- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 26, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from_____to_____
Commission File Number 1-12873
ASD GROUP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 14-1483460
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1 INDUSTRY STREET, POUGHKEEPSIE, NEW YORK 12603
-----------------------------------------------
(Address of principal executive offices, including Zip Code)
(914) 452-3000
--------------
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Common Stock, $.01 par value
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
Check whether the issuer (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 |_|
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: The number of shares of the issuer's
Common Stock, $.01 par value per share, outstanding as of February 5, 1998 was
1,577,917.
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
- --------------------------------------------------------------------------------
1
<PAGE>
ASD GROUP, INC.
- --------------------------------------------------------------------------------
FORM 10-QSB
QUARTERLY REPORT
DECEMBER 26, 1997
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C> <C> <C>
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheet:
December 26, 1997 (unaudited). . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations (unaudited):
Six and three months ended December 26, 1997 (as restated)
and December 27, 1996. . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows (unaudited):
Six months ended December 26, 1997 (as restated)
and December 27, 1996. . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . 7
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 11
SIGNATURES 12
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ASD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
DECEMBER 26,
1997
------------
<S> <C>
ASSETS
Current assets:
Cash ..................................................................... $ 68,111
Accounts receivable, less allowance for doubtful accounts of
$263,000 ............................................................... 3,339,338
Inventory ................................................................ 5,387,592
Prepaid expenses and other current assets ................................ 465,120
Deferred tax asset ....................................................... 262,789
-----------
Total current assets .............................................. 9,522,950
Property, plant and equipment, net ......................................... 4,733,786
Deferred tax asset ......................................................... 1,664,174
Other assets ............................................................... 642,874
-----------
Total assets ............................................................... $16,563,784
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ........................................ $ 1,679,196
Accounts payable ......................................................... 1,872,479
Accrued expenses ......................................................... 1,192,315
-----------
Total current liabilities ......................................... 4,743,990
Long-term debt ............................................................. 7,279,265
Deferred compensation ...................................................... 311,404
-----------
Total liabilities ................................................. 12,334,659
-----------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none issued ......................................................... --
Common stock, $.01 par value, 10,000,000 shares authorized,
1,577,917 shares issued and outstanding ............................. 15,779
Paid-in capital .......................................................... 4,206,892
Retained earnings ........................................................ 6,454
-----------
Total stockholders' equity ........................................ 4,229,125
-----------
Total liabilities and stockholders' equity ................................. $16,563,784
===========
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
<TABLE>
<CAPTION>
ASD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED
--------------------------- ---------------------------
DECEMBER 26, DECEMBER 27, DECEMBER 26, DECEMBER 27,
1997 1996 1997 1996
(AS RESTATED, (AS RESTATED,
SEE NOTE 5) SEE NOTE 5)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales .............................. $ 9,634,806 $ 8,209,844 $ 5,836,874 $ 3,728,069
Cost of goods sold ..................... 7,381,081 6,033,266 4,555,591 2,715,487
----------- ----------- ----------- -----------
Gross profit ........................ 2,253,725 2,176,578 1,281,283 1,012,582
----------- ----------- ----------- -----------
Operating expenses:
Sales and marketing ................. 134,460 96,216 84,441 48,680
General and administrative .......... 2,084,364 1,645,966 1,103,515 799,462
----------- ----------- ----------- -----------
Total operating expenses ............ 2,218,824 1,742,182 1,187,956 848,142
----------- ----------- ----------- -----------
Income from operations ................. 34,901 434,396 93,327 164,440
Other income ........................... 18,092 50,553 10,813 19,406
Interest expense ....................... 550,924 766,137 276,888 410,017
----------- ----------- ----------- -----------
Loss before income taxes ......... (497,931) (281,188) (172,748) (226,171)
Benefit for income taxes ............... (209,431) (118,000) (72,554) (89,000)
----------- ----------- ----------- -----------
NET LOSS ......................... $ (288,500) $ (163,188) $ (100,194) $ (137,171)
=========== =========== =========== ===========
Net loss per common share .............. $ (.18) $ (.26) $ (.06) $ (.22)
=========== =========== =========== ===========
Weighted average common shares
outstanding ......................... 1,577,917 632,917 1,577,917 632,917
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
<TABLE>
<CAPTION>
ASD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
-----------------------------
DECEMBER 26, DECEMBER 27,
1997 1996
(AS RESTATED
SEE NOTE 5)
------------ ------------
<S> <C> <C>
Operating activities:
Net loss ...................................................... $ (288,500) $ (163,188)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization ......................... 260,619 315,589
Provision (benefit)for doubtful accounts ................ 100,000 (90,000)
Deferred compensation ................................... 17,376 16,086
Interest accrued-stockholder advances ................... 30,361 23,284
Deferred income taxes ................................... (209,431) (118,000)
Changes in assets and liabilities:
Accounts receivable ................................. (1,263,936) 934,556
Inventory ........................................... (329,698) 695,675
Prepaid expenses and other current assets ........... (281,335) (64,852)
Other assets ........................................ (7,266) 22,219
Accounts payable .................................... 636,798 (902,254)
Accrued expenses .................................... 349,891 (325,149)
Deferred revenues ................................... -- (69,666)
----------- -----------
Net cash (used in) provided by operating
activities ................................... (985,121) 274,300
----------- -----------
Investing activities:
Capital expenditures .......................................... (321,147) (7,741)
----------- -----------
Net cash used in investing activities ........... (321,147) (7,741)
----------- -----------
Financing activities:
Borrowings .................................................... 7,376,500 1,100,000
Payments of long-term debt .................................... (6,968,900) (1,042,825)
Financing costs ............................................... (117,154) (315,698)
Payments of deferred compensation ............................. (15,257) (15,164)
----------- -----------
Net cash provided by (used in) financing activities 275,189 (273,687)
----------- -----------
Net decrease in cash .............................................. (1,031,079) (7,128)
Cash, beginning of period ....................................... 1,099,190 458,911
----------- -----------
Cash, end of period ............................................. $ 68,111 $ 451,783
=========== ===========
Supplemental disclosure:
Cash paid during the period for:
Income taxes .............................................. $ 14,325 $ 4,510
=========== ===========
Interest .................................................. $ 455,227 $ 493,048
=========== ===========
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
ASD GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INTERIM FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission for reporting on Form 10-QSB.
Accordingly, certain information and footnote disclosures required for complete
consolidated financial statements are not included herein. It is recommended
that these consolidated financial statements be read in conjunction with the
consolidated financial statements and related notes of ASD Group, Inc. and
subsidiaries (the "Company") contained in the Company's Annual Report on Form
10-KSB for the fiscal year ended June 27, 1997. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation of financial position, results of operations
and cash flows at the dates and for the periods presented have been included.
NOTE 2 - PUBLIC OFFERING OF COMMON STOCK
In May 1997, the Company completed an Initial Public Offering of
945,000 shares of common stock at $5.75 per share (the "Offering"). Prior to the
Offering, there was no public market for the Company's common stock. The net
proceeds of the Offering, after deducting applicable issuance costs and
expenses, was approximately $3,890,000. The net proceeds of the Offering were
used primarily to repay certain indebtedness, increase staffing and purchase
inventory and capital assets.
NOTE 3 - REFINANCING
On December 19, 1997, the Company completed a refinancing of its
indebtedness and secured a new credit facility with an increased borrowing
limit. The Company's new revolving line of credit with PNC Business Credit
permits borrowings of up to $8,750,000 at prime plus 1/2% and expires on
December 19, 2002 (the "Line of Credit"). The Line of Credit is secured by a
first lien on the Company's assets. The amount available for borrowings under
the Line of Credit is determined pursuant to a formula based upon the Company's
eligible accounts receivable, inventory, machinery and equipment. As of December
26, 1997, $4,029,000 was outstanding under the line of credit and the Company
had $4,721,000 available for additional borrowings. Approximately $3,800,000 of
the Line of Credit was used to repay the existing revolving credit agreement and
machinery and equipment loan with Bankers Trust Company. On that date, the
Company entered into a three year term loan with Bankers Trust Company for
$2,801,000 at 10%. The term loan is secured by a second lien on the Company's
Assets. The three year term loan replaces the existing mortgage payable notes
with Bankers Trust Company. On May 31, 1996, the Company entered into an
agreement with Bankers Trust Company which will permit the Company to repay its
indebtedness to Bankers Trust Company at a discount of approximately $460,000.
Under the terms of such agreement with Bankers Trust Company, the discount will
be earned when the unpaid principal balance of the three year term loan reaches
$460,000.
NOTE 4 - INVENTORIES
The components of inventories are as follows:
Raw materials . . . . . . . . . . . $ 572,917
Work-in-process . . . . . . . . . . 4,814,675
------------
$ 5,387,592
============
NOTE 5 - RESTATEMENT
Subsequent to the issuance of the Company's consolidated financial
statements for the six months ended December 26, 1997, the Company's management
determined that $285,000 of cash surrender value of life insurance policies
attributable to prior years, that was recognized during the three and six months
ended December 26, 1997, should have been recorded as a prior period adjustment.
As a result, the Company's consolidated financial statements for the three and
six months ended December 26, 1997 have been restated from the amounts
previously reported to reflect the recording of these assets. The significant
effect of this restatement on the Company's consolidated financial statements
was to decrease other income by $285,000 and to increase the loss before income
taxes, the net loss and the net loss per common share by $285,000, $165,000
and $.10, respectively.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ASD Group, Inc. (the "Company") cautions readers that certain important
factors may affect the Company's actual results and could cause such results to
differ materially from any forward-looking statements which may be deemed to
have been made in this Report or which are otherwise made by or on behalf of the
Company. For this purpose, any statements contained in this Report that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "intend," "could," "would," "estimate," or
"continue" or the negative other variations thereof or comparable terminology
are intended to identify forward-looking statements. Such factors include, but
are not limited to, the risks and uncertainties associated with a contract
manufacturing company which is dependent upon a small number of large companies,
a limited history of profitability, dependence upon key personnel, need for
future capital and dependence upon certain industries. Additionally, the Company
is subject to the risks and uncertainties associated with all contract
manufacturing companies including variability of customer requirements and
customer financing, limited availability of components and a market
characterized by rapidly changing technology and continuing process development.
The Company is also subject to other risks detailed herein or detailed from time
to time in the Company's filings with the Securities and Exchange Commission.
OVERVIEW
The Company provides comprehensive contract manufacturing and
engineering services to original equipment manufacturers ("OEMs.") The Company
was formed in 1965 to provide design and engineering services to IBM's main
frame computer development and manufacturing operations in New York's Hudson
Valley ("IBM-Hudson Valley"). Over a 25-year period, the Company's relationship
with IBM-Hudson Valley evolved to the point where by the mid-1980's the Company
assembled, wired and tested a significant portion of IBM-Hudson Valley's main
frame computers. IBM Hudson Valley became the Company's principal customer,
providing over 90% of its revenues. Commencing in 1990, IBM-Hudson Valley's main
frame sales began to decline due to the recession and the shift in technology to
personal computer-based systems. In December 1992, IBM-Hudson Valley eliminated
the use of substantially all main frame assembly vendors, including the Company.
As a result, the Company had significant reductions in revenues and incurred
substantial losses. Accordingly, during 1993 and 1994 the Company undertook a
restructuring of its operations wherein it implemented a significant downsizing,
re-engineered its operations and commenced intensive efforts to market its
contract manufacturing services to other OEMs. While the IBM-Hudson Valley
downsizing greatly affected the Company, management believes that its
relationship with IBM-Hudson Valley permitted the Company to evolve into a
vertically integrated contract manufacturer with a well disciplined quality
control program.
In May 1997, the Company completed an initial public offering (the
"IPO") of 945,000 shares of common stock at $5.75 per share. A portion of the
net proceeds of approximately $3,890,000 were used to repay $2,000,000 of
outstanding debt.
RESTATEMENT
Subsequent to the issuance of the Company's consolidated financial
statements for the six months ended December 26, 1997, the Company's management
determined that $285,000 of cash surrender value of life insurance policies
attributable to prior years, that was recognized during the three and six months
ended December 26, 1997, should have been recorded as a prior period adjustment.
As a result, the Company's consolidated financial statements for the three and
six months ended December 26, 1997 have been restated from the amounts
previously reported to reflect the recording of these assets. The significant
effect of this restatement on the Company's consolidated financial statements
was to decrease other income by $285,000 and to increase the loss before income
taxes, the net loss and the net loss per common share by $285,000, $165,000 and
$.10, respectively.
7
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 26, 1997 AS COMPARED TO THREE MONTHS ENDED DECEMBER
27, 1996
For the three months ended December 26, 1997, the Company's net sales
increased by $2,109,000 or 56.6% to $5,837,000 from $3,728,000 for the three
months ended December 27, 1996. The increase in sales was a result of the
Company completing a $2,600,000 contract to manufacture equipment used in the
production of fiber optics.
Cost of goods sold for the three months ended December 26, 1997
increased by $1,841,000 or 67.8% to $4,556,000 from $2,715,000 for the three
months ended December 27, 1996. The increase in cost of goods sold is primarily
the result of the increase in sales. Gross profit as a percentage of net sales
decreased by 5.2% from 27.2% for the three months ended December 27, 1996 to
22.0% for the three months ended December 26, 1997. The decrease in gross profit
as a percentage of net sales reflects the lower gross profit percentage on the
aforementioned $2,600,000 contract.
Selling, general and administrative expenses increased for the three
months ended December 26, 1997 by $340,000 or 40.1% to $1,188,000 from $848,000
for the three months ended December 27, 1996. The increase in selling, general
and administrative expenses is primarily the result of a change in the rate of
overtime pay, additional insurance costs and legal and consulting fees related
to post initial public offering activities and retroactive pay adjustments. It
is anticipated that certain of these additional expenses will be recurring.
Interest expense decreased for the three months ended December 26, 1997
by $133,000 or 32.4% to $277,000 from $410,000 for the three months ended
December 27, 1996. The decrease in interest expense reflects a net reduction in
debt as a result of a portion of the proceeds of the initial public offering
used to repay debt.
Benefit for income taxes for the three months ended December 26, 1997
is $73,000 as compared to a benefit of $89,000 for the three months ended
December 27, 1996. The Company recorded a tax benefit from the loss during the
periods ended December 26, 1997 and December 27, 1996.
The Company incurred a loss income before income tax benefit and net
loss of $173,000 and $100,000, respectively, during the three months ended
December 26, 1997, as compared to a loss before income taxes and a net loss of
$226,000 and $137,000, respectively, during the three months ended December 27,
1996.
8
<PAGE>
SIX MONTHS ENDED DECEMBER 26, 1997 AS COMPARED TO SIX MONTHS ENDED DECEMBER 27,
1996
For the six months ended December 26, 1997, the Company's net sales
increased by $1,425,000 or 17.4% to $9,635,000 from $8,210,000 for the six
months ended December 27, 1996. The increase in sales was a result of the
Company completing a $2,600,000 contract to manufacture equipment used in the
production of fiber optics. The increase in sales noted was partly offset by a
reduction in orders by several of the Company's largest customers. Although the
Company generated additional capital from the IPO, such capital was not received
in time to affect results of operations for the early part of the six months
ending December 26, 1997. Management believes, however, that such capital will
have a positive effect on sales in subsequent quarters.
Cost of goods sold for the six months ended December 26, 1997 increased
by $1,348,000 or 22.3% to $7,381,000 from $6,033,000 for the six months ended
December 27, 1996. The increase in cost of goods sold is primarily the result of
the increase of sales. Gross profit as a percentage of net sales decreased by
3.1% from 26.5% for the six months ended December 27, 1996 to 23.4% for the six
months ended December 26, 1997. The decrease in gross profit as a percentage of
sales reflects the lower gross profit percentage on the aforementioned
$2,600,000 contract.
Selling, general and administrative expenses increased for the six
months ended December 26, 1997 by $477,000 or 27.4% to $2,219,000 from
$1,742,000 for the six months ended December 27, 1996. The increase in selling,
general and administrative expenses is primarily the result of a change in the
rate of overtime pay, additional insurance costs and legal and consulting fees
related to post initial public offering activities and retroactive pay
adjustments. It is anticipated that certain of these additional expenses will be
recurring
Interest expense decreased for the six months ended December 26, 1997
by $215,000 or 28.1% to $551,000 from $766,000 for the six months ended December
27, 1996. The decrease in interest expense reflects a net reduction in debt as a
result of a portion of the proceeds of the initial public offering used to repay
debt.
Benefit for income taxes for the six months ended December 26, 1997 is
$209,000 as compared to a benefit of $118,000 for the six months ended December
27, 1996. The Company recorded a tax benefit from the loss during the periods
ended December 26, 1997 and December 27, 1996.
The Company incurred a loss before income tax benefit and a net loss of
$498,000 and $288,000, respectively, during the six months ended December 26,
1997, as compared to a loss before income taxes and a net loss of $281,000 and
$163,000, respectively, during the six months ended December 27, 1996.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
STATEMENTS OF CASH FLOWS
Net cash used in operations was $985,000 for the six months ended
December 26, 1997 as compared to $274,000 provided by operations for the six
months ended December 27, 1996. The increase in cash used in operations was
primarily the result of an increase in accounts receivable and inventory offset
by an increase in accounts payable and accrued expenses. The increase in
accounts receivable and inventory was the result of an increase in production
and shipments. Net cash provided by financing activities during the six months
ended December 26, 1997 was $275,000. During this period, $7,377,000 was
provided from borrowings, $6,969,000 of long-term debt was repaid, $117,000 of
financing costs were incurred and payments of deferred compensation of $15,000
were made. Working capital increased to $4,779,000 at December 26, 1997 from
$3,238,000 at December 27, 1996.
REFINANCING
On December 19, 1997, the Company completed a refinancing of its
indebtedness and secured a new credit facility with an increased borrowing
limit. The Company's new revolving line of credit with PNC Business Credit
permits borrowings of up to $8,750,000 at prime plus 1/2% and expires on
December 19, 2002 (the "Line of Credit"). The Line of Credit is secured by a
first lien on the Company's assets. The amount available for borrowings under
the Line of Credit is determined pursuant to a formula based upon the Company's
eligible accounts receivable, inventory, machinery and equipment. As of December
26, 1997, $4,029,000 was outstanding under the Line of Credit and the Company
had $4,721,000 available for additional borrowings. Approximately $3,800,000 of
the line of credit was used to repay the existing revolving credit agreement,
and machinery and equipment loan with Bankers Trust Company. On that date, the
Company entered into a three year term loan with Bankers Trust Company for
$2,801,000 at 10%. The term loan is secured by a second lien on the Company's
Assets . The three year term loan replaces the existing mortgage payable notes
with Bankers Trust Company. On May 31, 1996, the Company entered into an
agreement with Bankers Trust Company which will permit the Company to repay its
indebtedness to Bankers Trust Company at a discount of approximately $460,000.
Under the terms of such agreement with Bankers Trust Company, the discount will
be earned when the unpaid principal balance of the three year term loan reaches
$460,000.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On May 12, 1997, the U.S. Securities and Exchange Commission declared
effective the Company's Registration Statement on Form SB-2 (SEC File Number
333-7731). The offering of the securities registered pursuant to the
Registration Statement commenced on May 13, 1997. The IPO terminated after the
sale of 945,000 shares of the Company's common stock, $.01 par value per share
(the "Common Stock"), for $5.75 per share. The managing underwriter for the IPO
was H. J. Meyers & Co., Inc.
In connection with the IPO, the Company incurred expenses of
approximately $1,544,000. These expenses were in the form of direct or indirect
payments to others and not direct or indirect payments to directors or officers
of the Company or to persons owning more than 10% of any class of securities of
the Company. From the net proceeds of approximately $3,890,000, the Company has
used approximately $2,800,000 for repayment of indebtedness, $1,000,000 for the
purchase of materials and to increase staffing for the production of new
projects, and approximately $90,000 for working capital. With the exception of
payments to William Becker and Sanford Feld, persons owning more than 10% of the
Company's securities, none of the payments from the use of proceeds were made to
officers, directors or persons owning more than 10% of any class of securities
of the Company.
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits:
(27) Financial Data Schedule (Edgar version only)
(b) Reports on Form 8-K: none
11
<PAGE>
ASD GROUP, INC.
SIGNATURES
In accordance with the requirement of the Securities Exchange Act of 1934, the
Registrant has caused this amendment to be signed on its behalf by the
undersigned, therunto duly authorized.
By /S/ GARY HORNE
--------------------------------
Gary Horne
Chief Executive Officer
Date: April 10, 1998
12
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-26-1998 JUN-26-1998
<PERIOD-START> JUN-28-1997 JUN-28-1997
<PERIOD-END> DEC-26-1997 DEC-26-1997
<CASH> 91,300 68,111
<SECURITIES> 0 0
<RECEIVABLES> 2,709,059 3,602,338
<ALLOWANCES> 163,000 263,000
<INVENTORY> 5,222,744 5,387,592
<CURRENT-ASSETS> 638,880 727,910
<PP&E> 4,792,664 4,733,786
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 15,593,294 16,563,784
<CURRENT-LIABILITIES> 3,698,115 4,743,990
<BONDS> 0 0
0 0
0 0
<COMMON> 15,799 15,799
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 15,593,294 16,563,784
<SALES> 5,836,874 9,634,806
<TOTAL-REVENUES> 5,836,874 9,634,806
<CGS> 4,555,591 7,381,081
<TOTAL-COSTS> 1,187,956 2,218,824
<OTHER-EXPENSES> 10,813 18,092
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 276,888 550,924
<INCOME-PRETAX> (172,748) (497,931)
<INCOME-TAX> (72,554) (209,431)
<INCOME-CONTINUING> (100,194) (288,500)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (100,194) (288,500)
<EPS-PRIMARY> (.06) (.18)
<EPS-DILUTED> 0 0
</TABLE>
