<PAGE> 1
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 September 30, 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 1-12868
JALATE, LTD.
(Exact name of registrant as specified in its charter)
California 95-4121885
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) (Identification Number)
1675 South Alameda Street, Los Angeles, California 90021
(Address of principal executive offices) (Zip code)
(213) 765-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
The number of shares outstanding of the registrant's Common Stock, no par
value, at October 31, 1996 was 3,403,000 shares.
This Form 10-Q contains 14 pages.
Exhibit index appears on page 13 .
<PAGE> 2
JALATE, LTD.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 199 $ 92
Due from factor 3,839 455
Trade accounts receivable, less allowance for
doubtful receivables of $1,113 in 1996 and
$669 in 1995 1,203 989
Inventories 3,742 4,432
Refundable income taxes 17 1,567
Prepaid expenses and other current assets 337 313
Due from officers - 106
------- ------
Total current assets 9,337 7,954
Property and equipment, at cost, net 1,098 868
Investment in joint venture 496 273
Other assets, at cost 92 88
------- ------
$11,023 $9,183
======= ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 1,070 $ 90
Trade accounts payable 3,292 3,188
Accrued expenses 544 568
------- ------
Total current liabilities 4,906 3,846
------- ------
Shareholders' equity:
Preferred stock, no par value. Authorized 3,000,000
shares; none issued and outstanding - -
Common stock, no par value. Authorized 20,000,000
shares; issued and outstanding 3,403,000 and
3,390,500 shares in 1996 and 1995, respectively 5,177 5,177
Additional paid-in capital 134 134
Retained earnings 806 26
------- ------
Total shareholders' equity 6,117 5,337
------- ------
$11,023 $9,183
======= ======
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 3
JALATE, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands except earning per share and weighted average shares outstanding)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $12,925 $18,103 $43,240 $55,125
Cost of goods sold 9,083 14,005 31,490 41,693
GROSS PROFIT 3,842 4,098 11,750 13,432
Operating expenses 3,497 3,889 10,750 12,786
EARNINGS FROM OPERATIONS 345 209 1,000 646
Interest expense 123 262 443 675
Equity in (earnings) loss of joint venture (17) 21 (223) (5)
EARNINGS(LOSS) BEFORE INCOME TAXES 239 (74) 780 (24)
Income tax (benefit) - (27) - (10)
NET EARNINGS(LOSS) $ 239 $ (47) $ 780 $ (14)
NET EARNINGS (LOSS) PER SHARE $ 0.07 $ (0.01) $ 0.23 $ -
WEIGHTED AVERAGE SHARES OUTSTANDING 3,403,000 3,391,000 3,401,000 3,413,000
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE> 4
JALATE, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (Loss) $ 780 $ (14)
------- -------
Adjustments to reconcile net earnings
(loss) to net cash provided
by operating activities:
Depreciation and amortization 288 201
Compensation expense -stock options - 59
Changes in assets and liabilities
(Increase) decrease in:
Due from factor (3,384) 2,874
Inventoriesnts receivable (690) (3,029)
Prepaid expenses and other current assets (24) (931)
Due from officers 106 (51)
Refundable income taxes 1,550 -
Other assets (4) (336)
Increase (decrease) in:
Trade accounts payable 104 1,859
Accrued expenses (24) (6)
Total adjustments (912) 61
------- -------
Net cash provided (used) by operating activities (132) 47
------- -------
Cash flows from investing activities:
Capital expenditures (518) (293)
Investment in joint venture (223) -
------- -------
Net cash used in investing activities (741) (293)
------- -------
Cash flows from financing activities:
Proceeds from issuance of note payable to bank 980 494
------- -------
Net cash provided by financing activities 980 494
------- -------
Net increase in cash 107 248
Cash at beginning of period 92 182
------- -------
Cash at end of period $ 199 $ 430
======= =======
Cash paid during the period for flow information
Interest $ 440 $ 674
Income taxes $ - $ 1,187
======= =======
</TABLE>
See accompnaying notes to condensed financial statements.
<PAGE> 5
JALATE, LTD.
Notes to Condensed Financial Statements
(Unaudited)
1. General.
The unaudited condensed financial statements have been prepared on the same
basis as the audited financial statements and, in the opinion of management,
reflect all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation for each of the periods presented. The
results of operations for interim periods are not necessarily indicative of
results to be achieved for full fiscal years.
As contemplated by the Securities and Exchange Commission under Rule 10-01
of Regulation S-X, the accompanying financial statements and notes have been
condensed and do not contain certain information that will be included in
the Company's annual financial statements and notes thereto. For further
information, refer to the financial statements and related notes for the
year ended December 31, 1995 included in the Company's Annual Report on Form
10-K.
2. Income Taxes.
Income taxes for the nine months ended September 30, 1996 were computed
using the effective tax rate estimated to be applicable for the full fiscal
year , which is subject to ongoing review and evaluation by management. As
of December 31, 1995, the Company had deferred tax assets and a related
valuation allowance of $1,084,000. During the three and nine months ended
September 30, 1996, taxable income generated by the Company was offset by a
reduction in the beginning balance of the valuation allowance. Management
continues to evaluate the recoverability of the deferred tax assets.
3. Earnings per Share.
Net earnings (loss) per share is based on the weighted average number of
shares of Common Stock and Common Stock equivalents outstanding.
4. Inventories
A summary of inventories at September 30,1996 is as follows:
<TABLE>
<S> <C>
Piece Goods and Trim $ 1,100,000
Work in Proved $ 1,355,000
Finished Goods $ 1,287,000
-----------
$ 3,742,000
===========
</TABLE>
<PAGE> 6
5. Adoption of Accounting Standards.
STOCK COMPENSATION. Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (FAS 123), issued in October 1995
and effective for fiscal years beginning after December 15, 1995,
encourages, but does not require, a fair value based method of accounting
for employee stock options or similar equity instruments. FAS 123 allows an
entity to elect to continue to measure compensation cost under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APBO No. 25), but requires pro forma disclosures of net earnings and
earnings per share as if the fair value based method of accounting had been
applied. The Company has adopted FAS 123 effective January 1, 1996 and has
elected to continue to measure compensation cost under APBO No. 25.
Accordingly, FAS 123 has no impact on the Company's financial position or
results of operations.
IMPAIRMENT OF LONG-LIVED ASSETS. Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed of" (FAS 121), issued in March 1995 and
effective for fiscal years beginning after December 15, 1995, establishes
accounting standards for the recognition and measurement of impairment of
long-lived assets, certain identifiable intangibles, and goodwill either to
be held or disposed of. The Company has adopted FAS 121 effective January
1, 1996 and the adoption has not had a material impact on the Company's
financial position or results of operations.
6. Certain December 1995 condensed accounts have been reclassified in order to
conform with the 1996 presentation.
<PAGE> 7
ITEM 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
ADDRESSED IN THIS ITEM 2 CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACTOF 1934 AS AMENDED. SUCH
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO A VARIETY OF RISKS AND
UNCERTAINTIES, INCLUDING THOSE DISCUSSED BELOW UNDER THE HEADING "FACTORS
THAT MAY AFFECT FUTURE RESULTS" AND ELSEWHERE IN THIS REPORT ON FORM 10-Q
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED
BY THE COMPANY'S MANAGEMENT. THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 (THE "ACT") PROVIDES CERTAIN "SAFE HARBOR" PROVISIONS FOR
FORWARD-LOOKING STATEMENTS. ALL FORWARD-LOOKING STATEMENTS MADE IN THIS
QUARTERLY REPORT ON FORM 10-Q ARE MADE PURSUANT TO THE ACT.
<PAGE> 8
The following table sets forth, for the periods indicated, the percentage
which certain items in the statements of operations data bear to net sales
and the percentage dollar increase (decrease) of such items from period to
period
JALATE, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Percent of Net Sales Percent of Net sales
Three Months Ended Nine Months Ended
September 30, % Dollar September 30, % Dollar
-------------------- Increase -------------------- Increase
1996 1995 (Decrease) 1996 1995 (Decrease)
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% -28.6% 100.0% 100.0% -21.6%
Cost of goods sold (70.3) (77.4) (0.4) (72.8) (75.6) (0.2)
----- ----- ----- ----- ----- ------
Gross Profit 29.7 22.6 (0.1) 27.2 24.4 (0.1)
Operating Expenses 27.0 21.5 (0.1) 24.9 23.2 (0.2)
----- ----- ----- ----- ----- ------
Earnings from operations 2.7 1.1 0.7 2.3 1.2 0.5
Interest expense 1.0 1.4 (0.5) 1.0 1.2 (0.3)
Equity in (earnings) loss
of joint venture (0.1) 0.1 1.9 (0.5) - 43.8
----- ----- ----- ----- ----- ------
Earnings (loss) before taxes 1.8 (0.4) 4.2 1.8 - 33.5
Income tax expense (benefit) - 0.1 - - - -
----- ----- ----- ----- ----- ------
Net earnings (loss) 1.8% -0.3% 608.5% 1.8% * 5671.4%
===== ===== ===== ===== ===== ======
</TABLE>
* Not calculable
<PAGE> 9
NET SALES. Gross sales decreased from $20,086,000 for the three months
ended September 30, 1995 to $13,870,000 for the comparable period of fiscal
1996, a decrease of 30. 9%, and from $60,343,000 for the nine months ended
September 30, 1995 to $46,629,000 for the comparable period of fiscal 1996,
a decrease of 22.7%. The decrease in gross sales for the nine month period
was due to a decrease in the volume of apparel sold from 6,807,000 to
5,403,000 units, a decrease of 20.6%. The decrease in volume of apparel
sold was due in part to a 10.8% decrease in the number of units sold by the
Jalate division and 10.6% decrease in volume of the Zanoni division. The
average wholesale prices increased 19.3% for the Zanoni division and
increased 6.4% for the Jalate division. The decrease in gross sales for
the nine month period was also attributed to (i) the discontinuing of the
smaller and less profitable Pottery division and the Kids line of apparel,
which was offset in part by the start-up in the second quarter of 1995 of
the Product Development division, (ii) the discontinuing of the Missy line
of apparel and (iii) the Company's policy to be more selective in their
customer base in order to maintain adequate profitability levels.
RETURNS AND ALLOWANCES AND DISCOUNTS decreased from $1,983,000 (9.9% of
gross sales) for the three months ended September 30, 1995 to $945,000
(6.8% of gross sales) for the comparable period of fiscal 1996, a decrease
of 52.3% and from $5,218,000 (8.6% of gross sales) for the nine months
ended September 30, 1995 to $3,389,000 (7.3% of gross sales) for the
comparable period of fiscal 1996, a decrease of 35.1% due in part to the
Company's implementation of improved procedures to manage quality control
in the preproduction, production and distribution operations.
As a result of the above mentioned factors, net sales decreased from
$18,103,000 for the three months ended September 30, 1995 to $12,925,000
for the comparable period of fiscal 1996, a decrease of 28.6% and decreased
from $55,125,000 for the nine months ended September 30, 1995 to
$43,240,000 for the comparable period of fiscal 1996, a decrease of 21.6%.
GROSS PROFIT. Gross Profit decreased from $4,098,000 (22.6% of net sales)
for the three months ended September 30, 1995 to $3,842,000 (29.7% of net
sales) for the comparable period of fiscal 1996, a decrease of 6.2%, and
decreased from $13,432,000 (24.4% of net sales) for the nine months ended
September 30, 1995 to $11,750,000 (27.2% of net sales) for the comparable
period of fiscal 1996, a decrease of 12.5%.
The increase in gross profit as a percent of net sales for both the three
month period and nine month period for fiscal 1996 compared to fiscal 1995
was due primarily to the decrease in discounts, returns and allowances in
all product lines and to the company's policy of selecting customers that
provide acceptable gross profit margins.
<PAGE> 10
OPERATING EXPENSES. Operating expenses decreased from $3,889,000 (21.5% of
net sales) for the three months ended September 30, 1995 to $3,497,000
(27.1% of net sales) for the comparable period of fiscal 1996, a decrease
of 10.1%, and from $12,786,000 (23.2% of net sales) for the nine months
ended September 30, 1995 to $10,750,000 (24.9% of net sales) for the
comparable period of fiscal 1996, a decrease of 15.9%. The decrease in
operating expenses in absolute terms was due primarily to (i) re-analyzing
all company expenses and benefiting from cost-cutting measures where
appropriate (ii) a significant reduction in the cost of freight-out as a
result of minimizing air shipments and restructuring the distribution
center.
INTEREST EXPENSE. Interest expense primarily reflects interest payable on
advances from the factor and interest payable on loans against imports.
Interest expense decreased from $262,000 for the three months ended
September 30, 1995 to $123,000 for the comparable period of fiscal 1996, a
decrease of 52.7%, and from $675,000 for the nine months ended September
30, 1995 to $443,000 for the comparable period of fiscal 1996, a decrease
of 34.2% due to (i) the decreases in advances from the factor partly as
result of reductions in gross sales and inventory and (ii) the decrease in
the interest rate charged by the factor.
EQUITY IN EARNINGS OF JOINT VENTURE. Investment in joint venture is
accounted for by the equity method, under which the Company's share of
earnings of the joint venture is reflected in income as earned and
distributions are credited against the investment in the joint venture when
received. Equity earnings increased from a loss of $21,000 for the three
months ended September 30, 1995 to income of $18,000 for the comparable
period of fiscal 1996, and from income of $5,000 for the nine months ended
September 30, 1995 to $224,000 for the comparable period of fiscal 1996.
The increases are partly attributable to (i) the joint venture commenced
operations in May 1995 and (ii) the joint venture management has increased
the unit volume of sales while controlling operating expenses.
INCOME TAXES. As of June 30, 1996, the Company had deferred tax assets and
a related valuation allowance of $914,000. During the three months ended
September 30, 1996, taxable income generated by the Company was offset by a
reduction in the valuation allowance of $96,000. Management continues to
evaluate the recoverability the deferred tax assets. The estimated
effective tax rate for 1996 is subject to ongoing review and evaluation by
management. A 40.1% effective combined federal and state tax rate has been
used for the income tax provision for three months ended September 30,
1996.
NET EARNINGS. Net earnings (loss) increased from net loss of $47,000
($0.01 per common share) for the three months ended September 30, 1995 to
net earning of $239,000 ($.07 per common share) for the comparable period
of fiscal 1996 and from a net loss of $14,000 (none per common share) for
the nine months ended September 30, 1995 to a net earning of $780,000 ($.23
per common share) for the comparable period of fiscal 1996. The increases
in net earnings for the periods ended September 30, 1996 are attributed to
the reductions to expenses described above.
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES. At September 30, 1996, working capital
was $4,431,000 compared to $7,001,000 at September 30, 1995. Cash provided
by operating activities aggregated$47,000 for the nine months ended
September 30, 1995, compared with cash used by operating activities
aggregating $132,000 for the nine months ended September 30, 1996.
Inventory at September 30, 1996 was $3,742,000 as compared to $2,922,000 on
June 30, 1996 and $4,432,000 at December 31, 1995 and $8,131,000 at
September 30, 1995.
At September 30, 1996, the amount due from the factor consisted of the
following:
<TABLE>
<S> <C>
Factor receivables $ 8,652,000
Advances from Factor $(3,908,000)
Open Credit Memos $ (905,000)
-----------
$ 3,839,000
===========
</TABLE>
The company has a agreement with its factor, that provides for advances to
the company of up to 90% of qualified factor receivables.
The Company believes that its present and currently available sources of
working capital are sufficient to maintain its current level of operations
for the foreseeable future.
FACTORS THAT MAY AFFECT FUTURE RESULTS
All forward-looking statements contained in this Item 2 are subject to, in
addition to the other matters described in the Report on Form 10-Q, a
variety of significant risks and uncertainties. The following discussion
highlights some of these risks and uncertainties. Further, from time to
time, information provided by the Company or statements made by its
employees may contain forward-looking information. The Company cautions
the reader that there can be no assurance that actual results or business
conditions will not differ materially from those projected or suggested in
such forward-looking statements as a result of various factors, including
those discussed below.
RECENT OPERATING RESULTS. For the year ended December 31, 1995, the
Company reported a net loss of $2,896,000,. primarily due to the factors
described in the Company's Annual Report on Form 10-K. The Company has
responded to this loss by commencing a program to improve operating
efficiencies by expanding and strengthening its management team, including
the hiring of a new CEO, CFO,Controller MIS director, Human Resources
director, Distribution manager, Operations manager and Piece Goods Manager.
Although the Company's new management has responded to this loss with the
measures described above, and has achieved net earnings of $780,000 for the
first nine months of fiscal 1996, there can be no assurance that these or
any other measures will lead to continued profitability for the Company in
the remaining three months of 1996.
<PAGE> 12
MANAGEMENT STRATEGY. As discussed above, the Company's new management has
commenced a restructuring of operations in response to the Company's 1995
operating losses. The planned measures are based upon the new management's
current understanding and assumptions concerning the Company's operations
and, accordingly, management may modify its approach on these measures, or
take additional measures, as it deems appropriate. Further, there can be
no assurance that management's strategy in responding to the Company's
losses will continue to prove successful.
SUBSTANTIAL COMPETITION. The apparel industry is highly competitive. Many
of the Company's competitors have substantially greater financial,
distribution, marketing and other resources, including greater brand
awareness, than the Company. The Company competes with numerous apparel
manufacturers, including those with their own retail stores, as well as
department stores, specialty stores, retail chains and mass merchandisers
which sell apparel under their own labels. From time to time, the Company
has lowered prices on certain products to maintain market share, which has
adversely affected the Company's gross profit margin on such products.
There can be no assurance that such price competition will not recur.
CHANGING FASHION TRENDS. The Company's success depends in substantial part
on its ability to correctly anticipate, gauge and respond to rapidly
changing consumer preferences in a timely manner. If the Company
materially misjudges the market for a particular product or product line,
the Company may be faced with a substantial reduction in sales and excess
inventory. There can be no assurance that the Company will be able to
correctly anticipate, gauge and respond to changing consumer preferences in
a timely manner in the future.
ECONOMIC CONDITIONS. The apparel industry historically has been subject to
substantial cyclical variation, and a recession in the general economy or
uncertainties regarding future economic prospects that affect consumer
spending habits have in the past had, and may in the future have, a
materially adverse effect on the Company's results of operations. In
addition, certain retailers, including some of the Company's customers, are
experiencing financial difficulties which increase the risk of extending
credit to such retailers. Many retailers have attempted to improve their
own operating efficiencies by concentrating their purchasing power among an
increasingly small group of vendors. There can be no assurance that the
Company will remain a preferred vendor for its existing customers. A
decrease in business from, or loss of, a major customer could have a
material adverse effect on the Company's results of operations. In
addition, there can be no assurance that the Company's factor will approve
the extension of credit to certain retail customers in the future. If a
customer's credit is not approved by the factor, the Company could either
assume the collection risk on sales to such customer itself, or choose not
to make sales to such customer.
<PAGE> 13
VARIABILITY OF QUARTERLY RESULTS. The Company has experienced, and expects
to continue to experience, variability in its net sales and operating
results on a quarterly basis. The Company believes the factors which
influence this variability include (i) the timing of the Company's
introduction of new apparel collections, (ii) the level of consumer
acceptance of each new collection, (iii) general economic and industry
conditions that affect consumer spending and retailer purchasing, (v) the
timing of the placement or cancellation of customer orders, (v) the timing
of expenditures in anticipation of increased sales and customer delivery
requirements, (vi) the weather and (vii) actions of competitors. In
addition, women's apparel business is highly seasonal.
RELIANCE ON KEY PERSONNEL. The operations of the Company depend to a great
extent on the efforts of its senior management, including Vinton W.
Bacon, Larry Brahim, Theordore B. Cooper, Jeffrey L. Friedman and Jan L.
Grossman. The extended loss of the services of one or more of these
individuals could have a materially adverse effect on the Company's
operations.
IMPACT OF FOREIGN OPERATIONS. In July 1994, the Company commenced
manufacturing products abroad. As a result, the Company's operations are
subject to the customary risks of doing business abroad, including, but not
limited to, transportation delays, political instability, expropriation,
currency fluctuations and the imposition of tariffs, import and export
controls and other non-tariff barriers (including changes in the allocation
of quotas).
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.None
Item 2. Changes in Securities.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 - None
b. Reports on Form 8-k - None
<PAGE> 14
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.
JALATE, LTD.
Date: November 7, 1996 By /s/ FREDERICK A. FINDLEY
-------------------------
Frederick A. Findley
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 199
<SECURITIES> 0
<RECEIVABLES> 2,316
<ALLOWANCES> (1,113)
<INVENTORY> 3,742
<CURRENT-ASSETS> 9,337
<PP&E> 1,897
<DEPRECIATION> (800)
<TOTAL-ASSETS> 11,023
<CURRENT-LIABILITIES> 4,906
<BONDS> 0
0
0
<COMMON> 5,177
<OTHER-SE> 940
<TOTAL-LIABILITY-AND-EQUITY> 11,023
<SALES> 43,176
<TOTAL-REVENUES> 43,241
<CGS> 31,491
<TOTAL-COSTS> 42,241
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 443
<INCOME-PRETAX> 780
<INCOME-TAX> 0
<INCOME-CONTINUING> 780
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 780
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
