<PAGE>
Conformed copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JULY 31, 1996 COMMISSION FILE NUMBER 0-5622
- --------------------------------------------------------------------------------
PUROFLOW INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-1947195
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) identification No.)
16559 SATICOY STREET, VAN NUYS, CALIFORNIA 91406-1739
- --------------------------------------------------------------------------------
(Address of executive offices) (ZIP Code)
Registrant's telephone number, including area code: (818) 756-1388
Securities registered pursuant to Section 12(g) of the Act:
Common Stock Shares outstanding
COMMON STOCK, $.01 PAR VALUE 7,108,521
- --------------------------------------------------------------------------------
Indicate by check mark 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 preceding 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 [ ]
<PAGE>
ITEM 1. FINANCIAL INFORMATION
PUROFLOW INCORPORATED
Consolidated balance sheets
(Unaudited)
<TABLE>
<CAPTION>
July 31, January 31,
1996 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,076,586 $ -
Trade accounts receivable, net of allowance for
doubtful accounts of $150,000 at July 31, 1996,
and $140,000 at January 31, 1996. 1,265,102 1,548,495
Inventories 1,328,354 1,239,467
Note receivable, current portion 47,370 43,831
Prepaid expenses and other current assets 64,945 33,700
- -----------------------------------------------------------------------------------------------
Current assets 3,782,357 2,865,493
- -----------------------------------------------------------------------------------------------
PLANT & EQUIPMENT
Machinery & equipment 2,932,011 2,900,343
Tooling & dies 253,921 253,921
- -----------------------------------------------------------------------------------------------
Plant & equipment at cost 3,185,932 3,154,264
Less: accumulated depreciation (2,306,127) (2,134,836)
- -----------------------------------------------------------------------------------------------
Net plant & equipment 879,805 1,019,428
- -----------------------------------------------------------------------------------------------
OTHER ASSETS
Note receivable 16,703 60,276
Other assets 16,750 16,750
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TOTAL ASSETS $ 4,695,615 $ 3,961,947
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- -----------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft $ - $ 59,363
Current portion - long term debt 884,735 1,763,681
Line of credit 235,857
Accounts payable 417,361 582,393
Accrued expenses 132,908 237,472
- -----------------------------------------------------------------------------------------------
Current liabilities 1,435,004 2,878,766
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STOCKHOLDERS' EQUITY
Preferred stock, par value $.10 per share
Authorized, 500,000 shares; issued, none.
Common stock, par value $.01 per share.
Authorized, 12,000,000 shares; Outstanding
7,108,521 shares at July 31, 1996 and
4,578,521 shares at January 31, 1996. 430,579 405,279
Additional paid-in capital 4,977,727 3,230,127
Accumulated deficit (2,147,695) (2,552,225)
- -----------------------------------------------------------------------------------------------
Total stockholders' equity 3,260,611 1,083,181
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 4,695,615 $ 3,961,947
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
1
<PAGE>
PUROFLOW INCORPORATED
Consolidated statements of operation
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
July 31, July 31,
1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $2,008,911 $2,669,166 $4,175,619 $ 4,481,629
Cost of goods sold 1,347,894 1,757,709 2,793,115 3,126,959
- ---------------------------------------------------------------------------------------------------------------------------
Gross profit 661,017 911,457 1,382,504 1,354,670
Selling, general
and administrative expense 443,024 461,545 914,947 943,322
- ---------------------------------------------------------------------------------------------------------------------------
Operating income 217,993 449,912 467,557 411,348
Interest expense 26,925 71,281 63,027 157,631
- ---------------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before taxes 191,068 378,631 404,530 253,717
Provision for income taxes
- ---------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 191,068 378,631 404,530 253,717
Loss from discontinued operations - (91,217) (7,443)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 191,068 $ 287,414 $ 404,530 $ 246,274
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share:
Continuing operations $ 0.04 $ 0.08 $ 0.09 $ 0.06
Discontinued operations (0.02) -
- ---------------------------------------------------------------------------------------------------------------------------
Primary earnings per share $ 0.04 $ 0.06 $ 0.09 $ 0.06
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares 4,771,021 4,578,521 4,675,829 4,578,521
</TABLE>
See accompanying notes to the consolidated financial statements.
2
<PAGE>
PUROFLOW INCORPORATED
Consolidated statements of cash flows
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JULY 31, 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH AT BEGINNING OF PERIOD $ - $ 74,441
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 404,530 246,274
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 171,291 191,623
Provision for losses on accounts receivable 10,000 31,700
Changes in operating assets and liabilities:
Accounts receivable 273,393 (414,661)
Inventories (88,887) (785)
Prepaid expenses and other current assets (31,245) 85,175
Accounts payable (165,032) 299,994
Accrued expenses (104,564) (5,542)
- -----------------------------------------------------------------------------------------------------
Net cash provided by operating activities 469,486 433,778
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (31,668) (63,679)
Proceeds from sale of assets 375,190
Payments received on notes receivable 40,034 42,563
- -----------------------------------------------------------------------------------------------------
Net cash provided by investing activities 8,366 354,074
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft (59,363)
Net repayment under line of credit (235,857) (126,957)
Principal payments on long-term debt (878,946) (719,849)
Advances to officers and employees (900)
Proceeds from sale of common stock 1,772,900
- -----------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 598,734 (847,706)
- -----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 1,076,586 (59,854)
- -----------------------------------------------------------------------------------------------------
CASH AT END OF PERIOD $1,076,586 $ 14,587
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE>
PUROFLOW INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
JULY 31, 1996, JANUARY 31, 1996, AND JULY 31, 1995
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
Puroflow Incorporated was organized on May 15, 1961 under the laws of the
State of Delaware. Puroflow Incorporated, and its wholly owned
subsidiaries (together referred herein as the "Company") specializes
primarily in designing and manufacturing automotive airbag filters and high
performance filters. The Company is located in Van Nuys, California, and
does business with customers throughout the world, most of which are
located in the United States.
The information presented for the three months, and six months, ended July
31, 1996 and 1995 has not been audited by independent accountants, but
includes all adjustments (consisting of normal recurring accruals) which
are, in the opinion of management, necessary to a fair statement of the
results for such periods.
The loss from discontinued operations for the three and six months ended
July 31, 1995, reflect the results from operations of the Company's water
purification products subsidiary which was sold on November 9, 1994, and
the Company's valve products subsidiary which was sold on June 15, 1995.
The consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's January 31, 1996 Annual Report on Form 10-K.
The results of operations for the three months ended July 31, 1996 are not
necessarily indicative of the results to be expected for the year ended
January 31, 1997.
NOTE 2 - INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of the following:
<S> <C> <C>
July 31, 1996 January 31, 1996
--------------------------------------------------
Raw materials and purchased parts $664,795 $757,921
Work in process 249,882 235,404
Finished goods and assemblies 413,677 246,142
--------------------------------------------------
Totals $1,328,354 $1,239,467
--------------------------------------------------
--------------------------------------------------
</TABLE>
4
<PAGE>
<PAGE>
NOTE 3 - STOCKHOLDERS EQUITY
On March 26, 1996, the Company entered into an agreement with an
investment banker to raise equity through a private placement offering.
On July 24, 1996, such offering was completed. The Company sold
2,530,000 shares of common stock and received $1,772,900 of net proceeds,
including $1,300 of interest. Additionally, $50,000 is being held in
escrow, pending registration of the common shares sold. The purchase
price of the common stock was $.80 per share. From the gross proceeds,
the underwriter received $202,400 as a fee. The underwriter also
received a 24 month option to purchase 177,100 common shares, at a price
of $.80 per share. Proceeds received by the Company have and will be used
to retire bank debt and other pre-Receiver debt. The Company is
obligated to register the securities within six months of the closing
date of the offering.
NOTE 4 - NET INCOME PER SHARE
The computation of net income (loss) per common share is based on the
weighted average number of shares outstanding, including the effect of
common stock equivalents (common stock options) when dilutive.
NOTE 5 - SUBSEQUENT EVENTS
On August 13, 1996, all remaining bank debt owed by the Company was repaid.
On August 22, 1996, the Receivership Estate was terminated by order of the
Superior Court of the State of California and control of the Company was
returned to the Board of Directors and Management.
Additionally, the Company quit its former bank and entered a new banking
relationship. The Company has obtained a new $750,000 revolving credit
line. This credit line will bear interest at the rate of prime plus 1.5%
and be secured, primarily, by the Company's accounts receivable and
inventories. The Company also obtained a $300,000, non-revolving,
equipment acquisition credit line, which will bear interest at the rate of
prime plus 1.75% and be secured by all of the Company's assets. Both of
these loans will be cross-collateralized. The terms of these loan
agreements contain certain restrictive covenants, including maintenance of
minimum working capital, net worth, and ratios of current assets to current
liabilities and debt to net worth.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's principal products consist of high performance filters and
automotive airbag filters. The following table reflects the percentage
relationship to net sales of certain items included in the Company's statement
of operations for the three months and six months ended July 31, 1996 and 1995.
<TABLE>
<CAPTION>
Three months Six months
ended July 31, ended July 31,
1996 1995 1996 1995
------------------------------------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost and expenses:
Cost of goods sold 67.1% 65.9% 66.9% 69.8%
Selling, general and administrative 22.1% 17.3% 21.9% 21.0%
Interest 1.3% 2.7% 1.5% 3.5%
------------------------------------------
Continuing income 9.5% 14.2% 9.7% 5.7%
Discontinued income (3.4)% (0.2)%
------------------------------------------
Net income 9.5% 10.8% 9.7% 5.5%
------------------------------------------
------------------------------------------
</TABLE>
Comparison of the three and six months ended July 31, 1996 and 1995.
NET SALES
A comparison of the product groups is presented below:
<TABLE>
<CAPTION>
Three months Six months
ended July 31, ended July 31,
Product line 1996 1995 1996 1995
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Government and Aerospace
Filtration Products $1,266,619 $1,385,458 $2,534,217 $2,296,378
Airbag 742,292 1,283,708 1,641,402 2,185,251
----------------------------------------------------------
Total net sales $2,008,911 $2,669,166 $4,175,619 $4,481,629
----------------------------------------------------------
----------------------------------------------------------
</TABLE>
Net sales of Government and Aerospace Filtration Products decreased by 9%
compared to the quarter ended July 31, 1995. This revenue decrease was due to
delays in parts qualification within the Company's PMA program. For the six
months ended July 31, 1996, such revenue increased 10.4% over the prior year six
month period. This is due to strong first quarter sales increases from new PMA
program parts that have been qualified.
Net sales of the airbag product line decreased by 42.2% compared to the quarter
ended July 31, 1995. Current quarter revenues of the airbag product line were
affected by automotive product line changeovers, reduction of inventories by
downline automotive suppliers, and softening of demand. For the six months
ended July 31, 1996, such revenue decreased 24.9% compared to the prior year six
month
6
<PAGE>
period. The dollar amount of this decrease is virtually entirely due to the
current three month period sales decline.
COST OF SALES/GROSS PROFIT
Gross profit as a percentage of net sales was 32.9% and 33.1% for the three
months and six months ended July 31, 1996, as compared to 34.1% and 30.2% for
the three months and six months ended July 31, 1995. Gross profit percentage
for the current quarter as compared to the prior quarter has decreased primarily
due to product mix changes. The increased gross profit margin for the six month
period is due to consolidation of manufacturing facilities during the third
quarter of the prior year. This allowed management to reduce costs of
manufacturing overhead and personnel, while increasing productive capacity.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expenses were $443,024 and $461,545 for the
three months ended July 31, 1996 and 1995, or 22.1% and 17.3% of revenue,
respectively. For the six months ended July 31, 1996, and 1995, such expenses
were $914,947 and $943,322, or 21.9% and 21.0% of revenue, respectively.
Increases were primarily attributable to legal settlements and professional
fees.
INTEREST EXPENSE
Interest expense decreased by $44,356 and $94,604 for the three months and six
months ended July 31, 1996, as compared to 1995, due to reduction in interest
bearing debt.
PROVISION FOR INCOME TAXES
No provision for income taxes is necessary due to the Company's federal net
operating loss carryforwards in excess of $3,342,000 for federal income tax
purposes, and $2,709,000 for California state income tax purposes, at January
31, 1996. Such operating loss carryforwards expire from 2008 to 2011.
LOSS FROM DISCONTINUED OPERATIONS
The loss from discontinued operations for the three and six months ended July
31, 1995, reflect the results from operations of the Company's water
purification products subsidiary which was sold on November 9, 1994, and the
Company's valve products subsidiary which was sold on June 15, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $2,347,353 and $(726,292) as of July 31, 1996
and 1995, respectively. This provides for current ratios of approximately 2.64
and .82 at July 31, 1996 and 1995, respectively.
The Company's debt at July 31, 1996 was $884,735 consisting of notes payable to
the Company's former bank totaling $459,197 and notes payable to vendors of
$425,538.
On March 26, 1996, the Company entered into an agreement with an investment
banker to raise equity through a private placement offering. On July 24, 1996,
the offering was completed. The Company
7
<PAGE>
sold 2,530,000 shares of common stock and received $1,772,900 of net
proceeds, including $1,300 of interest. Additionally, $50,000 is being held
in escrow, pending registration of the common shares sold. The purchase
price of the common stock was $.80 per share. From the gross proceeds, the
underwriter received $202,400 as a fee. The underwriter also received a 24
month option to purchase 7% of the amount of shares sold, at an exercisable
price of $.80 per share. Proceeds received by the Company will be used to
retire bank debt and other pre-Receiver debt. The Company is obligated to
register the securities within six months of the closing date of the offering.
On August 13, 1996, all remaining bank debt owed by the Company was repaid. On
August 22, 1996, the Receivership Estate was terminated by order of the Superior
Court of the State of California and control of the Company was returned to the
Board of Directors and Management.
Additionally, the Company quit its former bank and entered a new banking
relationship. The Company has obtained a new $750,000 revolving credit line.
This credit line will bear interest at the rate of prime plus 1.5% and be
secured, primarily, by the Company's accounts receivable and inventories. The
Company also obtained a $300,000, non-revolving, equipment acquisition credit
line, which will bear interest at the rate of prime plus 1.75% and be secured by
all of the Company's assets. Both of these loans will be cross-collateralized.
The terms of these loan agreements contain certain restrictive covenants,
including maintenance of minimum working capital, net worth, and ratios of
current assets to current liabilities and debt to net worth.
PART ll - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
1. A judgment was obtained by DSS Company against Ultra Dynamics Corporation,
a former subsidiary, in the amount of $16,087.50.
2. Cynthia Meals vs. M. Rowena Willis, et al. represents a civil action
commenced in Court of Common Pleas of Chester County, Pennsylvania for
unspecified damages resulting from improper maintenance of a treatment
system for drinking water. Ultra Dynamics Corporation is included as one
of six codefendants as a supplier of the equipment to a codefendant
distributor. Ultra Dynamics has filed a cross complaint against all
codefendants and plaintiff. Registrant believed that there is absolutely
no merit to this action against Ultra, and the action will ultimately be
dismissed on motion.
3. The Receivership Estate, which had been a result of the action brought by
Imperial Bank against the Registrant, was terminated by order of the
Superior Court of the State of California and control of the Company was
returned to the Board of Directors and Management as of August 22, 1996.
4. Tenth and Colorado Associates, Ltd. commenced action against Puroflow
Incorporated for unlawful detainer related to Puroflow's occupation of a
building located in Santa Monica, California, which previously housed
Registrants Airbag and Michigan Dynamics operations. Registrant vacated
and Plaintiff has attempted to convert the action to a breach of lease
action. Registrant believes that it has valid legal defenses to this
claim, and that it will ultimately be dismissed.
5. Reliable Metallurgical Processes Inc. commenced an action against Puroflow
Corporation and Michigan Dynamics Inc. in September, 1995 in Los Angeles
County Superior Court for breach of contract, open account, and
anticipatory breach. This action is being vigorously opposed and the
Registrant has filed a cross-complaint alleging for failure to properly
perform the alleged Contract,
8
<PAGE>
ultra vires acts in consummation of original Agreement, and breach of
fiduciary obligation by a former Director and Officer of Registrant who
were also Officers and Directors of the Plaintiff.
6. Jerome Pearlman d.b.a. J&F Enterprises, a former Director of the
Registrant, commenced an action in the Los Angeles County Supreme Court,
for breach of an alleged promissory note. The Registrant will vigorously
defend by filing a cross-complaint against Plaintiff for breach of
fiduciary duty and constructive trust, seeking a return of all funds paid
to Plaintiff plus interest.
7. J&F Management, Inc., controlled by Jerome Pearlman, a former Director of
the Registrant, commenced an action in Municipal Court of Santa Monica
Judicial District against the Registrant, and the Court appointed Receiver
for possession and conversion of personal property. Defendants have
vigorously defended the action by filing a motion to disqualify Plaintiff's
Counsel, a demurrer to the complaint, and a cross-complaint seeking
recision of the contract and restitution to Defendant of all funds paid to
the Plaintiff pursuant to contract for a breach of Pearlman's fiduciary
duties to the Registrant.
8. The confession of judgment obtained by Memtec America Corporation against
the Registrant on December 19, 1995, previously reported on Form 10-K for
the fiscal year ended January 31, 1996, was vacated by order of the Circuit
Court for Baltimore County on June 24, 1996. The Registrant filed an
amended counter-claim and third party complaint on August 12, 1996 against
Memtec and four former employees of the Registrant now employed by Memtec.
The counter-claim contains many allegations against Memtec and the four
former employees and seeks substantial compensatory and punitive damages
against Memtec and against Joseph B. Jasso and Michael V. Perry, former
Puroflow President & CEO and Plant Manager, respectively.
9. The action against the Registrant by George Solymar, former President & CEO
of the Registrant was dismissed on July 12, 1996.
10. The action commenced by Joseph B. Jasso and Martha Jasso against the
Registrant and Board Members was withdrawn by the plaintiff on August 5,
1996.
The Company is not a party to any other material pending suits of legal actions,
and is not aware of any material claims that are threatened.
ITEM 2. CHANGES IN SECURITIES
On July 24, 1996, the Registrant sold 2,530,000 shares of its common
stock. Additionally, a twenty-four month option to purchase 177,100
shares of its common stock was granted to the underwriter of such
common share issue.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual shareholders meeting was held on July 11, 1996, in Van
Nuys, California. At the meeting 3,358,905 shares, representing 73.2%
of outstanding shares, were voted. The following propositions were
voted upon:
9
<PAGE>
Reelection of the current board of directors.
FOR: 3,332,461 votes
Reappointment of the Company's auditors.
FOR: 3,253,096 votes
There were no other matters brought for a vote.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
On July 12, 1996, the Company filed a Form 8-K reporting that on June
24, 1996, Registrant was successful in vacating a Confession of
Judgment obtained by Memtec America Corporation ("Memtec") in the
Circuit Court for Baltimore County, State of Maryland. On July 15,
1966, Registrant filed its answer and counter-claim against Memtec
alleging misappropriation of Puroflow's trade secrets and confidential
and proprietary information; unfair competition; and tortious
interference with Puroflow's contractual and economic relations.
Further, on the 8-K filed on July 12, 1996, it was reported that in
the Superior Court of California, County of Los Angeles, the
Registrant obtained a directed verdict against George Solymar, former
President and C.E.O., dismissed his alleged allegations of wrongful
discharge of his lifetime employment contract, and recovery of $46,000
of conversion of funds. The parties stipulated to a termination of
all further litigation between plaintiff and defendant.
On July 18, 1996, the Company filed a Form 8-K reporting the issuance
of 2,530,000 shares of common stock, for an aggregate sum of
$2,024,000, through Toluca Pacific Securities Corporation, as placement
agent.
On August 23, 1996, the Company filed a Form 8-K reporting that the
Receivership Estate was terminated by order of the Superior Court of
the State of California and control of the Registrant was returned to
the Board of Directors and Management as of August 22, 1996.
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed and on its behalf by the
undersigned thereto, duly authorized.
PUROFLOW INCORPORATED
August 26, 1996 By: /s/ Michael H. Figoff
---------------------------------------------
Michael H. Figoff
President
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 1076586
<SECURITIES> 0
<RECEIVABLES> 1415102
<ALLOWANCES> 150000
<INVENTORY> 1328354
<CURRENT-ASSETS> 3782357
<PP&E> 3185932
<DEPRECIATION> 2306127
<TOTAL-ASSETS> 4695615
<CURRENT-LIABILITIES> 1435004
<BONDS> 0
0
0
<COMMON> 5408306
<OTHER-SE> (2147695)
<TOTAL-LIABILITY-AND-EQUITY> 4695615
<SALES> 2008911
<TOTAL-REVENUES> 2008911
<CGS> 1347894
<TOTAL-COSTS> 1347894
<OTHER-EXPENSES> 443024
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26925
<INCOME-PRETAX> 191068
<INCOME-TAX> 0
<INCOME-CONTINUING> 191068
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 191068
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
