), and has applied the provisions prospectively.
The adoption of SFAS 109 changed the Company's method of accounting for income
taxes from the deferred method to an asset and liability method. Previously, the
Company deferred the past tax effects of timing differences between financial
reporting and taxable income. The asset and liability method requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between tax and financial reporting bases
of other assets and liabilities.
E. For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
F. Art and design costs incurred in the development of the Company's new
Lamaze from AMI product lines are being amortized over 2 years.
G. On February 9, 1996, the Company completed the acquisition of
Biobottoms, Inc. ("Biobottoms"), a California-based mail-order catalog company,
specializing in apparel and accessories for newborn through preteen children,
pursuant to an Agreement and Plan of Merger made as of December 22, 1995 by and
among Diplomat Corporation, Diplomat Acquisition Corporation, a wholly-owned
subsidiary of the Company, organized under the laws of the State of Delaware
("DAC"), Biobottoms and Joan Cooper and Anita Dimondstein, individuals and
principal stockholders of Biobottoms (the "Merger Agreement"). Biobottoms has
become a wholly-owned subsidiary of the Company and will continue its principal
place of business in Petaluma, California.
The Company paid $2,500,000 for Biobottoms, $1,000,000 in cash and
$1,500,000 in the form of two promissory notes to Biobottoms' shareholders, each
in the amount of $750,000 ("Acquisition notes"). The notes bear interest at 1%
over the prime rate as defined in the agreements. The first $750,000 note is due
August, 1996 and can be convertible into common stock at $2 per share and the
second note is due in two equal installments of $375,000 in November. 1996 and
August, 1997.
6
<PAGE>
The shares of capital stock of Biobottoms issued and outstanding
immediately prior to the effective date of the merger were exchanged for an
aggregate of $2.5 million payable as follows:
(i) $1.0 million in cash;
(ii) $750,000 by promissory note payable 180 days following closing of the
acquisition ("Closing"); and
(iii)$750,000 by promissory note, secured by a junior security interest in
all of the assets of Diplomat and Biobottoms, excluding real estate, such note
to be payable in two equal installments of $375,000 each, together with interest
on such principal amount, on the 270th day and 540th day following Closing.
The promissory notes made in connection with the merger are referred to
hereinafter as the Deferred Payment.
In connection with the Closing, Biobottoms established an inventory based
credit facility with Congress Financial Corporation, the Company's principal
lender, secured by a first priority security interest in substantially all of
the assets of Biobottoms and a guaranty of such obligations by the Company (the
"Biobottoms Congress Loan Facility"). The maximum credit available under the
facility is $2.0 and on the date of Closing $848,531 was available and borrowed.
The Biobottoms/Congress Loan Facility is guaranteed by the Company and a default
thereunder constitutes a default under the Company's Loan and Security Agreement
with Congress. The interest rate charged on the loan is the prime rate as
announced by Core States Bank, N.A. (the "Prime Rate") plus 2%. Simultaneously
with the Closing, the Company and Biobottoms also entered into a loan and
subordinated security agreement with Robert M. Rubin (a director and principal
stockholder of the Company) and American United Global, Inc. ("American United")
(a corporation of which Mr. Rubin is an officer, director and principal
stockholder) pursuant to which the Company borrowed from Mr. Rubin (the "Rubin
Loan") and the Company borrowed from American United (the "American United
Loan") (collectively the "Rubin/American United Loans") $2,353,100 and $450,000
respectively. The amounts represented by the Rubin Loan do not include
subordinated secured loans made by Mr. Rubin to the Company in April 1994. The
American United loan to the Company provided for additional working capital.
Repayment of these loans were secured by a first priority security interest in
the capital stock of Biobottoms owned by the Company and a junior security
interest in substantially all of the assets of the Company and Biobottoms, other
than real estate, Biobottoms guaranteed the indebtedness of the Company to
American United and Biobottoms guaranteed the indebtedness of the Company to Mr.
Rubin. The interest on these loans is payable monthly at the Prime Rate plus 2%,
the same rate charged by Congress Financial Corporation, subject to the
Intercreditor Agreement (defined below).
The Deferred Payment notes and the Rubin/American United loans are subject
to an Intercreditor Agreement with Congress Financial Corporation (the
"Intercreditor Agreement") which has the effect of restricting or limiting
enforcement remedies under the promissory notes evidencing the Deferred Payment
and the Rubin American United Loans prior to repayment of the senior debt
payable to Congress Financial Corporation and restricting the repayment of
principal payable thereon based upon certain minimum excess loan availability
requirements.
7
<PAGE>
Additionally, the Company incurred costs related to the of acquisition in
the amount of approximately $720,000. Of this amount, $600,000 represents the
estimated fair value of 100,000 shares of the Company's convertible preferred
stock issued to a significant stockholder (who is also a member of the Board of
Directors), as partial consideration to induce the making of the loan and for
his assistance in consummating the acquisition. The preferred shares are
convertible into 1,000,000 common shares of the Company. The transaction will be
accounted for as a purchase and accordingly, Biobottoms results of operations
will be included with the Company's beginning February 9, 1996.
The following unaudited pro-forma summary combines the consolidated results
of operations of the Company and Biobottoms as if the acquisition had occurred
at the beginning of fiscal 1995, after giving effect to certain adjustments,
including amortization of goodwill, increased interest expense on the
acquisition debt, and the adjustments required as a result of changes to certain
employment agreements as a direct result of the acquisition.
Three Months Ended Three Months Ended
March 31, 1996 March 31, 1995
-------------- --------------
(unaudited) (unaudited)
Net Sales $6,254,212 $6,842,509
Net Loss (523,028) (248,248)
Net Loss Per Common Share (.12) (.06)
The pro-forma results do not necessarily represent results which would have
occurred if the acquisition had taken place on the basis assumed above, nor are
they indicative of the results of future combined operations.
The following is the condensed balance sheet of Biobottoms at the date of
acquisition, February 9, 1996.
Assets
Cash $ 1,250
Accounts Receivable, Net 267,670
Inventory, Net 1,988,962
Prepaid and Other Current Assets 1,569,027
Property and Equipment, Net 296,981
Other Assets 613,659
-----------
$ 4,737,549
Liabilities and Shareholders' Equity
Bank Line of Credit $ 27,154
Accounts Payable 3,179,210
Accrued Liabilities 407,943
Current Portion of Long Term Debt 82,232
Long Term Debt, Net 6,994
Stockholders' Equity 1,034,016
-----------
$ 4,737,549
8
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 Compared to Three Months Ended March 31,
1995
NET SALES
Consolidated net sales for the Three Month Period ended March 31, 1996
("1996 Three Month Period") increased approximately $2,456,000 or 91% from the
Three Month Period ended March 31, 1995 ("1995 Three Month Period") primarily as
a result of the Biobottoms sales of $3,351,000 from the date of acquisition,
February 9, 1996. Sales of Diplomat decreased 33% for the period. The lower
sales in 1996 were also impacted significantly by an adverse retailing
environment that has continued from the last quarter of 1995.
Consolidated cost of sales were 51% of net sales in 1996 and 52% in 1995.
The increase in cost of sales of $1,226,000 in 1996 included $1,501,000 from
Biobottoms. Cost of sales of Diplomat decreased 18% in 1996 as a result of lower
sales.
For the 1996 Three Month Period, Toys 'R Us and Wal-Mart represented 23%
and 14% respectively, of the Diplomat sales as compared to 35% and 36% in 1996.
OPERATING EXPENSES
Consolidated operating expenses, which include selling, general,
administrative, warehouse and distribution expenses, increased approximately
$1,795,000 from 1995 to 1996 primarily from $1,735,000 of expenses as a result
of Biobottoms operating expenses. Operating expenses as a percentage of net
sales increased from 39% in 1995 to 55% in 1996 because of the greater
percentage of fixed costs to the lower sales.
Interest expenses increased $107,000 as a result of Diplomat's increased
borrowing at higher interest rates in 1996 compared to 1995.
The net loss for the 1996 period was $338,000 as compared to net income of
$78,000 for the comparable period in 1995. Significantly lower sales of Diplomat
during the first quarter of 1996, without corresponding reductions in operating
expenses, were the principal components for the loss in 1996. Although
Biobottoms had net income of $60,000 from the date of acquisition, Diplomat
incurred additional interest expenses from the acquisition.
Liquidity and Capital Resources
The Company completed an initial public offering on November 13, 1993 and
received net proceeds of approximately $4,454,000. Proceeds of the offering were
used for purchases of inventory, marketing and promotion, product development,
reduction of accounts payable and repayment of loans from a principal
stockholder and executive officer. The Company has relied upon the proceeds of
its initial public offering, borrowings from an institutional lender, a
principal stockholder and director of the Company, and proceeds from the
exercise of warrants in 1995 in order to fund its operation.
9
<PAGE>
In connection with the Company's line of layette products marketed under
the Lamaze/Ecology Kids name, it was determined in 1994 that these products
would be manufactured outside the United States in order to take advantage of
lower labor and manufacturing costs resulting in significant costs savings. In
order to achieve this, it was necessary to establish inventory positions in
advance of receiving firm orders for these products. In addition, these orders
required that the Company establish letters of credit in favor of such foreign
suppliers, thereby reducing liquidity and restricting the Company's ability to
borrow. The Company's inventory position at March 31, 1996 reflects this
inventory build up and sales for the period were significantly less than
originally anticipated, which also adversely affected liquidity. Inventory also
increased for seasonal products. Management believes that the market reception
for this product line has been favorable and that the inventory position will be
reduced. Increased sales are expected to generate additional availability under
the Company's secured line of credit. Reductions in inventory will also improve
liquidity.
In April 1994, the Company entered into an agreement with Congress
Financial Corporation providing the Company with a $3 million secured line of
credit to be used for loans and trade letters of credit. The loans are secured
by substantially all of the Company's personal property, including without
limitation, accounts receivable, inventory and trademarks. The interest rate on
loans is two (2%) percent above the prime rate announced by Core States Bank.
The credit agreement contains restrictions relating to the payment of dividends
and the maintenance of certain levels or working capital which may not be less
than $4,500,000, excluding the Congress loan and stockholders equity of not less
than $3,500,000. The Company is currently in compliance with all covenants.
Under the terms of the credit agreement, the Company could borrow up to 85%
of the amount of eligible accounts receivable (as defined in the agreement), not
to exceed the maximum credit. In February 1995 the Agreement was amended to
adjust the formula used to determine the amount available for revolving loans by
including therein an amount based upon eligible inventory not to exceed
$750,000.
In connection with that amendment, Robert Rubin, a director and principal
stockholder of the Company, furnished the lender with a personal limited
guarantee up to a maximum liability of $375,000, pertaining to loans made based
upon eligible inventory. In connection with the initial Congress transaction,
the Company borrowed from Robert Rubin $590,000 on a secured term loan basis,
subordinated to Congress Financial, in order to repay in full its then existing
outstanding principal indebtedness to Citibank, N.A. Such Citibank facility in
the initial principal amount of $650,000, was established in June, 1993, secured
by certain assets of the Company and a shareholder guaranty from Mr. Rubin. The
loan from Mr. Rubin is repayable with interest at the prime rate plus 1 1/2%,
with required principal payment amortization identical to the terms applicable
to the Citibank loan terms. Accordingly, the Company made principal payments of
$120,000 in 1994, $120,000 in 1995 and will be required to make payments of
$175,000 and $174,800 in 1996 and 1997, respectively. Initial borrowing from
Congress Financial in the amount of $1,065,192 were used to repay indebtedness
to the American Insured Receivables Fund, the Company's former asset based
lender.
On December 27, 1995, Diplomat Corporation (the "Company") entered into an
Agreement and Plan of Merger by and among Diplomat Corporation, Diplomat
Acquisition Corp., a wholly-owned subsidiary of the Company, organized under the
laws of the State of Delaware ("DAC"), Biobottoms, Inc., a California
Corporation ("Biobottoms") and Joan Cooper and Anita Dimondstein, individuals
and principal stockholders of Biobottoms (the "Merger Agreement"). On February
9, 1996, the acquisition of Biobottoms was completed. Biobottoms became a
wholly-owned subsidiary of the Company and will continue to maintain its
principal place of business in Petaluma, California.
10
<PAGE>
The Intercreditor Agreement also provides that irrespective of the relative
priority status between the holders of the Deferred Payment obligations and the
Rubin/American United loans, repayment of the Deferred Payment is permitted to
be paid provided that there has been no default of senior debt payable by the
Company or Biobottoms to Congress, minimum excess availability requirements
under the Company's loan facility with Congress are satisfied and such payments
are made with proceeds from a subsequent sale of its capital stock. Subject to
the Intercreditor Agreement, the Deferred Payment and the Rubin/American United
loans will be payable from the proceeds from any sale of capital stock by the
Company in the proportions of 40% on account of the Deferred Payment and 60% on
account of the Rubin/American United Loans, except that before any such
distributions are made, the Company will be required to reduce the outstanding
principal amount of the Deferred Payment by $150,000.
It is the Company's intention to provide for the repayment of the Deferred
Payment and the Rubin Loan with proceeds of a subsequent financing consisting of
equity, debt or a combination of both. The Company does not presently have any
commitment for any such financing. After April 4, 1996, principal payments on
the American United Loan may be made with funds available to Diplomat under its
credit facility with Congress. Prior to March 1, 1998, no principal amount of
the Rubin Loan may be repaid, except from proceeds from the sale of capital
stock by the Company, subject in all respect to the Intercreditor Agreement.
Commencing March 1, 1998 and subject to the provisions of the Intercreditor
Agreement, including without limitation the requirement that the Company have
certain minimum levels of excess loan availability at the time of the making of
any such principal payment, the Rubin Loan is subject to principal payments
monthly of the amount equal to 25% of the Company's net profit for the second
preceding month, plus depreciation and amortization expenses for said month,
with the unpaid principal amount of the Rubin Loan and unpaid interest accrued
thereon payable in full on February 9, 1999.
Subject to the Intercreditor Agreement, the American United Loan is payable
in full on May 4, 1996. In connection with the American United Loan, the Company
also paid an administrative fee of $40,000. Subject to its terms, the loan was
paid in full at maturity.
In connection with the Biobottoms Congress Loan Facility, Mr. Rubin also
issued to Congress his written commitment to provide additional term loans to
the Company, not to exceed in the aggregate the principal amount of $300,000,
such loans to be made solely at the discretion of Congress. Proceeds from any
such loans may only be used by the Company to provide working capital for
Biobottoms.
Proceeds from the Congress loan and the Rubin/American United Loans were
used on February 9, 1996 or remained otherwise available as follows:
Payment at Closing of Biobottoms'
Institutional Secured Lender $1,448,025
Cash portion of Biobottoms Purchase
Price 1,000,000
Loan Costs and Legal Fees 96,690
Available Working Capital 1,103,816
11
<PAGE>
In July 1995, the Company, in connection with a financial consulting
agreement, issued to Boulder Enterprises, Inc., Class B, Class C and Class D
Warrants, each exercisable for 500,000 shares of common stock, at $1.37, $2.50
and $3.00 per share, respectively. All of the Class B Warrants were exercised
during 1995 providing the Company with net proceeds of $628,000.
There can be no assurance that the Company will operate profitably in the
future or that cash from operations will become the principal source of funds
for operations.
12
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
FORM 8-K/A CURRENT REPORT FEBRUARY 9, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DIPLOMAT CORPORATION
May 14, 1996 By:/s/ Sheldon R. Rose
-----------------------------------
Sheldon R. Rose
Chief Executive Officer and
Chairman of the Board
May 14, 1996 By:/s/Irwin Oringer
-----------------------------------
Irwin Oringer
Principal Accounting Officer and
Controller
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 41,979
<SECURITIES> 0
<RECEIVABLES> 1,926,136
<ALLOWANCES> 0
<INVENTORY> 6,682,149
<CURRENT-ASSETS> 1,995,659
<PP&E> 2,180,790
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,211,103
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
600,000
<COMMON> 450
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,211,103
<SALES> 0
<TOTAL-REVENUES> 5,152,866
<CGS> 2,640,134
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,842,972
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 220,222
<INCOME-PRETAX> (547,777)
<INCOME-TAX> (209,392)
<INCOME-CONTINUING> (338,384)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (338,385)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> 0.000
</TABLE>
