<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 April 30, 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 May 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
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
o Consolidated Balance Sheets as of April 30, 1998
and October 31, 1997......................................................................... 3
o Consolidated Statements of Operations for the three months
and six months ended April 30, 1998 and 1997................................................. 5
o Consolidated Statement of Stockholders' Equity
for the period from October 31, 1997 to April 30, 1998....................................... 7
o Consolidated Statements of Cash Flows for the three months
and six months ended April 30, 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................................................................... 16
o Signatures................................................................................... 16
</TABLE>
2
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
04/30/98 10/31/97
Unaudited
ASSETS
Current Assets:
Cash and cash equivalents $154,715 $80,783
Accounts receivable, net of allowance
for doubtful accounts of $86,000 1,930,633 2,019,435
Inventories 3,114,920 2,379,278
Prepaid expense and other current assets 26,078 77,825
----------- ----------
Total current assets 5,226,346 4,557,321
Property, plant and equipment at cost 3,618,069 3,591,994
Less: accumulated depreciation 1,507,838 1,370,226
----------- ----------
Net property, plant & equipment 2,110,231 2,221,768
Other assets:
Intangible assets, net 57,752 60,885
Other assets 13,678 15,135
----------- ----------
Total other assets 71,430 76,020
----------- ----------
TOTAL ASSETS $7,408,007 $6,855,109
3
See accompanying notes to consolidated financial statements
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
04/30/98 10/31/97
Unaudited
<S> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Revolving promissory note $906,652 $626,652
Current maturities of long-term debt 503,311 556,809
Capital Lease Obligation 17,176 15,522
Accounts payable 1,911,763 1,343,922
Accrued liabilities 501,060 442,912
Customer deposits 462,387 427,022
----------- -----------
Total current liabilities 4,302,349 3,412,839
Long-term debt 160,024 177,126
Capital Lease Obligation, less current maturities 676,717 686,046
Minority interest in equity of subsidiary 0 210,322
----------- -----------
Total liabilities 5,139,090 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 0 0
Additional paid-in capital 6,349,687 6,207,936
Accumulated deficit (3,117,051) (2,870,589)
----------- -----------
3,291,935 3,394,808
Less: Treasury stock, 663,526 shares at cost 419,306 419,306
Less: Note receivable from stockholders 603,712 606,726
----------- -----------
Total stockholders' equity 2,268,917 2,368,776
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $7,408,007 $6,855,109
</TABLE>
4
See accompanying notes to consolidated financial statements
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Three months ended: 04/30/98 04/30/97
Net Sales $3,338,652 $2,248,147
Cost of Sales 2,563,407 1,867,171
---------- ----------
Gross Profit 775,245 380,976
Operating Expenses:
Selling 328,729 253,551
General and Administrative 372,199 396,329
---------- ----------
Total operating expenses 700,928 649,880
Operating Income (Loss) 74,317 (268,904)
Other Income (Expense)
Interest and Dividends 16,356 14,216
Interest Expense (50,295) (51,847)
Other Income 2,605 2,477
Other Expense 0 0
---------- ----------
Total Other Income (Expense) (31,334) (35,154)
Less minority interest in income of
consolidated subsidiary 0 (8,023)
---------- ----------
Income (Loss) before income taxes 42,983 (296,035)
Income Tax Provision
Current 0 2,100
Deferred 0 0
---------- ----------
NET INCOME (LOSS) $42,983 ($298,135)
Basic and Diluted Earnings (Loss) per share 0.01 (0.06)
Weighted Average number of shares 5,266,297 4,863,102
5
See accompanying notes to consolidated financial statements
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Six months ended: 04/30/98 04/30/97
Net Sales $6,346,764 $5,648,121
Cost of Sales 5,073,944 4,511,788
---------- ----------
Gross Profit 1,272,820 1,136,333
Operating Expenses:
Selling 651,145 501,803
General and Administrative 812,458 850,302
---------- ----------
Total operating expenses 1,463,603 1,352,105
Operating Income (Loss) (190,783) (215,772)
Other Income (Expense)
Interest income 34,417 29,278
Interest Expense (97,620) (95,445)
Other Income 7,524 4,299
Other Expense 0 0
---------- ----------
Total Other Income (Expense) (55,679) (61,868)
Less minority interest in income of
consolidated subsidiary 0 (4,334)
----------- ----------
Income (Loss) before income taxes (246,462) (273,306)
Income tax provision
Current 0 15,000
Deferred 0 0
----------- ----------
NET INCOME (LOSS) ($246,462) ($288,306)
Basic and Diluted Earnings (Loss) per share (0.05) (0.06)
Weighted Average number of shares 5,183,031 4,863,102
6
See accompanying notes to consolidated financial statements
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for six months ended April 30, 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) - - - (246,462)
--------- ------- ---------- -----------
Balance at April 30, 1998 5,929,823 $59,299 $6,349,687 ($3,117,051)
<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 - - 3,014 3,014
Net income (loss) - - - 246,462
------- --------- --------- ----------
Balance at April 30, 1998 663,526 ($419,306) ($603,712) $2,268,917
</TABLE>
7
See accompanying notes to consolidated financial statements
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Unaudited
<TABLE>
<CAPTION>
For Three Months Ended
04/30/98 04/30/97
<S> <C> <C>
Cash flow from operating activities:
Net Income (Loss) $42,983 ($298,135)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization 71,114 65,044
Minority interest in income of subsidiary 0 (8,023)
Increase (decrease) from changes in:
Accounts receivable 35,877 796,603
Inventories (258,811) (193,353)
Prepaid expenses and other current assets (1,728) (30,375)
Other assets 1,340 (5,272)
Accounts payable 129,235 (347,877)
Accrued liabilities 116,893 116,544
Customer deposits (112,020) 138,712
-------- ---------
Total adjustments (18,100) 532,003
Net cash (used in) provided by operating activities 24,883 233,868
Cash flows from investing activities:
Increase in notes receivable from shareholders (33,477) (32,892)
Purchase of property and equipment (71,015) (18,974)
-------- ---------
Net cash used in investing activities (104,492) (51,866)
Cash flows from financing activities:
Increase (decrease) in Debt 190,622 (138,751)
-------- ---------
Cash flows provided by (used in) financing activities 190,622 (138,751)
Net increase (decrease) in cash & cash equivalents 111,013 43,251
Cash & cash equivalents at beginning of period 43,702 49,935
Cash & cash equivalents at end of period 154,715 93,186
Supplemental schedule of disclosure of cash flow information
Cash paid during period for:
Interest 45,773 51,847
Income taxes 0 0
</TABLE>
8
See accompanying notes to consolidated financial statements
<PAGE>
WASTE TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Unaudited
<TABLE>
<CAPTION>
For Six Months Ended
04/30/98 04/30/97
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) ($246,462) ($288,306)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization 140,745 130,032
Minority interest in income of subsidiary 0 (4,334)
Increase (decrease) from changes in:
Accounts receivable 88,802 31,644
Inventories (735,642) 221,808
Prepaid expenses and other current assets 51,747 36,979
Other assets 1,457 1,456
Accounts payable 567,841 (2,869)
Accrued liabilities 108,130 37,530
Customer deposits 35,365 (304,474)
-------- ---------
Total adjustments 258,445 147,772
Net cash (used in) provided by operating activities 11,983 (140,534)
Cash flows from investing activities:
Increase in notes receivable from shareholders (46,980) (45,790)
Purchase of property and equipment (77,796) (23,465)
Purchase of minority interest (15,000) 0
-------- ---------
Net cash used in investing activities (139,776) (69,255)
Cash flows from financing activities:
Increase (decrease) in Debt 201,725 162,975
-------- ---------
Cash flows provided by (used in) financing activities 201,725 162,975
Net increase (decrease) in cash & cash equivalents 73,932 (46,814)
Cash & cash equivalents at beginning of period 80,783 140,000
Cash & cash equivalents at end of period 154,715 93,186
Supplemental schedule of disclosure of cash flow information
Cash paid during period for:
Interest 96,162 95,445
Income taxes 0 0
</TABLE>
9
See accompanying notes to consolidated financial statements
<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 six month period ended April 30, 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 ended April 30, 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 $408,748 to the General
Counsel and his law firm at April 30, 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 April 30, 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
April 30, 1998 which are included as a reduction of stockholders
equity:
General Counsel, net of accrued legal fees $ 331,151
President 272,561
----------
$ 603,712
==========
5. Long-Term Debt:
Long-term debt consists of the following:
<TABLE>
04-30-98 10-31-97
<S> <C> <C>
Term note payable to bank at prime rate, due
in equal monthly installments of $9,028, plus
interest through August 2002. $ 469,444 $ 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. 906,652 626,652
Term note payable to Appling County, Georgia
at 4.0% due in equal monthly installments
of $3,417, including interest through July 2003. 193,891 210,324
---------- ----------
1,569,987 1,360,587
Amounts classified as current 1,409,963 1,183,461
---------- ----------
$ 160,024 $ 177,126
========== ==========
</TABLE>
11
<PAGE>
Notes to Consolidated Financial Statements, Continued
5. Long-Term Debt Continued:
The bank's prime rate at April 30, 1998 was 8.50%. The carrying
value of the Company's debt approximates fair value.
The term note payable to bank and the revolving promissory note
contain certain covenants, whereby the Company must maintain, among
other things, specified levels of minimum net worth and working
capital, and maintain a specified ratio of maximum debt to worth,
and current ratio. The term note payable contains cross default
provisions as related to the revolving promissory note and other
debt agreements.
The Company violated certain financial covenants of the above debt
agreements. As of the date of issuance of these financial
statements, the lender has not waived these covenant violations nor
has it demanded repayment. The due date on the revolving promissory
note has been extended from May 7, 1998 to August 7, 1998.
Management plans to negotiate an extension of the revolving debt and
covenant requirements prior to the expiration date of the debt or
obtain alternative financing. However, no assurance can be given
that the Company will be successful. If the Company was unable to
negotiate an extension or obtain alternative financing and the
lender called the debt, Management would be required to sell certain
assets of the Company or seek equity financing. Management believes
its available collateral to be sufficient so that acceptable
financing can be obtained.
The Company has pledged substantially all of its assets as
collateral under the term loan and revolving loan agreement.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations: Three Month Comparisons
For the second quarter of fiscal 1998 the Company had net sales of
$3,338,652 as compared to $2,248,147 for the second quarter of 1997, an
increase of 48.5%. The higher sales were the result of higher shipments
at the Consolidated Baling Machine Company (CBMC) and the International
Press and Shear (IPS) subsidiaries.
Consolidated net income in the second quarter of 1998 was $42,983 versus
a loss of $298,135 in the second quarter of the prior year. The profit
improvement was the result of the higher shipments at CBMC and IPS. Gross
profit margins were 23.2% and 16.9% in the second quarter of 1998 and
1997 respectively. The increase in selling expense in the quarter is the
result of adding additional sales and marketing personnel and increasing
the overall marketing efforts of the Company.
Results of Operations: Six Month Comparisons
Net sales in the first half of fiscal 1998 were $6,346,764 as compared to
$5,648,121 in the prior year. The higher sales are the result of
increased sales at the IPS subsidiary.
Net income for the first six months of 1998 was a loss of $246,462 versus
a loss of $288,306 in the corresponding period of 1997. The loss in the
first quarter of 1998 was due to lower shipments at all operating units
of the Company and was directly related to continued weakness in the
corrugated board and paper markets for recycled materials. Corrugated and
paper market prices have recently shown increases which should result in
increased orders in the remainder of fiscal 1998.
On April 2, 1998, the Company had 20 dealers and 75 major users of baling
equipment at an open house to witness the operation of its new
patent-pending baler from IPS and a new designed baler from International
Baler Corporation. The Company has already sold a number of each model to
key industrial customers and expects a rapid growth in sales of each of
these products.
The backlog as of May 31, 1998 was $3,267,000 as compared with $3,670,000
as of May 31, 1997. Orders have been coming in at an accelerated rate and
the second half of fiscal 1998 is anticipated to show improved results
over the prior periods.
Financial Condition:
Net working capital decreased from $1,144,482 at October 31, 1997 to
$923,997 at April 30, 1998 due to increased borrowing on the revolving
promissory note to build inventories needed to meet production
requirements. This decrease in working capital is considered to be
temporary and should be reversed in the balance of fiscal 1998 based on
management's expectations for the second half of fiscal 1998.
13
<PAGE>
Financial Condition Continued:
The revolving note payable to SouthTrust Bank in the amount of $1,000,000
was extended to August 7, 1998. At April 30, 1998, the Company is in
violation of the covenants of the loan agreement related to the ratio of
liabilities to net worth and current ratio. As of the filing date, the
lender has not waived these covenant violations, nor has it demanded
repayment. While no assurance can be given, management believes its
available collateral to be sufficient to allow the Company to replace the
revolving note with a new revolving note of at least $1,000,000.
The term note with SouthTrust Bank had a balance of $469,444 at April 30,
1998 and is due in equal monthly installments of $9,028, plus interest at
the prime rate to August 2002. The entire balance of this term note was
classified as a current liability because the term loan has callable
provisions relating to the revolving note.
For the six months ended April 30, 1998 the Company had positive $11,983
cash flow from operations while in the same period in fiscal 1997 the
Company had negative operating cash flow of $140,534. The negative cash
flow in fiscal 1997 was due to the operating losses at IPS. However, the
Company has had to increase inventory levels by approximately $735,000 in
the first half of 1998 due to increased business activity.
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 operations of the IPS subsidiary have been operating at a
much reduced deficit and are expected to be profitable by the
end of 1998.
2. The Company violated the covenants related to maximum debt to net worth
and current ratio. As of the date of issuance of this report, the
lender has not waived these covenant violations nor has it demanded
repayment. Management is in the process of obtaining financing to
replace the revolving loan and the term loan and expects to accomplish
this prior to the expiration date of the revolving loan, August 7,
1998. However, no assurance can be given that the Company will be
successful. If the Company were unable to negotiate an extension or
obtain alternative financing and the lender called the debt, Management
would be required to sell certain assets of the Company or seek equity
financing. Management believes its available collateral to be
sufficient so as acceptable financing can be obtained.
This is a forward looking statement and is subject to many variables over
which the Company has no control such as inflation, competition, etc.
Therefore, there can be no assurances that IPS will be profitable by the
end of 1998 or that the Company can obtain financing to replace the
revolving loan.
14
<PAGE>
Financial Condition Continued:
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 economy changes which materially effect
the amount of reported income from continuing operations.
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.
15
<PAGE>
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 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.
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: June 10, 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 financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> APR-30-1998
<CASH> 154,715
<SECURITIES> 0
<RECEIVABLES> 2,106,633
<ALLOWANCES> 86,000
<INVENTORY> 3,114,920
<CURRENT-ASSETS> 5,226,346
<PP&E> 3,618,069
<DEPRECIATION> 1,507,838
<TOTAL-ASSETS> 7,408,007
<CURRENT-LIABILITIES> 4,302,349
<BONDS> 0
0
0
<COMMON> 59,299
<OTHER-SE> 2,209,618
<TOTAL-LIABILITY-AND-EQUITY> 7,408,007
<SALES> 3,338,652
<TOTAL-REVENUES> 3,338,652
<CGS> 2,563,407
<TOTAL-COSTS> 3,264,335
<OTHER-EXPENSES> (18,961)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,295
<INCOME-PRETAX> 42,983
<INCOME-TAX> 0
<INCOME-CONTINUING> 42,983
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,983
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
