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 June 30, 1995
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission File Number 1-4142
TENNEY ENGINEERING, INC.
(Exact name of small business issuer as
specified in its charter)
NEW JERSEY 22-1323920
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1090 Springfield Road, Union, New Jersey 07083
(Address of principal executive offices)
(908) 686-7870
(Issuer's telephone number)
NONE
(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 Exchange Act 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
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Class Outstanding at June 30, 1995
Common Stock $.10 par value 3,685,592
Transitional Small Business Disclosure Format:
Yes No X <PAGE>
TENNEY ENGINEERING, INC.
FORM 10-QSB
QUARTER ENDED JUNE 30, 1995
I N D E X
PAGE
Part I - Financial Information
Consolidated Condensed Balance Sheet - June 30, 1995 3
Consolidated Condensed Statements of Operations -
Three and six months ended June 30, 1995 and 1994 4
Consolidated Condensed Statements of Cash Flows -
Six months ended June 30, 1995 and 1994 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial 12
Condition and Results of Operations
Part II - Other Information 15
<PAGE>
TENNEY ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
June 30, 1995
(In thousands of dollars)
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 327
Accounts receivable, net 1,818
Current portion of installment receivables 99
Inventories 369
Prepaid expenses and other current assets 63
Total current assets 2,676
Equipment, net 149
Installment receivables, noncurrent portion 265
Other assets 135
Totals $ 3,225
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Note payable - bank and current portion of
long-term debt $ 150
Debt deficiency - deferred forgiveness 289
Accounts payable and other accrued liabilities 1,115
Accrued payroll and payroll taxes 173
Billings in excess of estimated revenue on
long-term contracts 1,195
Provision for income taxes 15
Pension obligation 561
Total current liabilities 3,498
Long-term debt, noncurrent portion 35
Total liabilities 3,533
Commitments and contingencies
Stockholders' equity (deficiency):
Preferred stock
Common stock at par value 369
Additional paid-in capital 1,960
Retained earnings (deficit) (2,600)
(271)
Less treasury stock 37
Total stockholders' equity (deficiency) (308)
Totals $ 3,225
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
TENNEY ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands of dollars -
except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Net revenue:
Product and product related $2,716 $ 884 $4,443 $1,756
Service 276 337 495 655
Parts 219 158 392 321
Totals 3,211 1,379 5,330 2,732
Cost of sales:
Product and product related 2,324 812 3,560 1,631
Service 167 223 322 455
Parts 91 85 163 178
Totals 2,582 1,120 4,045 2,264
Gross profit 629 259 1,285 468
Selling and administrative
expenses 435 393 961 813
Income (loss) from operations 194 (134) 324 (345)
Other expense (income):
Interest expense 23 88 67 197
Other income, net (12) (16) (23) (27)
Totals 11 72 44 170
Income (loss) before income
taxes and extraordinary items $ 183 $ (206) $ 280 $ (515)
Income taxes 3 - 5 -
Income (loss) before
extraordinary items 180 (206) 275 (515)
Extraordinary item - gain on
restructuring of debt net of
income taxes of four thousand
and nine thousand dollars,
respectively 284 - 569 -
Net income (loss) $ 464 $ (206) $ 844 $(515)
Income (loss) per common share
before extraordinary items $ .05 $ (.05) $ .07 $(.14)
Extraordinary item per common
share .08 - .16 -
Net income (loss) per common
share $ .13 $ (.05) $ .23 $ (.14)
Exercise of options would not be dilutative.
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
TENNEY ENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands of dollars)
Six Months Ended
June 30,
1995 1994
Operating activities:
Net income (loss) from operations $ 844 $ (515)
Adjustments to reconcile income (loss) to
net cash provided by (used in) operations:
Depreciation and amortization 29 70
Gain on debt forgiveness, principal and interest (578) -
Provision for pension withdrawal liability 59 -
Changes in operating assets and liabilities:
Accounts and installment receivables (635) 559
Inventories (85) 176
Prepaid expenses and other current assets 23 19
Other assets 3 (4)
Accounts payable and other accrued liabilities (218) (133)
Accrued payroll and payroll taxes 48 (5)
Billings in excess of estimated revenues 474 (3)
Accrued restructuring costs - (35)
Deferred income - 32
Pension obligation - 34
Net cash provided by (used in) operating
activities (36) 195
Investing activities:
Acquisition of equipment (39) (12)
Cash used in investing activities (39) (12)
Financing activities:
Payments of note payable - bank and long-term debt (440) (236)
Cash used in financing activities (440) (236)
Net decrease in cash and cash equivalents (515) (53)
Cash and cash equivalents, beginning of year 842 289
Cash and cash equivalents, end of period $ 327 $ 236
Supplemental disclosure of cash flow information:
Interest paid $ 6 $ 190
Income taxes paid $ 28 $ -
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
TENNEY ENGINEERING, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1:
The financial information enclosed herewith as at June 30, 1995,
and for the three and six months ended June 30, 1995, and 1994 is
unaudited, and, in the opinion of the Company, reflects all
adjustments (which included only normal recurring accruals)
necessary for a fair presentation of the financial position as of
June 30, 1995, the changes in cash flows for the six months ended
June 30, 1995 and 1994 and the results of operations for these
periods.
This quarterly report should be read in conjunction with the
Company's 1994 Annual Report and the June 30, 1995 Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
NOTE 2:
The results of operations for the six months ended June 30, 1995
are not necessarily indicative of the results to be expected for
the full year.
NOTE 3:
Financial Condition and Results of Operation:
At June 30, 1995, the Company's deficiencies in working
capital and stockholders' equity continue to be reduced due
to profits generated from operations and debt forgiveness (see
Note 8).
Significant obligation:
As discussed in Note 9, on June 5, 1995, the Company received
an amended demand for withdrawal liability resulting from the
cessation of manufacturing activities at the Union, New
Jersey, facility. The Fund demanded payment of $203,275.68
within 60 days from the receipt of the notice and the balance
of $368,123.89 in eleven (11) quarterly installments. Failure
to make the payments could constitute a default in which case
the Fund may file suit to collect either the amount claimed
to be currently due or the full withdrawal liability. The
Company will not make the payment demanded in the time period
specified. The Company, through its counsel, is negotiating
to obtain more favorable installment payment terms. Failure
to achieve more favorable terms may force the Company to seek
protection under the Federal Bankruptcy Laws.
NOTE 4:
License Agreement:
In December 1992, the Company entered into a six-year licensing
agreement ending December 31, 1998, with a privately owned
manufacturer (the "Licensee") of environmental conditioning
equipment. The terms of the agreement, among others, provide for:
the Licensee to manufacture and sell environmental test chambers
and other equipment under the Tenney name with the Company also
retaining the right to manufacture such products; the Company to
receive license fees (up to a maximum of $1,900,000; through June
30, 1995, the Company has earned approximately $786,000) equal to
5% of qualifying sales during the term of the agreement with
specified minimum amounts payable annually; an option for the
Licensee to purchase the Company's rights, title and interest in
the Tenney trademark for $100,000 at the end of the license term
in the event the Company is no longer manufacturing such products.
In conjunction with such transaction, in February 1993 the Company
ceased manufacturing operations at its Union, New Jersey facility.
In addition, the Company entered into an agreement with the
Licensee whereby, for an annual fee of $120,000 ending on December
31, 1996, the Company will make the services of the Company's
president available to the Licensee for specified periods.
NOTE 5:
Accounts Receivable:
Accounts receivable consist of the following:
June 30,
1995
(In thousands
of dollars)
Accounts receivable, billed $1,780
Due from Licensee, net 125
1,905
Allowance for doubtful accounts 87
Totals $1,818
At June 30, 1995, sales recognized on the percentage of
completion method approximated $4,217,000.
NOTE 6:
Inventories:
Inventories consist of the following:
June 30,
1995
(In thousands
of dollars)
Raw materials $ 178
Work in process 259
437
Less:
Customer advances on contracts included
in work in process (68)
Totals $ 369
Accumulated costs on long-term contracts recognized by the
percentage of completion method were approximately $3,459,000 in
1995.
NOTE 7:
Property:
On December 12, 1994, in accordance with the Settlement Agreement
(see Note 8), the Company conveyed to its bank lender (the "Bank")
the title to all real estate located in Union, New Jersey, with a
book value of approximately $340,000 net of accumulated
depreciation.
In conjunction with the conveyance of the property, the Company
entered into a Use and Occupancy Agreement for approximately 11,000
square feet of space at an annual rental of $50,000 and 25% of
building operating costs (excluding real estate taxes). The term
of the Use and Occupancy Agreement is on a monthly basis and the
termination date is dependent upon the Bank selling the property
(see Note 8).
NOTE 8:
Short-term note payable:
As of December 12, 1994, the Company was indebted to the Bank in
the amount of $1,017,648 principal, pursuant to a line of credit
agreement, the Bank having a security interest in substantially all
of the Company's assets, and $2,480,474 principal pursuant to a
mortgage loan, in addition to $260,541 in interest and fees. The
Company and the Bank entered into a Settlement Agreement as at
December 12, 1994, pursuant to which the Company conveyed to the
Bank title to the real estate located in Union, New Jersey, for a
credit of $1,800,000 against the total indebtedness of $3,758,663,
the remaining balance of $1,958,663 was converted to a non-
interest-bearing Note due September 30, 1995, in the amount of
$800,000, payable $200,000 in December, 1994, and the balance of
$600,000 due in nine monthly non-interest-bearing amounts of
$66,667, and forgiveness of debt of $1,158,663. The security
interest held by the Bank in substantially all the Company's assets
remains in effect until 93 days after the date of the last payment.
Upon failure to pay any amount when due, after a five-day remedy
period, the Bank may obtain a writ or other appropriate action to
attach or seize assets of the Company to satisfy the total
remaining amount due, including interest from the date of default.
During the three-month period ending June 30, 1995, the Company
paid the $200,000 due during such period and partially prepaid the
installment due July 31, 1995, which reduced the balance of the
non-interest-bearing Note to $121,699. On July 31, 1995, the
Company made the July 1995 payment of $66,667, reducing the amount
due on the non-interest-bearing Note to $67,032. The forgiveness
of $1,158,663 will be recognized quarterly upon the Company's
paying the periodic amounts when due. During the fourth quarter
of 1994 and the first quarter of 1995, the Company recognized
forgiveness of approximately $289,666 principal and interest for
each quarter. For the quarter ended June 30, 1995, the Company
recognized forgiveness of $289,666, leaving a balance of $289,665
to be recognized during the third quarter of 1995 after payments
are completed.
NOTE 9:
Multi-Employer Pension Obligation:
The Company's union employees were included in a separate multi-
employer pension plan to which the Company made monthly
contributions in accordance with a contractual union agreement
based on monthly hours worked. Due to the cessation of
manufacturing operations at the Company's Union Facility, the
Company ceased being a participant in the multi-employer pension
plan in February 1993. Under the Multi-Employer Pension Plan
Amendments Act of 1980, the Company may, under certain
circumstances, become subject to liabilities in excess of
contributions made under its collective bargaining agreement.
Generally, a liability may be incurred upon the termination,
withdrawal or partial withdrawal from an underfunded plan which
would be based upon a formula specified by the plan.
During the fourth quarter 1993, the Company received a letter from
the Sheet Metal Workers' National Pension Fund (the "Fund")
alleging $529,743.28 principal due as withdrawal liability. The
Fund demanded 18 quarterly payments of $33,879.28 and a final
payment of $32,797.59, with the initial payment to be made by
January 19, 1994. The Company engaged counsel to advise it in
these matters and made a provision for this amount in the 1993
Consolidated Financial Statements. The demand also states that the
amount due was subject to adjustment for performance of the Fund
during 1992.
The Company did not make the January 19, 1994 payment. In a letter
dated March 16, 1994, the Fund advised the Company that it was
delinquent in making its first withdrawal liability payment and
that failure to correct the delinquency within sixty days will
constitute a default. If a default is declared, the Fund can bring
suit to collect the delinquent withdrawal liability payment(s)
and/or the full amount of the withdrawal liability due.
In May 1994 the Company proposed an amount significantly less than
the amount demanded of $529,743. In June 1994 the Company received
notification from the Fund rejecting the Company's offer. In
November 1994 the Company submitted another offer, still
significantly less than the amount demanded by the Fund, and in
addition tendered a monthly payment less than the periodic payment
requested. In December 1994 the Company received from the Fund a
modified calculation reducing the withdrawal liability to $502,665
principal. On June 5, 1995, the Company received from the Fund a
formal rejection of the proposed settlement and the return of the
uncashed checks submitted under such proposal. In addition, the
Fund demanded payment of the first six installments totalling
$203,275.68 within 60 days from the receipt of the notice, an
additional ten (10) quarterly installment payments of $33,879.28,
and a final payment of $29,151.09. Failure to make the payments
could constitute a default in which case the Fund may file suit to
collect either the amount claimed to be currently due or the full
withdrawal liability. The Company will not make the payment
demanded in the time period specified. The Company, through its
counsel, is negotiating to obtain more favorable installment
payment terms. Failure to achieve more favorable terms may force
the Company to seek protection under the Federal Bankruptcy Laws.
NOTE 10:
Net Revenue:
Product and product-related net revenue includes revenue from the
Company's manufacturing operation, license and technology fees.
Service revenue includes revenue from the servicing and
installation of environmental equipment and from the services of
the Company's president provided to the Licensee (see Note 4).
Parts revenue includes revenue from the sale of replacement and
spare parts for equipment previously manufactured by the Company
as well as equipment now being manufactured by the Licensee.
NOTE 11:
Income Taxes:
Effective January 1, 1993, the Company has adopted the Statement
of Financial Accounting Standards No. 109 ("SFAS No. 109"),
"Accounting for Income Taxes," which applies a balance sheet
approach to income tax accounting. The new standard requires the
Company to reflect on its balance sheet the anticipated tax impact
of future taxable income or deductions implicit in the balance
sheet in the form of temporary differences. The Company has not
reflected any future tax benefits on its balance sheet as the value
of the deferred tax asset resulting from the net operating loss
carryforwards was offset by a valuation allowance of equal amount.
At June 30, 1995, the Company has available, for tax reporting
purposes, net operating loss carryforwards of approximately
$3,300,000, which expire through 2008.
The components of income tax expenses are:
June 30,
1995
(In thousands
of dollars)
Income taxes currently payable:
Federal income tax--regular $ 266
Federal alternative minimum tax 14
State income tax 77
Tax benefit arising from carryforward
of net operating losses $ (343)
1995 Income Tax Expenses $ 14
The income tax expense in 1995 results from the federal
alternative minimum tax rate of 20%, which was allocated as
follows:
June 30,
1995
(In thousands
of dollars)
Income before extraordinary items $ 5
Extraordinary item 9
1995 Income Tax Expenses $ 14
NOTE 12:
Profit (Loss) Per Common Share:
Profit (loss) per common share is computed based on the weighted
average number of common shares outstanding during the period. At
the Annual Meeting of Shareholders held on May 26, 1995, a new ten-
year Incentive Stock Option Plan for officers and key employees was
approved. At the first meeting of the Stock Option Committee held
on June 1, 1995, options for 165,000 shares were granted to
officers and key employees. The exercise of outstanding options
would not be dilutive on the per share computation. The weighted
average number of common shares outstanding was 3,685,592 for the
six-month period ending June 30, 1995 and 1994, respectively.
NOTE 13:
Extraordinary item:
Extraordinary item consists of gain on restructuring of debt net
of income taxes. The Settlement Agreement provided for the
forgiveness of debt of $1,158,000, principal and interest, to be
forgiven quarterly, if periodic quarterly payments totaling
$200,000 are made timely. During the fourth quarter of 1994 and
the first quarter of 1995, the Company recognized forgiveness of
approximately $289,666 principal and interest for each quarter.
For the quarter ended June 30, 1995, the Company recognized
forgiveness of $289,666, leaving a balance of $289,665 to be
recognized during the third quarter of 1995 after payments are
completed (see Note 8).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Operating revenues are currently at a level sufficient enough to
cover corporate and associated administrative costs. There still
remains a working capital and stockholders' equity deficit, which
deficits are being reduced as profitability continues.
The Company has been able to generate cash from operations and has
been paying down bank debt as per the Settlement Agreement (see
Note 8 of the Notes to Consolidated Condensed Financial
Statements). The Company had substantially prepaid the September
1995 periodic payment during the first quarter of 1995, and during
the second quarter of 1995 partially prepaid the July 31, 1995,
periodic payment. The July 1995 payment has been made and the
balance due the Bank as of August 3, 1995, is approximately
$67,032.
On June 30, 1995, the Company's cash and cash equivalents totaled
$327,000, a decrease of $515,000 from the December 31, 1994 total
of $842,000. Operating activities used cash net of $36,000. The
principal source of cash was operating profit of $844,000 and the
principal use of cash was the increase of accounts receivable (see
Note 5 of the Notes to Consolidated Condensed Financial
Statements). In addition, the payment of $440,000 against the
Company's Note payable - bank and current portion of long-term debt
was the principal non-operating activity that contributed to the
use of cash (see Note 8 of the Notes to Consolidated Condensed
Financial Statements).
The Company's operations now consist of manufacturing through its
DynaTenn, Inc. subsidiary (d/b/a "DynaVac") diversified vacuum
systems for space simulation, optic coating and plasma treatment
for medical labware and servicing, refurbishing, upgrading and
installing environmental testing equipment and earning license and
technology fees.
Significant obligation:
As discussed in Note 9, the Company received on June 5, 1995,
formal rejection of the proposed settlement from the Fund and the
return of the uncashed checks submitted under such proposal. In
addition, the Fund demanded payment of the first six installments
totalling $203,275.68 within 60 days from the receipt of the
notice. Failure to make the payments could constitute a default
in which case the Fund may file suit to collect either the amount
claimed to be currently due or the full withdrawal liability. The
Company will not make the payment demanded in the time period
specified. The Company, through its counsel, is negotiating to
obtain more favorable installment payment terms. Failure to
achieve more favorable terms may force the Company to seek
protection under the Federal Bankruptcy Laws.
RESULTS OF OPERATIONS
Total net revenue of $3,211,000 and $5,330,000 in the second
quarter and year-to-date periods ended June 30, 1995, respectively,
compares to net revenue of $1,379,000 and $2,732,000 for the same
periods, respectively, in 1994.
Product and product-related net revenue for the second quarter and
year-to-date periods in 1995 was $2,716,000 and $4,443,000,
respectively, and compare to 1994 revenue of $884,000 and
$1,756,000 in the corresponding periods, respectively. The
increase in revenue within this classification between years was
due primarily to the increased recognition of revenue under the
percentage of completion method of revenue for long-term projects
that were being worked on in our DynaVac subsidiary.
Service-related revenue for the second quarter and year-to-date
periods ended June 30, 1995, of $276,000 and $495,000,
respectively, compare to the same periods in 1994 of revenue of
$337,000 and $655,000, respectively, a decrease of 18% and 24%.
The decrease is due primarily to having field service technicians
working on product-related projects rather than service-related
projects. Included in the quarter and year-to-date ended June 30,
1995, and June 30, 1994, was revenue from the Company's Leased
Employee Agreement of approximately $30,000 and $60,000,
respectively.
Revenue related to the sale of parts totaled $219,000 and $392,000
for the second quarter and year-to-date periods ended June 30,
1995, respectively. For the second quarter and year-to-date
periods ended June 30, 1994, revenue related to the sale of parts
was $158,000 and $321,000, respectively. The increase in parts
revenue is due to increased orders.
The Company's order backlog at June 30, 1995, December 31, 1994,
and June 30, 1994, was $1,371,890, $5,300,000 and $1,900,000,
respectively. The decrease in backlog has been due to a decline
in backlog at the Company's DynaVac subsidiary.
The total cost of sales as a percentage of net revenue was 80% and
76% for the second quarter and year-to-date periods ended June 30,
1995, respectively, and compares to cost of sales percentages of
81% and 83%, respectively, for the same periods in 1994.
For the second quarter and year-to-date periods ended June 30,
1995, the cost of sales percentage for product and product-related
sales was 85% and 80%, respectively. The cost of sales percentage
related to this category for the same periods in 1994 were 91% and
93%, respectively. During 1994, the Company was negatively
impacted by certain long-term contracts for which the costs to
complete had increased over the estimated costs. These contracts
were completed during 1994 and no impact was felt in 1995. The
cost of sales percentage for vacuum system products remained
unchanged between years.
Service cost of sales as a percentage of sales was 60% and 65%,
respectively, for the second quarter and year-to-date periods ended
June 30, 1995. For the second quarter and year-to-date periods
ended June 30, 1994, the service cost of sales was 66%. The
decrease was due to the more efficient utilization of manpower.
Cost of sales as a percentage of parts revenue for the second
quarter and year-to-date periods ended June 30, 1995, was 41% as
compared to 54% for the corresponding periods in 1994. The
decrease in the cost of sales percentage in the 1995/1994
comparison is due to the sales mix.
Selling and administrative expenses for the first six months of
1995 was $961,000 and compares to $818,000 in the 1994 period. The
increase was due to increased professional fees and additional
payroll costs.
Interest expense was $67,000 for the six months ended June 30,
1995, and compares to $197,000 interest expense for the comparable
1994 period. The decrease is due primarily to no interest being
charged on the Note due to the Bank (see Note 9 of the Notes to the
Consolidated Condensed Financial Statements).
The second quarter and year-to-date periods ended June 30, 1995,
net income was $415,000 and $795,000, respectively, and compares
to a net (loss) of ($206,000) and ($515,000), respectively, for the
comparable periods in 1994. The Company continues to increase
revenue from its operating activities and to reduce costs.
PART II - OTHER INFORMATION
Item 6. Exhibits
(a)(27) Financial Data Schedule
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.
Tenney Engineering, Inc.
(Registrant)
Dated: August 3, 1995.
Martin Pelman
Vice President, Finance
Principal Finance Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 327,000
<SECURITIES> 0
<RECEIVABLES> 1,905,000
<ALLOWANCES> 87,000
<INVENTORY> 369,000
<CURRENT-ASSETS> 2,676,000
<PP&E> 1,445,000
<DEPRECIATION> (1,296,000)
<TOTAL-ASSETS> 3,225,000
<CURRENT-LIABILITIES> (3,498,000)
<BONDS> 0
<COMMON> (369,000)
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (3,225,000)
<SALES> (5,330,000)
<TOTAL-REVENUES> (5,330,000)
<CGS> 4,045,000
<TOTAL-COSTS> 5,006,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,000
<INCOME-PRETAX> (280,000)
<INCOME-TAX> 5,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (569,000)
<CHANGES> 0
<NET-INCOME> (844,000)
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
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