U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO
____________.
Commission File Number 0-23846
Minnesota Brewing Company
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1702599
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
882 West Seventh Street, St. Paul, Minnesota 55102
(Address of principal executive offices) Zip Code
(612) 228-9173
(Issuer's Telephone Number)
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 report), and (2) has been
subject to such filing requirements for the past 90 days. YES _X_ NO ___
As of July 31, 1998 the Company had 3,462,711 shares of Common Stock, no par
value per share, outstanding.
<PAGE>
MINNESOTA BREWING COMPANY
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of
June 30, 1998 and December 31, 1997....................3, 4
Statements of Operations for the three and six
month periods ended June 30, 1998 and
June 30, 1997.............................................5
Statements of Cash Flow for the six
month periods ended June 30, 1998
and June 30, 1997.........................................6
Notes to Financial Statements.............................8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................................9
PART II. OTHER INFORMATION....................................................13
Signatures....................................................................15
2
<PAGE>
MINNESOTA BREWING COMPANY
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31
1998 1997
---------- ----------
(unaudited) (Note)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 116,774 $ 465,984
U.S Treasury Bill (Pledged for BATF Bond) 474,961 --
Trade accounts receivable, less allowance
for doubtful accounts of $485,000 at
June 30, 1998 and
December 31, 1997 972,741 759,350
Inventories:
Raw materials 130,028 134,908
Work-in-progress 499,443 357,151
Finished goods 874,491 660,635
Packaging 973,685 1,243,705
Other 369,496 368,719
---------- ----------
Total Inventories 2,847,143 2,765,118
Other current Assets 84,621 150,921
---------- ----------
Total Current Assets 4,496,240 4,141,373
---------- ----------
Property and Equipment 6,332,793 6,087,477
Less accumulated depreciation 2,740,435 2,466,210
---------- ----------
Net property and equipment 3,592,358 3,621,267
---------- ----------
Other Assets
Trademarks, net of accumulated
amortization of $86,000 at
June 30, 1998 and $73,000 at December 31, 1997 236,169 221,577
Other, net of accumulated amortization of
$343,000 at June 30, 1998 and
$315,000 at December 31, 1997 438,495 291,209
---------- ----------
Total Other Assets 674,664 512,786
---------- ----------
$8,763,262 $8,275,426
========== ==========
</TABLE>
Note: The Balance Sheet at December 31, 1997 has been derived from the audited
financial statements at that date.
See Notes to Financial Statements
3
<PAGE>
MINNESOTA BREWING COMPANY
CONDENSED BALANCE SHEETS - CONTINUED
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
(unaudited) (note)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 1,931,858 $ 2,197,100
Accrued expenses 412,693 899,335
Deferred federal excise tax credit 397,490 --
Note payable to related party 2,271,725 --
------------ ------------
Total Current Liabilities 5,013,766 3,096,435
Long term debt
Capitalized lease obligations, less current
maturities 1,391,975 2,128,045
Due to related party -- 263,036
------------ ------------
Total long term debt 1,391,975 2,391,081
------------ ------------
Shareholders' Equity:
Common stock; $.01 par value; 10,000,000 shares
authorized 3,462,711 and 3,389,211 issued and
outstanding at June 30, 1998 and
December 31, 1997, respectively 34,627 33,892
Additional paid-in capital 10,592,217 10,435,668
Accumulated deficit (8,269,323) (7,681,650)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 2,357,521 2,787,910
------------ ------------
$ 8,763,262 $ 8,275,426
============ ============
</TABLE>
Note: The Balance Sheet at December 31, 1997 has been derived from the audited
financial statements at that date.
See Notes to Financial Statements
4
<PAGE>
MINNESOTA BREWING COMPANY
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIODS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 4,739,034 $ 7,144,208 $ 8,066,386 $ 11,322,408
Less excise taxes 387,211 694,589 802,015 1,230,273
------------ ------------ ------------ ------------
Net sales 4,351,823 6,449,619 7,264,371 10,092,135
Cost of goods sold 3,754,524 6,969,225 6,570,091 10,482,202
------------ ------------ ------------ ------------
Gross profit 597,299 (519,606) 694,280 (390,067)
------------ ------------ ------------ ------------
Operating expenses:
Advertising 131,880 120,468 378,128 331,275
Sales and marketing 203,338 477,917 246,519 620,934
Administrative 234,305 848,049 566,720 1,037,941
------------ ------------ ------------ ------------
Total operating expenses 569,523 1,446,343 1,191,367 1,990,150
------------ ------------ ------------ ------------
Operating income (loss) 27,776 (1,966,040) (497,087) (2,380,217)
------------ ------------ ------------ ------------
Other income (expense):
Interest income 3,029 5,880 7,669 12,647
Interest and other expenses (22,216) (36,968) (98,255) (75,020)
Provision for Income Taxes -- (294,548) -- (294,548)
------------ ------------ ------------ ------------
Net income (loss) 8,589 (2,291,676) (587,673) (2,737,138)
============ ============ ============ ============
Basic and diluted
Net income (loss)
per common share $ .00 $ (.68) $ (.17) $ (.81)
Basic and duluted
Weighted average shares
outstanding 3,389,211 3,389,211 3,389,211 3,389,211
</TABLE>
See Notes to Financial Statements
5
<PAGE>
MINNESOTA BREWING COMPANY
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE PERIODS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $ (587,673) $(2,737,138)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and Amortization 314,076 309,380
Deferred income taxes -- 293,000
Provision for doubtful accounts receivable -- 457,000
Provision for obsolete inventory and discontinued
products (68,000) 972,000
Changes in assets and liabilities:
Trade accounts receivable (213,391) (1,063,787)
Other receivables -- 91,084
Inventories (14,025) (362,663)
Prepaid expenses and other assets 66,300 (262,459)
Accounts payable and accrued expenses (594,599) 1,962,874
Deferred excise tax credit 397,490 347,718
----------- -----------
Net cash provided by (used in)
operating activities (699,822) 7,009
----------- -----------
INVESTING ACTIVITIES
Purchases of property and equipment (245,316) (84,656)
Purchase of intangible assets (201,730) (111,939)
----------- -----------
Net cash provided by (used in)
investing activities (447,046) (196,595)
----------- -----------
FINANCING ACTIVITIES
Net borrowings on related
party obligations 911,770 328,768
Principal payments under capital lease
obligations (114,112) (112,277)
----------- -----------
Net cash provided by 797,658 216,491
financing activities ----------- -----------
NET INCREASE (DECREASE IN) CASH (349,210) 26,905
CASH AT BEGINNING OF YEAR 465,984 386,325
----------- -----------
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
CASH AT END OF PERIOD $ 116,774 $ 413,230
=========== ===========
See Notes to Financial Statements
Supplemental schedule of non-cash
operating, investing and financing activities
Common shares issued in satisfaction
of accrued ESOP payable $ 157,284 $ --
=========== ===========
U.S. Treasury Bill financed
with note payable to related party $ 474,961 $ --
=========== ===========
</TABLE>
7
<PAGE>
MINNESOTA BREWING COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) Financial Statements
The balance sheet as of June 30, 1998, the statements of operations for
the three and six month periods ended June 30, 1998 and 1997 and the statements
of cash flows for the six month periods ended June 30, 1998 and 1997 have been
prepared by the Company without audit. In the opinion of management, all
adjustments (all of which are normal and recurring in nature with exception of
the accounts receivable, inventory valuation and deferred income tax
adjustments, see Note 2) necessary to present fairly the Company's financial
position at June 30, 1998, and results of operations and cash flows have been
included. Results of operations for the interim period are not necessarily
indicative of the results that may be expected for the full fiscal year.
(2) Significant Events
During the quarter ended June 30, 1997, the Company replaced its top
management and revised its business plan and operations to focus more on the
promotion and sales of certain of its proprietary products. Subsequently the
Company decided to discontinue sales of several of its proprietary products. In
addition, new management is placing less emphasis on securing contact brewing
arrangements that do not have profitable volume potential. Several of the
Company's contract brewing customers have experienced financial difficulties and
collection of amounts due from those customers, as well as the realization of
inventory purchased by the Company on their behalf, appear to be unrealizable.
Accordingly, during the quarter ended June 30, 1997, the Company recorded
charges to operations totaling $1,501,000 relating to increased allowances for
bad debts and inventory obsolescence, and the write-off of inventory and related
costs associated with discontinued products and contracts.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's revenues are derived from the production and sale of its
proprietary labels, which include Grain Belt Golden, Grain Belt Premium, Grain
Belt Premium Light, Pig's Eye and Yellow Belly malt beverages. In addition the
Company produces beverages for a number of companies under a variety of labels.
RESULTS OF OPERATIONS
The Company's net sales for the three and six month periods ended June
30, 1998 were 32.5% and 28.0% less, respectively, than the net sales for the
three and six month periods ended June 30, 1997. The decrease in net sales was
attributable to decreases in export sales on a three and six month basis of
57.0% and 53.5%, respectively for 1998 versus 1997. Contract sales decreased
41.5% on a quarter to quarter comparison, while they decreased on a six month
comparison basis by 41.1%. Sales of proprietary products decreased by 12.3% on a
six month comparable basis between 1998 and 1997 and decreased by 18.4% on a
three month basis.
Barrelage sales for the 1998 second quarter were 26.9% less than in the
second quarter of 1997 and 20.4% less for the first six months of 1998 versus
1997. Barrelage sales of proprietary products were down 24.4%, this volume
decrease reflects the discontinuance of some packages and is also the result of
increase pricing. However this increase of pricing resulted in higher gross
margins on the company's proprietary products in the second quarter of 1998
compared to 1997. Grain Belt Premium and Minnesota Brew had increases on a
quarter to quarter comparison while Pig's Eye and Landmark experienced
decreases. For the first six months of 1998 versus 1997 contract barrelage sales
were up 6.9% compared to 1997, primarily due to a substantial increase in bulk
mash sales production. For the same six month period export barrelage sales were
off 53.2% principally because of a reduction in Asian orders in 1998.
Operating Data (in barrels sold):
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
------- ------- ------- -------
Proprietary 34,403 45,504 59,837 74,305
Contract 30,551 29,158 62,486 58,438
Export 17,969 38,757 23,838 50,980
------- ------- ------- -------
Total 82,923 113,419 146,161 183,723
======= ======= ======= =======
The Company's gross profit was $1,084,000 greater during the first six
month period when compared to the similar period in 1997 and $1,117,000 greater
in the second quarter of 1998 versus the second quarter of 1997. The Company's
gross profit margin for the second quarter increased from (8.1)% in 1997 to a
13.7% in 1998. The increase is primarily related to the significant provisions
for inventory allowances taken in 1997 and the decrease in expenditures related
to the production and increased pricing of finished goods in 1998.
Operating expenses for the three and six month periods of 1998 were
$877,000 and $799,000 less, respectively than for a similar period in 1997. As a
percentage of net sales, three month operating expenses decreased from 22.4% in
1997 to 13.1% in 1998 as a result of the lower sales volume in the 1998 period
and the unfavorable adjustment to increase the allowance for doubtful accounts
in the 1997
9
<PAGE>
period. Operating expenses as a percentage of net sales also decreased to 16.4%
for the first six months of 1998 as compared to 19.7% in 1997. The decrease in
sales and marketing expense was attributable to the timing of expenditures, in
the second quarter of 1998, along with a reduction in personnel costs.
Administrative expense decreases were primarily associated with the provision
for the allowance for doubtful accounts in the 1997 period.
Interest income was $3,000 less in the second quarter of 1998 versus
1997 because of a reduced level of funds available for investment. Interest
expense in the second quarter was $51,000 greater in 1998 than in 1997 due to
interest being charged for deferred rental expense and the utilization of a line
of credit. This increase was partially offset by a lower principal balance on
the capitalized lease for the plant and equipment.
The Company experienced a net income of $9,000 in the second quarter of
1998 compared to a net loss of $2,292,000 in the second quarter of 1997. The
June 1997 loss was related primarily to the provisions to accounts receivable,
inventory and tax adjustments discussed herein. The Company also realized a
reduction in production costs and increased pricing in the 1998 period. For the
first six months of 1998 the Company experienced a net loss of $588,000 versus a
loss of $2,737,000 for the comparable period in 1997.
The negative tax provision of $293,000 for the second quarter of 1997
reflects the reversal of the $293,000 deferred tax asset, as its utilization
could not be specifically determined in accordance with Generally Accepted
Accounting Principles. In addition to the current year losses, the Company also
has approximately $6.7 million in loss carryforwards available from prior years
to offset future taxable income.
During 1997 and through June 1998, the Company operated significantly
below its production capacity. Therefore, in order to attain a profitable level
of operations, the Company continues to seek to increase its sales and
production volume. Management is pursuing opportunities to increase sales volume
at profitable margins. Management believes that the growth of its proprietary
labels offers the best opportunity for achieving operating profits in the long
term and has focused its efforts on growth of its proprietary products. An
emphasis has been placed on the promotion of these proprietary labels and the
generation of additional sales in the Company's core geographic market areas.
LIQUIDITY AND CAPITAL RESOURCES
Working capital deficit at June 30, 1998 decreased $1.5 million to $0.5
million from $1.0 million at December 31, 1997. The decrease is primarily
attributable to the loss for the six month period coupled with an overall
increase in current liabilities; principally amounts due to related parties.
During the six months ended June 30, 1998 the Company utilized $700,000
net cash in operating activities, which was due to an operating loss of
$588,000, an increase in accounts receivable of $213,000, an increase in
inventory, net of reserves, of $82,000, and decrease in accounts payable and
accrued expenses of $595,000. These amounts were offset by depreciation and
amortization of $314,000, a reduction of prepaid expenses and other asset of
$66,000 and an increase in deferred excise tax credit of $397,000.
The Company used $447,000 of cash in investing activities through the
purchase of $245,000 of property and equipment and the purchase of $202,000 of
intangible assets.
10
<PAGE>
The Company generated $798,000 of cash through financing activities as
a result of borrowings from a related party of $912,000, which were partially
offset by principal payments on the capitalized lease of $114,000. The
borrowings relate to rental obligations to Minnesota Brewing Limited Partnership
("Partnership"), which have been accrued but not yet paid.
The Company's plans in 1998 include the continued emphasis on promoting
its core proprietary brands. In order to achieve its 1998 plans, the Company
will require additional funds from equity or debt to meet its working capital
and capital resource needs. During 1997, the Minnesota Brewing Limited
Partnership ("Partnership"), a related party, deferred required lease payments
on the production facility and equipment and has agreed to defer past due 1997
payments and 1998 lease payments through at least January 1, 1999, which will
provide a portion of the Company's working capital needs. Due to the seasonal
nature of its business, the Company's June 30, 1998 working capital position is
not indicative of its needs during its peak selling and production season. At
present, except for leases of its production facility and certain of its
production equipment with the Partnership, the Company's assets are unsecured.
In connection with the $475,000 advance by the Partnership discussed below, the
Company agreed to grant the Partnership a security interest in certain of its
assets, including its trademarks. The Partnership has agreed to make available
to the Company a line of credit of up to $2,500,000 to meet its working capital
needs during 1998. This availability is in addition to $475,000 the Partnership
advanced the Company subsequent to December 31, 1997 to secure the purchase of a
Treasury Bond required by the Bureau of Alcohol Tobacco and Firearms. The
Company believes that the Partnership's line of credit, possible bank line of
credit and funds from operations will be sufficient to meet its working capital
and capital resource needs during 1998.
It will be necessary for the Company to obtain a permanent line of
credit or raise additional equity in order to meet its working capital and
capital resource needs for the next twelve months taking into consideration its
cash flow from operations, its existing cash and cash equivalents and short term
borrowings. The Company has a line of credit with the Partnership, but is
working to establish a working capital line of credit with a bank to supplement
its short-term working capital needs. The Company anticipates that any line of
credit would be secured by its current assets.
In conjunction with the Company's initial public offering in November
of 1993, the Company's existing operating leases were converted to capitalized
leases and the obligations were reflected as property and equipment and
long-term debt in the financial statements. The debt is being amortized over 10
years at a 7.75% interest rate. The Company has the option to acquire the
property at eight times the trailing twelve months rent. As indicated in the
Company's 1997 annual report, based upon 1997 lease payments, the purchase price
would be approximately $4.9 million at December 31, 1997. Should the Company
decide to exercise its option it would propose to finance the acquisition with
debt or equity financing or some combination thereof. The Company will monitor
the exercise price going forward and will select the most beneficial time to
exercise the option based upon existing facts and circumstances and the
availability of financing.
The Company's credit terms to its distributors are generally 10 days
and substantially all customers, except contract brewing accounts, are on
automatic debit to their bank account through electronic funds transfer ("EFT").
This program substantially reduces the credit risk and facilitates the
predictability of cash flows. Amounts from contract brewing production are
generally due 30 days after shipment and in many cases are secured by letters of
credit.
As a small brewer producing less than 2,000,000 barrels per year, the
Company presently receives an $11.00 per barrel credit against federal exercise
taxes on the first 60,000 barrels of taxable production.
11
<PAGE>
The cash benefit of this $660,000 credit is primarily received in the first and
second quarters of the year. For accounting purposes, however, this credit is
allocated throughout the year based upon projected taxable sales per quarter.
The Company is a party to collective bargaining agreements with five
union organizations, all of which run through March, 1999. The Company believes
its employee relationship to be good.
As of June 30, 1998, the Company had net operating loss carryforwards
totaling $6.7 million available without restriction to reduce future taxable
income. To the extent the Company generates taxable income during the periods in
which this net operating loss carryforward is available, the Company's cash
requirements for payment of income tax will be reduced.
The Company has applied and received permits from the State of
Minnesota to convert a portion of its facilities into the production of ethanol.
It is the Company's intention to pursue the production of ethanol if it
determines that it is possible to do so on a commercially reasonable basis.
Although the Company believes that it has commitments for financing in an amount
sufficient to convert a portion of its facilities to ethanol production, the
Company does not intend to convert its facilities until it is able to arrange
definitive contracts or otherwise determine that it can operate the project in a
commercially reasonable manner. There can be no assurance that the Company will
be able to successfully complete the ethanol project.
FORWARD-LOOKING STATEMENTS
Statements included in this Form 10-Q that are not historical or
current facts are "forward-looking statements" made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and are
subject to certain risks and uncertainties that could cause actual results to
differ materially. Among these risks and uncertainties are information included
in this Annual Report on Form 10-Q which can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate," or "continue" or the negative thereof or other variations thereon or
comparable terminology constitutes forward-looking information. The following
important factors, among others, in some cases have affected and in the future
could affect the Company's actual results and could cause the Company's actual
financial performance to differ materially from that expressed in any
forward-looking statement: (I) competition within the brewing industry resulting
from the increased number of brewers and available beers, (ii) the Company's
ability to continue to achieve and maintain contract brewing arrangements; (iii)
the continued success of the Company's proprietary brands, including its
reliance upon distributors, and (iv) the Company's continued ability to sell
products for export.
12
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on May 20, 1998.
The shareholders took the following actions:
(i) The shareholders elected six directors to hold office until
the annual meeting of shareholders. The shareholders present
in person or by proxy cast the following numbers of votes in
connection with the election of directors, resulting in the
election of all of the nominees:
Votes For Votes Withheld
--------- --------------
Bruce E. Hendry 2,243,545 13,785
John J. Lee 2,243,595 13,735
John R. Rollwagen 2,243,645 13,685
James A. Potter 2,243,445 13,885
Greg C. Heinemann 2,242,545 14,785
Richard A. Perrine 2,243,545 13,785
(ii) The shareholders ratified and approved an amendment to the
Company's 1993 Stock Option Plan increasing the number of
shares of Common Stock reserved for issuance under the Plan
from 250,000 shares to 450,000 shares. 2,229,668 votes were
cast for the resolution, 23,942 votes were against the
resolution and 3,720 votes abstained.
Item 5. Other Information
John Rollwagen resigned as a director on July 15, 1998. To date, no
replacement director has been determined.
The deadline for submission of shareholder proposals pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended, for inclusion in
the Company's proxy statement for its 1999 Annual Meeting of Shareholders is in
December 27, 1998. Additionally, if the Company receives notice of a shareholder
proposal after March 3, 1999, such proposal will be considered untimely pursuant
to Rules 14a-4 and 14a-5 (e) and the persons named in proxies solicited by the
Board of Directors of the
13
<PAGE>
Company for its 1999 Annual Meeting of Shareholders may exercise discretionary
voting power with respect to such proposal.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule.
(b) Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MINNESOTA BREWING COMPANY
Dated: August 14, 1998 /s/Michael C. Hime
--------------------------------
Michael C. Hime
Vice President of Finance (Chief Financial Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 116,774
<SECURITIES> 474,961
<RECEIVABLES> 972,741
<ALLOWANCES> (485,000)
<INVENTORY> 2,847,143
<CURRENT-ASSETS> 4,496,240
<PP&E> 6,332,793
<DEPRECIATION> 2,740,435
<TOTAL-ASSETS> 8,763,262
<CURRENT-LIABILITIES> 5,013,766
<BONDS> 0
0
0
<COMMON> 34,627
<OTHER-SE> 2,322,894
<TOTAL-LIABILITY-AND-EQUITY> 8,763,262
<SALES> 4,739,034
<TOTAL-REVENUES> 4,351,823
<CGS> 3,754,524
<TOTAL-COSTS> 4,343,234
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,787
<INCOME-PRETAX> 8,589
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,589
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,589
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
