SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended: September 30, 1997
Commission file number: 1-12840
CSL LIGHTING MANUFACTURING, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4463033
(State of incorporation) (I.R.S. employer identification No.)
27615 Avenue Hopkins, Valencia, California 91355-3447
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: 805-257-4155
Indicate by check 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 |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 13,916,620 shares of common
stock, $.01 par value, as of November 12, 1997.
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
INDEX
PART I. - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Condensed Balance Sheets at
December 31, 1996 and
September 30, 1997 (Unaudited)....................................3 - 4
Condensed Statements of Operations
for the nine months ended
September 30, 1996 (Unaudited) and
September 30, 1997 (Unaudited)........................................5
Condensed Statements of Operations
for the three months ended
September 30, 1996 (Unaudited) and
September 30, 1997 (Unaudited)........................................6
Condensed Statements of Cash Flows
for the nine months ended September 30, 1996 (Unaudited)
and September 30, 1997 (Unaudited)....................................7
Notes to Unaudited Condensed Financial Statements.................8 - 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................................................10 - 13
PART II - OTHER INFORMATION...................................................13
SIGNATURES....................................................................14
2
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
ASSETS
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(Unaudited)
CURRENT ASSETS:
Cash $ 7,000 $ 70,000
Accounts receivable, net of
allowance for doubtful
accounts of $381,000 at
December 31,1996 and
$196,000 at September 30, 1997 1,611,000 1,890,000
Inventories 4,172,000 4,449,000
Other current assets 1,013,000 989,000
---------- ----------
6,803,000 7,398,000
---------- ----------
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation and
amortization of $1,262,000 at December 31,
1996 and $1,590,000 at September 30, 1997 1,517,000 1,497,000
---------- ----------
OTHER ASSETS 280,000 110,000
---------- ----------
$8,600,000 $9,005,000
========== ==========
The accompanying notes are an integral part of these condensed balance sheets
3
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(Unaudited)
CURRENT LIABILITIES:
Bank overdraft $ -- $ 81,000
Current portion of long - term debt 19,000 7,000
Current portion of notes payable
to stockholders 100,000 --
Accounts payable 1,347,000 979,000
Accrued expenses 579,000 474,000
------------ ------------
2,045,000 1,541,000
------------ ------------
LONG - TERM LIABILITIES:
Long - term debt, net of current portion 1,936,000 2,155,000
Notes payable to stockholders,
net of current portion 78,000 78,000
Subordinated convertible debt 3,253,000 1,876,000
Deferred rent 220,000 211,000
------------ ------------
5,487,000 4,320,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized - 1,000,000 shares
Issued and Outstanding - none -- --
Common stock, $.01 par value:
Authorized - 30,000,000 shares
Outstanding -
6,269,000 shares at December 31, 1996
12,671,000 shares at September 30, 1997
Issued -
6,784,000 shares at December 31, 1996
13,186,000 shares at September 30, 1997 63,000 132,000
Additional paid-in-capital 11,722,000 15,513,000
Less - Shares held in treasury (1,218,000) (1,218,000)
Deferred compensation (575,000) (526,000)
Retained deficit (8,924,000) (10,757,000)
------------ ------------
1,068,000 3,144,000
------------ ------------
$ 8,600,000 $ 9,005,000
============ ============
The accompanying notes are an integral part of these condensed balance sheets
4
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
1996 1997
------------ ------------
NET SALES $ 9,250,000 $ 9,541,000
COST OF GOODS SOLD 4,793,000 5,626,000
------------ ------------
4,457,000 3,915,000
------------ ------------
OPERATING EXPENSES:
Selling 2,387,000 2,388,000
General and administrative 2,788,000 2,481,000
------------ ------------
5,175,000 4,869,000
------------ ------------
Loss from operations (718,000) (954,000)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income -- 4,000
Interest expense - financing obligations (367,000) (221,000)
Interest expense - conversion discount,
interest and additional stock conversion
bonus for convertible notes -- (661,000)
Gain from legal settlement 1,137,000 --
Other, net (149,000) --
------------ ------------
621,000 (878,000)
------------ ------------
Loss before provision for income taxes (97,000) (1,832,000)
PROVISION FOR INCOME TAXES 1,000 1,000
------------ ------------
NET LOSS $ (98,000) $ (1,833,000)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 5,240,658 10,152,744
============ ============
NET LOSS PER COMMON SHARE $ (0.02) (0.18)
============ ============
The accompanying notes are an integral part of
these condensed financial statements
5
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
1996 1997
------------ ------------
NET SALES $ 2,805,000 $ 3,080,000
COST OF GOODS SOLD 1,720,000 1,820,000
------------ ------------
1,085,000 1,260,000
------------ ------------
OPERATING EXPENSES:
Selling 764,000 771,000
General and administrative 899,000 955,000
------------ ------------
1,663,000 1,726,000
------------ ------------
Loss from operations (578,000) (466,000)
OTHER INCOME (EXPENSE):
Interest income -- 3,000
Interest expense - financing obligations (168,000) (73,000)
Interest expense - conversion discount,
interest and additional stock conversion
bonus for convertible notes -- (153,000)
Other, net (1,000) --
------------ ------------
(169,000) (223,000)
------------ ------------
Loss before provision for income taxes (747,000) (689,000)
PROVISION FOR INCOME TAXES (19,000) --
------------ ------------
NET LOSS $ (728,000) $ (689,000)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 5,428,081 10,620,508
============ ============
NET LOSS PER COMMON SHARE $ (0.13) $ (0.06)
============ ============
The accompanying notes are an integral part of
these condensed financial statements
6
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (98,000) $(1,833,000)
Adjustments to reconcile net loss to
net cash used in operating activities:
Deferred compensation 49,000 49,000
Depreciation and amortization 413,000 469,000
Provision for doubtful accounts 299,000 (185,000)
Interest expense associated with fixed
conversion discounts and additional stock bonus -- 556,000
Gain on legal settlement (1,137,000) --
Loss on licensing agreement 157,000 --
Loss on disposal of fixed assets 5,000 --
Decrease (increase) in assets:
Accounts receivable 315,000 (94,000)
Inventories (1,235,000) (277,000)
Other (377,000) (282,000)
Increase (decrease) in liabilities:
Bank overdraft -- 81,000
Accounts payable 273,000 (368,000)
Accrued expenses 70,000 77,000
Deferred rent -- (9,000)
----------- -----------
Net cash used in operating activities (1,266,000) (1,816,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable from employees 70,000 --
Cash proceeds from the sale of property and equipment 12,000 --
Purchases of property and equipment (324,000) (137,000)
Other assets (484,000) (6,000)
----------- -----------
Net cash used in investing activities (726,000) (143,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term borrowings -- 219,000
Repayments of long-term borrowings (730,000) --
Proceeds from the sale of subordinated convertible debt 2,600,000 2,100,000
Repayments of long-term debt (214,000) (12,000)
Repayments of note payable to stockholder -- (100,000)
Net proceeds from sale of common stock 924,000 --
Subordinated debt issuance costs (443,000) (172,000)
Additional costs associated with the converision
of subordinated debt to common stock -- (13,000)
----------- -----------
Net cash provided by financing activities 2,137,000 2,022,000
----------- -----------
NET INCREASE (DECREASE) IN CASH 145,000 63,000
CASH, beginning of period 120,000 7,000
----------- -----------
CASH, end of period $ 265,000 $ 70,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these condensed financial statements
7
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with the requirements of Form 10-QSB and, therefore, do not include
all information and footnotes which would be presented were such financial
statements prepared in accordance with generally accepted accounting principles.
These statements should be read in conjunction with the Company's Annual report
on Form 10-KSB which contain audited financial information as of December 31,
1996 and 1995. In the opinion of management, these interim financial statements,
when read in conjunction with Management's Discussion and Analysis contained in
this report, reflect all adjustments necessary for a fair presentation of the
financial position and results of operations for the periods presented. The
results of operations and cash flows for such periods are not necessarily
indicative of results to be expected for the full year.
Certain prior year financial information has been reclassified to conform to
current year presentation.
2. WEIGHTED AVERAGE NUMBER OF SHARES
Net loss per share are based upon the weighted average number of shares
outstanding during the period. Outstanding stock options and warrants were not
included in the weighted average computation because they were anti-dilutive.
3. INVENTORIES
Inventories include costs of materials, labor and manufacturing overhead, and
are stated at the lower of cost (weighted average) or market and consist of the
following at December 31, 1996 and September 30, 1997:
December 31, September 30,
------------ -------------
1996 1997
---- ----
Raw Material $ 749,000 $ 934,000
Finished Goods 3,423,000 3,515,000
----------- -----------
$ 4,172,000 $ 4,449,000
=========== ===========
4. INCOME TAXES
Under FASB Statement No. 109, Accounting for Income Taxes, deferred tax assets
may be recognized for temporary differences that will result in deductible
amounts in future periods and for loss carry-forwards. A valuation allowance is
recognized if, based on the weight of available evidence, it is more likely than
not that some portion or all of the deferred tax asset will not be realized.
Based on the Company's operating history, and inception to date accumulated
deficit, all of the Company's deferred tax assets are offset by a valuation
allowance.
The current provision for income taxes for the three and nine months ended
September 30, 1997 consists of the minimum state tax.
8
<PAGE>
5. STATEMENTS OF CASH FLOWS
Supplemental cash flows disclosures at September 30, 1996 and 1997 are as
follows:
1996 1997
---- ----
Interest paid $ 320,000 $ 206,000
========= =========
Income taxes paid $ 1,000 $ 1,000
========= =========
The Company incurred the following non cash transactions for the nine months
ended September 30, 1997:
Write off of subordinated debt accrued interest canceled in connection
with the conversion of subordinated debt to common stock of $182,000;
Write off of subordinated debt issuance costs in connection with the
conversion of subordinated debt to common stock of $339,000;
Reclassification of other long term asset costs to property, plant and
equipment of $164,000;
The Company converted $3,477,000 of subordinated debt to common stock.
6. SUBORDINATED DEBT
In February 1997, the Company raised $1,000,000 through the placement of 6
percent convertible debt notes due December 31, 1998. The notes are convertible
into common stock commencing 90 days after issuance at a conversion price equal
to 75 percent of the average bid price for the five trading days preceding
conversion. There is an additional 10% stock issuance, at no cost for each
conversion.
Additionally, in August 1997, the Company raised $1,100,000 through the
placement of 8 percent convertible debt notes due August 31, 1999. One half of
the notes are convertible into common stock commencing 90 days after issuance at
a conversion price equal to 75 percent of the average bid price for the five
trading days preceding conversion. The remaining debt is convertible into common
stock commencing 120 days after issuance at the same conversion price noted
above.
In accordance with generally accepted accounting principles, the fixed discount
on the conversion feature of these notes is considered to be interest expense
and is recognized in the statement of operations during the period from the
issuance of the debt to the time at which the debt becomes convertible. Further,
the additional 10% stock issuance upon conversion of the 6 percent convertible
subordinated debt is also deemed to be interest. Interest expense associated
with the fixed discount recorded during the third quarter of 1997 was $122,000.
During the nine months ended September 30, 1997 the Company recorded $556,000 of
fixed discount and additional stock issuance as "non-cash" interest expense
relating to this transaction. In the fourth quarter of 1997 the Company will
record the remaining fixed discount interest expense of $244,000.
7. CHANGES IN EQUITY
During the nine months ended September 30, 1997 the Company issued 6,916,620
shares of common stock to satisfy the common shares due from the conversion of
$3,477,000 of subordinated debt.
9
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Conditions and
Results of Operations:
Certain statements made in this form 10 - QSB are "forward looking statements
(within the meaning of the Private Securities Litigation Reform Act of 1996)
regarding the plans and objectives of management for future operations. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. The Company's plans and objectives are based,
in part, on assumptions involving the continued expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are difficult or impossible to predict accurately
and many of which are beyond the control of the Company. Although the Company
believes that its assumptions underlying the forward looking statements are
reasonable, any of the assumptions could prove inaccurate and, therefore, there
can be no assurance that the forward looking statements included in this report
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, particularly in view of the
Company's operations, the inclusion of such information should not be regarded
as a representation by the Company or any other person that the objectives and
plans of the Company will be achieved.
Overview
The Company's strategy is to exploit and expand its existing markets for its
product offerings. The Company continues to focus its efforts on maximizing the
efficiencies of its manufacturing and distribution network on a worldwide basis.
In furtherance of this strategy, the Company has expanded its operations to
include a presence in Asia, Southeast Asia, Europe, Africa and the Middle East.
The Company has entered into a number of joint venture, cooperative agreements,
and distribution agreements in the United States, Europe, Asia, Africa, and the
Middle East. In fiscal 1997, the Company began to realize the benefits of its
overseas investment through the signing of distribution agreements in Singapore,
Shanghai, Philippines, Indonesia and The Sultanate of Oman. These distribution
agreements have provided for commitments for approximately $1,700,000 of the
Company's product. During the nine months ended September 30, 1997 the Company
shipped approximately $650,000 of product related to these commitments.
The Company will continue to pursue the development of these types of
distribution relations in other parts of the world.
Going Concern Consideration
The Company has suffered recurring losses from operations and has a retained
deficit at September 30, 1997 of $10,757,000 that raises substantial doubt about
the Company's ability to continue as a going concern. Management continues to
evaluate its operations and has continued to focus the Company's efforts and
develop plans to raise additional capital, generate operating income and provide
strategic alliances throughout the world, to sustain the Company's operations
through 1997. The Company continues to evaluate its product line and refine it
to its customer base.
There can be no assurance that the Company will be able to successfully raise
additional capital to meet its current operating needs. In addition, there can
be no assurance that the Company's
10
<PAGE>
products will be successfully marketed in foreign markets or that the Company
will be able to produce and distribute products in sufficient quantities or at a
sufficient price levels to make its expansion efforts profitable.
Sales
Sales increased by $275,000 or 9.8% from $2,805,000 for the three months ended
September 30, 1996, to $3,080,000 for the three months ended September 30, 1997,
and sales increased by $291,000 or 3.2% from $9,250,000 for the nine months
ended September 30, 1996, to $9,541,000 for the nine months ended September 30,
1997. The increase in sales for the three and nine months ended September 30,
1997 over the three and nine months ended September 30, 1996 is attributable to
the Company's foreign sales offices and distribution relationships.
Gross Profit
Gross profit increased by $175,000 or 13.9% from $1,085,000 for the three months
ended September 30, 1996, to $1,260,000 for the three months ended September 30,
1997. Gross profit decreased by $542,000 or 12.2% from $4,457,000 for the nine
months ended September 30, 1996, to $3,915,000 for the nine months ended
September 30, 1997. Gross profit as a percentage of net sales increased 2.2%
from 38.7% for the three months ended September 30, 1996, to 40.9% for the three
months ended September 30, 1997. Gross profit as a percentage of net sales
decreased 7.2% from 48.2% for the nine months ended September 30, 1996, to 41.0%
for the nine months ended September 30, 1997. The decrease in margin as a
percentage of sales are attributable to the Company's fixed overhead not being
absorbed by its sales. However, gross profit margins for the three and nine
months ended September 30, 1997 are consistent with the Company's 1996 annual
gross margin of 41.5%.
Selling Expense
Selling expenses as a percentage of net sales for the three months ended
September 30, 1996 and 1997 were 27.2% and 25.0%, respectively. Selling expenses
as a percentage of net sales for the nine months ended September 30, 1996 and
1997 were 25.8%, and 25.0%, respectively. For the three and nine months ended
September 30, 1997, selling expenses were $771,000 and $2,388,000, respectively.
For the three and nine months ended September 30, 1996, selling expenses were
$764,000 and $2,387,000, respectively.
Selling expenses during the nine and three month periods ended September 30,
1997 included expenditures for the Company's foreign operations. The Company's
initial expenditure of $132,000 on its foreign operations began in the third
quarter of 1996. For the three and nine months ended September 30, 1997 the
Company expended approximately $163,000 and $461,000, respectively, on its
foreign operations.
Domestic selling expense as percentage of sales was approximately 19.7% and
20.2% for the three and nine months ended September 30, 1997 as compared to
22.5% and 24.4% for the three and nine months ended September 30, 1996. The
decrease in domestics sales expenses as a percentage of net sales for the three
and nine months ended September 30, 1997 is attributable to a reduction in the
Company's sales staff from the prior periods. In addition, the Company reduced
the amount of royalties and commissions paid on its products and reduced its
expenditures on tradeshows. Increased expenditures over the prior periods
include design and production costs for new catalogs and literature.
General and Administrative Expenses
11
<PAGE>
General and administrative expenses as a percentage of net sales for the three
months ended September 30, 1996 and 1997 were 32.0% and 31.0%, respectively.
General and administrative expenses as a percentage of net sales for the nine
months ended September 30, 1996 and 1997 were 30.1% and 26.0%, respectively. For
the three months ended September 30, 1996 and 1997, general and administrative
expenses were $899,000 and $955,000, respectively. For the nine months ended
September 30, 1996 and 1997, general and administrative expenses were $2,788,000
and $2,481,000, respectively. The increase in general and administrative
expenses for the three months ended September 30, 1996 and 1997 is attributable
to amortization of subordinated debt issuance costs, severance, and legal
expenditures. The overall decrease in general and administrative expenses for
the nine months ended September 30, 1996 and 1997 is attributable to reductions
in employee levels, bad debt expense, insurance premiums, and travel.
Other Income and (Expense)
Other income and expense as a percentage of net sales for the three and nine
months ended September 30, 1996 and 1997 were (6.0)% and 6.7%, respectively, and
(7.3)% and (9.3)%, respectively. For the three and nine months ended September
30, 1997, other expense, net was $(223,000) and $(878,000), respectively. For
the three and nine months ended September 30, 1996, other income and expense,
net was $(169,000) and $621,000, respectively. The increase in other expense for
the three and nine month periods ended September 30, 1997 over the comparable
periods in 1996 is attributable to the following transactions:
(i) In 1996 the Company recognized other income of $1,137,000 from a legal
settlement with its former Chairman of the Board and CEO. Through
September 30, 1997 the Company had no significant other income.
(ii) During fiscal 1997 the Company recognized $556,000 of interest expense
from the issuance of 6% and 8% subordinated debt convertible to common
stock at a 25% discount. In accordance with generally accepted accounting
principles the Company was required to account for the discount conversion
feature of this subordinated debt as interest expense (See Note 6 of Notes
to Unaudited Condensed Financial Statements). In addition, during the
fiscal 1997 the Company recognized $105,000 in interest expense associated
with its convertible subordinated debt.
(iii) Offsetting the increase in other expense was a reduction in interest
expense from the Company's financing obligations. The reduction in
interest expense from financing obligations was due to reduced borrowings
on the Company's line of credit.
Provision for Income Taxes
The provision for income taxes for the three and nine months ended September 30,
1997 and 1996 reflects the minimum state tax due.
12
<PAGE>
Liquidity and Capital Resources
During 1997, the Company used cash from operations of $1,816,000. The net cash
used from operations is primarily attributable to the Company's net loss before
depreciation, subordinated interest and deferred compensation charges of
$945,000. The remaining decrease in cash from operations of $871,000 is
primarily attributable to the reduction of trade payables net of accrued
expenses of $301,000 and increased inventory purchases to support the Company's
sales efforts of approximately $400,000.
During 1997, net cash used in investing activities, of $143,000, consisted
primarily of ongoing equipment purchases for both foreign and domestic
operations.
During 1997, net cash provided by financing activities, of $2,022,000, consisted
primarily of net proceeds of approximately $1,928,000 from the Company's 6% and
8% convertible subordinated debt offerings and funds from its bank line of
credit.
The Company believes that it will be able to generate sufficient cash flows to
help support its operations through fiscal 1997. If the Company continues to
generate losses from operations it may be required to raise additional funding
to support its operations. There can be no assurance that the Company will be
able to generate sufficient cash flows from operations, or raise additional
funding to support the Company's operations, the failure of which would have a
material effect on the Company's operations and financial position.
The Company believes that inflation has not had a material impact on it
operations.
PART II - OTHER INFORMATION
Not Applicable
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly authorized and caused the undersigned to sign this Report on
the Registrant's behalf.
CSL LIGHTING MANUFACTURING, INC.
By: /s/ Sylvan Gerber
-------------------------------------
Sylvan Gerber,
Chairman of the Board
By: /s/ Mark Allen
-------------------------------------
Mark Allen,
Acting Principal Accounting
Officer
Dated: November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 70,000
<SECURITIES> 0
<RECEIVABLES> 2,086,000
<ALLOWANCES> 196,000
<INVENTORY> 4,449,000
<CURRENT-ASSETS> 7,398,000
<PP&E> 3,087,000
<DEPRECIATION> 1,590,000
<TOTAL-ASSETS> 9,005,000
<CURRENT-LIABILITIES> 1,541,000
<BONDS> 4,109,000
0
0
<COMMON> 132,000
<OTHER-SE> 3,012,000
<TOTAL-LIABILITY-AND-EQUITY> 9,005,000
<SALES> 9,541,000
<TOTAL-REVENUES> 9,541,000
<CGS> 5,626,000
<TOTAL-COSTS> 10,495,000
<OTHER-EXPENSES> 878,000
<LOSS-PROVISION> 45,000
<INTEREST-EXPENSE> 882,000
<INCOME-PRETAX> (1,832,000)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (1,833,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,833,000)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
