UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10 - Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the period ended July 31, 1998.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to .
Commission file number 0-15407
Circuit Systems, Inc.
(Exact name of registrant as specified in charter)
Illinois 36-2663010
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2350 East Lunt Avenue, Elk Grove Village, Illinois 60007
(Address of principal executive offices) (Zip Code)
(847) 439 - 1999
(Registrant's telephone number, (Former name, former address and
including area code) and former fiscal year,
if changed since last report)
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 .
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15 (d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of
shares outstanding of each of the issuer's classes of common stock,
as of the latest practicable date, August 31, 1998: 4,352,292
<PAGE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets ................. 3
Consolidated Condensed Statements of Operations ....... 4
Consolidated Condensed Statements of Cash Flows ....... 5
Notes to Consolidated Condensed Financial Statements .. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market
Risks ................................................. 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................. 11
SIGNATURES.................................................... 12
<PAGE>
<TABLE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
7/31/98 4/30/98
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS....... $ 243,704 $ 1,531,526
ACCOUNTS RECEIVABLE, LESS
ALLOWANCE OF $150,000....... 11,622,450 14,286,084
INVENTORIES
RAW MATERIALS............... 3,188,628 3,118,101
WORK IN PROCESS............. 2,182,018 2,533,346
FINISHED GOODS.............. 3,413,261 2,863,661
8,783,907 8,515,108
REFUNDABLE INCOME TAXES........... 1,044,124 1,150,000
DEFERRED INCOME TAXES........... 330,000 330,000
PREPAID EXPENSES................ 604,736 572,082
TOTAL CURRENT ASSETS..... 22,628,921 26,384,800
INVESTMENT IN AFFILIATE.............. 2,934,384 2,930,595
PROPERTY, PLANT AND EQUIPMENT - AT COST
BUILDING AND IMPROVEMENTS........ 13,412,819 13,686,852
MACHINERY AND EQUIPMENT.......... 42,570,869 43,073,334
AUTOMOTIVE EQUIPMENT............. 85,481 98,938
56,069,169 56,859,124
LESS ACCUMULATED DEPRECIATION. 23,946,968 22,740,838
32,122,201 34,118,286
LAND....................... 2,506,703 2,693,089
34,628,904 36,811,375
OTHER ASSETS
DEPOSITS AND SUNDRY.............. 1,202,164 1,479,927
$ 61,394,373 $ 67,606,697
LIABILITIES AND SHAREHOLDERS'S EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF L/T
OBLIGATIONS................... $ 5,794,002 $ 7,088,855
ACCOUNTS PAYABLE............... 6,901,438 10,203,540
ACCRUED LIABILITIES............ 2,602,057 1,880,966
INCOME TAXES PAYABLE........... - -
TOTAL CURRENT LIABILITIES........ 15,297,497 19,173,361
LONG-TERM OBLIGATIONS............... 26,425,507 27,380,107
DEFERRED INCOME TAXES............... 2,283,000 2,108,000
MINORITY INTEREST.................. - 417,878
SHAREHOLDERS' EQUITY
COMMON STOCK................. 2,453,459 2,554,579
RETAINED EARNINGS............ 14,934,910 16,107,750
CUMULATIVE FOREIGN CURRENCY
TRANSLATION ADJUSTMENT...... - (134,978)
17,388,369 18,527,351
$ 61,394,373 $ 67,606,697
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
</TABLE>
<PAGE>
<TABLE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
7/31/98 7/31/97
<S> <C> <C>
NET SALES...................... $ 22,553,713 $ 12,922,618
COST OF GOODS SOLD............. 19,501,218 12,283,558
GROSS PROFIT............... 3,052,495 639,060
SALES AND MARKETING EXPENSES.... 794,165 640,089
ADMINISTRATIVE EXPENSES......... 913,051 588,355
RESTRUCTURING CHARGE............ 1,520,000 -
3,227,216 1,228,444
OPERATING LOSS.............. (174,721) (589,384)
OTHER (INCOME) DEDUCTIONS
INTEREST EXPENSE............ 727,179 354,993
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATE... (3,789) (32,528)
MINORITY INTEREST IN LOSS
OF SUBSIDIARY.............. (31,782) (28,375)
RENTAL INCOME............... (104,060) (90,860)
SUNDRY...................... 11,690 (18,328)
599,238 184,902
LOSS BEFORE INCOME TAXES.... (773,959) (774,286)
INCOME TAX BENEFIT.............. (275,000) (272,000)
NET LOSS.................... $ (498,959) $ (502,286)
PER SHARE DATA:
NET LOSS PER COMMON SHARE-BASIC $ (.11) $ (.10)
NET LOSS PER COMMON SHARE-DILUTED $ (.11) $ (.10)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
</TABLE>
<PAGE>
<TABLE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
7/31/98 7/31/97
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
NET LOSS.............................. $ (498,959) $ (502,286)
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION..................... 1,302,416 979,320
GAIN ON SALE OF EQUIPMENT........ -- (325)
MINORITY INTEREST IN LOSS OF
SUBSIDIARY..................... (31,782) (28,375)
DEFERRED INCOME TAXES........... 175,000 (38,000)
EQUITY IN EARNINGS OF UNCONSOLIDATED
AFFILIATE...................... (3,789) (32,528)
CHANGES IN ASSETS AND LIABILITIES, NET OF
EFFECTS FROM ACQUISITION AND DIVESTITURE
ACCOUNTS RECEIVABLE.......... 2,279,298 535,518
INVENTORIES.................. (529,438) 113,983
PREPAID EXPENSES............. (32,654) 3,362
OTHER ASSETS... ............ 244,456 (382,687)
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES................. (2,114,463) 153,618
TOTAL ADJUSTMENTS....... 1,289,044 1,303,886
NET CASH PROVIDED BY OPERATIONS. 790,085 801,600
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES............... (746,814) (456,169)
MINORITY INTEREST CAPITAL
CONTRIBUTION TO SUBSIDIARY........ -- 16,911
PAYMENT FOR PURCHASE OF PRINTED
CIRCUIT BOARD OPERATION OF PHILIPS. -- (10,150,000)
PROCEEDS FROM SALE OF EQUIPMENT..... -- 325
NET CASH USED IN INVESTING ACTIVITIES (746,814) (10,588,933)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET (PAYMENTS) BORROWINGS UNDER LINE
OF CREDIT ......................... (189,900) 1,315,463
REPURCHASE OF COMMON STOCK.......... -- (633,012)
PROCEEDS FROM LONG-TERM OBLIGATIONS. 365,750 10,426,363
PAYMENTS ON LONG-TERM OBLIGATIONS... (1,514,269) (1,297,111)
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES..... (1,338,419) 9,811,703
EFFECT OF FOREIGN EXCHANGE RATE CHANGES..... 7,326 5,067
(DECREASE) INCREASE IN CASH.............. (1,287,822) 29,437
CASH AT THE BEGINNING OF THE PERIOD....... 1,531,526 294,204
CASH AT THE END OF THE PERIOD............. $ 243,704 $ 323,641
<PAGE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
CASH PAID (RECEIVED) DURING THE PERIOD FOR:
INTEREST.......................... $ 689,461 $ 401,139
INCOME TAXES...................... (105,876) 189,227
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
DIVESTITURE OF NET INVESTMENT IN CIRCUIT
SYSTEMS (INDIA) LIMITED AND CIRCUIT SIGMA
INDIA LIMITED IN SATISFACTION OF CERTAIN
ACCRUED LIABILITIES AND REPURCHASE OF
COMMON STOCK............................ $ 1,270,049 $ --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
</TABLE>
<PAGE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. These interim Consolidated Condensed Financial Statements should
be read in conjunction with the Consolidated Financial
Statements and notes included in the Company's April 30, 1998
Annual Report and Form 10-K.
2. In the opinion of the Company, the accompanying unaudited
condensed consolidated financial information reflects all
adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the statements contained
herein.
3. These consolidated statements are presented in accordance with
the requirements of Form 10-Q and consequently may not include
all disclosures normally required by generally accepted
accounting principles normally made in the Company's Annual
Report and Form 10-K.
4. The following table illustrates a reconciliation of
the basic and diluted earnings per share calculations:
Three Months Ended
7/31/97
Net Loss $ (502,286)
Shares Per Share Amount
Basic Loss per Share 5,097,843 $ (.10)
Effect of Dilutive Securities:
Stock Options N/A N/A
Diluted Loss per Share 5,097,843 $ (.10)
Three Months Ended
7/31/98
Net Loss $ (498,959)
Shares Per Share Amount
Basic Loss per Share 4,503,296 $ (.11)
Effect of Dilutive Securities:
Stock Options N/A N/A
Diluted Loss per Share 4,503,296 $ (.11)
<PAGE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. Effective for the quarter ended July 31, 1998, the Company
adopted the provisions of Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income", which
requires that an entity report, by major components and as a
single total, the change in its net assets during the period
from non-shareholder resources. Total comprehensive income for
the quarter ended July 31, 1998 and 1997 was $(417,973) and
$(499,246), respectively.
6. Effective July 27, 1998, the Company's executive vice
president resigned as an officer and director of the Company.
In connection therewith, the Company agreed to repurchase the
181,181 shares held by him for $775,000 and entered into
severance and non-compete agreements and agreed to sell to him
its 70% interest in Circuit Systems (India) Limited and its
100% interest in Circuit Sigma India Limited.
In addition, during the quarter ended July 31, 1998, the Company
recorded a restructuring charge of approximately $1,520,000,
relating to a reorganization of the Company's management and
plant operations. The majority of the restructuring charge
relates to severance and termination benefits for its executive
vice president and five other managers and supervisors.
7. On August 25, 1998, the Company announced that it entered
into a nonbinding letter of intent with the three shareholders
of Silicon Valley Printed Circuits ("SVPC") of Santa Clara,
California, to acquire the assets and assume certain liabilities
of SVPC. SVPC specializes in quick turnaround production for
both prototype and low to medium volume orders. The estimated
purchase price will be $7,000,000 plus the assumption of certain
liabilities. The purchase price will be funded utilizing
$3,000,000 of collateralized bank borrowings plus $4,000,000 in
subordinated notes from SVPC and its three shareholders. The
acquisition is expected to be closed during the Company's second
quarter.
<PAGE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion contains forward-looking statements that involve
risks and uncertainties, The Company's actual results could differ
materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed herein, as well as those discussed in the Company's Annual
Report on Form 10-K for the year ended April 30, 1998. Reliance on
these forward-looking statements reflect management's analysis only
as of the date hereof. The Company undertakes no obligation to
publicly release the results of any revision to these forward-looking
statements which may be made to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.
Although the Company believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions within
the bounds of its knowledge of its business, a number of factors
could cause actual results to differ materially from those expressed
in any forward-looking statements, whether oral or written, made by
or on behalf of the Company. Many of these factors have previously
been identified in filings or statements made by or on behalf of the
Company. The Company does not intend to update these forward-looking
statements.
Reference to "IL" hereinafter refers to the Company's Illinois
operations only; reference to "CST" refers to Circuit Systems of
Tennessee; reference to "CSIL" refers to Circuit Systems (India)
Limited.
Net sales for the quarter ended July 31, 1998, were $22,554,000,
increasing by 75% when compared to $12,923,000 for the same quarter
last year. The net sales of IL, CST, and CSIL for fiscal 1999 were
$16,737,000, $5,205,000 and $612,000, respectively, as compared to
$12,585,000, $270,000 and $68,000, respectively, for fiscal 1998.
CST sales for the quarter ended July 31, 1997 were included from July
28, 1997, the date of acquisition. The increase in sales is
primarily due to sales from the CST facility as well as an increase
in net sales of $4,152,000 for IL, which is due to new or increased
activity from new customers as well as increased demand from the
current customer base. Net sales to five customers accounted for
approximately $13,818,000 or 61% for the quarter ended July 31,
1998, compared to three customers representing approximately
$7,580,000 or 59% of net sales for the same quarter last year.
<PAGE>
Gross profit for the quarter was $3,052,000 or 13.5% of net sales,
compared to $639,000 or 4.9% of net sales for the same quarter last
year. The increase in the gross profit is primarily due to the
increase in the net sales as well as a decrease in the material and
labor costs as a percentage of net sales which is attributable to
better operating efficiencies and yields. Overhead expenses have
increased by approximately $2,100,000 due to the addition of the CST
facility and an increased infrastructure in IL. Overall, margins
have and will continue to be impacted as a result of continued
pricing pressures, partially stemming from the "Asian economic
crisis". Realignment of certain manufacturing processes and the
administrative offices continued during the first quarter and will
continue over the next several quarters.
Sales and marketing and administrative expenses for the quarter were
$1,707,000 or 7.6% of net sales, compared to $1,228,000 or 9.5% of
net sales for the same quarter last year. The decrease in expenses
as a percentage of net sales is due to the increased sales and
revenue to Philips not being subject to commission which resulted in
a decrease of commissions as a percent of net sales from 3.3% in
fiscal 1998 to 2.6% in fiscal 1999.
Operating expenses in fiscal 1999 also included a restructuring
charge of $1,520,000 relating to the reorganization of the Company's
management and plant operations. The majority of the charge relates
to severance and other termination benefits for an executive vice
president and five other managers and supervisors. Excluding the
restructuring charge, income from operations was $1,345,000 or 6.0%
of net sales in fiscal 1999 compared to a loss from operations of
$589,000 or 4.6% of net sales in fiscal 1998.
Other deductions-net was $599,000 for the current quarter compared to
$185,000 for the same quarter last year. Interest expense increased
to $727,000 in fiscal 1999 from $355,000 in fiscal 1998 due to the
Philips acquisition in July 1997 and increased borrowings under the
line of credit to fund the additional working capital needs of the IL
and CST operations and the Company's stock repurchase during fiscal
1998. The equity in the earnings of SigmaTron decreased to $4,000
for the current quarter compared to $33,000 for the same period last
year.
The effective income tax rate for the quarter ended July 31, 1998 is
35.5%, compared to the 1997 rate of 35.1%. The lower effective
income tax rates are due to the inability to recognize the tax
effects of certain foreign net operating losses.
The net loss and diluted loss per share for the quarter ended July
31, 1998 were $499,000 and $.11, respectively, compared to net loss
and diluted loss per share of $502,000 and $.10, respectively, for
the same period last year.
<PAGE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations, capital
expenditures and debt payment requirements through its line of
credit, other collateralized borrowings and cash generated from
operations.
For the quarter ended July 31, 1998, the Company renewed its line of
credit of $15,000,000, consisting of $10,000,000, which matures
August 31, 2000 and $5,000,000, which matures on August 31, 1999.
The line bears interest at the bank's prime rate (8.5% at July 31,
1998) or the Company may borrow in $1,000,000 increments for 30, 60
or 90 days at LIBOR plus 3%. The maximum borrowings of $15,000,000
is limited to 80% of eligible accounts receivable, 75% of eligible
finished goods inventory (not to exceed $2,500,000) and $3,000,000
(based on equipment valuation). At July 31, 1998, there was
approximately $2,300,000 of unused credit available under the line
of credit. The agreement contains certain covenants which have been
amended, which restrict the amount of dividends the Company could
pay, capital stock redemptions, and capital expenditures. Other
financial covenants pertain to the maintenance of current ratio, debt
to tangible net worth ratio, debt service ratio and tangible net
worth as defined. The Company was in violation of its capital stock
redemption covenant which has been waived by the bank.
Effective July 27, 1998, the Company's executive vice president
resigned as an officer and director of the Company. In connection
therewith, the Company agreed to repurchase the 181,181 shares held
by him for $775,000 and entered into severance and non-compete
agreements and agreed to sell to him its 70% interest in Circuit
Systems (India) Limited and its 100% interest in Circuit Sigma India
Limited. The net cash outlay to the former officer is approximately
$400,000.
The Company has purchase commitments as of July 31, 1998 of
approximately $3,600,000 for future deliveries of machinery and
equipment and $400,000 for building and office improvements/furniture
for the 2400 E. Lunt Avenue property. The Company is in the process
of moving its administrative staff, training and conference rooms to
this location. The Company intends to finance such purchases through
collateralized borrowings and existing cash flow. The amount of
anticipated capital expenditures will frequently change based on
future changes in business plans.
<PAGE>
On August 25, 1998, the Company announced that it entered into a
nonbinding letter of intent with the three shareholders of Silicon
Valley Printed Circuits ("SVPC") of Santa Clara, California, to
acquire the assets and assume certain liabilities of SVPC. SVPC
specializes in quick turnaround production for both prototype and low
to medium volume orders. The estimated purchase price will be
$7,000,000 plus the assumption of certain liabilities. The purchase
price will be funded utilizing $3,000,000 of collateralized bank
borrowings plus $4,000,000 in subordinated notes from SVPC and its
three shareholders. The acquisition is expected to be closed during
the Company's second quarter.
The Company's backlog at July 31, 1998 is approximately $20,000,000,
which included approximately $8,000,000 for CST, compared to
$18,790,000 at July 31, 1997. Backlog is comprised of orders for
which artwork has been received, a delivery date has been scheduled
and the Company anticipates it will manufacture and deliver the
order. The majority of the July 31, 1998 backlog is scheduled to be
shipped within approximately 4 months. The reliability of backlog as
an indicator of future sales varies substantially with the make-up of
customers' orders and the Company's scheduled production and delivery
dates. A significant portion of the Company's backlog at any time
may be subject to cancellation or postponement without penalty.
YEAR 2000 COMPLIANCE
During the first quarter, the Company continued its Year 2000
compliance project as previously discussed in its 1998 Form 10-K.
The Company recently hired an independent consulting firm and the
evaluation phase process has begun whereby the firm will verify the
inventory of all existing Company hardware application as well as the
relevant software portfolio required to run these applications such
as operating systems, workstations, source codes, databases, data
files, etc.
The Company believes that the costs of the Year 2000 compliance
project are consistent with its previous estimates.
The Company anticipates completion of the Year 2000 project by early
1999. The Company's assessments and plans to complete it's Year 2000
project are based upon management's best estimates, which were
derived utilizing presently available information and numerous
assumptions about future events such as availability of certain
resources, ability to identify and correct relevant codes and other
uncertainties. The Company believes that its compliance with Year
2000 issues will not have a material impact on its business,
operations or financial condition.
Item 3. Quantitative and Qualitative Disclosures about Market Risks
Not Applicable.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits
(b)Reports on Form 8-K
Form 8-K filed July 27, 1998, regarding the resignation of
its executive vice president/director, repurchase of his
stockholdings and severance/non-compete agreements.
<PAGE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
SIGNATURES
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, registrant's principal financial officer,
thereunto duly authorized.
Circuit Systems, Inc.
(registrant)
/s/ James E. Robbs
James E. Robbs
Chief Financial Officer
(Principal Financial Officer)
September 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY OF FINANCIAL
INFORMATION EXTRACTED FROM FORM 10 - Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> JUL-31-1998
<CASH> 243,704
<SECURITIES> 0
<RECEIVABLES> 11,772,450
<ALLOWANCES> 150,000
<INVENTORY> 8,873,907
<CURRENT-ASSETS> 22,628,921
<PP&E> 58,575,872
<DEPRECIATION> 23,946,968
<TOTAL-ASSETS> 61,394,373
<CURRENT-LIABILITIES> 15,297,497
<BONDS> 26,425,507
0
0
<COMMON> 2,453,459
<OTHER-SE> 14,934,910
<TOTAL-LIABILITY-AND-EQUITY> 61,394,373
<SALES> 22,553,713
<TOTAL-REVENUES> 22,553,713
<CGS> 19,501,218
<TOTAL-COSTS> 19,501,218
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 727,179
<INCOME-PRETAX> (773,959)
<INCOME-TAX> (275,000)
<INCOME-CONTINUING> (498,959)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (498,959)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
