SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-22696
DISC GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3678012
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 Gilpin Avenue, Hauppauge, New York 11788-8831
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 234 -1400
(Former name, former address and former fiscal year,
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 and 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 [ ]
As of March 31, 1999, 5,518,352 shares of the Registrant's Common Stock, par
value $.01, were outstanding.
<PAGE>
DISC GRAPHICS, INC.
FORM 10-Q
Quarter Ended March 31, 1999
INDEX
Page
PART I - FINANCIAL INFORMATION ................................................3
Item 1 Financial Statements
Consolidated Balance Sheets as of March 31, 1999 (unaudited)
and December 31, 1998...........................................3
Consolidated Statements of Income (unaudited) for the
Three Months ended March 31, 1999 and 1998 .....................4
Consolidated Statements of Cash Flows (unaudited) for the
Three Months ended March 31, 1999 and 1998 .....................5
Notes to Unaudited Consolidated Financial Statements ................6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations ......................................8
Item 3 Quantitative and Qualitative Disclosures About Market Risk .........12
PART II - OTHER INFORMATION ..................................................13
Item 1 Legal Proceedings ..................................................13
Item 2 Changes in Securities ..............................................13
Item 3 Defaults Upon Senior Securities ....................................13
Item 4 Submission of Matters to a Vote of Security Holders ................13
Item 5 Other Information ..................................................13
Item 6(a) Exhibits ...........................................................13
Item 6(b) Reports on Form 8-K ................................................13
Signatures ...................................................................14
-2-
<PAGE>
DISC GRAPHICS, INC.
Consolidated Balance Sheets
As of March 31, 1999 (unaudited) and December 31, 1998
<TABLE>
March 31, 1999 December 31, 1998
(unaudited)
Assets
Current assets:
<S> <C> <C>
Cash $ 813,885 $ 43,313
Accounts receivable, net of allowance for doubtful accounts
of $1,333,000 and $1,332,000, respectively 11,285,921 12,721,102
Inventories 2,323,852 2,379,627
Prepaid expenses and other current assets 357,479 271,462
Deferred income taxes 963,000 963,000
------- -------
Total current assets 15,744,137 16,378,504
Plant and equipment, net 10,832,281 9,997,743
Goodwill, net of amortization of $244,137 and $221,979, respectively 1,243,052 1,265,210
Security deposits and other assets 439,112 730,084
------- -------
Total assets $ 28,258,582 $ 28,371,541
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of equipment notes payable $ 109,546 $ 123,948
Current portion of long-term debt 85,688 112,613
Current maturities of capitalized lease obligations payable 1,549,249 1,433,328
Accounts payable and accrued expenses 5,467,400 5,208,478
Income taxes payable 483,942 815,952
------- -------
Total current liabilities 7,695,825 7,694,319
Long term debt 528,750 1,415,625
Equipment notes payable, less current maturities 34,500 53,325
Capitalized lease obligations payable, less current maturities 4,434,993 3,944,868
Deferred income taxes 1,323,000 1,323,000
--------- ---------
Total liabilities 14,017,068 14,431,137
Stockholders' equity:
Preferred stock:
$.01 par value; authorized 5,000 shares; no shares issued
and outstanding --- ---
Common stock:
$.01 par value; authorized 20,000,000 shares; issued
5,548,761 and 5,440,256, respectively 55,488 55,488
Additional paid in capital 5,009,671 5,009,671
Retained earnings 9,207,961 8,906,581
--------- ---------
Less: 14,273,120 13,971,740
Treasury stock, at cost, 30,409 and 30,349 shares at
March 31, 1999 and December 31, 1998, respectively (31,606) (31,336)
------- -------
Total stockholders' equity 14,241,514 13,940,404
---------- ----------
Total liabilities and stockholders' equity $ 28,258,582 $ 28,371,541
============= ============
</TABLE>
See accompanying notes to unaudited Consolidated Financial Statements
- 3 -
DISC GRAPHICS, INC.
Consolidated Statements of Income
For the Three Months Ended March 31, 1999 and 1998
(unaudited)
<TABLE>
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Net sales $14,894,995 $ 12,612,460
Cost of sales 11,470,472 9,715,028
---------- ---------
Gross profit 3,424,523 2,897,432
Operating Expenses:
Selling and shipping 1,523,540 1,373,754
General and administrative 1,275,680 1,156,036
--------- ---------
Operating income 625,303 367,642
Interest expense, net 122,923 170,957
------- -------
Income before provision for income taxes 502,380 196,685
Provision for income taxes 201,000 79,000
------- ------
Net income $ 301,380 $ 117,685
========= =========
Net income per share:
Basic $ 0.05 $ 0.02
====== ======
Diluted $ 0.05 $ 0.02
====== ======
Weighted average number of shares outstanding
Basic 5,518,387 5,429,922
Diluted 5,555,661 5,447,450
</TABLE>
See accompanying notes to unaudited Consolidated Financial Statements
- 4 -
DISC GRAPHICS, INC.
Consolidated Statement of Cash Flows
For the Months Ended March 31, 1999 and 1998
(unaudited)
<TABLE>
March 31, 1999 March 31, 1998
--------------- --------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 301,380 $ 117,685
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 395,428 483,068
Allowance for doubtful accounts 100,000 85,000
Changes in assets and liabilities:
Accounts receivable 1,335,181 704,966
Inventory 55,775 (369,890)
Prepaid expenses and other current assets (86,017) (33,721)
Accounts payable and accrued expenses 258,922 362,120
Income taxes payable (332,010) (68,830)
Security deposits and other assets 285,419 (41,475)
------- -------
Net cash provided by operating activities 2,314,078 1,238,923
--------- ---------
Cash flows from investing activities:
Capital expenditures (202,355) (86,479)
Purchase of net assets of business acquired ---- 16,625
------- ------
Net cash used in investing activities (202,355) (69,854)
-------- -------
Cash flows from financing activities:
Repayments of long-term debt, net proceeds (913,800) (696,520)
Principal payments of equipment notes payable (33,227) (113,468)
Principal payments of capital lease obligations (393,854) (244,995)
Purchase of treasury stock (270) (555)
Payments of notes receivable ---- 15,801
-------- --------
Net cash used in financing activities (1,341,151) (1,039,737)
Net increase in cash 770,572 129,332
Cash at December 31 43,313 31,753
------ ------
Cash at March 31 $ 813,885 $ 161,085
========== =========
Cash paid during the year for:
Interest $ 134,776 179,572
Income taxes $ 533,010 147,830
</TABLE>
See accompanying notes to unaudited Consolidated Financial Statements
- 5 -
DISC GRAPHICS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
General
The consolidated financial statements included herein have been
prepared by Disc Graphics, Inc., and its subsidiaries (collectively, the
"Company") without audit. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to the rules
and regulations of the Securities and Exchange Commission. Although the Company
believes that the disclosures made herein are adequate to make the information
presented not misleading, it is recommended that these consolidated financial
statements be read in conjunction with the audited Consolidated Financial
Statements and the Notes thereto for the year ended December 31, 1998 included
in the Company's Annual Report on Form 10-K for its fiscal year ended December
31, 1998. The December 31, 1998 figures included herein were derived from such
audited Consolidated Financial Statements. In the opinion of management, the
information furnished herein reflects all normal recurring adjustments that are
necessary to present fairly such information.
Earnings Per Share
Earnings per share is computed in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 128. Basic earnings per
share is computed by dividing income available to common stockholders (which,
for the Company, equals its recorded net income) by the weighted average number
of common shares outstanding during the period. Diluted earnings per share
reflects the potential dilution that would occur if all securities exercisable
or exchangeable for or convertible into shares of common stock that were
outstanding during the period, such as stock options and warrants, were
exercised or exchanged for or converted into shares of common stock. The
computation of weighted average shares outstanding used in the calculation of
diluted earnings per share does not include shares of Common Stock that would be
issuable upon the exercise of the Company's outstanding warrants, because the
exercise price of such warrants exceeded the market price of the Company's
Common Stock during the relevant periods.
Goodwill
Goodwill, which represents the excess of purchase price over fair value
of net assets acquired, is amortized on a straight-line basis over a period of
15 years. The Company assesses the recoverability of this intangible asset by
determining whether the amortization of the goodwill balance over its remaining
life can be recovered through undiscounted future operating cash flows of the
acquired operation. The amount of goodwill impairment, if any, is measured based
on projected discounted future operating cash flows using a discount rate
reflecting the Company's average cost of funds. The assessment of the
recoverability of goodwill will be impacted if estimated future operating cash
flows are not achieved.
-6-
Inventories
Inventories consist of the following:
March 31, 1999 December 31, 1998
Raw materials $1,662,178 $1,577,349
Work-in-process 475,132 659,552
Finished goods 186,542 142,726
----------- ----------
$2,323,852 $2,379,627
========== ==========
Non-Cash Financing and Investing Activities
Capital lease obligations of $999,900 were incurred in 1999 when the
Company entered into leases for new machinery and equipment.
New Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement No. 133
related to "Accounting for Derivative Instruments and Hedging Activities;
Statement No. 133 is not expected to have a material impact on the consolidated
financial statements of the Company.
-7-
DISC GRAPHICS, INC.
This Form 10-Q contains predictions, projections and other statements
about the future that are intended to be "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties, and
other important factors that could cause the actual results, performance or
achievements of the Company, or industry results, to differ materially from
those expressed or implied by such statements. Such risks, uncertainties, and
other important factors include, among others: the Company's ability to sustain
current growth rates in net sales of certain products; the potential inability
of the Company to implement its marketing and other business strategies; the
amounts required for capital expenditures in future periods; the availability
and cost of materials; potential effects of Year 2000 problems on the Company's
business; and continuing industry-wide pricing pressures and other industry
conditions. Such forward-looking statements speak only as of the date of this
Report, and the Company disclaims any obligation or undertaking to update such
statements. Each forward-looking statement that the Company believes is material
is accompanied by one or more cautionary statements identifying important
factors that could cause actual results to differ materially from those
described in the forward-looking statement. The cautionary statements are set
forth following the forward-looking statement, in other sections of this Form
10-Q, and/or in the Company's other documents filed with the Securities and
Exchange Commission, whether or not such documents are incorporated herein by
reference. In assessing forward- looking statements, readers are urged to read
carefully all such cautionary statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The following discussion and analysis of the financial condition and
results of operations of Disc Graphics, Inc. and its subsidiaries (collectively
"Disc Graphics" or the "Company") for the three-month period ended March 31,
1999 should be read in conjunction with the unaudited Consolidated Financial
Statements and the Notes thereto included elsewhere in this Report, and the
Company's Annual Report on Form 10-K for its fiscal year ended December 31,
1998, as filed with the Securities and Exchange Commission (the "1998 Form 10-
K"). Results for the periods reported herein are not necessarily indicative of
results that may be expected for the full year or in future periods.
Results of Operations for the Three Months Ended March 31, 1999 and 1998
Net Sales
Net sales for the three months ended March 31, 1999 were $14,895,000
compared to $12,612,000 for the same period in 1998, representing an increase of
$2,283,000, or 18.1%. The categories that significantly contributed to the
increase in net sales for the quarter are video and entertainment software
packaging and consumer product packaging. Video and entertainment software
packaging sales increased largely as a result of sales to a national computer
software firm and a distributor of a popular work out video. Consumer product
packaging sales increased due to an increase in volume to a distributor for
packaging of a name brand food product. Although sales within the music/audio
packaging category remained relatively unchanged, the Company was able to offset
industry wide pricing pressures with increased sales volume. Sales within all
remaining categories, in the aggregate, remained relatively unchanged.
-8-
Gross Profit
The Company recognized gross profit of $3,425,000 (a 23.0% profit margin)
for the three months ended March 31, 1999, as compared to $2,897,000 (a 23.0%
profit margin) for the same period in 1998, representing an increase of
$528,000, or 18.2%. The increase in dollar amount is a direct result of the
increase in net sales over the comparable period. Despite industry wide pricing
pressure, the Company has managed to maintain a cost structure which has allowed
gross profit margins to remain consistent. The Company continues to focus on
improving manufacturing processes and making capital investments in more
efficient equipment.
Selling, General, and Administrative Expenses
Selling, general and administrative ("SG&A") expenses for the three months
ended March 31, 1999 were $2,799,000 (18.8% of net sales) compared to $2,530,000
(20.1% of net sales) for the same period a year ago, an increase of $269,000.
Despite the increased dollar amount of SG&A expenses, 1999 first quarter results
reflect a 1.3 percentage point improvement expressed as a percent of sales. The
increase in SG&A is primarily due to normal inflationary increases, and revenue
related expenses such as freight to customers and commissions. The Company
believes that its investment in its sales force and customer service departments
contributed to increased sales, which in turn resulted in decreased SG&A
expenses as a percentage of sales in the first quarter of 1999.
Net Interest Expense
Net interest expense for the three months ended March 31, 1999 was
$123,000 compared to $171,000 for the same period of the prior year. Interest
expense includes interest payable under the Company's revolving credit facility
and under capital lease obligations on equipment. The decrease is due to the
decline in the average borrowings under the Company's revolving credit facility
and interest income earned on overnight investments.
Income Taxes
The provision for income taxes for the three months ended March 31, 1999
was $201,000 compared to $79,000 for the same period in 1998, an increase of
$122,000. This increase was due to the increase in pre-tax income, with no
significant change in the effective tax rate.
Net Income
Net income for the three months ended March 31, 1999 was $301,000,
compared to $118,000 for the same period in the prior year, an increase of
$183,000, or 156.1%. This increase in net income was a result of the increase in
net sales and the improvement in SG&A and interest expenses as a percentage of
net sales.
Liquidity and Capital Resources
The primary source of cash for the Company's business has been cash flow
from operations and availability under the Company's $10 million revolving
credit facility. Cash as of March 31, 1999 was approximately $814,000, compared
to approximately $161,000 as of March 31, 1998. Cash flow from
-9-
operations in the first quarter of 1999 increased to approximately $2,314,000
from approximately $1,239,000 in the first quarter of 1998, primarily due to
continued profitable operations and collection efforts, which led to a decrease
of approximately $1,335,000 in accounts receivable. The Company expects to use
the additional cash for future capital investments and to assist in the
financing of future acquisitions. As of March 31, 1999, the Company had working
capital of $8,048,000 and the full $10 million was available to the Company
under its revolving credit facility.
The Company anticipates capital expenditures of approximately $7-10
million for the remainder of 1999, primarily for the purchase of manufacturing
equipment to increase capacity and further improve plant efficiencies and
acquisition. The Company intends to finance such capital expenditures through
capital leases and the Company's revolving credit agreement.
Subsequent Events
In April 1999, the Company signed a letter of intent to acquire
Contemporary Color Graphics, Inc., a New York based commercial printer with $8.0
million of revenue in 1998. Consummation of the acquisition is subject to the
Company's completion of due diligence and the execution of a definitive
acquisition agreement. The Company intends to finance this acquisition through
its revolving line of credit and any available cash.
Year 2000 Compliance
The Company is in the process of identifying, assessing and developing
contingency plans to address problems that may arise as a result of the
inability of the Company's computers, or those of its material vendors and
customers, to properly recognize and manipulate dates in the Year 2000 beginning
with the first two digits "20" instead of "19." In its evaluation process, the
Company considers a computer to be Year 2000 compliant if: (a) any valid date,
both before and after December 31, 1999 (including February 29, 2000), does not
cause an interruption in the desired operation; and (b) (i) the computer will
correctly sort, calculate and compare all dates; and (ii) if the first two
digits of the date are implicit, ( i.e., the date is represented by only 2
digits, e.g., "99" for "1999" and "00" for "2000"), the computer will interpret
the dates consistently and with the result that "99" always means 1999, and "00"
always means 2000).
The Company's evaluation of the Year 2000 problem includes the assessment
of its computer systems and its equipment and other systems that are controlled
or monitored by computers or embedded computer chips, and the ability of its
critical vendors and customers to ensure timely delivery of goods and services
and payment of invoices, respectively.
In March 1997, the Company installed a fully-integrated computer system
that is Year 2000 compliant. The software calculates the date incrementally from
a fixed past date, using a five-byte data field (compared to the standard
two-byte data field). For example, from the date of March 1, 1916, the software
can calculate incrementally 99,999 days from that fixed date, approximately
until the year 2189. Each software module has been examined to confirm that it
uses the five-byte date field in all date sorts, calculations and comparisons.
During the fourth quarter of 1998, the Company performed a full test of the
software by advancing the date past 2000 (including February 29, 2000) and ran
each software module with test data to confirm empirically that the system
accommodates the century rollover. The test confirmed that all mission critical
modules are Y2K compliant. Several modules contained two or eight character date
fields that are not used in calculations,
-10-
and are not adversely effected by the date change. One module contains a two
character date field that is used in calculations and must be fixed. The Company
expects to fix all the modules and fully retest the system by June 30, 1999.
The Company has also undertaken to test the Year 2000 compatibility of
each desktop and portable computer and each piece of equipment containing an
embedded computer chip, by confirming empirically that each computer and its
associated software and each piece of equipment will function properly with
dates occurring both before and after 2000. The tests of personal computers is
expected to be completed by June 30, 1999.
The Company's business could be materially affected if various material
vendors and customers are not themselves Year 2000 compliant. In particular, if
the Company is unable to obtain necessary supplies, services or critical machine
parts, its operations could suffer. If its major customers are unable to make
payments or continue purchases, the Company's cash flow could suffer. The
inability of major utilities to supply power or telephone service after the
rollover could also adversely affect the Company's operations. In order to
assess and address such problems, the Company is in the process of surveying all
its material vendors and customers to determine their likely state of Year 2000
compliance at the rollover. The survey is expected to be completed by June 30,
1999.
Although the Company is currently unaware of any material vendor or
customer who will not be Year 2000 compliant, it has and will continue to
develop contingency plans in the event any material vendors or customers are
unable in the Year 2000 to fulfill their supply or payment obligations to the
Company. In particular, the Company has taken steps to ensure that no
significant vendor is a sole-source or limited-source supplier, by arranging
multiple sources for all critical resources, by warehousing or stocking a
limited supply of critical materials and parts, and by developing the ability to
fabricate critical machine parts in an in-house facility.
The Company is exploring with its insurer whether present policies provide
any coverage for potential business losses and liability to third parties
resulting from the Company's failure or inability to be Year 2000 compliant due
to factors not under its control, and if not, whether such policies are
available.
The Company has established a Year 2000 Compliance Committee to assess the
impact of the Year 2000 problem on the Company's business and to ensure its Year
2000 compliance. The Committee is co-chaired by the Vice President for Legal
Affairs and the Management Information Systems Manager, and is comprised of
representatives from all major departments and all facilities within the
Company. Management has committed all resources, both financial and personnel,
reasonably necessary to achieve Year 2000 compliance and/or implement its
contingency plans for events outside its control. The Company does not believe
that the costs it has incurred to date or currently expects to incur in future
periods are or will be material, in the aggregate, primarily because these costs
have been and will be incurred in connection with projects begun before, and/or
budgeted without regard to, the Company's Year 2000 compliance efforts.
Although the Company believes it will be Year 2000 compliant no later than
June 30, 1999, there can be no assurance that the Company will successfully
identify all systems, vendors or customers which are not Year 2000 compliant,
that the Company will not have to increase significantly its expenditures
relating to any such non-compliance, or that its business will not be materially
adversely affected by any such non-compliance.
-11-
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company finances the purchase of production equipment and other
capital expenditures through long-term debt and/or capital leases. The stated or
implicit interest rates on such obligations are generally fixed. In those
instances where rates are variable, the Company will generally fix the rate
through an interest rate swap agreement. Accordingly, the Company does not
believe it is materially exposed to changes in interest rates.
The Company does not have any sales, purchases, assets or liabilities
denominated in currencies other than the U.S. dollar, and as such is not subject
to foreign currency exchange rate risk.
-12-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the opinion of the Company's management, there are no pending legal
proceedings, other than ordinary routine litigation incidental to the Company's
business, which either individually or in the aggregate are likely to have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6(a) Exhibits
The Exhibits to this Quarterly Report on Form 10-Q are listed in the
Exhibit Index which appears elsewhere herein and is incorporated herein by
reference.
Item 6(b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K during its fiscal
quarter ended March 31, 1999.
-13-
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.
DISC GRAPHICS, INC.
(Registrant)
May 13, 1999 /s/ Donald Sinkin
------------------
Donald Sinkin - President
May 13, 1999 /s/ Margaret Krumholz
---------------------
Margaret Krumholz - Chief Financial Officer
-14-
DISC GRAPHICS, INC.
Quarterly Report on Form 10-Q
for the Fiscal Quarter Ended March 31, 1999
EXHIBIT INDEX
Exhibit
Number Description
27.1 Financial Data Schedule
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000904541
<NAME> DISC GRAPHICS, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 813,885
<SECURITIES> 0
<RECEIVABLES> 12,618,921
<ALLOWANCES> (1,333,000)
<INVENTORY> 2,323,852
<CURRENT-ASSETS> 15,744,137
<PP&E> 19,776,714
<DEPRECIATION> (8,944,433)
<TOTAL-ASSETS> 28,258,582
<CURRENT-LIABILITIES> 7,695,825
<BONDS> 4,998,243
0
0
<COMMON> 55,488
<OTHER-SE> 14,186,026
<TOTAL-LIABILITY-AND-EQUITY> 28,258,582
<SALES> 14,894,995
<TOTAL-REVENUES> 14,894,995
<CGS> 11,470,472
<TOTAL-COSTS> 11,470,472
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 100,000
<INTEREST-EXPENSE> 122,923
<INCOME-PRETAX> 502,380
<INCOME-TAX> 201,000
<INCOME-CONTINUING> 301,380
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 301,380
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
