<PAGE>
================================================================================
U.S. SECURITIES AND EXCHANGE COMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
FOR SMALL BUSINESS ISSUERS
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
FOR THE TRANSITION PERIOD FROM ___ TO ____
COMMISSION FILE NUMBER 000-23369
FIX-CORP INTERNATIONAL, INC.
(EXACT NAME OF SMALL BUSINESS REGISTRANT IN ITS CHARTER)
DELAWARE 34-1783774
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3637 SOUTH GREEN ROAD / SUITE 201
BEACHWOOD, OHIO 44122
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER (216) 292-3182
INDICATE BY CHECK MARK WHETHER REGISTRANT (1) HAS FILED ALL REPORTS TO
BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS
(OR 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__
SHARES OF REGISTRANT'S COMMON SHARES, WITHOUT PAR VALUE, OUTSTANDING AT
NOVEMBER 12, 1998 WAS
30,393,269
================================================================================
<PAGE>
================================================================================
================================================================================
FIX-CORP INTERNATIONAL, INC.
AND SUBSIDIARIES
INDEX
================================================================================
================================================================================
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1998
and December 31, 1997................................. 2
Consolidated Statements of Income for the Third Quarter
and Nine Months Ended September 30, 1998 and
1997 ................................................. 3
Consolidated Statement of Stockholders' Equity for the
Period Ended September 30, 1998 ...................... 4
Consolidated Statements of Cash Flows for the Period
Ended September 30, 1998 ............................. 5
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition for the
Nine Months Ended September 30, 1998 ............. 6 - 8
PART II. OTHER INFORMATION
Item 1. Not Applicable
Item 2.(c). Change in Securities......................................... 9
Items 3-5. Not Applicable
Item 6. Exhibits
#27.1 Financial Data Schedule.................... 10
Signatures .............................................................. 11
</TABLE>
================================================================================
================================================================================
<PAGE>
Item 1. Financial Statements
FIX-CORP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1998 1997
(UNAUDITED) (AUDITED)
<S> <C> <C>
CURRENT ASSETS
CASH $ 329,732 $ 6,895,619
INVESTMENT IN MARKETABLE SECURITIES 427,511 108,287
ACCOUNTS RECEIVABLE, less allowance for
doubtful accounts of $1,000,000 at 9/30/98 4,973,005 1,643,503
INVENTORIES 7,662,680 2,910,220
OTHER CURRENT ASSETS 901,517 75,285
----------- -----------
TOTAL CURRENT ASSETS 14,294,445 11,632,914
----------- -----------
PROPERTY , PLANT AND EQUIPMENT
LAND AND LAND HELD FOR DEVELOPMENT 130,000 100,000
BUILDINGS 1,591,753 1,000,000
EQUIPMENT 23,890,327 13,388,496
----------- -----------
25,612,080 14,488,496
LESS ACCUMULATED DEPREC./AMORT. (1,767,672) (680,310)
----------- -----------
PROPERTY, PLANT AND EQUIPMENT-NET 23,844,408 13,808,186
----------- -----------
OTHER ASSETS
DEFERRED INCOME TAXES 1,267,680 820,050
OTHER ASSETS AND DEFERRED CHARGES 3,072,343 1,228,948
----------- -----------
TOTAL OTHER ASSETS 4,340,023 2,048,998
----------- -----------
TOTAL ASSETS $42,478,876 $27,490,098
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
SHORT-TERM BORROWINGS 25,000 320,000
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 4,058,592 4,087,543
CURRENT PORTION OF LONG-TERM DEBT 1,285,412 3,500,000
----------- -----------
TOTAL CURRENT LIABILITIES 5,369,004 7, 907,543
----------- -----------
LONG-TERM DEBT, LESS CURRENT PORTION 10,010,422 3,280,489
SUBORDINATED CONVERTIBLE DEBENTURES 18,000,000 8,000,000
STOCKHOLDERS' EQUITY
PREFERRED STOCK, $.001 par value, 2,000,000 shares authorized,
-0- shares issued or outstanding 0 0
COMMON STOCK, $.001 par value, 100,000,000 shares authorized
and 30,318,269 issued and outstanding as of September 30, 1998 30,318 29,850
ADDITIONAL PAID-IN CAPITAL 15,610,254 13,904,512
UNREALIZED LOSS ON INVESTMENTS (21,173) (21,173)
RETAINED EARNINGS (DEFICIT) (6,519,949) (5,611,123)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 9,099,450 8,302,066
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $42,478,876 $27,490,098
----------- -----------
2
</TABLE>
<PAGE>
FIX-CORP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
================================================================================
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------- --------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
NET SALES $3,533,518 $2,688,108 $12,598,193 $6,010,223
COST OF SALES
COST OF SALES 1,855,105 1,787,632 5,883,165 3,540,344
------------ ----------- ----------- -----------
GROSS PROFIT 1,678,413 880,476 6,715,028 2,469,879
OPERATING EXPENSES :
SALARIES, WAGES AND RELATED COSTS 479,662 375,619 1,372,325 1,210,112
PROVISION FOR DOUBTFUL ACCOUNTS 1,000,000 0 1,000,000 0
DEPRECIATION AND AMORTIZATION 446,240 225,000 1,087,362 511,500
LEGAL, PROFESSIONAL & CONSULTING FEES 65,645 87,106 333,064 170,338
OTHER GENERAL AND ADMINISTRATIVE 1,167,589 227,670 4,083,351 871,186
------------ ----------- ----------- -----------
TOTAL OPERATING EXPENSES 3,159,136 915,395 7,876,102 2,803,136
------------ ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (1,480,723) (34,919) (1,161,074) (333,257)
------------ ----------- ----------- -----------
OTHER INCOME (EXPENSE) :
INTEREST INCOME (EXPENSE) AND
FINANCING COSTS-NET (551,759) (272,388) (195,382) (495,209)
------------ ----------- ----------- -----------
NET INCOME (LOSS) BEFORE INCOME TAXES (2,032,482) (307,307) (1,356,456) (828,466)
PROVISION (CREDIT) FOR INCOME TAXES (574,130) (87,275) (447,630) (235,285)
------------ ----------- ----------- -----------
NET INCOME (LOSS) ($ 1,458,352) ($ 220,032) ($ 908,826) ($ 593,181)
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
BASIC EARNINGS (LOSS) PER COMMON SHARE ($0.048) ($0.009) ($0.030) ($0.026)
DILUTED EARNINGS (LOSS) PER COMMON SHARE ($0.048) ($0.008) ($0.030) ($0.022)
3
</TABLE>
<PAGE>
FIX-CORP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSDLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL RETAINED STOCK -
COMMON STOCK PAID-IN EARNINGS HOLDER'S
SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
<S> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1997, AS RESTATED 29,850,269 $29,850 $13,904,512 ($5,611,123) $8,323,239
PROCEEDS FROM SALE OF RESTRICTED SHARES 238,000 238 799,997 800,235
ISSUANCE OF SHARES IN CONNECTION
WITH FINANCING ACTIVITIES AND
OTHER PROFESSIONAL SERVICES 180,000 180 687,045 687,225
ISSUANCE OF SHARES IN CONNECTION
WITH ACQUISITION OF ASSETS 50,000 50 218,700 218,750
NET INCOME FOR THE PERIOD (908, 826) (908,826)
---------- ------- ----------- ----------- ----------
BALANCES AT SEPTEMBER 30, 1998 30,318,269 $30,318 $15,610,254 ($6,519,949) $9,120,623
---------- ------- ----------- ----------- ----------
UNREALIZED HOLDING LOSS ON INVESTMENTS (21,173)
----------
$9,099,450
----------
</TABLE>
================================================================================
4
<PAGE>
FIX-CORP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
NINE MONTHS ENDED 12 MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) ($ 908,826) ($1,027,084)
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH USED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION EXPENSE 1,087,362 728,044
INVESTMENT IN MARKETABLE SECURITIES (319,224) 22,405
ACCOUNTS RECEIVABLE (3,329,502) (1,363,068)
INVENTORIES (4,752,460) (2,814,218)
OTHER CURRENT ASSETS (826,232) (45,285)
OTHER ASSETS (2,291,025) (407,900)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (28,951) 3,975,219
------------ -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (11,368,858) (931,887)
------------ -----------
PROVIDED (USED) BY INVESTING ACTIVITIES:
PLANT AND EQUIPMENT ADDITIONS (11,123,584) (10,737,816)
------------ -----------
PROVIDED (USED) FROM FINANCING ACTIVITIES:
(PAYMENTS) ON NOTES PAYABLE (295,000) 0
PROCEEDS FROM SALE OF STOCK 1,706,210 6,438,294
PROCEEDS FROM BORROWINGS 4,515,345 3,902,489
PROCEEDS FROM CONVERTIBLE DEBENTURES 10,000,000 8,000,000
------------ -----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 15,926,555 18,340,783
------------ -----------
NET INCREASE (DECREASE) IN CASH (6,565,887) 6,671,080
------------ -----------
CASH AT BEGINNING OF YEAR 6,895,619 224,539
------------ -----------
CASH AT END OF PERIOD $ 329,732 $ 6,895,619
------------ -----------
</TABLE>
5
<PAGE>
================================================================================
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998.
================================================================================
RESULTS OF OPERATIONS
Third quarter sales amounted to $3,533,518, an increase of 32% over the
$2,668,108 for the 1997 quarter. Nine month sales of $12,598,193 represents
an increase of 110% over the $6,010,223 for the same period last year.
Comparative sales by type are summarized below (in $000's):
<TABLE>
<CAPTION>
THIRD QUARTER YEAR-TO-DATE
------------- ------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Resin $2,270 $2,575 $8,818 $5,441
Pallets 1,081 0 3,135 0
Vertical Blinds 168 0 413 0
All Other 15 93 232 569
------ ------ ------- ------
$3,534 $2,668 $12,598 $6,010
------ ------ ------- ------
</TABLE>
The volume of sales of recycled plastic resin increased by 2% in the third
quarter of 1998 as compared to the 1997 third quarter; however, sales dollars
were actually 12% lower as a result of the significant decrease in prices
since last year caused by the decline in oil prices worldwide that has
affected the selling prices of all commodities derived from petroleum. Also,
sales of resin were 26% less in the third quarter of 1998 as compared to the
second quarter of this year as a result of reduced production levels in July
and August to accommodate the improvements made to equipment and processes
during this period of low prices. Production levels were increased again in
September and are expected to remain at peak levels during the fourth quarter
and throughout 1999. In addition, as a result of the increased use of the
resin in the production of pallets, the low levels of resin prices will have
less of an effect on the Company's future results. Also, the Company is
continuing to explore alternatives to add other value-added plastic products
for use of the resin it produces.
Sales of pallets, which began during the end of the first quarter of 1998,
amounted to $1,081,393 in the third quarter and totaled $3,134,871 for the
year-to-date. These sales were down significantly from the level that had
been anticipated due to a number of reasons. First of all, during the third
quarter the Company stopped selling pallets to one of its initial major
customers due to the uncertainty of this party's ability to perform under the
terms of their contract. The Company has provided a special charge of
$1,000,000 for doubtful accounts in the third quarter to cover any potential
loss that the Company might incur from amounts due from this customer on
previous sales. The Company has taken legal actions to recover the amounts
due from the parties concerned and to obtain legal title for and possession
of the pallets previously sold to them in order to minimize any potential
losses to the Company. The provision for doubtful accounts that has been
provided for in the third quarter financial results is believed by management
to adequately provide for any potential losses from these transactions. It
is also believed that the Company will be able to resell these pallets during
the fourth quarter at prices that would recover a portion or all of this
provision.
Secondly, the increase in production capacity that was expected as a result
of the beginning of production in the new Florida plant did not come on
stream as quickly as had been forecast due to delays in obtaining local
operating permits and a longer start-up period for adjustments to the new
equipment and tooling than had been anticipated. In addition, although the
new Florida facility was beginning to achieve full operating performance
levels during September, a breakdown of the injection-molding machine
occurred during October and this plant is currently not operating until the
equipment is repaired. The profits that were lost as a result of this down
period will be covered under the Company's business interruption insurance.
It is anticipated that the Florida facility will be back in production during
the latter part of November.
6
<PAGE>
During the third quarter, it also became apparent that one of the new
distributors that had signed an agreement in April, 1998, to purchase and
distribute pallets in a 14 state area of the Western United States was not
going to be able to adequately perform under the terms of their agreement and
the Company chose to terminate this agreement in October, 1998.
As a result of the significant reductions in the planned production backlog
and sales caused by the failure of these initial orders to reach their
anticipated levels, the Company has taken a very active approach during the
third quarter and continuing during the fourth quarter to take direct control
over the sales and marketing of its plastic pallet products. In addition
to the direct involvement of the Company's top management, direct sales
personnel have been hired and additional experienced sales personnel will
continue to be added during the fourth quarter and the first quarter of 1999.
The Company has also entered into new sales and marketing agreements /
partnerships with organizations with proven abilities to sell and distribute
this type of product on a global basis. It is anticipated that, as a result
of these actions and the restarting of production in the new Florida
facility, sales of pallets should increase significantly during the fourth
quarter and into 1999. Through the first half of the fourth quarter, pallet
sales already exceed the entire sales amount for the third quarter.
Sales of plastic vertical blinds by the Company's Poly Style Industries, Inc.
subsidiary amounted to $167,648 in the third quarter as compared to the
$173,774 for the second quarter of 1998. Total 1998 year-to-date sales have
amounted to $413,418 since February 28, 1998, the date that these operations
were acquired.
Revenues from the Company's Fixcor Recovery Systems, Inc. subsidiary, that is
involved in the recovery and recycling of both plastic and residual oil from
used motor oil containers has not been significant to date; however, the
portable demonstration unit has recently been completed, tested, and is
currently operating in California. The initial production units are planned
for completion and installation beginning in 1999. To date, twenty-four (24)
states have been contacted and are interested in using this technology and
the Company's efforts to assist them in diverting this plastic and residual
oil from their landfills. It is anticipated that this activity will become
an increasing source of both revenues and plastic material for recycling into
resin for the production of the Company's plastic pallets in the future.
Revenues from corporate awards, jewelry marketing and the extension of
financing to small business collaterized by purchase orders has declined
since the Company no longer is involved in these activities.
As a percent of sales, gross profit was 39% for the third quarter, an
increase of 6 percentage points from the prior year, but substantially below
the 55% achieved for the first six months of 1998. The reductions in gross
profit during the third quarter of 1998 relates to the reduced level of resin
production during July and August (referred to previously) and the reduced
level of production and sales of pallets during the period. Year-to-date
gross profit, as a percent of sales, was 53% for the nine months ended
September 30, 1998, as compared to 41% for the year ago period.
Operating expenses increased as a result of the $1,000,000 special provision
for doubtful accounts recorded during the third quarter of 1998 and, also,
increased charges for depreciation and amortization and other expenses
relating to the increase in investments in plant and equipment and operations
during 1998. Depreciation amounted to $446,240 for the third quarter of 1998
as compared to $225,000 for 1997. Depreciation for the first nine months of
1998 was $1,087,362 as compared to $511,500 for the same period last year.
Interest expenses and other financing costs increased due to increased
borrowings and financing activities. The Company recognized approximately
$600,000 of income during the first quarter of 1998 from gains on funds that
had been invested in marketable securities.
The provisions (credit) for income taxes and the related deferred tax asset
of $1,267,680, net of a valuation allowance of $1,500,000, as of September
30, 1998, arises from the estimated future tax benefits relating to the
Company's net operating loss carryforwards of approximately $8,383,782, that
expire in years 2010 - 2013.
7
<PAGE>
Net income (loss) for the third quarter amounted to ($1,458,352), after the
$1,000,000 special charge for doubtful accounts and the increased depreciation
expense, as compared to a net loss of ($220,032) for the same quarter of 1997.
Net income (loss) for the nine months ended September 30, 1998 was
($908,826), after the $1,000,000 special charge for doubtful accounts
recorded in the third quarter and the increased depreciation exspense in
1998, and compares to a net loss of ($593,181) for the same period last year.
The Company believes that, due to the increased production levels of its
resin and the increase in sales of its value-added plastic pallets, the
results of operations will be profitable for the fourth quarter and in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash used for operations, including the additional working capital required
to support the growth of the Company's business, amounted to $11.4 million
for the nine months ended September 30, 1998.
Plant and equipment expenditures amounted to $11.1 million and were primarily
for capacity expansion, including the equipment and tooling required for both
the Ohio and Florida operations of Pallet Technology, as well as, for new
property and buildings for the operations of our new acquisition in Edmonton,
Alberta, Canada.
Cash provided from borrowings and other financing activities amounted to
$15.9 million during the nine months ended September 30, 1998, and were used
to support operating activities, as well as investments in property,
plant and equipment.
The Company anticipates that it will be able to meet its funding needs for
working capital, the acquisition of additional facilities and equipment, and
other needs through internally generated cash, from borrowings under its
existing revolving credit facility, or from other financing sources.
FORWARD-LOOKING INFORMATION
Certain statements contained in this Report, including, without limitation,
statements containing the words "believes", "anticipates", "expects" and
words of similar import, constitute "forward-looking statements", within the
meaning of the Section 21E of the Securities Exchange Act of 1934 and Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following:
international, national and local general economic and market conditions;
demographic changes; the size and growth of the plastic packaging markets for
both consumer and industrial use; the ability of the Company to sustain,
manage or forecast its growth; the ability of the Company to successfully
make and integrate acquisitions; raw material cost and availability, new
product development and introduction; existing government regulations and
changes in, or the failure to comply with, government regulations; adverse
publicity; competition; the loss of significant customers or suppliers;
fluctuations and difficulty in forecasting operating results; changes in
business strategy or development plans; business disruptions; the ability to
attract and retain qualified personnel; the ability to protect technology;
and other factors referenced in this Report. Certain of these factors are
discussed in more detail elsewhere in this Report and the Company's other
filings with the Securities and Exchange Commission. Given these
uncertainties, readers of this Report and investors are cautioned not to
place undue reliance on such forward-looking statements. The Company
disclaims any obligation to update any such factors or to publicly announce
the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The financial statements include the accounts of Fix-Corp International, Inc.
and its wholly-owned subsidiaries Fixcor Industries, Inc., Pallet Technology,
Inc., Poly Style Industries, Inc. and Fixcor Recovery Systems, Inc. All
significant intercompany balances and transactions have been eliminated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all the
information and footnotes necessary for a comprehensive presentation of
financial position and results of operations.
It is management's opinion, however, that all material adjustments
(consisting of normal recurring accruals) have been made which are necessary
for a fair financial statement presentation. The results for the interim
period are not necessarily indicative of the results to be expected for the
year.
For further information, refer to the consolidated financial statements and
footnotes included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1997.
In connection with the Company's initial registration of its securities, the
financial statements for the years ended December 31, 1996 and 1997 have been
restated to reflect the value of shares issued to a "related party" (a
principal shareholder) as an expense in the period ended December 31, 1996;
previously this had been included as part of the capitalized cost of the
Resource Recovery plant. The restated purchase price of $3,400,000 has been
reallocated on the same basis as the components of the appraised fair market
values of the property at the time of purchase.
================================================================================
================================================================================
PART II. OTHER INFORMATION
Item 1. Not Applicable.
Items 2.(c). Changes in Securities--Recent Issuances of Unregistered
Securities.
In August through October, 1998, in transactions exempt from registration
under Section 4(a) of the Securities Act, the Company issued 175,000 shares
of Common Stock (at values of $2.19 to $3.69 per share) to three (3)
consulting firms (or individuals affiliated therewith) in consideration of
public relations and other consulting services.
Items 3-5. Not Applicable
================================================================================
9
<PAGE>
ITEM 6. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
27 Financial Data Schedule (submitted electronically to the
Commission for information only and not filed)
</TABLE>
10
<PAGE>
================================================================================
================================================================================
SIGNATURES
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, thereunto duly authorized.
FIX-CORP INTERNATIONAL, INC.
By /s/ Roger A. Kittelson
-------------------------
Roger A. Kittelson
Chief Financial Officer
(Principal Financial Officer)
Date: November 12, 1998
================================================================================
================================================================================
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME AT SEPTEMBER
30, 1997 AND 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 329,732
<SECURITIES> 427,511
<RECEIVABLES> 5,973,005
<ALLOWANCES> (1,000,000)
<INVENTORY> 7,662,680
<CURRENT-ASSETS> 14,294,445
<PP&E> 25,612,080
<DEPRECIATION> (1,767,672)
<TOTAL-ASSETS> 42,478,876
<CURRENT-LIABILITIES> 5,369,004
<BONDS> 28,010,422
0
0
<COMMON> 30,318
<OTHER-SE> 9,099,450
<TOTAL-LIABILITY-AND-EQUITY> 42,478,876
<SALES> 3,519,046
<TOTAL-REVENUES> 3,533,518
<CGS> (1,855,105)
<TOTAL-COSTS> (1,855,105)
<OTHER-EXPENSES> (2,159,136)
<LOSS-PROVISION> (1,000,000)
<INTEREST-EXPENSE> (551,759)
<INCOME-PRETAX> (2,032,482)
<INCOME-TAX> (574,130)
<INCOME-CONTINUING> (1,458,352)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,458,352)
<EPS-PRIMARY> (0.048)
<EPS-DILUTED> (0.048)
</TABLE>
