<PAGE>
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 00-22690
CONSOLIDATED STAINLESS, INC.
STATE OF INCORPORATION: DELAWARE
IRS EMPLOYER IDENTIFICATION NUMBER: 59-1669166
1601 EAST AMELIA STREET
ORLANDO, FLORIDA 32803
(407) 896-4000
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 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 MAY 12, 1997, CONSOLIDATED STAINLESS, INC. HAD OUTSTANDING 4,465,866
SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE.
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<PAGE>
TABLE OF CONTENTS
ITEM PAGE (S)
PART I
FINANCIAL INFORMATION
<TABLE>
<S> <C>
1. FINANCIAL STATEMENTS
Balance Sheets............................................................... 1-2
Statements of Operations..................................................... 3
Statements of Cash Flows..................................................... 4
Notes to Financial Statements................................................ 5
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS......................................................................... 6-7
</TABLE>
PART II
OTHER INFORMATION
<TABLE>
<C> <S> <C>
6. EXHIBITS AND REPORTS ON FORM 8-K.................................................... 8
</TABLE>
<PAGE>
CONSOLIDATED STAINLESS, INC.
BALANCE SHEETS
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
3/31/97 12/31/96
------------- -------------
<S> <C> <C>
(UNAUDITED)
ASSETS
CURRENT:
Cash and cash equivalents........................................................ $ 466,562 $ 273,914
Accounts Receivable:
Trade, less allowance for possible losses of $164,133 and $129,000............. 8,255,441 6,165,794
Other.......................................................................... 136,246 145,723
Due from stockholders............................................................ 286,255 279,895
Inventories...................................................................... 20,152,325 21,321,810
Refundable income taxes.......................................................... 930,000 957,475
Prepaid expenses................................................................. 234,915 206,840
Deferred income taxes............................................................ 658,609 292,800
------------- -------------
TOTAL CURRENT ASSETS........................................................... 31,120,353 29,644,251
PROPERTY AND EQUIPMENT, less accumulated depreciation and amortization............. 17,388,872 17,513,878
OTHER ASSETS:
Deferred financing costs, less accumulated amortization $35,391 and $166,394..... 510,293 357,245
Goodwill, less accumulated amortization of $223,824 and $176,916................. 3,528,679 3,575,587
Other............................................................................ 195,887 161,290
------------- -------------
TOTAL OTHER ASSETS............................................................. 4,234,859 4,094,122
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TOTAL ASSETS................................................................... $ 52,744,084 $ 51,252,251
------------- -------------
------------- -------------
</TABLE>
See the accompanying notes to the financial statements.
1
<PAGE>
CONSOLIDATED STAINLESS, INC.
BALANCE SHEETS (CONTINUED)
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
3/31/97 12/31/96
------------- -------------
<S> <C> <C>
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................................................. $ 5,930,823 $ 4,379,114
Book overdrafts.................................................................. 338,370 702,116
Due to stockholders.............................................................. 563,158 563,158
Accrued expenses:
Payroll and related taxes...................................................... 431,800 528,312
Interest....................................................................... 138,808 228,704
Other.......................................................................... 600,298 657,695
Current maturities of long-term debt............................................. 1,358,440 4,989,411
Current portion of capital lease obligations..................................... 912,547 862,004
------------- -------------
TOTAL CURRENT LIABILITIES.................................................... 10,274,244 12,910,514
LONG-TERM DEBT, less current maturities............................................ 31,886,746 26,772,909
LONG-TERM CAPITAL LEASE OBLIGATIONS, less current portion.......................... 1,748,600 1,957,497
DEFERRED INCOME TAXES.............................................................. 393,000 393,000
------------- -------------
TOTAL LIABILITIES.............................................................. 44,302,590 42,033,920
COMMITMENTS AND CONTIGENCIES....................................................... -- --
STOCKHOLDERS' EQUITY:
Preferred stock $.01 par--shares authorized 2,000,000; none issued............... -- --
Common stock $.01 par--shares authorized 15,000,000; issued and outstanding
4,465,866...................................................................... 44,659 44,659
Additional paid-in capital....................................................... 7,741,039 7,741,039
Retained earnings................................................................ 655,796 1,432,633
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TOTAL STOCKHOLDERS' EQUITY..................................................... 8,441,494 9,218,331
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY........................................... $ 52,744,084 $ 51,252,251
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</TABLE>
See the accompanying notes to the financial statements.
2
<PAGE>
CONSOLIDATED STAINLESS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
<S> <C> <C>
3/31/97 3/31/96
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<CAPTION>
(UNAUDITED)
<S> <C> <C>
SALES.............................................................................. $13,371,684 $ 14,427,228
COST OF SALES...................................................................... 11,945,608 11,263,155
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Gross profit..................................................................... 1,426,076 3,164,073
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,742,099 1,865,386
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Income (loss) from operations.................................................... (316,023) 1,298,687
OTHER INCOME (EXPENSES):
Interest......................................................................... (840,622) (740,240)
Other............................................................................ 13,492 39,853
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(827,130) (700,387)
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Income (loss) before taxes on income (benefit)................................... (1,143,153) 598,300
TAXES ON INCOME (BENEFIT).......................................................... (366,316) 239,320
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NET INCOME (LOSS).................................................................. $(776,837) $ 358,980
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EARNINGS (LOSS) PER COMMON SHARE................................................... $(0.17) $ 0.08
WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND SHARE EQUIVALENTS OUTSTANDING......... 4,465,866 4,718,752
</TABLE>
See the accompanying notes to the financial statements.
3
<PAGE>
CONSOLIDATED STAINLESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
<S> <C> <C>
3/31/97 3/31/96
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................................................... $ (776,837) $ 358,980
Adjustments to reconcile net income (loss) to net cash used for operating activities:
Depreciation....................................................................... 401,907 275,238
Amortization....................................................................... 103,953 54,654
Gain on disposal of property and equipment......................................... (4,247) --
Deferred income taxes.............................................................. (365,809) 133,920
Cash provided by (used for):
Accounts receivable.............................................................. (2,080,170) (639,579)
Insurance proceeds receivable.................................................... -- 91,000
Due from stockholders............................................................ (6,360) (2,107)
Inventories...................................................................... 1,169,485 (37,294)
Refundable income taxes.......................................................... 27,475 --
Prepaid expenses................................................................. (28,075) 72,425
Accounts payable................................................................. 1,551,709 (1,091,162)
Accruals......................................................................... (243,804) 87,748
----------- -----------
Net cash used for operating activities................................................. (250,773) (696,177)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment................................................... (210,067) (1,391,791)
Proceeds from the sale of property and equipment..................................... 4,247 --
Purchase of Flow Components, Inc..................................................... -- (4,093,101)
Increase in other assets............................................................. (77,832) (158,539)
----------- -----------
Net cash used for investing activities................................................. (283,652) (5,643,431)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in book overdrafts.......................................................... (363,746) (2,422,207)
Net proceeds under revolving lines of credit......................................... 5,396,536 3,005,688
Repayments of long-term debt......................................................... (3,926,728) (2,673,345)
Proceeds from long-term debt......................................................... -- 9,668,702
Repayments of capital lease obligations.............................................. (212,131) (848,671)
Deferred financing costs............................................................. (166,858) (116,458)
Proceeds from exercise of stock options.............................................. -- 91,494
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Net cash provided by financing activities.............................................. 727,073 6,705,203
----------- -----------
Net increase in cash and cash equivalents.............................................. 192,648 365,595
CASH AND CASH EQUIVALENTS, beginning of period......................................... 273,914 94,319
----------- -----------
CASH AND CASH EQUIVALENTS, end of period............................................... $ 466,562 $ 459,914
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----------- -----------
</TABLE>
See the accompanying notes to the financial statements.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q, and do not include all of the
information and disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-K for the year
ended December 31, 1996. The accompanying financial statements have not been
examined by an independent accountant in accordance with generally accepted
auditing standards, but in the opinion of management, such financial statements
include all adjustments, consisting only of normal recurring adjustments and
accruals, to fairly report the Company's financial position and results of
operations. The results of operations for the interim periods shown in this
report are not necessarily indicative of results to be expected for the fiscal
year.
NOTE 2--EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share are based on the weighted average number of
common shares and dilutive common stock equivalents outstanding during the three
months ended March 31, 1996. Common stock equivalents include warrants and
options and have not been included for the three months ended March 31, 1997
since their effect would be antidilutive.
NOTE 3--SUPPLEMENTAL CASH FLOW INFORMATION
The Company incurred long-term debt and capital lease obligations of $66,835
and $409,983 in connection with the purchase of property and equipment and
during the three months ended March 31, 1997 and 1996, respectively.
5
<PAGE>
CONSOLIDATED STAINLESS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995
The statements contained herein that are not historical facts may be forward
looking statements. The forward looking statements are subject to certain risks
and uncertainties, including without limitation those identified below, which
could cause actual results to differ materially from historical results or those
anticipated. Readers are cautioned not to place undue reliance on these forward
looking statements, which speak only as of their dates.
The following factors could cause actual results to differ materially from
historical results or those anticipated; adverse economic conditions, the impact
of competitive products and pricing, product demand and acceptance risks, raw
material and other increased costs, customer delays or difficulties in the
production of products, and other risks detailed from time to time in
Consolidated Stainless, Inc.'s Securities and Exchange Commission filings.
RESULTS OF OPERATIONS
Sales declined 7.3% to $13.4 million for the quarter ended March 31, 1997,
compared with $14.4 million for the three months ended March 31, 1996. Despite a
rise in quantities sold, the sales decline was primarily the result of a 35%
reduction in selling prices for stainless steel pipe. The decrease reflects the
cyclically depressed conditions of the stainless steel pipe market and
management's decision to curtail production to meet anticipated demand for
product.
Gross profit as a percentage of sales for the first quarter of 1997
decreased to 10.7%, as compared to 21.9% for the first quarter of 1996. This
decrease is primarily due to a decline in the monthly production of stainless
steel pipe, without a corresponding decline in overhead costs, resulting in
higher per unit manufacturing costs compared with the corresponding period of
the previous year. Additionally, the decline was a result of limited production
in the first quarter of 1997 at the Company's ornamental and structural tube
facility which did not begin operations until the second quarter of 1996. In the
second quarter of 1997, the Company resumed producing stainless steel pipe at
normal production levels and anticipates an increase in the monthly production
of ornamental and structural tubing beginning in July 1997.
Selling, general and administrative expenses as a percentage of sales
increased slightly to 13.0% for the first quarter of 1997, compared with 12.9%
during the first quarter of 1996, yet the dollar amount expended decreased 10.4%
in the first three months of 1997, as compared with the first three months of
1996 due primarily to the lack of executive officer bonuses being earned in
1997.
Interest expense increased 13.6% for the first quarter of 1997 as compared
with the first quarter in 1996. This was primarily due to an increase in the
Company's indebtedness incurred during 1996 to finance capital improvement
projects such as the buttweld fittings, coil slitting, and ornamental and
structural tubing operations, and the expansion of the Auburndale manufacturing
facility.
As a result of the foregoing factors, the net loss for the three months
ended March 31, 1997 was $0.8 million, as compared with a net income of $0.4
million generated during the first quarter of 1996. This decrease is primarily
attributable to narrower gross profit margins resulting from a decline in
stainless steel selling prices and higher per unit manufacturing costs as
described above.
LIQUIDITY AND CAPITAL RESOURCES
On March 13, 1997, the Company increased its borrowing capacity $3.4 million
by replacing its $18.0 million revolving line of credit and $3.6 million term
loan facility with a $25.0 million revolving line of
6
<PAGE>
credit with Mellon Bank N.A. ("Mellon Agreement"). The borrowing base under the
Mellon Agreement is 85% of qualified accounts receivable and 65% of eligible
inventory (limited to a $17.0 million advance on the value of eligible
inventory), with a $3.75 million aggregate overadvance which will commence in
June 1997 to be reduced monthly until November 1998, when it must be reduced to
zero. Of the $25.0 million revolver, $0.5 million is reserved for the funding of
capital expenditures. The interest rate on the revolving line of credit under
the Mellon Agreement is a variable margin over either the fluctuating prime rate
of interest or the fluctuating LIBOR Rate. The Mellon Agreement contains certain
negative covenants to be observed by the Company, as well as certain financial
ratios which the Company must maintain. The maturity date for borrowings under
the revolving loan is March 10, 2001.
Borrowings under the Mellon Agreement are secured by all of the assets of
the Company, other than real property and specified equipment already subject to
liens in favor of other lenders, and such borrowings are personally guaranteed
up to $3.0 million in the aggregate by Harvey Adams, Chief Executive Officer,
and Ronald Adams, President.
On May 12, 1997, approximately $23.0 million was outstanding under the line
of credit owed to Mellon Bank with an additional $0.1 million reserved for
outstanding letters of credit.
Pursuant to the terms of the First Amendment to Loan and Security Agreement,
dated as of March 31, 1997, by and between Mellon Bank, N.A. and the Company,
certain financial covenants contained in the Loan and Security Agreement dated
March 10, 1997 by and between Mellon Bank, N.A. and the Company (the "Loan
Agreement") were amended.
Pursuant to the terms of Waiver and Modification Agreement No. 2, dated as
of March 31, 1997, to Convertible Subordinated Note Purchase Agreement dated as
of October 18, 1996, by and between the Company, SunTrust Banks, Inc., and
Messrs. Harvey and Ronald Adams (the "Note Purchase Agreement"), certain
financial covenants contained in the Note Purchase Agreement were amended.
The Company has entered into negotiations with Mellon Bank, N.A. and
SunTrust Banks, Inc. for the purpose of further modifying certain financial
covenants contained in the Loan Agreement and the Note Purchase Agreement for
fiscal periods ending after March 31, 1997.
7
<PAGE>
CONSOLIDATED STAINLESS, INC.
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C>
(a) Exhibits
10.1 First Amendment to Loan and Security Agreement with Mellon Bank, N.A., dated as of
March 31, 1997.
10.2 Waiver and Modification Agreement No. 2 to Convertible Subordinated Note Purchase
Agreement, dated as of March 31, 1997.
b) Form 8-K
None
</TABLE>
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED STAINLESS, INC.
---------------------------------------------
(REGISTRANT)
By: /s/ BURTON R. CHASNOV
-----------------------------------------
Burton R. Chasnov
EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER
Date: May 19, 1997
9
<PAGE>
EXHIBIT 10.1
As of March 31, 1997
Consolidated Stainless, Inc.
1601 East Amelia Street
Orlando, Florida 32803
Re: FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
Gentlemen:
Reference is made to the Loan and Security Agreement dated March 10, 1997 by
and between Consolidated Stainless, Inc. and Mellon Bank, N.A. (the "Loan
Agreement"). All capitalized terms used herein without definition have the
respective meanings ascribed to them in the Loan Agreement.
This will confirm the agreement of Borrower and Bank to amend certain
covenants contained in the Loan Agreement, as follows:
1. NET INCOME. Section 8.1(a)(i) of the Loan Agreement, relating to the
Net Income of Borrower for the three (3) month period ended March 31, 1997,
is hereby amended so as to provide that the Borrower shall have Net Loss for
such three (3) month period of not greater than Seven Hundred Seventy-Eight
Thousand Dollars ($778,000.00).
2. EFFECTIVE NET WORTH. Section 8.1(d)(ii) of the Loan Agreement,
relating to the Effective Net Worth of Borrower as of March 31, 1997, is
hereby amended so as to require Borrower to have Effective Net Worth of not
less than Eight Million Ninety-Three Thousand Dollars ($8,093,000.00) as of
such date.
Except as expressly set forth herein, all of the terms and conditions of the
Loan Agreement shall remain unchanged and in full force and effect, and are
hereby ratified, confirmed and continued.
The amendments set forth herein shall only be applicable for the specific
date and time period stated herein, and shall not be applicable to any other
dates or any other time periods whatsoever. Furthermore, this amendment shall
not be applicable to, and shall not imply Bank's agreement to grant any
amendment, consent or waiver in respect of, any covenant not specified herein,
or for any date or time period not specified herein, or in any other
circumstances (whether of like or unlike nature).
The effectiveness of this amendment is expressly subject to the execution
and delivery by SunTrust Banks, Inc. ("SunTrust"), of a certain modification
agreement with Borrower relating to certain covenants under the Convertible
Subordinated Note Purchase Agreement dated as of October 18, 1996 (as amended)
by and among Borrower, SunTrust and the other parties thereto. Such modification
agreement must be in form and substance satisfactory to Bank in its sole
discretion.
Bank hereby requests that Borrower acknowledge and confirm its agreement to
the foregoing amendments by countersigning a counterpart copy of this letter.
When signed, this amendment may not be altered or amended except in accordance
with Section 17.11 of the Loan Agreement.
Very truly yours,
MELLON BANK, N.A.
By:
- ---------------------------------------------
JOHN M. DE PLEDGE
Its Vice President
Duly Authorized
ACKNOWLEDGED AND AGREED TO INTENDING TO BE LEGALLY BOUND HEREBY:
CONSOLIDATED STAINLESS, INC.
By:
- ---------------------------------------------
BURTON R. CHASNOF
Its Chief Financial Officer
Duly Authorized
<PAGE>
EXHIBIT 10.2
As of March 31, 1997
SunTrust Banks, Inc.
25 Park Place
Atlanta, GA 30303
Re: Waiver and Modification Agreement No. 2 to
CONVERTIBLE SUBORDINATED NOTE PURCHASE AGREEMENT
Dear Sirs:
Reference is made to the Convertible Subordinated Note Purchase Agreement
dated as of October 18, 1996 by and between Consolidated Stainless, Inc., Harvey
B. Adams, Ronald J. Adams and SunTrust Banks, Inc. (as heretofore amended, the
"Note Agreement"). All capitalized terms used herein without definition have the
respective meanings ascribed to them in the Note Agreement.
This will confirm the agreement of the Company and the Purchaser to amend
certain covenants contained in the Note Agreement, as follows:
1. TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO. Section 6.8(a) of
the Note Agreement is hereby amended, solely with respect to the fiscal
quarter ending March 31, 1997, so as to require the Company's ratio of
Total Liabilities to Tangible Net Worth to be not less than 7.75:1.0 as
of such date.
2. FUNDED DEBT TO EBITDA. Section 6.8(b) of the Note Agreement is
hereby amended, solely with respect to the fiscal quarter ending March
31, 1997, so as to require the Company's ratio of Funded Debt to EBITDA
not to exceed 52.00:1.0 as of such date.
3. SENIOR FUNDED DEBT TO EBITDA. Section 6.8(c) of the Note
Agreement is hereby amended, solely with respect to the fiscal quarter
ending March 31, 1997, so as to require the Company's ratio of Senior
Funded Debt to EBITDA not to exceed 48.00:1.00 as of such date.
Except as expressly set forth herein, all of the terms and conditions of the
Note Agreement shall remain unchanged and in full force and effect, and are
hereby reaffirmed.
The amendments set forth herein shall only be applicable for the specific
date and time period stated herein, and shall not be applicable to any other
dates or any other time periods whatsoever. Furthermore, this amendment shall
not be applicable to, and shall not imply the Purchaser's agreement to grant any
amendment, consent or waiver in respect of, any covenant not specified herein,
or for any date or time period not specified herein, or in any other
circumstances (whether of like or unlike nature).
The effectiveness of this amendment is expressly subject to the execution
and delivery by Mellon Bank, N.A. ("Mellon"), of a certain modification
agreement with the Company relating to certain covenants under the Loan and
Security Agreement dated March 10, 1997 by and between the Company and Mellon,
in substantially the form attached hereto.
The Company hereby requests that the Purchaser acknowledge and confirm its
agreement to the foregoing amendments by countersigning a counterpart copy of
this letter. When signed, this amendment may not be altered or amended except in
the manner provided in the Note Agreement.
Very truly yours,
CONSOLIDATED STAINLESS, INC.
By: __________________________________
Acknowledged, Confirmed and
Agreed to:
SUNTRUST BANKS, INC.
By: ____________________________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS FOUND ON PAGES 1 THROUGH 3 OF THE COMPANY'S
FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 466,562
<SECURITIES> 0
<RECEIVABLES> 8,419,574
<ALLOWANCES> 164,133
<INVENTORY> 20,152,325
<CURRENT-ASSETS> 31,120,353
<PP&E> 22,049,155
<DEPRECIATION> 4,660,283
<TOTAL-ASSETS> 52,744,084
<CURRENT-LIABILITIES> 10,274,244
<BONDS> 33,635,346
0
0
<COMMON> 44,659
<OTHER-SE> 8,396,835
<TOTAL-LIABILITY-AND-EQUITY> 52,744,084
<SALES> 13,371,684
<TOTAL-REVENUES> 13,371,684
<CGS> 11,945,608
<TOTAL-COSTS> 11,945,608
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 33,750
<INTEREST-EXPENSE> 840,622
<INCOME-PRETAX> (1,143,153)
<INCOME-TAX> (366,316)
<INCOME-CONTINUING> (776,837)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (776,837)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
