U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended Commission File Number
September 30, 1998 1-13752
SMITH-MIDLAND CORPORATION
(Exact Name of Small Business
Issuer as Specified in Its Charter)
Delaware 54-1727060
(State of Incorporation) (I.R.S. Employer I.D. No.)
Route 28, P.O. Box 300, Midland, Virginia 22728
(Address of Principal Executive Offices)
(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 19, 1998, the Company had outstanding 3,044,798 shares
of Common Stock, $.01 par value per share.
<PAGE>
<TABLE>
SMITH-MIDLAND CORPORATION
INDEX
<S> <C>
PART I. FINANCIAL INFORMATION PAGE NUMBER
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited); 3
September 30, 1998 and December 31, 1997
Consolidated Statements of Operations 4
(Unaudited); Three months ended
September 30, 1998 and 1997
Consolidated Statements of Operations 5
(Unaudited); Nine months ended
September 30, 1998 and 1997
Consolidated Statements of Cash Flows 6
(Unaudited); Nine months ended
September 30, 1998 and 1997
Notes to Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
<PAGE>
<TABLE>
PART I - Financial Information
Item 1. Financial Statements
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
September 30, December 31,
Assets 1998 1997
Current assets: ----------- -----------
<S> <C> <C>
Cash and cash equivalents $ 288,218 $ 288,310
Accounts receivable:
Trade - billed, less allowances for doubtful accounts of
$266,577 and $231,304 3,611,233 3,254,993
Trade - unbilled 378,141 410,158
Inventories:
Raw materials 540,078 486,583
Finished goods 992,923 942,427
Prepaid expenses and other assets 100,155 69,801
----------- -----------
Total current assets 5,910,748 5,452,272
----------- -----------
Property and equipment, net 1,998,747 1,531,062
----------- -----------
Other assets:
Cash - restricted 615,266 196,977
Note receivable, officer 656,348 632,472
Other 219,096 79,443
----------- -----------
Total other assets 1,490,710 908,892
Total Assets $ 9,400,205 $ 7,892,226
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of notes payable $ 102,004 $ 2,199,228
Accounts payable - trade 1,703,615 1,744,127
Accrued expenses and other liabilities 335,404 570,693
Customer deposits 427,417 450,474
----------- -----------
Total current liabilities 2,568,440 4,964,522
Notes payable - less current maturities 4,463,685 759,440
Notes payable - related parties 104,686 115,598
----------- -----------
Total Liabilities 7,136,811 5,839,560
----------- -----------
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) (1,115,248) (1,325,976)
Total Stockholders' Equity 2,263,394 2,052,666
----------- -----------
Total Liabilities and Stockholders' Equity $ 9,400,205 $ 7,892,226
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
1998 1997
----------- -----------
<S> <C> <C>
Revenue $ 3,968,174 $ 3,464,094
Cost of goods sold 2,880,029 2,646,871
----------- -----------
Gross profit 1,088,145 817,223
----------- -----------
Operating expenses:
General and administrative expenses 663,181 493,812
Selling expenses 176,490 210,346
----------- -----------
Total operating expenses 839,671 704,158
----------- -----------
Operating income 248,474 113,065
----------- -----------
Other income (expense):
Royalties 78,691 84,420
Interest expense (135,056) (74,843)
Interest income 27,504 10,610
Other (54,871) 5,314
----------- -----------
Total other income (expense) (83,732) 25,501
Income (loss) before income taxes 164,742 138,566
Income tax expense (benefit) -- --
----------- -----------
Net income (loss) $ 164,742 $ 138,566
=========== ===========
Net income (loss) per share $ .05 $ .05
=========== ===========
Weighted average common shares outstanding 3,044,798 3,044,798
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Nine Months Ended
September 30, September 30,
1998 1997
------------ ------------
<S> <C> <C>
Revenue $ 10,552,785 $ 9,082,397
Cost of goods sold 7,928,331 6,796,708
------------ ------------
Gross profit 2,624,454 2,285,689
------------ ------------
Operating expenses:
General and administrative expenses 1,631,230 1,547,899
Selling expenses 497,774 502,218
------------ ------------
Total operating expenses 2,129,004 2,050,117
------------ ------------
Operating income 495,450 235,572
------------ ------------
Other income (expense):
Royalties 141,136 164,584
Interest expense (429,420) (272,076)
Interest income 54,502 37,063
Other (50,940) 16,458
------------ ------------
Total other income (expense) (284,722) (53,971)
Income before income taxes 210,728 181,601
Income tax expense (benefit) -- --
------------ ------------
Net income $ 210,728 $ 181,601
============ ============
Net income (loss) per share $ .07 $ .06
============ ============
Weighted average common shares outstanding 3,044,798 3,044,798
============ ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
1998 1997
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Cash received from customers $ 10,346,641 $ 8,490,347
Cash paid to suppliers and employees (10,367,663) (7,915,408)
Interest paid (429,420) (272,076)
Other
(20,314) 21,461
------------ ------------
Net cash provided (absorbed) by operating activities (470,756) 324,324
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (707,156) (412,459)
Decrease (increase) in officer note receivable -- 4,500
Decrease (increase) in related party receivables (10,912) --
Decrease (increase) in restricted cash (418,289)
Net cash absorbed by investing activities (1,136,357) (407,959)
------------ ------------
Cash flows from financing activities:
Proceeds from bank borrowings 4,094,392 177,359
Repayments of bank borrowings (2,487,371) (266,983)
Net cash provided (absorbed) by financing activities 1,607,021 (89,624)
------------ ------------
Net increase (decrease) in cash and cash equivalents (92) (173,259)
Cash and cash equivalents at beginning of period 288,310 438,079
------------ ------------
Cash and cash equivalents at end of period $ 288,218 $ 264,820
============ ============
Reconciliation of net income (loss) to net cash provided
(absorbed) by operating activities:
Net income $ 210,728 $ 181,601
Adjustments to reconcile net income to net cash
provided (absorbed) by operating activities:
Depreciation and amortization 239,471 305,665
Decrease (increase) in:
Accounts receivable - billed (356,240) (615,907)
Accounts receivable - unbilled 32,017 (455,654)
Inventories(103,991) 218,659
Prepaid expenses and other assets (193,883) 18,624
Increase (decrease) in:
Accounts payable - trade (40,512) 260,092
Accrued expenses and other liabilities (235,289) 96,317
Customer deposits (23,057) 314,927
------------ ------------
Net cash provided (absorbed) by operating activities $ (470,756) $ 324,324
============ ============
The accompanying notes are an integral part of these consolidated financial statement
</TABLE>
6
<PAGE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1998
(Unaudited)
Basis of Presentation
As permitted by the rules of the Securities and Exchange 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, 1997.
In the opinion of the management of Smith-Midland Corporation (the
"Company"), the accompanying financial statements reflect all adjustments of a
normal recurring nature which were necessary for a fair presentation of the
Company's results of operations for the three- and nine-month periods ended
September 30, 1998 and 1997.
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
inter-company 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 1998 presentation.
Inventories
Inventories are stated at the lower of cost, using the first-in, first-out
(FIFO) method, or market.
7
<PAGE>
SMITH-MIDLAND CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited
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.
No provision for income taxes has been made for the three- and nine-month
periods ended September 30, 1998 and 1997, as the Company does not expect to
incur income tax expense for 1998 and did not incur income tax expense during
1997.
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 soundwall 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.
8
<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.
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilutive
effect of securities that could share in earnings of an entity. At September 30,
1998, there was no material dilutive effect on earnings (loss) per share.
9
<PAGE>
tem 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The Company generates revenues primarily from the sale, licensing, leasing,
shipping 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 SlenderwallTM, a
patent-pending, lightweight, energy efficient concrete and steel exterior wall
panel for use in building construction; J-J HooksTM 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
three and nine months ended September 30, 1998 are not necessarily indicative of
the results for the Company's operations for the year ending December 31, 1998.
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 Company's accounting policies and other risks detailed in the
Company's Annual Report on Form 10-KSB and other filings with the Securities and
Exchange Commission.
Results of Operations
Three months ended September 30, 1998 compared to the three months ended
September 30, 1997
For the three months ended September 30, 1998, the Company had total
revenue of $3,968,174 compared to total revenue of $3,464,094 for the three
months ended September 30, 1997, an increase of $504,080, or 15%. Total product
sales were $3,365,303 for the three months ended September 30, 1998 compared to
$2,735,079 for the same period in 1997, an increase of $630,224, or 23%. The
increase was primarily due to increased SlenderwallTM sales during the 1998
period, as compared to the 1997 period. Shipping and installation revenue was
$602,871 for the three months ended September 30, 1998 and $729,015 for the same
period in 1997, a decrease of $126,144, or 17%. The decrease was attributable
primarily to lower installation activity during the three-month period in 1998,
compared to the same period in 1997.
Total cost of goods sold for the three months ended September 30, 1998 was
$2,880,029, an increase of $233,158, or 9% from $2,646,871 for the three months
ended September 30, 1997. The increase was due to a 15% increase in revenue,
partially offset by a decrease in cost of goods sold as a percentage of sales.
10
<PAGE>
Total cost of goods sold, as a percentage of total revenue, decreased to 72.6%
for the three months ended September 30, 1998, from 76.4% for the three months
ended September 30, 1997 primarily due to normal variations in the Company's
operations and product mix.
For the three months ended September 30, 1998, the Company's general and
administrative expenses increased $169,369 to $663,181 from $493,812 during the
same period in 1997. The 34% increase is primarily attributed to the cost of
increasing the allowance for doubtful accounts and personnel recruitment fees.
Selling expenses for the three months ended September 30, 1998 decreased
$33,856 to $176,490 from $210,346 for the three months ended September 30, 1997,
resulting primarily from decreased advertising expenses during the 1998 period.
The Company's operating income for the three months ended September 30,
1998 was $248,474 compared to operating income of $113,065 for the three months
ended September 30, 1997, an increase of $135,409, or 120%.
The increased operating income resulted primarily from
increased gross profit which was offset to some extent by increased operating
expenses as discussed above.
Royalty income totaled $78,691 for the three months ended September 30,
1998, compared to $84,420 for the same three months in 1997. The decrease of
$5,729, or 7%, was primarily due to a decrease in product sales by the Company's
licensees.
Interest expense was $135,056 for the three months ended September 30,
1998, compared to $74,843 for the three months ended September 30, 1997. The
increase of $60,213, or 80%, was primarily due to the higher level of debt
outstanding during the 1998 period.
The net income was $164,742 for the three months ended September 30, 1998,
compared to net income of $138,566 for the same period in 1997. The basic and
diluted net income per share for the current three month period was $.05
compared $.05 per share for the three months ended September 30, 1997.
11
<PAGE>
Nine months ended September 30, 1998 compared to the nine months ended
September 30, 1997
For the nine months ended September 30, 1998, the Company had total revenue
of $10,552,785 compared to total revenue of $9,082,397 for the nine months ended
September 30, 1997, an increase of $1,470,388, or 16%. Total product sales were
$9,076,218 for the nine months ended September 30, 1998, compared to $7,685,982
for the same period in 1997, an increase of $1,390,236, or 18%. The increase
resulted primarily from increased Slenderwall(TM), barrier and miscellaneous
architectural product sales during the 1998 period. Shipping and installation
revenue was $1,476,567 for the nine months ended September 30, 1998 and
$1,396,415 for the same period in 1997, an increase of $80,152, or 6%. The
increase is attributable to higher shipping activity and increased installation
revenue in the 1998 period, as compared to the 1997 period.
Total cost of goods sold for the nine months ended September 30, 1998 was
$7,928,331, an increase of $1,131,623, or 17%, from $6,796,708 for the nine
months ended September 30, 1997. The increase was primarily the result of
increased revenue and the related cost of production. Total cost of goods sold,
as a percentage of total revenue, increased modestly to 75.1% for the nine
months ended September 30, 1998, from 74.8% for the nine months ended September
30, 1997 primarily due to normal variations in the Company's operations and
product mix.
For the nine months ended September 30, 1998, the Company's general and
administrative expenses increased $83,331, or 5%, to $1,631,230, from $1,547,899
during the same period in 1997. The increase was attributed to increased use
tax, provisions for doubtful accounts and personnel recruitment expense, offset
somewhat by decreased professional fees.
Selling expenses for the nine months ended September 30, 1998 decreased
$4,444, or less than 1%, to $497,774 from $502,218 for the nine months ended
September 30, 1997. The decrease was due to decreased advertising expense which
was partially offset by increased bidding expenses during the 1998 period as
compared to the 1997 period.
The Company's operating income for the nine months ended September 30, 1998
was $495,450, compared to operating income of $235,572 for the nine months ended
September 30, 1997, an increase of $259,878, or 110%. The improved operating
income resulted primarily from increased gross profit offset, in part, by an
increase in operating expenses as discussed above.
Royalty income totaled $141,136 for the nine months ended September 30,
1998, compared to $164,584 for the same nine months in 1997. The decrease of
$23,448, or 14%, was largely due to a credit given for a reduction in the scope
of a licensing contract and the resulting reversal of previously recognized
royalty income of approximately $15,500.
Interest expense was $429,420 for the nine months ended September 30,
1998, compared to $272,076 for the nine months ended September 30, 1997. The
increase of $157,344, or 58%, was primarily due to interest, lease buyout
amounts and miscellaneous fees associated with the early retirement of
approximately 27 notes and capital leases as part of the Company's debt
restructuring in September 1998 (see "Liquidity and Capital Resources").
12
<PAGE>
Net income was $210,728 for the nine months ended September 30, 1998,
compared to net income of $181,601 for the same period in 1997. Net income per
share for the current nine month period was $.07 compared to net income per
share of $.06 for the nine months ended September 30, 1997.
Liquidity and Capital Resources
The Company has financed its capital expenditures, operating requirements
and growth to date primarily with proceeds from operations, its initial public
offering and bank and other borrowings. The Company had $4,670,375 of
indebtedness at September 30, 1998, of which approximately $102,000 was
scheduled to mature within twelve months.
In June 1998 the Company successfully restructured substantially all of its
then outstanding debt into one $4,000,000 note with The First National Bank of
New England ("FNB"), headquartered in Hartford, Connecticut. The Company closed
on this loan on June 25, 1998. The Company obtained a twenty three year term on
this note at 1.5% above prime, secured by equipment and real estate. The term of
the note dramatically improved the Company's current debt ratio and debt
service. Current debt decreased from $2,199,228 at December 31, 1997 to $102,004
at September 30, 1998. In addition to paying off existing debt of approximately
$2.9 million, the Company received approximately $832,000 in restricted funds,
to be used only for plant expansion and new equipment. The loan is guaranteed in
part by the U.S. Department of Agriculture Rural Business-Cooperative Service's
loan guarantee. Under the terms of the note, the Company's unfinanced fixed
asset expenditures are limited to $300,000 per year for a five year period. In
addition FNB will permit chattel mortgages on purchased equipment not to exceed
$200,000 on an annual basis. The Company was also granted a $500,000 operating
line of credit by FNB. This commercial revolving promissory note terminates on
May 1, 1999 and carries a variable rate of 1% above prime. This line is used to
meet day to day operating needs.
Other Comments
The Company has not completed its assessment of the effect of the year 2000
on the Company's data processing systems and operations, but the Company expects
that the costs incurred in the preparation for the year 2000 will not have a
significant impact on the Company's cash flow or results of operations. The
Company is currently planning to send questionnaires to its suppliers and
customers to ensure that they are taking steps to be year 2000 compliant.
However, if the Company and third parties upon which it relies, are unable to
address this issue in a timely manner, it could result in a material financial
risk to the Company. In order to assure this does not occur, the Company plans
to devote all resources required to resolve any significant year 2000 issues in
a timely manner.
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. However, The
Company is in the process of building an additional manufacturing facility at
its Midland, Virginia location which will bring these operations indoors and
13
<PAGE>
significantly increase annual manufacturing capacity. Completion of this
facility is anticipated for early 1999, although there can be no assurance of
such timing. 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 construction season. However, as of the date of
this filing, the Company's backlog is approximately $5.3 million, of
approximately which $2.2 million represents firm contracts for Slenderwall(TM)
and architectural pre-cast concrete products.
Management believes that the Company's operations have not been materially
affected by inflation.
14
<PAGE>
PART II - Other Information
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities and Use of Proceeds. 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 Exhibit is filed herewith:
Exhibit No. Title
----------- -----
27 Financial Data Schedule
B. Report on Form 8-K. None.
15
<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 19, 1998 By: /s/ Rodney I. Smith
----------------------------------
Rodney I. Smith
Chairman of the Board,
Chief Executive Officer and President
(principal executive officer)
Date: November 19, 1998 By: /s/ Theodore D. Pennington
----------------------------------
Theodore D. Pennington
Vice President, Finance and
Chief Financial Officer
(principal financial officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 288,218
<SECURITIES> 0
<RECEIVABLES> 3,877,810
<ALLOWANCES> 266,577
<INVENTORY> 1,633,001
<CURRENT-ASSETS> 5,910,748
<PP&E> 1,998,747
<DEPRECIATION> 239,471
<TOTAL-ASSETS> 9,400,205
<CURRENT-LIABILITIES> 2,568,440
<BONDS> 0
0
0
<COMMON> 30,857
<OTHER-SE> 2,232,537
<TOTAL-LIABILITY-AND-EQUITY> 9,400,205
<SALES> 10,552,785
<TOTAL-REVENUES> 10,697,483
<CGS> 7,928,331
<TOTAL-COSTS> 10,057,335
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 429,420
<INCOME-PRETAX> 210,728
<INCOME-TAX> 0
<INCOME-CONTINUING> 210,728
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 210,728
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>