FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: June 30, 1996
Commission File Number: 0-18393
WINLAND ELECTRONICS, INC.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-0992135
(state or other juris- (I.R.S. Employer
diction of incorporation) Identification No.)
1950 Excel Drive, Mankato, Minnesota 56001
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code:
(507) 625-7231
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of August 8, 1996, the
Registrant had 2,599,911 shares of Common Stock, $.01 par value, outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No x
<PAGE>
PART I-FINANCIAL INFORMATION
ITEM 1: Financial Statements
WINLAND ELECTRONICS, INC.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
ASSETS JUNE 30 DECEMBER 31
1996 1995
------------ -------------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 16,807 $ 2,839
Accounts Receivable, Net 658,077 995,231
Inventories 2,771,746 2,195,042
Prepaid Items 30,120 40,924
----------- -----------
Total Current Assets 3,476,750 3,234,036
Property and Equipment, Net 2,916,125 2,884,759
Property Under Capital Lease, Net 601,927 426,857
OTHER ASSETS:
Intangibles 9,329 10,093
----------- -----------
TOTAL ASSETS $ 7,004,131 $ 6,555,745
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable 1,735,227 1,075,452
Accounts Payable 275,810 630,460
Payroll Taxes Payable 13,977 11,770
Wages and Commission Payable 29,700 25,622
Other Accruals 62,107 73,126
Obligations Under Capital Lease 128,837 108,081
Deferred Revenue 27,001 27,001
Current Maturities 64,213 60,662
----------- -----------
Total Current Liabilities 2,336,872 2,012,174
LONG TERM LIABILITIES:
Long Term Maturities 2,110,322 2,086,499
Obligations Under Capital Lease
Less: Current Portion 351,486 300,373
----------- -----------
TOTAL LONG TERM LIABILITIES 2,461,808 2,386,872
OTHER LIABILITIES:
Deferred Revenue
Less:Current Portion 229,508 243,008
----------- -----------
TOTAL LIABILITIES 5,028,188 4,642,054
SHAREHOLDERS' EQUITY:
Common Stock 25,999 25,833
Additional Paid-In Capital 1,918,304 1,917,094
Retained Earnings 31,640 (29,236)
----------- -----------
Total Shareholders' Equity 1,975,943 1,913,691
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,004,131 $ 6,555,745
=========== ===========
</TABLE>
2
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
JUNE 30
1996 1995
----------- -----------
<S> <C> <C>
NET SALES: $ 1,562,655 $ 1,565,044
Less, Cost of Goods Sold (1,252,011) (1,279,266)
----------- -----------
Gross Profit on Sales 310,644 285,778
OPERATING EXPENSES:
General and Administrative 186,575 188,841
Marketing 42,264 57,346
Research and Development 74,262 55,609
----------- -----------
Total Operating Expenses 303,101 301,796
INCOME BEFORE OTHER INCOME
AND EXPENSE 7,543 (16,018)
----------- -----------
MISCELLANEOUS INCOME 18,936 ( 38)
INTEREST EXPENSE (36,176) (15,829)
----------- -----------
TOTAL OTHER INCOME AND EXPENSE (17,240) (15,867)
----------- -----------
NET INCOME BEFORE TAXES (9,697) (31,885)
----------- -----------
PROVISION FOR INCOME TAXES (1,000) ( 733)
----------- -----------
NET INCOME $ (10,697) $ (32,618)
=========== ===========
NET INCOME PER COMMON SHARE $ (0.004) $ (0.013)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
AS OF JUNE 30, 1996 AND 1995 2,587,833 2,580,702
</TABLE>
3
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1996 1995
----------- -----------
<S> <C> <C>
NET SALES: $ 3,315,707 $ 3,033,616
Less, Cost of Goods Sold (2,612,641) (2,428,121)
----------- -----------
Gross Profit on Sales 703,066 605,495
OPERATING EXPENSES:
General and Administrative 390,730 378,033
Marketing 94,724 107,720
Research and Development 134,592 94,260
----------- -----------
Total Operating Expenses 620,046 580,013
INCOME BEFORE OTHER INCOME
AND EXPENSE 83,020 25,482
----------- -----------
MISCELLANEOUS INCOME 48,811 ( 264)
INTEREST EXPENSE (69,958) (45,889)
----------- -----------
TOTAL OTHER INCOME AND EXPENSE (21,147) (46,153)
----------- -----------
NET INCOME BEFORE TAXES 61,873 (20,671)
----------- -----------
PROVISION FOR INCOME TAXES (1,000) (1,466)
----------- -----------
NET INCOME $ 60,873 $ (22,137)
=========== ===========
NET INCOME PER COMMON SHARE $ 0.022 $ (0.009)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
AS OF JUNE 30, 1996 AND 1995 2,585,584 2,580,509
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers $ 3,653,821 $ 2,901,299
Interest Received 22,171 -0-
Other miscellaneous operating receipts 13,293 1,368
Cash Paid to Suppliers and Employees (3,950,303) (3,062,885)
Interest Paid (152,250) ( 123,234)
Income Tax Paid ( 1,000) ( 4,928)
----------- -----------
Net Cash (Used) by Operating Activities (414,268) ( 288,380)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Property and Equipment (204,084) (2,434,086)
----------- -----------
Cash Proceeds From Sales of Equipment -0- 250
Net Cash (Used) by Investing Activities (204,084) (2,433,386)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Advances on Credit Line 659,775 ( 308,000)
Proceeds from Debt 57,725 2,199,620
Payments on Debt ( 30,350) ( 23,484)
Payments on Capital Lease Obligations ( 56,206) ( 42,978)
Sale of Common Stock 1,376 887,253
----------- -----------
Net Cash Provided by Financing Activities 632,320 2,712,411
----------- -----------
NET INCREASE IN CASH 13,968 ( 9,805)
CASH - BEGINNING OF YEAR 2,839 17,797
CASH - END OF THE FIRST SIX MONTHS OF 1996 $ 16,807 $ 7,992
----------- -----------
RECONCILIATION OF NET INCOME TO NET CASH (USED)
BY OPERATING ACTIVITIES
Net Income (Loss) $ 60,873 $ (22,137)
Adjustments:
Disposition of Assets 155 1,633
Depreciation & Amortization 126,330 92,910
Decrease (Increase) in Accounts Receivable 337,154 (132,317)
(Increase) in Inventory (576,703) ( 1,747)
Decrease (Increase) in Prepaid items 10,804 (25,758)
(Decrease) in Accounts Payable (354,650) (118,728)
Increase in Wages Payable 4,078 2,742
Increase in Accrued Payroll Taxes 2,207 1,474
(Decrease) in Other Accruals (11,019) ( 82,990)
(Decrease) in Deferred Revenue (13,500) -0-
(Decrease) in Income Taxes Payable -0- ( 3,462)
----------- -----------
Net Cash (Used) by Operating Activities $ (414,268) $ (288,380)
----------- -----------
</TABLE>
5
<PAGE>
WINLAND ELECTRONICS, INC.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
JUNE 30,1996
UNAUDITED
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by the
Company in accordance with generally accepted accounting principles, pursuant to
the rules and regulations of the Securities and Exchange Commission. In
management's opinion all adjustments necessary to a fair presentation of the
results for the interim period have been reflected in the interim financial
statements. The results of operations for any interim period are not necessarily
indicative of the results for a full year. Except for those described in Note B
below, all such adjustments are of a normal recurring nature. Certain
information and footnote disclosures normally included in financial statements
have been condensed or omitted. Such disclosures are those that would
substantially duplicate information contained in the most recent audited
financial statements of the Company, such as significant accounting policies,
net operating loss carry-overs, lease and license commitments and stock options.
Management presumes that users of the interim statements have read or have
access to the audited financial statements included in the Company's most recent
annual report on Form 10-KSB.
NOTE B - ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company maintains an allowance for doubtful accounts based on the aging of
accounts receivable. The balance of the allowance for doubtful accounts is
$4,831 at June 30, 1996 and $5,000 at December 31, 1995.
NOTE C - INVENTORY
Major components of inventory at June 30, 1996 and December 31, 1995 are as
follows:
June 30, December 31,
1996 1995
Raw Material................................ $ 1,857,813 $1,458,611
Work in Process............................. 279,209 405,102
Finished Goods.............................. 622,148 322,231
Manufacturing, Shipping, and Office Supplies 12,575 9,098
-------- -------
Total.............................. $ 2,771,745 $2,195,042
========= =========
NOTE D - PROPERTY AND EQUIPMENT
Property and Equipment not under capital leases consists of the following at
June 30, 1996 and December 31, 1995:
June 30, December 31,
1996 1995
Building.............................. $ 2,324,514 $ 2,268,510
Land.................................. 192,640 192,640
Office Equipment...................... 243,202 241,431
Research & Development Equipment...... 117,294 64,829
Marketing and Display Equipment....... 14,999 14,999
Factory Equipment..................... 426,742 410,570
Land Improvements..................... 77,369 77,369
Accumulated Depreciation.............. (480,635) (385,589)
--------- ---------
Net Book Value........................ $ 2,916,125 $ 2,884,759
========= =========
6
<PAGE>
WINLAND ELECTRONICS, INC.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
JUNE 30,1996
UNAUDITED
NOTE D - CONTINUED
Property and Equipment under capital leases consists of the following at June
30, 1996 and at December 31, 1995:
June 30, December 31,
1996 1995
---------- ----------
Factory Equipment..................... $ 649,888 $ 447,311
Office Equipment...................... 95,754 95,754
Research and Development Equipment.... 4,401 4,401
Accumulated Amortization.............. (148,116) (120,604)
---------- ----------
Total Leased Property and Equipment,
Net of Accumulated Amortization..... $ 601,927 426,857
Capital Leases are summarized as follows:
Lease on factory equipment with lease
period expiring May, 2001, at interest
of 9.96%............................... $ 122,372 $ -0-
Lease on factory, office, and R&D equipment
with lease period expiring July, 1997, at
interest of 8%......................... 15,286 21,185
Lease on factory and office equipment with
lease period expiring January, 2000, at
interest of 1% over prime.............. 287,965 325,050
Lease on factory equipment with lease
period expiring October, 1998 at interest
of 9.23%............................... 33,311 38,544
Lease on office equipment with lease
period expiring March, 2000 at interest
of 9%.................................. 21,389 23,675
Total.................................. $ 480,323 $ 408,454
Less Current Portion................... (128,837) (108,081)
--------- ---------
Long term Obligation under Capital Leases $ 351,486 $ 300,373
========= =========
NOTE E - SHORT TERM BORROWING
Short Term Borrowing consists of the following at June 30, 1996 and December 31,
1995 balance sheet:
June 30, December 31,
Norwest Bank-Revolving Credit Line 1996 1995
-------- -------
June 30, 1996 Balance................. $ 1,735,227 $1,075,452
Stated Interest Rate Per Annum........ 9.0% * 9.25%
Maximum Amount Outstanding During the
Quarter.........................$ 1,735,227 $1,373,452
Average Amount Outstanding During the
Quarter........................ $ 1,633,560 $ 853,529
Unused Credit Available............... $ 264,773 $ 126,548
Weighted Average Interest Rate........ 9.0% 9.6%
* The stated interest rate per annum is equal to 3/4 of a percent over the prime
rate
7
<PAGE>
WINLAND ELECTRONICS, INC.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
June 30, 1996
UNAUDITED
NOTE E CONTINUED
The interest expense on the revolving loan was $36,176 and $69,958 for the three
and six months ended June 30, 1996, respectively. Addition interest expense was
reported related to the leased capital equipment and other long term borrowing.
The interest expense on the leased capital equipment was $95,358 and $18,540 for
the three and six months ended June 30, 1996, respectively. The interest expense
on other long term borrowing was $33,835 and $67,454 for the three and six
months ended June 30, 1996, respectively.
NOTE F - STOCK OPTIONS AND WARRANTS
As of June 30, 1996, options to purchase an aggregate of 374,100 shares of the
Company's Common Stock were granted and outstanding under the Company's 1989
Stock Option Plan, and options to purchase 65,000 shares of the Company's Common
Stock granted outside of any plan were outstanding. As of June 30, 1996, options
to purchase 227,600 shares granted under the 1989 Stock Option Plan were
exercisable, and options to purchase 65,000 shares granted outside of any plan
were exercisable. The exercise prices of all outstanding options range from
$0.06 to $3.64 per share.
As of June 30, 1996, warrants to purchase an aggregate of 37,000 shares of the
Company's Common Stock at $2.20 per share were granted and outstanding, all of
which warrants are exercisable.
8
<PAGE>
ITEM 2: Management's Discussion and Analysis or Plan of
Operation
Results of Operations
Three and six months ended June 30 1996 v.
Three and six months ended June 30 1995
Net Sales:
The Company recorded net sales of $1,562,655 for the three months ended June 30,
1996, a slight decline from $1,565,044 for the same period in 1995. Net sales of
$3,315,707 for the first six months of 1996 showed a 9.3% increase over the same
period in 1995. The increase in the year to date sales was attributed to
increased contract design and manufacturing sales in the first quarter of 1996,
as well as increases in sales of security/industrial products.
The Company's management believes that, for the foreseeable future, net sales
from contract design and manufacturing services will grow at a faster rate than
security/industrial products. In July 1996 the Company obtained a $5.6 million
purchase order from Select Comfort Corporation. The Company expects to begin
shipping product with respect to such order in the third quarter of 1996. The
Company continues to direct considerable attention toward expanding customer
relationships and securing new, long-term contract design and manufacturing
customer relationships.
Gross Profits:
Gross profit was $310,644 or 19.9% of net sales for the three months ended June
30, 1996, compared to $285,778 or 18.3% of net sales for the same period in
1995. The increased gross profit margins are attributed in part to the sales mix
during the second quarter of 1996 compared to the same period in 1995.
Gross profit was $703,066 or 21.2% of net sales for the six months ended June
30, 1996, compared to $605,495 or 20.0% for the same period in 1995. The slight
increase in gross profit for the first six months was attributed to the sales
mix during the period and the effect that the non-recurring costs associated
with the Company's move to the current facility had on the gross profit margins
during 1995.
Operating Expenses:
General and administrative expense was $186,575 or 11.9% of net sales for the
three months ended June 30, 1996, a decrease of $2,266 from $188,841 or 12.1% of
net sales for the same period in 1995. General and administrative expenses were
$390,730 or 11.8% of net sales for the first half of 1996, compared to $378,033
or 12.5% of net sales for the same period in 1995. As a percentage of sales, the
general and administrative expense declined with an actual increase of $12,697
for the first six months of 1996 compared to the same period in the previous
year. The additional expenses are associated with the costs to support an
increased level of business.
9
<PAGE>
Marketing expense was $42,264 or 2.7% of net sales for the quarter ended June
30, 1996, compared to $57,340 or 3.7% for the same period in 1995. Marketing
reported expense of $94,724 or 2.9% of net sales for the first six months of
1996, compared to $107,720 for the same period in 1995. The marketing expense
for the first six months of 1996 declined slightly from the first six months of
1995. The nominal decrease in marketing expenditures for the first half of 1996
reflects a temporary shift in efforts due to new contract design and
manufacturing customer relationships in the anticipation of larger OEM orders.
The Company has continued to emphasize the marketing of its security/ industrial
products, while actively pursuing new (and maintaining existing) contract design
and manufacturing relationships. In the future, the marketing expenditures as a
percentage of sales are expected to approximate the historical levels.
Research and development expense was $74,262 or 4.8% of net sales for the three
months ended June 30, 1996, compared to $55,609 or 3.6% of net sales for the
same period in 1995. Research and development expense was $134,592 or 4.1% of
net sales for the first six months of 1996, compared to $94,260 or 3.1% of net
sales for the same period in 1995. The increased research and development
expense is attributed to increased technical staffing and the purchases of
technically advanced test and development equipment. Both the addition of staff
and the acquisition of research and development equipment are intended to
further assist the development of new products, the enhancement of existing
products and to continue to provide full technical and development services to
the Company's customers.
The research and development department has also worked with other departments
to help identify and secure new contract design and manufacturing projects and
customer relationships.
Interest Expense:
Interest expense was $36,176 or 2.3% of net sales for the three months ended
June 30, 1996, compared to $15,829 or 1% of net sales for the same period in
1995. Interest expense was $69,958 or 2.1% of net sales for the first six months
ended June 30, 1996, compared to $45,889 or 1.5% of net sales for the same
period in 1995. The increase in interest expense reflected additional borrowing
needed to support increased sales and inventories.
Net Earnings:
The Company recorded a net loss of $10,697 or $0.004 per share for the second
quarter of 1996, compared to a net loss of $32,168 or $0.013 per share for the
same period in 1995. For the six months ended June 30, 1996, the Company
recorded net income of $60,873 or $0.023 per share, compared to a net loss of
$22,137 or $0.009 for the same period in 1995. The Company recorded increased
sales and increased net income for the first six months of 1996 compared to the
same period in 1995. The Company also reported increased interest income and
rental income during the first six months of 1996 compared to the same period in
1995.
The Company believes inflation has not significantly affected its results of
operations.
10
<PAGE>
Liquidity and Capital Resources
The current ratio on June 30, 1996 was 1.49 to 1, compared to 1.61 to 1 on
December 31, 1995. Working capital on June 30, 1996 was $1,139,878 compared to
$1,221,862 on December 31, 1995. The decrease is primarily the result of
increased short term borrowing and increased accounts receivable offset in part
by increased inventories.
The Company has a revolving credit agreement with the Norwest Bank Minnesota
South N.A.("Norwest") with a maximum loan limit of $2,000,000, subject to
additional limitations set forth in the credit agreement. The interest rate is
calculated at 3/4% over the prime interest rate. At June 30, 1996, there was
$1,735,227 outstanding under the line of credit. The Company executed a new
credit agreement with Norwest in February of 1996, and has moved substantially
all of its banking activities to Norwest. Norwest is currently reviewing
financial arrangements necessary to assist the Company in meeting its increased
capital needs due to the substantial Select Comfort purchase order awarded to
the Company in July of 1996. Management believes that it will be able to obtain
an increase in its line of credit which, together with cash flows from
operations, will be sufficient to meets the Company's capital needs in the
foreseeable future.
11
<PAGE>
PART II-OTHER INFORMATION
ITEM 4: Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting on May 9, 1996.
(b) Proxies for the Annual Meeting were solicited pursuant to Regulation
14 under the Securities Exchange Act of 1934. There was no
solicitation in opposition to management's nominees as listed in the
proxy statement, and all of such nominees were elected.
The shareholders set the number of directors at six (6) by a vote of
1,769,088 shares in favor, with 11,170 shares voted against and 7,850
shares abstaining. The following persons were elected to serve as the
directors of the Company until the next annual meeting of the
shareholders with the following votes.
Number of Number of
Nominee Votes For Votes Withheld
W. Kirk Hankins 1,764,008 9,320
Swen E. Farland 1,764,608 8,720
Lorin E. Krueger 1,769,108 4,220
Kirk P. Hankins 1,769,308 4,020
S. Robert Dessalet 1,769,108 4,220
Thomas J. de Petra 1,769,908 3,420
The shareholders ratified the appointment of Ahern Montag & Vogler,
Ltd. as independent auditors for the Company by a vote of 1,770,838
shares in favor, with 9,470 shares voted against and 7,800 shares
abstaining.
ITEM 6: Exhibits and Reports on Form 8-K
(a) See Exhibit Index following the signature page.
(b) There were no reports on form 8-K for the quarter ended June 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirement 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.
WINLAND ELECTRONICS, INC.
Dated: August 9, 1996 By: /s/ William K. Hankins
William K. Hankins, President, Chief
Executive Officer and Chief Financial
Officer (Principal Executive Officer and
Principal Financial and Accounting Officer)
13
<PAGE>
WINLAND ELECTRONICS, INC.
EXHIBIT INDEX TO FORM 10-QSB
For The Quarter Ended
June 30, 1996
Exhibit
Number Item
11 Statement Re: Computation of per share earnings.
27 Financial Data Schedule (filed only with electronic version).
14
EXHIBIT 11
WINLAND ELECTRONICS, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Earning:
Net Income(Loss): $ (10,697) $ (32,618) $ 60,873 $ (22,137)
--------- --------- --------- ----------
Primary Earnings(Loss)Per Share $ (0.004) $ (0.013) $ 0.024 $ ( 0.009)
--------- --------- --------- ----------
Shares:
Weighted average number of
common shares outstanding 2,587,833 2,580,702 2,585,584 2,580,509
Assuming exercise of options
and warrants reduced by the
number of shares which could
have been purchased with the
proceeds from exercise of
options and warrants (treasury
stock method) using average
market price, except if
anti-dilutive. 231,201 231,201
Weighted average number of
common and common equivalent
shares outstanding 2,819,034 2,580,702 2,816,785 2,580,509
--------- --------- --------- ----------
Fully Diluted Earnings(Loss)
Per Share $ (0.004) $ (0.013) $ 0.022 $ (0.009)
--------- --------- --------- ----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 16,807
<SECURITIES> 0
<RECEIVABLES> 662,908
<ALLOWANCES> 4,831
<INVENTORY> 2,771,746
<CURRENT-ASSETS> 3,476,750
<PP&E> 4,146,803
<DEPRECIATION> 628,751
<TOTAL-ASSETS> 7,004,131
<CURRENT-LIABILITIES> 2,336,872
<BONDS> 2,461,808
0
0
<COMMON> 25,999
<OTHER-SE> 1,949,944
<TOTAL-LIABILITY-AND-EQUITY> 7,004,131
<SALES> 3,315,707
<TOTAL-REVENUES> 3,364,518
<CGS> 2,612,641
<TOTAL-COSTS> 3,232,687
<OTHER-EXPENSES> 69,958
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 155,952
<INCOME-PRETAX> 61,873
<INCOME-TAX> 1,000
<INCOME-CONTINUING> 60,873
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,873
<EPS-PRIMARY> (.024)
<EPS-DILUTED> (.022)
</TABLE>
