<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-27148
NEW WORLD COFFEE, INC.
(Name of small business issuer as specified in its charter)
DELAWARE 13-3690261
(State or other jurisdiction (I.R.S. Employer
of Incorporation or organization) Identification No.)
379 WEST BROADWAY
4TH FLOOR
NEW YORK, NY 10012
(Address of principal executive offices, including zip code)
(212) 343-0552
(Issuer's telephone number)
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
past 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 ___
---
Transitional small business disclosure format (check one): Yes ____ No X
---
Number of shares of common stock, $.001 par value per share, outstanding:
As of May 8, 1997: 6,245,498.
<PAGE>
NEW WORLD COFFEE, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULES
MARCH 30, 1997
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of
March 30, 1997 and December 29, 1996.............. -3-
Condensed Consolidated Statements of Operations
for the three months ended March 30, 1997
and March 31, 1996................................ -4-
Condensed Consolidated Statements of Cash Flows
for the three months ended March 30, 1997
and March 31, 1996................................ -5-
Notes to Consolidated Financial Statements........... -6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 30, 1997........... -8-
PART II: OTHER INFORMATION....................................... -11-
SIGNATURES.............................................. -12-
2
<PAGE>
NEW WORLD COFFEE, INC.
----------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
March 30, December 29,
ASSETS 1997 1996
------ ----------- ------------
(Unaudited)
CURRENT ASSETS:
Cash................................... $ 1,155,157 $ 1,419,786
Receivables............................ 219,372 288,329
Inventories............................ 604,412 450,722
Prepaid expenses....................... 274,843 116,533
------------ ------------
Total current assets........... 2,253,784 2,275,370
PROPERTY AND EQUIPMENT, net............. 10,813,991 10,208,339
GOODWILL, net of accumulated
amortization........................... 3,591,248 3,567,721
DEPOSITS AND OTHER ASSETS, net.......... 948,799 904,757
------------ ------------
Total assets $ 17,607,822 $ 16,956,187
============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:....................
Accounts payable....................... $ 1,579,043 $ 866,098
Accrued expenses....................... 736,770 1,100,942
Accrued compensation................... 145,236 318,487
Current portion of notes payable....... 1,446,645 846,645
Current portion of obligations under 296,105 230,022
capital leases........................ ------------ ------------
Total current liabilities...... 4,203,799 3,362,194
------------ ------------
DEFERRED RENT........................... 686,586 614,285
------------ ------------
NOTES PAYABLE........................... 1,576,519 2,200,269
------------ ------------
OBLIGATIONS UNDER CAPITAL LEASES........ 537,717 496,961
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value;
2,000,000 shares authorized...... - -
Series A Convertible Preferred
Stock, $.001 par value; 400
shares authorized, 375 shares
issued, 145 and 320 shares
outstanding...................... - -
Series B Convertible Preferred
Stock, $.001 par value; 225
shares authorized, 137.5 shares
issued, 137.5 and 0 shares
outstanding...................... - -
Common stock, $.001 par value;
20,000,000 shares authorized;
6,245,498 and 5,034,812 shares
issued and outstanding................ 6,245 5,035
Additional paid-in capital............. 22,125,425 20,820,172
Accumulated deficit.................... (11,528,469) (10,542,729)
------------ ------------
Total stockholders' equity..... 10,603,201 10,282,478
------------ ------------
Total liabilities and $ 17,607,822 $ 16,956,187
stockholders' equity.......... ============ ============
3
<PAGE>
NEW WORLD COFFEE, INC.
----------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
FOR THE FIRST QUARTER ENDED MARCH 30, 1997 AND MARCH 31, 1996
-------------------------------------------------------------
UNAUDITED
---------
March 30, March 31,
1997 1996
---------- -----------
REVENUES................................ $3,667,555 $ 2,278,581
COST OF SALES AND RELATED OCCUPANCY
COSTS.................................. 2,086,896 1,449,213
STORE OPERATING EXPENSES................ 1,173,888 726,333
---------- -----------
Store operating income......... 406,771 103,035
DEPRECIATION AND AMORTIZATION........... 520,412 264,674
GENERAL AND ADMINISTRATIVE EXPENSES..... 775,976 520,969
---------- -----------
Operating loss................. (889,617) (682,608)
INTEREST EXPENSE, Net.................. (96,123) (11,511)
WRITE-OFF OF DEBT ISSUANCE COST......... - (1,050,000)
-----------
Net loss....................... $ (985,740) $(1,744,119)
========== ===========
NET LOSS PER COMMON SHARE............... $(.18) $(.48)
========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING..................... 5,515,145 3,650,331
========== ===========
4
<PAGE>
NEW WORLD COFFEE, INC.
-----------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE FIRST QUARTER ENDED MARCH 30, 1997 AND MARCH 31, 1996
-------------------------------------------------------------
UNAUDITED
---------
March 30, March 31,
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................... $ (985,740) $(1,744,119)
Adjustments to reconcile net loss to
net cash used in operating activities-
Depreciation and amortization...... 520,412 264,674
Write-off of debt issuance costs... - 1,000,000
Increase (decrease) in cash
resulting from changes in
operating assets and liabilities-
Receivables.................... 98,124 (37,264)
Inventories.................... (153,690) 3,000
Prepaid expenses............... (158,310) (235,078)
Deposits and other assets...... (171,917) (135,669)
Accounts payable............... 712,945 (571,330)
Accrued expenses............... (364,172) 58,520
Accrued compensation........... (173,250) (51,356)
Deferred rent.................. 72,301 62,831
---------- -----------
Net cash used in operating (603,297) (1,385,791)
activities.................. ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................... (809,517) (234,955)
---------- -----------
Net cash used in investing (809,517) (234,955)
activities.................. ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock, net of 1,306,462 11,512,734
issuance costs........................
Additional paid in capital in - 236,884
connection with bridge financing......
Redemption of Series C Redeemable - (1,999,997)
Preferred Stock.......................
Repayment of bridge financing loan..... - (1,000,000)
Issuance (net) of capital leases....... - 74,864
Repayments of capital leases........... (114,527) -
Repayment of notes payable............. (43,750) (3,500,000)
---------- -----------
Net cash provided by
financing activities........ 1,148,185 5,324,485
---------- -----------
Net increase (decrease) in
cash........................ (264,629) 3,703,739
CASH, beginning of period............... 1,419,786 951,355
---------- -----------
CASH, end of period..................... $1,155,157 $ 4,655,094
========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest............................... 2,625 35,701
Non-cash investing and financing
activities:
Equipment purchased under capital
leases................................ 248,385 48,251
Accretion of debt discount.... 20,000 -
Debt issuance costs incurred
in connection with bridge
financing.................... - 236,884
5
<PAGE>
NEW WORLD COFFEE, INC.
NOTED TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The March 30, 1997 consolidated balance sheet presented herein was derived
from the audited December 29, 1996 consolidated financial statements of the
Company.
2. These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. The consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
of the Company for the year ended December 29, 1996 for a description of the
significant accounting policies, which have continued without change, and other
note information.
3. The consolidated financial statements included herein contain the accounts
of the Company and its wholly-owned subsidiary, Willoughby's, as of the date of
acquisition, October 25, 1996. All material intercompany balancesand
transactions have been eliminated for periods subsequent to that date.
4. All adjustments (recurring in nature) which are, in the opinion of
management, necessary for a fair presentation of the results of the interim
periods have been included. The results of the interim periods are not
necessarily indicative of the results for the full year.
5. The Company completed its Initial Public Offering ("IPO") on February 1,
1996 of 2,500,000 shares of Common Stock , par value $.001 at a purchase price
of $5.50 per share, for aggregate net proceeds of approximately $11.1 million.
A portion of the proceeds was used to repay the outstanding balance under the
Company's then existing line of credit agreement ($3,500,000), the bridge
financing ($1,000,000) and the redeemable Series C Preferred Stock ($1,999,997).
In connection with the IPO, the Convertible Redeemable Preferred Stock Series A,
B, and C was converted into common stock of the Company.
6. In December 1995 and January 1996, the Company received $1,000,000 in
bridge financing from a group of lenders, which included $200,000 from certain
related parties. This borrowing bore interest at 10% and was repaid from the
proceeds of the IPO. In connection with this bridge financing, the Company
issued warrants to purchase 181,818 shares of Common Stock at an exercise price
of $.01 per share. During the first quarter of 1996, the Company repaid the
outstanding balance under the loan with proceeds from the IPO and recorded a
write-off of debt issuance costs of $1,050,000 which has been reflected in the
consolidated statement of operations for the first quarter ended March 31, 1996.
7. The Company completed the sale of 375 shares of Series A Convertible
Preferred Stock, par value $.001 on June 28, 1996 realizing approximately
$3,320,000 in net proceeds after commissions and costs. During the third
quarter of 1996, 55 shares of Series A Convertible Preferred Stock were
converted into 221,022 shares of Common Stock. During the first quarter
6
<PAGE>
ended March 30, 1997, 175 shares of Series A Convertible Preferred Stock were
exchanged for 137.5 shares of Series B Convertible Preferred Stock, par value
$.001 and 194,440 shares of Common Stock.
8. On February 27, 1997, the Company completed a private placement of
1,000,000 shares of Common Stock and realized net proceeds of $1,345,000.
9. On April 18, 1997, the Company received a commitment from a bank for a
loan totaling $2.5 million in connection with the Company's plans to open ten
additional stores. The loan will bear interest at prime plus two percent and
has a term of 36 months. In connection with the loan, the Company will issue
warrants to purchase 50,000 shares of Common Stock at a price equal to the
market value of the Common Stock at the time of the closing of the loan.
Security for the loan will include, among other things, security liens on
certain of the Company's existing stores and all future stores. The Company and
the bank are currently in the final stages of negotiations.
10. In April 1997, the Company filed its Uniform Franchise Offering Circular
("UFOC") with the Federal Trade Commission and the Office of the Attorney
General of the State of New York. On May 6, 1997, the UFOC was approved by the
State of New York.
11. On May 8, 1997, the Company filed a registration statement with the
Securities and Exchange Commission on Form SB-2 for the purpose of registering
new shares of Common Stock to be sold to the public. Depending upon the sales
price and the number of shares to be sold, the Company expects to raise between
$250,000 and $2,500,000 before commissions and expenses and issue between
166,667 and 1,666,667 shares. The Company expects to complete the transaction
by the end of June 1997.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS FORM 10-QSB UNDER "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" CONSTITUTE "FORWARD-
LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1996 WITH RESPECT TO THE FINANCIAL CONDITION AND BUSINESS OF THE
COMPANY. THE WORDS "ESTIMATE", "PLAN", "INTEND", "BELIEVES", "EXPECT", AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE AND ARE SBJECT TO KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES, AND OTHER FACTORS WHICH COULD CAUSE THE ACTUAL RESULTS,
PERFORMANCE, AND ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE (FINANCIAL OR OPERATING), OR ACHIEVEMENTS EXPRESSED
OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG
OTHERS, THE FOLLOWING: COMPETITION; SUCCESS OF OPERATING INITIATIVES;
DEVELOPMENT SCHEDULES; ADVERTISING AND PROMOTIONAL EFFORTS; ADVERSE PUBLICITY;
ACCEPTANCE OF NEW PRODUCT OFFERINGS; AVAILABILITY OF NEW LOCATIONS, AND TERMS OF
SITES FOR STORE DEVELOPMENT; CHANGES IN BUSINESS STRATEGY OR DEVELOPMENT PLANS;
AVAILABILITY AND TERMS OF CAPITAL; FOOD, LABOR, AND EMPLOYEE BENEFIT COSTS;
CHANGES IN GOVERNMENT REGULATIONS; REGIONAL WEATHER CONDITIONS; AND OTHER
FACTORS REFERENCED IN THIS FORM 10-QSB OR IN THE COMPANY'S FORM 10-KSB FOR ITS
1996 FISCAL YEAR.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
New World Coffee currently owns and operates 40 specialty coffee cafes,
consisting of 28 in New York, seven in Connecticut, three in Pennsylvania and
two in New Jersey, making the Company the second largest specialty coffee retail
chain in the northeastern United States. With its recent acquisition of
Willoughby's, the Company's coffee purveyor and roaster since its inception, the
Company has become vertically integrated in its operations, reduced its coffee
costs, improved its quality control, and entered into the mail order and
wholesale businesses. The Company seeks to differentiate itself from other
specialty coffee retailers by serving high quality, freshly roasted coffee
(generally delivered to its stores within 24 hours of roasting) and a variety of
fresh, high quality gourmet foods in a sophisticated, award-winning cafe design
environment.
The Company has incurred losses in each fiscal year from inception primarily due
to the cost of retail store expansion and developing an infrastructure to
support future growth. The Company's fiscal year ends on the Sunday closest to
December 31. Prior to fiscal 1995 the Company was on a calendar year basis.
FISCAL QUARTER ENDED MARCH 30, 1997 COMPARED TO FISCAL QUARTER ENDED MARCH 31,
1996
Revenues. Revenues increased 61.0% to $3,667,552 for the fiscal quarter ended
March 30, 1997 from $2,278,582 for the comparable 1996 period. Comparable store
sales for 1997 for the 23 stores opened for both periods increased 0.9%.
Costs and Expenses. Cost of sales and related occupancy costs as a percentage of
revenues for the fiscal quarter ended March 30, 1997 decreased to 56.9% from
63.6% for the comparable 1996 period. The primary components were a decrease of
3.8% in cost of goods due to the Company's implementation of its Point of Sale
("POS") system which has allowed the Company to better control store purchasing
and waste, improved coffee pricing due to the vertical integration of
Willoughby's and favorable vendor pricing due to greater economies of scale. In
addition, occupancy costs declined 2.9% as a percentage of revenues reflecting
the Company's expansion into areas with lower rental expense outside of New York
City and the strategic refocusing of site selection towards residential and
shopping areas which carry lower occupancy costs than commercial store
locations.
Store operating expenses as a percentage of revenues for the fiscal quarter
ended March 30, 1997 increased to 32.0% from 31.9% for the comparable 1996
period. Store payroll as a percentage of revenues improved by 0.5% as the
benefits of improved staffing efficiencies were partly offset by higher payroll
costs for stores opened in the latter part of 1996 which experienced higher
payroll costs during their ramp-up period. Miscellaneous store expenses
8
<PAGE>
increased 0.6% as a percent of sales reflecting higher utility and other
expenses at some of the newer stores.
Depreciation and amortization expenses as a percentage of revenues for the
fiscal quarter ended March 30, 1997 increased to 14.2% from 11.6% for the
comparable 1996 period primarily due to an increase in the number of new stores
opened during the latter part of 1996 which carry higher depreciation expense as
a a percentage of revenues during their ramp-up period as well as amortization
related to the acquisitions made during the latter half of 1996.
General and administrative expenses for the current quarter decreased as a
percentage of revenues to 21.2% from 22.9% for the fiscal quarter ended March
31, 1996. The Company expects this improvement to continue as its investment in
building a senior management team is substantially complete and further growth
will enable it to leverage these costs.
Interest expense, net for the fiscal quarter ended March 30, 1997 increased to
$96,123, or 2.6% of revenues, from $11,511, or 0.5% for the comparable 1996
period. The 1997 expense reflects interest on the notes issued during 1996 in
connection with the various acquisitions and interest on capital leases entered
into subsequent to the first quarter of 1996 while the 1996 expense relates to
the borrowings under the Company's bank lines and bridge financing, all of which
were repaid in February 1996 with proceeds from the Company's IPO.
Net Loss. Net loss for the fiscal quarter ended March 30, 1997 decreased to
$985,740 from $1,744,119 for the comparable 1996 period. Operating margins
improved to a loss of 24.3% from a loss of 30.0% in the comparable 1996 period,
primarily due to improved store operating income of 6.6% as a percentage of
revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirement is for expansion of its retail
operations. The Company currently estimates that capital expenditures through
fiscal 1997 will be approximately $3,000,000. The Company expects to open up to
10 additional retail stores over the next 12 months. In fiscal 1996, the
average cost to open a store was approximately $300,000. The Company currently
has executed leases for five stores in existing markets which are not yet open.
The Company expects to meet its funding requirements with cash on hand and
internally generated funds, the Company's prospective bank financing,
prosepctive cash flow from franchising and the proceeds from the sale of up to
$2,500,000 in equity.
At March 30, 1997 the Company had a working capital deficit of $1,950,015
compared to a working capital deficit of $1,086,822 at December 29, 1996. The
primary reason for this increase was the reclassification to current liabilities
of certain acquisition debt payable in January 1998.
The Company had net cash used in operating activities of $603,297 for the first
quarter of 1997 compared with net cash used in operating activities of
$1,385,791 for the first quarter of 1996.
9
<PAGE>
The Company had net cash used for investing activities of $809,517 for the first
quarter of 1997 and $234,955 for the first quarter of 1996. The primary use of
cash for investing activities was for capital expenditures related to the
Company's retail store expansion.
The Company had net cash provided by financing activities of $1,095,727 for the
first quarter of 1997. The Company had net cash provided by financing activities
of $5,324,485 for the first quarter of 1996 as a result of its Initial Public
Offering which raised approximately $11.4 million in net proceeds.
On April 18, 1997, the Company received a commitment for a 3-year bank loan
totaling $2,500,000 in connection with its plans to open 10 additional stores.
The loan is in the final stages of negotiations.
As a result of the Willoughby's acquisition in October 1996, the Company has
scheduled debt payments of $600,000 due on July 1, 1997, $600,000 due on January
5, 1998 and $1,100,000 due on January 5, 1999. The Company is currently
negotiating to reschedule these debt payments.
SEASONALITY AND GENERAL ECONOMIC TRENDS
The Company anticipates that its business will be affected by general economic
trends that affect retailers in general. While the Company has not operated
during a period of high inflation, it believes based on industry experience that
it would generally be able to pass on increased costs resulting from inflation
to its customers. The Company's business may be affected by other factors,
including increases in the commodity prices of green coffee, acquisitions by the
Company of existing espresso bars, existing and additional competition,
marketing programs, weather, special or unusual events, and variations in the
number of store openings. The Company has few, if any, employees at the minimum
wage level and therefore believes that an increase in the minimum wage would
have minimal impact on its operations and financial condition.
10
<PAGE>
PART II - OTHER INFORMATION
NEW WORLD COFFEE, INC.
MARCH 30, 1997
Item 1. Legal Proceedings
A holder of Series A Preferred Stock has alleged in a lawsuit filed against
the Company on May 6, 1997 in the Delaware Court of Chancery in New Castle
County, Delaware that the Company breached its obligations to such holder
pursuant to the Company's Certificate of Incorporation because it failed to
notify such holder of the Company's attempt to create Series B Preferred Stock
and failed to obtain the necessary consents of the holders of Series A Preferred
Stock prior to the issuance of Series B Preferred Stock. Such holder has
requested that the court cancel the Series B Preferred Stock and enjoin the
Company from creating any new series of stock on parity with the Series A
Preferred Stock without complying with the Company's Certificate of
Incorporation. The Company is vigorously defending this action.
Item 2. Changes in Securities
On February 26, 1997, the Company sold 1,000,000 shares of Common Stock at
$1.375 per share. During the first quarter of 1997, 175 shares of the Company's
Series A Preferred Stock were converted into 137.5 shares of Series B
Convertible Preferred Stock, $.001 par value and 194,440 shares of Common Stock.
The Series B Convertible Preferred Stock bears no dividend and has limited
voting rights except as provided under the General Corporation Law of the State
of Delaware. The Series B Convertible Preferred Stock is convertible into
shares of Common Stock.
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. None
--------
11
<PAGE>
(b) Reports on Form 8-k
-------------------
A Current Report on Form 8-K dated February 26, 1997 was filed with the
SEC relating to the sale of 1,000,000 shares of Common Stock of the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it's behalf by the
undersigned thereunto duly authorized.
NEW WORLD COFFEE, INC.
Date: By: _______________________________________
R. Ramin Kamfar
President and Chief Executive Officer
Date: By: _______________________________________
Jerold E. Novack
Vice President-Finance
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-29-1997
<PERIOD-END> MAR-30-1997
<CASH> 1155
<SECURITIES> 0
<RECEIVABLES> 219
<ALLOWANCES> 0
<INVENTORY> 604
<CURRENT-ASSETS> 1978
<PP&E> 13439
<DEPRECIATION> 2626
<TOTAL-ASSETS> 17607
<CURRENT-LIABILITIES> 4204
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 10597
<TOTAL-LIABILITY-AND-EQUITY> 17607
<SALES> 3667
<TOTAL-REVENUES> 3667
<CGS> 2086
<TOTAL-COSTS> 3260
<OTHER-EXPENSES> 1296
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96
<INCOME-PRETAX> (986)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (986)
<EPS-PRIMARY> $(.18)
<EPS-DILUTED> 0
</TABLE>
