================================================================================
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 quarterly period ended September 30, 1998.
|_| 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 1-13002
PAGING PARTNERS CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 22-3281446
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Freehold Office Plaza
4249 Route 9N, Bldg. 2
Freehold, New Jersey 07728
(address of principal executive offices)
(732) 409-7088
(Issuer's telephone number)
(Former name, former address and former fiscal year
if changed since last report)
Check whether the issuer (1) 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 |_|
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,308,000 shares of Common
Stock, $.01 par value, were outstanding, as of November 10, 1998
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
<PAGE>
Form 10-QSB
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statements of Cash Flows 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION 11
SIGNATURES 12
2
<PAGE>
PAGING PARTNERS CORPORATION
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
Assets 1998 1997
---- ----
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents .................................................... $ 536,000 $ 752,000
Accounts receivable (net of allowances of $46,000 and $61,000) ............... 418,000 522,000
Inventory .................................................................... 277,000 106,000
Other current assets ......................................................... 129,000 194,000
------------ ------------
Total current assets ....................................................... 1,360,000 1,574,000
Property and equipment ....................................................... 3,957,000 4,608,000
Licenses (less accumulated amortization of $874,000 and $775,000)............. 442,000 541,000
------------ ------------
$ 5,759,000 $ 6,723,000
============ ============
Liabilities
Current Liabilities:
Current maturities of notes payable .......................................... $ 429,000 $ 384,000
Accounts payable and accrued expenses ........................................ 1,101,000 989,000
------------ ------------
Total current liabilities .................................................. 1,530,000 1,373,000
Notes payable (less current maturities) ...................................... 1,257,000 1,590,000
------------ ------------
2,787,000 2,963,000
------------ ------------
Commitments
Stockholders' Equity
Common stock, $.01 par value, 20,000,000 shares authorized ................... 63,000 63,000
Preferred stock, $.01 par value, 1,000,000 shares authorized (none issued) ... -0- -0-
Additional paid-in capital ................................................... 12,650,000 12,643,000
Accumulated deficit .......................................................... (9,741,000) (8,946,000)
------------ ------------
2,972,000 3,760,000
------------ ------------
$ 5,759,000 $ 6,723,000
============ ============
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
PAGING PARTNERS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Sept. 30, Three months ended Sept. 30,
----------------------------- -----------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Service .......................................... $ 5,663,000 $ 5,025,000 $ 1,896,000 $ 1,880,000
Equipment sales .................................. 1,839,000 1,379,000 615,000 601,000
----------- ----------- ----------- -----------
7,502,000 6,404,000 2,511,000 2,481,000
----------- ----------- ----------- -----------
Expenses:
Service .......................................... 3,307,000 2,993,000 1,137,000 1,084,000
Cost of equipment sold............................ 1,897,000 1,516,000 614,000 659,000
Selling .......................................... 674,000 870,000 210,000 291,000
Administrative ................................... 1,214,000 1,175,000 386,000 425,000
----------- ----------- ----------- -----------
7,092,000 6,554,000 2,347,000 2,459,000
----------- ----------- ----------- -----------
Income (loss) from operations before
depreciation and amortization .................... 410,000 (150,000) 164,000 (22,000)
Depreciation and amortization ...................... 951,000 855,000 321,000 291,000
----------- ----------- ----------- -----------
Loss from operations ............................... (541,000) (1,005,000) (157,000) (269,000)
Provision for emergency satellite transfer costs ... 100,000 -0- -0- -0-
Interest expense ................................... 154,000 141,000 51,000 58,000
----------- ----------- ----------- -----------
NET LOSS ........................................... $ (795,000) $(1,146,000) $ (208,000) $ (327,000)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE .......................... $ (0.12) $ (0.19) $ (0.03) $ (0.05)
=========== =========== =========== ===========
Weighted average common shares outstanding ......... 6,303,000 6,140,000 6,306,000 6,300,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
PAGING PARTNERS CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Sept. 30,
---------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ........................................... $(795,000) $(1,146,000)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization .................. 951,000 855,000
Changes in operating assets and liabilities ........ 77,000 306,000
--------- -----------
Net cash provided by operating activities ...... 233,000 15,000
--------- -----------
Cash flows used by investing activities:
Acquisition of property, equipment and licenses .... (168,000) (186,000)
--------- -----------
Cash flows from financing activities:
Stock option exercise .............................. 7,000 9,000
Net proceeds from private equity placement ......... -0- 500,000
Repayment of notes payable ......................... (288,000) (104,000)
--------- -----------
Net cash provided (used) by financing activities (281,000) 405,000
--------- -----------
Net increase (decrease) in cash and cash equivalents (216,000) 234,000
Cash and cash equivalents - beginning of period .... 752,000 507,000
--------- -----------
Cash and cash equivalents - end of period .......... $ 536,000 $ 741,000
========= ===========
Supplemental disclosures of cash flow information:
Cash paid for interest ........................... $ 162,000 $ 140,000
Common stock issued in exchange for services ..... -0- 120,000
Debt issued for the purchase of equipment ........ -0- 741,000
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE>
PAGING PARTNERS CORPORATION
NOTE TO CONDENSED FINANCIAL STATEMENTS
1. The Company and basis of presentation:
The financial statements presented herein as of September 30, 1998 and for
the nine and three month periods ended September 30, 1998 and 1997 are
unaudited and, in the opinion of management, include all adjustments
(consisting only of normal and recurring adjustments) necessary for a fair
presentation of financial position and results of operations. Such
financial statements do not include all of the information and footnote
disclosures normally included in audited financial statements prepared in
accordance with generally accepted accounting principles. The results of
operations for the nine and three month periods ended September 30, 1998
are not necessarily indicative of the results that may be expected for the
full year ended December 31, 1998. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's 1997 Annual Report on Form 10-KSB.
2. Subsequent Event
On November 6, 1998, the Company entered into a merger agreement with BAP
Acquisition Corporation ("BAP"). BAP has conducted no operations to date,
but has agreed to purchase substantially all of the assets of the Paging
Division of Bell Atlantic prior to or simultaneously with the consummation
of the merger. After the merger is complete, the current shareholders of
BAP would own a majority of the Company's stock. The merger is subject to
the approval of the Company's shareholders and the FCC (regarding transfer
of the Company's radio paging licenses).
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results Of Operations
The tables on the following page present certain items in the Company's
statements of operations in dollars and as percentages of total revenues
including changes therein for the nine and three month periods ended September
30, 1998 and 1997. The tables also present certain key operating statistics for
the same periods.
The increase in the Company's service revenues reflects increases in the
number of (equivalent) units in service offset in part by reduced service
revenue per unit. Service revenue per unit on reseller units has declined due in
part to continued competitive pricing in the industry, offset in part by
increased market penetration on reseller units by the Company of higher (per
unit) revenue alphanumeric messaging. Additionally, the portion of the Company's
revenues generated by transmission-only services has increased. The Company
charges a lower unit price to customers for transmission-only services as the
customers operate their own switching terminal equipment and procure their own
telephone numbers from local exchange carriers and are only using the Company's
radio transmission network. In turn, the Company incurs virtually no incremental
telecommunications, selling, customer service, or capital costs from servicing
these units. Service revenue per unit for transmission-only units has declined
because early customers were alphanumeric information providers who were charged
a fixed monthly fee for use of the Company's systems. Since the Company began
active marketing of transmission-only capability in early 1997, new customers
have mostly added numeric paging units with lower revenue per unit.
The Company reports its units in service on the basis of "(equivalent)
units in service". Certain of the Company's customers are serviced and billed on
a measurement basis other than one which relates to the number of units in
service. In such case the number of units reported is based upon the monthly
revenue received converted into units at the lowest unit pricing given to any of
the Company's customers for equivalent service. The number of units in service
excludes subscribers receiving AlphaPlus (R) data services but not subscribing
to basic paging services.
Service cost includes transmission site rentals, telephone interconnect
services, message dispatch costs, and the costs (mostly personnel-related) of
the Company's engineering function. The increases in service costs in 1998 as
compared to 1997 are primarily attributable to increased message dispatch costs
resulting from continued alphanumeric penetration and increased telephone
interconnect costs.
Equipment sales increased during 1998 as compared to the same periods in
1997 due to new product introductions by the Company's primary supplier
(Motorola) as well as price increases and decreased availability from certain
competitors. The Company continues to sell pagers as an accommodation to
Resellers and not as a source of profit. However, lessened competition has
permitted narrower loss margins on pager sales during 1998 than in previous
years. Management expects this improvement to continue during the remainder of
1998.
Selling expenses decreased in 1998 as compared to 1997. This reflects
lower promotional expenditures, lower sales commissions due to lower
intra-quarter sales growth, and lower salary expense due to a sales department
reorganization more fully described in the Current Trends section below.
General and administrative expense increased during 1998 as compared to
1997 as a result of increases in MIS headcount and salaries. However, based on
current needs, management has instituted a modest cutback in administrative
payroll resulting in a reduction of administrative expense in the 1998 third
quarter compared to the same period in 1997.
7
<PAGE>
PAGING PARTNERS CORPORATION
RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended Sept. 30, Nine months ended Sept. 30,
--------------------------- ---------------------------
1998 1997 Chg.
---- ---- ----
$ % $ % $ %
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Service 5,663,000 100.0 5,025,000 100.0 638,000 12.7
Equipment sales 1,839,000 32.5 1,379,000 27.4 460,000 33.4
--------- ----- ---------- ----- ----------
Total Revenues 7,502,000 132.5 6,404,000 127.4 1,098,000 17.1
Cost of equipment 1,897,000 33.5 1,516,000 30.1 381,000 25.1
--------- ----- ---------- ----- ----------
5,605,000 99.0 4,888,000 97.3 717,000 14.7
--------- ----- ---------- ----- ----------
Operating expenses:
Service 3,307,000 58.4 2,993,000 59.6 314,000 10.5
Selling 674,000 11.9 870,000 17.3 (196,000) (22.5)
General and administrative 1,214,000 21.5 1,175,000 23.4 39,000 3.3
--------- ----- ---------- ----- ----------
5,195,000 91.8 5,038,000 100.3 157,000 3.1
--------- ----- ---------- ----- ----------
EBITDA 410,000 7.2 (150,000) (3.0) 560,000 373.3
Depreciation and amortization 951,000 16.8 855,000 17.0 96,000 11.2
--------- ----- ---------- ----- ----------
Loss from operations (541,000) (9.6) (1,005,000) (20.0) 464,000 46.2
Interest and other expense 154,000 2.7 141,000 2.8 13,000 9.2
Emergency satellite transfer costs 100,000 1.8 0 0.0 100,000 NA
--------- ----- ---------- ----- ----------
Net loss (795,000) (14.0) (1,146,000) (22.8) 351,000 30.6
--------- ----- ---------- ----- ----------
Equivalent Units (Sept. 30)
Reseller 119,000 103,000 16,000 15.5
Transmission only 59,000 39,000 20,000 51.3
--------- ---------- ----------
178,000 142,000 36,000 25.4
--------- ---------- ----------
Avg. monthly (per unit) service
revenue
Reseller $5.04 $5.71 ($0.67) (11.7)
Transmission only $0.96 $1.72 ($0.76) (44.2)
<CAPTION>
Three months ended Sept. 30, Three months ended Sept. 30,
---------------------------- ----------------------------
1998 1997 Chg.
---- ---- ----
$ % $ % $ %
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Service 1,896,000 100.0 1,880,000 100.0 16,000 0.9
Equipment sales 615,000 32.4 601,000 32.0 14,000 2.3
--------- ----- ---------- ----- ----------
Total Revenues 2,511,000 132.4 2,481,000 132.0 30,000 1.2
Cost of equipment 614,000 32.4 659,000 35.1 (45,000) (6.8)
--------- ----- ---------- ----- ----------
1,897,000 100.0 1,822,000 96.9 75,000 4.1
--------- ----- ---------- ----- ----------
Operating expenses:
Service 1,137,000 60.0 1,084,000 57.7 53,000 4.9
Selling 210,000 11.1 291,000 15.4 (81,000) (27.8)
General and administrative 386,000 20.3 425,000 22.6 (39,000) (9.2)
--------- ----- ---------- ----- ----------
1,733,000 91.4 1,800,000 95.7 (67,000) (3.7)
--------- ----- ---------- ----- ----------
EBITDA 164,000 8.6 22,000 1.2 142,000 645.4
Depreciation and amortization 321,000 16.9 291,000 15.5 30,000 10.3
--------- ----- ---------- ----- ----------
Loss from operations (157,000) (8.3) (269,000) (14.3) 112,000 41.6
Interest and other expense 51,000 2.7 58,000 3.1 (7,000) (12.1)
Emergency satellite transfer costs 0 0 0 0 0 NA
--------- ----- ---------- ----- ----------
Net loss (208,000) (11.0) (327,000) (17.4) (119,000) (36.4)
--------- ----- ---------- ----- ----------
Equivalent Units (Sept. 30)
Reseller 119,000 103,000 16,000 15.5
Transmission only 59,000 39,000 20,000 51.3
--------- ---------- ----------
178,000 142,000 36,000 25.3
--------- ---------- ----------
Avg. monthly (per unit) service revenue
Reseller $4.90 $5.83 ($0.93) (16.0)
Transmission only $0.94 $1.25 ($0.31) (24.8)
</TABLE>
8
<PAGE>
EBITDA reflects the Company's earnings (excluding interest and
non-operating items) before taxes, depreciation and amortization and measures
the Company's operating cash flows, which the Company considers to be a
significant measure of performance. EBITDA is commonly used in the paging
industry and by financial analysts and others who follow the industry to measure
operating performance, but should not be considered in isolation or as an
alternative to measures of operating performance or cash flows pursuant to
generally accepted accounting principles. EBITDA improved significantly during
1998 as compared to the same period in 1997 reflecting the fact that the
increase in service revenue exceeded the resulting increase in cost of service.
Now that the Company's paging systems are built-out, increases in service
revenues should not result in proportional increases in operating expenses.
Interest expense primarily reflects the Company's equipment financing with
Motorola and has increased as a result of the Metro System upgrade described
below.
Depreciation increased as the Company put into service equipment purchased
for the final portion of the Corridor System as well as the Metro System upgrade
described below.
Net loss decreased consistent with the improvement in EBITDA noted above,
partially offset by increased depreciation and interest expense and by the
emergency satellite transfer costs described below.
Emergency Satellite Transfer Costs
The Company relies on a satellite for dissemination of its paging signal
from its paging hub in Freehold, New Jersey to its network of over 240 radio
transmitters in the Eastern United States. On the evening of May 19, 1998, the
unprecedented sudden failure of the Galaxy IV satellite used by the Company (as
well as most other large paging carriers) caused the suspension of paging
service. Within 24 hours, the Company made a successful transition to an
alternate satellite (SBS-6) on which it had previously reserved backup time.
However, the Company had to engage subcontractors to reorient the satellite
receiver on each transmission tower to receive radio signals from the new
satellite. The Company made a provision of $100,000 in the quarter ended June
30, 1998 to cover the costs of these realignments.
Current Trends
Service revenue increased only modestly in the nine months ended September
30, 1998 compared to the previous nine months (ended December 31, 1997) due to a
reduction in alphanumeric and message dispatch units and revenue. Management
believes that a significant factor in such reduction was a new per-call charge
instituted in October 1997 under the Telecommunications Act of 1996 for calls to
toll-free numbers made from pay phones. This charge has disrupted the cost
structures of the Company's message dispatch providers which either have had to
absorb the cost (approximately $.30 per call) or pass it on to the Company which
would likely, in turn, seek to pass it on to the Company's resellers (and
ultimately to end users). Rather than elect to absorb the new cost without
knowing whether it could successfully be recovered from end-users, the Company,
with its major dispatch providers, has determined to block calls originating
from pay phones to the toll free numbers maintained by the dispatch providers to
receive messages for end users. The inability to receive messages from callers
using pay phones may have caused some end-users to stop obtaining message
dispatch (and possibly numeric and alphanumeric) service from the Company's
resellers.
Additionally, in an effort to reduce the impact of the new per call
charge, certain of the Company's dispatchers switched long distance carriers or
made programming changes to their internal switches. In some cases this may have
interfered with the quality of service provided to the Company's end-users,
which may have caused them to seek an alternative service provider.
Consistent with an industry-wide trend, revenue growth from numeric
display paging slowed during the first nine months of 1998. In addition,
although the Company's "churn" rate (the monthly ratio of service disconnects to
total units serviced) is not directly comparable to that of paging companies
which do not rely upon resellers, the Company has experienced an increased churn
rate as compared to prior years.
9
<PAGE>
The paging industry experienced substantial consolidation during 1997 as
well as announcements of additional transactions during 1998. There have also
been significant management changes at many of the larger companies in the
industry. In response to investor dissatisfaction, management at several major
paging companies announced their intention to shift from a price competitive
strategy intended to increase subscriber base, towards a strategy intended to
increase operating margins.
In an effort to capitalize on any opportunity that may result from its
competitors' strategy shifts and offset the impact of the negative trends
discussed above, the Company has made several changes in how it markets its
services and supports its resellers and, in turn, end-users. The Company has
restructured its salaried sales force into regional teams, emphasizing field
representatives for major reseller solicitations and less costly internal
support personnel servicing existing resellers and soliciting increased business
from smaller accounts. This has reduced churn while enabling the Company to
increase market share with its current reseller base. The Company has also
recently introduced several attractively priced service bundles and now offers
E-mail based messaging on alphanumeric (text) pagers.
Senior management continues to solicit large, established resellers and
carriers for transmission-only service. Although the Company's per unit revenues
for such service are lower, the Company incurs no incremental costs and the
Company is partnered with organizations having the financial and management
strength to purchase and maintain their own paging terminals.
Liquidity and Capital Resources
By relying primarily upon resellers to build its subscriber base, the
Company has been able to avoid many of the expenses associated with the
solicitation and servicing of subscribers. Nevertheless, the construction and
initial operation and marketing of a paging system requires substantial
expenditures which can only be recouped, if at all, from the subsequent
operation of the system. At this point, the Company anticipates that it will
from time to time make substantial capital expenditures to upgrade its Systems
to assure that they remain technologically current, but the level of such
expenditures should be less than those associated with the initial construction
of its Systems. During 1997, the Company incurred approximately $750,000 of net
capital expenditures, primarily for technological upgrades of the Metro System,
substantially all of which was financed by Motorola. During the first nine
months of 1998, the Company incurred $168,000 of capital expenditures and
expects such spending to remain at or below such levels for the balance of 1998.
During 1998, the Company's revenues have not grown sufficiently to enable
the Company to meet certain covenants in its Loan Agreement with Motorola, as
amended. However, in light of the Company's continued financial progress, in
particular the fact that if the Company continues its present trends it will be
generating sufficient cash from operations to meet its scheduled Motorola debt
payments, Motorola is considering the Company's request that Motorola revise its
loan covenants to avoid future violations and waive past ones.
Subsequent Events
On November 6, 1998, the Company agreed to merge with BAP Acquisition
Corporation ("BAP"). BAP has had no operations to date, but has agreed to
purchase substantially all the paging assets of Bell Atlantic prior to or
simultaneous with the consummation of the merger. After the merger is complete,
the current shareholders of BAP would own approximately 58.5% of the Company"
common stock. The merger is subject to the approval of the Company" shareholders
as well as FCC approval of the transfer of the Company's radio (paging)
licenses. In connection with this agreement, Motorola has agreed to waive any
past or future covenant violations occurring prior to merger.
The BAP asset purchase from Bell Atlantic is being financed by a blend of
senior debt, seller financing, and equity. Based on the individual performances
of the Bell Atlantic paging business and the Paging Partners business,
management believes that the combined entity should generate sufficient
operating cash flow to finance its combined debt service and capital
expenditures with funds left over for acquisitions or early debt retirement.
10
<PAGE>
The ability of the Company to achieve the financial results reflected in
the discussions above is dependent upon future uncertainties and factors that
could cause actual results to differ, in some cases materially, from
expectations. Among the factors that impact the Company's results are the level
of price competition in the paging industry, the rate of technological change in
the wireless industry, the performance of the Company's systems, changes in
regulations applicable to the paging industry and the Company's ability to
complete the merger described above.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) On November 6, 1998, the Company filed a Form 8-K reporting
the execution of the Agreement and Plan of Merger with BAP.
11
<PAGE>
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.
PAGING PARTNERS CORPORATION
/s/ Jeffrey M. Bachrach
----------------------------------------
Dated: November 13, 1998 By: Jeffrey M. Bachrach
Vice President and Principal Financial
and Accounting Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the year ended September 30, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 536,000
<SECURITIES> 0
<RECEIVABLES> 418,000
<ALLOWANCES> 0<F1>
<INVENTORY> 277,000
<CURRENT-ASSETS> 1,260,000
<PP&E> 3,957,000<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,759,000
<CURRENT-LIABILITIES> 1,530,000
<BONDS> 1,257,000<F3>
0
0
<COMMON> 63,000
<OTHER-SE> 2,909,000
<TOTAL-LIABILITY-AND-EQUITY> 5,759,000
<SALES> 1,839,000
<TOTAL-REVENUES> 7,502,000
<CGS> 1,897,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,195,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154,000
<INCOME-PRETAX> (795,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (795,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (795,000)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
<FN>
<F1> Notes and accounts receivable - trade are reported net of allowances for
doubtful accounts in the Balance Sheet.
<F2> Property, plant, and equipment are reported net of accumulated
depreciation in the Balance Sheet.
<F3> Excludes current portion
</FN>
</TABLE>
