<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X Quarterly report pursuant to Section 13 or 15 (d) of the
- --- Securities Exchange Act of 1934
For the quarterly 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 0-14443
WASTE TECHNOLOGY CORP.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 13-2842053
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization)
Identification No.)
5400 Rio Grande Avenue
Jacksonville, Florida 32254
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(904) 355-5558
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether 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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
At August 31, 1998, Registrant had outstanding 5,266,297 shares of its
Common Stock.
Transitional small business disclosure format check one:
Yes No X
---- ----
1
<PAGE>
WASTE TECHNOLOGY CORP.
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
o Consolidated Balance Sheets as of July 31, 1998
and October 31, 1997............................................ 3
o Consolidated Statements of Operations for the three months
and nine months ended July 31, 1998 and 1997.................... 5
o Consolidated Statement of Stockholders' Equity
for the period from October 31, 1997 to July 31, 1998........... 7
o Consolidated Statements of Cash Flows for the three months
and nine months ended July 31, 1998 and 1997.................... 8
o Notes to Consolidated Financial Statements......................10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS...................................................13
PART II. OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS............................................15
o Signatures.....................................................16
2
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
07/31/98 10/31/97
Unaudited
ASSETS
Current Assets:
Cash and cash equivalents $126,976 $80,783
Accounts receivable, net of allowance
for doubtful accounts of $92,000 1,351,768 2,019,435
and $86,000, respectively
Inventories 3,094,465 2,379,278
Prepaid expense and other current assets 7,995 77,825
----------- -----------
Total current assets 4,581,204 4,557,321
Property, plant and equipment at cost 3,615,821 3,591,994
Less: accumulated depreciation 1,569,746 1,370,226
----------- -----------
Net property, plant & equipment 2,046,075 2,221,768
Other assets:
Intangible assets, net 56,185 60,885
Other assets 12,950 15,135
----------- -----------
Total other assets 69,135 76,020
----------- -----------
TOTAL ASSETS $6,696,414 $6,855,109
See accompanying notes to consolidated financial statements
3
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
07/31/98 10/31/97
Unaudited
<S> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Revolving promissory note - $626,652
Current maturities of long-term debt 142,540 556,809
Capital Lease Obligation 17,533 15,522
Accounts payable 1,972,466 1,343,922
Accrued liabilities 477,569 442,912
Customer deposits 248,442 427,022
Accrued Judgment 537,000 -
---------- ----------
Total current liabilities 3,395,550 3,412,839
Revolving promissory note 940,189 -
Long-term debt 485,372 177,126
Capital Lease Obligation, less current maturities 672,398 686,046
Minority interest in equity of subsidiary - 210,322
---------- ----------
Total liabilities 5,493,509 4,486,333
Stockholders' equity
Common stock, par value $.01
25,000,000 shares authorized; 5,929,823 and
5,746,029 shares issued in 1998 & 1997, respectively 59,299 57,461
Preferred stock, par value $.0001,
10,000 shares authorized, none issued - -
Additional paid-in capital 6,349,687 6,207,936
Accumulated deficit (4,190,178) (2,870,589)
---------- ----------
2,218,808 3,394,808
Less: Treasury stock, 663,526 shares at cost 419,306 419,306
Less: Note receivable from shareholders 596,597 606,726
---------- ----------
Total stockholders' equity 1,202,905 2,368,776
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $6,696,414 $6,855,109
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
Three months ended: 07/31/98 07/31/97
Net Sales $2,996,640 $2,401,082
Cost of Sales 2,615,980 1,898,754
----------- -----------
Gross Profit 380,660 502,328
Operating Expenses:
Selling 429,063 303,445
General and Administrative 449,978 427,125
----------- -----------
Total operating expenses 879,041 730,570
Operating Income (Loss) (498,381) (228,242)
Other Income (Expense):
Interest & Dividends 15,918 16,039
Interest Expense (57,220) (59,473)
Other Income 3,556 1,940
Provision for Judgment (537,000) -
----------- -----------
Total Other Income (Expense) (574,746) (41,494)
Less minority interest in income of
consolidated subsidiary - 4,334
----------- -----------
Income (Loss) before income taxes (1,073,127) (274,070)
Income Tax Provision
Current - -
Deferred - -
----------- -----------
NET INCOME (LOSS) ($1,073,127) ($274,070)
Basic and diluted loss per share (0.20) (0.06)
Weighted average number of shares 5,266,297 4,863,102
See accompanying notes to consolidated financial statements
5
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
Nine months ended: 07/31/98 07/31/97
Net Sales $9,343,404 $8,049,203
Cost of Sales 7,689,924 6,410,542
----------- -----------
Gross Profit 1,653,480 1,638,661
Operating Expenses:
Selling 1,080,208 805,248
General and Administrative 1,262,436 1,277,427
----------- -----------
Total operating expenses 2,342,644 2,082,675
Operating Income (Loss) (689,164) (444,014)
Other Income (Expense):
Interest income 50,335 45,317
Interest Expense (154,840) (154,918)
Other Income 11,080 6,239
Provision for Judgment (537,000) -
----------- -----------
Total Other Income (Expense) (630,425) (103,362)
Less minority interest in income of
consolidated subsidiary - -
----------- -----------
Income (Loss) before income taxes (1,319,589) (547,376)
Income tax provision
Current - 15,000
Deferred - -
----------- -----------
NET INCOME (LOSS) ($1,319,589) ($562,376)
Basic and diluted loss per share (0.25) (0.12)
Weighted average number of shares 5,211,091 4,863,102
See accompanying notes to consolidated financial statements
6
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for nine months ended July 31, 1998
unaudited
<TABLE>
<CAPTION>
Common Stock
Par Value $.01 Authorized
25,000,000
NUMBER ADDITIONAL
OF SHARES PAR PAID-IN ACCUMULATED
ISSUED VALUE CAPITAL DEFICIT
<S> <C> <C> <C> <C>
Balance at October 31, 1997 5,746,029 $57,461 $6,207,936 ($2,870,589)
Shares issued 183,794 1,838 141,751 -
Adjustment of Note Receivable
from shareholder - - - -
Net income (loss) - - - (1,319,589)
--------- ------- ---------- -----------
Balance at July 31, 1988 5,929,823 $59,299 $6,349,687 ($4,190,178)
<CAPTION>
Treasury Stock
NUMBER TOTAL
OF STOCKHOLDERS'
SHARES COST OTHER EQUITY
<S> <C> <C> <C> <C>
Balance at October 31, 1997 663,526 ($419,306) ($606,726) $2,368,776
Shares issued - - - 143,589
Adjustment of Note Receivable
from shareholder - - 10,129 10,129
Net income (loss) - - - (1,319,589)
--------- --------- --------- ----------
Balance at July 31, 1988 663,526 ($419,306) ($596,597) $1,202,905
</TABLE>
See accompanying notes to consolidated financial statements
7
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
unaudited
<TABLE>
<CAPTION>
For Three Months Ended
07/31/98 07/31/97
<S> <C> <C>
Cash flow from operating activities:
Net (loss) income ($1,073,127) ($274,070)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 74,108 65,043
Minority interest in income of subsidiary - 4,334
Increase (decrease) from changes in:
Accounts receivable 578,865 125,169
Inventories 20,455 (260,110)
Prepaid expenses and other current assets 18,083 (1,141)
Other assets 728 729
Accounts payable 60,703 325,427
Accrued liabilities (2,559) (55,182)
Customer deposits (213,945) 305,890
Accrued Judgment 537,000 -
----------- -----------
Total adjustments 1,073,438 510,159
----------- -----------
Net cash provided by (used in) 311 236,089
operating activities
Cash flows from investing activities:
Increase in notes receivable from shareholders (13,805) (13,200)
Purchase of property and equipment (8,397) (17,198)
----------- -----------
Net cash used in investing activities (22,202) (30,398)
Cash flows from financing activities:
Increase (decrease) in Debt (5,848) 161,253
----------- -----------
Cash flows provided by (used in) (5,848) 161,253
financing activities
Net increase (decrease) in cash (27,739) 366,944
Cash at beginning of period 154,715 93,186
Cash at end of period 126,976 460,130
Supplemental schedule of disclosure of cash flow information
Cash paid during period for:
Interest 56,493 53,221
Income taxes - -
</TABLE>
See accompanying notes to consolidated financial statements
8
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
unaudited
<TABLE>
<CAPTION>
For Nine Months Ended
07/31/98 07/31/97
<S> <C> <C>
Cash flow from operating activities:
Net (loss) income ($1,319,589) ($562,376)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 214,853 195,075
Increase (decrease) from changes in:
Accounts receivable 667,667 156,813
Inventories (715,187) (38,302)
Prepaid expenses and other current assets 69,830 35,838
Other assets 2,185 2,185
Accounts payable 628,544 322,558
Accrued liabilities 105,571 (17,652)
Customer deposits (178,580) 1,416
Accrued Judgment 537,000 -
----------- -----------
Total adjustments 1,331,883 657,931
----------- -----------
Net cash provided by (used in) 12,294 95,555
operating activities
Cash flows from investing activities:
Increase in notes receivable from shareholders (60,785) (58,990)
Purchase of property and equipment (86,193) (40,663)
Purchase of minority interest (15,000) -
----------- -----------
Net cash used in investing activities (161,978) (99,653)
Cash flows from financing activities:
Increase (decrease) in Debt 195,877 324,228
----------- -----------
Cash flows provided by (used in) 195,877 324,228
financing activities
Net increase (decrease) in cash 46,193 320,130
Cash at beginning of period 80,783 140,000
Cash at end of period 126,976 460,130
Supplemental schedule of disclosure of cash flow information
Cash paid during period for:
Interest 152,655 148,666
Income taxes - -
</TABLE>
See accompanying notes to consolidated financial statements
9
<PAGE>
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the
three-month period and nine month period ended July 31, 1998 are not
necessarily indicative of the results that may be expected for the year
ending October 31, 1998. For further information, refer to the Company's
Annual Report on form 10KSB for the year ended October 31, 1997 and the
Management Discussion included in this form 10QSB.
Certain prior year amounts have been reclassified to conform with the
current year's presentation.
2. ACCOUNTING POLICIES:
STOCK-BASED COMPENSATION - On November 2, 1996, the Company adopted SFAS
No. 123, "Accounting for Stock-Based Compensation," which permits entities
to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 also
allows entities to continue to apply the provisions of APB Opinion No. 25
and provide pro forma net income and pro forma earnings per share
disclosures for employee stock option grants made in 1997 and future years
as if the fair-value-based method defined in SFAS No. 123 had been applied.
The Company has elected to continue to apply the provisions of APB Opinion
25 and provide the disclosure provisions of SFAS No. 123. No stock options
were granted during the quarter and nine months ended July 31, 1998.
3. EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE:
Earnings (loss) per common and common equivalent share are calculated using
the weighted average number of common shares outstanding during each period
and on the net additional number of shares which would be issuable upon the
exercise of stock options, assuming that the Company used the proceeds
received to purchase additional shares at market value in the case of
income. Options are not considered in loss periods as they would be
antidilutive.
The Company adopted SFAS No. 128, "Earnings per Share," effective with the
first quarter of fiscal year 1998. The adoption of this statement did not
materially impact the Company's statements.
10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. RELATED PARTY LOAN AND NOTES RECEIVABLE:
The Company was indebted in the amount of $429,668 to the General Counsel
and his law firm at July 31, 1998. During 1997, the General Counsel and his
law firm authorized the Company to set off accrued legal fees against the
note receivable from the General Counsel at such time as the Board of
Directors shall determine. Accordingly, accrued legal fees are presented as
a reduction of notes receivable from General Counsel at July 31, 1998.
On December 29, 1995, the Company transferred a life insurance policy,
covering the life of its president, to the president in exchange for a note
receivable. The amount of the note receivable from president is equal to
the amount of the cash surrender value of the policy at the time of the
transfer. Interest accrues at the rate of 6% per annum. No principal or
interest is due until proceeds from the policy are realized.
The following presents notes receivable and accrued interest at July 31,
1998 which are included as a reduction of stockholders equity:
General Counsel, net of accrued legal fees $ 320,320
President 276,277
----------
$ 596,597
==========
5. LONG-TERM DEBT:
Long-term debt consists of the following:
07-31-98 10-31-97
-------- --------
Term note payable to bank at prime rate, due
in equal monthly installments of $9,028, plus
interest through August 2002. $442,361 $523,611
Revolving promissory note payable to bank in the
amount of $1,000,000. Interest at prime + 1%
payable monthly. All amounts borrowed are
due in full August 7, 1998. -- 626,652
Revolving loan agreement payable to lender
at 1 1/2% above the prime rate. Interest only
payments. $2,000,000 maximum line through
July 31, 2000. 940,189 --
11
<PAGE>
5. LONG-TERM DEBT CONTINUED:
Term note payable to Appling County, Georgia at 4.0%
due in equal monthly installments of $3,417,
including interest through July 2003. 185,551 210,324
---------- ----------
1,568,101 1,360,587
Amounts classified as current 142,540 1,183,461
---------- ----------
$1,425,561 $ 177,126
========== ==========
The bank's prime rate at July 31, 1998 was 8.50%. The carrying value of the
Company's debt approximates fair value. The company has pledged
substantially all of its assets as collateral under the term loans and
revolving loan agreement.
On July 31, 1998, the Company entered into a revolving Loan Agreement with
Foothill Capital Corporation. This revolving loan agreement is for a period
of two years and has a maximum loan amount of $2,000,000. The $1,000,000
revolving promissory note with SouthTrust Bank was satisfied with funds
from the loan from Foothill Capital Corporation.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS: THREE MONTH COMPARISONS
For the third quarter of fiscal 1998 the Company had net sales of $2,996,640 as
compared to $2,401,082 for the third quarter of 1997, an increase of 24.8%. The
higher sales were the result of higher shipments at the International Press and
Shear (IPS) subsidiary. Gross margins for the quarter were 12.7% as compared to
gross margins of 20.9% for the third quarter of 1997 as a result of lower
shipments of certain of the Company's higher margin products.
The Company reported a net loss of $1,073,127 in the third quarter 1998
including a reserve for a judgment of $537,000 including interest thereon
related to the Company's former subsidiary, Ram Coating Technology, Inc. This
judgment is being appealed. Excluding the judgment, the company lost $536,127 in
the third quarter of fiscal 1998 versus a loss of $274,070 in the third quarter
of fiscal 1997. Gross profit decreased by $121,668 due to lower sales at the
International Baler and Consolidated Baling subsidiaries and the postponement at
customer's request of deliveries of certain balers from the third quarter to the
fourth quarter, partially offset by higher sales and gross profit at IPS. Gross
profit margin percentage decreased due to the lower gross profit margins at IPS.
The increase in selling expense in the quarter was the result of additional
sales and marketing personnel and increasing the overall marketing efforts of
the Company. The Company has since effectuated substantial reductions in selling
expenses.
RESULTS OF OPERATIONS: NINE MONTH COMPARISONS
Net sales in the first half of fiscal 1998 were $9,343,404 as compared to
$8,049,203 in the prior year. The higher sales are the result of increased sales
at the IPS subsidiary.
The loss in the first nine months of 1998 was $1,319,589 versus a loss of
$562,376 in the corresponding period of 1997. Excluding the reserve for the
judgment of $537,000, the loss for the first nine months of 1998 was $235,213
higher than the loss in 1997. The loss for the nine months was the result of
losses at all operating units and was directly related to continued weakness in
the corrugated board and paper markets for recycled materials.
The backlog as of August 31, 1998 was $2,615,000 as compared with $3,831,000 as
of August 31, 1997.
13
<PAGE>
FINANCIAL CONDITION:
Net working capital increased from $1,144,482 at October 31, 1997 to $1,185,654
at July 31, 1998 due to the replacement of the revolving line of credit with a
new line of credit with a two year term, partially offset by higher inventories
at IPS and the accrued liability for the legal settlement. The revolving note
payable to SouthTrust Bank in the amount of $1,000,000 was replaced with a
Foothill Capital Corporation line of credit of $2,000,000. This line of credit
is for a period of two years, accrues interest at 1 1/2% above the prime rate
and is secured primarily by accounts receivable and inventories.
The term note with SouthTrust Bank had a balance of $442,361 at July 31, 1998
and is due in equal monthly installments of $9,028, plus interest at the prime
rate to August 2002. The term note payable to Appling County, Georgia is due in
equal monthly installments of $3,417 including interest at 4.0% through July
2003.
Our auditors, KPMG Peat Marwick LLP, have stated in the "Report of Independent
Accountants" for October 31, 1997 to the shareholders of Waste Technology
Corporation that there is "substantial doubt" about the Company's ability to
continue as a going concern. While the Company understands why the accountants
report had to include the explanatory paragraph, (the absence of a loan default
waiver), and though the Company's Management and Board of Directors has
substantial concern, it believes that it has several viable options to continue
as a going concern for the following reasons:
1. The Company has replaced the $1,000,000 revolving promissory note with
SouthTrust Bank with a $2,000,000 (maximum) revolving promissory note
with a term of two years. Therefore, the Company is no longer in
violation of the SouthTrust revolving promissory note loan covenants.
2. The IPS subsidiary has been operating at a much reduced deficit.
3. The Company has taken certain actions to reduce operating costs
including the elimination of personnel, implementing salary reductions
for management, and cutting expenditures wherever possible. These cost
cutting actions should result in annual savings in excess of $500,000
and will take effect in the fourth quarter of this year. The Company is
also developing additional contingency plans to further reduce costs in
order that the Company can operate profitably in the future and have
positive cash flow from operations at a minimum.
The Company has no commitments for any material capital expenditures. Other than
as set forth above, there are no unusual or infrequent events or transactions or
significant economic changes which materially affect the amount of reported
income from continuing operations.
14
<PAGE>
FINANCIAL CONDITION CONTINUED:
The above contains forward looking statements and is subject to many variables
over which the Company has no control such as inflation, competition, and the
general market conditions for its products. Therefore the Company may have to
consider additional financing and/or operating alternatives to insure the
Company will continue as a going concern.
YEAR 2000 COMPLIANCE:
The Company believes it has fully achieved Year 2000 compliance for all internal
systems. Costs associated with compliance were immaterial and have been fully
incurred. The Company is in the process of examining key vendor and customer
relationships to determine, to the extent practical, the degree of such parties'
Year 2000 compliance.
Should a key vendor or customer have a systems failure due to the century
change, the Company believes that the most significant impact would likely be
the inability to receive inventory on a timely basis. While the Company does not
expect any such impact to be material, it is developing contingency plans to
address this possibility.
INFLATION:
The costs of the Company and its subsidiaries are subject to the general
inflationary trends existing in the general economy. The Company believes that
expected pricing by its subsidiaries for balers will be able to include
sufficient increases to offset any increase in costs due to inflation.
PART II-OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS
On June 5, 1998, a judgment (the "Judgment") was rendered against the Company's
former wholly owned subsidiary, Ram Coating Technology Corporation ("RAM"), and
Transamerica Premier Insurance Corporation ("Transamerica") in the amount of
$360,194 together with interest in favor of L & A Contracting Company in the
19th Judicial District Court of the State of Louisiana in the case of L & A
Contracting Company v. Ram Industrial Coatings, Inc., et al., Case No. 382,924,
Division F. Transamerica had issued a performance and payment bond (the "Bond")
for Ram in connection with the contract which was the subject of the action and
which was the basis of the Judgment against Ram. The Company had agreed to
indemnify Transamerica for any payments it was required to make pursuant to the
Bond. As a result of this indemnification agreement, the Company is liable to
Transamerica for the amount of the Judgment. The Company believes that the Court
was in error in rendering the Judgment and intends to appeal. The Company's
management believes that its appeal is meritorious and will be successful.
15
<PAGE>
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 undersigned
hereto duly authorized.
Dated: Sept. 14, 1998 WASTE TECHNOLOGY CORPORATION
BY: /s/Ted C. Flood
-------------------------
Ted C. Flood, President
(Chief Executive Officer)
BY: /s/William E. Nielsen
-------------------------
William E. Nielsen
Chief Financial Officer
(Principal Financial and
Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
financial statements and is qualified in its entirety by reference to such
fianancial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 126,976
<SECURITIES> 0
<RECEIVABLES> 1,442,768
<ALLOWANCES> 92,000
<INVENTORY> 3,094,465
<CURRENT-ASSETS> 4,581,204
<PP&E> 3,615,821
<DEPRECIATION> 1,569,746
<TOTAL-ASSETS> 6,696,414
<CURRENT-LIABILITIES> 3,218,744
<BONDS> 0
0
0
<COMMON> 59,299
<OTHER-SE> 1,320,412
<TOTAL-LIABILITY-AND-EQUITY> 6,696,414
<SALES> 2,996,640
<TOTAL-REVENUES> 2,996,640
<CGS> 2,615,980
<TOTAL-COSTS> 3,495,021
<OTHER-EXPENSES> 340,720
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,220
<INCOME-PRETAX> (896,321)
<INCOME-TAX> 0
<INCOME-CONTINUING> (536,127)
<DISCONTINUED> 0
<EXTRAORDINARY> (360,194)
<CHANGES> 0
<NET-INCOME> (896,321)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
