Pallet Management Systems, Inc. Reports Second Quarter Results, Private Placement Completion

Business Wire, Feb 17, 1998

BOCA RATON, Fla.--(BUSINESS WIRE)--Feb. 17, 1998--Pallet Management Systems, Inc. (OTC/BB:PALT) today reported the results for its second fiscal quarter and six months ended December 27, 1997. For the thirteen weeks ended December 27, 1997 net sales decreased 2% to $5,168,237 from $5,289,065 for the comparable 1997 period. This reduction is attributable to the elimination of several unprofitable or marginal accounts.

The company experienced a net loss of ($100,250) or a loss of ($.07) per share compared to a profit of $21,790 or $.02 per share for the same period last year. This loss includes a 43% increase in interest expense attributable to increased borrowing and $25,000 in additional interest paid to NationsBank for default of certain covenants.

For the twenty-six weeks ended December 27, 1997 sales increased by approximately 8% to $9,744,636 from the $9,019,756 recorded in the comparable period last year. During this period the company experienced a net loss of ($276,093) or a loss of ($.20) per share compared with a net loss of ($278,342) or a loss of ($.26) for the same period last year.

Commenting on the results for the quarter, Chairman/CEO John C. Lucy III of Pallet said, "During the first half of this year we continued the strategy of focusing our manufacturing on niche markets as well as pallet repair and retrieval systems outside of the grocery industry. The completion of a $1,000,000 private placement in November has provided us with the resources to expand in these areas. We continue to focus on our original goal of developing pallet management systems for our customers and are proceeding steadily toward that goal."

Mr. Lucy added, "We are in final negotiations with a new lending institution to replace NationsBank."

Pallet Management Systems, Inc. is the first United States based publicly traded pallet company in the more than $6 billion U.S. pallet market. The company is a pioneer and leader in pallet management and recycling with operations along the East Coast of the United States.

(Financial Highlights Table Follows) -0-

                  PALLET MANAGEMENT SYSTEMS, INC.
               CONSOLIDATED STATEMENT OF OPERATIONS

                            13 Weeks Ended       26 Weeks Ended
                          Dec. 27,   Dec. 28,  Dec. 27,   Dec. 28,
                            1997       1996      1997       1996

Net sales              $5,168,237 $5,289,065  $9,744,636 $9,019,756

Cost of goods sold      4,698,320  4,752,318   8,909,313  8,263,432

Gross Profit              469,917    536,747     835,323    756,324

Selling, general and
 administrative expense   458,247    442,557     902,741    864,977

Operating profit           11,670     94,190     (67,418)  (108,653)

Other income (expense)
  Other income                  0      5,971           0      9,940
Interest expense         (111,920)   (78,371)   (208,675)  (179,629)

Earnings before income
 taxes                   (100,250)    21,790    (276,093)  (278,342)

Net earnings (loss)     ($100,250)   $21,790   ($276,093) ($278,342)

Net (loss) earnings
 per common share          $(0.07)     $0.02      ($0.20)    ($0.26)