UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended January 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______ to _______
Commission file number 2-90422-C
Infinite Graphics Incorporated
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Minnesota 41-0956693
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4611 East Lake Street, Minneapolis, Minnesota 55406
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(612) 721-6283
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(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 2,752,575 common shares as of January
31, 1999
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
INFINITE GRAPHICS
BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
January 31, 1999 April 30, 1998
------------------ -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $263,220 $195,984
Accounts receivable, less allowance for doubtful accounts
of $88,933 and $43,420 respectively $715,727 $735,870
Account receivable - other (Note D ) $495,933 $200,000
Inventories $479,869 $187,743
Prepaid expenses and other $163,802 $44,723
------------------ -----------------
Total current assets $2,118,551 $1,364,320
PROPERTY, PLANT, AND EQUIPMENT, NET $2,715,598 $758,076
PURCHASED SOFTWARE, NET $74,811 $94,364
ACCOUNTS RECEIVABLE-OTHER $0 $313,254
OTHER ASSETS $28,969 $31,183
------------------ -----------------
TOTAL ASSETS $4,937,929 $2,561,197
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit agreement $231,517 $141,324
Trade accounts payable $372,645 $237,834
Accrued salaries, wages, vacations, and employee withholdings $215,378 $198,762
Other accrued expenses $347,780 $239,673
Current portion of long-term debt $46,862 $38,855
Current portion of capitalized lease obligations $276,194 $34,442
------------------ -----------------
Total current liabilities $1,490,376 $890,890
LONG-TERM DEBT, less current portion $850,359 $403,651
CAPITALIZED LEASE OBLIGATIONS, less current portion $1,163,703 $76,795
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS EQUITY:
Common stock, no par value; authorized 10,000,000 shares
issued and outstanding 2,752,575 and 2,652,575, respectively $4,167,635 $4,136,697
Accumulated deficit ($2,703,206) ($2,946,836)
------------------ -----------------
$1,464,429 $1,189,861
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Notes and related interest receivable from purchase of common stock ($30,938) $0
------------------ -----------------
Total stockholders' equity $1,433,491 $1,189,861
------------------ -----------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $4,937,929 $2,561,197
================== =================
</TABLE>
See notes to financial statements.
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<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
INFINITE GRAPHICS INCORPORATED
STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTH PERIOD NINE MONTH PERIOD
ENDED JANUARY 31 ENDED JANUARY 31
1999 1998 1999 1998
<S> <C> <C> <C> <C>
REVENUES $1,097,629 $777,916 $3,244,595 $2,595,596
COSTS AND EXPENSES:
Costs of products sold $822,969 $679,340 $2,257,864 $1,993,593
Selling, general and administrative $139,585 $256,888 $625,654 $782,747
Interest $55,119 $23,494 $117,447 $38,980
------------- ------------- ------------ ------------
Total costs and expenses $1,017,673 $959,722 $3,000,965 $2,815,320
------------- ------------- ------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS $79,956 ($181,806) $243,630 ($219,724)
DISCONTINUED OPERATIONS-Loss from operations
of discontinued software division (Note D) $0 ($33,470) $0 ($116,214)
------------- ------------- ------------ ------------
NET INCOME (LOSS) $79,956 ($215,276) $243,630 ($335,938)
============= ============= ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING:
Basic 2,752,575 2,625,727 2,698,030 2,516,959
============= ============= ============ ============
Diluted 2,874,029 2,625,727 2,785,491 2,516,959
============= ============= ============ ============
BASIC NET INCOME (LOSS) PER SHARE:
Continuing operations $0.03 ($0.07) $0.09 ($0.09)
Discontinued operations $0.00 ($0.01) $0.00 ($0.04)
------------- ------------- ------------ ------------
Net income (loss) $0.03 ($0.08) $0.09 ($0.13)
============= ============= ============ ============
DILUTED NET INCOME (LOSS) PER SHARE:
Continuing operations $0.03 ($0.07) $0.09 ($0.09)
Discontinued operations $0.00 ($0.01) $0.00 ($0.04)
------------- ------------- ------------ ------------
Net income (loss) $0.03 ($0.08) $0.09 ($0.13)
============= ============= ============ ============
</TABLE>
See notes to financial statements.
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<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
INFINITE GRAPHICS INCORPORATED
STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Nine Month Period
Ended January 31
1999 1998
----------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $243,630 ($335,938)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization $283,802 $696,698
Changes in assets and liabilities:
Accounts receivable $20,143 $360,877
Inventories ($142,126) $8,546
Prepaid expenses and other assets ($118,710) ($10,848)
Deferred revenue ($120,176)
Accounts payable, accruals and other accrued expenses $139,402 $23,747
----------------------------------
Net cash provided by operating activities $426,141 $622,906
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for capitalized software ($9,964) ($533,548)
Other capital expenditures ($444,830) ($263,444)
Payment for acquisition, net of liabilities assumed ($375,000) $0
Decrease in account receivable-other $17,321 $0
----------------------------------
Net cash used in investing activities ($812,473) ($796,992)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in revolving credit agreement $90,193 ($84,643)
Proceeds from issuance of debt $499,552 $450,448
Payments on long-term debt and capital lease obligations ($136,177) ($215,469)
Proceeds from exercise of stocks, warrants and options $0 $23,750
----------------------------------
Net cash provided by financing activities $453,568 $174,086
----------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS $67,236 $0
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR $195,984 $0
----------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $263,220 $0
==================================
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Stock options purchased with note receivable $30,938
Equipment acquired by capital lease $1,420,000
</TABLE>
See notes to financial statements.
-5-
<PAGE>
PART 1- FINANCIAL INFORMATION (CONTINUED)
NOTES TO FINANCIAL STATEMENTS
NOTE A:
The Balance Sheet as of January 31, 1999 and the Statements of Operations for
the three and nine months ended January 31, 1999 and 1998 and the Statements of
Cash Flows for the nine months ended January 31, 1999 and 1998 have been
prepared by Infinite Graphics Incorporated without audit. In the opinion of
management, these statements reflect all adjustments, consisting of only normal
accruals and adjustments, necessary for the fair-statement of the periods
presented. The Balance Sheet as of April 30, 1998 has been derived from the
audited Balance Sheet included in the Company's April 30, 1998 Annual Report to
Shareholders. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes included in the
Company's April 30, 1998 Annual Report to Shareholders.
Effective May 1, 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income." For the periods
presented, comprehensive income (loss) is the same as net income (loss).
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
requires companies to record derivatives on the balance sheet as assets and
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending upon the use of
the derivative and whether it qualifies as hedge accounting. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999, with earlier adoption
encouraged. The Company has not yet determined the effects SFAS No. 133 will
have upon its financial position or the results of its operations.
Reclassifications-Certain amounts in the financial statements have been
reclassified for fiscal year 1998 to conform with fiscal 1999 presentation.
NOTE B:
Basic net (loss) income per share are computed by dividing net income (loss) by
the weighted average number of common shares outstanding. Diluted net income per
share assumes the exercise of stock options and warrants using the treasury
stock method. Diluted net loss per share is the same as basic loss per share due
to the antidilutive effect of the assumed exercise of stock options and
warrants.
NOTE C:
During 1998, the Company installed equipment costing approximately $1,420,000.
The Company was not required to pay for the equipment until it was operating
within specific tolerances. Arrangements were made with a financing company to
lease the equipment at the time of acceptance. The sixty month lease payments
total $30,800 per month and a fair market buy out at the end of the lease. The
equipment and the leases are reflected on the financials dated January 31, 1999.
NOTE D:
On February 27, 1998, the Company sold an exclusive license to use, market and
distribute the Company's PAR/ICE, ParCAM, and CheckMate (PAR for Design)
software products; sold a nonexclusive license to certain other CAD/CAM
products, including those known as 2100, ProCADD, ProFLEX and ProCHEM; and sold
certain assets of its software systems business to Global MAINTECH Corporation
(Global
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<PAGE>
MAINTECH). The Company, however, has retained the right to use all of this
software in its own business. The Company has also agreed that for a period of
five years it will not distribute, market, promote or provide to any third
parties software that is competitive with the software with respect to which
Global MAINTECH was granted an exclusive license. As consideration for the grant
of the Agreements and the sale of the software systems division assets to Global
MAINTECH, the Company received $500,000 on February 27, 1998 and $200,000 on
June 2, 1998 and may receive additional payments totaling not more than
$3,300,000 on or before June 1999, depending on the level of profit performance
of the licensed software.
The above transaction was recognized as a disposal of a business. At January 31,
1998, the Company has a $496,000 receivable from Global MAINTECH.
At the present time, management of the Company believes the future payments in
connection with the Agreements will exceed $496,000. The Company has only
recorded a future receivable to the extent of the realized loss reulting in no
gain or loss recognition on the sale of discontinued operations. Future receipts
in connection with the Agreements will be recorded as a reduction of the Global
MAINTECH receivable and any excess will be recorded as gain on sale of
discontinued operations.
The Company has also agreed to continue to manage day to day operations of the
business relating to the software products and assets licensed and sold to
Global Maintech through May,1999.
NOTE E:
During the nine months ended January 31, 1999, stock options for the purchase of
100,000 shares of the Company's common stock were exercised at $.31 per share.
NOTE F:
Infinite Graphics Incorporated (the "Company") acquired certain assets and
assumed certain liabilities of Photronics Colorado, Inc. ("PCI"), a Colorado
corporation, effective as of January 28, 1999, under the terms of an Asset
Purchase Agreement dated January 28, 1999, between the Company and
Photronics, Inc. for a total purchase price not to exceed $2 million in the
aggregate. The company paid $375,000 of the purchase price in cash on January
28, 1999. In addition, the Company will pay or credit PCI over a period of 36
months following January 28, 1999 at a rate not to exceed $150,000 per quarter
the following: a) 50% of all net invoices of certain large area masks ("LAM")
shipped to or for PCI; and b) 10% of the net invoice amount received from the
sale of LAM to existing and identified PCI customers. Prior to this transaction,
PCI had no material relationship with the Company or any of the Company's
affiliates, officers, directors or any associate of the Company's officers and
directors.
Of the $375,000 cash paid by the Company on January 28, 1999, $275,000 was
funded through a bank facility with Riverside Bank, and the remaining $100,000
was funded by cash from the Company's operations. The remaining purchase price,
a sum which is not certain, will be funded from certain LAM sales specified in
the Asset Purchase Agreement made by the Company during the 36 month period
following January 28, 1999. The remaining purchase price will be recorded as
property until the acquired property is recorded at fair value and any excess
will be recorded as goodwill.
Assets acquired:
Inventory $150,000
Property $345,000
--------
Total Assets $495,000
Liabilities assumed:
Accrued warranty $25,000
-7-
<PAGE>
Accrued expenses $95,000
--------
Total Liabilities $120,000
--------
Cash consideration: $375,000
NOTE G
During the nine months ended January 31, 1999, the Company borrowed and
additional $500,000 on their $700,000 equipment note line of credit. The balance
outstanding as of January 31, 1999, was $666,000.
During the nine months ended January 31, 1999, the Company entered into a
capital lease to purchase a Maskwrite 800 Photo Plotting machine for $990,000.
The monthly payments are $21,025 and the lease term is 60 months. The Company
also entered into a capital lease to purchase a Heidelberg DWL 400 System for
$430,000 during the nine months ended January 31, 1999. The monthly payments are
$9,700 and the lease term is 60 months.
-8-
<PAGE>
PART 1 - FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION THREE MONTHS
ENDED JANUARY 31, 1999 COMPARED TO THREE MONTHS ENDED JANUARY 31, 1998
Operations for the three months ended January 31, 1999 resulted in sales of
$1,098,000 compared to $778,000 for the same period last year or a 41 percent
increase. The increase in sales is primarily due to an increase in Large Area
Mask business.
The increase in sales was the primary contributor to the gross margin increasing
to 25 percent for the three months ended January 31, 1999 compared to 13 percent
for the same period last year.
The Company's total selling, general and administrative (S, G & A) expenses were
$140,000 and $257,000 for the three months ended January 31, 1999 and 1998,
respectively. Interest expense for the three months ended January 31, 1999 was
$55,000 compared to $23,000 for the same period last year. The increase in the
interest expense is primarily attributable to additional borrowings to finance
equipment purchases.
The Company had income from continuing operations of $80,000 for the three
months ended January 31, 1999 compared to a loss of $182,000 from continuing
operations for the same period last year. The Company had net income of $80,000
for the three months ended January 31, 1999, compared to a net loss of $215,000
for the three months ended January 31, 1998. The improved operating results are
attributable to increased sales.
NINE MONTHS ENDED JANUARY 31, 1999 COMPARED TO NINE MONTHS ENDED JANUARY 31,
1998
Operations for the nine months ended January 31, 1999 resulted in sales of
$3,245,000 compared to $2,596,000 for the same period last year or a 25 percent
increase. The increase in sales is primarily due to an increase in Large Area
Mask business.
The increase in sales was the primary contributor to the gross margin increasing
to 30 percent for the nine months ended January 31, 1999 compared to 23 percent
for the same period last year.
The Company's total selling, general and administrative (S, G & A) expenses for
the nine months ended January 31, 1999 was $626,000 compared to $783,000 for the
same period last year, a decrease of $157,000 or 25 percent. S, G & A decreased.
Interest expense for the nine months ended January 31, 1999 was $117,000
compared to $39,000 for the same period last year. The increase in the interest
expense is primarily attributable to higher borrowings to finance equipment
purchases.
The Company had income from continuing operations of $244,000 for the nine
months ended January 31, 1999 compared to a loss of $220,000 from continuing
operation for the same period last year. The Company had net income of $244,000
for the nine months ended January 31, 1999, compared to a net loss of $336,000
for the nine months ended January 31, 1998. The improved results are
attributable to increased sales.
Liquidity. The Company's cash flow from operations was $426,000 for the nine
months ended January 31, 1999, compared to $623,000 for the same period last
year. The largest components of cash flow from operations for the nine months
ended January 31, 1999 were net income of $244,000 and depreciation and
amortization of $284,000 partially offset by the increase in inventory of
$142,000. The largest components of cash flow from
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<PAGE>
operations for the nine months ended January 31, 1998 were depreciation and
amortization of $697,000 and the decrease in accounts receivable of $361,000
partially offset by the net loss of $336,000.
Cash provided from planned operations and availability under the Company's
revolving credit agreement are estimated to be sufficient to support the
Company's expected cash needs for the remainder of fiscal 1999 and through
fiscal 2000.
Capital Resources. The Company has invested primarily in equipment and
improvements essential for present operations in fiscal 1999, but plans to
increase its investment in capital resources for future operations over the next
two or three years by obtaining additional debt and/or equity financing. The
Company's capital expenditures for equipment, automation improvements and new
opportunities during fiscal 1999 are expected to be approximately $2,500,000,
which includes $1,000,000 of equipment accepted in late October, 1998. The
Company anticipates that financing for such expenditures will be derived from
planned operations, leases and obtaining additional debt and/or equity
financing. Although the Company is exploring additional funding possibilities,
it has no agreements to provide additional debt or equity capital and there can
be no assurance that additional funds will be available, or if available,
available on terms acceptable to the Company. If the Company does not achieve
its operations plan and additional financing is not obtained, it will restrict
planned business growth.
The Company's cash flows used in investing activities was $812,000 and $797,000
for the nine months ended January 31, 1999 and 1998, respectively. For the nine
months ended January 31, 1999 it consisted primarily of capital expenditures of
$445,000 and the purchase of assets, net of liabilities assumed as discussed in
Note F. For the nine months ended January 31, 1998 it consisted primarily of
expenditures for capitalized software of $534,000 and $263,000 for other capital
expenditures.
The Company's cash flows provided by financing activities was $454,000 for the
nine months ended January 31, 1999 compared to cash flows provided by financing
activities of $174,000 during the same period last year. Cash flows provided by
financing activities for the nine months ended January 31, 1999 consisted of
proceeds from long-term debt and an increase in the revolving credit agreement
of $590,000 partially offset by payments of $136,000 on long-term debt and
principal payments on capital lease obligations. The largest components of cash
flows used in financing activities for the nine months ended January 31, 1998
consisted of $450,000 from the issuance of debt partially offset by payments as
line of credit borrowings, long-term debt and capital lease obligations of
$300,000.
Other Items. Inflation has not had any significant impact upon the Company's
results of operation.
Year 2000 Compliance. The year 2000 issue focuses on whether computer systems
will properly recognize date-sensitive information in the year 2000 and beyond.
Many installed computer systems and software products are coded to accept only
two digit entries in the date code field. As the year 2000 approaches, these
code fields will need to accept four digit entries to distinguish years
beginning with "19" from those beginning with "20". This inability to recognize
or properly treat the Year 2000 may cause systems to process financial and
operational information incorrectly. As a result, in less than ten months,
computer systems and/or software products used by many companies may need to be
upgraded to comply with such year 2000 requirements. The Company is dependent on
computer processing in its business activities and the year 2000 issue creates
risk for the Company from unforeseen problems in the Company's computer system
and from third parties with whom the Company does business. The failure of the
Company's computer systems and/or third parties computer systems from unforeseen
problems could have a material adverse effect on the Company's ability to
conduct its business.
The Company has conducted a review of its computer systems to identify those
areas that could be affected by the Year 2000 problem and is developing an
implementation plan to resolve the issues identified. The Company has not
developed a Year 2000 contingency plan.
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<PAGE>
The Company's accounting software is not Year 2000 compliant. The Company is
currently evaluating vendor software packages to meet its future needs. The
Company is currently unable to estimate the acquisition cost of the hardware and
software and related costs of conversion, training, and support. The Company
intends to finance the acquisition of this system through a multiple year lease
arrangement. The Company anticipates that the acquisition cost of the
non-recurring transition costs will be financed through the use of the Company's
available operating cash flow and advances under its line of credit.
The Company is currently working with its customers and suppliers to certify
Year 2000 compliance. The Company cannot predict whether noncompliance by
customers and suppliers will have an adverse effect on sales and operating
income.
Accounting Pronouncements. In June 1998, the Financial Accounting Standards
Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 requires companies to record derivatives on the
balance sheet as assets and liabilities, measured at fair value. Gains or losses
resulting from changes in the value of those derivatives would be accounted for
depending upon the use of the derivative and whether it qualifies as hedge
accounting. SFAS No. 133 is effective for fiscal years beginning after June 15,
1999, with earlier adoption encouraged. The Company has not yet determined the
effects SFAS No. 133 will have on its financial position or the results of its
operations.
Securities Litigation Reform Act. Except for the historical information
contained herein, the matters discussed in this report are forward-looking
statements which involve risks and uncertainties, including but not limited to
economic, competitive, governmental and technological factors affecting the
Company's operations, markets, products, services and prices, and other factors
discussed in the Company's filings with the Securities and Exchange Commission.
-11-
<PAGE>
PART 2 - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Change in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matter to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Asset Purchase Agreement dated January 28, 1999
among Infinite Graphics Incorporated, Photronics
Colorado Inc. and Photronics, Inc. (incorporated by
reference to the Form 8-K filed by Infinite Graphics
Incorporated on February 11, 1999)
27.1 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended January 31, 1999, Infinite
Graphics Incorporated did not file with the Securities and
Exchange Commission any current reports on Form 8-K.
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.
INFINITE GRAPHICS INCORPORATED
March 22, 1999 By
----------------------------
Clifford F. Stitch, Jr.
Chief Executive Officer
Chief Financial Officer
-12-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
- ----------- ---------------------- --------
2.1 Asset Purchase Agreement dated January 28, 1999 among
Infinite Graphics Incorporated, Photronics Colorado Inc.
and Photronics, Inc. (incorporated by reference to the
Form 8-K filed by Infinite Graphics Incorporated on
February 11, 1999)
27.1 Financial Data Schedule
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> JAN-31-1999
<CASH> 263,220
<SECURITIES> 0
<RECEIVABLES> 804,660
<ALLOWANCES> (88,933)
<INVENTORY> 479,869
<CURRENT-ASSETS> 2,118,551
<PP&E> 7,156,604
<DEPRECIATION> (4,441,006)
<TOTAL-ASSETS> 4,937,929
<CURRENT-LIABILITIES> 1,490,376
<BONDS> 2,014,062
0
0
<COMMON> 4,167,635
<OTHER-SE> (2,734,144)
<TOTAL-LIABILITY-AND-EQUITY> 4,937,929
<SALES> 3,244,595
<TOTAL-REVENUES> 3,244,595
<CGS> 2,257,864
<TOTAL-COSTS> 2,257,864
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 117,447
<INCOME-PRETAX> 243,630
<INCOME-TAX> 0
<INCOME-CONTINUING> 243,630
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 243,630
<EPS-PRIMARY> .06
<EPS-DILUTED> .05
</TABLE>
