<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OF 14(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For quarterly period ended November 29, 1997
-----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from ________________to______________________
Commission file number 0-21634
-------
METRO GLOBAL MEDIA, INC.
------------------------
(Exact name of small business issuer as specified in its charter)
Delaware
-------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
65-0025871
--------------------------------
(IRS Employer Identification No.)
1060 PARK AVENUE, CRANSTON, RHODE ISLAND 02910
----------------------------------------------
(Address of principal executive offices)
(401) 942-7876
-----------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last year)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
- -
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12,13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Yes ___ No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,558,168 at December 27, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets F-1
Statements of Income F-2
Statements of Cash Flows F-3
Notes to Consolidated Financial Statements F-5 & F-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 29, 1997 VERSUS THREE
MONTHS ENDED NOVEMBER 30, 1996.
The Company had revenues of $4,551,635 for the three months ended November 29,
1997. This represents a 9.5% increase from revenues of $4,157,243 for the three
months ended November 30, 1996. Revenues consist principally of sales of
prerecorded videocassettes, magazines, electronic software products and related
items. The increase in revenue was primarily attributed to an increase in the
new feature and video compilation releases. The Company released 23 new
features and 54 video compilations during the quarter ended November 29, 1997 as
compared to 17 new features and 38 video compilations during the quarter ended
November 30, 1996. Magazine revenue decreased $88,500 due to the Company's
cessation of publication of its newsstand magazine during the quarter ended
August, 1997, which was offset by increases in sales of foreign film rights and
cable film rights of $74,300 and $38,800, respectively. The Company recognized
approximately $104,500 in revenue during the quarter ended November 29, 1997 for
restocking fees on returns in excess of allowances established.
Costs of revenues (including amortization of film costs) for the three month
period ended November 29, 1997 increased to $2,593,446 from $2,548,290 for the
corresponding period in the prior year principally due to the increase in
revenue. Costs of revenues as a percentage of revenues in the second quarter of
fiscal 1998 was 57% as compared to 61.3% in the second quarter of fiscal 1997.
This improvement in cost of revenue percentage is due to the increased sales of
foreign film rights and cable film rights on which there is little cost
associated.
Selling, general and administrative (SG&A) expenses for the three months ended
November 29, 1997, decreased marginally to $1,430,571 from $1,436,659 for the
three months ended November 29, 1996 due to decreases in advertising, artwork,
depreciation, legal fees and payroll costs fees which were partially offset by
increases in equipment rental and freight expenses. These expense reductions
are the result of the Company's continued expense monitoring and resolution of
previously pending legal matters. Selling, general, and administrative
expenses, as a percentage of revenue, decreased to 31.4% in 1997 as compared to
34.6% in the three months ended November 29, 1996.
In August, 1997 Rocket Media Group, LLC, a wholly-owned subsidiary of Metro,
Inc., formed a limited liability company, Maxstone Media Group, LLC, with
Salmill Enterprises, Inc. for the purpose of magazine publishing. As of
November 29, 1997, 2 magazines had been published. The Company's 50% share of
the net income, $11,797 at November 29, 1997, has been reflected in other
income.
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 29, 1997 VERSUS THREE
MONTHS ENDED NOVEMBER 30, 1996. (CONTINUED)
Operating income for the three month period ended November 29, 1997 was $527,618
as compared to operating income of $172,294 for the corresponding period in the
prior year. Net income for the fiscal quarters ended November 29, 1997 and
November 30, 1996 were $272,308 and $64,804 respectively, resulting in earnings
per share of $.08 for the quarter ended November 29, 1997 versus $.02 for the
quarter ended November 30, 1996.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 29, 1997 VERSUS SIX
MONTHS ENDED NOVEMBER 30, 1996.
Revenues for the six month period ended November 29, 1997 increased 1.2% to
$8,647,856 from $8,545,655 for the six months ended November 30, 1996. Costs of
revenues (including amortization of film costs) for the six month period ended
November 29, 1997 were $5,439,653 in comparison to $5,361,682 for the
corresponding period in the prior year, an increase of 1.5%. This increase is
primarily attributable to the increase in amortization of approximately $77,000
in fiscal 1998, as compared to the same period fiscal 1997. The Company's gross
profit percentage for the six month period ended November 29, 1997 decreased to
37.1% from 37.3% for the comparative prior fiscal period. The decrease in gross
profit percentage again reflects the increase in amortization due to the growth
in the film library.
Selling, general and administrative expenses for the six months ended November
29, 1997 decreased 2.5% or $76,471 to $2,957,828 from $3,034,299 for the six
months ended November 30, 1996. The decrease was primarily due to reductions in
artwork, freight, and rent, which were partially offset by increases in
equipment rental and professional services. As a result of the cost controls
implemented, selling, general and administrative expenses as a percentage of
sales decreased to 34.2% in fiscal 1998 from 35.5% in fiscal 1997.
Net income for the six months ended November 29, 1997 increased to $43,850 from
$23,559 in the prior year 's corresponding period.
LIQUIDITY AND CAPITAL RESOURCES AT NOVEMBER 29, 1997
Cash and cash equivalents amounted to $14,005 at quarter-end. Cash provided by
operating activities amounted to $1,621,663 for the six months ended November
29, 1997, whereas net cash of $733,675 was provided by operations for the same
period in the prior fiscal year. The primary uses of cash in fiscal 1998
consisted of (1) investments in motion pictures and other films $1,053,631; (2)
payments on capital lease obligations of $111,140, (3) purchases of property
and equipment $44,182; and (4) net payments on short-term borrowings of
$456,429.
Working capital amounted to $2,298,994 at November 29, 1997 as compared to
$2,489,792 at May 31, 1997. The net decrease in accounts receivable of
$1,133,812 was primarily due to increased collection efforts specifically on the
account receivables from Capital Video Corporation (see below). Inventory
increased $429,045 in anticipation of increased sales during the remainder of
fiscal 1998 due to an aggressive film production and release schedule. Accounts
payable and accrued expenses decreased $23,321 due to a payment of a litigation
settlement liability that was due in November, 1997 and improved cash flow from
the decrease in accounts receivable.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES AT NOVEMBER 29, 1997 (CONTINUED)
Of Metro's total accounts receivable at November 29, 1997, $599,337 (19.8%) as
compared to $1,711,443 (41.9%) at May 31, 1997 is owed by Capital Video
Corporation ("CVC"), a chain of retail stores of which a former
officer/shareholder of the Company is the sole shareholder. Because of the
amount of this receivable and the concentration of business with CVC, this
receivable is monitored very closely. Metro has the personal guaranty of its
one shareholder. Accordingly, no allowance for related party receivables and no
related party bad debt expense has been recorded in the Company's financial
statements.
At November 29, 1997 the Company had entered into agreements with producers to
finance 46 new feature films and videos which will be released during fiscal
1998. The completion of these movies will require approximately $800,000 to
$1,000,000. Financing for these activities has been and will continue to be
generated through operating cash flows as well as funds received from its line
of credit.
During June, 1997, Metro, Inc. entered into a line of credit agreement with a
finance company. Under the agreement, Metro, Inc. may borrow up to 75% of
assigned accounts receivable less than 90 days old, up to a maximum of
$1,500,000. The balance due under the line of credit bears interest at the
prime rate plus 5% per annum. In addition, Metro, Inc. shall pay the finance
company a collateral management or notification fee equal to 3/4 of 1% of sales
submitted to the finance company for inclusion in the net security value of
accounts receivable, but no more than $7,500 per month. The outstanding balance
under the line is secured by accounts receivable of Metro, Inc and guaranties of
the Company and certain officers/shareholders. The line of credit expires
during June, 1999, but includes an option for an additional year. As of
November 29, 1997, the balance on the line of credit was $440,818.
Capital Expenditures: Capital expenditures for the six months ended November 29,
1997 amounted to $44,182 as compared to $147,726 at May 31, 1997. The Company
anticipates that its capital expenditures for 1998 will be approximately
$350,000 to $450,000 primarily used for computer equipment in Rhode Island, and
duplicating and editing equipment in California. The company currently has a
$500,000 lease line available for its use which management believes is
sufficient.
Management believes that funds provided by operations, existing and new line of
credit, are adequate to meet the anticipated short-term and long-term capital
needs. Management believes that inflation has not had a material effect on its
operations.
New Accounting Standards
SFAS No. 128 has been issued effective for the years ending after December
15, 1997. This statement establishes standards for computing and presenting
earnings per share and also establishes standards with respect to disclosure of
information about an entity's capital structure. Earnings per share
calculations should not be impacted if the Company adopted such standard for the
year ended May 31, 1997. The Company is required to adopt the provisions of
SFAS No. 128 in the third quarter of 1998 and does not expect adoption thereof
to have a material effect on the Company's financial position or results of
operations.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES AT NOVEMBER 29, 1997 (CONTINUED)
New Accounting Standards (Continued)
Statement of Financial Accounting Standards No. 129 ("SFAS No. 129"),
"Disclosure of Information About Capital Structure" has been issued effective
for the years ending after December 15, 1997. This statement establishes
standards for disclosing information about an entity's capital structure. The
Company will be required to adopt the provisions of SFAS No. 129 in the third
quarter of 1998 and does not expect adoption thereof to have a material impact
on the Company's financial position, results of operations or cash flows.
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Assets
------
<TABLE>
<CAPTION>
For the six For the
months ended year ended
November 29, May 31,
1997 1997
(Unaudited) (See Note 3)
--------- ----------
<S> <C> <C>
Current assets:
- --------------
Cash $ 14,005 $ 57,724
Accounts receivable, less allowance for doubtful accounts of
$77,241 and $22,082, respectively 2,947,219 4,081,031
Inventory 4,113,546 3,684,501
Recoverable income tax 287,000 287,000
Prepaid expenses and other current assets 89,405 41,460
Deferred income taxes 165,650 165,650
---------- -----------
Total current assets 7,616,825 8,317,366
--------------------
Motion pictures and other films at cost, less accumulated amortization
of $5,786,855 and $5,085,183, respectively 3,705,702 3,353,743
Property and equipment at cost, less accumulated depreciation and
amortization of $1,457,027 and $1,303,93, respectively 1,466,293 1,575,199
Other assets 135,263 292,235
---------- -----------
Total assets $12,924,083 $13,538,543
------------ =========== ===========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
- -------------------
Current portion of long-term debt $ 178,561 $ 137,651
Current portion of capital lease obligations 219,479 222,962
Short-term borrowings 440,818 897,247
Accounts payable and accrued expenses 4,176,251 4,206,577
Income taxes payable 302,722 363,137
---------- -----------
Total current liabilities 5,317,831 5,827,574
-------------------------
Long-term debt, less current portion 355,078 395,988
Capital lease obligations, less current portion 253,934 361,591
Deferred income taxes 35,700 35,700
---------- -----------
Total liabilities 5,962,543 6,620,853
----------------- ---------- -----------
Commitments and contingencies
Shareholders' equity
- ---------------------
Preferred stock, no par value; authorized 2,000,000 shares; issued
and outstanding, none
Common stock, $.0001 par value; authorized 10,000,000 shares;
issued and outstanding and 3,558,168 shares, respectively 356 356
Additional paid in capital 5,504,311 5,542,762
Retained earnings 1,456,873 1,374,572
--------- -----------
Total shareholders' equity 6,961,540 6,917,690
-------------------------- --------- -----------
Total liabilities and shareholders' equity $12,924,083 $13,538,543
------------------------------------------ =========== ===========
</TABLE>
See notes to consolidated financial statements
F-1
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Six Three Six
months ended months ended months ended months ended
November 29, November 29, November 30, November 30,
1997 1997 1996 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $4,551,635 $8,647,856 $4,157,243 $8,545,655
Costs of revenues, including
amortization of motion pictures
and other films 2,593,446 5,439,653 2,548,290 5,361,682
---------- ---------- ---------- ----------
1,958,189 3,208,203 1,608,953 3,183,973
Selling, general and administrative
expenses 1,430,571 2,957,828 1,436,659 3,034,299
---------- ---------- ---------- ----------
Income from operations 527,618 250,375 172,294 149,674
----------------------
Other income (expense), net (68,345) (191,905) (58,602) (108,342)
---------- ---------- ---------- ----------
Income before income taxes 459,273 58,470 113,692 41,332
Income tax expense 186,965 14,620 48,888 17,773
---------- ---------- ---------- ----------
Net income $ 272,308 $ 43,850 $ 64,804 $ 23,559
========== ========== ========== ==========
Net income per common and
common equivalent share primary $ .08 $ .02 $ .02 $ .01
Weighted average number of shares
outstanding 3,558,168 3,558,168 3,708,341 3,670,396
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
November 29, November 30,
1997 1996
(Unaudited) (Unaudited)
--------- ---------
<S> <C> <C>
Cash flows from (used by) operating activities:
- ----------------------------------------------
Net income $ 43,850 $ 23,559
Adjustments to reconcile net income to net cash ------------ -----------
provided (used) by operating activities:
Depreciation and amortization 854,760 768,080
Amortization of deferred rent (7,005) -
Amortization of unearned compensation - 37,500
Gain on disposal of asset - 2,857
(Increase) decrease in assets:
Accounts receivable 1,133,812 (22,846)
Inventory (429,045) (75,752)
Prepaid expenses and other current assets (47,945) (15,496)
Other assets 156,972 23,458
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (23,321) 32,842
Income taxes payable (60,415) (40,527)
------------ -----------
Total adjustments 1,577,813 710,116
----------------- ------------ -----------
Net cash provided by operating activities 1,621,663 733,675
----------------------------------------- ------------ -----------
Cash flows from (used by) financing activities:
- ----------------------------------------------
Proceeds from the issuance of common stock - 26,250
Proceeds from capital leases - 53,927
Payments on notes payable - (186,366)
Payments on capital leases (111,140) (62,258)
Net payments from line of credit (456,429) -
------------ -----------
Net cash used by financing activities (567,569) (168,447)
------------------------------------- ------------ -----------
Cash flows used by investing activities:
- ---------------------------------------
Investments in motion pictures and other films (1,053,631) (779,356)
Purchase of property and equipment (44,182) (34,656)
------------ -----------
Net cash used by investing activities (1,097,813) (814,012)
-------------------------------------- ------------ -----------
Decrease in cash (43,719) (248,784)
----------------
Cash, beginning of period 57,724 360,671
------------ -----------
Cash, end of period $ 14,005 $ 111,887
============ ==========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Six months ended
<TABLE>
<CAPTION>
November 29, November 30
1997 1996
-------- -------
Supplemental disclosures of cash flow information:
- ----------------------------------------------------
<S> <C> <C>
Cash paid during the period for:
Interest $174,687 $85,014
======== =======
Income taxes $ 74,849 $58,300
======== =======
</TABLE>
Supplemental schedule of non-cash investing and financing activities:
- --------------------------------------------------------------------
During the quarter ended November 29, 1997, a wholly-owned subsidiary of the
Company contributed rights to certain magazine titles and other materials
(recorded at zero cost basis in these financial statements) in exchange for 50%
interest into a newly formed joint venture.
During the quarter ended November 30, 1996, the Company issued 90,000 shares of
common stock with a value of $230,000 to settle an outstanding accounts payable
balance with a consultant.
During the quarter ended November 30, 1996, a note receivable for $211,023 was
exchanged in full by acquiring PAL masters to be used for the sale of film
rights internationally.
During the quarter ended November 30, 1996, the Company settled pending
litigation by agreeing to pay a fine of $200,200 of which $100,200 was paid.
The Company was indemnified by a previous owner and therefore has reduced the
indebtedness to that owner by $200,200 accordingly.
See notes to consolidated financial statements.
F-4
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 29, 1997 AND NOVEMBER 30, 1996
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of Metro Global
Media, Inc. ("Metro Global") and its wholly-owned subsidiaries (collectively the
"Company"). All intercompany balances and transactions have been eliminated in
consolidation.
Basis of Presentation
The accompanying unaudited condensed 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 and
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 and six month periods ended
November 29, 1997 are not necessarily indicative of the results that may be
expected for the year ending May 31, 1998. For further information, refer to
the financial statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended May 31, 1997.
Earnings Per Share (EPS)
Earnings per common and common equivalent share are based on the average number
of common shares outstanding during each period, assuming exercise of all
options have exercise prices less than the average market price of the common
stock using the treasury stock method. Fully diluted computations reflect the
additional dilutive effect of using period-end prices under the treasury stock
method.
The weighted average number of common shares and common stock equivalent shares
utilized in computing earnings per share were 3,558,168 and 3,708,341 for
primary and fully diluted earnings per share for the quarters ended November 29,
1997 and 1996 respectively.
Joint Ventures
In August, 1997 Rocket Media Group, LLC, a wholly-owned subsidiary of Metro,
Inc. formed a limited liability company, Maxstone Media Group, LLC, with Salmill
Enterprises, Inc. for the purpose of magazine publishing. The investment in the
jointly owned company is carried at cost, adjusted for the company's
proportionate share of their undistributed earnings or losses.
F-5
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 29, 1997 AND NOVEMBER 30, 1996
(UNAUDITED)
2. NOTES PAYABLE
During June, 1997, Metro, Inc., a wholly owned subsidiary of the Company,
entered into a line of credit agreement with a finance company. Under the
agreement, Metro, Inc. may borrow up to 75% of assigned accounts receivable less
than 90 days old, up to a maximum of $1,500,000. The balance due under the line
of credit bears interest at the prime rate plus 5% per annum. In addition,
Metro, Inc. shall pay the finance company a collateral management or
notification fee equal to 3/4 of 1% of sales submitted to the finance company
for inclusion in the net security value of accounts receivable, but no more than
$7,500 per month. The outstanding balance under the line is secured by accounts
receivable of Metro, Inc and guaranties of the Company and certain
officers/shareholders. The line of credit expires during June, 1999, but
includes an option for an additional year. As of November 29, 1997, the balance
on the line of credit was $440,818.
3. SUBSEQUENT EVENTS
During December, 1997, the company discovered that its former director and Chief
Financial Officer was a convicted felon and had been criminally suspended from
appearing or practicing before the Securities and Exchange Commission. See Form
8-K as filed by the Company on December 29, 1997 for more detailed information.
As of January 13, 1998, the Company has engaged a forensic consulting firm. The
results of their engagement are expected during February, 1998.
F-6
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
Not applicable
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
-----------------
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
None
(b) Reports of Form 8-K
The Company filed a Form 8-K with the Securities and Exchange
Commission on December 29, 1997 to report the following:
Item 5. Other events
The Company recently learned that on May 27, 1992, in United
States v. Blair, criminal action No 92-CR-Z46 (N.D.N.Y.),
Thomas J. Blair (a/k/a T. James Blair) ("Blair") a former
director and chief financial officer of the Company pled
guilty to and was convicted of two counts of felony charges.
Based on the foregoing, the commission found that Blair had
been convicted of a felony within the meaning of Rule
102(e)(2) of the Commission's Rules and Practices and on
August 29, 1995 issued an order that Thomas J. Blair was
forthwith permanently suspended from appearing or practicing
before the commission.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
-------------------------------------------
As a result of the discovery concerning Blair, the company's auditors
have informed the Company that because they relied on Mr. Blair's
management representations, and this could impact materially the
fairness and reliability of the company's financial statements, their
audit reports dated July 31, 1997 and August 9, 1996 on the underlying
financial statements of the years ended May 31, 1997 and May 31, 1996
are not to be relied upon.
The Company is in the process of retaining an independent accounting
firm to re-examine the previously filed financial statements to verify
their accuracy. The Company will file a supplemental report with the
results of that examination when the investigation is completed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be singed on its behalf by the
undersigned, thereunto duly authorized.
METRO GLOBAL MEDIA, INC.
By:_________________________________
Janet Hoey, Treasurer
(duly authorized, principal financial
and chief accounting officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> MAY-30-1998 MAY-30-1998
<PERIOD-START> AUG-31-1997 JUN-01-1997
<PERIOD-END> NOV-29-1997 NOV-29-1997
<CASH> 14,005 0
<SECURITIES> 0 0
<RECEIVABLES> 2,947,219 0
<ALLOWANCES> 0 0
<INVENTORY> 4,113,546 0
<CURRENT-ASSETS> 7,616,825 0
<PP&E> 1,466,293 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 12,924,083 0
<CURRENT-LIABILITIES> 5,317,831 0
<BONDS> 0 0
0 0
0 0
<COMMON> 356 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 12,924,083 0
<SALES> 4,551,635 8,647,856
<TOTAL-REVENUES> 4,551,635 8,647,856
<CGS> 2,593,446 5,439,653
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 68,345 191,905
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 459,273 58,470
<INCOME-TAX> 186,965 14,620
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 272,308 43,850
<EPS-PRIMARY> .08 .02
<EPS-DILUTED> 0 0
</TABLE>
