UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999 Commission File Number 000-18389
WORLD WIDE STONE CORPORATION
NEVADA 33-0297934
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification number)
5236 S. 40th Street, Phoenix, AZ 85040
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
602-438-1001
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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 1934 during
the preceding 12 months (or, for such 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 [ ]
As of September 30, 1999, there were 32,703,768 shares of common stock
outstanding.
<PAGE>
WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998 ............................... 3
Consolidated Statements of Operations
Three months ended September 30, 1999 and 1998 ......................... 4
Consolidated Statements of Operations
Nine months ended September 30, 1999 and 1998 .......................... 5
Consolidated Statements of Cash Flows
Nine months ended September 30, 1999 and 1998 .......................... 6
Notes to Consolidated Financial Statements ............................. 7
Item 2. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations .................... 8
PART II. OTHER INFORMATION ................................................ 13
Signatures ................................................................ 14
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<PAGE>
WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
1999 1998
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash $ 346,706 $ 279,167
Accounts receivable 602,184 265,585
Inventory 1,320,494 885,478
Prepaid expenses and other 170,744 168,715
----------- -----------
Total current assets 2,440,128 1,598,945
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of $1,532,220 and $1,247,199,
respectively 4,659,674 3,559,788
COST IN EXCESS OF NET ASSETS ACQUIRED, net of
accumulated amortization of $113,995 and
$100,316, respectively 159,594 173,273
OTHER ASSETS:
Other receivables 198,766 172,338
Deferred loan fees, net 58,944 --
Prepaid taxes 19,179 13,865
Deferred taxes -- 300,000
----------- -----------
Total assets $ 7,536,285 $ 5,818,209
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 157,621 $ 124,294
Accrued liabilities 275,870 189,714
Current portion of long-term debt 298,557 101,561
Other 900,000 900,000
----------- -----------
Total current liabilities 1,632,048 1,315,569
LONG-TERM DEBT, net of current portion 860,099 102,898
----------- -----------
Total liabilities 2,492,147 1,418,467
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 100,000,000
shares authorized, 34,703,768 shares issued,
32,703,768 outstanding 34,704 34,704
Additional paid-in capital 8,024,536 8,024,536
Accumulated deficit (2,916,855) (3,537,237)
Cumulative remeasurement adjustment 21,753 (2,261)
Treasury stock, at cost, 2,000,000 shares (120,000) (120,000)
----------- -----------
Total stockholders' equity 5,044,138 4,399,742
----------- -----------
Total liabilities and stockholders' equity $ 7,536,285 $ 5,818,209
=========== ===========
The accompanying notes are an integral part of these
consolidated balance sheets.
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<PAGE>
WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
-----------------------------
1999 1998
------------ ------------
REVENUE $ 1,860,900 $ 1,221,792
COST OF GOODS SOLD 898,382 574,825
------------ ------------
Gross profit 962,518 646,967
COST AND EXPENSES:
Selling, general and administrative 465,315 313,453
Depreciation and amortization 7,510 10,568
------------ ------------
Income from operations 489,693 322,946
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 6,241 1,246
Interest expense (36,974) (4,916)
(Loss) gain on currency remeasurement (44,878) 25,541
Other 27,383 --
------------ ------------
Total other income (expense) (48,228) 21,871
------------ ------------
Income before provision for income taxes 441,465 344,817
PROVISION FOR INCOME TAXES 178,000 --
------------ ------------
Net income 263,465 344,817
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Foreign currency remeasurement adjustment 3,226 --
------------ ------------
Comprehensive income $ 266,691 $ 344,817
============ ============
EARNINGS PER SHARE Basic and diluted:
Net income per share $ .01 $ .01
============ ============
Weighted average number of common shares
outstanding 32,703,768 34,703,768
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE>
WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended
September 30,
----------------------------
1999 1998
------------ ------------
REVENUE $ 4,567,585 $ 3,183,134
COST OF GOODS SOLD 2,316,805 1,507,333
------------ ------------
Gross profit 2,250,780 1,675,801
COST AND EXPENSES:
Selling, general and administrative 1,183,142 834,534
Depreciation and amortization 29,558 31,704
------------ ------------
Income from operations 1,038,080 809,563
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 13,444 2,947
Interest expense (69,407) (18,249)
(Loss) gain on currency remeasurement (10,118) 33,293
Other 27,383 --
------------ ------------
Total other income (expense) (38,698) 17,991
------------ ------------
Income before provision for income taxes 999,382 827,554
PROVISION FOR INCOME TAXES 379,000 --
------------ ------------
Net income 620,382 827,554
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Foreign currency remeasurement adjustment 24,014 --
------------ ------------
Comprehensive income $ 644,396 $ 827,554
============ ============
EARNINGS PER SHARE Basic and diluted:
Net income per share $ .02 $ .02
============ ============
Weighted average number of common shares
outstanding 32,703,768 34,703,768
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE>
WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
------------------------
1999 1998
----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 620,382 $ 827,554
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 304,140 248,648
Loss (gain) on foreign currency remeasurement 10,118 (33,293)
Changes in certain assets and liabilities:
Increase in accounts receivable (336,599) (168,244)
Increase in inventory (435,016) (185,109)
Increase in prepaid expenses and other (7,343) (53,361)
(Increase) decrease in other receivables (12,532) 168,169
Decrease in deferred taxes 300,000 --
Increase (decrease) in accounts payable 33,327 (21,361)
Increase (decrease) in accrued liabilities 86,156 (64,263)
----------- ---------
Net cash provided by operating activities 562,633 718,740
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and equipment, net (1,384,907) (405,433)
----------- ---------
Net cash used in investing activities (1,384,907) (405,433)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on notes payable (125,803) (90,976)
Proceeds from equipment loan, net of fees 1,015,616 --
----------- ---------
Net cash provided by (used in) financing
activities 889,813 (90,976)
----------- ---------
NET INCREASE IN CASH 67,539 222,331
CASH, beginning of period 279,167 221,660
----------- ---------
CASH, end of period $ 346,706 $ 443,991
=========== =========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest $ 30,732 $ 18,249
=========== =========
Cash paid for income taxes $ -- $ --
=========== =========
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE>
WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
(1) INTERIM FINANCIAL REPORTING:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows for the periods presented have been made. The results of operations
for the three-month and nine-month periods ended September 30, 1999 are not
necessarily indicative of the operating results that may be expected for the
entire year ending December 31, 1999. These financial statements should be read
in conjunction with the Company's Form 10-KSB for the year ended December 31,
1998.
(2) INVENTORY:
Inventory is stated at the lower of cost or market. Inventory and cost of goods
sold include all operating costs incurred at the two factories in Mexico as well
as freight charges from Mexico to the United States. Included in these operating
costs was depreciation of property, plant and equipment of $99,584 and $72,315
for the three months ended September 30, 1999 and 1998, respectively, and
$269,142 and $216,945 for the nine months ended September 30, 1999 and 1998,
respectively. As of September 30, 1999, inventory was located at the plant in
Durango, Mexico, at a showroom-warehouse in Phoenix, Arizona, and at a warehouse
in El Paso, Texas. Inventory at September 30, 1999, consists of finished goods
and raw materials of $1,019,882 and $300,612, respectively.
(3) EARNINGS PER SHARE:
The Company utilizes SFAS No. 128, EARNINGS PER SHARE, to compute basic and
diluted earnings per share. Because the Company has no outstanding convertible
securities or other common stock equivalents, there is no difference between
amounts reported for weighted average common shares and earnings per share for
basic and diluted amounts.
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<PAGE>
(4) FOREIGN CURRENCY TRANSLATION:
The Company's wholly-owned Mexican subsidiaries maintain their books and records
in Mexican pesos. Their functional currency, however, is the U.S. dollar.
Therefore, these subsidiaries utilize the remeasurement method of foreign
currency translation when consolidated.
The remeasurement method of foreign currency converts all monetary assets and
liabilities from Mexican pesos to U.S. dollars at the current rate of exchange
at the balance sheet date. All nonmonetary assets and liabilities are converted
at the historical rates that were present when the particular transaction took
place. Revenue and expenses from the statements of operations are converted from
Mexican pesos to U.S. dollars at a weighted average conversion rate.
Depreciation, amortization, and similar historical-cost-based expenses use a
historical-based rate. Remeasurement gains and losses resulting from
transactions that are short-term in nature are reported in the Company's
consolidated statements of operations as foreign currency remeasurement
adjustments. Remeasurement gains or losses resulting from intercompany
transactions that are long-term in nature are reported as a separate component
of stockholders' equity as a cumulative remeasurement adjustment.
(5) RELATED PARTY TRANSACTIONS
In January 1999, an officer of the Company acquired the building that the
Company leases for its corporate offices in Phoenix, Arizona. Because the
Company entered into the lease with a third party prior to the officer's
acquisition of the building, the Company believes that the terms of the lease
are no less favorable to the Company than it could obtain from non-affiliated
parties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this Report on Form 10-QSB that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's "expectations,"
"anticipation," "intentions," "beliefs," or "strategies" regarding the future.
Forward-looking statements include statements regarding revenue, margins,
expenses, and earnings analysis for fiscal 1999 and thereafter; future products
or product development efforts; spending for acquisitions of additional
equipment or expansion of production facilities; and liquidity and anticipated
cash needs and availability. All forward-looking statements included in this
Report are based on information available to the Company as of the filing date
of this Report, and the Company assumes no obligation to update any such
forward-looking statements. It is important to note that the Company's actual
results could differ materially from those in such forward-looking statements as
a result of a variety of factors, including those identified in the Company's
Form 10-KSB for the year ended December 31, 1998, as filed with the Securities
and Exchange Commission.
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<PAGE>
INTRODUCTION
The Company quarries, manufactures, and markets a wide variety of dimensional
stone products. The Company extracts marble limestone and travertine blocks from
quarries located in Mexico. The Company then transports the blocks to plants
operated by its wholly-owned Mexican subsidiaries in Durango, Durango, Mexico,
where the blocks are cut, honed, polished or tumbled, then dimensioned and
packaged. The Company markets its dimensional stone products primarily in the
United States and Canada through distributors, dealers, and designers. In
addition, the Company sells nominal quantities of its products in Europe.
RESULTS OF OPERATIONS OF THE COMPANY FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1999
REVENUE. The Company's revenue for the three months ended September 30, 1999 was
$1,860,900, which represents a 52% increase over revenue of $1,221,792 for the
three months ended September 30, 1998. The Company's revenue for the nine months
ended September 30, 1999 was $4,567,585, which represents a 43% increase over
revenue of $3,183,134 for the nine months ended September 30, 1998. The Company
attributes the increases in revenue to increased market acceptance and demand
for its products and its ability to sell additional volume through its stocking
distributors.
COST OF GOODS SOLD; GROSS PROFIT. Cost of goods sold was $898,382 and $2,316,805
during the three and nine months ended September 30, 1999, respectively, as
compared with $574,825 and $1,507,333 during the three and nine months ended
September 30, 1998, respectively. Gross profit as a percentage of revenue was
52% and 49% for the three and nine months ended September 30, 1999,
respectively, compared to 53% for both the three and nine months ended September
30, 1998. The decrease in gross profit as a percentage of revenue over the nine
month period ended September 30, 1999 resulted from excess costs incurred to
fill two specialty orders of specific stone color and dimension during the
second quarter of 1999. The Company rarely accepts speciality orders and has
adopted procedures to reduce the likelihood that it will accept speciality
orders in the future that may ultimately prove to be unprofitable. There can be
no assurance, however, that the Company will not incur unanticipated expenses in
connection with specialty orders that it accepts in the future.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased to $465,315 during the three months ended
September 30, 1999 from $313,453 during the three months ended September 30,
1998. Selling, general, and administrative expense represented approximately 25%
of revenue during both the three months ended September 30, 1999 and 1998.
Selling, general and administrative expense increased to $1,183,142 during the
nine months ended September 30, 1999 from $834,534 during the nine months ended
September 30, 1998. Selling, general, and administrative expense represented
approximately 26% of revenue during both the nine months ended September 30,
1999 and 1998. Although relatively consistent with the increase in revenue,
selling, general, and administrative expense has increased in each of the
periods presented due to the addition of employees, increased travel costs, and
increases in marketing and promotional activities.
INCOME BEFORE PROVISION FOR INCOME TAXES. Income before provision for income
taxes for the three months ended September 30, 1999 increased 28% to $441,465
compared to the same period in 1998. The increase is a direct result of
increased revenue. Income before provision for income taxes for the nine months
ended September 30, 1999, increased by 21% to $999,382 over $827,554 for the
nine months ended September 30, 1998, as a result of increased revenue.
PROVISION FOR INCOME TAXES. The Company has determined that it is more likely
than not that it will utilize all of its net operating loss carryforwards in
fiscal 1999. The Company accounted for utilization of its net operating loss
carryforwards during the nine-month period ended September 30, 1999 by reducing
its deferred tax asset by $300,000 and recording a related provision for income
taxes of $379,000 for the nine months ended September 30, 1999. The reduction of
the Company's deferred tax asset of $300,000 during the nine months ended
September 30, 1999 was a non-
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<PAGE>
cash transaction. No provision for income taxes was recorded for the nine months
ended September 30, 1998.
NET INCOME. Net income for the three months ended September 30, 1999, was
$263,465 as compared with net income of $344,817 for the three months ended
September 30, 1998. Net income for the nine months ended September 30, 1999, was
$620,382 as compared with net income of $827,554 for the nine months ended
September 30, 1998.
SEASONALITY
The Company historically has experienced lower sales in the fourth calendar
quarter as a result of production declines during the holiday season as well as
seasonal declines in homebuilding and remodeling. The Company took a number of
steps during fiscal 1998 to increase sales during the fourth quarter, including
concentrating selling efforts in parts of the world that experience warm weather
during this time. The Company has started taking similar steps during the third
and fourth quarters of fiscal 1999. The Company also may be subject to periodic
declines experienced by the building industry in general.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital position increased to $808,080 at September 30,
1999 from $283,376 at December 31, 1998. The increase was attributable to
increases in cash, accounts receivable, and inventory as a result of greater
production and sales.
The Company's net cash provided by operating activities was $562,633 for the
nine months ended September 30, 1999, compared to net cash provided by operating
activities of $718,740 for the nine months ended September 30, 1998. The change
was primarily attributable to increases in inventory and accounts receivable.
The Company invested approximately $1,900,000 during the first nine months of
1999 to construct its third factory. The Company intends to acquire additional
property, plant, and equipment during the fourth quarter of 1999 and in future
years in order to continue to support its current sales volume and to
accommodate anticipated increases in demand for its products.
On April 12, 1999, the Company obtained a loan in the principal amount of
$1,080,000 to purchase equipment to be installed at the new factory under
construction in Mexico. The loan bears interest at the rate of 9.5258% per annum
and matures on April 12, 2004. The loan is secured by quarry block, quarry
equipment, and the building structure and equipment purchased and installed
specifically from these loan proceeds at the new factory. The Company is the
guarantor for the loan under the terms and conditions of the loan agreement. The
Company's subsidiary, Sociedad Piedra Sierra, S.A. de C.V., also has guaranteed
the loan. Loan fees incurred in connection with obtaining the loan were deferred
and are being amortized over the life of the loan.
The Company's current cash resources, expected cash flow from operations, and
equipment financing are expected to be sufficient to fund the Company's capital
needs during the next 12 months at its current level of operations. The Company
may be required to obtain additional capital to fund its planned growth during
the next 12 months and beyond, particularly for expansion of the Company's
facilities and operations in Mexico. Potential sources of any such capital may
include the proceeds from bank financing, strategic alliances, and offerings of
the Company's equity or debt securities. There can be no assurance that such
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<PAGE>
capital will be available from these or other potential sources, and the lack of
such capital could have a material adverse effect on the Company's business.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two-digit entries to represent years in the date code field.
Computer systems and products that do not accept four-digit year entries will
need to be upgraded or replaced to accept four-digit entries to distinguish
years beginning with 2000 from prior years. The Company has upgraded its
internal computer network at its headquarters in Phoenix, Arizona, in order to
integrate its management information systems, as well as to ensure that its
computer systems and other process control equipment located at its Arizona
facility will be able to deal appropriately and without malfunctions caused by
"Year 2000" issues.
The Company has completed upgrades to its computer systems and equipment located
in Mexico during 1999 to ensure that they will properly process dates beginning
on and after January 1, 2000, as well as to improve the content, quality, and
flow of information throughout the Company. The Company currently has one
internal information technology systems employee and one external computer
engineer upgrading the computer network and computer-operated equipment.
The Company has corresponded with all its third-party vendors, suppliers, banks,
government agencies, and others with respect to the Year 2000 issue. Most of the
third parties that the Company has contacted have responded and have indicated
that they have addressed the Year 2000 issue and are working towards solving
problems related to the Year 2000 issue. There can be no assurance, however,
that computer systems operated by third parties, including customers, vendors,
credit card transaction processors, and financial institutions, will continue to
properly interface with the Company's systems and will otherwise be compliant on
a timely basis with Year 2000 requirements.
The Company's costs to modify software and hire Year 2000 solution providers are
included as part of the management information system enhancements described
above. The Company currently estimates that its costs to address the Year 2000
issue to date have been approximately $45,000 for internal and external computer
network services. The Company currently anticipates that it will incur minimal
additional costs during 1999 to complete documentation of its contingency plan.
The Company's business depends entirely upon its ability to extract and process
stone in Mexico and ship its dimensional stone products to the United States for
sales and distribution. The Company may be at risk with respect to suppliers of
necessary resources, particularly suppliers of power, water, and
telecommunications within Mexico, if those suppliers are not Year 2000
compliant. Extended power brownouts or blackouts or loss of the water supply at
the Company's factories in Mexico would seriously disrupt the Company's
production of dimensional stone products. Telephone communication system
failures within Mexico or between the United States and Mexico, Canada, and
Europe as a result of Year 2000 issues would severely hinder the Company's sales
and shipping functions. In addition, disruption to local and international
banking, credit
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<PAGE>
card processing, and other financial services as a result of Year 2000 issues
would have a material adverse effect on the Company's cash management systems
and financial resources. Potential revenue losses and/or liabilities to third
parties as a result of Year 2000 problems could adversely impact the Company's
ability to continue as a going concern. Because of these factors, the Company is
unable to fully assess the impact of the Year 2000 issue as of the filing date
of this Report. The Company is formulating a contingency plan with respect to
the Year 2000 issues and will have completed a formally documented plan prior to
December 31, 1999.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 27.1: Financial Data Schedule
(b) REPORTS ON FORM 8-K
Not Applicable
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<PAGE>
SIGNATURE
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 authorized.
Date: November 12, 1999 World Wide Stone Corporation
By: /s/ Aaron T. Macneil
---------------------------------
Aaron T. Macneil
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF WORLD WIDE STONE CORPORATION FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS. THIS EXHIBIT SHALL NOT BE DEEMED FILED
FOR THE PURPOSE OF SECTION 11 OF THE SECURITIES ACT OF 1933 AND SECTION 18 OF
THE SECURITIES EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF
SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART OF ANY OTHER FILING WHICH
INCORPORATES THIS REPORT BY REFERENCE, UNLESS SUCH OTHER FILINF EXPRESSLY
INCORPORATES THIS EXHIBIT BY REFERENCE.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 346,706
<SECURITIES> 0
<RECEIVABLES> 602,184
<ALLOWANCES> 0
<INVENTORY> 1,320,494
<CURRENT-ASSETS> 2,440,128
<PP&E> 6,191,894
<DEPRECIATION> 1,532,220
<TOTAL-ASSETS> 7,536,285
<CURRENT-LIABILITIES> 1,632,048
<BONDS> 1,158,656
0
0
<COMMON> 34,704
<OTHER-SE> 5,009,434
<TOTAL-LIABILITY-AND-EQUITY> 7,536,285
<SALES> 4,567,585
<TOTAL-REVENUES> 4,567,585
<CGS> 2,316,805
<TOTAL-COSTS> 2,316,805
<OTHER-EXPENSES> 1,212,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,407
<INCOME-PRETAX> 999,382
<INCOME-TAX> 379,000
<INCOME-CONTINUING> 620,382
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 620,382
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
