<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: SEPTEMBER 30, 1996 Commission File Number: 0-28720
ROSE INTERNATIONAL LTD.
(Exact name of small business issuer as specified in its charter)
DELAWARE 73-1479833
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
100 WEST 5TH STREET, SUITE 601, TULSA, OKLAHOMA 74103
(Address of principal executive office)
(918) 582-1788
(Issuer's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 12 months (or for such shorter period that 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 close of the period covered by this report.
<TABLE>
<CAPTION>
COMMON STOCK $0.01 PAR VALUE 6,522,243
---------------------------- ---------
<S> <C>
Class Outstanding at
September 30, 1996
</TABLE>
Transitional Small Business Disclosure Format: Yes ; No X
--- ---
<PAGE> 2
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
No.
---
<S> <C>
PART I. Financial Information
Item 1. Condensed Consolidated Balance Sheets - 3
September 30, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations - 4
Three and Nine Months Ended September 30, 1996 and 1995
Condensed Consolidated Statement of Stockholders' Equity - 5
Nine Months Ended September 30, 1996
Condensed Consolidated Statements of Cash Flows - 6-7
Nine Months Ended September 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements - 8-10
Nine Months Ended September 30, 1996 and 1995
Item 2. Management's Discussion and Analysis of 11-13
Financial Condition and Results of Operations
PART II. Other information 14
</TABLE>
2
<PAGE> 3
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 338,113 $ 178,670
Marketable equity securities 23,287 213,348
Receivables, net 1,094,499 862,376
Inventories 1,728,076 1,285,434
Prepaid expenses and other assets 62,655 36,330
------------ ------------
Total current assets 3,246,630 2,576,158
Property and equipment, net 6,296,238 6,259,906
Goodwill, net of amortization 2,224,188 2,249,930
Investment in MRCI 292,070 417,512
Other 9,345 11,032
------------ ------------
$ 12,068,471 $ 11,514,538
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 804,253 $ 396,834
Accrued liabilities 136,389 20,307
Payable to parent company -- 215,386
Current maturities of long-term obligations 100,567 101,630
Notes payable - related party -- 125,000
------------ ------------
1,041,209 859,157
Long-term obligations 143,940 219,425
Deferred income taxes 739,000 831,000
STOCKHOLDERS' EQUITY
Common stock 65,222 47,750
Paid-in capital 11,005,076 9,806,548
Stock subscription receivable (798,000)
Retained earnings (deficit) (84,186) (209,616)
Foreign currency translation adjustment (43,790) (39,726)
------------ ------------
Total stockholders' equity 10,144,322 9,604,956
------------ ------------
$ 12,068,471 $ 11,514,538
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES AND REVENUES $ 1,294,380 $ 1,195,483 $ 4,740,331 $ 4,130,296
COST OF SALES 1,151,720 1,000,451 3,706,186 3,201,817
----------- ----------- ----------- -----------
GROSS PROFIT 142,660 195,032 1,034,145 928,479
OTHER EXPENSE (INCOME)
Selling, general and administrative expense 236,708 183,074 831,106 648,952
Interest expense - Parent -- -- 6,473 --
Interest expense - Other 7,765 21,772 28,343 96,711
Equity in loss of MRCI 531 -- 72,378 --
Gain from sale of marketable equity securities -- -- (167,123) --
Interest and other income (1,402) (721) (6,462) (489)
----------- ----------- ----------- -----------
243,602 204,125 764,715 745,174
----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES (100,942) (9,093) 269,430 183,305
INCOME TAX EXPENSE (23,000) -- 144,000 --
----------- ----------- ----------- -----------
NET EARNINGS $ (77,942) $ (9,093) $ 125,430 $ 183,305
=========== =========== =========== ===========
NET EARNINGS PER SHARE $ (0.01) $ (0.00) $ 0.02 $ 0.04
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 6,522,243 4,775,000 5,696,921 4,775,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Stock Foreign
Common Stock Paid-in Subscription Accumulated Currency
Shares Par Value Capital Receivable Deficit Adjustment Total
------ --------- ------- ---------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996 4,775,000 $47,750 $ 9,806,548 $ (209,616) $ (39,726) $ 9,604,956
Sale of common stock 997,243 9,972 990,028 (798,000) 202,000
Net earnings 125,430 125,430
Foreign currency translation
adjustment (4,064) (4,064)
Conversion of Parent debt
to common stock 750,000 7,500 208,500 216,000
--------- ------- ------------ --------- ---------- ------------ ------------
BALANCE, September 30, 1996 6,522,243 $65,222 $ 11,005,076 $(798,000) $ (84,186) $ (43,790) $ 10,144,322
========= ======= ============ ========= ========== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 125,430 $ 183,305
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 290,064 249,376
Deferred income taxes 144,000 --
Foreign operations, net 101,378 --
Gain on sale of equity securities (166,888) --
Interest due parent 6,473 --
Changes in assets and liabilities:
Receivables (232,122) 47,445
Inventories (442,642) (95,250)
Prepaid and other assets 12,555 1,928
Accounts payable and accrued liabilities 484,619 (548,269)
--------- -----------
Net cash provided by (used in) operating activities 322,867 (161,465)
--------- -----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Capital expenditures (223,965) (376,297)
Investment in MRCI -- (179,788)
Investment in SPS Alfachem, Inc. (75,000) --
Sale of equity securities 665,471 --
Purchase of equity securities (308,522) --
--------- -----------
Net cash provided by (used in) investing activities 57,984 (556,085)
--------- -----------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Sale of common stock 202,000 --
Contributions by (to) parent company -- 1,353,591
Repayment of parent loan (221,859) --
Loan from related party -- 500,000
Loan principal repayments (201,548) (631,115)
--------- -----------
Net cash provided by (used in) financing activities (221,407) 1,222,476
--------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 159,444 504,926
CASH AND CASH EQUIVALENTS, beginning of period 178,669 258,043
--------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 338,113 $ 762,969
========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
---- ----
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 36,539 $96,711
======== =======
Income taxes paid $ -- $ --
======== =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Common stock exchanged for stock subscriptions receivable $798,000 $ --
Common stock issued in exchange for debt to parent $216,000 $ --
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of Rose International Ltd.
include the accounts of Rose International Ltd. ("Rose Ltd."), its
wholly-owned subsidiaries, Rose Color, Inc. ("Rose Color") and SPS
Alfachem, Inc. ("SPS") and the 80% owned subsidiary of Rose Color, JBW
International, Inc. ("JBW"). Rose Ltd. is a majority-owned subsidiary
of M&M Group, a Nevada corporation, ("M&M"). (Rose Ltd. and its
subsidiaries are collectively referred to as the "Company").
On April 26, 1994, Rose Color entered into a contract with Indian
Dyestuff Industries LTD. ("IDI"), headquartered in Bombay, India to
form a new company in India (Mafatlal Rose Color Industries Ltd.
("MRCI")), to produce a wide range of dyes and related intermediates in
a facility leased to the new joint venture company by IDI. During 1995,
Rose Color paid approximately $600,000 for its initial 49% ownership in
the joint venture company. Construction on the facility, which is
located within the IDI Baroda, India plant, was completed and the first
commercial production commenced during the fourth quarter of 1995.
The financial statements included in this report have been prepared by
the Company pursuant to the rules and regulations of the Securities and
Exchange Commission for interim reporting and include all adjustments
(consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation. These
financial statements have not been audited. The consolidated balance
sheet at December 31, 1995 included in this report has been derived
from the audited consolidated balance sheet.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations for interim reporting. The Company believes that
the disclosures contained herein are adequate to make the information
presented not misleading. However, these financial statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report for the year ended December 31,
1995, which is included in the Company's Form 10-SB which was filed in
August 1996. The financial data for the interim periods presented may
not necessarily reflect the results to be anticipated for the complete
year. Certain reclassifications of the amounts presented for the
comparative period have been made to conform to the current
presentation.
B. ACQUISITION
During May 1996, the Company paid $75,000 to acquire 100% ownership of
SPS, a New Jersey development-stage corporation, whose principal
business will be production and supply of fine chemicals,
pharmaceutical intermediates and agrochemicals. SPS also plans to offer
custom/toll product development and manufacturing capabilities. Sales
for SPS commenced during August 1996. The acquisition cost of $75,000
was treated as goodwill, which is being amortized over a fifteen year
period.
8
<PAGE> 9
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. MARKETABLE SECURITIES
During March 1996, the Company exercised its option to acquire for
$285,000 an additional 142,500 shares of Proactive Technologies, Inc.,
which increased its total investment to 285,000 shares with a cost
basis of $498,348. The shares were sold for $665,471, resulting in a
gain of $167,123. The payment of $285,000 for the exercise of the
option was made during April 1996. As of September 30, 1996, the
Company has an investment in marketable equity securities which are
classified as trading securities. As of September 30, 1996 cost exceed
the fair value of the securities by $235 and this amount has been
included as a loss.
D. LONG-TERM OBLIGATIONS
During the nine months ended September 30, 1996, the Company reduced
long-term obligations by $76,548 and retired the remaining balance of a
related party loan in the amount of $125,000. The Company did not add
any additional long-term obligations during the period.
E. COMMON STOCK
During the nine months ended September 30, 1996, the Company collected
a total of $202,000 attributable to the sale of its common stock in an
exempt offering under Rule 504 of Regulation D. A stock subscription
receivable in the amount of $798,000 is treated as a reduction in
stockholders' equity, and represents the balance of the offering.
During the nine months ended September 30, 1996, the Company issued an
additional 750,000 common shares to Struthers Industries, Inc. as
consideration for the forgiveness of $216,000 of debt during the
period.
On August 7, 1995 the Board of Directors of the Company authorized an
Incentive Stock Option Plan (the "Plan") which for a term of ten years
provides that one million shares of the Company's common stock be
reserved for issuance to selected key employees and consultants. The
Plan is to be administered by a compensation committee composed of two
directors of the Company and this committee may grant no more than
three hundred thousand shares of common stock to any one individual at
a price based on the fair market value of the shares at the date of
grant. The grant may be exercised over a ten year period, in not less
than one thousand share lots and when exercised, the stock must be held
for six months prior to sale. The options may be exercised only by the
person to whom the option is granted and the Plan may be modified by
the Board of Directors at any time. At September 30, 1996 the Company
had granted options totaling 525,000 shares for ten years at an
exercise price of $1.00 per share in accordance with the Plan, none of
which had been exercised.
On August 10, 1995 the Board of Directors adopted a 1995-1996
Nonstatutory Stock Option Plan for its officers, directors, key
employees and consultants reserving 500,000 common shares for this
option plan, which expires December 31, 1996. The options may be
granted at prices determined by the compensation committee, which
administers this
9
<PAGE> 10
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
plan, and may be exercised upon grant and paid for at the discretion of
the Compensation Committee, with any unpaid amounts for shares received
being evidenced by promissory notes. At September 30, 1996 the Company
had granted 300,000 shares at an exercise price of $2.50 per share and
30,000 shares at an exercise price of $2.25 per share, for three years,
none of which had been exercised.
Common stock options do not have an impact on primary earnings per
share or fully-diluted earnings per share as the average trading price
and the ending trading price has approximated the lowest exercise price
of the common stock options.
F. INCOME TAXES
The Company follows SFAS No. 109, "Accounting for Income Taxes".
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. SFAS No. 109 requires that a valuation allowance be
established to reduce deferred tax assets to the amount that is more
likely than not to be realized.
Deferred income taxes result primarily from temporary differences in
recognizing depreciation expense and foreign operations for tax and
financial reporting purposes.
The following reconciles the Company's expected income tax expense
utilizing statutory tax rates to the actual tax expense for the nine
month periods ended September 30:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Tax expense at federal statutory rate $ 92,000 $ 62,000
Non-deductible goodwill amortization 33,000 33,000
State income tax, net of federal benefit 19,000 11,000
Change in valuation allowance and other - - 106,000
================== ==================
$ 144,000 $ -
================== ==================
</TABLE>
10
<PAGE> 11
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A. LIQUIDITY AND CAPITAL
The Company had working capital of $2,205,421 at September 30, 1996 as
compared to $1,717,001 at December 31, 1995, an improvement of
$488,420. Current assets increased $670,472 and current liabilities
increased $182,052. Approximately 67% of the asset increase is an
increase in inventory with the remainder representing an increase in
accounts receivable. Increases in cash and prepaid expenses are offset
by reductions in marketable equity securities. Accounts payable and
accrued expenses increased $523,501, primarily to finance the increase
in inventory. This increase was offset by a reduction in notes payable
and the payable to parent which totaled $340,386.
During the nine months ended September 30, 1996, cash flows from
operating activities was $322,867 and cash flows from investing
activities was $57,984 while financing activities used $221,407,
resulting in an increase in cash of $159,444. During the same 1995 nine
month period, cash was used in operating activities in the amount of
$161,465 and cash was used in investing activities in the amount of
$556,085, while financing activities provided cash in the amount of
$1,222,476, which resulted in an increase in cash of $504,926.
During the nine months ended September 30, 1996, the Company incurred
$223,965 for capital expenditures. The Company has a capital
expenditure plan which calls for a total investment of approximately
$1,200,000 during 1996 and 1997, as the funds become available. Some of
the planned investment may be delayed, depending upon the availability
of funds. The major items included in the capital expenditure budget
include construction of a semi-automatic waste treatment facility, the
replacement of older reactors and added storage, the purchase of
additional equipment to be utilized in expanding powder dye production,
the construction of a manual ice plant and laboratory and office
equipment.
B. RESULTS OF OPERATIONS
The operations of the Company are all within one segment, the
manufacture and marketing of chemicals.
SALES AND COSTS OF SALES
Total revenues increased 15% during the nine month period ended
September 30, 1996, as compared to the same period in 1995. Total
revenues increased 8% during the three month period ended September 30,
1996, as compared to the same period in 1996. Gross profit margins were
22% during both nine month periods, while the gross profit experienced
during the three months ended September 30, 1996 was 11% as compared to
16% during the same period in 1995.
The sales increases during both the nine and three month periods ended
September 30, 1996 were from the sale of new products. The sales
increases are even more dramatic when the decline in red dye sales is
considered. During the nine months ended
11
<PAGE> 12
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996, Rose Color's sales of its red 614 dye declined 22%
from the year earlier period. This reduced its share of sales from 38%
during the 1995 period to 26% during the 1996 period. This same sales
decline was 57% during the three month period ended September 30, 1996
as compared to the same period during 1995. Red dye sales during the
1996 third quarter represented only 16% of total sales, whereas it
represented 38% of the same 1995 period.
The manufacture and sale of a wider variety of dyes is not without its
cost. The efficiencies gained when producing the same product on a
fairly continuous basis are lost when the manufacturing effort
emphasizes a larger variety of dyes. Although sales did increase 15%
during the nine month period ended September 30, 1996 as compared to
the same year earlier period, manufacturing costs increased 21% during
the same period.
During the nine months ended September 30, 1996, the Company reduced
the production of its red 614 dye by approximately 18% due to lower
demand. During the nine months ended September 30, 1996, the red dye
represented 36% of total production, whereas, in the same period during
1995, the red dye represented 55% of total production. Since 85% of the
reduced production was made during the three months ended September 30,
1996, the lower manufacturing volume resulted in a lower gross profit
margin during the 1996 third quarter as compared to the 1995 third
quarter.
OTHER EXPENSE (INCOME)
Selling, general and administrative expense increased 28% during the
nine month period ended September 30, 1996 as compared to the same 1995
period. These same expenses increased 30% during the three month period
ended September 30, 1996 as compared to the same 1995 period. During
the nine month period, one-half of the increase was incurred in Rose
Ltd. and SPS. Rose Ltd. had only nominal costs during the 1995 period,
while SPS was not acquired until 1996. Of the remaining $90,000
increase in costs, $45,000 was from increased travel costs, primarily
to India for meetings relating to Rose Color's investment in MRCI,
$18,000 was from increased sales commissions, less a reduction in
direct sales salaries and the remainder related primarily to increased
administrative compensation and related office expenses. The remainder
of the increase during the three month period ended September 30, 1996
as compared to the same 1995 period was primarily due to the travel
costs discussed above.
Interest expense during both the nine month period and the three month
period ended September 30, 1996 is approximately one-third the amount
incurred during the same 1995 periods. The reduction in interest
expense is due to the repayment of the related party loan, which was
originally $500,000 in January 1995 and repaid in full during February
1996, and the reduction of other debt during the periods.
During the first six months of 1996, the Company recognized a loss in
the amount of $72,000 from its share of the start-up operations of
MRCI. The MRCI operations reached a break-even point during the three
months ended September 30, 1996, and are expected to yield a positive
contribution to earnings in the future. MRCI completed its plant
construction and had initial commercial production during the fourth
quarter of 1995.
12
<PAGE> 13
ROSE INTERNATIONAL LTD. AND SUBSIDIARIES
(A MAJORITY-OWNED SUBSIDIARY OF M&M GROUP)
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company realized a gain of $167,123 from the sale of marketable
equity securities during the first quarter of 1996. The Company had not
had any transactions of this nature prior to that time.
During the nine and three month periods ended September 30, 1996,
respectively, the Company recorded deferred income tax expense to
recognize the effects of changes in temporary differences. During the
year ended December 31, 1995 and for the eight months ended August 31,
1996, the Company was included in the consolidated income tax return of
Struthers Industries, Inc., its former majority owner. Deferred income
taxes were not recorded by the subsidiary for 1995 until the fourth
quarter of 1995, due to the significant losses incurred by Struthers.
13
<PAGE> 14
PART II
OTHER INFORMATION
Items 1 through 5 of Part II have been omitted as not required, not
significant, or because the information has been previously reported.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Not applicable
(b) Reports on Form 8-K - Not applicable
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ROSE INTERNATIONAL LTD.
Date: November 8, 1996 By: /s/ G. David Gordon
-------------------- ---------------------------
G. David Gordon
President
Date: November 8, 1996 By: /s/ James R. Ross
-------------------- ---------------------------
James R. Ross
Controller
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1996 AND FOR THE NINE MONTH PERIOD THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB FOR
THE QUARTER ENDED SEPTEMBER 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 338,113
<SECURITIES> 23,287
<RECEIVABLES> 1,094,499
<ALLOWANCES> 30,000
<INVENTORY> 1,728,076
<CURRENT-ASSETS> 3,246,630
<PP&E> 6,966,797
<DEPRECIATION> 670,559
<TOTAL-ASSETS> 12,068,471
<CURRENT-LIABILITIES> 1,041,209
<BONDS> 0
0
0
<COMMON> 65,222
<OTHER-SE> 10,079,100
<TOTAL-LIABILITY-AND-EQUITY> 12,068,471
<SALES> 4,740,331
<TOTAL-REVENUES> 4,740,331
<CGS> 3,706,186
<TOTAL-COSTS> 3,706,186
<OTHER-EXPENSES> 831,106
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,816
<INCOME-PRETAX> 269,430
<INCOME-TAX> 144,000
<INCOME-CONTINUING> 125,430
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,430
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
