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: September 30, 1997
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 October 31, 1997, the
Registrant had 2,803,881 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 September 30, December 31,
1997 1996
---------- ----------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 167,906 $ 19,499
Accounts Receivable, Net 1,240,680 1,327,386
Inventories 3,320,231 2,969,677
Prepaid Items 135,867 63,633
---------- ----------
Total Current Assets 4,864,684 4,380,195
Property and Equipment, Net 3,165,875 3,128,588
Property Under Capital Lease, Net 1,053,326 721,066
OTHER ASSETS:
Intangibles 7,417 8,564
Deferred Income Taxes 52,535 52,535
---------- ----------
TOTAL ASSETS $9,143,837 $8,290,948
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $1,822,227 $1,580,227
Accounts Payable 677,345 683,406
Payroll Taxes Payable 27,437 34,891
Wages and Commissions Payable 66,463 41,815
Other Accruals 133,912 120,382
Obligations Under Capital Lease 229,019 163,636
Deferred Revenue 27,001 27,001
Income Taxes Payable 22,416 336
Current Maturities 169,530 161,267
---------- ----------
Total Current Liabilities 3,175,350 2,812,961
LONG TERM LIABILITIES:
Long Term Maturities 2,332,376 2,459,644
Obligations Under Capital Lease
Less: Current Portion 725,547 492,120
---------- ----------
TOTAL LONG TERM LIABILITIES 3,057,923 2,951,764
OTHER LIABILITIES:
Deferred Revenue
Less: Current Portion 195,756 216,007
---------- ----------
TOTAL LIABILITIES 6,429,029 5,980,732
SHAREHOLDERS' EQUITY:
Common Stock 28,039 27,511
Additional Paid-In Capital 2,068,920 2,047,794
Retained Earnings 617,849 234,911
---------- ----------
Total Shareholders' Equity 2,714,808 2,310,216
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $9,143,837 $8,290,948
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
SEPTEMBER 30,
1997 1996
----------- -----------
<S> <C> <C>
NET SALES: $ 2,854,539 $ 2,183,619
Less, Cost of Goods Sold 2,242,295 1,787,402
----------- -----------
Gross Profit on Sales 612,244 396,217
OPERATING EXPENSES:
General and Administrative 207,481 188,970
Marketing 59,798 48,407
Research and Development 113,852 88,073
----------- -----------
Total Operating Expenses 381,131 325,450
INCOME BEFORE OTHER INCOME
AND EXPENSE 231,113 70,767
----------- -----------
MISCELLANEOUS INCOME 19,675 14,336
MISCELLANEOUS EXPENSE, PROVISION
FOR BAD DEBT (19,400) --
INTEREST EXPENSE (55,438) (43,390)
----------- -----------
TOTAL OTHER INCOME & EXPENSE (55,163) (29,054)
----------- -----------
NET INCOME BEFORE TAXES 175,950 41,713
----------- -----------
PROVISION FOR INCOME TAXES 584 500
----------- -----------
NET INCOME $ 175,366 $ 41,213
NET INCOME PER COMMON SHARE $ 0.063 $ 0.016
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING AS OF SEPTEMBER 30, 1997 & 1996 2,803,881 2,599,911
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
----------- -----------
<S> <C> <C>
NET SALES: $ 8,660,164 $ 5,499,326
Less, Cost of Goods Sold 6,806,799 4,400,044
----------- -----------
Gross Profit on Sales 1,853,365 1,099,282
OPERATING EXPENSES:
General and Administrative 759,630 579,699
Marketing 184,720 143,132
Research and Development 322,067 222,665
----------- -----------
Total Operating Expenses 1,266,417 945,496
INCOME BEFORE OTHER INCOME
AND EXPENSE 586,948 153,786
----------- -----------
MISCELLANEOUS INCOME 44,513 63,147
MISCELLANEOUS EXPENSE, PROVISION
FOR BAD DEBT (62,400) --
INTEREST EXPENSE (161,957) (113,348)
----------- -----------
TOTAL OTHER INCOME & EXPENSE (179,844) (50,201)
----------- -----------
NET INCOME BEFORE TAXES 407,104 103,585
----------- -----------
PROVISION FOR INCOME TAXES 24,168 1,500
----------- -----------
NET INCOME $ 382,936 $ 102,085
NET INCOME PER COMMON SHARE $ 0.137 $ 0.039
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING AS OF SEPTEMBER 30, 1997 & 1996 2,793,522 2,590,689
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997
----------- -----------
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Cash Received from Customers $ 8,684,470 $ 5,062,708
Interest Received 22,411 27,622
Other Miscellaneous Operating Receipts 1,400 15,428
Cash Paid to Suppliers and Employees (7,991,729) (5,370,986)
Interest Paid (326,595) (239,292)
Income Taxes Paid (1,752) (1,500)
----------- -----------
Net Cash Provided (Used) by Operating Activities 388,205 (506,020)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of Property and Equipment (215,473) (243,791)
Cash Proceeds From Sales of Equipment 3,165 --
----------- -----------
Net Cash Provided (Used) by Investing Activities (212,308) (243,791)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Advances on Credit Line 242,000 919,775
Proceeds from Debt -- 57,725
Payments on Debt (119,005) (46,094)
Payments on Capital Lease Obligations (172,139) (95,299)
Sale of Common Stock 21,654 1,376
----------- -----------
Net Cash Provided by Financing Activities (27,490) 837,483
----------- -----------
NET INCREASE IN CASH 148,407 87,672
CASH - BEGINNING OF YEAR 19,499 2,839
----------- -----------
CASH - END OF PERIOD $ 167,906 $ 90,511
----------- -----------
RECONCILIATION OF NET INCOME TO NET CASH (USED)
BY OPERATING ACTIVITIES
Net Income (Loss) $ 382,936 $ 102,085
Adjustments:
Disposition of Assets (407) 155
Depreciation & Amortization 315,266 193,271
(Increase) Decrease in Accounts Receivable 86,706 (436,617)
(Increase) Decrease in Inventory (350,554) (343,818)
(Increase) Decrease in Prepaid Items (72,234) (11,422)
(Decrease) Increase in Accounts Payable (6,061) (35,192)
(Decrease) Increase in Wages Payable 24,648 43,371
(Decrease) Increase in Accrued Payroll Taxes (7,454) 7,301
(Decrease) Increase in Other Accruals 13,530 (4,903)
(Decrease) Increase in Deferred Revenue (20,251) (20,251)
(Decrease) Increase in Income Taxes Payable 22,080 --
----------- -----------
Net Cash Provided (Used) by Operating Activities $ 388,205 $ (506,020)
----------- -----------
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(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 other 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
$66,330 at September 30, 1997 and $4,455 at December 31, 1996. The allowance for
doubtful accounts was increased by $62,400 in 1997 to reflect increased
uncertainty regarding a customer that had filed for chapter eleven bankruptcy.
NOTE C - INVENTORY
Major Components of inventory at September 30, 1997 and December 31, 1996 are as
follows:
September 30, December 31,
1997 1996
----------- -----------
Raw Materials $2,219,624 $1,695,764
Work In Process 461,699 554,090
Finished Goods 630,705 709,860
Manufacturing, Shipping, and Office Supplies 8,203 9,963
----------- -----------
Total $3,320,231 $2,969,677
----------- -----------
NOTE D - PROPERTY AND EQUIPMENT
Property and Equipment not under capital leases consists of the following at
September 30, 1997 and December 31, 1996:
September 30, December 31,
1997 1996
----------- -----------
Building $ 2,376,511 $ 2,343,275
Land 192,640 192,640
Office Equipment 166,429 341,658
Computer & Telephone Equipment 390,729 --
Research & Development 109,369 143,941
Marketing and Display Equipment 18,152 31,413
Factory Equipment 547,845 549,567
Land Improvements 77,369 77,369
Accumulated Deprecation (713,169) (551,275)
----------- -----------
Net Book Value $ 3,165,875 $ 3,128,588
----------- -----------
<PAGE>
WINLAND ELECTRONICS, INC.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
NOTE D - CONTINUED
Property and Equipment under capital leases consists of the following at
September 30, 1997 and at December 31, 1996:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----------- -----------
<S> <C> <C>
Factory Equipment $ 1,247,109 $ 863,472
Office Equipment 41,623 95,754
Computer & Telephone Equipment 110,640 --
Research & Development -- 4,401
Accumulated Amortization (346,046) (242,561)
----------- -----------
Total Leased Property and Equipment, Net of
Accumulated Amortization $ 1,053,326 $ 721,066
----------- -----------
Capital Leases are summarized as follows:
Lease on factory equipment with lease period expiring
May of 2002, at an interest rate of 10.04% $ 60,989 $ --
Lease on factory equipment with lease period expiring
June of 2002, at an interest rate of 10.04% 76,053 --
Lease on factory equipment with lease period expiring
March of 2002, at an interest rate of 9.94% 58,493 --
Lease on factory equipment with lease period expiring
March of 2002, at an interest rate of 8.88% 196,474 --
Lease on computer and telephone equipment with lease
period expiring February of 2000, at an interest rate of 9.01% 34,038 --
Lease on factory equipment with lease period expiring
August of 2001, at an interest rate of 9.49% 211,691 242,293
Lease on factory equipment with lease period expiring
July of 2001, at an interest rate of 9.96% 100,140 113,809
Lease on factory, office, and R&D equipment with lease
period expiring July of 1997, at an interest rate of 8.0% -- 6,195
Lease on factory and office equipment with lease period
expiring January of 2000, at interest of 1% over prime 186,332 248,826
Lease on factory equipment with lease period expiring
October of 1998 at an interest rate of 9.23% 15,155 25,641
Lease on office equipment with lease period expiring
March of 2000 at an interest rate of 9% 15,201 18,992
----------- -----------
Total $ 954,566 $ 655,756
Less Current Portion (229,019) (163,636)
----------- -----------
Long Term Obligation Under Capital Leases $ 725,547 $ 492,120
----------- -----------
</TABLE>
NOTE E - SHORT TERM BORROWING
Short term borrowing consists of the following at September 30, 1997 and
December 31, 1996 balance sheet:
<TABLE>
<CAPTION>
September 30, December 31,
Norwest Bank - Revolving Credit Line 1997 1996
----------- -----------
<S> <C> <C>
Balance $1,822,227 $1,580,227
Stated Interest Rate per Annum 9.0%* 9.0%*
Maximum Amount Outstanding During the Quarter $1,897,227 $1,995,227
Average Amount Outstanding During the Quarter $1,872,227 $1,626,398
Unused Credit Available $ 755,003 $1,204,081
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
* The stated interest rate per annum was equal to 3/4 of a percent over prime
rate for the majority of the third quarter. Effective September 18, 1997, the
stated interest rate per annum was reduced to 1/2 of a percent over the prime
rate. The interest on the revolving loan was $55,438 for the three months ended
September 30, 1997 and $161,957 for the first nine months of 1997. Additional
interest expense was reported related to the leased capital equipment and other
term borrowing. The interest expense on leased equipment was $23,952 and $71,772
for the three and nine months ended September 30, 1997. Interest expense on
other long term borrowing was $33,507 and $90,322 for the three and nine months
ended September 30, 1997.
NOTE F - STOCK OPTIONS AND WARRANTS
As of September 30, 1997, options to purchase an aggregate of 305,000 shares of
the Company's common stock were granted and outstanding under the Company's 1989
Stock Option Plan(the "1989 Plan"). As of September 30, 1997, options to
purchase 154,900 shares granted under the 1989 Plan were exercisable. The
exercise prices of all outstanding options under the 1989 Plan range from $0.06
to $3.64 per share. Options to purchase 6,000 shares were granted and
outstanding under the 1997 Stock Option Plan, all of which were exercisable at
September 30, 1997. The exercise price of such options was $3.125.
As of September 30, 1997, 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.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Three and nine months ended September 30 1997 v.
Three and nine months ended September 30 1996
Net Sales:
The Company recorded net sales of $2,854,539 for the three months ended
September 30, 1997, an increase of 30.7% from net sales of $2,183,619 for the
same period in 1996. Net sales of $8,660,164 were recorded for the first nine
months of 1997, compared to $5,499,326 for the same period in 1996, a 57.5%
increase. The increase in sales for the third quarter and first nine months of
1997 compared to the same period in 1996 was primarily attributed to sales to
Select Comfort Corporation pursuant to a $9.7 million dollar purchase order,
which was increased from $6.9 million dollars in October of 1997. The Select
Comfort Corporation purchase order for $9.7 million was approximately 59%
complete at September 30, 1997. In addition to the Select Comfort purchase order
the Company also has in place a $5.5 million dollar manufacturing agreement with
PeopleNet Communications Corporation of Chaska, MN. The Company plans to begin
production in relation to this agreement in late 1997. In late October of 1997
the Company announced that it had been awarded a $250,000 purchase order from
Keyless Door Lock Company, for the manufacture of a residential key less entry
system, to be fulfilled in late 1997 and early 1998. In addition, sales of the
Company's security/industrial products were up slightly for both the third
quarter and first nine months of 1997, compared to 1996.
The Company has continued to identify and secure new contract design and
manufacturing customers, as well as to actively market its security/industrial
products. The loss of any contract customer could have an adverse effect on the
Company's short-term results. The management of the Company believes that the
contract design and manufacturing portion of its business has the greatest
potential for growth and is actively promoting this portion of the business.
Gross Profits:
Gross profit was $612,244 or 21.4% of net sales for the three months ended
September 30, 1997, compared to $396,217 or 18.1% of net sales for the same
period in 1996. For the first nine months of 1997, gross profit was $1,853,365
or 21.4% of net sales, compared to $1,099,282 or 20.0% of net sales for the same
period in 1996. As a percentage of net sales, gross profits increased only
slightly for the three and nine months ended September 30, 1997, compared to the
same periods in 1996. The higher gross profits are primarily attributed to the
sales mix during the quarter and first nine months of 1997 compared to 1996.
Operating Expenses:
General and administrative expense was $207,481 or 7.3% of net sales for the
three months ended September 30 1997, compared to $188,970 or 8.7% of net sales
for the same period in 1996. General and administrative expense was $759,630 or
8.8% for the first nine months of 1997, compared to $579,699 or 10.5% of net
sales for the same period in 1996. As a percentage of net sales, general and
administrative expenses declined for the three months and nine months ended
September 30, 1997, compared to the same periods in 1996. The decline in general
and administrative expense is primarily attributed to the costs associated with
supporting a growing sales base increasing at a slower rate than the sales for
the periods ended September 30, 1997.
Marketing and customer relations expense was $59,798 or 2.1% of net sales for
the quarter ended September 30, 1997, compared to $48,407 or 2.2% for the same
period in 1996. The marketing and customer relations expense for the first nine
months of 1997 was $184,720 or 2.1% of net sales, compared to $143,132 or 2.6%
of net sales for the same period in 1996. As a percentage of net sales, the
marketing and customer relations expense declined for the third quarter and
first nine months of 1997, compared to the same periods in 1996. While the
Company continues to actively market its security/industrial products, there has
been a shift to emphasize the Company's design and manufacturing capabilities of
custom controls and assemblies. These custom controls and assemblies are sold
primarily for the Company's contract manufacture customers.
<PAGE>
Research and development expense was $113,852 or 4.0% of net sales for the three
months ended September 30, 1997, compared to $88,073 or 4.0% of net sales for
the same period in 1996. For the first nine months of 1997 research and
development expenses were $322,067 or 3.7% of net sales, compared to $222,665 or
4.0% of net sales for the same period in 1996. While research and development
expenses, as a percentage of net sales, declined or remained the same for the
three and nine months ended September 30, 1997, the actual expenses increased to
support the Company's emphasis on the expansion of its engineering capabilities.
The increases are primarily attributed to the addition of technical staff and
equipment.
Interest Expense:
Interest expense on the revolving line of credit was $55,438 or 1.9% of net
sales for the three months ended September 30, 1997, compared to $43,390 or 2.0%
of net sales for the same period in 1996. Interest expense for the first nine
months of 1997 on the revolving line of credit was $161,957 or 1.9% of net sales
compared to $113,348 or 2.1% of net sales for the same period in 1996. The
increase in interest expense reflected additional short-term borrowing needed to
support increased sales, as well as increases in interest rates compared to
1996.
Net Earnings:
The Company reported net income of $175,366 or $0.063 per share for the three
months ended September 30, 1997, compared to net income of $41,213 or $0.016 per
share for the same period in 1996. For the nine months ended September 30, 1997,
the Company reported net income of $382,936 or $0.137 per share, compared to net
income of $102,085 or $0.039 per share for the same period in 1996.
The Company believes inflation has not significantly affected its results of
operations.
Liquidity and Capital Resources
The current ratio on September 30, 1997 was 1.53 to 1, compared to 1.56 to 1 on
December 31, 1996. Working capital on September 30, 1997 was $1,689,334 compared
to $1,567,234 on December 31, 1996. The increase in working capital is primarily
attributed to increases in inventory, and prepaid items that are offset by
additional short term borrowing needed to support the increased sales during the
first nine months of 1997. The Company has pending lease agreements for capital
equipment expenditures in excess of $700,000, for which delivery is expected in
1997.
The Company has a revolving credit agreement with the Norwest Bank Minnesota
South N.A.("Norwest"), with a maximum loan limit of $3,500,000, subject to
additional limitations set forth in the credit agreement. The interest rate is
calculated at 1/2% over the prime interest rate. On September 18, 1997, pursuant
to the "Third Amendment" to the revolving credit agreement, the interest rate
was reduced from 3/4 % over prime to 1/2 % over prime. At September 30, 1997,
there was an outstanding balance of $1,822,227 under the line of credit. The
Company's management believes that capital available through the current credit
agreement, together with cash flows from operations will be sufficient to meet
the Company's capital needs in the near future.
<PAGE>
PART II-OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company is one of 18 different companies who are defendants in a products
liability case. The plaintiffs are Debmar, Inc. and St. Paul Fire and Marine
Insurance Company. It is venued in the Superior Court of Maricopa County,
Phoenix, Arizona. The case was filed in May of 1997, although it was not served
on the Company until a few months later. The plaintiff Debmar is a company that
provides vaccines to various medical entities, and St. Paul Fire and Marine is
Debmar's insurance carrier. Debmar claims that a refrigeration system that it
purchased to store certain vaccines was defective, causing a drop in the
refrigeration system's temperatures in May of 1995 and an alleged subsequent
substantial loss of vaccines. Debmar's insurance carrier paid for the economic
loss and is now seeking indemnification for the payment from virtually all of
the companies that had any relationship in manufacturing component parts for the
refrigeration system, distributing or maintaining the refrigeration system. The
amount of the claimed loss is in excess of $1.1 million. It appears that the
Company is a party in this case because it produced a small component of the
larger refrigeration system.
ITEM 5: OTHER INFORMATION
Effective September 8, 1997, Steven N. Bronson resigned as a member of the
Company's Board of Directors. The Company does not plan to be replace Mr.
Bronson at this time.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index following the signature page.
(b) There are no reports on Form 8-K for the quarter ended September 30, 1997.
<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: Nov. 10, 1997 By: /s/ W. K. Hankins
William K. Hankins, President,
Chief Executive Officer and
Chief Financial Officer
(Principal Executive Officer
and Principal Financial and
Accounting Officer)
<PAGE>
WINLAND ELECTRONICS, INC.
EXHIBIT INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED
SEPTEMBER 30,1997
Exhibit
Number Item
11 Statement Re: Computation of per share earnings.
27 Financial Data Schedule (filed only with electronic version).
EXHIBIT 11
WINLAND ELECTRONICS, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
Earning:
<S> <C> <C> <C> <C>
Net Income(Loss): $ 175,366 $ 41,213 $ 385,936 $ 102,085
---------- ---------- ---------- ----------
Primary Earnings(Loss)Per Share $ 0.063 $ 0.016 $ 0.137 $ 0.039
---------- ---------- ---------- ----------
Shares:
Weighted average number of
common shares outstanding 2,803,881 2,599,911 2,793,522 2,590,689
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 62,785 204,732 62,785 204,732
Weighted average number of
common and common equivalent
shares outstanding 2,866,666 2,804,723 2,856,307 2,795,421
---------- ---------- ---------- ----------
Fully Diluted Earnings(Loss)
Per Share $ 0.061 $ 0.015 $ 0.134 $ 0.037
---------- ---------- ---------- ----------
----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 167,906
<SECURITIES> 0
<RECEIVABLES> 1,307,010
<ALLOWANCES> 66,330
<INVENTORY> 3,320,231
<CURRENT-ASSETS> 4,864,684
<PP&E> 5,278,416
<DEPRECIATION> 1,059,215
<TOTAL-ASSETS> 9,143,837
<CURRENT-LIABILITIES> 3,175,350
<BONDS> 2,038,513
28,039
0
<COMMON> 0
<OTHER-SE> 2,686,769
<TOTAL-LIABILITY-AND-EQUITY> 9,143,837
<SALES> 8,660,164
<TOTAL-REVENUES> 8,704,677
<CGS> 6,806,799
<TOTAL-COSTS> 8,073,216
<OTHER-EXPENSES> 224,357
<LOSS-PROVISION> 62,400
<INTEREST-EXPENSE> 161,957
<INCOME-PRETAX> 407,104
<INCOME-TAX> 24,168
<INCOME-CONTINUING> 382,936
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 382,936
<EPS-PRIMARY> 0.137
<EPS-DILUTED> 0.134
</TABLE>
