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 October 31, 1998
-------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ____________________
001-13207
Commission file number 000-22827
DISCAS, INC.
................................................................................
(Exact name of registrant as specified in its charter)
DELAWARE 06-1175400
................................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
567-1 South Leonard Street, Waterbury, Connecticut 06708
................................................................................
(Address of principal executive offices) (Zip Code)
203-753-5147
................................................................................
(Registrant's telephone number, including area code)
................................................................................
(Former name, former address 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
l934 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.
|X| Yes |_| No
The number of shares outstanding of the issuer's single class of common
stock as of December 1, 1998 was 3,270,776.
Transitional Small Business Disclosure Format (check one)
|_| Yes |X| No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DISCAS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, April 30,
1998 1998
----------- ----------
(unaudited) (audited)
ASSETS
Current assets:
<S> <C> <C>
Cash and equivalents $ 156,109 $ 464,619
Accounts receivable 966,518 909,296
Inventory 998,549 976,967
Other current assets 72,891 56,868
---------- ----------
Total current assets 2,194,067 2,407,750
---------- ----------
Property and equipment (net) 2,354,069 2,434,584
Other assets 317,747 260,495
---------- ----------
$4,865,883 $5,102,829
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 949,295 $ 895,978
Accrued expenses 19,492 92,962
Line of credit 1,173,023 1,273,023
Current portion of capital leases 33,652 35,885
Current portion of long-term debt 401,802 425,335
---------- ----------
Total current liabilities 2,577,264 2,723,183
---------- ----------
Capital leases, excluding current portion 49,206 83,854
Long-term debt, excluding current portion 149,211 187,888
Related party loans 112,312 236,156
Stockholders' equity:
Common stock, par value $.0001 per share:
Authorized 20,000,000 shares
Outstanding 3,260,776 and 3,207,200 shares, respectively 326 321
Additional paid in capital 4,615,119 4,459,305
Accumulated deficit (2,637,555) (2,587,878)
---------- ----------
Total stockholders' equity 1,977,890 1,871,748
---------- ----------
$4,865,883 $5,102,829
========== ==========
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DISCAS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
October 31, October 31,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales $1,229,330 $1,495,093 $2,568,950 $3,375,967
Cost of sales 953,963 1,350,870 2,041,403 2,679,986
---------- ---------- ---------- ----------
Gross Profit 275,367 144,223 527,547 695,981
Selling, general and administrative expenses 381,197 573,165 675,052 1,063,061
---------- ---------- ---------- ----------
Income (loss) from operations (105,830) (428,942) (147,505) (367,080)
Other income (expense):
Amortization of deferred financing costs - (58,768) - (145,000)
Interest expense (28,881) (53,877) (69,022) (129,441)
Gain on sale of fixed assets 25,006 43,006
---------- ---------- ---------- ----------
- -
Net other expense (3,875) (112,645) (26,016) (274,441)
---------- ---------- ---------- ----------
Income (loss) before extraordinary items (109,705) (541,587) (173,521) (641,521)
Extraordinary items
- forgiveness of debt income 123,844 - 123,844 -
- loss on extinguishment of debt - (287,463) - (287,463)
---------- ---------- ---------- ----------
Net income (loss) $ 14,139 $(829,050) $ (49,677) $(928,984)
========== ========== =========== ==========
Average number of shares outstanding 3,260,776 3,106,141 3,247,840 2,797,446
========= ========= ========= =========
Net income (loss) per share - basic and diluted
Income (loss) before extraordinary items (.03) (.18) (.05) (.23)
Extraordinary items
- forgiveness of debt income .03 - .03 -
- loss on extinguishment of debt - (.09) - (.10)
---- ------ ------ ------
Net income (loss) $.00 $(.27) $(.02) $(.33)
==== ====== ====== ======
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DISCAS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six months ended
October 31,
1998 1997
----------- -----------
Cash flows from operating activities:
<S> <C> <C>
Cash received from customers $ 2,431,383 $ 3,439,030
Cash paid to suppliers and employees (2,488,125) (4,330,833)
Interest paid (69,022) (129,441)
----------- -----------
Net cash provided (used) by operating activities (125,764) (1,021,244)
----------- -----------
Cash flows from investing activities:
Payments on other assets (79,978)
Purchases of fixed assets (75,255) (525,903)
----------- -----------
Net cash used by investing activities (155,233) (525,903)
----------- -----------
Cash flows from financing activities:
Net proceeds from offering of stock - 3,190,878
Principal payments on long-term debt (62,210) (836,696)
Principal payments on capital leases (36,881) (13,987)
Proceeds from credit line (100,000) 793,119
Proceeds from issuance of common stock and warrants 100,000 -
Other 71,578 -
----------- -----------
Net cash provided by financing activities (27,513) 3,133,314
----------- -----------
Net increase (decrease) in cash (308,510) 1,586,167
Cash and equivalents at beginning of period 464,619 173,100
----------- -----------
Cash and equivalents at end of period $ 156,109 $ 1,759,267
=========== ===========
Reconciliation of net loss to cash provided (used) by
operating activities:
Net loss $ (49,677) $ (928,984)
----------- -----------
Items which did not (provide) use cash:
Depreciation and amortization 181,240 174,780
Extraordinary item - forgiveness of debt income (123,844) -
Amortization of deferred financing costs - 145,000
Extraordinary item - loss on extinguishment of debt - 287,463
Working capital changes which provided (used) cash:
Accounts receivable (57,222) 63,063
Inventory (21,582) (113,737)
Other assets (64,722) 46,960
Prepaid expenses (16,023) (265,194)
Accounts payable 53,717 (347,758)
Accrued expenses (27,651) (82,837)
----------- -----------
Net cash provided (used) by operating activities $ (125,764) $(1,021,244)
============ ============
Noncash investing and financing activities:
Issuance of common stock in lieu of cash $ 45,819 $ -
=========== ==========
Issuance of warrants in lieu of cash $ 10,000 $ -
=========== ==========
Exchange of convertible debt for stock $ - $1,000,000
=========== ==========
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
DISCAS, INC.
October 31, 1998
Item 1. Financial Statements - Notes
1. Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and in the opinion
of the Company include all adjustments necessary to present fairly the results
of operations, financial position and changes in cash flow. All adjustments are
of a normal and recurring nature.
The results of operations for the interim periods are not necessarily indicative
of the results expected for the full year.
2. Inventories
Inventories are stated at the lower of cost or market as determined by the
average cost method.
Inventories consist of the following:
October 31, 1998 April 30, 1998
---------------- --------------
Finished goods $487,204 $306,707
Raw materials and supplies 511,345 670,260
-------- --------
$998,549 $976,967
======== ========
3. Property and equipment
Property and equipment are stated at cost and are depreciated over their useful
lives of 7-10 years. Depreciation is computed by using the straight-line method
for financial reporting purposes and straight-line and accelerated methods for
income tax purposes. Maintenance and repairs are charged to expense as incurred.
Expenditures for major renewals and betterments that extend the useful lives of
the assets are capitalized. The cost and related accumulated depreciation of
property and equipment retired or disposed of are removed from the accounts and
the resulting gains or losses are reflected in income.
<PAGE>
Item 1. Financial Statements - Notes (Cont'd)
Property and equipment consist of the following:
October 31, 1998 April 30, 1998
---------------- --------------
Machinery and equipment $3,380,393 $3,310,406
Leasehold improvements 86,091 86,091
Office equipment 149,692 144,424
Vehicles 64,556 64,556
Furniture and fixtures 29,868 29,868
---------- ----------
Total property and equipment 3,710,600 3,635,345
Less: accumulated depreciation (1,356,531) (1,200,761)
----------- -----------
Net property and equipment $2,354,069 $2,434,584
========== ==========
4. Other assets
Other assets consist of the following:
October 31, 1998 April 30, 1998
---------------- --------------
Goodwill, net $193,667 $201,137
Security deposits 71,357 59,358
Other 52,723 -
-------- --------
$317,747 $260,495
======== ========
5. Economic dependency
In the six month period ended October 31, 1998, two customers accounted for
approximately 28% of sales (17% and 11%, respectively); in the six month period
ended October 31, 1997, two customers accounted for approximately 29% of sales
(15% and 14%, respectively).
6. Stockholders' equity
During the six months ended October 31, 1998, warrants to acquire 40,000 shares
of the Company's common stock at $2.50 per share were exercised and 13,576
shares of common stock were issued to satisfy obligations of the Company.
7. Extraordinary item
An extraordinary gain of $123,844 resulted from forgiveness of debt to the
President of the Company. The debt was originally incurred by the President of
the Company voluntarily deferring a portion of his salary.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The Company produces proprietary plastic and rubber compounds and a broad line
of injection molded horticultural containers using a variety of recycled and
prime (virgin) materials. The Company has extensive experience in polymer
technology, and has commercialized proprietary formulations used in the
manufacturing of plastics in the packaging, footwear, aeronautic, military,
automotive and consumer products sectors.
Statements included in this report which are not historical in nature, are
intended to be, and are hereby identified as "forward looking statements" for
purposes of the safe harbor provided by Section 21E of the Securities Exchange
Act of 1934, as amended. The Company cautions readers that forward looking
statements, including without limitation, those relating to the Company's future
business prospects, revenues, working capital, liquidity, capital needs,
interest costs, and income, are subject to certain risks and uncertainties,
certain of which are described herein, that could cause actual results to differ
materially from those indicated in the forward looking statements.
The Company experienced a strong start in the first and second quarters in
implementing its Phase I plan to turnaround the business. Downsizing,
restructuring and refinancing plans are expected to be completed in the third
quarter. Despite a persistent depressed market for virgin plastic materials
which keeps the Company's recycled compounds business at very low profit
margins, the other specialty material businesses and the Christie molded
products businesses remain at acceptable margins.
During the first half the Company improved its operating effectiveness, reduced
SG&A expenses (in total dollars and as a percent of sales) to better match the
lower sales levels caused by seasonal factors, and decided to reduce sales to
marginal accounts, particularly in the commodity compounds sector.
Strong performance from Christie during the first half along with the successful
introduction of new molds for value line pots, consummation of the marketing
joint venture with Better Plastics (Better Christie Containers LLC) in Opopka,
Florida and the scheduled startup of new molding lines of traffic safety items
in the third quarter all give the Company a stronger base on which to build its
business.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
The Company has also taken steps to accelerate the planned closing of the
Christie molded products plant in Kenilworth, New Jersey by the end of the third
quarter in order to reduce the impact on sales and customer service during the
busy fourth quarter production season. Our current Waterbury, Connecticut
facility can accommodate this production. The Board of Directors has authorized
relocation of most of the Kenilworth plant to Waterbury, with possible
relocation of some equipment at outside molders in New Jersey, Florida and New
England, subject to available financing and hiring of key personnel. This move
will eliminate the production bottlenecks of the Kenilworth plant and
approximately $200,000 in annual fixed costs for rents, taxes and building
related costs.
The relocation and facility closing cost is estimated at $100,000-$125,000.
Refinancing activities to replace the Company's current senior lender have not
been completed, and the Company continues to be in default on its forbearance
agreement. Talks continue with our senior lender as well as other lenders
interested in refinancing the Company. A recent asset appraisal indicates that
the nature of the Company assets can likely justify restructuring long term
asset financing to reduce short term loans. In addition, the downsizing has
given the Company surplus equipment which will be sold to further reduce debt,
beginning in the third quarter.
The Company is still actively negotiating potential mergers and strategic
alliances to improve profits, reduce fixed overhead and to spread risk in a
continuing depressed market for commodity recycled plastics.
The Company's focus on our traditional plastic compound materials business is to
continue driving costs down while applying technology to produce higher quality
recycled compounds that can be marketed at attractive prices.
Our investments in molds, machinery and market distribution, particularly in the
Northeast and Southeast, will allow Discas to compete for an increased share of
the horticultural container market.
The strategic joint venture, Better Christie Containers, LLC, will be started by
mid third quarter and will result in an immediately expanded container line with
complementary sizes to offer customers. The joint venture will be introduced at
upcoming major trade shows in January, 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Management also decided to establish Discas Marketing Group, Inc. as a separate
subsidiary responsible for all products sold by the Company. Mr. Tom Tamaszek
was appointed President of this subsidiary and will be responsible for managing
and coordinating all sales activities of the Christie Products and Discas
materials business, along with sales of distributed products from outside
suppliers.
Our goal in the first half was to substantially balance the costs of operating
as a public manufacturing company with the income produced at the current
depressed profit levels. This adjustment has been substantially completed as a
result of reductions in personnel costs and the consolidation of the Waterbury
administrative and plant offices and warehouses into one combined operating
site. In addition, the temporary closing of our North Carolina preprocessing
facility is being reviewed and plans are being studied to activate the facility
as a joint venture to process low cost fiber and non-woven scrap feedstock,
which are now available at historically low prices. An alternate plan is to
permanently close the facility.
Our overall goal has not changed. We want to be the best investment in our
industry. We are working to restructure the financial base to strengthen our
ability to operate efficiently and to grow in higher margin markets.
One of our strengths which has been demonstrated during the tough downsizing and
restructuring of the past several months, is our dedicated employee team which
has worked tirelessly to restore balance to our business. Many key employees
have taken voluntary pay cuts and have worked extra hours to test and approve
alternate materials in order to give our customers an affordable quality
product.
The Consolidated Financial Statements of the Company as of and for the quarter
ended October 31, 1998 filed as part of this Form 10-QSB have been prepared in
accordance with generally accepted accounting principles applicable to a company
on a "going concern" basis, which except as otherwise noted, contemplates the
realization of assets and the liquidation of liabilities in the ordinary course
of business; however, as a result of operating losses and current economic
conditions, such realization of assets and liquidation of liabilities are
subject to significant uncertainties. The Company's ability to continue as a
going concern is dependent on its ability to achieve profitable operations and
to restructure its bank debt. The Company is currently in default on its
existing bank debt and is in the process of finding another lending source.
However, no assurance can be given that another lending source will be found.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
The Company expects to have a Year 2000 compliant computer system fully
operational by early 1999. The Company does not expect this project to have a
significant effect on operations and further expenditures are anticipated to be
immaterial (approximately $72,000 spent in fiscal 1998).
Results of Operations
Three Month Periods Ended October 31, 1998 and 1997
Sales decreased by $265,763, or approximately 17.8%, to $1,229,330 for the three
month period ended October 31, 1998, as compared to $1,495,093 for the three
month period ended October 31, 1997. The reduction in sales is attributable to
the Company's decision to reduce its commodity compounding business as well as
the conditions mentioned above.
Cost of goods sold decreased by $396,907, or approximately 29.4%, to $953,963
for the three month period ended October 31, 1998, compared to $1,350,870 for
the three month period ended October 31, 1997. The decrease in cost of goods
sold was attributable to lower raw material costs, improved processing
efficiencies and the reduced sales volume. Cost of goods sold as a percentage of
sales was 77.6% for the three month period ended October 31, 1998 as compared to
90.3% in 1997. The decrease in cost of sales as a percent of sales is primarily
the result of lower material costs and improved processing efficiencies.
Gross profit increased by $131,144, or approximately 90.9%, to $275,367 for the
three month period ended October 31, 1998, as compared to $144,223 for the three
month period ended October 31, 1997. The increase in gross profit is
attributable to cost reductions that more than offset the sales decline.
Selling, general and administrative costs decreased by $191,968, or
approximately 33.5%, to $381,197 for the three month period ended October 31,
1998 as compared to $573,165 for the three month period ended October 31, 1997.
The decrease is attributable to the Company's consolidation moves and
restructuring discussed above.
Operating loss decreased by $323,112 to $105,830 for the current three month
period ended October 31, 1998 as compared to a loss of $428,942 from the three
month period ended October 31, 1997.
Deferred financing charges of $58,768 were amortized in the three month period
ended October 31, 1997 (none in fiscal 1998) and this noncash charge is included
in other income (expense). In addition, the related debt was extinguished in
October 1997 and the remaining unamortized deferred financing charges ($287,463)
were expensed.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Net income increased by $843,189 to $14,139 for the three month period ended
October 31, 1998 as compared to a loss of $829,050 for the three month period
ended October 31, 1997. The increase was primarily attributable to reductions in
production, administrative and financing costs that more than offset sales
decreases and to the President's forgiveness of $123,844 of deferred
compensation.
Six Month Periods Ended October 31, 1998 and 1997
Sales decreased by $807,017, or approximately 23.9%, to $2,568,950 for the six
month period ended October 31, 1998, as compared to $3,375,967 for the six month
period ended October 31, 1997.
Cost of goods sold decreased by $638,583, or approximately 23.8%, to $2,041,403
for the six month period ended October 31, 1998, compared to $2,679,986 for the
six month period ended October 31, 1997. The decrease in cost of goods sold was
attributable to the factors discussed above. Cost of goods sold as a percentage
of sales was 79.5% for the six month period ended October 31, 1998, virtually
the same as 79.4% in 1997.
Gross profit decreased by $168,434, or approximately 24.2%, to $527,547 for the
six month period ended October 31, 1998, as compared to $695,981 for the six
month period ended October 31, 1997. Such decrease was primarily attributable to
the decrease in sales volume.
Selling, general and administrative costs decreased by $388,009, or
approximately 36.5%, to $675,052 for the six month period ended October 31, 1998
as compared to $1,063,061 for the six month period ended October 31, 1997. The
decrease is attributable to the factors mentioned above.
Operating loss decreased by $219,575 to a loss of $147,505 for the current six
month period ended October 31, 1998 as compared to a loss of $367,080 from the
six month period ended October 31, 1997.
Deferred financing charges of $145,000 were amortized in the six month period
ended October 31, 1997 (none in fiscal 1998) and this noncash charge is included
in other income (expense). In addition, the related debt was extinguished in
October 1997 and the remaining unamortized deferred financing charges ($287,463)
were expensed.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
Net loss decreased by $879,307 to $49,677 for the six month period ended October
31, 1998 as compared to $928,984 for the six month period ended October 31,
1997. The decrease was primarily attributable to reductions in production,
administrative and financing costs that more than offset sales decreases and to
the President's forgiveness of $123,844 of deferred compensation.
Liquidity and Capital Resources
Financial Condition
The Company's operations for the year ended April 30, 1998 produced severely
depressed results because of a persistent negative supply/demand relationship in
the polypropylene industry which has been caused, in part, by over capacity, the
economic conditions in Asia and reduced prices for crude oil. As a result of
these conditions, the operations of the Company resulted in the Company being in
violation of certain financial covenants under its debt agreement with a
commercial bank and the Company's working capital position has eroded to a
significant degree. The Company's primary lender entered into a forbearance
agreement with the Company which requires the Company to replace that senior
lender. This has not been completed and the Company continues to be in default
on its forbearance agreement. Talks continue with our senior lender as well as
with other lenders interested in refinancing the Company. A recent appraisal
indicates that restructuring long term asset financing to reduce short term
loans might be appropriate. If a satisfactory arrangement is not consummated,
this situation raises substantial doubt about the Company's ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Cash and cash equivalents at October 31, 1998 amount to $156,109 and the Company
may realize another $150,000 in cash resulting from the exercise of outstanding
warrants to purchase common stock of the Company. The initial $25,000 in cash
was received in November, 1998. If the warrants are exercised and a new lender
is found, management believes the Company can continue as a going concern
because it has significantly restructured its operations and made significant
reductions in its work force. As noted above, the results of operations for the
quarter ended October 31, 1998 are significantly improved over the quarters
ended October 31, 1997, January 31, 1998, April 30, 1998 and July 31, 1998. The
Company believes it is positioned to show continuing improvements from its
operations although it cannot predict with certainty when, if ever, sustained
profitable operations will be achieved.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)
As disclosed in the Company's Form 10-KSB filed for the fiscal year ended April
30, 1998, the Company did not meet the minimum tangible net worth requirement of
$2,000,000 for listing on the NASDAQ SmallCap Market. The Company submitted its
plan to meet such requirement to NASDAQ on September 4, 1998. Subsequently, the
Company presented its plan, which included the sale of surplus equipment, the
infusion of outside equity capital, the restructuring of some debt to equity,
and merger opportunities, before a NASDAQ Qualifications Hearing Panel on
November 19, 1998. The Company is awaiting NASDAQ's response. If the plan is not
approved by NASDAQ or the Company is not able to achieve an appropriate level of
income from operations over the long term, the Company's common stock and
warrants could be de-listed and trading would then only be available on the OTC
electronic bulletin board or the "pink sheets." If the Company is de-listed, its
ability to raise additional equity capital will be adversely impacted.
<PAGE>
PART II - OTHER INFORMATION
DISCAS, INC.
October 31, 1998
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Item Number
27 Financial Data Schedule (EDGAR filing only).
(b) Reports on Form 8-K
None.
<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 the
undersigned thereunto duly authorized:
DISCAS, INC.
Registrant
Date: December 14, 1998 By /s/ Patrick A. DePaolo, Sr.
------------------------------------
Patrick A. DePaolo, Sr.
Chairman, President and CEO
By /s/ Ray G. Paulin
------------------------------------
Ray G. Paulin
Controller, Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1
<CASH> 156,109
<SECURITIES> 0
<RECEIVABLES> 999,490
<ALLOWANCES> 32,972
<INVENTORY> 998,549
<CURRENT-ASSETS> 2,194,067
<PP&E> 3,710,600
<DEPRECIATION> 1,356,531
<TOTAL-ASSETS> 4,865,883
<CURRENT-LIABILITIES> 2,577,264
<BONDS> 0
0
0
<COMMON> 326
<OTHER-SE> 1,977,564
<TOTAL-LIABILITY-AND-EQUITY> 4,865,883
<SALES> 2,568,950
<TOTAL-REVENUES> 2,568,950
<CGS> 2,041,403
<TOTAL-COSTS> 2,716,455
<OTHER-EXPENSES> (43,006)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,022
<INCOME-PRETAX> (173,521)
<INCOME-TAX> 0
<INCOME-CONTINUING> (173,521)
<DISCONTINUED> 0
<EXTRAORDINARY> 123,844
<CHANGES> 0
<NET-INCOME> (49,677)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
