<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ....................to ...................
Commission file number 1-13856
Sel-Leb Marketing, Inc.
(Exact name of small business issuer as
specified in its charter)
New York 11-3180295
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
495 River Street, Paterson, NJ 07524
(Address of principal executive offices)
973-225-9880
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such report(s)), 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: 8,712,727 shares of common
stock as of May 13, 1998.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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SEL-LEB MARKETING, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Page No.
Part I Consolidated Financial Information
Item 1. Financial Statements
Balance sheet at March 31, 1998 (Unaudited) 1
Balance sheet at December 31, 1997 2
Statements of Operations for the three months
ended March 31, 1998 and 1997 (Unaudited) 3
Statement of Stockholders' Equity for the three
months ended March 31, 1998 (Unaudited) 4
Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 (Unaudited) 5
Notes to Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis or Plan
of Operation 9- 12
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
<PAGE>
SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 1998
ASSETS
Current Assets:
Cash and cash equivalents $ 49,850
Accounts receivable, less allowance for doubtful accounts
of $191,578 3,824,140
Inventory 5,407,985
Due from officer 25,136
Prepaid expenses and other current assets 999,183
Deferred tax asset, net 173,655
----------
Total current assets 10,479,949
Property and equipment - at cost, net of accumulated
depreciation and amortization 659,165
Goodwill, net of accumulated amortization of $66,180 312,088
Other assets 57,849
----------
Total $11,509,051
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable - bank $ 1,700,000
Current portion of long-term debt 161,975
Accounts payable (includes cash overdraft of $112,244) 1,613,423
Accrued expenses and other current liabilities 243,440
----------
Total current liabilities 3,718,838
Long-term debt, net of current portion 933,196
----------
Total liabilities 4,652,034
----------
Minority interest 10,816
----------
Commitments and contingencies
Stockholders' Equity:
Common stock - $.01 par value;
authorized 40,000,000 shares, issued
and outstanding 8,712,727 shares 87,127
Additional paid-in capital 6,363,859
Retained earnings 440,215
Less receivable in connection with equity transactions (45,000)
----------
Total stockholders' equity 6,846,201
----------
Total $11,509,051
===========
See Notes to Consolidated Financial Statements
1
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SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (AUDITED)
DECEMBER 31, 1997
ASSETS
Current Assets:
Cash and cash equivalents $ 249,688
Accounts receivable, less allowance for doubtful
accounts of $202,810 2,959,996
Inventory 5,814,673
Due from officer 25,136
Prepaid expenses and other current assets 835,856
Deferred tax asset, net 173,655
----------
Total current assets 10,059,004
Property and equipment - at cost, net of accumulated
depreciation and amortization 474,252
Goodwill, net of accumulated amortization of $59,099 321,669
Other assets 51,655
----------
Total $10,906,580
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable - bank $1,400,000
Current portion of long-term debt 161,975
Accounts payable 1,159,203
Accrued expenses and other liabilities 229,872
----------
Total current liabilities 2,951,050
Long-term debt, net of current portion 933,642
-------
Total liabilities 3,884,692
---------
Commitments and contingencies
Stockholders' Equity:
Common stock - $.01 par value;
authorized 40,000,000 shares, issued
and outstanding 8,712,727 shares 87,127
Additional paid-in capital 6,363,859
Retained earnings 615,902
Less receivable in connection with equity transactions (45,000)
--------
Total stockholders' equity 7,021,888
---------
Total $10,906,580
===========
See Notes to Consolidated Financial Statements
2
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SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31, MARCH 31,
1998 1997
---- ----
<S> <C> <C>
Revenue:
Net sales $4,019,008 $4,198,790
---------- ----------
Operating expenses:
Cost of sales 2,938,416 2,917,837
Selling, general and administrative expenses 1,374,844 1,005,751
---------- ---------
Total operating expenses 4,313,260 3,923,588
---------- ---------
Operating income (loss) (294,252) 275,202
Other income (expense):
Interest expense, net of interest income of $4,519 and $727 (52,209) (12,713)
Other - 1,259
---------- ---------
Income (loss) before unusual item, minority interest and
provision (credit) for income taxes (346,461) 263,748
Unusual item-gain on sale of portion of minority
interest in subsidiary 75,729 -
---------- ---------
Income (loss) before minority interest and provision
(credit) for income taxes (270,732) 263,748
Minority interest 2,004 -
---------- --------
Income (loss) before provision (credit) for
income taxes (272,736) 263,748
Provision (credit) for income taxes (97,049) 105,950
---------- --------
Net income (loss) ($175,687) $157,798
========== ========
Net earnings (loss) per share - basic $(.02) $.02
========== ========
Net earnings (loss) per share - diluted $(.02) $.01
========== ========
</TABLE>
See Notes to Consolidated Financial Statements
3
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SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Receivable In
Connection
Additional With
Common Stock Paid In Retained Equity Stockholders'
Shares Amount Capital Earrings Transactions Equity
------ ------ ------- -------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 8,712,727 $87,127 $6,363,859 $615,902 ($45,000) $7,021,888
Net loss ---- --- --- (175,687) --- (175,687)
--------- ------- ---------- -------- --------- --------
Balance at March 31, 1998 8,712,727 $87,127 $6,363,859 $440,215 ($45,000) $6,846,201
========= ======= ========== ======== ========= ==========
</TABLE>
See Notes to Consolidated Financial Statements
4
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SEL-LEB MARKETING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1998 1997
---- ----
<S> <C> <C>
Operating activities:
Net income (loss) ($175,687) $157,798
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization 57,178 46,045
Allowance for doubtful accounts 85,000 -
Net gain on sale of interest in subsidiary (75,729) -
Minority interest 2,004 -
Changes in operating assets and liabilities:
Accounts receivable (949,144) (757,260)
Inventories 406,688 (475,140)
Prepaid expenses and other current assets (82,190) (91,073)
Other assets (6,194) (29,001)
Accounts payable and accrued expenses 471,192 354,197
-------- -------
Net cash used in operating activities (266,882) (794,434)
--------- ---------
Investing activities:
Purchase of property and equipment (232,510) (79,458)
Due from officer - (465)
--------- ---------
Net cash used in investing activities (232,510) (79,923)
--------- --------
Financing activities:
Proceeds from notes payable to bank 300,000 650,000
Repayment of long-term debt (446) -
Net proceeds from exercise of stock warrants - 338,674
Net proceeds from exercise of stock options - 294,561
Collection of receivable in connection with sale of warrants - 500
--------- --------
Net cash provided by financing activities 299,554 1,283,735
--------- --------
Net increase (decrease) in cash and cash equivalents (199,838) 409,378
Cash and cash equivalents at beginning of period 249,688 129,538
--------- --------
Cash and cash equivalents at end of period $ 49,850 $538,916
========= ========
</TABLE>
See Notes to Consolidated Financial Statements
5
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SEL-LEB MARKETING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(The information pertaining to the three month periods ended March 31, 1998 and
1997 are unaudited)
1. Organization and Basis of Presentation:
The accompanying consolidated financial statements include the accounts
of Sel-Leb Marketing, Inc. (a New York corporation) and Ales Signature,
Ltd. ("Ales"), its 80%-owned (see Note 5 herein) subsidiary
(collectively, the "Company"). The Company is primarily engaged in the
manufacturing, distribution and marketing of cosmetics and consumer
products through mass merchandisers, discount chain stores and food,
drug and electronic retailers. Ales was formed in September 1997 and
commenced operations on October 23, 1997. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The financial statements of the Company included herein have been
prepared pursuant to generally accepted accounting principles and have
not been examined by independent public accountants. In the opinion of
management, all adjustments which are of a normal recurring nature
necessary to present fairly the results of operations have been made.
Pursuant to Securities and Exchange Commission ("SEC") rules and
regulations, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted from
these statements unless significant changes have taken place since the
end of the most recent fiscal period. The disclosures contained herein
should be read in conjunction with the financial statements and notes
included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997 previously filed with the SEC. The consolidated
results of operations for the three month period ended March 31, 1998
are not necessarily indicative of the results to be expected for the
full year.
2. Earnings (Loss) per Share
Effective December 31, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, Earnings Per
Share, which establishes the new standard for computation and
presentation of net earnings per share. Under the new requirements,
both basic and diluted net earnings (loss) per share are presented. All
prior period net earnings per share information have been restated.
Prior to the adoption of Statement 128, the Company presented primary
and, if appropriate, fully diluted earnings per share (see Note 1 in
the 1997 Form 10-KSB). The Company originally reported primary and
fully diluted earnings per share of $.01 for the three months ended
March 31, 1997.
Basic net earnings (loss) per common share is calculated by dividing
net income (loss), less dividends on preferred shares, if any, by the
weighted average common shares outstanding during the period.
The calculation of diluted net earnings (loss) per share is similar to
that of basic net
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earnings (loss) per share, except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if all potentially dilutive common shares, principally
those issuable upon exercise of stock options and warrants under the
treasury stock method, were issued at the beginning of the reporting
period.
The following table summarizes the calculation of basic and diluted
earnings (loss) per common share:
1998 1997
---- ----
Numerator:
Net income (loss) ($175,687) $157,798
========== ========
Denominator:
Weighted average shares
for basic net earnings
(loss) per share 8,708,705 7,934,580
Plus effect of dilutive
securities, stock options
and warrants 4,228,750
--------- ---------
Weighted average shares
for diluted net earnings
(loss) per share 8,708,705 12,163,330
========= ==========
Net earnings (loss) per
share - basic ($.02) $.02
====== ====
Net earnings (loss) per
share - diluted ($.02) $.01
====== ====
3. Line of Credit:
Note payable - bank consists of outstanding borrowings drawn under a
$2,000,000 revolving credit agreement with Summit Bank (the "Lender"),
which was subsequently increased to $2,500,000 (see Note 6 herein). The
agreement expires on May 31, 1998. Borrowings under the credit
agreement bear interest, payable monthly, at the Lender's prevailing
base rate (8.5% at March 31, 1998 and December 31, 1997). The loan is
collateralized by substantially all of the assets of the Company. In
the opinion of management, the fair value of the note payable
approximates the carrying amount due to the short-term nature of the
instrument.
4. Long-term Debt:
At March 31, 1998, long-term debt consisted of the following loans:
Bank term loan (A) $1,000,000
Paterson Restoration Corporation loan (B) 95,171
----------
1,095,171
Less current portion 161,975
----------
Long-term debt $933,196
==========
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(A) The term loan agreement requires monthly interest payments at the
Lender's prevailing base rate plus .25% (an effective rate of 8.75% at
March 31, 1998 and December 31, 1997) and a principal payment of
$150,000 each August 31, until August 31, 2000, when the unpaid balance
is due. This loan is secured by substantially all of the assets of the
Company.
(B) The loan was obtained by the Company in connection with the
relocation of the Company's office and warehouse facilities to
Paterson, New Jersey and was used for the purchase of fixed assets. The
loan bears interest at 6% per annum, and provides for monthly payments
of principal and interest of $1,461 through October 1, 2004, at which
time the unpaid balance is due. The loan is secured by a second lien on
all new machinery and equipment purchased by the Company.
5. Minority Interest in Subsidiary:
On March 31, 1998, the Company entered into an agreement with the
holder of the 10% minority interest in Ales to sell an additional 10%
to such holder for a total consideration of $81,137. This amount has
been included in other current assets as of March 31, 1998, and is
payable in three installments, the final installment of which is due on
June 18, 1998. The sale resulted in a gain of $75,729, before giving
effect to taxes on such gain, and has been reflected separately as an
unusual item in the accompanying consolidated statement of operations
for the three months ended March 31, 1998. Upon completion of this
sale, the minority stockholder will have a 20% interest in Ales.
6. Subsequent Events:
On April 1, 1998, the Company and the Lender entered into an amendment
to the Company's revolving line of credit agreement pursuant to which
the line of credit available thereunder was increased by $500,000 to
$2,500,000. As of May 11, 1998, the Company had $2,200,000 outstanding
under this line of credit agreement.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of the Company's results of
operations, liquidity and financial condition should be read in conjunction with
the Consolidated Financial Statements of the Company and related notes thereto.
This Quarterly Report on Form 10-QSB contains certain forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements due to a number of factors, including but not limited
to general trends in the retail industry, the ability of the Company to
successfully implement its expansion plans, consumer acceptance of any products
developed and sold by the Company, the ability of the Company to develop its
"celebrity" product business and other factors set forth herein or in reports
and other documents filed by the Company with the SEC.
Consolidated Results of Operations: Three Month Period Ended March 31, 1998
Compared to the Corresponding Period Ended March 31, 1997
Net sales for the three months ended March 31, 1998 were $4,019,008
compared to $4,198,790 for the three months ended March 31, 1997, representing a
decrease of 4.3%. This decrease in net sales resulted primarily from a decrease
in sales of merchandise acquired in connection with the Company's opportunistic
purchasing business, partially offset by increases in sales of the Company's
cosmetics product lines.
Cost of sales increased from $2,917,837 for the three month period in
1997 to $2,938,416 for the same period in 1998. The cost of goods sold increased
as a percentage of sales from 69.5% in 1997 to 73.1% in 1998, reflecting the
Company's efforts to reduce general inventory levels and eliminate merchandise
which generates lower margins for the Company. It is management's belief that
the continuing reduction of inventory and lower margin merchandise is in the
long-term best interests of the Company and will enable the Company to focus on
sales of higher margin merchandise.
Selling, general and administrative ("SG&A") expenses increased from
$1,005,751 for the three month period ended March 31, 1997 to $1,374,844 for the
comparable period in 1998. Generally, the principal components of the Company's
SG&A expenses are payroll, rent, commission, insurance, legal, accounting, and
other fees paid to third parties and travel and promotional expenses. The
increase in SG&A expenses for the three month period ended March 31, 1998
resulted primarily from expenses incurred in connection with sales of a
specialty cosmetics line being marketed and sold through the electronic media
pursuant to the Company's agreement with ACI, Inc.. Expenses related to the sale
of these products, including royalty, promotional, commission and other
expenses, increased to approximately $250,000 in 1998 from approximately
$40,000 in 1997.
In addition, SG&A expenses were higher in 1998 than 1997 due to (i)
the hiring of outside sales representatives and, in connection therewith, the
incurrence of commission expenses of approximately $76,000 in 1998 as compared
to approximately $39,000 in 1997 (ii) an increase in rent expenses of
approximately $30,000 in 1998 as the result of the Company's having moved to its
larger facility in April 1997 and (iii) SG&A expenses relating to Ales, which
amounted to approximately $32,000.
As a result of the increase in the cost of sales and the increase in
SG&A expenses, total operating expenses increased from $3,923,588 in the three
month period ended March 31, 1997 to
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$4,313,260 in the three month period ended March 31, 1998. As a result of these
increased operating expenses, operating income decreased by $569,454 from income
of $275,202 for the period ended March 31, 1997 to a loss of $(294,252) for the
comparable period in 1998.
The Company's net interest costs increased from $13,440 in 1997 to
$56,728 in 1998 primarily as a result of additional borrowings under the
Company's revolving line of credit and the Company's term loan.
During the three month period ended March 31, 1998, the Company sold
a 10% interest in its subsidiary for $81,137 and recorded a gain of $75,729 on
the sale.
As a result of the Company's having recorded a net operating loss for
the three month period ended March 31, 1998 as compared to net operating income
for the comparable period in 1997, the Company's provision for income taxes
decreased from an expense of $105,950 in 1997 to a benefit of $97,049 in 1998.
As a result of the above, the Company's net income decreased by
$333,485 from income of $157,798 for the three month period ended March 31,
1997 to a loss of $(175,687) for the comparable period in 1998.
Although the Company has historically reflected a profit in the first
quarter of its fiscal year, the 1998 loss was accentuated by the fact that the
Company's management has made the decision to reduce inventory of slow moving
lower-margin items by selling them at reduced margins and concentrating on the
higher margin proprietary lines. The continued sale of lower-margin items could
continue to have a negative impact on the Company until such time as sales and
gross profit margins increase. In addition, the results for the first quarter of
1998 were also affected by the Company's having built up its infrastructure
since the latter part of 1997 in order to support the Company's sales efforts
during the balance of 1998.
The Ales subsidiary, which was acquired in October 1997, contributed
net sales and income to the Company of approximately $212,000 and $20,000,
respectively, in 1998.
Liquidity and Capital Resources
At March 31, 1998, the Company had working capital of $6,761,111 and
cash and cash equivalents in the amount of $49,850. The Company's principal cash
requirements are for the acquisition of inventory and the financing of
receivables. Receivables increased from $2,959,996 at December 31, 1997 to
$3,824,140 at March 31, 1998, representing an increase of $864,144. A portion of
the increase in receivables was financed by increased borrowings under the
Company's revolving credit arrangement and term loan described below.
On November 6, 1995, the Company entered into a Loan and Security
Agreement (the "Original Loan Agreement") with Summit Bank (formerly known as
United Jersey Bank) (the "Lender") pursuant to which it obtained a revolving
line of credit for general working capital purposes in an aggregate principal
amount of up to $2,000,000, subject to a borrowing base limitation. The line of
credit bore interest at fluctuating rates per annum based on the "Prevailing
Base Rate" (as defined in the Original Loan Agreement) of the Lender. The Loan
Agreement terminated on July 31, 1997 and, subsequent thereto, the Company
borrowed funds from the Lender pursuant to an informal, non-binding arrangement
on the same terms as the Original Loan
10
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Agreement. The Company and the Lender reinstated the Original Loan Agreement on
September 22, 1997.
On October 22, 1997, the Company and Ales entered into a new Loan and
Security Agreement with the Lender (the "Current Loan Agreement"). The Current
Loan Agreement provides for the continuation through May 31, 1998 of the
Company's line of credit arrangement and provided for borrowings of up to the
lesser of $2,000,000 or prescribed levels of eligible accounts receivable and
inventories on substantially the same terms as under the Original Loan
Agreement. On April 1, 1998, the Company and the Lender executed a first
amendment to the Loan and Security Agreement pursuant to which the line of
credit available thereunder was increased to $2,500,000. As of March 31, 1998
and May 11, 1998, the Company had outstanding borrowings of $1,700,000 and
$2,200,000, respectively, under this line of credit. Although the Company is
currently in discussions to extend the maturity of, and further increase the
amount available under, its line of credit arrangement, there can be no
assurance that such renewal and amendment will be consummated or, if
consummated, as to the timing or terms thereof. In the event the maturity date
is not extended beyond May 31, 1998, the entire amount outstanding under the
line of credit, together with accrued interest thereon, will become due and
payable on such date. In addition, if the Company were to be in default
of its obligation to repay such amount on that date, such default would also
result in the entire amount of the Company's term loan with the Lender, as
described below, becoming due and payable.
Pursuant to the Current Loan Agreement, the Company and Ales also
obtained from the Lender in October 1997 a three-year, $1 million term loan to
finance the acquisition by Ales of certain assets from SBC Corporation, Inc.
("SBC"), a manufacturer of cosmetics, skin care and treatment products. The term
loan bears interest at the "Prevailing Base Rate" plus .25%, and the outstanding
principal amount of the loan is payable in installments, with $150,000 payable
on each of August 31, 1998 and 1999 and the balance payable on August 31, 2000.
In connection with the acquisition, which was consummated on October 23, 1997,
Ales acquired from SBC, for approximately $670,000, inventory and certain other
assets, as well as trademarks and trade names including Signature Solutions(TM)
and Signature Beauty Care(R). The balance of the proceeds from the term loan
were used for working capital purposes.
On September 26, 1997, in connection with the previous relocation of
its office and warehouse facilities to Paterson, New Jersey, the Company
borrowed $100,000 from the Paterson Restoration Corporation. The loan, which
bears interest at 6% per annum, provides for monthly payments of principal and
interest in the amount of $1,461 through October 1, 2004 and is secured by a
second priority lien on all new machinery and equipment purchased by the
Company. The proceeds of the loan were used for the purchase of fixed assets.
Assuming that the Company is able to extend the maturity of its
current line of credit on terms that are substantially similar to those that are
currently in effect, the Company anticipates that its working capital, together
with anticipated cash flow from the Company's operations, will be sufficient to
satisfy the Company's cash requirements for at least twelve months. In the event
the Company's plans change (due to unanticipated expenses or difficulties or
otherwise), or if the working capital and projected cash flow otherwise prove
insufficient to fund operations, the Company could be required to seek
additional financing sooner than currently anticipated. Except for the Current
Loan Agreement, which expires on May 31, 1998, the Company has no current
arrangements with respect to, or sources of, additional financing. Accordingly,
there can be no assurance that the additional financing will be available to the
Company when needed, on commercially reasonable terms, or at all. The Company's
inability to obtain such additional financing could have a material adverse
effect on the Company's liquidity and the business plans of
11
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the Company.
The Company recognizes the need to assure that its operations will
not be adversely impacted by Year 2000 software failures. The impact on
operations is currently being evaluated. In 1998, management will begin to
identify the revisions, if any, needed to be made to ensure that the Company
will be able to process information beyond 1999 without disruption. Software
revisions are expected to be performed principally by Company employees and the
total estimated cost for achieving Year 2000 compliance is not anticipated to be
material to the Company's financial position or results of operations.
12
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Part II Other Information
Item 6 Exhibits and Reports on Form 8-K
A. Exhibits
10.1 Stock Purchase Agreement dated March 31, 1998 by and
between Sel-Leb Marketing, Inc. and RBCJJ
Associates, LCC
10.2 First Amendment to Loan and Security Agreement dated
April 1, 1998 between Sel-Leb Marketing, Inc. and
Summit Bank.
27. Financial Data Schedule
B. Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
three month period ended March 31, 1998.
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SEL-LEB MARKETING, INC.
/s/ Jan S. Mirsky
-----------------------------
Jan S. Mirsky
Executive Vice President - Finance
Dated: May 15, 1998 as both duly authorized officer of the
registrant and as principal financial
officer of registrant.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, made the 31st day of March, 1998, by
and between SEL-LEB MARKETING, INC., with its principal place of business at
495 River Street, Paterson, New Jersey 07524, (hereinafter, "Seller"), RBCJJ
ASSOCIATES, LLC, with its principal place of business at 25 Seabro Avenue,
North Amityville, New York 11701 (hereinafter, "Purchaser"), and ALES
SIGNATURE, LTD., with its principal office at 495 River Street, Paterson, New
Jersey 07524, (hereinafter, "ALES").
W I T N E S S E T H :
WHEREAS, ALES has been validly organized under the laws of the State
of New York, and is authorized to issue Two Hundred (200) shares of common
stock, no par value each, of which Ninety (90) shares are presently owned by
Seller, and Ten (10) shares are presently owned by Purchaser, representing
100% ownership of ALES, for a total of One Hundred (100) shares issued and
outstanding; and
WHEREAS, on October 31, 1997, the parties hereto executed a
shareholders' agreement (the "Shareholders' Agreement," which is incorporated
herein by reference), which Shareholders' Agreement, at Paragraph 12,
contemplated and provided for the option by Purchaser to purchase up to
thirty-nine (39) shares of Seller's no par value common stock which option is
triggered by several events, none of which have, as of the present date,
occurred (collectively, the "Option");
WHEREAS, the Purchaser has expressed to Seller its desire to
purchase, and Seller has agreed to sell ten (10) shares of Seller's no par
value common stock prior to the occurrence of any of the events set forth in
the Shareholders' Agreement which trigger the Purchaser's Option (such shares
to be hereinafter referred to as the "Shares").
WHEREAS, upon consummation of the transaction contemplated hereby,
Seller shall own Eighty (80) shares of ALES common stock, no par value each,
and Purchaser shall own Twenty (20) shares of ALES common Stock, no par value
each, representing 100% ownership of ALES, for a total of One Hundred (100)
shares issued and outstanding;
NOW, THEREFORE, in consideration of the premises and other mutual
covenants, conditions and agreements herein contained, the parties hereto,
each intending to be legally bound, hereby agree as follows:
1
<PAGE>
1. Purchase and Sale of Shares.
(a) Transfer of Shares: Subject to the terms and conditions
set forth in this Agreement, the Seller will transfer and convey the Shares of
ALES to the Purchaser, subject to all liens, charges, security interests,
pledges, equity, options, plans, restrictions, and other encumbrances.
(b) Purchase Price: The aggregate purchase price for the
Shares shall be Eighty-One Thousand One Hundred and Thirty-Seven ($81,137.00)
Dollars.
(d) Form and Manner of Payment: The purchase price shall be
paid as follows: (i) $27,045.67 at Closing; (ii) $27,045.66 on or before May
18, 1998; and (iii) the balance of $27,045.66 on or before June 18, 1998.
(e) Payment in Full: Payment of the Purchase Price, when
made in full, will represent payment in full for the Shares and no further
consideration will be owed to the Seller hereunder.
2. Time and Place of Closing, Documents Deliverable:
(a) Consummating the purchase and sale contemplated herein
between the Sellers and the Buyer (the "Closing") shall take place
simultaneously with the signing of the Agreement, on March 31, 1998.
(b) Deliveries by the Seller Prior to Closing: As the
Purchaser is active in the management of ALES, the parties hereto agree that
there will be no deliveries by Seller prior to Closing.
(c) Deliveries by the Seller at closing:
(i) Original Stock Certificates of ALES for the
shares duly endorsed. These certificates will be surrendered to ALES and the
transfer noted on the books of the ALES and new certificates will be issued in
the name of the Purchaser.
3. Further Assurances: The parties hereto shall, upon request,
cooperate with each other by furnishing any additional information, executing
and delivery any additional documents required by the parties or their counsel
to consummate or to otherwise implement the transactions contemplated by this
Agreement.
4. Representations and Warranties of the Seller: As the Purchaser is
active in the management of ALES, the parties hereto agree that the Seller
shall make no Representations and Warranties in connection with the sale of
the Shares. Further, Purchaser acknowledges that it is not relying on any
statement, representation or warranty made by Seller in connection with its
purchase of the Shares.
2
<PAGE>
(a) Purchaser acknowledges that it is purchasing the Shares
subject to all liens, charges, security interests, restrictions, and other
encumbrances held by Summit Bank, if any.
5. Indemnification by The Sellers As the Purchaser is active in the
management of ALES, and the Seller is not making, and Purchaser is not relying
on any representations or warranties in connection with the sale of the
Shares, the Seller shall neither indemnify nor hold harmless the Purchaser
from and against any losses, costs, damages or expenses arising from or
relating to the sale of the Shares.
6. Conditions Precedent to the Seller's Obligations: Other than
payment in full of the purchase price by Purchaser to Seller, there are no
conditions precedent to Seller's obligations hereunder.
7. Conditions Precedent to the Purchaser's Obligations: NONE.
8. Effect of this Agreement: The parties hereto agree and acknowledge
that the sale of the Shares by Seller to Purchaser contemplated hereby was a
negotiated transaction which neither modifies, alters or otherwise amends the
terms, nor does it constitute a waiver of, the terms and conditions of the
Shareholders' Agreement other than as follows:
(a) Upon consummation of the transaction contemplated hereby,
Seller shall own Eighty (80) shares of ALES common stock, no par value each,
and Purchaser shall own Twenty (20) shares of ALES common Stock, no par value
each, representing 100% ownership of ALES, for a total of One Hundred (100)
shares issued and outstanding;
(b) Paragraph 12 of the Shareholder's Agreement is modified and
amended to reflect the purchase by Purchaser of the Shares and to reduce the
Purchaser's unqualified right to additional shares from thirty-nine (39)
shares to twenty-nine (29) Shares, which equates to a forty-nine percent
ownership of ALES.
9. Entire Agreement; Amendment, Modification and Termination: This
Agreement contains the entire understanding among the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of
the trade inconsistent with any of the terms hereof. This Agreement may be
amended, modified or terminated at any time or times by the unanimous
agreement in writing of the parties hereto.
10. Miscellaneous:
(a) Indulgences, Etc.: Neither the failure nor any delay on the
party of any party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or
3
<PAGE>
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence.
No waiver shall be effective unless it is in writing and is signed by the
party asserted to have granted such waiver.
(b) Controlling Law: This Agreement and all questions relating
to its validity, interpretation, performance and enforcement (including,
without limitation, provisions concerning limitations of actions), shall be
governed by and construed in accordance with the laws of the State of New
York, notwithstanding any conflict-of-laws, doctrines of such state or any
other jurisdiction to the contrary, and without the aid of any canon, custom
or rule of law requiring construction against the draftsman.
(c) Notices: All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
delivered (personally, by courier service such as Federal Express, or by other
messenger), or when deposited in the United States mails, registered or
certified mail, postage prepaid, return receipt requested, addressed as set
forth above.
In addition, notice by mail shall be by air mail if posted
outside of the continental United States.
Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provisions this paragraph for the giving of notice.
(d) Binding Nature of Agreement; No Assignment: This Agreement
shall be binding and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns, except
that no party may assign or transfer its rights or obligations under this
Agreement without the prior written consent of the other parties hereto.
(e) Arbitration:. Any dispute or controversy of any kind or
nature, relating to this Agreement or the breach of performance thereof, that
shall arise among the parties hereto or their legal representative, but
excluding actions for equitable or injunctive relief brought hereunder, shall
be settled and determined by arbitration in the County of Nassau, in
accordance with the Commercial Rules then obtaining of the American
Arbitration Association, before an arbitrator or arbitrators selected by said
Association pursuant to its rules. All costs of arbitration shall be borne as
directed by the arbitrators. Judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction.
(f) Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same
4
<PAGE>
instrument. This Agreement shall become binding when one (1) or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories.
(g) Provisions Separable: The provisions of this Agreement are
independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for
any reason any other or others of them may invalid or unenforceable in whole
or in part.
(h) Paragraph Headings: The paragraph headings of this
Agreement are for convenience only; they form no part of this Agreement and
shall not affects its interpretation.
(i) Gender, Etc.: Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context indicates is appropriate.
(j) Number of Days: In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or holiday on which Federal banks are or
may elect to be closed, then the final day shall be deemed to be the next day
which is not a Saturday, Sunday or such holiday.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
AGREED AND CONSENTED TO:
SEL-LEB MARKETING, INC. (Seller) RBCJJ ASSOCIATES, LLC (Purchaser)
By: /s/ Jan S. Mirsky By: /s/ Joel Spielvogel
------------------------------ ---------------------------
Jan S. Mirsky Name:
Executive Vice President Title:
ALES SIGNATURE, LTD.
By: /s/ Jan S. Mirsky
------------------------------
Jan S. Mirsky
Executive Vice President
5
<PAGE>
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This First Amendment to Loan and Security Agreement (the "Amendment")
dated April 1, 1998 by and between SUMMIT BANK, a state banking association
organized and existing under the laws of the State of New Jersey (the
"Lender") with an office at 250 Moore Street, 2nd Floor, Hackensack, New
Jersey 07601 and SEL-LEB MARKETING, INC., a New York corporation ("Sel-Leb"),
having its principal executive office located at 495 River Street, Paterson,
New Jersey 07524 and ALES SIGNATURE LTD., a New York corporation ("ALES"),
having its principal executive office located at 495 River Street, Paterson,
New Jersey 07524 (ALES and SEL-LEB each a "Borrower" and collectively the
"Borrowers").
WHEREAS, on October 22, 1997, the Lender provided a certain credit
facility (the "Loan") to the Borrowers pursuant to the terms and conditions of
a certain Loan and Security Agreement dated as of October 22, 1997 (the "Loan
Agreement") in the principal amount of Three Million ($3,000,000.00) Dollars
as evidenced by a certain Line of Credit Note dated October 22, 1997 in the
principal amount of Two Million ($2,000,000.00) Dollars (the "Line of Credit
Note") and by a certain Term Note dated October 22, 1997 in the principal
amount of One Million ($1,000,000.00) Dollars (the "Term Note");
WHEREAS, the Borrowers have requested that the Lender increase the
Line of Credit Loan Maximum by five hundred thousand ($500,000) dollars;
<PAGE>
WHEREAS, the Lender is willing to increase the Line of Credit Loan
Maximum subject to the terms and conditions set forth within this Amendment.
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants contained herein, the parties hereto agree as follows:
1. All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them pursuant to the Loan Agreement, Line
of Credit Note and Term Note. Notwithstanding anything to the contrary
contained in the Loan Agreement, the Line of Credit Note or the Term Note, the
terms of this Amendment shall control.
2. Section 1.1(x) of the Loan Agreement is hereby stricken and
replaced with the following:
"(x) "Line of Credit Loan Maximum" shall mean Two Million Five
Hundred Thousand ($2,500,000) Dollars."
3. The reference to the "Line of Credit Note" in Section 1.1(z)
of the Loan Agreement shall be deemed to refer to the Line of Credit
Note as amended and restated by that certain Restated Line of Credit Note
attached hereto as Exhibit A (the "Restated Line of Credit Note") and by this
reference made a part hereof as if fully set forth herein.
-2-
<PAGE>
4. The reference to "Loan Documents" in Section 1.1(aa) of the Loan
Agreement shall also be deemed to include this Amendment and the Restated Line
of Credit Note.
5. The Borrowers acknowledge and agree that: (a) as of March 27, 1998
the unpaid principal balance of the Line of Credit Note is One Million Seven
Hundred Thousand ($1,700,000.00) Dollars; (b) the obligation of the Borrower
to repay the Line of Credit Note is absolute and unconditional and is not
subject to any defense, counterclaim, set-off, right of recoupment, abatement
or other claim or determination, and (c) the Line of Credit Note is and shall
be governed by the terms and provisions of the Loan Agreement, and as set
forth in this Amendment.
6. The Lender and the Borrower hereby agree and consent to the terms
and provisions of this Amendment and the transactions contemplated hereby.
7. The Borrowers shall pay all of the Lender's costs and expenses
incurred in connection with the preparation, execution and delivery of this
Amendment, including, without limitation, reasonable legal fees and
disbursements of Lender's counsel.
8. Except as expressly otherwise provided herein, the terms of the
Loan Agreement shall remain in full force and effect and are incorporated
herein by reference. In the event of a conflict between the terms of this
Amendment and the Loan Agreement, the terms of this Amendment shall control.
-3-
<PAGE>
9. The Borrowers acknowledge that the Lender has no obligation to
make any further amendments to the Loan Agreement or any other agreement
executed in connection therewith, including but not limited to this Amendment
and the Line of Credit Note.
10. This Amendment shall be construed in accordance with, and shall
be governed by, the laws of the State of New Jersey. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this First Amendment
to Loan and Security Agreement to be executed by their proper and duly
authorized officers and members as of the date first set forth above.
SUMMIT BANK
By: /s/ RICHARD MADY
----------------------------------
RICHARD MADY, Vice President
WITNESS: SEL-LEB MARKETING, INC.
/s/ JACK KOEGEL By: /s/ JAN MIRSKY
- --------------------- ----------------------------------
JAN MIRSKY, Executive Vice President
of Finance
WITNESS: ALES SIGNATURE LTD.
/s/ JACK KOEGEL By: /s/ JAN MIRSKY
- --------------------- ----------------------------------
JAN MIRSKY, Chief Financial Officer
-4-
<PAGE>
EXHIBIT A
RESTATED LINE OF CREDIT NOTE
Principal Amount: $2,500,000 Dated: April 1, 1998
FOR VALUE RECEIVED, SEL-LEB MARKETING, INC., a New York
corporation, having its principal place of business at 495 River Street,
Paterson, New Jersey 07524 ("SEL-LEB") and ALES SIGNATURE LTD., a New York
corporation, having its principal place of business at 495 River Street,
Paterson, New Jersey 07524 ("ALES") (SEL-LEB and ALES each a "Payor" and
collectively the "Payors"), jointly and severally, promise to pay to the order
of SUMMIT BANK, a state banking association organized under the laws of the
State of New Jersey (the "Bank" or "Holder"), its successors and assigns, at
its offices at 250 Moore Street, 2nd Floor, Hackensack, New Jersey 07601, or
at such other address as Holder shall notify Payors in writing, the principal
sum of TWO MILLION FIVE HUNDRED THOUSAND ($2,500,000) DOLLARS, or so much
thereof as shall have been advanced to the Payors pursuant to the Loan
Agreement (as defined below), together with interest on the unpaid principal
balance, payable as provided below.
1. Subject to Loan Documents.
(a) The obligations of Payors under this Restated
Line of Credit Note ("Restated Note") are secured by the "Collateral", as such
term is defined in the Loan and Security Agreement entered into between the
Bank and Payors on October 22, 1997 ("Original Loan and Security Agreement"),
as amended by that certain First Amendment to Loan and Security Agreement
dated the date hereof ("First Amendment") (the Original Loan and Security
Agreement as amended by the First Amendment is hereinafter referred to as the
"Loan Agreement").
(b) The terms and provisions of the Loan Agreement
and all other documents and instruments referred to therein or executed and
delivered pursuant thereto are incorporated herein by reference (all of the
foregoing are hereinafter collectively referred to as the "Loan Documents").
2. Rate of Interest. The principal amount outstanding under
this Restated Note shall bear interest at the Bank's Prevailing Base Rate on a
floating basis. The Bank's Prevailing Base Rate of interest is the fluctuating
rate of interest established by the Bank from time to time whether or not such
rate shall be otherwise published. The Prevailing Base Rate is established for
the convenience of the Bank. The Prevailing Base Rate is a means of pricing
some loans to customers of the Bank. The Prevailing Base Rate is not tied to
any external rate of interest and does not necessarily reflect the lowest rate
of interest actually charged at any given time by the Bank to any particular
class or category of customers of the Bank. In the event that there shall be a
change in the Prevailing Base Rate, such change shall be effective on the date
of such change without
<PAGE>
notice to Payors. Interest shall be computed on the basis of the actual number
of days elapsed over a period of 360 days.
3. Payment of Interest; Repayment of Principal. Principal
and interest shall be paid during the term of this Restated Note in the
following manner:
(a) Payors shall make consecutive monthly payments
of interest at the Bank's Prevailing Base Rate on a floating basis on the
principal balance outstanding under this Restated Note commencing on May 1,
1998, and continuing on the first (1st) day of each and every month thereafter
through and including May 1, 1998.
(b) Payors shall make a final payment of the entire
unpaid principal balance and accrued interest under this Restated Note and all
other costs, expenses and charges of any nature whatsoever due or assessable
hereunder, on May 31, 1998.
(c) In addition to the payments required to be made
as set forth in subparagraphs 3(a) and 3(b) above, pursuant to Section 5.20 of
the Loan Agreement, during each twelve month period, commencing on the date of
execution of the Loan Agreement, Payors shall reduce the principal amount
outstanding under this Restated Note to zero ($0) dollars for a period of
thirty (30) continuous and consecutive days.
(d) Upon the failure of Payors to make any payments
hereunder within ten (10) days of the date when due, Payors shall, to the
extent permitted by law, pay a late payment charge on all amounts overdue
equal to five (5%) percent of the overdue amount (but in no event less than
twenty five ($25.00) dollars nor more than two thousand five hundred
($2,500.00) dollars). Any such late charge assessed is immediately due and
payable.
4. Event of Default. Either of the following shall
constitute an Event of Default under this Restated Note:
(a) Failure to make any payments required hereunder
within five (5) days after the date when due; or
(b) The occurrence of any Event of Default (as
defined in the Loan Agreement) under any of the Loan Documents.
5. Acceleration Upon Default. Upon the occurrence of an
Event of Default, the entire unpaid principal balance of this Restated Note,
together with accrued interest, shall, at the option of Holder, immediately
become due and payable without notice or demand. Upon acceleration by Holder
as hereinabove provided, all amounts due hereunder, whether principal,
interest or otherwise, which have not been paid as of the date of such
acceleration, shall bear interest from such date to the date payment in full
is received by Holder at the rate of interest set forth in Paragraph
-2-
<PAGE>
2 of this Restated Note plus five (5%) percent per annum, instead of the rate
established in Paragraph 2 of this Restated Note.
6. Cumulative Remedies; Waivers by Payors. No remedy
referred to herein is intended to be exclusive, but each shall be cumulative
and in addition to any other remedy above or otherwise available to the Holder
under any of the Loan Documents, at law or in equity. Payors hereby waive
presentment, demand for payment, protest and notice of dishonor of this
Restated Note and all other notices and demands.
7. Non-Waiver. Failure to insist on the strict performance
of any or all of the terms, provisions, and covenants contained in this
Restated Note shall not be construed as a waiver or relinquishment of the
future performance of any term, provision or covenant herein.
8. Collection Fees. If suit is brought to collect this
Restated Note or any part hereof, Payors expressly agree to pay all of
Holder's reasonable costs and expenses of collection, including reasonable
attorneys' fees.
9. Prepayment. This Restated Note may be prepaid in full or
in part at any time without premium or penalty.
10. WAIVER OF JURY TRIAL. EACH PAYOR HEREBY WAIVES ALL
RIGHTS IT MAY HAVE TO A JURY TRIAL IN ANY AND ALL ACTIONS OR CONTROVERSIES
ARISING OUT OF OR IN CONNECTION WITH THIS RESTATED NOTE.
11. Usury. All provisions of this Restated Note and the Loan
Documents are expressly subject to the condition that in no event, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the undersigned
hereunder and deemed interest under applicable law exceed the maximum rate of
interest on the unpaid principal balance of this Restated Note allowed by
applicable law (the "Maximum Allowable Rate"), which shall mean the law in
effect on the date of this Restated Note, except that if there is a change in
such law which results in a higher Maximum Allowable Rate being applicable to
this Restated Note, then this Restated Note shall be governed by such amended
law from and after its effective date. In the event that fulfillment of any
provision of this Restated Note or the Loan Documents results in the interest
rate hereunder being in excess of the Maximum Allowable Rate, the obligation
to be fulfilled shall automatically be reduced to eliminate such excess. If,
notwithstanding the foregoing, the Bank or any other holder of this Restated
Note receives an amount which under applicable law would cause the interest
rate hereunder to exceed the Maximum Allowable Rate, the portion thereof which
would be excessive shall automatically be applied to and deemed a prepayment
of the unpaid principal balance of this Restated Note and not a payment of
interest.
-3-
<PAGE>
12. Governing Law. This Restated Note shall be governed
by and construed in accordance with the laws of the State of New
Jersey.
13. Line of Credit Note. This Restated Line of Credit Note
dated as of April 1, 1998 is issued in replacement (but not in novation of the
debt evidenced thereby) of that certain Line of Credit Note of the Borrower
dated as of October 22, 1997.
IN WITNESS WHEREOF, each Payor has duly executed this
Restated Note the day and year first above written.
ATTEST: SEL-LEB MARKETING, INC.
By: /s/ JACK KOEGEL By: /s/ JAN MIRSKY
----------------------- ----------------------------
JACK KOEGEL, Vice-Chairman JAN MIRSKY, Executive Vice
of the Board President of Finance
ATTEST: ALES SIGNATURE, LTD.
By: /s/ JACK KOEGEL By: /s/ JAN MIRSKY
----------------------- ----------------------------
JACK KOEGEL, Secretary JAN MIRSKY, Chief Financial
Officer
-4-
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 49,850
<SECURITIES> 0
<RECEIVABLES> 4,015,718
<ALLOWANCES> 191,578
<INVENTORY> 5,407,985
<CURRENT-ASSETS> 10,479,949
<PP&E> 1,057,725
<DEPRECIATION> 398,560
<TOTAL-ASSETS> 11,509,051
<CURRENT-LIABILITIES> 3,718,838
<BONDS> 0
0
0
<COMMON> 87,127
<OTHER-SE> 6,759,074
<TOTAL-LIABILITY-AND-EQUITY> 11,509,051
<SALES> 4,019,008
<TOTAL-REVENUES> 4,019,008
<CGS> 2,938,416
<TOTAL-COSTS> 2,938,416
<OTHER-EXPENSES> 1,374,844
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,728
<INCOME-PRETAX> (272,736)
<INCOME-TAX> (97,049)
<INCOME-CONTINUING> (175,687)
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<EXTRAORDINARY> 0
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<NET-INCOME> (175,687)
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