<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from_________________ to __________________
COMMISSION FILE NUMBER: 0-12113
CONNECTIVITY TECHNOLOGIES INC.
(Exact name of small business issuer as specified in its charter)
Delaware 94-2691724
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
680 Mechanic Street, Leominster, MA 01453
-----------------------------------------
(Address of principal executive offices)
(978) 537-9138
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant 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: 5,565,704 shares of Common Stock, par
value. $.04 per share, outstanding as of May 7, 1999.
<PAGE> 2
CONNECTIVITY TECHNOLOGIES INC.
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets
as of March 31, 1999 and December 31, 1998 .................................. 3
Condensed Consolidated Statements of Operations
for the Three Months Ended March 31, 1999 and 1998 .......................... 4
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1999 and 1998 .......................... 5
Notes to Condensed Consolidated Financial
Statements .................................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................................... 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .............................................. 13
</TABLE>
<PAGE> 3
CONNECTIVITY TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 725,236 $ 598,804
Accounts receivable, net 6,722,350 6,740,133
Inventories, net 5,554,186 5,203,023
Prepaid expenses and other assets 165,455 129,883
Refundable income taxes, net 272,183 286,733
------------- -------------
Total current assets 13,439,410 12,958,576
Property, plant and equipment, net 6,693,020 6,949,801
Deposits and other assets 91,028 102,919
Goodwill and intangible assets, net of accumulated
amortization 9,498,915 9,606,045
------------- -------------
Total assets $ 29,722,373 $ 29,617,341
============= =============
LIABILITIES
CURRENT LIABILITIES
Loan payable to bank $ 16,462,168 $ 16,462,168
Subordinated notes payable 882,600 882,600
Trade accounts payable 3,708,787 2,740,040
Accrued liabilities 1,907,356 1,895,116
------------- -------------
Total current liabilities 22,960,911 21,979,924
============= =============
STOCKHOLDERS' EQUITY
Preferred stock - $.01 par value;
10,000,000 shares authorized, none outstanding
Series B Common Stock - $.04 par value; 750,000 shares authorized, none
outstanding
Common Stock - $.04 par value; 20,000,000 shares authorized, 5,771,857 shares
issued, 5,565,704 shares outstanding 230,867 230,874
Additional paid-in capital 109,334,759 109,336,244
Accumulated deficit (102,795,900) (101,921,437)
Less 206,601 shares in treasury, at cost (8,264) (8,264)
------------- -------------
Total stockholders' equity 6,761,462 7,637,417
------------- -------------
Total liabilities and stockholders' equity $ 29,722,373 $ 29,617,341
============= =============
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
Page 3
<PAGE> 4
CONNECTIVITY TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31,1998
-------------- -------------
<S> <C> <C>
Net sales $9,251,783 $11,803,705
Cost of goods sold 7,633,537 9,637,372
---------- -----------
Gross profit 1,618,246 2,166,333
Selling, general and administrative expenses 2,068,953 2,054,633
---------- -----------
Operating income (loss) (450,707) 111,700
Other income (expense):
Interest expense, net (423,675) (450,206)
Other (81) 10,080
---------- -----------
(423,756) (440,126)
---------- -----------
Loss from continuing operations before income taxes (874,463) (328,426)
Income taxes 0 0
---------- -----------
Loss from continuing operations (874,463) (328,426)
Gain on sale of discontinued operations, net of income taxes 0 38,151
---------- -----------
Net loss $ (874,463) $ (290,275)
========== ===========
Earnings (loss) per share
Continuing operations $ (0.16) $ (0.06)
Discontinued operations 0.00 0.01
---------- -----------
$ (0.16) $ (0.05)
========== ===========
Weighted average shares outstanding 5,565,704 5,565,256
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
Page 4
<PAGE> 5
CONNECTIVITY TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,1999 MARCH 31,1998
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Loss from continuing operations $(874,463) $ (328,426)
Adjustments to reconcile loss from continuing operations to
cash provided by (used for) operating activities:
Depreciation and amortization 413,327 404,314
Changes in assets and liabilities:
Accounts receivable, net 17,783 1,151,853
Inventories, net (351,163) (265,238)
Prepaid expenses, deposits and other assets (23,681) 62,640
Refundable income taxes, net 13,058 0
Trade accounts payable 968,747 (545,688)
Accrued liabilities and federal and state income taxes payable 12,241 (3,548,843)
--------- -----------
Net cash provided by (used for) continuing operations 175,849 (3,069,388)
Income from discontinued operations 0 38,151
Adjustment to reconcile income from discontinued
operations to cash provided by operating activities:
Change in accrued liabilities 0 (38,151)
--------- -----------
0 0
--------- -----------
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 175,849 (3,069,388)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (49,417) (708,911)
--------- -----------
NET CASH USED FOR INVESTING ACTIVITIES (49,417) (708,911)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 0 4,000,000
Repayment of long-term borrowings 0 (350,000)
--------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 0 3,650,000
--------- -----------
Net increase (decrease) in cash 126,432 (128,299)
Cash at beginning of period 598,804 245,843
--------- -----------
CASH AT END OF PERIOD $ 725,236 $ 117,544
========= ===========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
Page 5
<PAGE> 6
CONNECTIVITY TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
Note 1 - Condensed Consolidated Financial Statements
The Condensed Consolidated Financial Statements included herein have
been prepared by Connectivity Technologies Inc. ("CTI" or "the Company") without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes the disclosures which are made are
adequate to make the information presented not misleading. Further, the
Condensed Consolidated Financial Statements have been prepared in accordance
with generally accepted accounting principles for interim financial information,
the instructions to Form 10-Q and Regulation S-K and reflect, in the opinion of
management, all adjustments of a normal recurring nature necessary to present
fairly the financial position and results of operations as of and for the
periods indicated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
These Condensed Consolidated Financial Statements should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
included in CTI's Annual Report on Form 10-K for the year ended December 31,
1998.
The accompanying condensed consolidated financial statements have been
prepared assuming that the Company will continue as a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Company incurred a loss from continuing
operations in 1998 and for the three months ended March 31, 1999 and has a
working capital deficiency. Also, as further described in Note 3, the Company
has consummated a $16.5 million revolving credit agreement under which, among
other things, all amounts outstanding become due on January 31, 2000. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern.
Management's plans to resolve these matters presently include the sale
of the stock of the Company's Connectivity Products Incorporated ("CPI")
subsidiary or some or all of CPI's operating assets. If a sale were successfully
consummated, the proceeds from the sale would be applied first against the
outstanding loan payable to the bank. In addition, the Company continues to make
changes in its operations in order to improve profitability and to generate
sufficient cash flow to meet its obligations.
6
<PAGE> 7
There can be no assurance that management will be successful in its
efforts to sell the stock of CPI or any other assets at a price acceptable to
the Board of Directors. Further, there can be no assurance that proceeds from
any sale would be sufficient to satisfy outstanding obligations or that
management will be successful in its efforts to carry out its operational plan.
The accompanying condensed consolidated financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
Note 2 - Nature of Operations and Basis of Presentation
The primary business of the Company is the manufacture and sale of wire
and cable products. The major markets served by the Company are industrial,
commercial and residential security, factory automation, traffic and transit
signal control and audio systems.
The Company's condensed consolidated financial statements include the
accounts of CTI and operations of its 97.8% owned subsidiary, CPI. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Certain reclassifications of amounts reported in the accompanying
December 31, 1998 Condensed Consolidated Balance Sheet have been made to permit
comparison with March 31, 1999 classifications.
Note 3 - Revolving Credit Facility
On April 27, 1999, the Company's subsidiary, CPI, consummated a $16.5
million revolving credit agreement (the 1999 Revolver) whereunder borrowings
under the credit agreement existing at December 31, 1998 became amounts
outstanding under the 1999 Revolver. The 1999 Revolver matures on January 31,
2000. Borrowings under the 1999 Revolver: 1) accrue interest at the bank's base
rate plus 200 basis points (the bank's base rate was 7.75% at March 31, 1999);
2) are secured by substantially all assets of the Company and further guaranteed
by the Company's interest in the stock of CPI and; 3) cannot exceed an amount
that is calculated by reference to specified percentages of eligible accounts
receivable, inventory, and equipment. The 1999 Revolver contains a lockbox
requirement and a subjective acceleration clause and, therefore, is classified
as a current liability in the financial statements. The 1999 Revolver also
contains covenants restricting the amount of capital expenditures and requiring,
among other things, the attainment of monthly minimum earnings and cash flow
related thresholds and monthly principal payments.
Note 4 - Subordinated Debt
Subordinated notes payable were issued as part of the Company's
acquisition of CPI. The notes bear interest at the rate of 10% per annum,
payable quarterly. The Company has made no interest payments on the subordinated
notes since December 31, 1997. Under the terms of the note, principal becomes
payable on May 31, 2003. The Company entered into agreements with certain of the
noteholders in 1998 pursuant to which the Company's obligations for principal
amounting to $4,767,400 and accrued interest of $260,440 were canceled. At
7
<PAGE> 8
March 31, 1999, the Company was in not in compliance with certain of the
conditions specified in the preexisting bank note agreement and was not
permitted to pay accrued interest, thus the outstanding balances have been
classified as a current liability.
In connection with consummating the 1999 Revolver, the remaining holder
of the subordinated note agreed not to require any payments of either principal
or interest under the note until the earlier of such time as the 1999 Revolver
is repaid, or May, 2002.
Note 5 - Inventories
Inventories consist of the following:
March 31, 1999 December 31, 1998
-------------- -----------------
Raw materials $3,489,296 $3,211,631
Work in process 1,165,794 686,124
Finished goods 899,096 1,305,268
---------- ----------
$5,554,186 $5,203,023
========== ==========
Note 6 - Comprehensive Income (Loss)
As of January 1, 1998, the Company adopted FASB Statement No. 130,
Reporting Comprehensive Income (Statement 130). Statement 130 established new
rules for the reporting and display of comprehensive income and its components.
Statement 130 requires unrealized gains or losses on the Company's
available-for-sale securities which, prior to adoption, were reported separately
in stockholders' equity, to be included in other comprehensive income. For the
three month period ended March 31, 1999, the Company had no material
transactions other than net loss that should be reported as comprehensive loss.
Comprehensive loss for the three month period ended March 31, 1998 consisted of
the following:
Net loss $(290,275)
Unrealized loss on investments (314,763)
----------
$(605,038)
=========
Note 7 - Discontinued Operations
Income from discontinued operations of $38,151 recognized during 1998
resulted from the final settlement of the sale price of the Company's Energy
Electric Cable division, which was sold in 1997.
8
<PAGE> 9
Note 8 - Contingencies
In March 1999, the Company was named a defendant in a $2 million
lawsuit alleging wrongful termination of employment. The Company believes it has
not engaged in any wrongdoing in connection with this matter. However, as this
litigation is in a very early stage, the Company is unable to conclude on the
likely outcome of this matter.
The Company is also subject to various other legal proceedings and
claims that arise in the ordinary course of business. In the opinion of
management, such proceedings will not, individually or in the aggregate, have a
material adverse impact on the Company's financial position.
Note 9 - Segment Information
The Company has two reportable business segments: BSCC division and EEA
division. The BSCC division manufactures low voltage copper electronic and
electric wire and cable for security, factory automation, signal and sound
markets. The EEA division provides cable design application and assembly
services for machine tool and robotics products used primarily within the
automotive industry. The divisions maintain separate and distinct physical
operating facilities.
The Company also maintains a corporate headquarters apart from its
operating divisions. The Company evaluates performance and allocates resources
based on profit or loss from operations before income taxes. Expenses incurred
and revenues received by the corporate headquarters are not allocated to the
divisions.
The divisions use the same accounting policies as those described in
Note 1, "Condensed Consolidated Financial Statements". Interdivision sales
consist principally of product sales from the BSCC division to the EEA division.
Such sales carry the same markup as sales to external customers.
Following is a presentation of selected financial information for each
division and the corporate headquarters for the three months ended March 31,
1999 and 1998.
<TABLE>
<CAPTION>
BSCC EEA
Division Division Corporate Eliminations Consolidation
-------- -------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Three months ended March 31, 1999
Sales to external customers $ 6,472,339 $ 2,779,444 $ 9,251,783
Interdivision sales 372,762 $ (372,762)
Income (loss) from continuing
operations before income taxes (369,586) 230,524 $ (625,271) (110,130) (874,463)
Total assets 16,568,570 7,495,036 14,568,788 (8,910,021) 29,722,373
Three months ended March 31, 1998
Sales to external customers $ 8,061,990 $ 3,741,715 $ 11,803,705
Interdivision sales 590,473 $ (590,473)
Income (loss) from continuing
operations before income taxes (191,952) 487,261 $ (496,742) (126,993) (328,426)
Total assets 18,908,677 6,525,325 16,608,705 (8,044,845) 33,997,862
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS MARCH 31, 1999
The primary business of Connectivity Technologies Inc. (the "Company" or "CTI")
is the manufacture and assembly of wire and cable products through its
subsidiary, Connectivity Products Incorporated ("CPI"). The major markets served
by the Company are commercial and residential security, factory automation,
traffic and transit signal control and audio systems. The Company has no
operations other than those carried out by CPI.
Before acquiring 85% of the common stock of CPI as of May 31, 1996, the
Company's principal activity consisted of seeking and evaluating candidates for
acquisition.
RESULTS OF OPERATIONS
Net sales decreased by approximately 21.6% during the quarter ended March 31,
1999, as compared to the corresponding period of the preceding year. The
decrease is attributable to a 17.6% decrease in the Comex average price of
copper, which the BSCC division bases its selling price, during the quarter
ended March 31, 1999 as compared to the quarter ended March 31, 1998, and a
general slow down experienced at the EEA division due to a more competitive
environment. Further, management believes customer apprehension at both
operating divisions due to the lack of a finalized loan agreement with the
Company's lenders has also impacted sales.
Gross profit as a percent of net sales decreased to 17.5% from 18.4% for the
corresponding period of the preceding year. The decrease is attributable
principally to the decrease in sales which results in less revenue to absorb
fixed costs inherent in cost of goods sold. Margins have been affected
positively by increased manufacturing efficiencies inherent in new machinery
acquired and new manufacturing and scheduling processes implemented by
management.
Selling, general and administrative expense increased to 22.4% of net sales for
the three month period ended March 31, 1999 compared to 17.4% for the same three
month period in 1998. The increase is attributable principally to decreased
sales during the three months, which on a percentage basis increases the fixed
cost component. On a dollar basis, selling, general and administrative expense
increased approximately $14,000 from the corresponding period of the preceding
year.
Interest expense decreased during the three month period ended March 31, 1999,
as compared to 1998, due principally to lower average borrowings offset by
higher interest rates. Interest rates have increased in accordance with the
terms of the Second Amended and Restated Revolving Credit Agreement and because
the Company does not have the option in 1999 to use the preferential LIBOR based
interest rate.
10
<PAGE> 11
FINANCIAL CONDITION AND LIQUIDITY
The accompanying statement of cash flows for the three months ended March 31,
1999 reports net cash provided by operating activities of approximately $176,000
as compared to cash used for operating activities of approximately $3,070,000
during the corresponding three months of the previous year. Increased payables
of approximately $968,000 resulted in cash flows provided by operating
activities during the quarter ended March 31, 1999, primarily caused by
increased purchases to support increasing sales in the last month of the
quarter. Offsetting the increase in liabilities is an increase in inventory of
approximately $351,000. This is a normal trend as inventories were reduced in
anticipation of the plant shut down during the holidays. Included in the
determination of cash flows from operating activities for the quarter ended
March 31, 1998 are tax payments of approximately $2,700,000 related to the
taxable gain realized on the sale of the Company's Energy Electric Cable
division in 1997. The Company used approximately $545,000 of operating cash
flows to reduce accounts payable in a concerted effort to make payments within
or better than accepted trade terms.
The Company used approximately $49,000 for the purchase of property, plant and
equipment for the three months ended March 31, 1999 as compared to an
approximate use of $709,000 for the corresponding three months of the previous
year. The change is attributable to the upgrading of machinery at the BSCC
division during the quarter ended March 31, 1998.
No cash was used or provided by financing activities during the quarter ended
March 31, 1999 as compared to $3,650,000 provided by financing activities for
the corresponding three months ended March 31, 1998. The Company did not draw on
the bank loan or pay down principal during the quarter ended March 31, 1999.
As described in Note 3 of the accompanying Notes to Condensed Consolidated
Financial Statements, the Company has negotiated the 1999 Revolver, which to
date has been the Company's principal external source of capital. The terms of
the new agreement extend to January 31, 2000. The Company is in compliance with
all terms and conditions of the 1999 Revolver.
YEAR 2000 UPDATE
The Company has made significant progress in its plan to ensure Year 2000
compliancy. Its BSCC division implemented and upgraded its business critical
systems in 1998. The EEA division will complete the same implementation and
upgrade of business critical systems in the second quarter of 1999. The
Company's hardware compliance issues have been identified and non-compliant
hardware is in the process of being or has been replaced or upgraded. Most other
production software and database applications that are not Year 2000 ready have
been scheduled to migrate to fully compliant systems by mid 1999. The Company
has purchased all of the software upgrades. Altogether, the total cost to
upgrade, test, and implement the Company's hardware and software to date is
approximately $425,000 and has been funded through cash flows and bank
borrowings. The Company requires a new job writing production software design.
The programming required to make the job writing software compliant, which is
being
11
<PAGE> 12
performed internally, has begun and it is anticipated that this software will be
fully programmed and tested during the fourth quarter of 1999. There is a
contingency plan if this project is not completed by December 31, 1999. All
software and hardware has been tested and non-compliant issues will be addressed
in the second quarter of 1999. No contingency plan exists in the event that any
tested system fails. The Company plans to evaluate such failures on a case by
case basis. The Company began surveying its customers, service providers, and
suppliers regarding Year 2000 compliancy in the first quarter of 1999. Current
plans are for this phase of the Company's Year 2000 project to be completed in
the second quarter of 1999.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third party suppliers, customers, and
service providers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition.
SAFE HARBOR PROVISION OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in Item 2 (Management's Discussion and Analysis of
Financial Condition and Results of Operations) that were not historical facts
may be forward-looking statements. Whenever possible, the Company has identified
these forward-looking statements by words such as "believes", "plans",
"intends", and similar expressions. The Company cautions readers that these
forward-looking statements are subject to a variety of risks and uncertainties
that could cause the Company's actual results in the remainder of 1999 and
beyond to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Company. These risks and uncertainties
are more fully described in the Company's filings with the Securities and
Exchange Commission including, without limitation, general economic and business
conditions affecting the industries of the Company's customers, competition from
other manufacturers and assemblers that have greater financial, technical, and
marketing resources than the Company, the Company's ability to adequately
address its going concern issues in a timely matter including, without
limitation, its ability to sell its CPI subsidiary or any other assets, reduce
its debt, continue to negotiate long term credit facilities, and the Company's
ability to adequately address its Year 2000 issues in a timely manner.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description of Document
- ----------- -----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
13
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONNECTIVITY TECHNOLOGIES INC.
Date: May 21, 1999 By: /s/ James M. Hopkins
-----------------------------------------------
James M. Hopkins
President and Chief Executive Officer (as a
duly authorized officer of the Registrant)
By: /s/ George H. Buckham
-----------------------------------------------
George H. Buckham
Corporate Controller and Secretary
(as the principal accounting officer
of the Registrant)
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 725,236
<SECURITIES> 0
<RECEIVABLES> 6,722,350
<ALLOWANCES> 0
<INVENTORY> 5,554,186
<CURRENT-ASSETS> 13,439,410
<PP&E> 6,693,020
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,722,373
<CURRENT-LIABILITIES> 22,960,911
<BONDS> 0
0
0
<COMMON> 230,867
<OTHER-SE> 6,530,595
<TOTAL-LIABILITY-AND-EQUITY> 29,722,373
<SALES> 9,251,783
<TOTAL-REVENUES> 9,251,783
<CGS> 7,633,537
<TOTAL-COSTS> 7,633,537
<OTHER-EXPENSES> 2,068,953
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 423,675
<INCOME-PRETAX> (874,463)
<INCOME-TAX> 0
<INCOME-CONTINUING> (874,463)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (874,463)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
