SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
For the Quarter Ended May 31, 1996
Commission File Number 01-19001
MILLER DIVERSIFIED CORPORATION
----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada 84-107093
- -------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
Mailing Address:
23360 Weld County Road 35
La Salle, Colorado 80645
-------------------------------------
(Address of Principal Executive Office)
(970) 284-5556
-------------------------------------------------
(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 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
------ ------
Number of shares of Common Stock, par value $.0001, outstanding on May 31,
1996, 5,764,640.
Transitional Small Business Disclosure Format: YES NO X
----- -----
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
May 31, August 31,
1996 1995
- --------------------------------------------------------------------------------
ASSETS
- ------
Current Assets:
Cash $ 191,130 $ 72,272
Trade accounts receivable 758,737 1,218,614
Trade accounts receivable - related party 15,206 38,647
Account receivable - related party 119,800 156,015
Current portion of note receivable - related party -- 112,781
Income taxes receivable -- 11,082
Inventories 235,306 131,142
Prepaid expenses 27,798 13,735
Deposits on feeder cattle -- 57,800
- --------------------------------------------------------------------------------
Total Current Assets 1,347,977 1,812,088
- --------------------------------------------------------------------------------
Property and Equipment:
Land held for sale 700,000 700,000
Feedlot facilities under capital lease
- related party 1,497,840 1,497,840
Equipment 78,354 71,486
Equipment under capital leases - related party 347,957 351,957
Leasehold improvements 37,211 34,311
2,661,362 2,655,594
Less: Accumulated depreciation and amortization 668,007 546,620
- --------------------------------------------------------------------------------
Total Property and Equipment 1,993,355 2,108,974
- --------------------------------------------------------------------------------
Other Assets:
Notes receivable - related party 250,000 250,000
Water shares held for sale 120,000 120,000
Deposits and other 1,600 1,500
Total Other Assets 371,600 371,500
TOTAL ASSETS $ 3,712,932 $ 4,292,562
- --------------------------------------------------------------------------------
Continued on next page.
-2-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
-------------------------------------------------------------------------------
May 31, August 31,
1996 1995
-------------------------------------------------------------------------------
LIABILITIES
-----------
Current Liabilities:
Notes payable $ -- $ 676,000
Trade accounts payable 596,501 615,998
Accrued income taxes payable 36,445 30,200
Accrued expenses 15,247 17,936
Customer advance feed contracts 207,052 34,304
Customer advance feed contracts - related party 176,856 149,395
Current portion of capital lease
obligations-related party 61,278 106,322
- --------------------------------------------------------------------------------
Total Current Liabilities 1,093,379 1,630,155
Capital Lease Obligations - related party 1,057,463 1,095,135
Obligation Payable -- 240,289
Deferred Gain 4,654 18,617
- --------------------------------------------------------------------------------
Total Liabilities 2,155,496 2,984,196
- --------------------------------------------------------------------------------
Commitments
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
- --------------------
Preferred Stock -- --
Common Stock, par value $.0001 per share; 25,000,000
shares authorized; 6,554,799 issued; and 5,764,640
shares outstanding 655 655
Additional Paid-In Capital 1,654,649 1,654,649
Retained Earnings (Deficit) 235,227 (13,843)
----------------------
1,890,531 1,641,461
Less: Treasury stock, at cost 333,095 333,095
- --------------------------------------------------------------------------------
Total Stockholders' Equity 1,557,436 1,308,366
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,712,932 $ 4,292,562
- --------------------------------------------------------------------------------
See Accompanying Note to Unaudited Consolidated Financial Statements.
-3-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
- --------------------------------------------------------------------------------
Nine Months Ended May 31, 1996 1995
- --------------------------------------------------------------------------------
Revenues:
Feed and other sales $ 7,487,836 $ 5,040,152
Feedlot services 1,174,498 1,535,030
Interest 24,478 19,036
Interest on notes receivable related party 11,250 12,533
Debt relief income 95,289 --
Other 316,740 181,092
- --------------------------------------------------------------------------------
Total Revenues 9,110,091 6,787,843
- --------------------------------------------------------------------------------
Costs and Expenses
Cost of feed and other sales 6,839,499 4,544,417
Cost of feedlot services 933,679 1,284,599
Selling, general and administrative 925,153 740,555
Interest 28,404 32,935
Interest on capital leases - related party 94,553 99,029
- --------------------------------------------------------------------------------
Total Costs and Expenses 8,821,288 6,701,535
- --------------------------------------------------------------------------------
Earnings before Income Taxes 288,803 86,308
Income Taxes 39,733 23,730
- --------------------------------------------------------------------------------
NET EARNINGS $ 249,070 $ 62,578
- --------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE AND
COMMON EQUILAVENT SHARE $ .04 $ .01
- --------------------------------------------------------------------------------
Weighted Average Number of Common and
Common Equilavent Shares Outstanding 5,764,640 5,764,640
- --------------------------------------------------------------------------------
See Accompanying Note to Unaudited Consolidated Financial Statements.
-4-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
- --------------------------------------------------------------------------------
Three Months Ended May 31, 1996 1995
- --------------------------------------------------------------------------------
Revenues:
Feed and other sales $ 2,958,424 $ 1,741,210
Feedlot services 401,348 387,367
Interest 2,905 5,558
Interest on notes receivable related party 3,750 3,954
Debt relief income 95,289 --
Other 119,893 27,133
- --------------------------------------------------------------------------------
Total Revenues 3,581,609 2,165,222
- --------------------------------------------------------------------------------
Costs and Expenses:
Cost of feed and other sales 2,744,558 1,548,709
Cost of feedlot services 301,586 269,955
Selling, general and administrative 302,151 248,695
Interest 1,459 6,753
Interest on capital leases - related party 30,895 32,257
- --------------------------------------------------------------------------------
Total Costs and Expenses 3,380,649 2,106,369
Earnings Before Income Taxes 200,960 58,853
Income Taxes 12,810 18,337
- --------------------------------------------------------------------------------
NET EARNINGS $ 188,150 $ 40,516
- --------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE $ .03 $ .01
- --------------------------------------------------------------------------------
Weighted Average Number of Common and
Common Equivalent Shares Outstanding 5,764,640 5,764,640
- --------------------------------------------------------------------------------
See Accompanying Note to Unaudited Consolidated Financial Statements.
-5-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
Nine Months Ended May 31, 1996 1995
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Cash received from customers $ 9,423,136 $ 7,288,254
Cash paid to suppliers and employees (8,674,373) (6,784,059)
Interest received 35,727 31,569
Interest paid (127,851) (135,300)
Tax refunds received -- 57,146
Taxes paid (22,406) --
- --------------------------------------------------------------------------------
Net Cash Provided by
Operating Activities 634,233 457,610
- --------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Acquisition of property and equipment (15,497) (34,961)
Proceeds from sale of equipment -- 710
Proceeds from sale of investments - subsidiaries 44,929 --
Collections on loan to related parties 112,781 60,544
Loan to related party -- (185,000)
- --------------------------------------------------------------------------------
Net Cash Provided (Used) by
Investing Activities 142,213 (158,707)
- --------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from notes payable 1,420,000 3,028,000
Principal payments on:
Short-term notes payable (2,096,000) (3,236,000)
Capital lease obligations - related party (79,271) (82,938)
Net increase in short-term cattle financing 97,683 21,102
Increase in cash overdraft -- 67,031
- --------------------------------------------------------------------------------
Net Cash Used by
Financing Activities (657,588) (202,805)
- --------------------------------------------------------------------------------
Net Increase in Cash 118,858 96,098
Cash, Beginning of Period 72,272 49,348
- --------------------------------------------------------------------------------
Cash, End of Period $ 191,130 $ 145,446
- --------------------------------------------------------------------------------
Continued on next page.
.. -6-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
- --------------------------------------------------------------------------------
Nine Months Ended May 31, 1996 1995
- --------------------------------------------------------------------------------
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net earnings $ 249,070 $ 62,578
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Gain on sale of investments - subsidiaries (20,000) --
Depreciation and amortization expense 123,386 126,050
Amortization of deferred gain (13,963) (13,963)
Changes in assets and liabilities net of
short-term cattle financing:
(Increase) decrease in:
Trade accounts receivable 254,374 83,761
Trade accounts receivable - related party 23,441 86,871
Accounts receivable - related party 61,080 (119,883)
Income taxes receivable 11,082 69,063
Inventories (68,410) 132,238
Prepaid expense (14,063) (11,121)
Deposits and other (100) 150
Increase (decrease) in:
Trade accounts payable and accrued expenses 62,171 (34,595)
Accrued participation losses - related party -- (298,850)
Customer advance feed contracts 172,748 174,282
Customer advance feed contracts - related party 27,461 201,029
Income taxes payable 6,245 --
Obligation payable (240,289) --
- --------------------------------------------------------------------------------
Net Cash Provided by Operating Activities $ 634,233 $ 457,610
- --------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Reduction of long-term capital lease with a related
party for an equipment item returned to lessor $ -- $ 2,000
- --------------------------------------------------------------------------------
See Accompaning Note to Unaudited Consolidated Financial Statements.
-7-
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARIES
NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------
The consolidated balance sheets as of May 31, 1996 and August 31, 1995, the
consolidated statements of earnings for the three months and nine months ended
May 31, 1996 and 1995 and consolidated statements of cash flows for the nine
months ended May 31, 1996 and 1995 have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condense or omitted as allowed by the rules and regulations
of the Securities and Exchange Commission.
In preparation of the above-described financial statements, all adjustments of a
normal and recurring nature have been made. The Company believes that the
accompanying unaudited financial statements contain all adjustments necessary to
present fairly the results of operations and cash flows for the periods
presented. Further, management believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the annual financial statements
and the notes thereto. The operations for the nine months and three months
periods ended May 31, 1996 are not necessarily indicative if the results to be
expected for the year.
-8-
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
Results of Operations
- ---------------------
A summary of the net earnings (loss) by quarter for the nine months ended May
31, 1996, compared to the same periods the year before is as follows:
Increase
Nine Months Ended May 31, 1996 1995 (Decrease)
------------------------------------------------------------------------
First Quarter $ 63,986 $ (10,300) $ 74,286
Second Quarter (3,066) 32,362 (35,428)
Third Quarter 188,150 40,516 147,634
Nine Monhs Combined $ 249,070 $ 62,578 $ 186,492
The most significant factor that affects operating results is the average head
numbers of cattle per day ("average head days") in the Company's feedlot because
feed is sold and feedlot services are rendered to the cattle owners. Sales of
feed and feedlot services account for 95 % or more of the Company's revenues.
The average head days for the periods being compared were as follows:
Increase
Nine Months Ended May 31, 1996 1995 (Decrease)
------------------------------------------------------------------------
First quarter 15,782 13,257 2,525
Second quarter 15,038 13,995 1,043
Third quarter 16,093 15,012 1,081
Nine months combined 15,466 13,933 1,533
The 1,533, or 11.0 %, increase in average head days, impacts several areas, as
described below.
Another factor that affected earnings for the nine months ended May 31,
1996 and 1995, and that did or will impact average head numbers and earnings
later in the fiscal year is the Company's "fall calf program". As a service to
customers, the Company purchases for them calves weaned in the fall and places
them with local farmer-feeders who feed and care for them until the following
February through April when they are transferred to the Company's feedlot. These
fall calf programs are undertaken on essentially a breakeven basis; that is, the
amounts paid to the farmer-feeders are about the same as amounts charged to the
customers. The Company offers this service to improve placements in February
through April when cattle placements are usually low. The revenues are recorded
as sales of feedlot services and the costs as the cost of feedlot services.
Therefore, a high volume in the fall calf program can reduce the gross profit
percentage on sales of feedlot services. For the nine months ended May 31, 1996,
the Company had 1,310 head in its fall calf program as compared to 4,200 head
the previous year. Therefore, the sales and costs for 1996 were about $398,800
less than for 1995, and did cause an increase in the gross profit percentage
from sales of feedlot services.
Management does not believe that this decrease in the "fall calf program"
will adversely affect future average head numbers due to anticipated placements
from other customers.
-9-
<PAGE>
Other key factors that affect earnings are the gross profit percentages on
feed and other sales, and on feedlot services. The following is a brief summary
of gross profit and gross profit percentages on feed and other sales:
Increase
Nine Months Ended May 31, 1996 1995 (Decrease)
---------------------------------------------------------------------------
Feed and other sales $7,487,836 $5,040,152 $2,447,684
Cost of feed and other sales 6,839,499 4,544,417 2,295,082
---------------------------------------------------------------------------
Gross Profit $ 648,337 $ 495,735 $ 152,602
Gross profit percentage 8.7% 9.8% (1.1%)
Ingredients sold in rations are separately marked up so the gross profit
percentage on feed sales is affected by the mix of ingredients sold as well as
management's discretionary pricing decisions, and feed sold under future
delivery contracts at lower markups. Due to unusually high ingredient costs
during the period ended May 31, 1996, the Company has altered both its pricing
structures and the type of ingredients fed to maintain its competitive edge by
keeping feeding costs down. This has resulted in a minor decrease in the gross
profit percentage, but management does not expect this decrease to have a major
impact on the Company's operations.
The following is a brief summary of the gross profit and gross profit
percentages on sales of feedlot services:
Increase
Nine Months Ended May 31, 1996 1995 (Decrease)
-----------------------------------------------------------------------
Sales of feedlot services $1,174,498 $1,535,030 $(360,532)
Cost of feedlot services 933,679 1,284,599 (350,920)
-----------------------------------------------------------------------
Gross profit $ 240,819 $ 250,431 $ (9,612)
Gross profit percentage 20.5% 16.3% 4.2%
Sales of feedlot services consist primarily of yardage (pen rent) charged
to the owners of the cattle on feed and grain processing charged for the
processing of certain feed stuffs before then can be fed to the cattle. Yardage
charges and grain processing for the nine months ended May 31, 1996 increased
$38,300 or 4.9% from the same period the prior year due to the increased head
number and mix of ingredients as described above.
The cost of feedlot services consists largely of feedlot operating
expenses. Although the cost of feedlot services decreased $350,920 for the nine
months ended May 31, 1996 compared to the same period the prior year this
decrease is reduced by the cost of the "fall calf program" as described above,
of $398,800. This results in an increase in the cost of feedlot services of
$47,880. Primarily as a result of the increase in average head days labor costs
increased $34,900 and equipment repair costs increased $13,500. The balance of
the change is due to increases and decreases in various expenses.
The increase in gross profit percentage of feedlot services is a
combination of the increase in revenues and expenses and the decrease in the
"fall calf program" as noted above.
Other revenues increased $135,600 primarily as the result of the revenues
generated by the Company's two commodity brokerage subsidiaries, LaSalle
Commodity and Cattle Services Co. and Miller Trading Co. Commission revenues
increased $162,995 or 88.2% for the nine months ended May 31, 1996 over the same
period the prior year when Miller Trading Co. had just began to generate
revenues. Interest income increased $4,159 or 13.2% for the nine months ended
May 31, 1996 over the same period the prior year due to the Company's "carrying"
or financing more customer feeding charges. The balance of the increase is the
result of increases and decreases in various accounts.
-10-
<PAGE>
In May 1996, the Company sold the two commodity brokerage subsidiaries,
LaSalle Commodity and Cattle Services Co. and Miller Trading Co. to a related
party. Although the subsidiaries had been generating revenue, they were not
profitable. Management also considered the goals of the Company as they relate
to diversity in agriculture and the effects the two subsidiaries might have on
possible future acquisitions and/or mergers in making its decision to sell the
subsidiaries. Although revenues will decline as a result of the sale, expenses
will decline farther.
During the nine months ended May 31, 1996 the Company settled an obligation
that was assumed by the Company with the Company's merger with Genetic
Engineering, Inc. for less than the amount the Company had been reporting the
obligation. The terms of the settlement resulted in a gain of $95,289.
Selling, general, and administrative expenses increased $184,600 for the
nine months ended May 31, 1996 over the same period the prior year. Payroll
expenses related to the increase in the commission revenues as described above
increased $52,600, while telephone and advertising expenses, the two most
prevalent expenses for the commodity brokerage subsidiaries, increased $36,700.
For the nine months ended May 31, 1996, the Company incurred $35,500 in customer
death loss adjustments. These adjustments, although not required, are made to
customers for the purpose of creating goodwill and/or when management feels that
the death loss is out of the ordinary. Nonwage payroll expenses increased
$39,900 for the period ended May 31, 1996 over the same period the previous
year, partially as the result of the increased payroll expenses as described
above and normal cost increases. The balance of the increase in selling,
general, and administrative expenses are various increases and decreases in
several accounts.
Income taxes are directly related of the net earnings before income taxes
and certain assumptions made with the estimations. For the nine months ended May
31, 1996, income taxes increased $16,000 from the same period the prior year
while pretax profits increased $202,495. This desparity is the result of certain
amounts of the debt releif income are offset by a net operating loss carry
forward.
Liquidity and Capital Resources
- -------------------------------
For the nine months ended May 31, 1996, the internally-generated funds from
operating activities were $634,233 compared to $457,610 for the same period the
previous year, an increase of $176,623. Cash received from customers for the
period increased $2,134,882, and cash paid to suppliers and employees increased
$1,890,314, for a total cash increase of $244,568. Interest received for the
period increased $4,158, while interest paid decreased $7,449, for a total cash
increase of $11,607. For the period ended May 31, 1996, net income tax payments
totalled $22,406 compared to net income tax refunds received the previous year
of $57,146, a net cash decrease of $79,552.
The net cash provided by investing activities increased $300,920 for the
nine months ended May 31, 1996 compared to the same period the previous year.
For the period ended May 31, 1996, acquisition of property and equipment
decreased $19,464, while collections on loans from related parties increased
$52,237. The Company made no additional loans to related parties for the nine
months ended May 31, 1996, compared to loans made the prior year of $185,000, a
decrease is funds used by investing activities of $185,000.
-11-
<PAGE>
The net cash used by financing activities was $657,588 for the nine months
ended May 31, 1996, an increase of $454,783 from the usage of $202,805 for the
same period the prior year. The change in net borrowings over repayments of
notes and other obligations resulted in a $468,000 increase in funds used for
the nine months ended May 31, 1996 compared to the same period the previous
year. Net short-term cattle financing for the nine months ended May 31, 1996
provided $97,683 compared to the provision of funds the same period the prior
year of $21,102, an increase in funds provided of $76,581. The change in the
cash overdraft, which provided $67,031 for the nine months ended May 31, 1995
compared to no activity in the current year, resulted in a decrease in funds
provided by financing activities of $67,031.
The Company's working capital (current assets minus current liabilities)
increased by $72,665 during the nine months ended May 31, 1996 from $181,933 at
August 31, 1995 to $254,598 at May 31, 1996. There were offsetting increases and
decreases to several current assets and current liabilities as shown on the
consolidated balance sheets.
Trade accounts receivable were reduced by $459,877 for the nine months
ended May 31, 1996 due to collections of financed amounts from customers. The
reduction in trade accounts receivable from related parties is due to the
decrease in sales to related parties.
Inventories increased $104,164 due to feeder cattle held for sale to a
customer in the amount of $35,700 were not in inventory at August 31, 1995 and
due to additional feed ingredient inventories on hand.
Deposits on feeder cattle decreased $57,800 due to the fact that the cattle
for which the deposits had been made have been delivered to the feedlot, and the
deposit made for them has been applied against the purchase price.
Notes payable were reduced by $676,000 for the nine months ended May 31,
1996 mainly because of the increase in customer advance feed contracts of
$200,209 and the decrease in trade accounts receivable described above.
Customers make advance purchases of feed ingredients primarily during December
both for tax purposes and to stabilize their feeding costs. These advance
payments provide additional cash which lessens the amount of borrowed funds
required.
The Company has a revolving line of credit of $200,000 from a local bank
that matures December 31, 1996 and bears interest at 2% over the prime rate
(actual rate of 10.25% at May 31, 1996). There was no outstanding balance at May
31, 1996 which meant that the Company could generate an additional $200,000 cash
if needed under this line of credit. The note is secured by feed accounts
receivable, feed inventories, and equipment, and is guaranteed by one
officer/director. Miller Feeders, Inc. (MFI) has a $300,000 revolving line of
credit at the same local bank for the procurement of feeder cattle for resale to
customers. The line matures on December 31, 1996 and bears interest at 2% over
the prime rate (actual rate of 10.25% at May 31, 1996). There was no outstanding
balance at May 31, 1996 which meant that MFI could borrow up to $300,000 to
purchase feeder cattle for resale to customers. The line is secured by feeder
cattle inventories and feeder cattle accounts receivable and guaranteed by one
officer/director. In June 1996 the Company obtained an additional $300,000 line
of credit at the same local bank for the same terms and maturing December 31,
1996 for the purpose of carrying a customer's feeding charges.
-12-
<PAGE>
The Company had no material commitments for capital expenditures at May 31,
1996.
Management believes it has adequate financial resources to conduct
operations at present and reasonably anticipated levels.
-13-
<PAGE>
PART II - OTHER INFORMATION
Items 1 through 6 - None
- ------------------------
-14-
<PAGE>
SIGNATURES
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 duly authorized.
MILLER DIVERSIFIED CORPORATION
------------------------------
(Registrant)
Date: July 18, 1996 \s\ JAMES E. MILLER
-------------------------------------
James E. Miller
President,Chief Executive Officer
Chief Financial Officer
Date: July 18, 1996 \s\ STEPHEN R. STORY
--------------------------------------
Stephen R. Story
Secretary-Treasurer
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Form 10-QSB for the Quarter Ended May 31, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> MAY-31-1996
<CASH> 191,130
<SECURITIES> 0
<RECEIVABLES> 893,743
<ALLOWANCES> 0
<INVENTORY> 235,306
<CURRENT-ASSETS> 1,347,977
<PP&E> 1,993,355
<DEPRECIATION> 668,007
<TOTAL-ASSETS> 3,712,932
<CURRENT-LIABILITIES> 1,093,379
<BONDS> 0
0
0
<COMMON> 655
<OTHER-SE> 1,889,876
<TOTAL-LIABILITY-AND-EQUITY> 3,712,932
<SALES> 7,487,836
<TOTAL-REVENUES> 9,110,091
<CGS> 6,839,499
<TOTAL-COSTS> 7,773,178
<OTHER-EXPENSES> 925,153
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122,957
<INCOME-PRETAX> 288,803
<INCOME-TAX> 39,733
<INCOME-CONTINUING> 249,070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 249,070
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
