<PAGE>
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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 JUNE 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
August 12, 1998 was
30,218,269
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<PAGE>
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FIX-CORP INTERNATIONAL, INC.
AND SUBSIDIARIES
INDEX
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================================================================================
<TABLE>
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997......... 1
Consolidated Statements of Income for the Second Quarter and
Six Months Ended June 30, 1998 and 1997......................................2
Consolidated Statement of Stockholders' Equity for the Period
Ended June 30, 1998..........................................................3
Consolidated Statements of Cash Flows for the Period
Ended June 30, 1998..........................................................4
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations....................................................5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................................9
Item 2-3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders...........................9
Item 5. Other Information.............................................................9
Item 6. Exhibits
#27.1 Financial Data Schedule...........................................9
Signatures.............................................................................10
</TABLE>
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<PAGE>
ITEM 1. FINANCIAL STATEMENTS
FIX-CORP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
(UNAUDITED) (AUDITED)
<S> <C> <C>
CURRENT ASSETS
CASH $ 4,971,337 $ 6,895,619
INVESTMENT IN MARKETABLE SECURITIES 771,034 108,287
TRADE ACCOUNTS RECEIVABLE 5,032,203 1,643,503
INVENTORIES 6,909,430 2,910,220
OTHER CURRENT ASSETS 504,408 75,285
----------- ------------
TOTAL CURRENT ASSETS 18,188,412 11,632,914
----------- ------------
PROPERTY , PLANT AND EQUIPMENT
LAND AND LAND HELD FOR DEVELOPMENT 100,000 100,000
BUILDINGS 1,074,086 1,000,000
EQUIPMENT 21,778,926 13,388,496
----------- ------------
22,953,012 14,488,496
----------- ------------
LESS ACCUMULATED DEPREC./AMORT. (1,321,432) (680,310)
----------- ------------
PROPERTY, PLANT AND EQUIPMENT-NET 21,631,580 13,808,186
----------- ------------
OTHER ASSETS
DEFERRED INCOME TAXES 693,550 820,050
OTHER ASSETS AND DEFERRED CHARGES 2,536,957 1,228,948
----------- ------------
TOTAL OTHER ASSETS 3,230,507 2,048,998
----------- ------------
TOTAL ASSETS $43,050,499 $27,490,098
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
SHORT-TERM BORROWINGS 25,000 320,000
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 5,073,447 4,087,543
CURRENT PORTION OF LONG-TERM DEBT 1,276,933 3,500,000
----------- ------------
TOTAL CURRENT LIABILITIES 6,375,380 7, 907,543
----------- ------------
LONG-TERM DEBT, LESS CURRENT PORTION 8,442,417 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 30,218,269 issued and
outstanding as of June 30, 1998 30,218 30,058
ADDITIONAL PAID-IN CAPITAL 15,285,254 13,904,304
UNREALIZED LOSS ON INVESTMENTS (21,173) (21, 173)
RETAINED EARNINGS (DEFICIT) (5,061,597) (5,611,123)
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 10,232,702 8,302,066
----------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $43,050,499 $27,490,098
----------- ------------
</TABLE>
1
<PAGE>
FIX-CORP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
================================================================================
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $4,887,668 $2,173,585 $9,064,675 $3,342,115
COST OF SALES
COST OF SALES 2,209,287 1,114,768 4,028,060 1,752,712
---------- ---------- ---------- ----------
GROSS PROFIT 2,678,381 1,058,817 5,036,615 1,589,403
OPERATING EXPENSES :
SALARIES, WAGES AND RELATED COSTS 601,421 540,817 892,663 834,493
DEPRECIATION AND AMORTIZATION 341,122 225,000 641,122 326,500
LEGAL, PROFESSIONAL AND CONSULTING FEES 128,834 52,993 267,419 83,232
OTHER GENERAL AND ADMINISTRATIVE 1,512,177 400,603 2,915,762 643,516
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 2,583,554 1,219,413 4,716,966 1,887,741
---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS 94,827 (160,596) 319,649 (298,338)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE) :
INTEREST INCOME (EXPENSE) AND
FINANCING COSTS-NET 47,095 (255,419) 356,377 (222,821)
---------- ---------- ---------- ----------
NET INCOME (LOSS) BEFORE INCOME TAXES 141,922 (416,009) 676,026 (521,159)
PROVISION FOR INCOME TAXES 26,500 0 126,500 0
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 115,422 ($ 416,009) $ 549,526 ($ 521,159)
---------- ---------- ---------- ----------
BASIC EARNINGS (LOSS) PER COMMON SHARE $0.004 ($0.019) $0.018 ($0.024)
DILUTED EARNINGS (LOSS) PER COMMON SHARE $0.004 ($0.016) $0.017 ($0.020)
</TABLE>
2
<PAGE>
FIX-CORP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSDLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL RETAINED STOCK-
COMMON STOCK PAID-IN EARNINGS HOLDERS
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 80,000 80 362,045 362,125
ISSUANCE OF SHARES IN CONNECTION
WITH ACQUISITION OF ASSETS 50,000 50 218,700 218,750
NET INCOME FOR THE PERIOD 549,526
---------- --------- ------------- ------------ -------------
BALANCES AT JUNE 30, 1998 30,218,269 $ 30,218 $15,285,254 ($5,061,597) $10,253,875
---------- --------- ------------- ------------ -------------
UNREALIZED HOLDING LOSS ON INVESTMENTS (21,173)
-------------
$10,232,702
-------------
</TABLE>
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3
<PAGE>
FIX-CORP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
SIX MONTHS ENDED 12 MONTHS ENDED
JUNE 30, DECEMBER 31,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) $ 549,526 ($1,027,084)
---------- -----------
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH USED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION EXPENSE 641,122 728,044
(INCREASE) IN INVESTMENT IN MARKETABLE SECURITIES (662,747) 22,405
(INCREASE) IN ACCOUNTS RECEIVABLE (3,388,700) (1,363,068)
(INCREASE) IN INVENTORIES (3,999,210) (2,814,218)
(INCREASE) IN OTHER CURRENT ASSETS (429,123) (45,285)
(INCREASE) IN OTHER ASSETS (1,181,509) (407,900)
INCREASE IN ACCOUNTS PAYABLE AND
ACCRUED EXPENSES 985,904 3,975,219
---------- -----------
NET CASH PROVIDED(USED) BY OPERATING ACTIVITIES (7,484,737) (931,887)
---------- -----------
CASH FLOWS PROVIDED(USED) BY INVESTING ACTIVITIES
PURCHASES OF EQUIPMENT (8,464,516) (10,737,816)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
(PAYMENTS) ON NOTES PAYABLE (295,000) 0
PROCEEDS FROM SALE OF STOCK 1,381,110 6,438,294
PROCEEDS FROM BORROWINGS 2,938,861 3,902,489
PROCEEDS FROM CONVERTIBLE DEBENTURES 10,000,000 8,000,000
---------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 14,024,971 18,340,783
---------- -----------
NET CASH (DECREASE) INCREASE (1,924,282) 6,671,080
---------- -----------
CASH AT BEGINNING OF PERIOD 6,895,619 224,539
---------- -----------
CASH AT END OF PERIOD $4,971,337 $ 6,895,619
---------- -----------
</TABLE>
4
<PAGE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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.
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 the purchase.
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 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 uses; 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 costs 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, 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.
DEVELOPMENT STAGE ACTIVITIES
In December, 1996, the Company formed Fixcor, a wholly-owned subsidiary. This
entity acquired the Facility, a stand-alone post-consumer plastic recycling
operation. The acquisition significantly changed the focus of the Company from
corporate awards jewelry marketing and financing to the manufacturing of plastic
resin.
With this acquisition, the Company's business plan may be divided into four
phases based upon the services performed, the products produced, and the
products and services to be performed and produced.
Note 2(C.) to the December 31, 1996 audited financial statements indicates that
for the year ended December 31, 1995, the Company incurred a bad debt of
$962,471. This charge to earnings related to the Company's Purchase Order
Financing business. As a result of an uncollectible financing, the Company
incurred this expense. After incurring this loss, the Company changed the
procedures it utilized to secure its interest in these transactions to preclude
any future losses. In fact, no losses have been incurred in these transactions
since 1995.
PHASE 1
This phase of the business plan relates to the source of the Company's revenues
prior to acquisition of the Facility now owned and operated by Fixcor. The
sources of these revenues were corporate awards, jewelry marketing and the
extension of financing to small businesses collateralized by purchase orders.
PHASE 2
With the acquisition of the Facility in Heath, Ohio, the Company, through its
wholly-owned subsidiary, became the owner and operator of a stand-alone,
post-consumer, plastic recycling operation. This operation contains three
operating lines for cleaning and washing raw material and five extrusion
lines for producing post-consumer plastic resin. The first became
operational January 8, 1997, the second March 4, 1997, and the third October
22, 1997. Since the acquisition of this Facility, the corporate awards
jewelry marketing and the financing of purchase orders has become an
immaterial portion of the revenues and operations of the Company. Funding of
the Facility acquisition was made by obtaining bridge financing in the amount
of $2,500,000 from Gordon Brothers Capital Corporation and $900,000 in cash.
The bridge financing was secured by a mortgage on the Facility, and a
security interest in all inventory, accounts receivables and contracts with
customers, and a personal guarantee of Mr. Fixler. On May 14, 1997, the
Company replaced this bridge financing with permanent financing from
NationsCredit Commercial Corporation for up to $7,000,000.
This financing consisted of a security agreement on all of Fixcor's assets,
and a credit line based upon a percentage of inventory and accounts
receivable. All financing from NationsCredit Commercial Corporation was
refinanced through Gordon Brothers Capital, LLC (successor to Gordon Brothers
Capital Corp.) in December, 1997. This resulted in the Company, Fixcor and
Pallet Technology being the borrowers on a revolving credit facility in the
principal amount of $7,000,000, $3,500,000 of which principal was due in
October, 1998. In June, 1998, all credit facilities being provided by Gordon
Brothers Capital, LLC were refinanced through a credit facility with Coast
Business Credit, a division of Southern Pacific Bank, a commercial lender
with an office located in Los Angeles, California. This financing was in the
amount of $20,000,000 and was secured by a security interest in all of the
Company's, Fixcor's, Pallet Technology's, and Poly Style's receivables,
inventory, equipment, investment property and general intangibles. Each of
the Company, Fixcor, Pallet Technology also provided cross guarantees under
this financing agreement. This financing arrangement included a $10,000,000
term loan, a $5,000,000 line of credit for accounts receivables and a
$5,000,000 credit facility for new equipment purchases.
5
<PAGE>
PHASE 3
On July 7, 1997, the Company formed another wholly-owned subsidiary, Pallet
Technology. The purpose of this subsidiary is to specialize in the
production of plastic pallets. Pallet Technology has ordered a specialized,
state-of-the-art, injection molding machine which transforms resin pellets,
produced by Fixcor, into plastic pallets. Installation of this equipment was
completed during January, 1998 and it was operating at substantially full
capacity by the end of the first quarter of fiscal year 1998. The
approximate cost of the equipment, molds, transportation and installation of
the equipment for Pallet Technology's operation at the Facility was
$4,000,000. The approximate cost of equipment, transportation and
installation at the Florida Plant is expected to be approximately $3,000,000.
The total cost of molds, which has not yet been determined, is not included
in this amount. The cost of the standard pallet mold is approximately
$700,000, and additional molds are on order. Not taking into consideration
Pallet Technology's operations at the Florida Plant, which the Company
expects to commence during the third quarter of fiscal year 1998, the Company
conservatively estimates that Pallet Technology revenues for 1998 will be
$10.0 to 13.0 million.
PHASE 4
During September, 1997, the Company's wholly-owned subsidiary, Fixcor entered
into in agreement with AlliedSignal. Under this licensing agreement, Fixcor
is entitled to utilize technology owned by Allied in the recovery of oil and
plastic from shredded motor oil containers. This process produces two
useable products from a previous waste stream, The Company expects to
commence these operations during fiscal year 1998. The agreement requires
Fixcor to pay royalties to Allied based upon the volume of recycling
performed by Fixcor under these licenses.
PHASE 5
During February, 1998, the Company's wholly-owned subsidiary, Poly Style
entered into the UV Agreement, under which Poly Style acquired substantially
all of the assets of UV at the UV Plant, for a purchase price of
approximately $1.04 million. Poly Style manufactures plastic vertical window
blinds from extruded PVC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998
Second quarter sales amounted to $4,887,668, an improvement of 125% over the
$2,173,585 for the 1997 quarter. Net income amounted to $115,422, as
compared to a net loss of ($416,009) for the second quarter of 1997.
Six months sales of $9,064,675 increased 171% over the $3,342,115 for the
same period last year. Net income for the period was $549,526, as compared
to a net loss of ($521,159) for the first six months of 1997.
Comparative sales by type are summarized below (in $000's):
<TABLE>
<CAPTION>
SECOND QUARTER YEAR-TO-DATE
-------------- ------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
RESIN $3,061 $2,047 $6,548 $2,866
PALLETS 1,535 0 2,053 0
VERTICAL BLINDS 174 0 246 0
ALL OTHER 118 127 218 476
------ ------ ------ ------
$4,888 $2,174 $9,065 $3,342
------ ------ ------ ------
</TABLE>
Sales of recycled plastic resin, although significantly higher than a year
ago, were actually 12% less in the second quarter of 1998 as compared to the
first quarter. This is a result of the significant change in the cost (and
corresponding selling prices) for both mixed color and natural raw material
since December 31, 1997.
These significant decreases in prices are putting increased pressure on the
ability to maintain profitable margins, but to date, Fixcor has remained
profitable.
Sales of pallets which began during the end of the first quarter of 1998
continued to increase during the second quarter and totaled $2,053,000 for the
year-to-date. These sales should continue to increase significantly as the
additional capacity created by the beginning of production in the new Florida
plant develops throughout the third quarter of this year.
Another source of income for the period related to the increased value of funds
invested in marketable securities. As a result of these gains, the Company
recognized approximately $600,000 of income from this source.
The provision for income tax of $126,500 for the six months ended June 30, 1998,
results from the reduction in the deferred tax asset recorded in the prior
years. The total estimated net operating loss carry forwards that are available
to the Company as of June 30, 1998, are approximately $6,000,000, and expire in
the years 2010-2012.
LIOUIDITY AND CAPITAL RESOURCES AS OF JUNE 30, 1998
On June 30, 1998, the Company had loans of $9,719,350 outstanding from its
$20,000,000 revolving credit facility versus $6,780,489 in such loans at
December 31, 1997. The Company also has $18,000,000 of subordinated
convertible debentures outstanding at June 30, 1998 compared to $8,000,000 at
year end 1997. During the first six months of 1998, the Company also received
$1,381,110 from the sale of stock.
Net cash used for operations was $7,484,737 for the six months ended June 30,
1998, due primarily to increased working capital needs including accounts
receivable and inventories.
Capital expenditures, including acquisitions, were approximately $8,500,000
during the six months ended June 30, 1998.
The Company anticipates that it will be able to meet its funding needs for the
acquisition of additional facilities and equipment, working capital and other
needs through internally generated cash and borrowings under its existing
revolving credit facility.
6
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time made party to legal proceedings arising in the
ordinary course of business. The Company does not believe that the results of
such legal proceedings, even if unfavorable to the Company, will have a
materially adverse impact on its financial condition or the results of its
operations. With respect to the lawsuit between the Company and each of 3DM
Limited Liability Co., the lawsuit between the Company and AMR Group, and the
Company's Amendment No. 1 to the Annual Report on Form 10-KSB, filed July 28,
1998, no material developments have occurred.
ITEMS 2-3. NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on April 22, 1998. At the
meeting the stockholders voted to establish the number of directors at six (6)
and to elect each of the following to serve as a director of the Company for a
one-year term expiring at the Annual Meeting of Stockholders in 1999 and until
his successor is elected: Mark Fixler, Gary M. De Laurentiis, Michael DiSanto,
S. Darwin Noll, Andrew Press and Lawrence Schmelzer. Of these, Messrs. Fixler,
De Laurentiis and Schmelzer were re-elected at the meeting and accordingly their
terms of office continued after the meeting. The resolution to establish the
number of directors and the resolution to elect the directors were each approved
by the following vote: 11,083,849 in favor, and 0 opposed.
ITEM 5. OTHER INFORMATION
In connection with the Company's initial registration of the Common Stock on
Form 10-SB, the financial statements for the years ended December 31, 1996 and
1997 have been restated to reflect the value of shares issued to Mr. Fixler, a
"related Party" and 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 Company's facility in Heath, Ohio (the "Facility"). The restated
purchase price of $3,400,000 has been reallocated on the same basis as the
components of the appraised fair market value of the Facility at the time of the
purchase.
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9
<PAGE>
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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 duly authorized.
FIX-CORP INTERNATIONAL, INC.
By /s/ Roger A. Kittelson
-----------------------
Roger A. Kittelson
Chief Financial Officer
(Principal Financial Officer)
Date: August 12, 1998
10
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 4,971,337 0
<SECURITIES> 771,034 0
<RECEIVABLES> 5,032,203 0
<ALLOWANCES> 0 0
<INVENTORY> 6,909,430 0
<CURRENT-ASSETS> 0 0
<PP&E> 22,953,012 0
<DEPRECIATION> (1,321,432) 0
<TOTAL-ASSETS> 43,050,499 0
<CURRENT-LIABILITIES> 6,375,380 0
<BONDS> 26,442,417 0
0 0
0 0
<COMMON> 30,218 0
<OTHER-SE> 10,232,702 0
<TOTAL-LIABILITY-AND-EQUITY> 43,050,499 0
<SALES> 4,769,668 2,046,585
<TOTAL-REVENUES> 4,887,668 2,173,585
<CGS> 2,209,287 1,114,768
<TOTAL-COSTS> 2,209,287 1,114,768
<OTHER-EXPENSES> (2,583,554) (1,214,413)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 47,095 (255,419)
<INCOME-PRETAX> 141,922 (416,009)
<INCOME-TAX> 26,500 0
<INCOME-CONTINUING> 115,422 (416,009)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 115,422 (416,009)
<EPS-PRIMARY> 0.004 (0.019)
<EPS-DILUTED> 0.004 (0.016)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 4,971,337 0
<SECURITIES> 771,034 0
<RECEIVABLES> 5,032,203 0
<ALLOWANCES> 0 0
<INVENTORY> 6,909,430 0
<CURRENT-ASSETS> 0 0
<PP&E> 22,953,012 0
<DEPRECIATION> (1,321,432) 0
<TOTAL-ASSETS> 43,050,499 0
<CURRENT-LIABILITIES> 6,375,380 0
<BONDS> 26,442,417 0
0 0
0 0
<COMMON> 30,218 0
<OTHER-SE> 10,232,702 0
<TOTAL-LIABILITY-AND-EQUITY> 43,050,499 0
<SALES> 8,846,675 2,866,115
<TOTAL-REVENUES> 9,064,675 3,342,115
<CGS> (4,028,060) (1,752,712)
<TOTAL-COSTS> (4,028,060) (1,752,712)
<OTHER-EXPENSES> (4,716,966) (1,887,741)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 356,377 (222,821)
<INCOME-PRETAX> 676,026 (521,159)
<INCOME-TAX> 126,500 0
<INCOME-CONTINUING> 549,526 (521,159)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 549,526 (521,159)
<EPS-PRIMARY> 0.018 (0.024)
<EPS-DILUTED> 0.017 (0.020)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 6,895,619
<SECURITIES> 108,287
<RECEIVABLES> 1,643,503
<ALLOWANCES> 0
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0
0
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