<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended JUNE 30, 1997
____ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-17864
DAWN TECHNOLOGIES, INC.
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C>
DELAWARE 13-3493060
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer Identification No.)
Organization)
</TABLE>
433 SOUTH MAIN STREET, WEST HARTFORD, CONNECTICUT 06110
(Address of Principal Executive Office) (Zip Code)
(860) 561-3979
(Issuer's Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registration was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of the issuer's common stock, as of August
7,1997, was:
Class of Stock Shares Outstanding
COMMON STOCK $.001 PAR VALUE PER SHARE 9,419,478
The exhibit index is located at page 11 of this report.
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<PAGE> 2
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION:
Item I - Financial Statements:
Consolidated Balance Sheets, June 30, 1997 (Unaudited) and
December 31, 1996 3
Consolidated Statements of Income and Accumulated Deficit,
Six Months and Three Months Ended June 30, 1997 and 1996 (Unaudited) 4
Consolidated Statements of Cash Flows, Six Months Ended
June 30, 1997 and 1996 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2 - Management's Discussion of Analysis of Financial Condition
and Results of Operations 9
PART II - OTHER INFORMATION 11
</TABLE>
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<PAGE> 3
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 14,269 $ 92,089
Accounts receivable, less allowance for doubtful accounts of $2,500 598,615 637,368
Inventories 333,231 764,939
Insurance claim receivable -- 201,980
Other current assets 595 25,366
----------- -----------
Total current assets 946,710 1,721,742
----------- -----------
PROPERTY AND EQUIPMENT
Land 52,150 52,150
Building and improvements 349,536 349,536
Machinery and equipment 844,645 727,769
Office equipment 339,337 321,543
Leasehold improvements 59,522 42,765
----------- -----------
1,645,190 1,493,763
Less accumulated depreciation and amortization (842,914) (786,920)
----------- -----------
802,276 706,843
----------- -----------
$ 1,748,986 $ 2,428,585
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank note payable $ 280,765 $ 100,000
Current portion of long-term debt 33,350 166,667
Current portion of capitalized lease obligations 28,421 28,420
Accounts payable and accrued expenses 679,667 839,792
Accrued payroll and related liabilities 65,729 125,732
Current portion of accrued cost of non-compete agreement 95,999 94,700
Income taxes payable 8,243 12,210
----------- -----------
Total current liabilities 1,192,174 1,367,521
----------- -----------
OTHER LIABILITIES
Capitalized lease obligations, less current portion 91,126 122,176
Accrued cost of non-compete agreement, less current portion 248,296 278,628
----------- -----------
Total other liabilities 339,422 400,804
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 15,000,000 shares
authorized, 9,419,478 shares issued and outstanding 9,420 9,327
Capital in excess of par value 2,397,708 2,381,151
Unearned restricted common stock issued (217,372) (217,372)
Treasury stock (10,625) (10,625)
Accumulated deficit (1,961,741) (1,502,221)
----------- -----------
217,390 660,260
----------- -----------
$ 1,748,986 $ 2,428,585
=========== ===========
</TABLE>
See the accompanying notes to consolidated financial statements.
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<PAGE> 4
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED DEFICIT
For the Six Months and Three Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES $ 2,268,667 $ 3,246,461 $ 1,099,597 $ 1,392,456
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Cost of sales 2,222,700 2,569,031 1,140,408 1,131,678
Selling, general and administrative expenses 480,846 558,537 213,771 315,463
Product development expenses -- 15,791 -- 4,114
----------- ----------- ----------- -----------
Total costs and expenses 2,703,546 3,143,359 1,354,199 1,451,255
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (434,879) 103,102 (254,602) (58,799)
OTHER INCOME (EXPENSE)
Interest expense (24,641) (60,242) (13,117) (19,942)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (459,520) 42,860 (267,719) (78,741)
INCOME TAX EXPENSE -- -- -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) (459,520) 42,860 (267,719) (78,941)
ACCUMULATED DEFICIT, beginning of period (1,502,221) (1,980,111) (1,694,022) (1,858,510)
----------- ----------- ----------- -----------
ACCUMULATED DEFICIT, end of period $(1,961,741) $(1,937,251) $(1,961,744) $(1,937,251)
=========== =========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE (0.049) 0.005 (0.028) (0.009)
----------- ----------- ----------- -----------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING $ 1,694,022) $ 9,036,478 $(1,694,022) $ 9,036,478
=========== =========== =========== ===========
</TABLE>
See the accompanying notes to consolidated financial statements.
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<PAGE> 5
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(459,520) $ 121,601
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 55,994 23,700
Expenses related to restricted common stock earned -- 10,000
Changes in assets and liabilities:
Accounts receivable 38,753 (72,717)
Inventories 431,708 5,742
Other current assets 24,771 17,867
Insurance claim receivable 201,980 --
Accounts payable and accrued expenses (160,125) (6,501)
Accrued payroll and related liabilities (60,003) 3,487
Income taxes payable (3,967) (18,377)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 61,591 84,802
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchases of property and equipment (151,427) (21,542)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short term borrowings 180,765 --
Payments on non-compete agreement (29,033) --
Repayments of long-term debt (116,667) (87,500)
Payments on capitalized lease obligations (31,049) (4,236)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES 4,016 (91,736)
--------- ---------
NET DECREASE IN CASH (77,820) (28,476)
CASH, Beginning of period 92,089 96,005
--------- ---------
CASH, End of period $ 14,269 $ 67,529
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid $ 11,524 $ 18,377
Interest paid $ 24,631 $ 22,022
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
During the six-month period ended June 30, 1997, $16,650 of long-term debt was
converted into 92,500 shares of the Company's $.001 par value common stock.
See the accompanying notes to consolidated financial statements.
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<PAGE> 6
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Statements
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not
include all the information and footnotes required by generally accepted
accounting principles. All adjustments which are of a normal recurring nature
and, in the opinion of management, necessary for a fair presentation have
been included. These statements should be read in conjunction with the
financial statements and notes thereto included in the Company's annual
report filed in its Form 10-KSB for the year ended December 31, 1996.
NOTE 2 - RELATED PARTY TRANSACTIONS:
In October, 1996, Mr. Dennis DiDonato, a former officer and director of the
Company filed an action against the Company, it's Chairman of the Board, and
it's two subsidiaries, in the Supreme Court of New York, Westchester County, to
collect compensation claimed due him for services rendered in 1994 plus interest
thereon and for severance allegedly owed him in the sum of $150,000,plus
interest, and for the alleged breach of an unsigned three year employment
contract, in the sum of $500,000 plus interest.
On January 28, 1997, the Company agreed in a settlement to pay Mr. DiDonato
$60,000 in twelve monthly equal installments. The balance due is included in
accrued payroll and related liabilities on the consolidated balance sheet at
June 30, 1997.
NOTE 3 - MAJOR CUSTOMERS:
At June 30, 1997, accounts receivable includes approximately $382,812 from two
major customers. Approximate sales to major customers during the six months and
three months ended June 30, 1997 and 1996 are summarized below:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
International Business Machines Corp. $ 548,144 $ 761,920 $ 293,469 $ 381,920
United States Defense Department 359,547 53,692 66,353 16,692
United States Postal Service 1,085,262 2,380,882 474,226 985,882
---------- ---------- ---------- ----------
$1,992,953 $3,196,494 $ 834,048 $1,384,494
========== ========== ========== ==========
</TABLE>
NOTE 4 - STOCKHOLDERS' EQUITY:
In January of 1997, the Company issued 92,500 shares of common stock of the
Company upon the conversion of $16,650 due on a subordinated convertible note.
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<PAGE> 7
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - NOTES PAYABLE:
Bank notes payable consist of the following at June 30, 1997:
<TABLE>
<S> <C>
Bank note payable on demand which is secured by all the assets of the
Company and guaranteed by the Company's principal stockholders. The
note bears interest at 1% above the bank's prime rate(9.5% at June 30,1997) $100,000
Line of Credit, secured by substantially all the assets of the Company. The
note bears interest at 1% above the bank's prime rate(9.5% at June 30,1997) 100,000
Bank note, equipment line. Borrowings up to $150,000 to be used only
for the acquisition of equipment. The note is secured by certain assets of the
Company and bears interest at 1% above the bank's prime rate(9.5% at
June 30, 1997 80,765
--------
$280,765
========
</TABLE>
NOTE 6- NOTES PAYABLE:
Long-term debt consists of a subordinated converted note payable due
October,1997. This note bears interest at 10% and can be converted into 107,500
shares of the Company's common stock during the term of the loan.
NOTE 7 - CAPITALIZED LEASE OBLIGATIONS
The following is a summary of capitalized leases at June 30, 1997:
<TABLE>
<S> <C>
Five equipment leases payable with monthly installments ranging from
$176 to $1605 including interest ranging from 11.75% to 14.74%. $ 119,547
Less current portion (28,421)
----------
$ 91,126
----------
Aggregate future principal payments on capitalized lease obligations
are as follows:
Twelve-month period ending June 30:
1998 $ 28,421
1999 36,978
2000 30,455
2001 23,693
----------
$ 119,547
==========
</TABLE>
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<PAGE> 8
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES:
The provision for income taxes represents minimum state corporate taxes
currently due.
The net operating loss incurred in 1994 created an uncertainty as to whether the
Company will be able to utilize its net operating loss carryforwards and realize
its deferred tax asset. Accordingly, management elected to record a valuation
allowance for the entire amount of its deferred tax asset. At December 31,1996,
the Company has a net operating loss carryforward of approximately $860,000 for
federal income tax purposes.
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<PAGE> 9
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and results of
operations during the periods included in the accompanying consolidated
financial statements.
Comparison of Operating Results for the Six Months Ended June 30, 1997 to 1996
Sales decreased from $3,246,461 in 1996 to $2,268,667 in 1997. This decrease
is due primarily to reduced sales volume to the United States Postal Service.
Cost of sales as a percentage of sales increased from 79.1% in 1996 to 97.9%
in 1997. This increase is primarily due to increased end of program costs on
contracts with the United States Postal Service and expensed start-up costs
on new contracts with respect to which sales have not yet occurred.
Selling, general and administrative expenses, decreased from $558,537 in 1996
to $480,846 in 1997 which is primarily due to lower volume and cost cutting
measures implemented by management.
As a result of all the factors discussed above, income from operations
decreased from $103,102 in 1996 to loss from operations of $434,879 in 1997.
Interest expense decreased from $60,242 in 1996 to $24,641 in 1997. This
decrease is due to the corresponding debt being reduced.
As a result of all factors discussed above, net income decreased from $42,860
in 1996 to a net loss of $459,520 in 1997.
Comparison of Operating Results for the Three Months Ended March 31, 1997 to
1996
Sales decreased from $1,392,456 in 1996 to $1,099,597 in 1997. This decrease
is due primarily to reduced sales volume to the United States Postal Service.
Cost of sales as a percentage of sales increased from 81.27% in 1996 to
103.71% in 1997. This increase is primarily due to increased end of program
costs on contracts with the United States Postal Service and expensed
start-up costs on new contracts with respect to which sales have not yet
occurred.
Selling, general and administrative expenses, decreased from $315,463 in 1996
to $213,771 which is primarily due to decreased volume and cost cutting
measures implemented by management.
As a result of all the factors discussed above, loss from operations
increased from $58,799 in 1996 to loss from operations of $254,602 in 1997.
Interest expense decreased from $19,942 in 1996 to $13,117 in 1997. This
decrease is due to the corresponding debt being reduced.
As a result of all factors discussed above, net loss increased from $78,941
in 1996 to a net loss of $267,719 in 1997.
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<PAGE> 10
Backlog
As of August 7, 1997, the Company had a sales backlog of approximately
$1,086,534. Scheduled shipments of this backlog are approximately $767,733 in
1997 and $318,801 in 1998. The backlog does not reflect anticipated orders
from certain repeat customers.
Management is aggressively pursuing efforts to diversify the Company's
product line and attract new customers, along with expanding services within
its current base.
Future sales beyond the shipments of items in the Company's backlog cannot be
predicted.
All of the orders in the Company's backlog are subject to cancellation. In
certain cases the Company may be entitled to some compensation in the event
of cancellation.
Liquidity and Capital Resources
Operating activities provided cash of $61,591 in 1997 and $84,802 in 1996. In
addition, the Company used cash of $151,427 in 1997 and $21,542 in 1996 to
acquire property and equipment, borrowed an aggregate of $180,765 against
it's line of credit and equipment line and repaid long-term debt and capital
lease obligations of $147,716 in 1997 and $91,736 in 1996.
The Company had a working capital deficit of $143,428 at June 30, 1997 and
surplus of $354,221 at December 31, 1996. The ratio of current assets to
current liabilities was 1.12 to 1.00 at June 30, 1997 and 1.26 to 1.00 at
December 31, 1996.
Management believes that the Company has sufficient liquidity, borrowing
capacity and other capital resources to meet its planned needs for the next
year.
Inflation
The Company does not believe that inflation would have a significant effect
on its operations because the Company factors in potential escalation's in
the costs of material, labor and overhead when preparing its bids for
contract awards and when pricing its products.
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<PAGE> 11
DAWN TECHNOLOGIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
The Company has increased it's work scope with Chromalloy of Connecticut, Inc.
from part refurbishment on certain components of jet engine parts to include
assembly of specific components. Sales volume can not be determined at this
time.
The Company received it's first two purchase orders from Pratt & Whitney
Aircraft during 1997. Upon successful completion of these orders, the Company
will be able to bid on numerous additional proposals for Pratt.
6 - EXHIBITS AND REPORTS ON FORM 8-K
a The following exhibits are filed as a part of this report.
Exhibit No Exhibit Description
---------- -------------------
3.2b Amendment to the By-laws of Dawn Technologies, Inc.
27 Financial Data Schedule
b. Reports on Form 8-K.
No reports on Form 8-K were filed by the issuer during the quarter
for which this report is filed.
-11-
<PAGE> 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dawn Technologies, Inc.
/S/ David Sklar August 14, 1997
----------------------------------------- ---------------
By: David Sklar Date
President and Chief Executive
Officer (Principal Executive Officer)
Dawn Technologies, Inc.
/S/ John Scanlon August 14, 1997
----------------------------------------- ---------------
By: John Scanlon Date
Chief Financial and Accounting
Officer (Principal Finance and
Accounting Officer)
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<PAGE> 13
EXHIBIT INDEX
Exhibit No Exhibit Description
---------- -------------------
3.2b Amendment to the By-laws of Dawn Technologies, Inc.
27 Financial Data Schedule
<PAGE> 1
Exhibit 3.2b
Amendment to the By-laws of Dawn Technologies, Inc.
Effective immediately after the 1997 Annual Meeting of Stockholders of the
Company, Article II, Section 8 of the By-laws of the Company is hereby amended
in its entirety to read as set forth below:
SECTION 8. BUSINESS TRANSACTED. (a) No business other than that stated in
the notice shall be transacted at any meeting without the unanimous consent of
all the stockholders to vote thereat.
(b) ANNUAL MEETING OF STOCKHOLDERS. (1) Nominations of persons for election
to the board of Directors to be considered by the stockholders may be made at an
annual meeting of stockholders (I) pursuant to the corporations notice of
meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any
stockholder of the corporation who was a stockholder of record at the time of
giving of the notice provided for in this Article II, who is entitled to vote at
the meeting and who compiled with the notice procedures set forth in this
Section 8.
(2) For nominations to be properly brought before an annual meeting by a
stockholder pursuant to clause (iii) of paragraph (b)(1) of this section 8, the
stockholder must have given notice thereof in writing to the secretary of the
corporation. To be timely, a stockholders notice shall be delivered to the
secretary at the principal executive offices of the corporation not less than 60
days nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting; provided, however that in the event that the date of the
annual meeting is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later than the close on the later of the 60th day prior to such annual meeting
or the tenth day following the day on which public announcement of the date of
such meeting is first made. Such notice shall set forth (I) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to regulation 14A under the securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such persons written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination is made, (x) the name
and address of such stockholder, as they appear on the corporations books, and
of such beneficial owner and (y) the number of shares of stock of the
corporation which are beneficially and of record by such stockholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (b)(2) of
this section 8 to the contrary, in the event that the number of directors to be
elected to the Board of Directors is increased and there is no public
announcement naming all of the nominees for directors or specifying the size of
the increased Board of Directors made by the corporation at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a stockholders
notice required by this section 8(b) shall also considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to the secretary at the principal executive offices of the
corporation not later than the close of business on the tenth day on which such
public announcement is first made by the corporation.
(c) SPECIAL MEETINGS OF STOCKHOLDERS. Nominations of persons for election to
the Board of Directors may be made at a special meeting of the stockholders at
which directors are to be elected (I) pursuant to the corporations notice of
meeting, (ii) by or at the direction of the Board of Directors, or (iii)
provided that the Board of Directors has determined that directors shall be
elected at such special meeting by any stockholder of the corporation who was a
stockholder of record at the time of giving of notice provided for in this
article 11 who is entitled to vote at this meeting and who compiled with the
notice procedures set forth in this section 8(c). In the event the corporation
calls a special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder may nominate a person
or persons ( as the case may be) for election to such position as specified in
the corporations notice of meeting, if the stockholder notice containing the
information required by paragraph (b)(2) of this Section 8 shall be delivered to
the secretary at the principal executive offices of the corporation not earlier
than the 90th day prior to such special meeting and not later than the close of
business on the later of the 60th day prior to such special meeting or the tenth
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the directors to be elected
at such
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<PAGE> 2
meeting.
(d) GENERAL. (1) Only such persons who are nominated in accordance with the
procedures set forth in this section 8 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with this section 8. The
presiding officer of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made in accordance with the procedures set forth in this section 8 and, if
any proposed nomination or business is not in compliance with this section 8, to
declare that such defective nomination or proposal be disregarded.
(2) For purposes of this section 8, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable news service or document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to sections
13,14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this section 8,
a stockholder shall also comply with all applicable requirements of the state
law and of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 8. Nothing in this Section 8
shall be deemed to affect any rights of stockholders to request inclusion of
proposals in the corporation's proxy statement pursuant to rule 14a-8 under the
exchange act.
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 14269
<SECURITIES> 0
<RECEIVABLES> 598615
<ALLOWANCES> 0
<INVENTORY> 333231
<CURRENT-ASSETS> 946710
<PP&E> 1645190
<DEPRECIATION> 842914
<TOTAL-ASSETS> 1748986
<CURRENT-LIABILITIES> 1192174
<BONDS> 339422
0
0
<COMMON> 9420
<OTHER-SE> 207970
<TOTAL-LIABILITY-AND-EQUITY> 1748986
<SALES> 2268667
<TOTAL-REVENUES> 2268667
<CGS> 2222700
<TOTAL-COSTS> 2703546
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24641
<INCOME-PRETAX> (459520)
<INCOME-TAX> 0
<INCOME-CONTINUING> (459520)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (459520)
<EPS-PRIMARY> (.049)
<EPS-DILUTED> (.049)
</TABLE>
