UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended: September 30, 1995
Commission File Number: 0-18050
EAGLE PACIFIC INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Minnesota 41-1642846
(State of Incorporation) (IRS Employer ID No.)
2430 Metropolitan Centre
333 S. Seventh Street
Minneapolis, Minnesota 55402
(Address of principal executive offices)
Registrant's telephone number, including area code:
(612) 371-9650
BLACK HAWK HOLDINGS, INC.
(Former name or former address, if changed since last report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 4,080,440 shares of Common
Stock, $.01 par value per share, outstanding at November 10, 1995.
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Black Hawk Holdings, Inc. and Subsidiaries)
INDEX
PART 1 - FINANCIAL INFORMATION
Item 1 - Consolidated Condensed Balance Sheets - September
30, 1995 and December 31, 1994 (Unaudited)
Consolidated Condensed Statements of Operations - Three and
Nine Months Ended September 30, 1995 and 1994 (Unaudited)
Consolidated Condensed Statements of Cash Flows - Nine
Months Ended September 30, 1995 and 1994 (Unaudited)
Notes to Consolidated Condensed Financial Statements
(Unaudited)
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
EAGLE PACIFIC INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Black Hawk Holdings, Inc. and Subsidiaries)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
ASSETS SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 273,599 $ -
Restricted cash 500,000 500,000
Accounts receivable 9,562,468 4,018,700
Inventories 8,737,326 3,834,246
Other 286,855 43,167
------------ -----------
Total current assets 19,360,248 8,396,113
PROPERTY AND EQUIPMENT, net 8,858,641 6,616,910
OTHER ASSETS:
Prepaid interest 3,056,230 -
Goodwill, net 3,235,085 3,287,000
Deferred financing costs, net 573,931 592,877
Non-compete agreements, net 251,750 -
Cash value of life insurance 215,972 188,272
Other - 100,000
------------ ------------
7,332,968 4,168,149
------------ ------------
$35,551,857 $19,181,172
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 8,888,338 $ 916,985
Accounts payable 5,353,576 2,038,490
Accrued liabilities and other 806,060 554,607
Current maturities of long-term debt 2,962,819 910,478
----------- -----------
Total current liabilities 18,010,793 4,420,560
----------- -----------
LONG-TERM DEBT, net of current maturities 5,848,180 3,273,710
SUBORDINATED DEBT 6,328,250 6,152,750
MINORITY INTEREST 480,209 497,074
OTHER LONG-TERM LIABILITIES 244,424 806,705
STOCKHOLDERS' EQUITY:
Series A preferred stock, 7% cumulative dividend; convertible;
$2 liquidation preference, no par value; authorized 2,000,000
shares; issued and outstanding 1,383,500 2,767,000 2,767,000
Undesignated stock, $.01 par value 18,000,000 shares authorized;
none issued and outstanding
Common stock, par value $.01; authorized 30,000,000 shares;
issued and outstanding 4,080,440 and 3,583,230 shares,respectively 40,804 35,832
Additional paid-in capital 32,649,356 31,261,979
Unearned compensation on stock options (229,761) (306,348)
Accumulated deficit (30,587,398) (29,728,090)
------------ ------------
Total stockholders' equity 4,640,001 4,030,373
------------ ------------
$35,551,857 $19,181,172
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Black Hawk Holdings, Inc. and Subsidiaries)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NET SALES $19,038,421 $ 9,504,417 $37,315,159 $26,306,004
COST OF GOODS SOLD 16,494,901 6,565,035 30,655,564 18,602,542
-----------
Gross profit 2,543,520 2,939,382 6,659,595 7,703,462
OPERATING EXPENSES:
Selling expenses 1,789,828 1,036,552 3,786,709 2,931,661
General and administrative expenses 499,657 405,281 1,559,853 1,201,430
----------
2,289,485 1,441,833 5,346,562 4,133,091
----------
OPERATING INCOME 254,035 1,497,549 1,313,033 3,570,371
OTHER INCOME (EXPENSE):
Interest expense (865,578) (647,830) (2,147,574) (1,700,614)
Minority interest in loss (income) 6,650 (58,108) 16,865 (125,107)
Other 84,901 7,012 103,634 16,083
------------
(774,027) (698,926) (2,027,075) (1,809,638)
------------
(LOSS) INCOME BEFORE TAXES (519,992) 798,623 (714,042) 1,760,733
INCOME TAX PROVISION (12,600) (88,000) - (134,000)
-----------
NET (LOSS) INCOME (532,592) 710,623 (714,042) 1,626,733
PREFERRED STOCK DIVIDENDS (48,421) (48,422) (145,266) (144,866)
-----------
NET (LOSS) INCOME APPLICABLE TO
COMMON STOCK $ (581,013) $ 662,201 $ (859,308) $1,481,867
===========
NET (LOSS) INCOME PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary $ (.14) $ .14 $ (.22) $ .34
============ ========== ============ ==========
Fully diluted $ (.14) $ .12 $ (.22) $ .27
============ ========== ============ ==========
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING:
Primary 4,054,788 4,640,455 3,835,722 4,407,042
==========
Fully diluted 4,054,788 6,023,955 3,835,722 6,023,955
==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Black Hawk Holdings, Inc. and Subsidiaries)
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (714,042) $ 1,626,733
Adjustments necessary to reconcile net (loss) income
to net cash (used in) provided by operating activities:
(Gain) loss on sale of property and equipment (544) 106
Depreciation and amortization 909,737 658,500
Loan discount amortization 817,934 175,500
Minority interest (16,865) 125,107
Change in operating assets and liabilities (1,217,218) (1,105,519)
-----------
Net cash (used in) provided by operating activities (220,998) 1,480,427
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of equipment 14,700 -
Purchase of Pacific Plastics, Inc., net of cash acquired (4,695,270) -
Purchase of property and equipment (321,417) (420,241)
Principal collections on loans receivable - 25,000
----------
Net cash used in investing activities (5,001,987) (395,241)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of preferred stock - 25,000
Issuance of long-term debt 1,961,624 -
Issuance of common stock 43,750 -
Payment of preferred stock dividends (145,266) (144,866)
Payments on long-term debt (939,877) (602,058)
Net borrowings (payments) on notes payable 4,576,353 (500,000)
---------
Net cash provided by (used in) financing activities 5,496,584 (1,221,924)
---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 273,599 (136,738)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - 414,704
-------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 273,599 $ 277,966
============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC. AND SUBSIDIARIES
(Formerly Black Hawk Holdings, Inc. and Subsidiaries)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited)
1.PRESENTATION
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position of Eagle
Pacific Industries, Inc. and subsidiaries at September 30, 1995 and the results
of its operations for the three and nine month periods ended September 30, 1995
and 1994 and its cash flows for the nine month periods ended September 30, 1995
and 1994. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. Although the Company's
management believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these consolidated condensed
financial statements be read in conjunction with the consolidated financial
statements of the Company included with its annual report on Form 10-K for the
year ended December 31, 1994.
On July 11, 1995, the Company's shareholders approved the
change in the Company's name from Black Hawk Holdings, Inc.
to Eagle Pacific Industries, Inc.
2. ACQUISITION OF PACIFIC PLASTICS, INC.
On July 10, 1995, the Company acquired all of the outstanding common
stock of Pacific Plastics, Inc. (Pacific). Pacific, and its
wholly-owned subsidiary, Arrow Pacific Plastics, Inc., extrude
polyvinyl chloride pipe and polyethylene tubing products which are
marketed primarily in the Northwestern United States. The purchase
price of Pacific was $6,750,000 consisting of $4,350,000 in cash,
$1,700,000 in the form of a note to the previous owners of Pacific
(Sellers), and 262,210 shares of the Company's common stock valued at
$700,000. In addition, the Company paid $750,000 in cash to two of the
Sellers in exchange for their agreement not to compete with the Company
for five years.
The Company financed the cash portion of the purchase and
noncompetition agreements from borrowings on a new revolving credit
line (Revolver) and term loan (Term Loan) of $3,184,000 and $1,916,000,
respectively. Additional proceeds from the Revolver were used to repay
Pacific's existing line of credit. The Revolver requires interest to be
paid monthly at the bank's reference rate, as defined, plus .5%. The
Revolver expires December 31, 1996. The Term Loan is due on June 1,
2000, with interest payable monthly at the bank's reference rate, as
defined, plus .75%. Principal payments on the Term Loan are due
quarterly in the amount of $87,500 for the first 12 quarters starting
September 1, 1995, and $212,500 for 8 quarters starting September 1,
1998. Both the Revolver and the Term Loan are subject to a loan
agreement containing standard covenants, representations and
warranties, are secured by all of the assets of Pacific and its
subsidiary, except real property, and are guaranteed by the Company.
The $1,700,000 note payable to the Sellers requires the Company to make
36 monthly payments of principal and interest at a fixed rate of 9% per
annum or aggregate payments of $54,059 per month. The Sellers' note is
an obligation of Pacific, secured by the stock of Pacific acquired by
the Company and is guaranteed by the Company.
The Company also entered into a three year and a two year employment
contract with two of the Sellers whom the Company entered into
noncompetition agreements. Such contracts provide for base salary and
<PAGE>
standard benefits. In consideration for entering into such employment
contracts, the Company granted each seller stock options to purchase
100,000 shares of the Company's common stock at $3.125 per share.
This acquisition was accounted for under the purchase method of
accounting. The Company included the results of operations of Pacific
beginning July 1, 1995. The fair value of the assets acquired less the
liabilities assumed exceeded the purchase price by $5,316,000. This
excess has been recorded as a reduction to property and equipment and
Noncompete Agreements of $4,831,000 and $485,000, respectively.
The following unaudited pro forma condensed combined statements of
operations reflect the combined operations of the Company and Pacific
during the three months ended September 30, 1994 and the nine months
ended September 30, 1995 and 1994, as if the acquisition had occurred
at the beginning of 1994. The unaudited pro forma condensed combined
statements of operations may not necessarily reflect the actual results
of operations of the Company which would have resulted had the
acquisition occurred as of the dates presented. The unaudited pro forma
information is not necessarily indicative of future results of
operations for the combined companies.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended September 30
------------------ ------------------------------
September 30
------------
1994 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenues $17,570,000 $55,480,000 $50,247,000
Gross profit 4,811,000 9,570,000 12,916,000
Net (loss) income 1,505,000 (485,000) 3,527,000
Net (loss) income applicable to common
stock 1,457,000 (631,000) 3,382,000
Net (loss) income per common share $.34 $(.16) $.72
</TABLE>
3. INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Raw materials $3,120,707 $ 978,660
Finished goods 5,616,619 $2,855,586
--------- ----------
$8,737,326 $3,834,246
---------- ----------
</TABLE>
4. INCOME TAXES
As of September 30, 1995, the Company had incurred net operating loss
carryforwards for federal tax purposes of approximately $44,000,000.
These carryforwards expire in varying amounts between 1996 and 2008 and
the utilization of these carryforwards may be limited by applicable tax
regulations; in particular, Section 382 of the Internal Revenue Code.
5. PREPAID INTEREST
In March 1995, the Company entered into an agreement extinguishing the
contingent interest agreement in exchange for $1,500,000 in cash, a
$1,200,000 noninterest bearing note due September 1, 1995, a $970,000
noninterest bearing note due September 1, 1996, the issuance of
210,000 shares of the Company's common stock and the issuance of a
three year warrant to purchase 100,000 shares of the Company's common
stock. The present value of the total consideration, $4,134,000 is
being amortized over the period the Subordinated Note is outstanding
using the interest method.
<PAGE>
6. STOCKHOLDER'S EQUITY
During the first quarter of fiscal 1995, warrants for the purchase of
25,000 shares of the Company's common stock were exercised at $1.75 per
share.
In connection with the agreement extinguishing the contingent interest
entered into in March 1995, the Company issued 210,000 shares of common
stock and warrants to purchase 100,000 shares of the Company's common
stock at $3.00 per share. The warrants are currently exercisable and
expire in 1998. A value of $642,600 and $6,000 has been assigned to the
common stock and warrants, respectively.
In connection with the acquisition of Pacific, the Company issued
262,210 shares of the Company's common stock to the Sellers and stock
options to purchase 100,000 shares of the Company's common stock at
$3.125 per share.
7. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH
FINANCING ACTIVITIES
A summary of supplemental cash flow information and noncash financing
activities for the nine months ended September 30, is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash paid for interest including prepaid interest in
connection with the agreement extinguishing the
contingent interest $ 2,773,181 $ 971,168
Issuance of notes payable in connection with the
agreement extinguishing the contingent interest 1,985,325 -
Issuance of common stock in connection with the
agreement extinguishing the contingent interest 642,600 -
Value of warrants issued in connection with the
agreement extinguishing the contingent interest 6,000 -
Issuance of common stock in connection with the
acquisition of Pacific 700,000 -
Issuance of notes payable in connection with the
acquisition of Pacific 1,700,000 -
</TABLE>
<PAGE>
Item 2 - Management's Discussion and Analysis
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS:
Net Sales - Net sales for the three months ended September 30, 1995 were
$19,038,000, an increase of $9,534,000 over net sales of $9,504,000 for the
three months ended September 30, 1994. Net sales for the nine months ended
September 30, 1995 were $37,315,000, an increase of $11,009,000 over net sales
of $26,306,000 for the nine months ended September 30, 1994. This increase in
sales was due to the acquisition of Pacific Plastics, Inc. (Pacific) and
increases in selling prices.
Gross Profit - Gross profit as a percentage of net sales was 13.4% and 17.8% for
the three and nine months ended September 30, 1995, respectively, compared to
30.9% and 29.3% for the three and nine months ended September 30, 1994,
respectively. The primary reason for the decline in the gross profit is
fluctuating polyvinyl chloride (PVC) and polyethylene (PE) raw material prices
and the reaction of the plastic pipe market to these price changes. During the
first six months of 1995 raw material prices increased, partly due to foreign
demand. Since part of the price increase was derived from foreign markets, the
Company was not able to fully offset the raw material price increases to it's
domestic customers. During the most recent three month period ended September
30, 1995, PVC and PE raw material prices decreased significantly. To maintain
market share, the Company was required to lower its prices at the same rate as
raw material price changes. As higher priced inventory was sold at the lower
market prices, gross profits decreased significantly. The Company has reduced
inventories by over one-third in an effort to better relate current selling
prices and raw material costs.
Selling Expenses - Selling expenses for the three and nine months ended
September 30, 1995 increased $753,000 and $855,000, respectively, when compared
to the same periods in 1994. The increases in selling expenses is primarily due
to the acquisition of Pacific and the increase in net sales described above. The
primary selling expenses, shipping and commissions, are based on a percentage of
gross sales.
General and Administrative Expenses - General and administrative expenses
increased by $94,000 and $358,000 during the three and nine months ended
September 30, 1995, respectively, when compared to the same periods in 1994. The
increase in general and administrative expenses is primarily due to the
acquisition of Pacific and higher expenses relating to professional and
consulting services and employee compensation.
Interest Expense - Interest expense increased by $218,000 and $447,000 during
the three and nine months ended September 30, 1995, respectively, when compared
to the same periods in 1994. The increase in interest expense is primarily due
to higher levels of borrowings and increases in the prime rate.
Income Taxes - The income tax provision for the three and nine months ended
September 30, 1995 and 1994 was calculated based upon management's estimate of
the annual effective rates. The effective income tax rate for fiscal 1995 is
lower than the statutory rate because of the Company's net operating losses
could not be carried back. The effective income tax rate for fiscal 1994 is
lower than the statutory rate as a result of the Company having federal net
operating loss carryforwards available to offset current federal taxable income.
Net (Loss) Income - The Company's net loss for the three and nine months ended
September 30, 1995 compared to the net income for the same period in 1994 was
primarily due to lower gross profit margins.
LIQUIDITY AND CAPITAL RESOURCES:
Working capital at September 30, 1995 was $1,349,000, a decrease of
$2,627,000 from working capital of $3,976,000 at December 31, 1994. The decrease
in working capital is primarily a result of the Company paying $1,500,000 in
cash and paying $1,200,000 on a noninterest bearing note due September 1, 1995
in connection with an agreement to fix the amount of the contingent interest due
under the subordinated debt agreement. The agreement also required the Company
to enter into a $970,000 noninterest bearing note due September 1, 1996, issue
210,000 shares of the Company's common stock, and issue warrants to purchase
100,000 shares of the Company's common stock at $3.00 per share.
<PAGE>
Net cash flows used in operating activities decreased by $1,701,000 from cash
provided by operating activities of $1,480,000 for the nine months ended
September 30, 1994 to cash used in operating activities of $221,000 for the nine
months ended September 30, 1995. The decrease is primarily due to the Company
having a net loss of $714,042 for the nine months ended September 30, 1995
compared to the Company having net income of $1,626,733 during the same period
in 1994, and an increase in prepaid interest related to the subordinated debt.
Net cash flows used in investing activities totaled $5,002,000 and $395,000 for
the nine months ended September 30, 1995 and 1994, respectively. The increase is
primarily due to the acquisition of Pacific.
Net cash flows provided by financing activities total $5,497,000 for the nine
months ended September 30, 1995. The primary sources of cash were additional
borrowings on the Company's line of credit and the issuance of long-term debt.
Net cash flows used in operating activities total $1,222,000 for the nine months
ended September 30, 1994. The primary uses of cash were for payments on
long-term debt and note payable.
RECENT ACCOUNTING PRONOUNCEMENTS:
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which requires adoption of the disclosure provisions no later
than fiscal years beginning after December 15, 1995 and adoption of the
recognition and measurement provisions for non-employee transactions no later
than after December 15, 1995. The new standard defines a fair value method of
accounting for stock options and other equity instruments. Under the fair value
method, compensation cost is measured at the grant date based on the fair value
of the award and is recognized over the service period, which is usually the
vesting period.
Pursuant to the new standard, companies are encouraged, but are not required, to
adopt the fair value method of accounting for employee stock-based transactions.
Companies are also permitted to continue to account for such transactions under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," but would be required to disclose in a note to the financial
statements pro forma net income and, if presented, earnings per share as if the
company had applied the new method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption. The Company
has not yet determined if it will elect to change to the fair value method, nor
has it determined the effect the new standard will have on net (loss) income and
earnings (loss) per share should it elect to make such a change. Adoption of the
new standard will have no effect on the Company's cash flows.
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
None
ITEM 2 - Changes in Securities
None
<PAGE>
ITEM 3 - Defaults Upon Senior Securities
None
ITEM 4 - Submission of Matter to a Vote of Security Holders
None
ITEM 5 - Other Information
None
ITEM 6 - Exhibits and Reports on Form 8-K
Amendment dated September 23, 1995 to Form 8-K filed July 25, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
EAGLE PACIFIC INDUSTRIES, INC.
By /s/ William H. Spell
William H. Spell
President
By /s/ Bruce A. Richard
Bruce A. Richard
Chief Financial Officer
Dated: November 13, 1995
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC.
EXHIBIT INDEX TO FORM 10-QSB
FOR QUARTER ENDED SEPTEMBER 30, 1995
Exhibit No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 773,599
<SECURITIES> 0
<RECEIVABLES> 9,802,323
<ALLOWANCES> 239,855
<INVENTORY> 8,737,326
<CURRENT-ASSETS> 19,360,248
<PP&E> 10,328,060
<DEPRECIATION> 1,469,419
<TOTAL-ASSETS> 35,551,857
<CURRENT-LIABILITIES> 18,010,793
<BONDS> 0
<COMMON> 40,804
2,767,000
0
<OTHER-SE> 1,832,197
<TOTAL-LIABILITY-AND-EQUITY> 35,551,857
<SALES> 37,315,159
<TOTAL-REVENUES> 37,315,159
<CGS> 30,655,564
<TOTAL-COSTS> 30,655,564
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,147,574
<INCOME-PRETAX> (714,042)
<INCOME-TAX> 0
<INCOME-CONTINUING> (714,042)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (714,042)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
