UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(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, 1997
( ) 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 -17072
WINDSWEPT ENVIRONMENTAL GROUP, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 11-2844247
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
100 Sweeneydale Avenue, Bay Shore, New York 11706
(Address of principle executive offices)
(516) 694-7060
(Issuer's telephone number)
Indicate by check mark whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes __X__ No_____
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common Stock, Par Value $.0001 10,410,396
- --------------------------------------------------------------------------------
(Title of Each Class) (Outstanding at October 31, 1997)
Transitional Small Business Disclosure Format (check one): Yes _____ No __X__
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31,
1997 April 30,
(Unaudited) 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 117,427 $ 654,377
Accounts receivable, net of allowance for doubtful
accounts of $250,000 and $200,000 at July 31,
1997 and April 30, 1997, respectively 3,034,395 2,195,284
Inventories and prepaid supplies 177,193 158,714
Costs in excess of billings on contracts in progress 274,200 --
Due from officer 49,053 --
Other current assets 276,752 426,220
------------ ------------
Total current assets 3,929,020 3,434,595
------------ ------------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization 3,122,060 2,841,783
------------ ------------
OTHER ASSETS
Goodwill, net 1,488,866 1,529,320
Note receivable, net of current portion 196,125 200,282
Other assets 231,818 233,271
------------ ------------
TOTAL ASSETS $ 8,967,889 $ 8,239,251
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable to bank $ 745,930 $ --
Accounts payable and accrued expenses 2,937,485 2,573,708
Payroll taxes payable 527,715 347,404
Current portion of long-term debt 684,373 765,432
Billings in excess of cost on contracts in progress 506,000 18,765
Obligations of unconsolidated subsidiary, net 196,112 196,112
------------ ------------
Total current liabilities 5,597,615 3,901,421
OTHER LIABILITIES
Convertible notes 800,000 800,000
Long-term debt, net of current portion 467,446 454,560
Other liabilities 75,000 --
------------ ------------
Total liabilities 6,940,061 5,155,981
------------ ------------
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
par value $.01; 1,300,000 shares issued and outstanding 1,300,000 1,300,000
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value,
10,000,000 shares authorized; 1,300,000
Series A redeemable convertible shares issued and outstanding -- --
Common stock, $.0001 par value,
50,000,000 shares authorized;
10,069,455 shares issued, 10,049,455, outstanding 1,007 979
Additional paid-in capital 27,741,402 27,318,031
Treasury stock, 20,000 shares at cost (10,000) (10,000)
Accumulated deficit (26,753,609) (25,379,601)
Less deferred compensation (250,972) (146,139)
------------ ------------
Total stockholders' equity 727,828 1,783,270
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,967,889 $ 8,239,251
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
1
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
(Unaudited)
July 31, July 31,
1997 1996
----------- -----------
Revenues $ 3,295,363 $ 5,073,402
Cost of revenues 3,039,914 3,328,727
----------- -----------
Gross profit 255,449 1,744,675
Selling, general and administrative expenses 1,321,220 1,453,135
----------- -----------
Income (loss) from operations (1,065,771) 291,540
----------- -----------
Other income (expense):
Losses on investments -- (100,003)
Interest expense (308,237) (15,056)
----------- -----------
Total other income (expense) (308,237) (115,059)
----------- -----------
Net income (loss) $(1,374,008) $ 176,481
=========== ===========
Earnings (loss) per common share $ (.14) $ .02
=========== ===========
Weighted average number of
common shares outstanding 9,835,410 7,597,922
=========== ===========
See Accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JULY 31, 1997
(Unaudited)
Common Stock
------------------------------- Additional
Number of Par Paid-in Treasury
Shares Value Capital Stock
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at April 30, 1997 9,766,074 $ 979 $ 27,318,031 $ (10,000)
Issuance of common stock for services 86,011 9 65,084 --
Issuance of common stock for
employee and director compensation 175,552 17 127,509 --
Issuance of common stock to settle
legal obligations 21,818 2 14,998 --
Accretion of discount on convertible
notes -- -- 239,126 --
Amortization of deferred compensation -- -- -- --
Dividends paid -- -- (23,346) --
Net loss -- -- -- --
------------ ------------ ------------ ------------
Balance at July 31, 1997 10,049,455 $ 1,007 $ 27,741,402 $ (10,000)
============ ============ ============ ============
<CAPTION>
Accumulated Deferred
Deficit Compensation Total
------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at April 30, 1997 $(25,379,601) $ (146,139) $ 1,783,270
Issuance of common stock for services -- (15,000) 50,093
Issuance of common stock for
employee and director compensation -- (150,000) (22,474)
Issuance of common stock to settle
legal obligations -- -- 15,000
Accretion of discount on convertible
notes -- -- 239,126
Amortization of deferred compensation -- 60,167 60,167
Dividends paid -- -- (23,346)
Net loss (1,374,008) -- (1,374,008)
------------ ------------ ------------
Balance at July 31, 1997 $(26,753,609) (250,972) $ 727,828
============ ============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
<TABLE>
<CAPTION>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
(Unaudited)
July 31, July 31,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(1,374,008) $ 176,481
Adjustments to reconcile net income (loss) to net cash
flows from operating activities:
Depreciation and amortization 542,562 160,300
Provision for doubtful accounts 76,997 31,000
Issuance of common stock for services 60,776 150,000
Losses on investment -- 100,003
Changes in operating assets and liabilities:
Accounts receivable (916,108) (1,155,260)
Inventories (18,479) (105,000)
Due from officer (49,053) --
Other current assets 149,468 (89,260)
Other assets (9,567) 21,791
Accounts payable and accrued expenses 420,620 279,321
Current Income taxes 180,311 (38,375)
Billings in excess of costs on contracts in progess, net 213,035 --
Other current liabilities -- (228,591)
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (723,446) (697,590)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Obligations of unconsolidated subsidiary, net -- 147,987
Collection of notes receivable 4,157 --
Acquisition of fixed assets (390,091) (196,197)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (385,934) (48,210)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments of long-term debt (150,154) (33,135)
Proceeds from revolving bank line, net 745,930 --
Dividends paid on redeemable preferred stock (23,346) --
Proceeds from issuance of common stock -- 1,129,413
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 572,430 1,096,278
----------- -----------
NET INCREASE (DECREASE) IN CASH (536,950) 350,478
CASH - BEGINNING 654,377 282,933
----------- -----------
CASH - ENDING $ 117,427 $ 633,411
=========== ===========
Cash paid during the period for:
Interest $ 34,027 $ --
=========== ===========
Taxes $ -- $ --
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JULY 31, 1997
(Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet at April 30, 1997 has been derived from the
audited consolidated balance sheet contained in Windswept Environmental
Group, Inc.'s (the "Company") Form 10-KSB and is presented for comparative
purposes. The unaudited interim financial statements of the Company for the
three months ended July 31, 1997 and 1996 have been prepared by management
and include all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the unaudited interim periods. The
results of operations for interim periods are not necessarily indicative of
the results to be expected for the full year. These consolidated interim
financial statements should be read in conjunction with he financial
statements and notes thereto included in the Company's Form 10-KSB for
fiscal year ended April 30, 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassifications - Certain amounts included in the prior year's
consolidated financial statements have been reclassified to conform with
the current periods presentation.
3 LIQUIDITY AND BUSINESS RISKS
As of July 31, 1997 the Company has an accumulated deficit of $26,753,609
and has not generated positive cash flow from operations to date. The
Company has financed its operations to date primarily through issuances of
debt and equity securities. At July 31, 1997, the Company had $117,427 in
cash, and a working capital deficit of $1,668,595. In addition, as of
October 31, 1997 and July 31, 1997, the Company was in arrears with respect
to certain payroll tax obligations of approxinately $575,000 and $528,000,
respectively.
In May 1997, the Company entered into a revolving bank credit facility to
obtain a revolving credit line of $1,500,000, secured by certain of the
Company's assets. Borrowings remain at a maximum of $750,000. The Company
is working independently and in conjunction with its bank to find financing
sources above the $750,000 line which the bank has made available, using
the same collateral provided to the bank. The Company has received
proposals which it is in the process of evaluating.
The Company believes that, should this financing be made available, the
Company would have adequate capital resources to meet its current cash
requirements for a period of at least twelve months. Management believes
that should the bank not make available the additional financing, there
will be alternative debt and/or equity sources available to the Company.
The Company is currently engaged in various discussions with potential
investors regarding possible equity transactions.In addition, the Company
is striving to improve its gross margin and control its selling, general,
and administrative expenses. There can be no assurance, however, that
changes in the Company's plans or other events effecting the Company's
operations will not result in accelerated or unexpected cash requirements,
or that it will be successful in obtaining the additional financing to meet
its obligations as they become due. The Company's future cash requirements
will depend on numerous factors, including, but no limited to: (i) the
ability to successfully bid on construction contracts (ii) the ability to
generate positive cash flow from operations, and (iii) general economic
conditions.
4. EQUITY TRANSACTIONS
During the quarter ended July 31, 1997, the Company issued 100,000 common
share valued at $75,000 to a new employee. The Company also agreed to issue
an additonal 100,000 common shares to the same employee on the one year
employment anniversary date.
5. RELATED PARTY TRANSACTIONS
Due from officer represent interest bearing (8%) advances to the Company's
chief executive officer due upon demand. The Company purchased materials
and supplies of $38,317, and had an outstanding balance payable of $56,598
to Eastco Industrial Safety Corp., of which one of it's directors is
affiliated. The same director is owed $100,000 on a 12% convertible note
payable in full on December 1999.
5
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JULY 31, 1997
(Unaudited)
6. NOTE PAYABLE TO BANK
Secured Revolving Credit Facility
In May 1997, the Company executed a revolving bank credit facility (the
"Facility") which provides for borrowings of up to $1,500,000 secured by
all of the Company's assets not previously pledged under a debt or lease
obligation. The Facility bears interest at the bank's prime rate plus
$1.5%. The Facility expires May 1, 2000.
Borrowings shall be limited to the lesser of $1.5 million less reserves
determined by the bank or 80% of the Company's eligible receivables, as
defined. Said reserves remain at a minimum $750,000.
The Facility requires certain minimum tangible net worth, working capital,
and other restrictive covenants. The Company was in default of certain of
these covenants at July 31, 1997.
7. STATEMENT OF CASH FLOWS
During the quarter ended July 31, 1997, the Company financed the
acquisition of certain machinery and office equipment of approximately
$82,000 through various capital lease transactions. The Company utilized
approximately $72,000 of its common stock to repay liabilities of $57,000
and prepaid certain public relations expenses in the amount of $15,000. In
connection with an employment agreement reached during the first quarter of
fiscal 1998 the Company recorded deferred compensation of $150,000 after
issuing 100,000 shares of its common stock valued at $75,000 and recording
an other liability of $75,000 for the shares to be issued on the employment
anniversary date. See Note 4.
During the quarter ended July 31, 1996 the Company issued $58,000 in
treasury shares to settle legal obligations.
8. COMMITMENTS AND CONTINGENCIES
Litigation
In October 1996, the United States Attorney for the Eastern District of New
York obtained a federal grand jury indictment against, among others, the
former Chief Operating Officer and the former Special Securitie Counsel on
charges including violations of federal securities law, including
fraudulent issuances of 700,000 shares of the Company's common stock. The
former Chief Operating Officer and the former Special Securitites Counsel
both subsequently pleaded guilty to the charges in the Federal indictment.
The SEC has been investigating what role,if any, other officers and
directors, including the current Chairman and Chief Executive Officer and
the former Chief Financial Officer, may have had in connection with such
activities. The Company hascooperated and continues to cooperate with the
SEC by providing documents in response to subpoenas issued to it. To date,
no charges have been filed against the Company, it's CEO, or it's former
CFO, as a result of the investigation. However, the SEC could seek an order
enjoining the Company from violating the securities laws.
The Company is currently negotiating with the tax authorities regarding the
late payment of the required withholding taxes. No assurance can be given
that the Company will be able to reach an agreement with the tax
authorities, that the tax authorities will not immediately seek payment of
the taxes, or that the tax authorities will not commence an action or file
a lien against the Company in order to recover the taxes.
The Company is currently in default of its bank agreement due to failure to
comply with certain of its loan covenants. The Company is also in default
of its $700,000 convertible notes due to non-payment of interest.
The Company is party to other litigation matters and claims which are
normal in the course of its operations, and while the results of litigation
and claims cannot be predicted with certainty, management believes, based
on advice of counsel, the final outcome of such matters will not have a
materially adverse effect on the consolidated financial position, results
of operations and cash flows of the Company.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion of the fiscal quarters ended July 31, 1997 and 1996,
should be read in conjunction with the Consolidated Financial Statements
contained herein.
RESULTS OF OPERATIONS
Net loss and loss per share was $(1,374,008) and $(.14) at July 31, 1997
compared to net income and earnings per shareof $176,481 and $.02 per share
during the same period in 1996.
Revenues decreased by $1,778,039, or 35%, from $5,073,402 to $3,295,363, while
gross margins declined to 8% compared to 34% for the first quarter of fiscal
1997. In the quarter ended July 31, 1996 the Company generated revenues of
$2,200,000 on a New York City Housing Authority paint removal project. The
decrease in gross margin was a result of the recognition of losses in the
current period related to certain longer-term contracts with projected losses,
the effect of higher labor costs due to unionization in June 1996, and cost
overruns on certain fixed price contracts during the quarter ended July 31,
1997.
Non-cash charges increased from $441,000 for the quarter ended July 31,1996 to
$680,000 in the present quarter, or 54% over the prior comparative period.
During the present quarter the Company incurred approximately $240,000 of
interest expense relating to the accretion of a discount on the $700,000 of
convertible notes issued in the fourth quarter of fiscal 1997. The Company also
incurred approximately $36,000 in goodwill amortization (included in selling,
general, and administrative charges) associated with the North Atlantic
acquisition which it also concluded in the fourth quarter of fiscal 1997.The
Company incurred increased depreciation charges and bad debt provision charges
of approximately $55,000 and $46,000, respectively in this fiscal period which
offset the $100,000 losses on investments in the prior fiscal year. The
increased depreciation charges are reflective of the Company's growth in
equipment capacity necessary to provide its broad range of services.
Selling, general and administrative expenses declined by $131,915, or 9%, from
$1,453,135 as of July 31,1996 to $1,321,220 as of July 31, 1997. The decline was
primarily related to a reduction in promotion, consulting and legal expenses of
approximately $315,000 in the prior comparative quarter offset by higher
employee compensation costs, goodwill amortization expense of $40,000, and
$25,000 in fines for late payroll filings in the current quarter. The Company
has hired various engineering, technical consulting, business development and
marketing personnel which it is paying on a non-commission based salary
structure to develop and extend various strategic lines of business for which
the Company has set its strategic focus. The Company intends to provide various
additional value-added services to its existing clientele and to significantly
enhance its service offering to more profitable business areas.
Interest expense reflects the $240,000 accretion of the discount described above
and approximately $21,000 of interest on convertible notes. The balance
represents amortization of debt issue costs and fees associated with the current
bank facility as well as normal interest charges related to its bank facilty and
outstanding equipment loans.
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 1997 the Company has an accumulated deficit of $26,753,609 and
has not generated positive cash flow from operations to date. The Company has
financed its operations to date primarily through issuances of debt and equity
securities. At July 31, 1997, the Company had $117,427 in cash, and a working
capital deficit of $1,668,595. In addition, as of October 31, 1997 and July 31,
1997, the Company was in arrears with respect to certain payroll tax obligations
of approxinately $575,000 and $528,000, respectively. During the quarter ended
July 31, 1997, the Company invested approximately $390,000 in its property and
equipment. Of this amount $275,000 was spent on leasehold improvements relating
to the new Bay Shore headquarters and central operations facility, $60,000 in
transportation equipment and $55,000 on various other machinery and equipment.
The Company also paid down approximately $150,000 of equipment loans and paid
$23,346 in dividends to the holders of mandatorily redeemable convertible
preferred stock.
In May 1997, the Company entered into a revolving bank credit facility to obtain
a revolving credit line of $1,500,000, secured by certain of the Company's
assets. Borrowings remain at a maximum of $750,000. The Company is working
independently and in conjunction with it's bank to find financing sources above
the $750,000 line which the bank has made available, using the same collateral
provided to the bank. The Company has received various proposals which it is in
the process of evaluating. The Company is currently in default of this agreement
due to failure to comply with certain of its loan covenants. The Company is also
in default of its $700,000 convertible notes due to non-payment of interest.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (cont.).
LIQUIDITY AND CAPITAL RESOURCES (CONT.)
The Company believes that, should this financing be made available, the Company
would have adequate capital resources to meet its current cash requirements for
a period of at least twelve months. Management believes that should the bank not
make available the additional financing, there will be alternative debt and/or
equity sources available to the Company. The Company is currently engaged in
various discussions with potential investors regarding possible equity
transactions.In addition, the Company is striving to improve its gross margin
and control its selling, general, and administrative expenses. There can be no
assurance, however, that changes in the Company's plans or other events
affecting the Company's operations will not result in accelerated or unexpected
cash requirements, or that it will be successful in obtaining the additional
financing to meet its obligations as they become due. The Company's future cash
requirements will depend on numerous factors, including, but no limited to: (i)
the ability to successfully bid on construction contracts (ii) the ability to
generate positive cash flow from operations, and (iii) general economic
conditions.
The Company has reached certain short term agreements with federal tax
authorities on certain of its past due payroll withholding taxes. It is the
Company's intent to clear up the balance of these taxes as soon as it can obtain
financing. No assurance can be given that the tax authorities will not
immediately seek payment of the taxes, or that the tax authorities will not
commence an action or file a lien against the Company in order to recover the
taxes.
Any forward looking statements contained in this document reflect management's
current intentions and expectations. Actual future results could vary materially
depending on certain risks and uncertainties, including factors such as
financing, operational spending, revenue levels, and the other factors referred
to in this document.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In October 1996, the United States Attorney for the Eastern District of New
York obtained a federal grand jury indictment against, among others, the
former Chief Operating Officer and the former Special Securitie Counsel on
charges including violations of federal securities law, including
fraudulent issuances of 700,000 shares of the Company's common stock. The
former Chief Operating Officer and the former Special Securitites Counsel
both subsequently pleaded guilty to the charges in the Federal indictment.
The SEC has been investigating what role,if any, other officers and
directors, including the current Chairman and Chief Executive Officer and
the former Chief Financial Officer, may have had in connection with such
activities. The Company has cooperated and continues to cooperate with the
SEC by providing documents in response to subpoenas issued to it. To date,
no charges have been filed against the Company, it's CEO, or it's former
CFO, as a result of the investigation. However, the SEC could seek an order
enjoining the Company from violating the securities laws.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
The Company is currently in default of its secured revolving credit line
with North Fork Bank due to failure to comply with certain of the loan
covenants. The Company is also default of its $700,000 convertible notes
due to non-payment of interest.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: October 31, 1997
WINDSWEPT ENVIRONMENTAL GROUP, INC.
By: /s/ Michael O'Reilly
---------------------------------
MICHAEL O'REILLY, Chairman and
Chief Executive Officer
By: /s/ Alan W. Schoenbart
---------------------------------
ALAN W. SCHOENBART, CPA,
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUL-31-1997
<CASH> 117,427
<SECURITIES> 0
<RECEIVABLES> 3,284,395
<ALLOWANCES> 250,000
<INVENTORY> 177,193
<CURRENT-ASSETS> 3,929,020
<PP&E> 4,465,008
<DEPRECIATION> 1,342,948
<TOTAL-ASSETS> 8,967,889
<CURRENT-LIABILITIES> 5,597,615
<BONDS> 1,342,446
1,300,000
0
<COMMON> 1,007
<OTHER-SE> 726,821
<TOTAL-LIABILITY-AND-EQUITY> 8,967,889
<SALES> 3,295,363
<TOTAL-REVENUES> 3,295,363
<CGS> 3,039,914
<TOTAL-COSTS> 4,284,137
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 76,997
<INTEREST-EXPENSE> 308,237
<INCOME-PRETAX> (1,374,008)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,374,008)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,374,008)
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
