UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------
FORM 10-QSB/A
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission File Number 0-28524
HIREL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 65-0666239
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
650 S.W. 16th Terrace
Pompano Beach, Florida 33069
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (954) 942-5390
----------------------
19599 N.E. 10th Avenue, Suite A, North Miami Beach, Florida 33179
(Former Name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities and 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 No X
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of as of the latest practicable date: At September 5, 1996,
there were 4,813,750 shares of the Registrant's $.0001 par value common stock
outstanding.
<PAGE>
HIREL HOLDINGS, INC. AND SUBSIDIARIES
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INDEX TO 10-QSB
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Part I: Financial Information
Item 1. Financial Statements
Combined Balance Sheet as of June 30, 1996 [Unaudited]........3
Combined Statements of Operations for the three and six months ended
June 30, 1996 and 1995 [Unaudited]............................4
Combined Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 [Unaudited]............................5
Notes to Combined Financial Statements........................6......7
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................8......11
Part II. Other Information
Signature Page................................................12
. . . . . . . . . . . . .
2
<PAGE>
<TABLE>
Item 1: Financial Statements
HIREL HOLDINGS, INC. AND SUBSIDIARIES
- ------------------------------------------------------------------------------
COMBINED BALANCE SHEET AS OF JUNE 30, 1996
[UNAUDITED]
- ------------------------------------------------------------------------------
<S> <C>
Assets:
Current Assets:
Cash $ 449,912
Accounts Receivable [Net of Allowance for Doubtful Accounts
of $30,439] 577,138
Inventory 776,874
Other Current Assets 19,391
-----------
Total Current Assets 1,823,315
Property and Equipment - Net 760,166
-----------
Other Assets:
Loans Receivable - Related Parties 342,886
Deferred Offering Costs 275,940
Other Assets 76,804
-----------
Total Other Assets 695,630
Total Assets $ 3,279,111
===========
Liabilities and Stockholder's Equity:
Current Liabilities:
Line of Credit $ 1,310,339
Accounts Payable 495,359
Due to Stockholder 195,000
Other Current Liabilities 128,244
-----------
Total Current Liabilities 2,128,942
Loan Payable - Related Party 10,036
-----------
Commitments and Contingencies --
Stockholder's Equity:
Preferred Stock - $.001 Par Value, 1,000,000 Shares Authorized,
None Issued or Outstanding --
Common Stock, $.001 Par Value, 24,000,000 Shares Authorized,
3,750,000 Shares Issued and Outstanding 3,750
Paid-in Capital 1,169,854
Retained [Deficit] (33,471)
Total Stockholder's Equity 1,140,133
Total Liabilities and Stockholder's Equity $ 3,279,111
===========
See Notes to Combined Financial Statements.
3
</TABLE>
<PAGE>
<TABLE>
HIREL HOLDINGS, INC. AND SUBSIDIARIES
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COMBINED STATEMENTS OF OPERATIONS
[UNAUDITED]
- ------------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
-------- --------
1 9 9 6 1 9 9 5 1 9 9 6 1 9 9 5
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales:
Computer Equipment $5,834,427 $ 4,185,919 $12,497,056 $ 9,264,073
Computer Equipment - Related Party -- 633,562 -- 2,491,111
Fuel Injection Systems 604,954 -- 929,394 --
---------- ----------- ---------- -----------
Total Net Sales 6,439,381 4,819,481 13,426,450 11,755,184
---------- ----------- ---------- -----------
Cost of Goods Sold:
Computer Equipment 5,674,124 4,618,934 11,852,878 11,342,443
Fuel Injection Systems 427,991 -- 606,586 --
---------- ----------- ---------- -----------
Total Cost of Goods Sold 6,102,115 4,618,934 12,459,464 11,342,443
---------- ----------- ---------- -----------
Gross Profit 337,266 200,547 966,986 412,741
---------- ----------- ---------- -----------
Expenses:
General and Administrative
Expenses 472,353 119,868 914,154 240,110
Research and Development 71,124 -- 79,936 --
---------- ----------- ---------- -----------
Total Expenses 543,477 119,868 994,090 240,110
---------- ----------- ---------- -----------
Operating [Loss] Income (206,211) 80,679 27,104 172,631
---------- ----------- ---------- -----------
Other Income [Expense]:
Interest Expense (12,964) -- (63,901) --
Interest Income - Related Parties 7,645 -- 14,750 --
Loss on Sale of Asset -- -- (41,574) --
Rental Income - Related Party 9,000 -- 9,000 --
---------- ----------- ---------- -----------
Total Other [Expense] 3,681 -- (81,725) --
---------- ----------- ---------- -----------
Net [Loss] Income Before Pro
Forma Income Tax Adjustment (202,530) 80,679 (108,829) 172,631
Pro Forma Income Tax
Adjustments -- 25,850 -- 64,950
---------- ----------- ---------- -----------
Pro Forma Net [Loss] Income $ (202,530) $ 54,829 $ (108,829) $ 107,681
========== =========== ========== ===========
[Loss] Earnings Per Share $ (.05) $ .02 $ (.03) $ .04
========== =========== ========== ===========
Weighted Average Common Shares
Outstanding 3,750,000 2,750,000 3,750,000 2,750,000
========== =========== ========== ===========
See Notes to Combined Financial Statements.
4
</TABLE>
<PAGE>
<TABLE>
HIREL HOLDINGS, INC. AND SUBSIDIARIES
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COMBINED STATEMENTS OF CASH FLOWS
[UNAUDITED]
- ------------------------------------------------------------------------------
Six months ended
June 30,
1 9 9 6 1 9 9 5
------- -------
<S> <C> <C>
Operating Activities:
Net [Loss] Income $ (108,829) $ 172,631
---------- -----------
Adjustments to Reconcile Net Income to Net Cash [Used for] Provided by
Operating Activities:
Depreciation 51,653 2,953
Amortization 44,652 --
Loss on Sale of Asset 41,574 --
Provision for Losses on Accounts Receivable 20,439 940
Changes in Assets and Liabilities:
[Increase] Decrease in:
Accounts Receivable (247,158) (55,951)
Inventory (375,008) 4,058
Other Current Assets (13,432) (1,636)
Increase [Decrease] in:
Accounts Payable (198,641) 46,089
Other Current Liabilities (64,220) (30,628)
---------- -----------
Total Adjustments (740,141) (34,175)
---------- -----------
Net Cash - Operating Activities (848,970) 138,456
---------- -----------
Investing Activities:
Purchase of Property and Equipment (11,611) (109)
Proceeds from Sale of Equipment 85,000 --
Loans Receivable - Related Party (119,782) --
---------- -----------
Net Cash - Investing Activities (46,393) (109)
---------- -----------
Financing Activities:
Increase in Deferred Offering Costs (302,328) --
Distributions (384,317) (265,000)
Advances from Line of Credit 3,970,052 --
Repayments on Line of Credit (3,320,519) --
Advances from Related Parties 268,283 449,584
Repayments to Related Parties (93,137) (399,234)
Proceeds from Equity Sales 649,000 --
---------- -----------
Net Cash - Financing Activities 787,034 (214,650)
---------- -----------
Net [Decrease] in Cash (108,329) (76,303)
Cash - Beginning of Periods 558,241 88,581
---------- -----------
Cash - End of Periods $ 449,912 $ 12,278
========== ===========
See Notes to Combined Financial Statements.
5
</TABLE>
<PAGE>
HIREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS
[UNAUDITED]
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[1] Basis of Presentation
The unaudited combined financial statements as of and for the period ended June
30, 1996 give retroactive effect to the acquisition by Hirel Holdings, Inc. [the
"Company"] of all of the outstanding common stock of Hirel Marketing, Inc. [an S
corporation] ["HMI"] and Hirel Technologies, Inc. ["HTI"] on July 22, 1996. HTI
is the successor to Hirel Technologies, Ltd. ["HTL"], a limited partnership. The
financial statements of the Company will be presented on a consolidated basis
commencing July 22, 1996. Prior to that date the separate results of HMI and HTI
[including HTL as predecessor from inception on October 24, 1995] have been
combined on a basis consistent with that of consolidated financial statements in
a manner similar to a pooling of interests and giving retroactive effect to the
issuance of 2,750,000 shares of the Company's common stock to the stockholders
of HMI, and 1,000,000 shares of the Company's common stock to the stockholders
of HTI. Additionally, the S corporation and partnership equity sections of HMI
and HTL as predecessor to HTI have been reclassified to additional paid-in
capital. No adjustment of assets to "fair value" have been recorded and all
intercompany balances and transactions were eliminated. The accompanying
combined financial statements will become the historical financial statements
upon issuance of financial statements for the period subsequent to July 22,
1996.
In opinion of management, the accompanying unaudited financial statements
included in the Form 10- QSB reflect all adjustments [consisting only of normal
recurring accruals] necessary to make the interim financial statements not
misleading. The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.
The following pro forma unaudited information gives effect to the results the
Company would have reflected for three months and six months periods ended June
30, 1995 had the predecessor of HTL [Cutler Induction Systems, Inc.] been
included in the combined statements of operations.
Three months ended Six months ended
June 30, 1995 June 30, 1995
Net Sales - Computer Equipment $ 4,819,481 $11,755,184
Net Sales - Fuel Injection Systems 346,377 487,145
----------- ----------
Total Net Sales $ 5,165,858 $12,242,329
--------------- =========== ===========
Net Loss $ (249,406) $ (615,953)
- -------- =========== ==========
Net Loss Per Share $ (.07) $ (.16)
- ------------------ =========== ==========
Weighted Average Common Shares Outstanding 3,750,000 3,750,000
For further information, refer to the financial statements and footnotes
included in the Company's Form SB-2, filed July 22, 1996.
[2] Inventory
The components of inventory as of June 30, 1996 are as follows:
Raw Materials $ 243,146
Work-in-Process 15,515
Finished Goods 518,213
-----------
Total $ 776,874
----- ===========
6
<PAGE>
HIREL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL STATEMENTS, Sheet #2
[UNAUDITED]
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[3] Income Taxes
Income taxes are provided, where appropriate, on historical earnings of each
combining company. Pro forma income tax adjustments are provided to reflect an
estimate of income tax expense had the combined companies been subject to
federal and state income taxes for each period presented.
[4] Earnings Per Share
Earnings per share is based on the weighted average number of common shares
outstanding for each period presented and gives retroactive effect to the
combination discussed in Note 1. The Company does not have any common stock
equivalents outstanding.
[5] Subsequent Event
On July 22, 1996, the Company realized net proceeds of approximately $5,200,000
through the sale of 1,063,750 shares of common stock.
. . . . . . . . . .
7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995
The Combined Statement of Operations for the three months ended June 30, 1996
reflects Total Net Sales of $6,439,381, and Gross Profit of $337,266. This
resulted in a Gross Profit Margin of 5.2% and a Pro Forma Net loss of $202,530.
The Combined Statement of Operations for the three months ended June 30, 1995
reflected Total Net Sales of $4,819,481 and Gross Profit of $200,547, resulting
in a Gross Profit Margin of 4.1%. Income Before Income Taxes for the three
months ended June 30, 1995 was $80,679, and Pro Forma Net Income was $54,829.
Any comparisons between the Combined Statement of Operations for the three
months ended June 30, 1996 and the three months ended June 30, 1995 must made in
light of the discussion that follows. The Combined Statement of Operations for
the three months ended June 30, 1996 includes the results from operations for
both of its subsidiaries, Hirel Marketing, Inc. and Hirel Technologies, Inc. The
Combined Statement of Operations for the three months ended June 30, 1995 only
includes the operations of HMI, and does not include the operations of HTI,
which did not commence business [through a predecessor entity] until October 24,
1995. The sections below compare the operations of HMI and HTI for the three
months ended June 30, 1996 and June 30, 1995 separately.
Hirel Marketing, Inc.
Hirel Marketing, Inc. ["HMI"] is the subsidiary of the Company that is a
distributor of microcomputer hardware, peripherals and related communications
products. Net sales increased by $1,015,000, which is an increase of 21% during
the second quarter 1996, as compared to the second quarter 1995. Gross Profit on
computer equipment sold decreased by approximately $40,000, which is a decrease
of 20%. The Gross Profit margin for the second quarter 1996 was 2.75%, which is
a decrease from the Gross Profit margin of 4.16% for the second quarter 1995.
On June 21, 1995, HMI obtained a $1,000,000 line of credit. This line of credit
is used to finance letters of credit used by HMI to purchase inventory. The line
of credit allows HMI the option of paying upon presentation or financing the
inventory purchases for up to 90 days. The line of credit carries interest at
the Citibank prime rate [8.5% at June 30, 1996] plus 2% to a maximum of 18%. The
line of credit is subject to renewal annually is collateralized by all corporate
assets and is guaranteed by Vincent Montelione. The line of credit was increased
to $2,000,000 on December 26, 1995. As of June 30, 1996, borrowings under the
line of credit were $1,310,339, as compared to $0 as of June 30, 1995. Letters
of credit which have not yet been presented for payment, are included on the
financial statements under the caption "Accounts Payable," and totaled $437,349
as of June 30, 1996, as compared to $-0- as of June 30, 1995. The interest
expense associated with the line of credit was $12,964 for the three months
ended June 30, 1996. Management intends to continue to seek favorable
opportunities to purchase inventory using, where appropriate, financing
available through the line of credit.
In the second quarter 1996, total General and Administrative Expenses
attributable to HMI were $205,192. This increase of approximately $85,000 in
General and Administrative Expenses is primarily attributable to the
amortization of the loan origination costs and bank charges associated with the
line of credit [approximately $31,000] and increases in salaries and payroll
taxes [approximately $37,000].
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------
During the quarter ended June 30, 1996, a private placement was successfully
completed whereby $500,000 was raised as additional stockholders equity. This
additional stockholders equity was obtained in large part to offset the costs
incurred in connection with the initial public offering of the Company, which
was completed on July 22, 1996. As of June 30, 1996, total deferred offering
costs were $275,940.
The Pro Forma Net Loss attributable to the operations of HMI was $50,206 for the
fiscal quarter ended June 30, 1996, as compared to Pro Forma Net Income of
$54,829 for the fiscal quarter ended June 30, 1995. This decrease is primarily
the result of a decrease in Gross Profit and increased General and
Administrative Expenses during the fiscal quarter ended June 30, 1996.
Hirel Technologies, Inc.
Hirel Technologies, Inc. ["HTI"], through its predecessor entity, Hirel
Technologies, Ltd. ["HTL"] began operations on October 24, 1995. HTI is a
subsidiary of the Company that develops and sells fuel injection systems,
related components and other products designed to enhance the performance of
gasoline powered engines For the fiscal quarter ended June 30, 1996, HTI had
total revenue of $604,954, of which $324,260 came from original equipment
manufacturer ["OEM"] customers and the remaining $280,694 resulted from sales to
after market purchasers. A single OEM customer accounted for approximately 48%
of revenues for the fiscal quarter ended June 30, 1996, and although the
disruption or loss of that customer may have a material adverse effect on the
total revenues of HTI, Management believes that the relationship with this and
other OEM customers will strengthen and broaden in the future.
Total General and Administrative Expenses for the fiscal quarter ended June 30,
1996 totaled $230,161, and consisted primarily of salaries and payroll taxes of
approximately $110,000. Research and Development Expenses incurred during the
fiscal quarter ended June 30, 1996 were $71,124. Management believes that HTI
will continue to incur Research and Development Expenses as it endeavors to
develop new products and enhancements of existing products that are consistent
with the current product line. The loss from operations for the fiscal quarter
ended June 30, 1996, was $115,322.
While the quarter ended June 30, 1996 reflects the operations of HTI, the
comparative quarter ended June 30, 1995, does not reflect the operations of
Cutler Induction Systems, Inc., a Florida corporation ["Cutler"] that originally
developed the intellectual property rights acquired by HTL from Cutler and that
is related to HTL by certain common beneficial ownership. For a complete
discussion of the acquisition of certain property rights by HTL and certain
issues related thereto, please see the Registration Statement [Form SB-2] as
filed with the Securities and Exchange Commission and effective as of July 22,
1996. As noted in footnote 1 of the Combined Financial Statements, had the
results of Cutler been included in the statement of operations for HTI for the
fiscal quarter ended June 30, 1995, the loss from operations would have been
$193,594. Net sales of Fuel Injection Systems for that period were $346,377, as
compared to $604,954 sold by HTI during the fiscal quarter ended June 30, 1996.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
The Combined Statement of Operations for the six months ended June 30, 1996
reflects Total Net Sales of $13,426,450, and Gross Profit of $966,986. This
resulted in a Gross Profit Margin of 7.2% and Pro Forma Net Loss of $108,829.
The Combined Statement of Operations for the six months ended June 30, 1995
reflected Total Net Sales of $11,755,184 and Gross Profit of $412,741, resulting
in a Gross Profit Margin of 3.5%. Income Before Pro Forma Income Tax Adjustments
for the six months ended June 30, 1995 was $172,631, and Pro Forma Net Income
was $107,681.
As noted previously, any comparisons between the Combined Statement of
Operations for the six months ended June 30, 1996 and the six months ended June
30, 1995 must made in light of the discussion that follows. The Combined
Statement of Operations for the six months ended June 30, 1996 includes the
results from operations for both HMI and HTI. The Combined Statement of
Operations for the six months ended June 30, 1995 only includes the operations
of HMI, and does not include the operations of HTI. The sections below compare
the operations of HMI and HTI for the six months ended June 30, 1996 and June
30, 1995 separately.
Hirel Marketing, Inc.
Net Sales of computer equipment were $12,497,056 for the six months ended June
30, 1996, which reflects an increase of approximately $740,000 or 6.3% as
compared to the six months ended June 30, 1995. The Gross Profit Margin for the
six months ended June 30, 1996 increased to 5.2%, as compared to 3.5% for the
six months ended June 30, 1995. Management believes that this increase in Gross
Profit Margin was, in part, reflective of enhanced buying opportunities as a
result of the availability of the line of credit, which is more fully described
above. The interest expense associated with the line of credit was $63,901 for
the six months ended June 30, 1996.
General and Administrative Expenses for the six months ended June 30, 1996
totaled $450,340, as compared to $240,110 of General and Administrative Expenses
incurred during the six months ended June 30, 1995. The increase in General and
Administrative Expenses was primarily attributable to the increase in payroll
and related employee taxes resulting from the increase in Net Sales
[approximately $80,000], as well as increases in rent and telephone expenses
[approximately $23,000]. Further, HMI incurred certain loan origination fees in
connection with obtaining the $1,000,000 line of credit referenced above, as
well as in connection with the increase in the line of credit to $2,000,000.
Amortization of loan origination fees and related bank charges [and included
under General and Administrative Expenses] charged to operations during the six
months ended June 30, 1996 was $78,084.
Income before Income Taxes attributable to HMI for the six months ended June 30,
1996 was $151,100, as compared to $172,631 for the six months ended June 30,
1995.
Hirel Technologies, Inc.
As previously noted, HTI [through its predecessor HTL] began operations on
October 24, 1995. For the six months ended June 30, 1996, HTI had total sales of
$929,394 in Fuel Injection Systems, of which $500,660 came from OEM customers
and $428,734 were from sales to after market purchasers. The Gross Profit
attributable to such systems was $322,808, a Gross Profit margin of 35%. The
General and Administrative Expenses for HTI during the six months ended June 30,
1996 totaled $426,814, and Research and Development Expenses during that time
totaled $79,936 [substantially all of which were incurred in the second quarter
of 1996]. The General and Administrative Expenses consisted primarily of salary
and payroll taxes of $232,156, rent of $50,345, and depreciation of $45,990. The
total loss of HTI for the six months ended June 30, 1996, was $137,929, of which
$96,355 was the loss from operations and interest expense, and $41,574 was the
loss from the sale of a capital asset.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------
As noted previously, the Pro Forma Combined Statement of Operations for the six
month period ended June 30, 1995, does not reflect the operations of Cutler
Induction Systems, Inc. As set forth in footnote 1, had the operations of Cutler
been included in the statement of operations for HTI for the six months ended
June 30, 1995, the loss before income taxes would have been $788,584. This
compares to the loss before income taxes of HTI for the six months ended June
30, 1996 of $137,929.
Liquidity and Capital Resources
Cash balances at June 30, 1996 were $449,912, an increase from the cash balance
of $12,278 at June 30, 1995. This increase as reflected on the Combined
Statement of Cash Flows is primarily the result of the following:
Net cash used for operating activities was $848,970 for the six months ended
June 30, 1996, compared to net cash generated from operating activities of
$138,456 for the same period in 1995. This change is primarily attributable to
the increases in accounts receivable of $247,158 and inventory of $375,008, and
a decrease in accounts payable of $198,641.
Net cash used in investing activities was $46,393 for the six months ended June
30, 1996, due largely to an increase in loans receivable-related party of
$119,782. This was partially offset by proceeds from the sale of equipment of
$85,000. There were insignificant investing activities for the same six months
ended June 30, 1995.
Net cash provided by financing activities totaled $787,034 for the six month
period ending June 30, 1996, as compared to a net use of cash from financing
activities of $214,650 at June 30, 1995. This change is the result of proceeds
from draws under the line of credit in excess of repayments on the same line of
$649,533, proceeds from equity sales of $649,000, and net related party advances
of $175,146. Net cash provided by financing activities decreased as a result of
distributions of $384,000 and expenses of $302,328 associated with the public
offering [which subsequently occurred on July 22, 1996].
HMI continues to maintain a $2,000,000 short-term line of credit with a
financial institution. Amounts outstanding under the line were $1,310,339 as of
June 30, 1996. HMI intends to repay the outstanding borrowings under the line
through normal conversion of its short-term trade assets. The Company was not
dependent upon trade terms for material, supplies and other working capital
needs incurred during the six months ended June 30, 1996.
Impact of Inflation
Inflation has not been a major factor in the Company's business since inception.
There can be no assurances that this will continue.
11
<PAGE>
SIGNATURE
- ------------------------------------------------------------------------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-QSB/A to be signed on its
behalf by the undersigned thereon duly authorized.
HIREL HOLDINGS, INC.
By: /s/ Vincent Montelione
Vincent Montelione,
Duly Authorized and Chief Financial Officer
November 19, 1996
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> dec-31-1996
<PERIOD-END> jun-30-1996
<CASH> 449,912
<SECURITIES> 0
<RECEIVABLES> 607,577
<ALLOWANCES> 0
<INVENTORY> 776,874
<CURRENT-ASSETS> 1,823,315
<PP&E> 760,166
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,279,111
<CURRENT-LIABILITIES> 2,128,942
<BONDS> 0
0
0
<COMMON> 3,750
<OTHER-SE> 1,136,383
<TOTAL-LIABILITY-AND-EQUITY> 3,279,111
<SALES> 6,439,381
<TOTAL-REVENUES> 6,439,381
<CGS> 6,102,115
<TOTAL-COSTS> 543,477
<OTHER-EXPENSES> (16,645)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,964
<INCOME-PRETAX> (202,530)
<INCOME-TAX> 0
<INCOME-CONTINUING> (202,530)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (202,530)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
