<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934. (Fee required). For the fiscal year ended:
December 31, 1996
-----------------
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. (No fee required).
Commission file number: 0-17385
---------------
DYNA GROUP INTERNATIONAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 87-0404753
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1801 West 16th Street, Broadview, Illinois 60153
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 450-9200
-----------------
Securities registered pursuant to Section 12(b) of the Act: None
----------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share
---------------------------------------
(Title of Class)
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 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sect. 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this form
10-K(X).
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 1, 1997 was $2,578,869.
The number of shares outstanding of the registrant's common stock as of
March 1, 1997 was 7,482,925.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE> 2
Page 2
Part I
Item 1. Business
General
Dyna Group International, Inc. (the "Company") is a Nevada corporation and
conducts all of its business through its wholly-owned subsidiary, Great
American Products, Inc. ("Great American"). The Company was an inactive
publicly held corporation (formerly Red Creek Investments, Inc.) until August
22, 1986 when the Company acquired all of the outstanding stock of Dyna Tour
Corporation ("Dyna Tour") and simultaneously changed its name to Dyna Group
International, Inc. The Company acquired Great American on December 15, 1986,
XLM, Inc., ("XL") on January 1, 1987 and Great American Marketing Services
Corporation, ("American Marketing") on November 1, 1989.
In September, 1989, the Company decided to discontinue the operations of
its Dyna Tour subsidiary.
In September, 1992, the Company decided to discontinue the operations of
its Wholly owned subsidiary American Marketing.
In December, 1992, the distributorship of the Company's wholly owned
subsidiary, XL, was discontinued, and in February, 1993, XL completed the sale
of its tire inventory and backlog of orders to General Tire, Inc.
In August 1994, the Company entered into a joint venture agreement with
Mexican individuals for the painting and marketing of its products.
In January 1995, the Company leased a manufacturing/warehousing facility
in Columbia, Missouri for the assembly and shipping of its glassware and
ceramic products. This lease was terminated as of December 31, 1996.
In January 1997, the Company leased a manufacturing/warehousing facility
in New Braunfels, Texas to replace its Columbia, Missouri facility. The
Company also intends to move its Broadview, Illinois production to the Texas
location during 1997.
The Company, through its Great American subsidiary, is engaged in the
business of manufacturing consumer products for sale to the retail giftware
market and the corporate premium and incentive market. Great American produces
and sells cast products, pewter enhanced glassware and wall and desk decor.
Products and Sales
The Company designs, manufactures and markets lines of consumer products,
as well as products for industry used as advertising specialties and premiums,
utilizing pewter and white metal alloys centrifugally cast in rubber molds.
These products include belt buckles, model miniatures, key chains, picture
frames, as well as, pewter decorated glassware, caps, ceramic ware, pewter
decorated wall and desk decor, and beginning in 1995 pewter enhanced keepsake
boxes. All of the Company's centrifugally cast products are designed at the
Company's Broadview, Illinois facility, with the pewter enhanced glass and
ceramic ware assembled in the Columbia, Missouri facility. In 1996
approximately 50% of the manufacturing and painting of the cast products was
performed in Mexico with the remainder done in Broadview, Illinois.
<PAGE> 3
Page 3
Products and Sales, continued
In 1991, the Company acquired certain assets of Sports Magnets, Inc.,
including license agreements to market a popular line of consumer magnets which
bear the logos of the National Football League, Major League Baseball, the
National Hockey League and the National Basketball Association. The Company's
Great American subsidiary has also obtained license agreements with the
National Football League, Major League Baseball, the National Hockey League and
the National Basketball Association, Rock Groups, various Universities,
Fraternities and Sororities. The Company is continuing its efforts to expand
its license agreements in other areas, as it is management's belief that
licensed products will enhance the Company's image and present new
opportunities for market expansion. As the license agreements must be
periodically renewed it is management's belief that future extensions will
continue to allow the Company to market licensed products, and management does
not anticipate any cancellations or non-renewals.
The raw materials used in the manufacture of the Company's centrifugally
cast products are obtained and are readily available from numerous sources.
The business of the Company is affected by seasonal factors. The Company
does experience an increase in inventory during the third quarter of the year
followed by an increase in accounts receivable during the fourth quarter.
Management believes the Company's inventory level and fluctuations in
inventory are in line with its sales and seasonal requirements.
Extension of credit terms provided by the Company to its customers range
from normal 30 day terms to 180 days from the date of invoice. Management
believes that while these longer credit terms do result in extended collection
periods, they also offer the Company an effective sales tool.
Marketing and Distribution
As of December 31, 1996, the Company's sales force and related support
staff numbered 14 persons. The Company also utilizes approximately 134
independent, commissioned sales representatives.
The Company's centrifugally cast products are sold through the Company's
own sales force, including sales made via telemarketing and direct sales,
through independent commissioned sales representatives and through
distributors. These cast products are also produced for sale to the
premium/advertising specialty industry, and are sold through independent
commissioned sales representatives and invoiced directly to the end users for
purposes of sales promotions and incentives.
The Company advertises in trade and industry publications, including
retail trade publications and incentive marketing publications. Advertising
also consists of point of purchase displays for the centrifugally cast
products.
<PAGE> 4
Page 4
Foreign Operations and Export Sales
The Company from its U.S. facilities markets its products internationally.
International sales accounted for 7% and 7% of total sales for the years ended
1996 and 1995. In 1996, European sales comprised 54% of international sales,
while Asia comprised 15% with the balance sold elsewhere. In 1995 the
composition of the international markets was Europe 74%, Asia 6% and the
balance sold elsewhere.
In August 1994, the Company entered into a joint venture agreement with
Mexican individuals for the painting and marketing of its products. The
Company believes this will further reduce costs and open new markets in the
Spanish speaking countries. The Company's ownership interest in the joint
venture is 40%, with 60% held by the Mexican individuals.
Major Customers
The Company has over 5,000 customers. One major customer accounted for
23% of sales in 1996 and 22% of sales in 1995.
Competition
Operations in the consumer goods industry involve the production and sale
of cast products, and pewter enhanced glassware. The Company believes that it
is a significant factor in the market for cast products based upon Dun and
Bradstreet, Inc. reports, and that it currently is not a significant factor in
the overall market for glassware. The Company competes in the consumer goods
industry primarily on the basis of quality workmanship and competitive pricing.
Operations in the broad based corporate premium and ad specialty industry
for cast products include the sale of corporate products by the Company's sales
force and independent representatives. The Company believes that its premium
division ranks among the top ten producers of similar products, as estimated by
its representatives.
The Company actively competes with many companies which are substantially
larger, have more extensive product lines, wider distribution and greater
financial resources.
Employees
The Company employs up to 186 people, of whom 26 are engaged in sales and
administration, 21 in creative and art and 139 in manufacturing and
warehousing.
In December, 1993 the Company was petitioned by its factory employees to
allow the Independent Ladies Garment Workers Union ("the Union") to represent
them in a collective bargaining agreement. The Company and the Union signed a
three year collective bargaining agreement on June 24, 1994. The Company has
experienced no adverse effects from this agreement.
<PAGE> 5
Page 5
Equipment
The Company's Broadview, Illinois facility is equipped for manufacturing
and packaging of centrifugally cast pewter and white metal alloy consumer
products. All of the Company's equipment is considered to be in good condition.
The Company's leased facility in New Braunfels, Texas is equipped for the
assembly, packaging and shipping of the pewter enhanced glass and ceramic ware.
The Company's joint venture facility is equipped to cast and paint its
products.
The Company also has one (1) vehicle lease which has a monthly rental of
$317.
Item 2. Property
The Company's executive office is located in a 31,000 square foot owned
facility at 1801 W. 16th Street, Broadview, IL 60153. All of the Company's
centrifugally cast products were designed and some were manufactured at this
facility in 1996.
In January 1995, the Company leased a manufacturing/warehousing facility
in Columbia, Missouri for assembly and shipping of its glassware and ceramic
products. In January 1997, the Company leased a manufacturing/warehousing
facility in New Braunfels, Texas from its principal shareholder to replace its
Columbia, Missouri facility.
The terms of these leases are summarized below.
<TABLE>
<CAPTION>
Approximate area Lease Monthly
Type of Facility in square feet Expiration Rental
- ---------------- -------------- ---------- ------
<S> <C> <C> <C>
Manufact/Warehouse-Missouri 20,000 12/31/96 $2,500
Manufact/Warehouse-Texas 32,000 1/01/02 $6,000
</TABLE>
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
<PAGE> 6
Page 6
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
Market Information
The Company's Common Stock trades on The NASDAQ Small-Cap Market under the
symbol DGIX. The following table sets forth for the periods indicated the high
and low bid quotations for the Company's Common Stock. The quotations
represent prices in the over-the-counter market between dealers in securities,
do not include retail markup, markdown or commissions. Prices were determined
based on actual transactions.
<TABLE>
<CAPTION>
High Bid Low Bid
---- --- --- ---
<S> <C> <C> <C>
1996 4th Quarter $ 1-1/16 $ 11/16
3rd Quarter 1-1/4 11/16
2nd Quarter 1-3/8 15/16
1st Quarter 1-15/16 1
1995 4th Quarter $ 1-7/16 $ 13/16
3rd Quarter 1 11/16
2nd Quarter 15/16 11/16
1st Quarter 1 5/8
</TABLE>
Holders
<TABLE>
<CAPTION>
Approximate number of holders
Title of Class of record as of March 1, 1997
-------------- -----------------------------
<S> <C>
Common stock, par value
$.001 per share 371
</TABLE>
Dividends
There have been no dividends paid on the Company's Common Stock since
inception. It is currently expected that any additional earnings the Company
realizes will be retained to finance growth.
<PAGE> 7
Page 7
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Set forth below is a discussion and analysis of the financial condition
and operating results of the Company's operations. This discussion should be
read in conjunction with the accompanying consolidated financial statements and
notes.
Liquidity and Capital Resources
The Company's liquidity position remained unchanged at a 1.5 to 1 current
ratio. Net cash increased by $181,954.
Operating activities used $266,310 of cash in 1996. Income from
operations and non-cash adjustments provided a total increase in cash of
$528,900. This was offset by a $701,086 decrease in net working capital, while
an increase in other assets used $94,124. Net working capital declined as a
result of a large increase in accounts receivable, due to allowing extended
payment terms to some large and valued customers. A moderate increase in
inventories was offset by a like increase in accounts payable. Accrued
expenses declined due to earlier payments of liabilities compared to last year.
Other assets increased due to refundable income taxes.
Investing activities used $315,748, with capital expenditures, primarily
dies and molds, using $366,394, a decrease in the investment in the joint
venture providing $15,000, and distributions from the joint venture providing
$35,646. Financing activities provided $764,012. During the period the
Company had a net decrease in long-term debt of $90,130, and increased short
term borrowing $854,142.
At December 31, 1996 the Company had a bank revolving line of credit,
allowing the Company to borrow up to $3,750,000 against qualified receivables
and inventory. At that date the Company had approximately $13,800 available to
borrow. This line of credit expires August 31, 1997.
As of December 31, 1996 there are no material commitments for future
capital expenditures, and management does not feel there will be any major
expenditures in the foreseeable future. It is management's belief that the
Company's present credit facilities will be adequate to meet its current and
future needs, as the Company has instituted programs to reduce inventory from
present levels via sales and reduced production levels and to reduce accounts
receivable with more intensive collection efforts.
<PAGE> 8
Page 8
Results of Operations
1996 versus 1995
Net sales for the year ended December 31, 1996 increased by $846,420 or
8.4% as compared to 1995. 1996 foreign sales declined from the 1995 level by
$19,000, as a result of decreasing sales of belt buckles in these markets. The
Company is in the process of introducing some of its new product lines to the
foreign marketplace which it believes will increase sales. Domestic sales
increased from 1995 levels by $865,000 as a result of some new large retail
customers as well as increased sales to a major customer.
Gross profit margin as a percent of sales declined from 47% of sales in
1995 to 41% of sales in 1996. This change was primarily attributed to a
substantial reduction in the Company's year end physical inventory value as
compared to perpetual inventory records. Also contributing to this decline was
an overall increase in the cost of goods sold without a corresponding price
increase to customers.
Throughout the year the Company estimated its gross profit margin based on
previous historical margins. During 1996 there were unanticipated
inefficiencies incurred as the Company began Aoutsourcing more of its
production to its Mexican joint venture which resulted in a decline in gross
profit and the year-end inventory writedown. The Company is in the process of
relocating its production and distribution facility to New Braunfels, Texas.
It is anticipated that this will eliminate the inefficiencies which occurred in
1996 and result in significant savings in the future.
Selling, general and administrative expenses as a percent of sales
decreased from 41% in 1995 to 38% in 1996. This decrease was largely due to
the fixed nature of these costs which were virtually unchanged in total between
the two years, but declined as a percentage because of the sales increase. The
composition of these costs did change with increased selling costs being offset
by decreases in administrative costs.
Interest expense increased $65,023 over 1995 due to higher short term
borrowing levels prompted by higher average accounts receivable and inventory
levels throughout the year.
The Company is a partner in a joint venture in Mexico for the casting and
painting of its products. In 1995 the Company's ownership interest was 45% and
its share of joint venture earnings was $14,331. In 1996 the Company's
ownership interest declined to 40% and its share of joint venture earnings was
$60,731.
For 1996 the Company's net income declined to $31,487 as compared to
1995's net income of $204,325. The decline in earnings was primarily due to
the decrease in gross profit margins and the increase in interest expense.
<PAGE> 9
Page 9
1995 versus 1994
Net sales for the year ended December 31, 1995 increased by $19,592 or
0.2% as compared to 1994. It should be noted that in 1995 foreign sales
declined from the 1994 level by $380,000, as a result of decreasing sales of
belt buckles in these markets. Domestic sales increased from 1994 levels by
nearly $400,000 as a result of new product introduction and increased sales to
a major customer. Gross profit margin as a percent of sales increased by 0.3%
from 1994 to 1995.
Selling, general and administrative expenses as a percent of sales
increased from 36% in 1994 to 41% in 1995. Most of this increase was
associated with the cost of introducing several new product lines and upgrading
old lines. Specifically, catalog and packaging costs rose considerably in 1995
due to redesign costs.
Interest expense increased $69,113 over 1994 due to higher short term
borrowing levels prompted by the increased accounts receivable and inventory
volumes.
In August 1994, the Company entered into a joint venture agreement
allowing for the painting and casting of its products in Mexico. The Company
has a 45% ownership in this operation. In 1995, the Company's equity in the
earnings of the joint venture was $14,331.
For 1995 the Company's net income declined to $204,325 as compared to
1994's net income of $564,075. The decline in earnings was due to the
increases in selling, general and administrative expenses and interest expense
as previously discussed.
Inflation
The Company believes that inflation will have little or no effect on
the salability of its products and that the cost increases of its produced
products can be passed on to the consumer.
Item 7. Financial Statements and Supplementary Data
See financial statements set forth in Item 13 of this annual report.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no disagreements of the type described in Item 304 of
Regulation S-B with the Company's accountants.
<PAGE> 10
Page 10
PART III
Item 9. Directors and Executive Officers of the Registrant
The executive officers and directors of the Company are listed in the
table below, and brief summaries of their business experience and certain other
information with respect to them are set forth thereafter:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Roger R. Tuttle 49 Chairman of the Board of Directors, and
Chief Executive Officer, President of
Great American
William M. Sandstrom 50 Director
Jeffrey L. Smith 40 Secretary, Vice President and General
Manager of Great American, and Director
Thomas J. Heslinga 51 Treasurer, Controller
</TABLE>
All directors of the Company serve in such capacity until the next annual
meeting of the Company's stockholders following their election and until their
successors have been elected and qualify. Subject to their contract rights as
to compensation, officers may be removed with or without cause, at any time, by
a majority of the Board of Directors.
Roger R. Tuttle, has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since August 1986. Mr. Tuttle served
as President of Great American from 1974 to September 1989. Mr. Tuttle has
also served as Vice President of XL from 1984 to 1993. In December 1991, Mr.
Tuttle resumed the President's position at Great American.
William M. Sandstrom had served as Treasurer of the Company since
September 1989 and Controller since 1988, until his resignation effective July
31, 1995. He currently is self employed as a consultant. Prior to this, and
since 1982, Mr. Sandstrom was Director of Administration of Ashland Products
Company, an injection molder of engineered thermo plastics. Mr. Sandstrom was
appointed as a Director in December 1991.
Jeffrey L. Smith has served as Vice President and General Manager of
Great American Products since October 1991. Prior to this and since 1985 Mr.
Smith served as the General Manager of Great American's retail division. Mr.
Smith was appointed Secretary and Director in October 1992.
Thomas J. Heslinga has served as Treasurer and Controller since August 1,
1995. Mr. Heslinga had assisted Mr. Sandstrom with year end financial projects
since 1992. Mr. Heslinga is a C.P.A. and has held Controllership positions
with several organizations during his career.
<PAGE> 11
Page 11
Item 10. Executive Compensation
Cash Compensation
The following table sets forth all cash compensation paid or accrued by
the Company for services rendered during the years ended December 31, 1996, and
1995 to each director and executive officer of the Company whose aggregate cash
compensation exceeded $100,000 and to all directors and executive officers of
the Company as a group:
<TABLE>
<CAPTION>
Other Annual Long Term
Name Year Salary Bonus Compensation Compensation
- ---- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Roger R. Tuttle 1996 $141,000 --- $3,850 -----
Chairman of the 1995 $136,100 --- $3,750 -----
Board of Directors,
and Chief Executive
Officer
</TABLE>
The Company provides certain executive officers and employees with fringe
benefits. These benefits, valued at their incremental cost, for any individual
do not exceed 10% of reported cash compensation for such individual.
Directors currently are not paid any fees for attendance at meetings of
the Board of Directors.
Compensation Pursuant to Plan
The Company has a Profit Sharing Trust for eligible employees. Employees
of the Company who have completed one year of service are eligible to
participate in the Trust under which the Company contributes amounts determined
from time to time at its discretion. Company contributions vest in specified
percentages per year commencing after 2 years and generally become fully vested
after 6 years of employment with the Company. The annual contributions and
forfeitures allotted to any participant may not exceed the lesser of $30,000 or
25% of the participant's total compensation. Benefits generally are payable
upon death or upon termination of employment with the Company or age 65.
Participants' account balances under the Trust as of the year ended December
31, 1996 for Mr. Tuttle and for all executive officers as a group, were
$144,112, and $156,132, respectively.
<PAGE> 12
Page 12
Item 11. Security Ownership of Certain Beneficial
Owners and Management
The following table provides information as of March 6, 1997 for each
person who owned more than five (5%) percent of the Company's Common Stock
beneficially and by each director and each officer and all officers and
directors as a group:
<TABLE>
<CAPTION>
Name and Amount and
Title Address of Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
-------- ---------------- -------------------- --------
Security Ownership of Management:
<S> <C> <C> <C> <C>
Common Stock Roger R. Tuttle (1) 3,327,000 44.46%
1801 W. 16th Street
Broadview, IL 60153
Common Stock All Directors and
Officers as a Group 3,407,000 45.53%
</TABLE>
(1) In December 1996, Mr. Tuttle gifted 13,000 shares each to his two
minor children, he retains guardianship and voting rights.
Item 12. Certain Relationships and Related Transactions
The Company has a note payable to the Chairman of the Board which is
summarized as follows:
<TABLE>
<S> <C>
Unsecured promissory note, due 12/14/97
both principal and interest payable to
the major stockholder, interest at
prime plus 1/2% (8.75% at December 31, 1996) $350,000
</TABLE>
See "Notes to the Consolidated Financial Statements".
<PAGE> 13
Page 13
PART IV
Item 13. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
(a) 1. Financial Statements: Page
----
Dyna Group International, Inc.
Report of Independent Certified Public Accountants . . . . . . . 15
Consolidated Balance Sheet - December 31, 1996 and 1995. . . . . 16
Consolidated Statement of Income - for the years
ended December 31, 1996 and 1995 . . . . . . . . . . . . . . . 18
Consolidated Statement of Stockholders' Equity - for the
years ended December 31, 1996 and 1995 . . . . . . . . . . . . 19
Consolidated Statement of Cash Flows - for the years
ended December 31, 1996 and 1995 . . . . . . . . . . . . . . . 20
Notes to Consolidated Financial Statements . . . . . . . . . . . 22
2. Exhibits:
Reference is made to "Exhibit Index" beginning on page 30 herein.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of 1996.
<PAGE> 14
Page 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(b) 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.
DYNA GROUP INTERNATIONAL, INC.
------------------------------------------
(Registrant)
By/S/Roger R. Tuttle
-----------------------------------------------------------------------------
Roger R. Tuttle, Chairman of the Board and Chief Executive Officer
Date: March 28, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
By/S/Roger R. Tuttle
-----------------------------------------------------------------------------
Roger R. Tuttle, Chairman of the Board and Chief Executive Officer
By/S/Thomas J. Heslinga
-----------------------------------------------------------------------------
Thomas J. Heslinga, Treasurer (Principal Accounting and
Financial Officer)
By/S/Jeffrey L. Smith
-----------------------------------------------------------------------------
Jeffrey L. Smith, Secretary and Director
By/S/William M. Sandstrom
-----------------------------------------------------------------------------
William M. Sandstrom, Director
Date: March 28, 1997
<PAGE> 15
Page 15
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
of Dyna Group International, Inc.
We have audited the accompanying consolidated balance sheets of Dyna Group
International, Inc. and Subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of income, stockholders' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Dyna Group
International, Inc. and Subsidiaries at December 31, 1996 and 1995, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/S/ BDO SEIDMAN, LLP
Chicago, Illinois
March 18, 1997
<PAGE> 16
Page 16
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
ASSETS ------------------------------
1996 1995
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 338,961 $ 157,007
Accounts receivable, less allowance
for doubtful accounts of $92,000 2,888,815 2,405,039
Inventories 3,814,075 3,667,195
Prepaid expenses and other 126,451 118,267
Refundable Income taxes 127,433
Deferred tax assets 53,963 61,372
----------- -----------
7,349,698 6,408,880
----------- -----------
PROPERTY AND EQUIPMENT, Net 1,089,036 1,137,353
----------- -----------
OTHER ASSETS:
Cost in excess of net assets of acquired
business, less accumulated
amortization of $120,843 and $100,963 14,909 34,789
Investment in joint venture 94,906 84,821
Other 115,444 98,027
----------- -----------
225,259 217,637
----------- -----------
$ 8,663,993 $ 7,763,870
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 17
Page 17
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
LIABILITIES AND ------------------------------
STOCKHOLDERS' EQUITY 1996 1995
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable to bank $ 3,469,142 $ 2,565,000
Note payable to related party 350,000 400,000
Accounts payable 800,213 642,026
Accrued expenses 284,698 458,423
Due to Joint Venture 88,389 4,194
Current maturities of long-term debt 50,004 150,311
----------- -----------
5,042,446 4,219,954
----------- -----------
LONG-TERM DEBT:
Bank less current maturities 695,829 685,652
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock $.001 par value - authorized,
100,000,000 shares; issued 8,179,704 8,180 8,180
Capital in excess of par value 967,113 950,687
Retained earnings 2,094,947 2,063,460
Treasury stock - 696,779 and
714,557 shares, at cost (140,084) (143,657)
Unearned compensation ( 4,438) (20,406)
----------- -----------
2,925,718 2,858,264
----------- -----------
$ 8,663,993 $ 7,763,870
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 18
Page 18
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
NET SALES $10,891,187 $10,044,767
COST OF SALES 6,442,252 5,336,504
----------- -----------
Gross profit 4,448,935 4,708,263
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 4,131,820 4,133,607
----------- -----------
Operating income 317,115 574,656
INTEREST EXPENSE 309,869 244,846
EQUITY IN EARNINGS OF
JOINT VENTURE 60,731 14,331
----------- -----------
Income from operations
before income taxes 67,977 344,141
PROVISION FOR INCOME TAXES 36,490 139,816
----------- -----------
NET INCOME $ 31,487 $ 204,325
=========== ===========
INCOME PER COMMON SHARE:
Net income $ -- $ .03
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,478,822 7,464,839
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 19
Page 19
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in
Common excess of Retained Treasury Unearned
Stock par value Earnings Stock compensation Total
------ ---------- -------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1994 $ 8,180 $ 944,574 $1,859,135 $(100,196) $(23,063) $2,688,630
Issuance of treasury
stock ---- 6,113 ---- 7,950 (14,063) ----
Purchase of treasury
stock ---- ---- ---- (51,411) ---- (51,411)
Amortization ---- ---- ---- ---- 16,720 16,720
Net income ---- ---- 204,325 ---- ---- 204,325
------- --------- --------- --------- -------- ----------
Balance at
December 31, 1995 $ 8,180 $ 950,687 $2,063,460 $(143,657) $(20,406) $2,858,264
Issuance of treasury
stock ---- 16,426 ---- 3,573 ---- 19,999
Amortization ---- ---- ---- ---- 15,968 15,968
Net income ---- ---- 31,487 ---- ---- 31,487
------- --------- --------- --------- -------- ----------
Balance at
December 31, 1996 $ 8,180 $ 967,113 $2,094,947 $(140,084) $ (4,438) $2,925,718
======= ========= ========== ========= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Common Stock
---------------------
Share Amounts Issued Treasury
- ------------- --------- --------
<S> <C> <C>
Balance at December 31, 1994 8,179,704 684,057
Shares issued as compensation ---- (37,500)
Purchase of treasury stock ---- 68,000
--------- -------
Balance at December 31, 1995 8,179,704 714,557
Shares issued for license agreement ---- (17,778)
Balance at December 31, 1996 8,179,704 696,779
========= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 20
Page 20
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995
------------ ------------
<S> <C> <C>
Net income $ 31,487 $ 204,325
Adjustments to reconcile net income to net cash
provided (used) by operating activities -
Depreciation and amortization 434,591 397,030
Provision for losses on accounts receivable 150,902 131,493
Amortization of unearned compensation 15,968 16,720
Other (43,317) (4,519)
Equity in earnings of joint venture (60,731) (14,331)
Change in assets and liabilities:
Decrease (increase) in accounts receivable (634,678) (621,066)
Increase in inventories (146,880) (1,287,526)
Decrease (increase) in prepaid expenses
and other 11,815 (6,678)
Increase (decrease) in accounts payable 158,187 (6,624)
Decrease in accrued expenses (173,725) (23,406)
Decrease (increase) in other assets (94,124) 32,306
Increase in due to joint venture 84,195 4,194
----------- -----------
Cash provided (used) by operating activities (266,310) (1,178,082)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (366,394) (454,396)
Investment in joint venture 15,000 (45,000)
Distribution from joint venture 35,646 ---
----------- -----------
Cash used by investing activities (315,748) (499,396)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (840,130) (144,714)
Increase (decrease) in notes payable 854,142 1,725,000)
New long-term borrowing 750,000 ---
Repurchase of common stock --- (51,411)
----------- -----------
Cash (used) provided by financing activities 764,012 1,528,875
----------- -----------
INCREASE (DECREASE) IN CASH 181,954 (148,603)
CASH, beginning of year 157,007 305,610
----------- -----------
CASH, end of year $ 338,961 $ 157,007
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 21
Page 21
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------
1996 1995
------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
<S> <C> <C>
Interest $ 279,066 $ 231,880
Income Taxes 284,738 90,522
</TABLE>
NON-CASH INVESTING AND FINANCING ACTIVITIES
During 1994, the Company issued 84,000 shares of treasury stock to
employees as a bonus. In connection with this transaction, the Company
recorded $35,438 in unearned compensation which is being amortized over its
vesting term of three years.
In the second quarter of 1995, the Company issued 37,500 shares of
treasury stock to employees as a bonus. In connection with this transaction,
the Company recorded $14,063 in unearned compensation which is being amortized
over three years. Also, in the second quarter of 1995 the Company redeemed
4,000 shares of restricted stock through forfeiture.
During the first quarter of 1996, the Company issued 17,778 shares of
treasury stock to obtain certain NFL licensing rights. In connection with this
transaction, the Company recorded $19,999 in prepaid licensing fees which are
being amortized over 36 months.
See accompanying notes to consolidated financial statements.
<PAGE> 22
Page 22
DYNA GROUP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Dyna Group International, Inc. (the "Company") is a Nevada
corporation and conducts all its business through its wholly owned subsidiary,
Great American Products, Inc.
The Company designs, manufactures and markets lines of consumer
products, as well as products for industry used as advertising specialties and
premiums, utilizing pewter and white metal alloys centrifugally cast in rubber
molds. These products include belt buckles, model miniatures, key chains,
picture frames, and pewter decorated products.
The products are designed and some are manufactured at the Company's
Broadview, Illinois facility. In addition, the Company has an assembly
operation located in Columbia, Missouri (see Note 16). Most of the Company's
products are cast and painted by the Company's joint venture in Mexico.
Principles of Consolidation
The consolidated financial statements include the accounts of Dyna
Group International, Inc. and its wholly-owned subsidiaries ("Company"). All
significant intercompany balances and transactions are eliminated.
Inventories
Inventories are valued at the lower of cost or market. Cost is
determined by the first-in, first-out method.
Revenue Recognition
The Company recognizes revenue as products are shipped.
Property, Equipment and Depreciation
Property and equipment are stated at cost. Depreciation is computed
over the estimated useful lives of the assets using both straight-line and
accelerated methods. Depreciable lives of major classes of property and
equipment are summarized as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Building 31.5
Building improvements 3 - 7
Machinery, equipment and furnishings 5 - 7
Transportation equipment 5
Molds and dies 3
</TABLE>
<PAGE> 23
Page 23
Cost in Excess of Net Assets of Acquired Business
Cost in excess of net assets of acquired business is being amortized
on a straight-line basis over five years.
Investment in Joint Venture
The investment is being accounted for using the equity method of
accounting.
Financial Instruments
The carrying value of cash, accounts receivable, accounts payable and
accrued expenses approximate the fair value because of the short maturity of
these items.
The carrying amounts of notes payable and long term debt approximate
fair value because the interest rates on these instruments reflect current
market interest rates.
Estimates
The accompanying financial statements include estimated amounts and
disclosures based on management's assumptions about future events. Actual
results may differ from these estimates.
Income Taxes
The provision for income taxes include federal and state income taxes
currently payable and those deferred because of temporary differences between
the financial statement and tax basis of assets and liabilities.
Income Per Common Share
Income per common share is computed by dividing net income by the
weighted average number of common shares outstanding.
Reclassifications
Certain amounts in the 1995 financial statements have been
reclassified to conform with the 1996 presentation.
NOTE 2 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Raw materials and work in process $ 998,453 $1,131,045
Finished goods 2,815,622 2,536,150
---------- ----------
$3,814,075 $3,667,195
========== ==========
</TABLE>
<PAGE> 24
Page 24
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Land $ 200,000 $ 200,000
Building 488,323 488,323
Building improvements 117,970 117,970
Machinery, equipment and furnishings 724,770 720,729
Molds and dies 2,011,613 1,649,260
---------- ----------
3,542,676 3,176,282
Less accumulated depreciation 2,453,640 2,038,929
---------- ----------
$1,089,036 $1,137,353
========== ==========
</TABLE>
NOTE 4 - NOTES PAYABLE TO BANK
Effective October 21, 1996 the Company changed its primary banking
relationship. As a result of the change, the Company paid off its old line of
credit with its former bank, and established a new line of credit with its new
bank. The maximum borrowing permitted on the new line is $3,750,000, and the
loan maturity date is August 31, 1997. The interest rate on the new line is a
blended rate tied to the prime rate (approximately 8.5% as of December 31,
1996).
NOTE 5 - NOTE PAYABLE TO RELATED PARTY
In December 1994, the Company borrowed $560,000 from a bank to repay
the long-term debt due to the major stockholder, concurrently the major
stockholder loaned the Company $500,000 as evidenced by a promissory note due
December 14, 1995 with interest at prime plus 1/2 percent (8.75% at December
31, 1996). The proceeds from this loan were used to reduce current
indebtedness to the bank. At December 31, 1996 the amount outstanding was
$350,000 and the major stockholder extended the due date on this note to
December 14, 1997.
<PAGE> 25
Page 25
NOTE 6 - INCOME TAXES
Provisions (credits) for income taxes consist of the following:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
--------- ---------
<S> <C> <C>
Current:
Federal $ 24,719 $106,215
State 4,362 23,313
-------- --------
29,081 129,528
Deferred 7,409 10,288
-------- --------
$ 36,490 $139,816
======== ========
</TABLE>
The components of the deferred assets (liabilities) are as
follows:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
--------- ---------
<S> <C> <C>
Allowance for doubtful accounts $ 34,532 $ 34,532
Employee benefit accrual (492) 15,612
Vacation 9,315 9,315
Equity in earnings of joint venture (7,365) 1,913
Unrealized JV profits in inventory 17,973 ---
-------- --------
Net deferred tax assets $ 53,963 $ 61,372
======== ========
</TABLE>
The effective tax rate on income was different than the
statutory federal income tax rate for the following reasons:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
--------- ---------
<S> <C> <C>
Tax at U.S. statutory rate $ 23,113 $117,006
State income taxes, net of
federal income tax benefit 1,745 18,005
Goodwill amortization 6,759 6,759
Other 4,873 (1,954)
-------- --------
$ 36,490 $139,816
======== ========
</TABLE>
<PAGE> 26
Page 26
NOTE 7 - ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Salary, payroll taxes and other $138,394 $162,056
Interest 63,243 32,442
Income taxes --- 128,224
Real estate taxes 83,061 84,260
Insurance --- 51,441
-------- --------
$284,698 $458,423
======== ========
</TABLE>
NOTE 8 - EMPLOYEE BENEFIT PLANS
The Company has a qualified profit sharing plan for eligible
employees. Contributions to the plan are determined on a discretionary basis
by the Board of Directors. Amounts charged to expense were as follows: 1996
- - $25,000, 1995 - $30,000.
NOTE 9 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
7.74% mortgage note, repaid during 1996 $ --- $387,963
Prime plus 1/2% term note, repaid during 1996 --- 448,000
Prime plus 1/4% mortgage note, due 2001 745,833 ---
-------- --------
745,833 835,963
Less: current maturities 50,004 150,311
-------- --------
$695,829 $685,652
======== ========
</TABLE>
On October 21, 1996, the Company changed its primary banking
relationship. At that time the Company paid off the balances due on its 7.74%
mortgage note and its prime plus 1/2% term note held by its old bank, and
simultaneously took out a new mortgage note for $750,000 from its current bank.
This note is secured by the Company's operating facility. The new note is
at prime plus 1/4% and matures on October 21, 2001. Principal payments of
$4,167 plus interest are required monthly.
The aggregate long-term maturities over each of the next five years
are as follows: 1997 - $50,004, 1998 - $50,004, 1999 - $50,004, 2000 -
$50,004, and 2001 - $545,817.
<PAGE> 27
Page 27
NOTE 10 - LEASE OBLIGATIONS
As of December 31, 1996, the Company terminated its operating
facility in Columbia, Missouri. This facility was replaced in January 1997
with another in New Braunfels, Texas which is leased from the major
stockholder. That lease expires in January 2002. The Company also leases an
automobile under a lease expiring in 1998. Its computer equipment is leased
from the major stockholder on a month to month basis.
Future minimum noncancellable lease payments under the above
operating leases are as follows:
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Lease from major stockholder $72,000 $72,000 $72,000 $72,000 $72,000
Other 3,809 2,222 --- --- ---
------- ------- ------- ------- -------
Total $75,809 $74,222 $72,000 $72,000 $72,000
======= ======= ======= ======= =======
</TABLE>
Rent expense is summarized as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1996 1995
--------- --------
<S> <C> <C>
Rent to major stockholder $ 3,809 $ 3,809
Other 20,500 22,226
-------- -------
Total $ 24,309 $26,035
======== =======
</TABLE>
NOTE 11 - STOCKHOLDERS' EQUITY
During 1994, the Company issued 84,000 shares of treasury stock to
employees as a bonus. In connection with this transaction, the Company
recorded $35,438 in unearned compensation which is being amortized over three
years.
In the first quarter of 1995, the Company repurchased 64,000 shares
of stock for its treasury at a cost of $51,411.
In the second quarter of 1995, the Company issued 37,500 shares of
treasury stock to employees as a bonus. In connection with this transaction,
the Company recorded $14,063 in unearned compensation which is being amortized
over three years. Also, in the second quarter of 1995, the Company redeemed
4,000 shares of restricted stock through forfeiture.
During the first quarter of 1996, the Company issued 17,778 shares of
treasury stock to obtain certain NFL licensing rights. In connection with this
transaction, the Company recorded $19,999 in prepaid licensing fees which are
being amortized over 36 months.
<PAGE> 28
Page 28
NOTE 12 - FOREIGN OPERATIONS AND EXPORT SALES
The Company from its United States facility in Broadview, Illinois
markets its products both domestically and internationally. Export sales were
as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
Europe $384,386 $541,948
Asia 106,663 46,065
Other 218,764 141,077
-------- --------
Total $709,813 $729,090
======== ========
</TABLE>
The Company presently operates in one business segment, "Consumer
Goods."
In August 1994, the Company entered into a Joint Venture agreement
with Mexican individuals for the casting, painting and marketing of its
products. The Company believes this will further reduce costs and open new
markets in the Spanish speaking countries. The Company's ownership interest in
the joint venture is 40%, with 60% held by Mexican individuals.
The investment is being accounted for using the equity method of
accounting. Financial information for this joint venture, accounted for by the
equity method, is as follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Current assets $508,000 $157,000
Noncurrent assets 45,000 29,000
Current Liabilities 239,000 21,000
Stockholder's equity 314,000 165,000
Net Sales 1,487,000 200,000
Gross Margin 532,000 24,000
Net Income 264,156 36,000
</TABLE>
The Company purchased $1,218,643 and $182,669 of inventory from the
joint venture in 1996 and 1995 respectively. At December 31, 1996 the Company
has recorded a reserve for intercompany profits in ending inventory of $44,931.
NOTE 13 - MAJOR CUSTOMERS
The Company sells to over 5,000 customers. One accounted for 23% of
sales in 1996, 22% of sales in 1995. This customer accounted for 33% and 29%
of the outstanding accounts receivable at December 31, 1996 and 1995,
respectively.
NOTE 14 - OTHER MATTERS
In December 1993, the Company was petitioned by its factory employees
to allow the Independent Ladies Garment Workers Union ("the Union") to
represent them in a collective bargaining agreement. The Company and the Union
signed a three year collective bargaining agreement on June 24, 1994. The
Company believes there have been no adverse effects from this agreement.
<PAGE> 29
Page 29
NOTE 15 - FOURTH QUARTER ADJUSTMENTS
During the fourth quarter of 1996 the Company recorded a
book-to-physical inventory adjustment of approximately $500,000.
During the fourth quarter of 1995 the Company recorded an inventory
adjustment of approximately $100,000 for products donated to a charitable
organization, and additionally wrote off as uncollectible $60,000 of accounts
receivable.
NOTE 16- SUBSEQUENT EVENTS
During January, 1997 the Company began leasing a warehouse/office
facility in New Braunfels Texas from the major stockholder to replace its
facility in Columbia Missouri. The Texas facility is located near the Mexico
border and will offer the Company an opportunity to save on freight costs on
shipments between it and its joint venture partner in Mexico.
The Company currently has its Broadview Illinois warehouse and office
available for sale or lease. The remaining United States production will be
relocated from Broadview to New Braunfels.
<PAGE> 30
Page 30
EXHIBIT INDEX
2(a) Plan and Articles of Merger between Red Creek Investments, Inc. and
Dyna Group International, Inc. dated August 22, 1986 (incorporated by
reference to Exhibit 2(a) to Form 10 Registration Statement File No.
0-17385).
(b) Agreement and Plan of Reorganization between Red Creek Investments,
Inc. and Dyna Tour Corporation dated August 22, 1986 (incorporated by
reference to Exhibit 2(b) to Form 10 Registration Statement File No.
0-17385).
(c) Agreement and Plan of Reorganization between Dyna Group International,
Inc. and Great American Products, Inc. dated December 26, 1986
(incorporated by reference to Exhibit 2(c) to Form 10 Registration
Statement File No. 0-17385).
(d) Agreement and Plan of Reorganization between Dyna Group International,
Inc. and XL Marketing Corporation dated January 1, 1987 (incorporated
by reference to Exhibit 2(d) to Form 10 Registration Statement File No.
0-17385).
3(a) Articles of Incorporation (incorporated by reference to Exhibit 3(a) to
Form 10 Registration Statement File No. 0-17385).
(b) By-Laws (incorporated by reference to Exhibit 3(b) to Form 10
Registration Statement File No. 0-17385).
4(a) Specimen Common Stock Certificate (incorporated by reference to Exhibit
4(a) to Form 10 Registration Statement File No. 0-17385).
10(a) Asset Purchase Agreements between General Tire, Inc. and Hibdon Tire
Centers, Inc. dated February 26, 1993 (incorporated by reference to
Exhibits 10.1 and 10.2 to Form 8-K Dated February 26, 1993, Commission
File No. 0-17385).
10(b) Joint Venture Agreement and Manufacturing Agreement between Dyna Group
International, Inc. and Promociones GAP, S.A. De C.V. dated August 6,
1994 (Incorporated by reference to Exhibits 10.3 and 10.4 to Form 10-K
Dated March 22, 1995).
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 33,961
<SECURITIES> 338,961
<RECEIVABLES> 2,980,815
<ALLOWANCES> 92,000
<INVENTORY> 3,814,075
<CURRENT-ASSETS> 7,349,698
<PP&E> 3,542,676
<DEPRECIATION> 2,453,640
<TOTAL-ASSETS> 8,663,993
<CURRENT-LIABILITIES> 5,042,446
<BONDS> 695,829
0
0
<COMMON> 8,180
<OTHER-SE> 2,917,538
<TOTAL-LIABILITY-AND-EQUITY> 8,663,993
<SALES> 10,891,187
<TOTAL-REVENUES> 10,891,187
<CGS> 6,442,252
<TOTAL-COSTS> 6,442,252
<OTHER-EXPENSES> 4,071,089
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 309,869
<INCOME-PRETAX> 67,977
<INCOME-TAX> 36,490
<INCOME-CONTINUING> 31,487
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,487
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
