SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-8161
DIONICS, INC.
(Exact name of Small Business Issuer as Specified in its Charter)
Delaware 11-2166744
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
65 Rushmore Street
Westbury, New York 11590
(Address of Principal Executive Offices)
(516) 997-7474
(Issuer's Telephone Number, Including Area Code)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 equity, as of the latest practicable date:
Common, $.01 par value per share: 3,683,678
outstanding as of August 1, 1998
(excluding 164,544 treasury shares).
<PAGE>
PART I - FINANCIAL INFORMATION
DIONICS, INC.
Index to Financial Information
Period Ended June 30, 1998
Item Page Herein
Item 1 - Financial Statements:
Introductory Comments 3
Condensed Balance Sheet 4
Condensed Statement of Operations 6
Statement of Cash Flows 8
Notes to Financial Statements 9
Item 2 - Management's Discussion and
Analysis or Plan of Operation 15
<PAGE>
DIONICS, INC.
June 30, 1998
The financial information herein is unaudited. However, in the opinion of
management, such information reflects all adjustments (consisting only of
normal recurring accruals) necessary to a fair presentation of the results
of operations for the periods being reported. Additionally, it should be
noted that the accompanying condensed financial statements do not purport
to be complete disclosures in conformity with generally accepted accounting
principles.
The results of operations for the six months ended June 30, 1998 are not
necessarily indicative of the results of operations for the full fiscal
year ending December 31, 1998.
These condensed statements should be read in conjunction with the Company's
financial statements for the year ended December 31, 1997.
<PAGE>
DIONICS, INC.
COMBINED BALANCE SHEET
JUNE 30, DECEMBER 31,
1998 1997
(UNAUDITED) (UNAUDITED)
A S S E T S
CURRENT ASSETS:
Cash $ 447,400 $ 473,400
Accounts Receivable Trade
(Less Estimated Doubtful
Accounts of $10,000 in
1998 and $10,000 in
1997) - Note 2 277,400 192,300
Inventory - Notes 2 and 3 441,800 359,500
Prepaid Expenses and Other
Current Assets 11,400 25,400
Total Current Assets 1,178,000 1,050,600
PROPERTY, PLANT AND
EQUIPMENT - Note 2
(At Cost Less Accumulated
Depreciation of $1,639,800
in 1998 and $1,636,100 in
1997) 46,500 50,200
DEPOSITS AND OTHER ASSETS -
Note 2 19,200 20,200
Total $1,243,700 $1,121,000
<PAGE>
DIONICS, INC.
COMBINED BALANCE SHEET
JUNE 30, DECEMBER 31,
1998 1997
(UNAUDITED) (UNAUDITED)
L I A B I L I T I E S
CURRENT LIABILITIES:
Current Portion of Long-Term
Debt - (Note 5) $ 392,100 $ 26,700
Accounts Payable 91,700 54,400
Accrued Expenses 79,800 57,200
Deferred Compensation Payable -
Current (Note 4) 200,000 50,000
Total Current Liabilities 763,600 188,300
Deferred Compensation Payable -
(Note 4) 334,900 453,000
Long-Term Debt Less Current
Maturities - (Note 5) 423,200 802,900
Total Liabilities 1,521,700 1,444,200
CONTINGENCIES AND COMMENTS
SHAREHOLDERS' EQUITY
Common Shares - $.01 Par Value
Authorized 5,000,000 Shares
Issued 3,848,222 Shares in
1997 and 3,848,222 in 1996 38,400 38,400
Additional Paid-in Capital 1,522,800 1,522,800
(Deficit) (1,615,700) (1,663,800)
(54,500) (102,600)
Less: Treasury Stock at Cost
171,063 Shares in 1998 and
164,544 Shares in 1997 (223,500) (220,600)
Total Shareholders'
Equity (Deficit) (278,000) (323,200)
Total $1,243,700 $1,121,000
<PAGE>
DIONICS, INC.
CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED
JUNE 30,
1998 1997
(UNAUDITED) (UNAUDITED)
SALES $ 560,600 $ 503,200
COST AND EXPENSES:
Cost of Sales
(Including Research
and Development Costs) 381,200 339,800
Selling, General and
Administrative Expenses 94,200 95,700
Total Costs and Expenses 475,400 435,500
NET INCOME FROM OPERATIONS 85,200 67,700
INTEREST AND OTHER INCOME 4,500 2,500
89,700 70,200
OTHER DEDUCTIONS
Interest Expenses 17,300 18,200
NET INCOME FOR THE PERIOD $ 72,400 $ 52,000
NET INCOME PER SHARE -
Basic $ .020 $ .014
Diluted $ .019
Average Number of Shares
Outstanding Used in Computation
of Per Share Income -
Basic 3,677,159 3,683,678
Diluted 3,730,434
<PAGE>
DIONICS, INC.
CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED
JUNE 30,
1998 1997
(UNAUDITED) (UNAUDITED)
SALES $ 864,500 $ 929,600
COST AND EXPENSES:
Cost of Sales (Including Research
and Development Costs) 609,100 637,800
Selling, General and Administrative
Expenses 181,500 175,700
Total Costs and Expenses 790,600 813,500
NET INCOME FROM OPERATIONS 73,900 116,100
INTEREST AND OTHER INCOME 8,900 4,200
82,800 120,300
OTHER DEDUCTIONS:
Interest Expense 34,600 36,500
NET INCOME FOR THE PERIOD $ 48,200 $ 83,800
NET INCOME PER SHARE -
Basic $ .013 $ .022
Diluted $ .013
Average Number of Shares
Outstanding Used in Computation
of Per Share Income -
Basic 3,677,159 3,683,678
Diluted 3,729,402
<PAGE>
DIONICS, INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30,
1998 1997
(UNAUDITED)(UNAUDITED)
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income $ 48,200 $ 83,800
Adjustment to Reconcile
Net Income or (Loss) to
Net Cash Used for
Operating Activities:
Depreciation and Amortization 3,700 6,200
Deferred Compensation
and Related Interest 31,900 30,100
Changes in Operating Assets
and Liabilities:
(Increase) in Accounts Receivable (85,100) (40,400)
(Increase) Decrease in Inventory (82,300) 17,700
Decrease in Prepaid Expenses
and Other Current Assets 14,000 6,300
Decrease in Deposits and
Other Assets 1,000 1,100
Increase in Accounts Payable 37,300 5,900
Increase in Accrued Expenses 22,600 12,700
Net Cash (Used In)
Provided by Operating
Activities (8,700) 123,400
CASH FLOWS (USED IN)
FINANCING ACTIVITIES:
Repayment of Debt (14,300) (14,200)
CASH FLOWS (USED IN)
INVESTING ACTIVITIES:
Purchase of Treasury Shares (3,000) -0-
NET (DECREASE) INCREASE IN CASH (26,000) 109,200
CASH - Beginning of Period 473,400 210,900
CASH - End of Period $447,400 $320,100
<PAGE>
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - BUSINESS:
The Company designs, manufactures and sells silicon semiconductor
electronic products, as individual discrete components, as multicomponent
integrated circuits and as multicomponent hybrid circuits.
The individual discrete components are predominantly transistors, diodes
and capacitors, intended for use in miniature circuit assemblies called
"hybrid microcircuits".
Due to the rapidly changing needs of the marketplace, there are continual
shifts in popularity among the various chip components offered by the
Company. Taken as a whole, the category of discrete chip components for
the hybrid circuit industry is one of the three main classes of products
offered by the Company.
A second main class of products offered by the Company is encapsulated,
assembled, integrated circuits for use in electronic digital display
functions.
The third main class of products offered by the Company is a range of
hybrid circuits that function as opto-isolated MOSFET drivers and custom
Solid State Relays.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
Assets, liabilities, revenues and expenses are recognized on the accrual
basis of accounting.
Cash and Cash Equivalents
The Company considers money market funds to be cash equivalents.
Merchandise Inventory
Inventory is stated at the lower of cost (which represents cost of
materials and manufacturing costs on a first-in, first-out basis) or
market.
<PAGE>
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Property, Plant and Equipment
Property, Plant and Equipment is stated at cost less accumulated
depreciation and amortization. Expenditures for renewals and improvements
that significantly extend the useful life of assets are capitalized for all
assets; depreciation is provided over the estimated useful lives of the
individual asset, using the straight- line method. The following asset
lives are in effect:
Machine and Equipment 8 Years
Testing Equipment 8 Years
Furniture and Fixtures 10 Years
Building Improvements 10 Years
Building 25 Years
Deferred Compensation Plan
Future payments required under a plan of deferred compensation adopted in
1987, as well as interest accrued thereon are being charged to operations
over the period of expected service.
Bad Debts
The Company maintains a constant allowance for doubtful accounts of
$10,000.
NOTE 3 - INVENTORY:
Inventories are stated at the lower of cost (which represents cost of
materials and manufacturing costs on a first-in, first-out basis) or
market, and are comprised of the following:
June 30, December 31,
1998 1997
(Unaudited) (Unaudited)
Finished Goods $ 49,000 $ 39,900
Work-in-Process 238,000 193,700
Raw Materials 110,800 90,100
Manufacturing Supplies 44,000 35,800
Total $441,800 $359,500
<PAGE>
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 4 - DEFERRED COMPENSATION PAYABLE:
In 1987 the company entered into an agreement, amended in 1997, which calls
for payments to its chief executive officer upon his reaching the age of
65, provided that he has not voluntarily terminated his employment prior to
that event. Such agreement further provides that in the event of death or
termination of employment of the officer prior to age 65, such payments are
to commence during the month subsequent to such event. Assuming his
continuous employment until age 65, the terms of the agreement call for the
executive to receive $25,000 per month for the 12-month period from
November 1, 1998 to October 31, 1999 and $6,666,66 per month for the
following 60 consecutive months.
Other than a Life Insurance policy to cover death benefits, the Company has
no designated funds to meet these requirements. In view of its
indebtedness and need for operating capital, there can be no assurance that
the company will be able to satisfy the terms of this agreement, in full or
in part. Should such circumstances occur, the terms of the agreement may
have to be renegotiated to better match the Company's then-current
financial circumstances. Although there can be no assurance of the
following, the Company believes that if such renegotiation becomes
necessary it will be able to agree on terms acceptable to both parties.
The above-mentioned Life Insurance policy had a cash surrender value at
12/31/97 of approximately $1,700 which is included in other assets.
NOTE 5 - LOANS PAYABLE - APPLE BANK:
Effective February 29, 1994, the Company and Apple Bank for Savings (the
"Bank") entered into a restructuring Agreement, whereby the Bank agreed to
forgive a portion of existing indebtedness of the Company and to
restructure the balance. In October 1988, the Company had obtained from
the Bank a Commercial Equity Line in the original principal amount of $1
million (the "Original Mortgage") and in 1990 the Company had obtained
certain other asset-based loans from the bank in the principal amount of
$283,850 (the "1990 Loans").
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 5 - LOANS PAYABLE - APPLE BANK: (Continued)
Pursuant to the Restructuring Agreement:
A. The bank has forgiven $376,146.59 of accrued and unpaid interest
stemming from the Original Mortgage and the 1990 Loans.
B. The 1990 Loans have been replaced by a new term loan in the principal
amount of $283,850, ("Term Loan A") structured over two five-year periods.
During the first five-year period, the Company will pay interest only at an
annual rate of 6.0 percent. Of that amount, only one-third (2.0 percent)
will be paid monthly, with the remainder accruing and becoming part of
unpaid principal at the end of that period. During the second five-year
period, the balance due will be paid over 60 equal monthly installments,
plus interest at Prime plus two percent.
C. The remaining balance of $750,000 outstanding on the Original Mortgage
Loan has been replaced by a new $415,000 Mortgage Loan plus two additional
Term Loans of $167,500 each. These are treated as follows:
The new $415,00 Mortgage Loan ("Mortgage Loan B") has a five-year term and
bears interest at of 7.5 percent. For the first two years of Mortgage Loan
B, the Company is obligated to pay interest only, on a monthly basis.
Thereafter, monthly payments will include interest plus the amount of
$1,921.30, which began in April 1996, towards reduction of debt. At the
end of the five-year period, the then-remaining principal ($347,754.50)
will be due.
The first new Term Loan ("Term Loan C") stemming from the Original
Mortgage has a face amount of $167,500 and carries the same interest rate
and payment terms over two five-year periods as the new $283,850 Term Loan
A described in Paragraph B above.
The second new Term Loan ("Term Loan D") stemming from the Original
Mortgage also has a face amount of $167,500, but carries an annual interest
rate of 4.0 percent, none of which is payable during the initial five-year
period. This interest will accrue and will be added to the principal at
the end of the first five-year period. The new total balance due will be
repaid over the second five-year period with 60 equal monthly installments
plus interest of Prime plus two percent.
<PAGE>
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 5 - LOANS PAYABLE - APPLE BANK - (Continued)
D. Term Loans A and C also carry convertibility rights under which the Bank
may, at its sole discretion, exchange debt for Common Stock in the Company
at the price of (I) $.75 per share until May 31, 1995, (ii) $1.00 per share
from June 1, 1995 until January 31, 1997, and (iii) $1.25 per share from
February 1, 1997 until expiration, provided, however, that the aggregate
number of shares that the Bank may acquire will not exceed 15 percent of
the number of then outstanding shares of the Company's Common Stock,
subject to certain anti-dilution rights. These convertibility rights
expire upon the payment-in-full of the balance due on Mortgage Loan B, due
to mature on the Interim Maturity Date which will occur in March 1999.
E. Having met, in 1994 and 1995, certain particular financial performance
standards as called for in the January 31, 1994 Debt Restructuring
Agreement, the Company has qualified in full for the Forgiveness of
specific elements of its debt. While according to the terms of the
Agreement, the actual forgiveness is due to be formally granted on "the
interim Maturity Date" which will occur in March 1999, the Company has, in
the interests of more accurately describing its over-all debt situation,
decided to adopt those changes in its current and future reports. The
forgiveness will cover all of the principal and accrued interest on Term
Loan D and all of the accrued interest on both Term Loans A and C, as more
fully described in the above-referenced Debt Restructuring Agreement.
All the Company's Assets are pledged to the foregoing loans.
In September 1994, the Company was advised that the foregoing loans were
purchased from the Bank by D.A.N. Joint Venture, a Limited Partnership, an
affiliate of the Cadle Company.
NOTE 6 - STOCK OPTION PLAN
In September 1997, the Board of Directors of the Company adopted the 1997
Incentive Stock Option Plan (the "1997 Plan") for employees of the Company
to purchase up to 250,000 shares of common Stock of the Company. Options
granted under the 1997 plan are "incentive stock options" as defined in
Section 422 of the Internal Revenue Code. Any stock options granted under
the 1997 Plan shall be granted at no less than 100% of the fair market
value of the Common Stock of the Company at the time of the grant. As of
June 30, 1998, options to acquire 120,000 shares of Common Stock have been
granted under the 1997 Plan. All of such options were granted on September
11, 1997 and have an exercise price of $.38 per share. As of June 30,
1998, 130,000 options were available for future grant. The 1997 Plan is
subject to obtaining stockholder approval within twelve months of the
adoption of the 1997 Plan. If is not so approved by the stockholders of
the Company, any options granted under the 1997 Plan will be rescinded and
void. The plan has not been approved at June 30, 1998.
<PAGE>
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 7 - INCOME TAXES:
As of December 31, 1997 the Company had a federal operating loss carry
forward of $865,600. This net operating loss originated in 1989 through
1992 and may be carried forward and expires as follows:
Year of Origin Amount Carry Forward
Expires In
1990 $566,800 2005
1991 65,600 2006
1992 233,200 2007
$865,600
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
A. LIQUIDITY AND CAPITAL RESOURCES
After many years of steadily reducing losses, the Company finally succeeded
in crossing over into gradually increasing profitability in 1996 and 1997.
During the First Quarter of 1998, however, the Company encountered several
conditions that resulted in a loss for the period. First, there was the
absence of previously available "opportunity" business that, while helpful,
really plays no role in the Company's long-term plans. Next, more
critical, the Company also failed to increase its shipments against a large
backlog of orders for strategic core-technology products. This failure, in
the opinion of Management, exposed the need to reduce middle-management's
concentration on defensive survival strategies and to increase the efforts
needed for aggressive growth. Re-assignment of middle-management personnel
for the Second Quarter showed a marked improvement in getting product
shipped, producing a significant rebound in Sales volume and helping the
Company recover from a short bout of what it considers temporary "growing
pains".
With the restructuring of its Bank debt in early 1994, the Company achieved
a significant easing of its debt obligations. That new Agreement, however,
called for a large "balloon" payment on its Mortgage Note and the
commencement of payments on two other Notes early in 1999. The Company has
already accumulated the required funds for that balloon payment, but the
fact that it is due within twelve-months of this report means that such
amount must be included in Current Liabilities. Also included in Current
Liabilities starting in 1998 are several payments under the Company's
Deferred Compensation Agreement with its Chief Executive Officer. The
combined effects of all the above debt obligations increases Current
Liabilities to $763,600 from the $188,300 which showed at December 31,
1997. While the Company's present cash position is enough to fund the Bank
debt payments due in early 1999, the Deferred Compensation Agreement may
not also be covered. In such case, the terms of the present agreement may
have to be renegotiated to better match the then-current financial
conditions of the Company. Due to the above obligations, the Company's
ratio of Current Assets to Current Liabilities has dropped to 1.54:1. If
Deferred Compensation is entirely removed from the calculation, the Current
Ratio would drop to only 2.09:1, although no assurance can be given that
such will be the result of any possible renegotiation.
Management has continued its search for additional Working Capital to
provide further growth momentum for the Company. Contacts with potential
lenders or investors are always in some state of motion, but no assurance
can be given of any positive outcome. For the immediate future, the Company
is well able to support its ongoing operations, although Working Capital
has now dropped to $414,400. The decrease from $862,300 at December 31,
1997 came as a result of the large shift into Current Liabilities described
earlier.
B. RESULTS OF OPERATIONS
Sales in the Second Quarter of 1998 rose 12 percent from the same period
last year, with $560,600 in the current period as compared to $503,200 in
the Second Quarter of 1997. Most of the increase occurred in the Company's
core-technology products which are based on micro-photovoltaics, and
reversed the financial results of the immediately prior First Quarter. A
more aggressive middle-management plan was instituted to deal more
effectively with the Company's large backlog for photovoltaic (PV) Solid
State Relays and PV MOSFET-drivers. One very bright spot has been the
growth in total backlog from $622,400 at December 31, 1997 to $1.15 million
at June 30, 1998.
Gross Profit margins in the current period and in the Second Quarter of
1997 were both approximately 32 percent. Selling, General and
Administrative costs changed very little from period to period, with the
result that the higher Sales volume in the current period had S, G & A at
16.8 percent of Sales, as compared to 19.0 percent in the same period last
year. As a result of the higher Sales volume, Net Profit from Operations
rose to $89,700 in the current period, as compared to $70,200 in the Second
Quarter of 1997.
The Company also showed a Net Profit of $72,400 in the Second Quarter of
1998 as compared to a Net Profit of $52,000 in the Second Quarter of 1997.
The Loss shown in the First Quarter of 1998 was the first interruption of
profitable periods in recent times but, as explained earlier, it is
considered by Management to have been only a temporary effect, already
remedied by re-assignments of certain production responsibilities.
For the First Six-Months of 1998 the Company saw its Sales volume drop 7.0
percent, with $864,500 in the current year and $929,600 in the previous
year. The decrease was the result of the poor showing in the First Quarter
of this year. The Gross Profit margin for the First Six-Months of 1998 was
29.5 percent, as compared to 31.4 percent in the prior year when higher
Sales volume was achieved. Selling, General & Administrative expenses were
almost unchanged in both periods, with $181,500 in the current year and
$175,700 in the previous year.
Net Operating Income for the First Six-Months of 1998 was $73,900 as
compared to $116,100 for the First Six-Months of 1997, the decrease being
caused by the poor performance in the First Quarter of 1998. Interest
Expenses were essentially unchanged, with $34,600 in the current year and
$36,500 in the prior year's First Six-Months.
Net Income for the First Six-Months of 1998 dropped to $48,200 as compared
to $83,800 in the First Six-Months of 1997, again due to the poor
performance in the First Quarter of 1998.
Addressing the bigger, longer-term picture, the Company has made great
strides in dealing with its debt situation as well as its need for
currently profitable operations. The debt picture has now entered a new
phase in which, by the end of the next nine-months, significant repayment
obligations come to the surface. The Company has already put in reserves
enough cash to make the required "balloon" payment on the real estate
Mortgage Note when that becomes due. Nonetheless, the Company is still
searching for sources of funding to permit it to refinance its debt to more
favorable terms. Even if debt-refinancing does not become possible, the
Company expects to be able to continue supporting its ongoing operations
from internally generated cash flow.
Beyond its debt situation, the Company currently has a significant order-
backlog for core-technology products, with further increases anticipated in
the not-too-distant future. There is developing an increasing positive
background concerning projected future performance. A particularly
encouraging element is the growing usage of the Company's patented
photovoltaic MOSFET-drivers in a rapidly growing segment of the medical-
electronics field. Looking back across the temporary First Quarter
"valley," there is much reason for optimism that Management's goals of
continued increases in sales and profits will be met. As always, and as
demonstrated unfortunately in the recent First Quarter, risks of failure
persist. Nonetheless, the Company is well back from the brink it once
fought so desperately and successfully to avoid.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote
of Security-Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. There are no exhibits applicable to this Form 10-
QSB.
(b) Reports on Form 8-K. Listed below are Current Reports on
Form 8-K filed by the Registrant during the fiscal quarter ended June 30,
1998:
None
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DIONICS, INC.
(Registrant)
Dated: August 12, 1998 By: /s/Bernard Kravitz
Bernard Kravitz,
President
Dated: August 12, 1998 By: /s/Bernard Kravitz
Bernard Kravitz,
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM DIONICS, INC.'S QUARTERLY REPORT FOR THE QUARTER ENDED JUNE 30, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 447,400
<SECURITIES> 0
<RECEIVABLES> 277,400
<ALLOWANCES> 0
<INVENTORY> 441,800
<CURRENT-ASSETS> 1,178,000
<PP&E> 1,686,300
<DEPRECIATION> 1,639,800
<TOTAL-ASSETS> 1,243,700
<CURRENT-LIABILITIES> 763,600
<BONDS> 758,100
<COMMON> 38,400
0
0
<OTHER-SE> 1,522,800
<TOTAL-LIABILITY-AND-EQUITY> 1,243,700
<SALES> 864,500
<TOTAL-REVENUES> 864,500
<CGS> 609,100
<TOTAL-COSTS> 790,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,600
<INCOME-PRETAX> 48,200
<INCOME-TAX> 0
<INCOME-CONTINUING> 48,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,200
<EPS-PRIMARY> .013
<EPS-DILUTED> .013
</TABLE>
