Encompass Group Affiliates, Inc.(fka ECGA)

[sludgehound]

3Q Sales $11M but huge PMIC Loss

http://biz.yahoo.com/e/050524/advc.ob10qsb.html

Overview of Third Quarter Results

For the three months ended March 31, 2005, we recorded consolidated sales of $11.4 million relating to the repair, service and warranty and exchange of various electronic office equipment and the sale and distribution of various computer components, parts and accessories realizing a consolidated gross profit of $1.1 million or 9.2 % of sales for the quarter. For the three months ended March 31, 2005, CTI generated a net profit from operations of $112,000 or 5.5% of sales, while PMIC generated a consolidated net loss of $800,000, net of minority interest, on gross margins of 4%.

For the three months ended March 31, 2005, we reported a consolidated loss from operations of $1.2 million because of consolidated overhead costs inclusive of CTI and PMIC's operations versus a $82,000 loss for the three months ended March 31, 2004. Consolidated overhead costs for the three months ended March 31, 2005 amounted to $2.3 million and include $216,000 of amortization of deferred compensation and depreciation and $1.8 million of general and administrative costs. For the three months ended March 13, 2005, our overall consolidated net loss for the quarter increased an additional $400,000 from investment activities and net interest expense as compared to a $200,000 increase in other income from investment income for the comparative three-month period ended March 31, 2004.