U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Filed Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter year ended Commission File Number
September 30, 1997 1-13752
SMITH-MIDLAND CORPORATION
(Name of Small Business
Issuer As Specified In Its Charter)
Delaware 54-1727060
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Route 28, P.O. Box 300, Midland, Virginia 22728
(Address of Principal Executive Offices, Zip Code)
(540) 439-3266
(Issuer's Telephone Number, Including Area Code)
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 November 11, 1997, the Company had outstanding 3,044,798 shares
of Common Stock, $.01 par value per share.
<PAGE>
SMITH-MIDLAND CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
Item 1. Financial Statements
Consolidated Balance Sheets; 1
September 30, 1997 (Unaudited);
and December 31, 1996 (Unaudited)
Consolidated Statements of Operations 2
(Unaudited); Three months ended
September 30, 1997 and 1996
Consolidated Statements of Operations 3
(Unaudited); Nine months ended
September 30, 1997 and 1996
Consolidated Statements of Cash Flows 4
(Unaudited); Nine months ended
September 30, 1997 and 1996
Notes to Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
PART II. OTHER INFORMATION
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. Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE>
<TABLE>
PART I - Financial Information
Item 1. Financial Statements
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
<S> <C>
September 30, December 31,
Assets 1997 1996
----------- -----------
Current assets:
Cash and cash equivalents $ 264,820 $ 438,079
Accounts receivable:
Trade - billed, less allowances for doubtful accounts of
$221,464 and $334,062 3,321,232 2,705,325
Trade - unbilled 568,953 113,299
Inventories:
Raw materials 492,221 440,225
Finished goods 820,160 1,090,815
Prepaid expenses and other assets 47,863 92,383
----------- -----------
Total current assets 5,515,249 4,880,126
Property and equipment, net 1,487,665 1,380,871
----------- -----------
Other assets:
Cash - restricted 196,977 194,617
Note receivable, officer 684,200 659,000
Other 74,096 80,260
----------- -----------
Total other assets 955,273 933,877
----------- -----------
Total Assets $ 7,958,187 $ 7,194,874
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of notes payable $ 2,307,333 $ 2,066,253
Accounts payable -- trade 1,700,026 1,439,934
Accrued expenses and other liabilities 611,796 515,479
Customer deposits 515,550 200,623
----------- -----------
Total current liabilities 5,134,705 4,222,289
Notes payable -- less current maturities 737,420 1,068,124
Notes payable -- related parties 115,598 115,598
----------- -----------
Total Liabilities 5,987,723 5,406,011
Stockholders' equity:
Preferred stock, $.01 par value, authorized 1,000,000 shares,
none outstanding -- --
Common stock, $.01 par value, authorized 8,000,000 shares,
issued and outstanding 3,044,798 and 3,044,798 30,857 30,857
Additional capital 3,450,085 3,450,085
Treasury Stock
(102,300) (102,300)
Retained earnings (deficit)
(1,408,178) (1,589,779)
----------- -----------
Total Stockholders' Equity 1,970,464 1,788,863
----------- -----------
Total Liabilities and Stockholders' Equity $ 7,958,187 $ 7,194,874
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
1997 1996
----------- -----------
Revenue:
Net sales $2,735,079 $2,914,155
Shipping and installation income 729,015 387,301
----------- -----------
Total revenue 3,464,094 3,301,456
----------- -----------
Cost of goods sold:
Cost of goods sold -- sales 2,178,815 2,057,194
Shipping and installation expense 468,056 303,262
----------- -----------
Total cost of goods sold 2,646,871 2,360,456
---------- -----------
Gross profit 817,223 941,000
----------- -----------
Operating expenses:
General and administrative expenses 493,812 538,143
Selling expenses 210,346 181,606
----------- -----------
Total operating expenses 704,158 719,749
----------- -----------
Operating income 113,065 221,251
----------- -----------
Other income (expense):
Royalties 84,420 79,927
Interest expense (74,843) (114,365)
Interest income 10,610 16,446
Other 5,314 8,753
----------- -----------
Total other income (expense) 25,501 (9,239)
Income before income taxes 138,566 212,012
Income tax expense (benefit) -- --
----------- -----------
Net income $ 138,566 $ 212,012
=========== ===========
Net income per share $ .05 $ .07
=========== ===========
Weighted average common shares outstanding 3,044,798 3,085,718
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1997 1996
---------- ----------
Revenue:
Net sales $7,685,982 $7,625,417
Shipping and installation income 1,396,415 946,820
---------- ----------
Total revenue 9,082,397 8,572,237
---------- ----------
Cost of goods sold:
Cost of goods sold -- sales 5,906,958 5,994,103
Shipping and installation expense 889,750 789,306
---------- ----------
Total cost of goods sold 6,796,708 6,783,409
----------- -----------
Gross profit 2,285,689 1,788,828
---------- ----------
Operating expenses:
General and administrative expenses 1,547,899 1,608,670
Selling expenses 502,218 513,290
---------- ----------
Total operating expenses 2,050,117 2,121,960
---------- ----------
Operating income (loss) 235,572 (333,132)
---------- ----------
Other income (expense):
Royalties 164,584 211,572
Interest expense (272,076) (357,807)
Interest income 37,063 53,005
Other 16,458 7,324
---------- ----------
Total other income (expense) (53,971) (85,906)
Income (loss) before income taxes 181,601 (419,038)
Income tax expense (benefit) -- --
---------- ----------
Net income (loss) $ 181,601 $ (419,038)
========== ==========
Net income (loss) per share $ .06 $ ( .14)
========== ==========
Weighted average common shares outstanding 3,044,798 3,076,411
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
<S> <C>
Nine Months Ended
September 30,
1997 1996
----------- -----------
Cash flows from operating activities:
Cash received from customers $ 8,490,347 $ 8,649,223
Cash paid to suppliers and employees (7,915,408) (8,696,514)
Interest paid (272,076) (357,807)
Other 21,461 32,931
----------- -----------
Net cash provided (absorbed) by operating activities 324,324 (372,167)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (412,459) (239,989)
(Increase) decrease in officer note receivable 4,500 5,474
----------- -----------
Net cash absorbed by investing activities (407,959) (234,515)
----------- -----------
Cash flows from financing activities:
Proceeds from bank borrowings 177,359 1,104,442
Repayments of bank borrowings (266,983) (1,054,042)
Proceeds from issuance of common stock -- 396,333
----------- -----------
Net cash provided by financing activities (89,624) 446,733
----------- -----------
Net increase (decrease) in cash and cash equivalents (173,259) (159,949)
Cash and cash equivalents at beginning of period 438,079 938,089
----------- -----------
Cash and cash equivalents at end of period $ 264,820 $ 778,140
=========== ===========
Reconciliation of net income (loss) to net cash provided
by operating activities:
Net income (loss) $ 181,601 $ (419,038)
Adjustments to reconcile net income (loss) to net cash
provided (absorbed) by operating activities:
Depreciation and amortization 305,665 201,456
Decrease (increase) in other assets (25,896) (35,381)
Decrease (increase) in:
Accounts receivable - billed (615,907) (195,135)
Accounts receivable - unbilled (455,654) (151,239)
Inventories 218,659 136,743
Prepaid expenses and other assets 44,520 127,748
Increase (decrease) in:
Accounts payable - trade 260,092 (290,503)
Accrued expenses and other liabilities 96,317 41,394
Customer deposits 314,927 211,788
----------- -----------
Net cash provided (absorbed) by operating activities $ 324,324 $ (372,167)
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
September 30, 1997
Basis of Presentation
As permitted by the rules of the Securities and Exchange Commission (the
"Commission") applicable to quarterly reports on Form 10-QSB, these notes are
condensed and do not contain all disclosures required by generally accepted
accounting principles. Reference should be made to the consolidated financial
statements and related notes included in the Smith-Midland Corporation's Annual
Report on Form 10-KSB, for the year ended December 31, 1996.
In the opinion of management of Smith-Midland Corporation (the "Company"),
the accompanying financial statements reflect all adjustments which were of a
normal recurring nature necessary for a fair presentation of the Company's
results of operations for the three-month and nine-month periods ended September
30, 1997 and 1996.
The results disclosed in the consolidated statements of operations are not
necessarily indicative of the results to be expected for any future periods.
Principles of Consolidation
The Company's accompanying consolidated financial statements include the
accounts of Smith-Midland Corporation, a Delaware corporation and its wholly
owned subsidiaries: Smith-Midland Corporation, a Virginia corporation; Easi-Set
Industries, Inc., a Virginia corporation; Smith-Carolina Corporation, a North
Carolina corporation; Concrete Safety Systems, Inc., a Virginia corporation; and
Midland Advertising & Design, Inc., a Virginia corporation. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Reclassifications
Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the 1997 presentation.
Inventories
Inventories are stated at the lower of cost, using the first-in, first-out
(FIFO) method, or market.
<PAGE>
Property and Equipment
Property and equipment, net is stated at depreciated cost. Expenditures for
ordinary maintenance and repairs are charged to income as incurred. Costs of
betterments, renewals, and major replacements are capitalized. At the time
properties are retired or otherwise disposed of, the related cost and allowance
for depreciation are eliminated from the accounts and any gain or loss on
disposition is reflected in income.
Depreciation is computed using the straight-line method over the following
estimated useful lives:
Years
-----
Buildings................................................... 10-33
Trucks and automotive equipment............................. 3-10
Shop machinery and equipment................................ 3-10
Land improvements........................................... 10-30
Office equipment............................................ 3-10
Income Taxes
The provision for income taxes is based on earnings reported in the
financial statements. A deferred income tax asset or liability is determined by
applying currently enacted tax laws and rates to the expected reversal of the
cumulative temporary differences between the carrying value of assets and
liabilities for financial statement and income tax purposes. Deferred income tax
expense is measured by the change in the deferred income tax asset or liability
during the year.
Effective January 1, 1993, the Company adopted SFAS 109 "Accounting for
Income Taxes." The adoption of SFAS 109 did not have a material effect on the
consolidated financial statements as the deferred tax asset related to the
Company's net operating loss carry forward has been reserved in its entirety. No
provision for income taxes has been made for the three-month and nine-month
periods ended September 30, 1997 and 1996, as the Company does not expect to
incur income tax expense for fiscal year 1997 and did not incur income tax
expense in fiscal year 1996.
Revenue Recognition
The Company primarily recognizes revenue on the sale of its standard
precast concrete products at shipment date, including revenue derived from any
projects to be completed under short-term contracts. Installation services for
precast concrete products, leasing and royalties are recognized as revenue as
they are earned on an accrual basis. Licensing fees are recognized under the
accrual method unless collectibility is in doubt, in which event revenue is
recognized as cash is received. Certain sales of sound wall and SlenderwallTM
concrete products are recognized upon completion of production and customer site
inspections. Provisions for estimated losses on contracts are made in the period
in which such losses are determined.
<PAGE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Estimates
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.
Income Per Share
Income per share is calculated based on net income and the weighted average
number of shares of common stock outstanding during the period.
Common Stock Offering
In December 1995, the Company completed an initial public offering ("IPO")
of 1,000,000 shares of common stock, $.01 par value per share (the "Common
Stock"), and 1,000,000 Redeemable Common Stock Purchase Warrants (the
"Warrants"), at a purchase price of $3.60 per share of Common Stock and Warrant
sold together. The Company realized net proceeds from the IPO of approximately
$2,618,000. In January 1996, the Company completed an overallotment of an
additional 150,000 shares of Common Stock and 150,000 Warrants for net proceeds
of approximately $396,000.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The Company generates revenues primarily from the sale, shipping,
licensing, leasing and installation of precast concrete products for the
construction, utility and farming industries. The Company's operating strategy
has involved producing innovative and proprietary products, including
Slenderwall(TM), a patent-pending, lightweight, energy efficient concrete and
steel exterior wall panel for use in building construction; J-J Hooks(TM)
Highway Safety Barrier, a patented, positive-connected highway safety barrier;
Sierra Wall, a sound barrier primarily for roadside use; and transportable
concrete buildings. In addition, the Company produces utility vaults, farm
products such as cattleguards, and water and feed troughs, and custom order
precast concrete products with various architectural surfaces.
This Form 10-QSB contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements and the results for the
nine months ended September 30, 1997 are not necessarily indicative of the
results for the Company's operations for the year ending December 31, 1997.
Factors that might cause such a difference include, but are not limited to,
product demand, the impact of competitive products and pricing, capacity and
supply constraints or difficulties, general business and economic conditions,
the effect of the Companies accounting policies and other risks detailed in the
Company's Annual Report, Form 10-KSB and other filings with the Securities and
Exchange Commission.
Results of Operations
Three months ended September 30, 1997 compared to the three months ended
September 30, 1996
For the three months ended September 30, 1997, the Company had total
revenue of $3,464,094 compared to total revenue of $3,301,456 for the three
months ended September 30, 1996, an increase of $162,638 or 5%. Total product
sales were $2,735,079 for the three months ended September 30, 1997 compared to
$2,914,155 for the same period in 1996, a decrease of $179,076 or 6%. The
decrease for the three months was primarily the result of decreased sales of
highway safety barrier and architectural products during the 1997 period,
partially offset by increases in highway sound barrier and utility building
sales. Shipping and installation revenue was $729,015 for the three months ended
September 30, 1997 and $387,301 for the same period in 1996, an increase of
$341,714 or 88%. The increase is attributable to an increase in highway sound
barrier installment contracts.
<PAGE>
Total cost of goods sold for the three months ended September 30, 1997 was
$2,646,871, an increase of $286,415 or 12% from $2,360,456 for the three months
ended September 30, 1996. The increase was primarily the result of increased
revenue and unfavorable adjustments resulting from a physical count and
valuation of inventories in the current three month period. Total cost of goods
sold, as a percentage of total revenue, increased to 76% for the three months
ended September 30, 1997, from 71% for the three months ended September 30,
1996.
For the three months ended September 30, 1997, the Company's general and
administrative expenses decreased $44,331 to $493,812 from $538,143 during the
same period in 1996. The decrease was attributed to profitability initiatives
begun in 1996 to lower overall expense.
Selling expenses for the three months ended September 30, 1997 increased
$28,740 to $210,346 from $181,606 for the three months ended September 30, 1996
resulting from increases in advertising and marketing efforts for new and
existing products.
The Company's operating income for the three months ended September 30,
1997 was $113,065, compared to operating income of $221,251 for the three months
ended September 30, 1996, a decrease of $108,186.
Interest expense was $74,843 for the three months ended September 30, 1997,
compared to $114,365 for the three months ended September 30, 1996. The decrease
of $39,522, or 35%, was primarily due to an improved overall rate of interest
paid on outstanding debt and the retirement of debt.
Net income was $138,566 for the three months ended September 30, 1997
compared to $212,012 for the same period of the prior year. Net income per share
for the current three month period was $.05 compared to net income per share of
$.07 achieved in the quarter ended September 30, 1996.
Nine months ended September 30, 1997 compared to the nine months ended
September 30, 1996
For the nine months ended September 30, 1997, the Company had total revenue
of $9,082,397 compared to total revenue of $8,572,237 for the nine months ended
September 30, 1996, an increase of $510,160, or 6%. Total product sales were
$7,685,982 for the current nine months compared to $7,625,417 for the same
period in 1996, an increase of $60,565. The increase in product sales was
primarily the result of increased highway soundwall sales during 1997. Shipping
and installation revenue increased to $1,396,415 for the nine months ended
September 30, 1997 compared to $946,820 for the same period in 1996, an increase
of $449,595. The increase was attributed primarily to an increase in highway
soundwall installation contracts.
<PAGE>
Total cost of goods sold for the nine months ended September 30, 1997
remained relatively flat at $6,796,708 compared to $6,783,409 for the period
ended September 30, 1996. Total cost of goods sold as a percentage of total
revenue decreased to 75% for the nine months ended September 30, 1997, from 79%
during the same period of the prior year. Rewards from profitability initiatives
begun in 1996 to reduce costs more than offset unfavorable adjustments made to
inventories in the third quarter of the current year.
General and administrative expenses for the nine month period declined
$60,771, down from $1,608,670 during 1996 to $1,547,899 in 1997. The reduction
was attributed to profitability efforts begun in 1996 to reduce costs.
Selling expenses for the nine months ended September 30, 1997 decreased
slightly to $502,218, down from $513,290 for the nine months ended September 30,
1996. Decreases in employee compensation expenses for the period were partially
offset by increased advertising and marketing efforts for new and existing
products.
The Company's operating income for the nine months ended September 30, 1997
was $235,572 compared to an operating loss of $(333,132) for the same period in
the prior year.
Royalty income decreased to $164,584 for the nine months ended September
30, 1997 from $211,572 during the first nine months of the prior year. The
decrease in the current year was attributed to the completion in the prior year
of a major contract held by one of the Company's licensees for JJ Hook Barrier.
Interest expense was $272,076 for the nine months ended September 30, 1997,
compared to $357,807 for the nine months ended September 30, 1996. This decrease
of $85,731, or 24%, was primarily due to an improved overall rate of interest
paid on outstanding debt and the retirement of debt. Interest income of $37,063
for the nine months ended September 30, 1997 represented a decrease of $15,942,
or 30% over interest income of $53,005 for the 1996 period. This decrease was
attributed to interest earned on higher investment balances during the 1996
period, offset somewhat by the recognition of interest income on the officer
note receivable during the 1997 period. The Company incurred other income, net
of other expense, of $16,458 for the nine months ended September 30, 1997,
compared to other income, net of other expense, of $7,324 for the same period in
1996.
The Company experienced net income for the nine months ended September 30,
1997 of $181,601 compared to a net loss of $(419,038) for the same period in
1996, an increase of $600,639. Net income per share increased $.20 to net income
of $.06 per share for the nine months ended September 30, 1997 compared to a net
loss of $(.14) per share during the same period of the prior year.
<PAGE>
Liquidity and Capital Resources
The Company has financed its capital expenditures, operating requirements
and growth to date primarily with proceeds from its initial public offering
("IPO") and subsequent overallotment, bank and other borrowings, and the sale of
stock to and loans from its principal stockholders.
The Company had $3,044,753 of indebtedness at September 30, 1997, of which
$2,307,333 was scheduled to mature within twelve months. Included in the
indebtedness were two notes totaling approximately $1,112,000, secured by assets
of the Company, that matured in July 1997 and were not paid by the Company. For
one of the two notes, management has successfully negotiated an extension until
alternative financing can be found. For the other note payable, management has
received an extension through November 30, 1997 and is currently negotiating an
extension on this note through February 28, 1998. All original terms and
conditions are applicable for both notes during the extension periods
successfully negotiated. The Company's debt is generally secured by the assets
of the Company and a significant portion is personally guaranteed by the
Company's President. Management is confident that the Company will be able to
extend or refinance this debt as it becomes due. However, no assurance can be
given that the Company will be successful in its efforts to extend or refinance
its current indebtedness, or that if it is successful in those efforts, that
such extension or refinancing will be on terms favorable to the Company. In the
event that the Company was not able to extend or refinance the indebtedness, the
Company may be subject to having its assets foreclosed upon by certain lenders.
As a result of the Company's substantial debt burden, the Company is
especially sensitive to changes in the prevailing interest rates. Fluctuations
in such interest rates may materially and adversely affect the Company's ability
to finance its operations either by increasing the Company's cost to service its
current debt, or by creating a more burdensome refinancing environment, if
interest rates should increase.
Other Comments
The Company performs a portion of its concrete pouring and curing processes
on uncovered, outdoor manufacturing areas. During the winter months, cold or
adverse weather causes a slowdown or cessation of these outdoor production
activities, thereby reducing the Company's production capacity. In addition, the
Company services the construction industry primarily in areas of the United
States where construction activity is inhibited by adverse weather during the
winter. As a result, the Company traditionally experiences reduced revenues from
December through March and realizes the substantial part of its revenues during
the other months of the year. The Company typically experiences lower profits,
or losses, during the winter months, and must have sufficient working capital to
fund its operations at a reduced level until the spring
<PAGE>
construction season. However, as of the date of this filing, the Company's
backlog is approximately $6.9 million, of which $2.6 million represents firm
contracts for Slenderwall and architectural pre-cast concrete products. The
majority of the projects relating to this backlog are contracted to be
constructed in the fourth quarter of 1997 and the first quarter of 1998.
Management believes that the Company's operations have not been materially
affected by inflation.
Mr. Robert McElhinney joined the Company as the new Chief Financial Officer
in July 1997. Mr. McElhinney was formerly the Director of Finance and Chief
Financial Officer for ABC Photo Imaging in Manassas, Virginia and for Ten Hoeve
Brothers, Inc. headquartered in New Jersey. Mr. Charles Adams joined the Company
as Controller in September 1997. Mr. Adams was formerly the General Accounting
Manager for American Woodmark Corporation in Winchester, Virginia.
<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. None
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
A. The following Exhibits are filed herewith:
Exhibit No. Title
----------- -----
27 Financial Data Schedule
B. Report on Form 8-K. None.
<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.
SMITH-MIDLAND CORPORATION
Date: November 12, 1997 By:/s/ Rodney I. Smith
----------------------
Rodney I. Smith
Chairman of the Board,
Chief Executive Officer and President
(principal executive officer)
Date: November 12, 1997 By:/s/ Robert V. McElhinney
---------------------------
Robert V. McElhinney
Vice President of Finance,
Chief Financial Officer
(principal financial officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Sep-30-1997
<CASH> 264,820
<SECURITIES> 0
<RECEIVABLES> 4,111,649
<ALLOWANCES> 221,464
<INVENTORY> 1,312,381
<CURRENT-ASSETS> 5,515,249
<PP&E> 6,138,320
<DEPRECIATION> 4,650,655
<TOTAL-ASSETS> 7,958,187
<CURRENT-LIABILITIES> 5,250,303
<BONDS> 737,420
0
0
<COMMON> 30,857
<OTHER-SE> 1,939,607
<TOTAL-LIABILITY-AND-EQUITY> 7,958,187
<SALES> 7,685,982
<TOTAL-REVENUES> 9,300,502
<CGS> 6,796,708
<TOTAL-COSTS> 8,846,825
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 272,076
<INCOME-PRETAX> 181,601
<INCOME-TAX> 0
<INCOME-CONTINUING> 181,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181,601
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
