<PAGE>
- --------------------------------------------------------------------------------
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 33-27603
-----------------------
DIRECTCOM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 22-2942013
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
20 Maple Avenue
Armonk, New York 10504
(Address of principal executive offices)
(914) 273-8620
(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
___ ___
The number of shares of Common Stock of the Registrant outstanding as of March
31, 2000 was 1,336,981.
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Item 1. Financial Information
---------------------
Page No.
--------
Consolidated balance sheets - March 31, 2000 (unaudited) and December 31, 1999 3
Consolidated statements of operations (unaudited) - Three months ended
March 31, 2000 and 1999 4
Consolidated statements of cash flows (unaudited) - Three months ended
March 31, 2000 and 1999 5
Notes to consolidated financial statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There is no material litigation or other proceeding currently pending against
the registrant.
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other information
-----------------
</TABLE>
The basic and diluted earnings per common share for the three months ended March
31, 2000 is calculated as follows:
Common shares outstanding 1,336,981
Common shares equivalents outstanding 64,000
Net Loss $(138,569)
Per share - Basic loss $ (.04)
Per share - Diluted loss $ (.04)
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits: Page
----
3.1 Amended and Restated Certificate of Incorporation.
The Certificate of Ownership and Merger was filed with
Registrant's Form 10-K on April 20, 1990 and
is hereby incorporated by reference. __
3.2 Bylaws of the Corporation already have been
filed with Registrant's prior Registration
Statement effective May 18, 1989 and are
hereby incorporated by reference. N/A
4.1 Form of Common Stock Certificate (specimen)
has been filed with Registrant's Registration
Statement effective May 18, 1989, and is hereby
incorporated by reference. N/A
10.1 Office Lease Agreement between Garrett Mountain __
Office Center Associates-I and DirectCom, with
regard to the Armonk, New York office has
been filed with Registrant's 10-K for the year
ended December 31, 1996 and is hereby incorporated
by reference.
10.2 Stock Option Plan __
11.1 Statement regarding the computation of per-share
earnings is included in Note __ to Financial
Statements on sequentially numbered page __ and
is hereby incorporated by reference. N/A
27 Financial Data Schedule (filed herewith) __
(b) Reports on Form 8-K
Registrant filed a Form 8-K on March 30, 2000 reporting under
item 4 of that Form a change in its certifying accountant for the performance of
accounting and financial reporting services. Registrant reported that its
decision to replace Thompson Dugan, PC with Goff Ellenbogen Backa & Alfera, LLC
("GEBA") was a result of Registrant's decision to remain with the individual at
Thompson Dugan who was primarily responsible for performing such accounting and
financial reporting services when he recently decided to join GEBA.
<PAGE>
DIRECTCOM, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, 2000 December 31, 1999
--------------- ------------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,264,658 $ 1,560,893
Accounts receivable, net of allowance for doubtful accounts of $176,220 709,727 842,398
Accounts receivable - related company - 195,496
Inventory 303,645 297,799
Prepaid and other current assets 314,233 145,182
----------- -----------
Total current assets 2,592,263 3,041,768
PROPERTY, PLANT AND EQUIPMENT, Net 6,224,653 6,393,502
OTHER ASSETS 579,836 583,659
NET ASSETS (LIABILITIES) OF DISCONTINUED OPERATIONS (68,764) (111,096)
----------- -----------
TOTAL ASSETS $ 9,327,988 $ 9,907,833
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt 384,476 384,476
Accounts payable 164,914 192,557
Accounts payable - related company 65,524 -
Income taxes payable - 204,894
Accrued expenses and other current liabilities 225,911 334,994
Deferred revenue - 70,758
----------- -----------
Total current liabilities 840,825 1,187,679
LONG-TERM DEBT 4,996,535 5,064,651
DEFERRED INCOME TAXES 513,300 531,600
MINORITY INTEREST 1,003,519 1,011,525
----------- -----------
TOTAL LIABILITIES 7,354,179 7,795,455
SHAREHOLDERS' EQUITY
Preferred stock $.00001 par value - authorized 10,000,000 shares;
issued and outstanding: none - -
Common stock $.00001 par value - authorized 60,000,000 shares;
issued: 3,661,983 shares, of which 2,325,002 shares are held as
treasury stock. 38 38
Paid-in capital 659,777 659,777
Retained earnings 4,806,494 4,945,063
----------- -----------
5,466,309 5,604,878
Less treasury stock, at cost (3,492,500) (3,492,500)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 1,973,809 2,112,378
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 9,327,988 $ 9,907,833
=========== ===========
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
DIRECTCOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
REVENUES
Agency $ 449,971 $4,803,762
Printing 903,155 2,482,428
Printing - related company 823,189 553,467
---------- ----------
Total revenues 2,176,315 7,839,657
COST OF REVENUE
Agency - related company 314,042 3,255,953
Agency - other 80,189 62,997
Printing 1,220,356 1,626,296
Printing - related company 32,814 -
---------- ----------
Total cost of revenue 1,647,401 4,945,246
Selling, general and
administrative expenses 449,317 501,893
Administrative fee - related party (Note 8) 153,412 554,031
Depreciation and amortization 172,315 171,136
---------- ----------
Total costs and expenses 2,422,445 6,172,307
---------- ----------
OTHER INCOME (EXPENSE)
Interest expense (79,871) (78,630)
Rental income - related party 45,000 -
Miscellaneous income 38,426 18,769
---------- ----------
Total other income (expense) 3,555 (59,861)
---------- ----------
(Loss) income from continuing operations before income taxes,
minority interest and discontinued operations (242,575) 1,607,490
(Benefit) provision for income taxes (96,000) 667,200
---------- ----------
(Loss) income from continuing operations before minority interest and
discontinued operations (146,575) 940,290
Minority interest in (loss) income of subsidiary (8,006) 53,966
---------- ----------
Income from continuing operations (138,569) 886,324
Loss from discontinued operations (Note 2) - (61,761)
---------- ----------
Net (loss) income $ (138,569) $ 824,563
========== ==========
BASIC (LOSS) EARNINGS PER SHARE
Continuing operations $ (0.04) $ 0.28
========== ==========
Discontinued operations $ - $ (0.02)
========== ==========
DILUTED (LOSS) EARNINGS PER SHARE
Continuing operations $ (0.04) $ 0.29
========== ==========
Discontinued operations $ - $ (0.02)
========== ==========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
DIRECTCOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $(138,569) $ 923,523
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 172,315 171,136
Bad debt expense - 9,048
Minority interest (8,006) 53,966
Deferred taxes (18,300) 16,600
(Increase) decrease in:
Accounts receivable 132,671 (2,803,275)
Accounts receivable - related company 195,496
Inventory (5,846) 143,968
Prepaid and other current assets (169,051) (14,242)
Other assets 357 9,492
Increase (decrease) in:
Accounts payable (27,643) (131,114)
Accounts payable - related company 65,524 1,822,815
Income taxes payable (204,894) 399,291
Accrued expenses and other current liabilities (109,083) 127,757
Deferred revenue (70,758) -
---------- -----------
Net cash (used) provided by operating activities (185,787) 728,965
---------- -----------
Cash flows from investing activities:
Purchase of furniture and equipment - (93,251)
---------- -----------
Net cash used in investing activities - (93,251)
---------- -----------
Cash flows from financing activities:
Repayments of long-term debt (68,116) (65,198)
---------- -----------
Net cash used in financing activities (68,116) (65,198)
---------- -----------
Net cash (used) provided by discontinued operations (42,332) 30,680
---------- -----------
Net (decrease) increase in cash (296,235) 601,196
Cash at beginning of period 1,560,893 3,026,447
---------- -----------
Cash at end of period $1,264,658 $ 3,627,643
========== ===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
DIRECTCOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000. For further information, refer to the consolidated financial statements
and related footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
NOTE 2 - DISCONTINUED OPERATIONS
Effective September 30, 1999 the Company decided to close its database
operations in West Paterson, New Jersey. Accordingly, the results of the
database operations are shown as discontinued operations with the prior year
restated in accordance with Accounting Principles Board Opinion No. 30.
Components of amounts reflected in the statements of operations, balance sheets
and statements of cash flow are as follows:
Statement of operations data for the three months ended March 31,
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues $ - $ 753,035
Costs and expenses - (851,996)
-------- ---------
Operating loss - (98,961)
Income tax benefit - 37,200
-------- ---------
Loss - (61,761)
-------- ---------
Balance sheet data for the period ended
3/31/00 12/31/99
------- --------
Current Assets - 1,304
Property plant and equipment, net - -
Other assets 47,000 47,000
Current liabilities - 21,500
Non current liabilities 115,764 137,900
-------- ---------
Net liabilities of discontinued operations (68,764) (111,096)
======== =========
Cash flow data for the three months ended March 31,
Cash flow from operations $(42,332) $ 30,680
Cash flow from investments - -
Cash flow from financing activities - -
-------- ---------
Cash (used) provided by discontinued operations $(42,332) $ 30,680
======== =========
</TABLE>
6
<PAGE>
DIRECTCOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
<S> <C> <C>
Paper $177,595 $155,552
Other raw materials 68,116 69,376
Work-in-process 57,934 72,871
-------- --------
$303,645 $297,799
======== ========
</TABLE>
NOTE 4 - RELATED-PARTY TRANSACTIONS
Certain of the Company's major shareholders also exercise control over North
American Communications, Inc. (NAC), an affiliated company that has extensive
transactions with the Company. The Company's related party revenue is generated
through printed materials for direct mail packages for NAC. The Company's
related party expenses, provided by NAC, result from the purchases of
production, printing and mailing services for direct mail packages to integrate
into the Company's printing and production requirements. Additionally, related
party expenses include certain salary and insurance expenses.
ACCOUNTS PAYABLE - ACCOUNTS RECEIVABLE - RELATED COMPANY
The accounts payable - related company at March 31, 2000 represents amounts due
to NAC for printing and mailing services. Offsets against the related party
payable are receivables due from NAC in the amount of $454,398 at March 31,
2000.
The accounts receivable - related company at December 31, 1999 represents
amounts due the Company from NAC for printing services and lease revenue. Offset
against the related party receivable are payables due NAC in the amount of
$230,789 at December 31, 1999.
LEASE REVENUE - RELATED COMPANY
During 1999, the Company agreed to lease NAC equipment under two operating
leases. The lease terms are three years, cancelable upon a thirty day notice by
either party, without penalty. The current period rental income due from NAC is
$45,000.
Administrative Fee
On December 15, 1997, the Company entered into a management agreement with NAC.
The agreement provides for administrative, consulting and management support
services. This fee is computed based on 7% of consolidated revenues. The amount
due NAC as of March 31, 2000 related to this fee is $302,712.
7
<PAGE>
DIRECTCOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 5 - INCOME TAXES
The income tax expense or benefit consists of the Company's current liability or
credit for federal and state taxes and the changes in the Company's deferred
income tax assets and liabilities. Differences between the federal statutory
rate and the Company's effective tax rate are primarily due to state taxes and
certain non-deductible expenses.
The effective tax rate was 39.5% for the three months ended March 31, 2000 and
41.5% for the three months ended March 31, 1999, respectively. The higher rate
in 1999 reflects certain non-deductible expenses not applicable to the first
quarter of 2000. The provision for the three month period ended March 31,2000
reflects management's estimate of the expected annual effective rate for the
year ending December 31, 2000.
NOTE 6 - EARNINGS PER SHARE
Basic earnings per share is computed based on the weighted average number of
outstanding common shares for the period. Diluted earnings per share adjusts the
weighted average for the potential dilution that could occur if stock options,
warrants or other convertible securities were exercised or converted into common
stock.
NOTE 7 - SEGMENT INFORMATION
The Company organizes its business into two segments based on its product and
service offerings: advertising and marketing agency, and printing services.
Segment data includes intercompany common customer revenues for contracted
services between segments. Management evaluates the performance of the Company's
segments based on EBITDA exclusive of the administrative fee, other income and
extraordinary items.
The table below presents information about the Company's segments for the three
months ended March 31, 2000 and 1999.
The table below presents information about the Company's segments.
<TABLE>
<CAPTION>
March 31, 2000 Agency Printing Total
------ -------- -----
<S> <C> <C> <C>
Revenues $ 449,971 $1,741,625 $2,191,596
EBITDA (55,568) 135,164 79,596
<CAPTION>
March 31, 1999 Agency Printing Total
------ -------- -----
<S> <C> <C> <C>
Revenues $4,803,762 $3,110,956 $7,914,718
EBITDA 1,476,942 915,575 2,392,517
</TABLE>
8
<PAGE>
DIRECTCOM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
A reconciliation of the total segment revenues to total consolidated revenues
and the total segment EBITDA to total consolidated (loss) income before income
taxes for the three months ended March 31, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
Revenues March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Total segment revenues $2,191,596 $7,914,718
Elimination of intercompany revenue (15,281) (75,061)
---------- ----------
Consolidated revenues $2,176,315 $7,839,657
========== ==========
<CAPTION>
EBITDA March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Total EBITDA for reportable segments $ 79,596 $2,392,517
Management fee (153,412) (554,031)
Interest expense (48,945) (78,630)
Depreciation and amortization (172,315) (171,136)
Other income 52,500 18,769
---------- ----------
Consolidated (loss) income before taxes $ (242,576) $1,607,489
</TABLE>
9
<PAGE>
Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Periods Ended March 31, 2000 and March 31, 1999
General
DirectCom, Inc. re-evaluated the Company's directional and growth strategies
during 1999. The Company's main focus of attention in this evaluation process
was directed toward its database operations. The database operations consisted
primarily of customer database management and maintenance services for its
clients. The Company has phased out these services, as of September 30, 1999. As
part of this process, the Company relocated their headquarters to Armonk, New
York.
The Company continues to pursue its goal of providing seamless, integrated
marketing and printing services to direct marketers through its printing and
agency operations. DirectCom's strategy is to provide unmatched values in
consulting, fulfillment, agency creative, production management, printing and
direct mail to deliver its customers a lower cost of production, reduced
production cycles and a greater degree of control over the quality of each
element of the campaign.
(a) Results of Operations - Three Months Ended March 31, 2000 and March 31,
1999
<TABLE>
<CAPTION>
2000
--------
Agency Printing Total
------ -------- -----
<S> <C> <C> <C>
Revenues $ 449,971 $1,726,344 $2,176,315
Gross profit $ 117,822 $ 473,174 $ 590,996
Operating loss $ (202,680) $ (40,077) $ (242,757)
1999
--------
Revenues $4,803,762 $3,035,895 $7,839,657
Gross profit $1,484,812 $1,409,599 $2,894,411
Operating income $1,013,101 $ 594,388 $1,607,489
</TABLE>
Revenues
- --------
Net revenue decreased $5,663,342 from $7,839,657 in 1999 to $2,176,135 in 2000.
The revenue decline is primarily attributed to the loss of a significant common
customer, which accounted for approximately 52 percent of the prior period
revenue. Management believes the loss of this common significant customer may
have an adverse impact on future earnings of the Company, but anticipates the
Company will remain competitive and anticipates replacing the revenue loss
through the establishment of relationships with new agency and printing
customers.
Cost of Revenue
- ---------------
The Company's cost of revenue, as a percentage of net revenues, was 75.6% for
the three month period ended March 31, 2000 as compared to 63% for the prior
period.
The agency cost of revenue for the three months ended March 31, 2000, as a
percentage of agency revenues, increased 18.6% from the prior period. The
printing cost of revenue for the three months ended March 31, 2000, as a
percentage of printing revenues, increased 9.8% from the prior period. The prior
period includes sales to a significant customer who provided a majority of their
own raw materials, as a result the prior period had lower costs and increased
margins. During December 1999 this significant customer ceased doing business
with the Company.
Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses decreased $52,576 for the three
month period
10
<PAGE>
ended March 31, 2000 as compared to the prior period. The current period
decrease resulted from the decrease in costs due to decreased revenues.
Administration fee - related company
- ------------------------------------
The administrative fee - related company decreased $400,619 in 2000 as compared
to the prior period. The current period decrease resulted from decreased revenue
for the three months ended March 31, 2000. The administrative fee results from a
management agreement with NAC for administrative, consulting and management
support services provided to the Company. This fee is based on 7% of
consolidated revenues.
Depreciation and Amortization
- -----------------------------
Depreciation and amortization expense increased $1,179 as compared to the prior
period.
Interest Expense
- ----------------
Interest expense increased $1,241 for the three month period as compared to the
prior period. The current period increase resulted from an increase in interest
rates on a long term loan.
Other Income (Expense)
- ----------------------
During 1999, the Company entered into a lease agreement with a related party
resulting in rental income. The current period proceeds for the three month
period total $45,000. (Note 4). Miscellaneous income primarily represents
interest income on the Company's cash deposits. The decrease in interest income
is attributed to the overall decrease in cash during the first quarter of 2000
as compared to the same period in 1999.
Income Taxes
- ------------
The income tax benefit resulted from a loss from operations. The effective tax
rate was approximately 39.5% and 41.5% for the three months ended March 31, 2000
and 1999, respectively. The higher effective rate in 1999 reflects certain non-
deductible expenses not relative to the 2000 first quarter tax provision. The
income tax benefit for the three month period ended March 31, 2000 reflects
management's estimate of the expected annual effective rate for the year ending
December 31, 2000.
Liquidity and Capital Resources
- -------------------------------
<TABLE>
<CAPTION>
3/31/00 12/31/99
------- --------
<S> <C> <C>
Working capital $1,751,438 $1,854,089
Cash 1,264,658 1,560,893
<CAPTION>
3/31/00 3/31/99
------- -------
<S> <C> <C>
Cash (used) provided by operating
activities (185,787) 728,965
Cash used in investing activities - 93,251
Cash used in financing activities 68,116 65,198
</TABLE>
Working capital decreased as of March 31, 2000 by $102,651 as compared to
December 31, 1999, primarily as a result of decreased cash and is offset by an
increase in prepaid expenses due to prepaid income taxes in the amount of
$167,806.
The decrease in cash flows from operations in 2000 as compared to 1999 resulted
primarily from the current period loss and the decrease in the accounts
receivable as a result of the decreased revenues.
The Company had no investing activities for the current period.
The cash used in financing resulted from the reduction in the Company's long-
term debt.
At March 31, 2000, the Company had outstanding debt of $5,38,011 primarily in
the form of notes payable. The amount available under the Company's lines of
credit at March 31, 2000 was approximately $3,500,000. The Company anticipates
that current cash balances will provide sufficient funds to meet its working
capital and capital expenditures through December 31, 2000.
11
<PAGE>
Impact of Inflation
- -------------------
Although the Company has not attempted to calculate the effect of inflation,
management does not believe inflation has had a material effect on results of
operations. Material increases in costs and expenses, particularly packaging,
raw materials and labor costs, in the future, could have a significant impact on
the Company's operating results to the extent that the effect of such increases
cannot be transferred to its customers.
Impact of Year 2000 Issues
- --------------------------
DirectCom experienced no year 2000 - related disruptions to business operations.
The Company will continue to monitor its information systems to assess whether
its systems are at risk of misinterpreting any future dates and will develop, if
needed, appropriate contingent plans to prevent any system malfunction or
correct any system failures. The Company has not been informed of any such
problem experienced by its suppliers or customers.
However, it is too soon to conclude that there will not be any problem arising
from the Year 2000 problem. The Company will continue to monitor its significant
vendors of goods and services and customers with respect to any Year 2000
problems they may encounter, as those issues may effect the Company's ability to
continue operations, or might adversely affect its financial position, results
of operations and cash flows. At this time, the Company does not believe that
these potential problems will materially impact the ability to continue it
operations or effect its financial statements. Any delays, mistakes, or failures
could have a significant impact in the Company's financial condition and
profitability.
12
<PAGE>
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Not applicable
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 1,264,568 1,560,893
<SECURITIES> 0 0
<RECEIVABLES> 885,947 1,214,114
<ALLOWANCES> 176,220 176,220
<INVENTORY> 303,645 297,799
<CURRENT-ASSETS> 2,592,263 3,041,768
<PP&E> 8,628,118 8,628,118
<DEPRECIATION> 2,403,465 2,234,616
<TOTAL-ASSETS> 9,327,988 9,907,833
<CURRENT-LIABILITIES> 840,825 1,187,679
<BONDS> 0 0
0 0
0 0
<COMMON> 38 38
<OTHER-SE> 659,777 659,777
<TOTAL-LIABILITY-AND-EQUITY> 9,327,988 9,907,833
<SALES> 2,176,315 7,839,657
<TOTAL-REVENUES> 2,176,315 7,839,657
<CGS> 1,647,401 4,945,246
<TOTAL-COSTS> 1,647,401 4,945,246
<OTHER-EXPENSES> 602,729 1,046,876
<LOSS-PROVISION> 0 9,048
<INTEREST-EXPENSE> 79,871 78,630
<INCOME-PRETAX> (242,575) 1,607,490
<INCOME-TAX> (96,000) 667,200
<INCOME-CONTINUING> (146,575) 940,290
<DISCONTINUED> 0 (61,761)
<EXTRAORDINARY> (8,006) 53,966
<CHANGES> 0 0
<NET-INCOME> (138,569) 824,563
<EPS-BASIC> (.04) .28
<EPS-DILUTED> (.04) .29
</TABLE>
