U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended March 31, 1998
OR
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the transition period from _______ to _______
Commission File Number 1-14556; 0-21857
POORE BROTHERS, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 86-0786101
-------- ----------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
3500 S. La Cometa Drive, Goodyear, Arizona 85338
------------------------------------------------
(Address of principal executive offices)
(602) 932-6200
--------------
(Issuer's telephone number)
Check whether the Registrant: (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 March 31, 1998, the number of issued and outstanding shares of common
stock of the Registrant was 7,126,657.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C> <C>
Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997................. 3
Consolidated Statements of Operations for the three months ended
March 31, 1998 and 1997............................................................ 4
Consolidated Statements of Cash Flows for the three months ended March 31, 1998
and 1997............................................................................... 5
Notes to Financial Statements.......................................................... 6
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.................................................................... 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings...................................................................... 10
Item 2. Changes in Securities and Use of Proceeds.............................................. 10
Item 3. Defaults Upon Senior Securities........................................................ 10
Item 4. Submission of Matters to a Vote of Security Holders.................................... 10
Item 5. Other Information...................................................................... 10
Item 6. Exhibits and Reports on Form 8-K....................................................... 11
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POORE BROTHERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................................... $ 1,133,795 $ 1,622,751
Accounts receivable, net of allowance of $188,000 in 1998
and $174,000 in 1997......................................................... 1,635,332 1,528,318
Note receivable................................................................. 78,414 78,414
Inventories..................................................................... 434,829 473,025
Other current assets............................................................ 158,811 175,274
Total current assets.......................................................... 3,441,181 3,877,782
Property and equipment, net........................................................ 6,491,525 6,602,435
Intangible assets, net............................................................. 2,250,377 2,294,324
Other assets....................................................................... 86,629 100,673
------------- -------------
Total assets.................................................................. $ 12,269,712 $ 12,875,214
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................... $ 612,023 $ 824,129
Accrued liabilities............................................................. 478,473 502,793
Current portion of long-term debt............................................... 1,036,020 1,127,217
------------- --------------
Total current liabilities................................................ 2,126,517 2,454,139
Long-term debt, less current portion............................................... 4,894,291 5,017,724
------------- --------------
Total liabilities............................................................. 7,020,807 7,471,863
------------- --------------
Shareholders' equity:
Preferred stock, $100 par value; 50,000 shares authorized;
None issued and outstanding in 1998 and 1997........................... - -
Common stock, $.01 par value; 15,000,000 shares authorized;
7,126,657 and 7,051,657 shares issued and outstanding in 1998
and 1997, respectively................................................. 71,267 70,516
Additional paid-in capital...................................................... 10,875,134 10,794,768
Accumulated deficit............................................................. (5,697,495) (5,461,933)
------------- ------------------
Total shareholders' equity.................................................... 5,248,904 5,403,351
------------- ------------------
Total liabilities and shareholders' equity.....................................$ 12,269,712 $12,875,214
============= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
POORE BROTHERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31,
---------------------------
1998 1997
(unaudited) (unaudited)
Net sales $ 3,196,764 $ 4,945,733
Cost of sales 2,372,885 4,261,900
----------- -----------
Gross profit 823,879 683,833
Selling, general and administrative expenses 935,844 1,124,216
----------- -----------
Operating loss (111,965) (440,383)
----------- -----------
Interest income 13,495 42,776
Interest expense (137,092) (80,813)
----------- -----------
(123,597) (38,037)
----------- -----------
Net loss $ (235,562) $ (478,420)
=========== ===========
Net loss per common share:
Basic $ (0.03) $ (0.07)
=========== ===========
Diluted $ (0.03) $ (0.07)
=========== ===========
Weighted average number of common shares:
Basic 7,058,946 6,960,362
=========== ===========
Diluted 7,058,946 6,960,362
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
POORE BROTHERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss ................................................................. $ (235,562) $ (478,420)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation ........................................................... 142,052 58,136
Amortization ........................................................... 57,991 43,947
Bad debt expense ....................................................... 50,000 9,000
Change in operating assets and liabilities:
Accounts receivable .................................................... (157,014) 46,776
Inventories ............................................................ 38,196 26,720
Other assets and liabilities ........................................... 16,463 196,997
Accounts payable and accrued liabilities ............................... (236,426) (438,526)
----------- -----------
Net cash used in operating activities .................... (324,300) (535,370)
----------- -----------
Cash flows from investing activities:
Proceeds on disposal of property ........................................ -- 705,809
Purchase of short term investments ...................................... -- (980,420)
Purchase of property and equipment ...................................... (31,142) (857,986)
----------- -----------
Net cash used in investing activities .................... (31,142) (1,132,597)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock .................................. 81,116 1,181,250
Net decrease in restricted certificate of deposit ....................... -- 1,250,000
Stock issuance costs .................................................... -- (162,574)
Payments made on long-term debt ......................................... (232,585) (1,956,117)
Net increase (decrease) in working capital line of credit ............... 17,955 (102,933)
----------- -----------
Net cash (used in) provided by financing activities ...... (133,514) 209,626
----------- -----------
Net (decrease) in cash and cash equivalents ................................. (488,956) (1,458,341)
Cash and cash equivalents at beginning of period ............................ 1,622,751 3,603,850
----------- -----------
Cash and cash equivalents at end of period .................................. $ 1,133,795 $ 2,145,509
=========== ===========
Supplemental disclosures of cash flow information:
Summary of non cash investing and financing activities:
Construction loan for new facility ................................... $ -- $ 860,838
Capital lease obligation incurred - equipment acquisition ............ -- 5,462
Cash paid during the three months for interest, net of amounts
capitalized .......................................................... 133,710 110,213
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
POORE BROTHERS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies:
General
Poore Brothers, Inc. (the "Company"), a Delaware corporation, was
organized in February 1995 as a holding company and on May 31, 1995
acquired substantially all of the equity of Poore Brothers Southeast, Inc.
("PB Southeast") in an exchange transaction pursuant to which 1,560,000
previously unissued shares of the Company's common stock, par value $.01
per share (the "Common Stock"), were exchanged for 150,366 issued and
outstanding shares of PB Southeast's common stock. The exchange transaction
with PB Southeast has been accounted for similar to a pooling-of interest
since both entities had common ownership and control immediately prior to
the transaction. In December 1996, the Company completed an initial public
offering of its common stock. During 1997, the Company disposed of its
Houston, Texas distribution business and closed its Tennessee manufacturing
operation.
The Company manufactures and distributes potato chips under the Poore
Brothers(TM) brand name, as well as private label potato chips, and also
distributes a variety of other independently manufactured snack food items.
Basis of Presentation
The consolidated financial statements include the accounts of Poore
Brothers, Inc. and all of its controlled subsidiaries. In all situations,
the Company owns from 99% to 100% of the voting interests of the controlled
subsidiaries. All significant intercompany amounts and transactions have
been eliminated. The financial statements have been prepared in accordance
with the instructions for Form 10-QSB and, therefore, do not include all
the information and footnotes required by generally accepted accounting
principles. In the opinion of management, the consolidated financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary in order to make the consolidated financial
statements not misleading. A description of the Company's accounting
policies and other financial information is included in the audited
financial statements filed with the Form 10-KSB for the fiscal year ended
December 31, 1997. The results of operations for the three months ended
March 31, 1998 are not necessarily indicative of the results expected for
the full year.
Certain expenses relating to manufacturing costs and promotional
expenses have been reclassified for the previously reported periods shown
as part of this current filing in order to conform to the current financial
statement classifications and to those that are preferred in the industry.
The current and previously reported amounts are shown in the table below.
Three months ended March 31, 1997
---------------------------------
Previously Current
reported filing
------------- -------------
Revenues....................... $ 4,733,686 $ 4,945,733
Cost of sales.................. 3,769,038 4,261,900
Gross profit................... 964,648 683,833
Operating expenses............. 1,405,031 1,124,216
Operating (loss)............... (440,383) (440,383)
6
<PAGE>
Loss Per Share
During 1997, the Company adopted SFAS 128, "Earnings Per Share".
Pursuant to SFAS 128, basic earnings per common share is computed by
dividing net income (loss) by the weighted average number of shares of
common stock outstanding during the period. Exercises of outstanding stock
options and conversion of convertible debentures were not assumed to be
exercised for purposes of calculating diluted earning per share for the
quarters ended March 31, 1998 and 1997, as their effect was anti-dilutive.
Quarter Ended
March 31,
--------------------------
1998 1997
----------- -----------
Basic loss per share:
Loss available to common shareholders $ (235,562) $ (478,420)
Weighted average common shares 7,058,946 6,960,362
----------- -----------
Loss per share-basic $ (0.03) $ (0.07)
=========== ===========
Diluted loss per share:
Loss available to common shareholders $ (235,562) $ (478,470)
Weighted average common shares 7,058,946 6,960,362
Common stock equivalents -- --
----------- -----------
Loss per share-diluted $ (0.03) $ (0.07)
=========== ===========
2. Long-Term Debt
The Company's $1.0 million working capital line of credit was renewed
as of November 30, 1997 for a six-month period. At March 31, 1998, the
Company had over $1.0 million of eligible receivables. The balance
outstanding was $604,052 and $586,097 at March 31, 1998 and December 31,
1997, respectively.
At March 31, 1998, the Company had outstanding 9% Convertible
Debentures due July 1, 2002 (the "9% Convertible Debentures") in the
principal amount of $2,299,591. The Company was not in compliance with a
required interest coverage ratio of 2:1 (actual of -3.1:1). However, the
holders of the 9% Convertible Debentures have granted the Company a waiver
effective through June 30, 1999. After that time, the Company will be
required to be in compliance with the following financial ratios, so long
as the 9% Convertible Debentures remain outstanding: working capital of at
least $1,000,000; minimum shareholders' equity (net worth) that will be
calculated based upon the earnings of the Company and the consideration
received by the Company from issuances of securities by the Company; an
interest coverage ratio of at least 2:1; and a current ratio at the end of
any fiscal quarter of at least 1.1:1. Interest on the 9% Convertible
Debentures is paid by the Company on a monthly basis. Monthly principal
payments of approximately $20,000 are required to be made by the Company
beginning in July 1998 through July 2002. Management believes that the
fulfillment of the Company's plans and objectives will enable the Company
to attain a sufficient level of profitability to be in compliance with the
financial ratios or alternatively, that the Company will be able to obtain
an extension or renewal of the waivers; however, there can be no assurance
that the Company will attain any such profitability, be in compliance with
the financial ratios upon the expiration of the waivers or be able to
obtain an extension or renewal of the waivers. Any acceleration under the
9% Convertible Debentures prior to their maturity on July 1, 2002 could
have a material adverse effect upon the Company.
3. Litigation
In February 1998, the Court reversed its prior grant of summary
judgment on one of the seven counts in the Gossett litigation and
reinstated Mr. Gossett's claim that the defendants breached fiduciary
duties to him. The Court also set the matter for trial beginning October 5,
1998. The Court's recent ruling merely preserves Mr. Gossett's claim for
trial and does not adjudicate the merits of the claim. The Company believes
that the claim is without merit and will continue to vigorously defend the
lawsuit.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Quarter ended March 31, 1998 compared to the quarter ended March 31,
1997
Net sales for the three months ended March 31, 1998 were $3,197,000,
down $1,749,000 or 35%, from $4,946,000 for the three months ended March
31, 1997. The disposition of the PB Texas distribution operation in June
1997 contributed approximately $945,000 to the sales decline, consisting of
$784,000 in sales of products manufactured by others and $161,000 in Poore
Brothers manufactured products. An additional $575,000 decrease occurred in
sales of products manufactured by others due to the elimination of several
unprofitable product lines during the second quarter of 1997. Poore
Brothers kettle chip sales for the first quarter of 1998 were $2,153,000,
down $612,000, or 22%, from $2,765,000 for the first quarter of 1997. This
decrease was driven principally by lower volume as a result of the
Company's discontinuance of unprofitable promotion programs with certain
customers and the shutdown of the Tennessee manufacturing facility in the
third quarter of 1997.
Gross profit for the three months ended March 31, 1998, was $824,000,
or 26% of net sales, as compared to $684,000, or 14% of net sales, for the
three months ended March 31, 1997. The increase in gross profit, despite
35% lower sales, resulted from the restructuring actions implemented in
1997, benefits from negotiated raw material cost savings phased in during
the first quarter of 1998 and a continuing improvement in manufacturing and
operating efficiencies from the new Goodyear, Arizona facility.
Selling, general and administrative expenses decreased to $936,000 for
the three months ended March 31, 1998 from $1,124,000 for the same period
in 1997. This represented a $188,000 decrease, or 17%, compared to the
first quarter of 1997. The decrease in selling, general and administrative
expenses was primarily the result of expenses related to severance,
relocation and equipment write-downs incurred in the first quarter of 1997.
Decreases in other selling, general and administrative expenses were offset
by a 26% increase in marketing spending.
Net interest expense increased to $124,000 for the quarter ended March
31, 1998 from $37,000 for the quarter ended March 31, 1997. This increase
was due primarily to interest expense related to the permanent financing on
the new manufacturing facility and production equipment, and a decrease in
interest income generated from investment of the remaining proceeds of the
initial public offering.
The Company's net losses for the quarters ended March 31, 1998 and
March 31, 1997 were $236,000 and $478,000, respectively. The reduction in
net loss was attributable primarily to the increased gross profit and lower
selling, general and administrative expenses, offset by higher net interest
expense.
Liquidity and Capital Resources
Net working capital was $1,315,000 at March 31, 1998, with a current
ratio of 1.6:1. At December 31, 1997, net working capital was $1,424,000
with a current ratio of 1.6:1. The $109,000 decrease in working capital was
primarily attributable to the Company's use of cash for operating
activities.
At March 31, 1998, the Company had outstanding 9% Convertible
Debentures due July 1, 2002 (the "9% Convertible Debentures") in the
principal amount of $2,299,591. The Company was not in compliance with a
required interest coverage ratio of 2:1 (actual of -3.1:1). However, the
holders of the 9% Convertible Debentures have granted the Company a waiver
effective through June 30, 1999. After that time, the Company will be
required to be in compliance with the following financial ratios, so long
as the 9% Convertible Debentures remain outstanding: working capital of at
least $1,000,000; minimum shareholders' equity (net worth) that will
8
<PAGE>
be calculated based upon the earnings of the Company and the consideration
received by the Company from issuances of securities by the Company; an
interest coverage ratio of at least 2:1; and a current ratio at the end of
any fiscal quarter of at least 1.1:1. Interest on the 9% Convertible
Debentures is paid by the Company on a monthly basis. Monthly principal
payments of approximately $20,000 are required to be made by the Company
beginning in July 1998 through July 2002. Management believes that the
fulfillment of the Company's plans and objectives will enable the Company
to attain a sufficient level of profitability to be in compliance with the
financial ratios or alternatively, that the Company will be able to obtain
an extension or renewal of the waivers; however, there can be no assurance
that the Company will attain any such profitability, be in compliance with
the financial ratios upon the expiration of the waivers or be able to
obtain an extension or renewal of the waivers. Any acceleration under the
9% Convertible Debentures prior to their maturity on July 1, 2002 could
have a material adverse effect upon the Company.
As a result of the expansion of the Company's operations, the Company
may incur additional operating losses in the future. Expenditures relating
to marketing, territory expansion and new product development may adversely
affect selling, general and administrative expenses and consequently may
adversely affect operating and net income. These types of expenditures are
expensed for accounting purposes as incurred, while sales generated from
the result of such expansion may benefit future periods.
Management believes that the 1997 restructuring actions taken by the
Company, including the sale of the Texas distribution business,
consolidation of manufacturing in the new Arizona facility and the closure
of the Tennessee manufacturing operation, should result in improved
manufacturing efficiencies and lower selling, general and administrative
costs in the future. Accordingly, management believes that current working
capital, together with available line of credit borrowings, and anticipated
cash flows from operations, will be sufficient to finance the operations of
the Company for at least the next twelve months. This belief is also based
on current operating plans and certain assumptions, including those
relating to the Company's future sales levels and expenditures, industry
and general economic conditions and other conditions. If any of these
plans, assumptions or factors change, the Company may require future debt
or equity financing to meet its business requirements. There can be no
assurance that such financing will be available or, if available, on terms
attractive to the Company.
FORWARD LOOKING STATEMENTS
WHEN USED IN THIS FORM 10-QSB AND IN FUTURE FILINGS BY THE COMPANY WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), THE WORDS OR PHRASES
"WILL LIKELY RESULT," "THE COMPANY EXPECTS," "WILL CONTINUE," "IS ANTICIPATED,"
"ESTIMATED," "PROJECT," OR "OUTLOOK," OR SIMILAR WORDS OR EXPRESSIONS, ARE
INTENDED TO IDENTIFY "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. THE COMPANY WISHES TO CAUTION READERS NOT TO
PLACE UNDUE RELIANCE ON ANY SUCH FORWARD-LOOKING STATEMENTS, EACH OF WHICH SPEAK
ONLY AS OF THE DATE MADE. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
HISTORICAL EARNINGS AND THOSE PRESENTLY ANTICIPATED OR PROJECTED. IN LIGHT OF
SUCH RISKS AND UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT FORWARD-LOOKING
INFORMATION CONTAINED IN THIS FORM 10-QSB WILL, IN FACT, TRANSPIRE OR PROVE TO
BE ACCURATE. THE COMPANY HAS NO OBLIGATION TO PUBLICLY RELEASE THE RESULT OF ANY
REVISIONS THAT MAY BE MADE TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT
ANTICIPATED OR UNANTICIPATED EVENTS OR CIRCUMSTANCES OCCURRING AFTER THE DATE OF
SUCH STATEMENTS.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In June 1996, a lawsuit was commenced in an Arizona state court against
two directors of the Company, Mark S. Howells and Jeffrey J. Puglisi, and
Poore Brothers Southeast, Inc. ("PB Southeast") which alleged, among other
things, that James Gossett had an oral agreement with Mr. Howells to
receive a 49% ownership interest in PB Southeast, that Messrs. Howells and
Puglisi breached fiduciary duties and other obligations to Mr. Gossett and
that he was entitled to exchange such alleged stock interest for shares in
the Company. Another plaintiff, PB Pacific Distributing, Inc., further
alleged that Messrs. Howells and Puglisi failed to honor the terms of an
alleged distribution agreement between it and PB Foods. In July 1997,
summary judgement was granted in favor of all defendants on all counts of
the lawsuit. In February 1998, the Court reversed its prior grant of
summary judgment on one of the seven counts and reinstated Mr. Gossett's
claim that Messrs. Howells and Puglisi breached fiduciary duties to him.
The Court also set the matter for trial beginning October 5, 1998. The
Court's recent ruling merely preserves Mr. Gossett's claim for trial and
does not adjudicate the merits of the claim. The Company believes that the
claim is without merit and will continue to vigorously defend the lawsuit.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
At March 31, 1998, the Company had outstanding 9% Convertible
Debentures due July 1, 2002 (the "9% Convertible Debentures") in the
principal amount of $2,299,591. The Company was not in compliance with a
required interest coverage ratio of 2:1 (actual of -3.1:1). However, the
holders of the 9% Convertible Debentures have granted the Company a waiver
effective through June 30, 1999. After that time, the Company will be
required to be in compliance with the following financial ratios, so long
as the 9% Convertible Debentures remain outstanding: working capital of at
least $1,000,000; minimum shareholders' equity (net worth) that will be
calculated based upon the earnings of the Company and the consideration
received by the Company from issuances of securities by the Company; an
interest coverage ratio of at least 2:1; and a current ratio at the end of
any fiscal quarter of at least 1.1:1. Interest on the 9% Convertible
Debentures is paid by the Company on a monthly basis. Monthly principal
payments of approximately $20,000 are required to be made by the Company
beginning in July 1998 through July 2002. Management believes that the
fulfillment of the Company's plans and objectives will enable the Company
to attain a sufficient level of profitability to be in compliance with the
financial ratios or alternatively, that the Company will be able to obtain
an extension or renewal of the waivers; however, there can be no assurance
that the Company will attain any such profitability, be in compliance with
the financial ratios upon the expiration of the waivers or be able to
obtain an extension or renewal of the waivers. Any acceleration under the
9% Convertible Debentures prior to their maturity on July 1, 2002 could
have a material adverse effect upon the Company.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
10
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Description
27.1 Financial Data Schedule. *
* Filed herewith.
(b) Current Reports on Form 8-K:
(1) Current Report on Form 8-K, reporting the change in the
Company's independent auditors (filed with the Commission on
January 7, 1998).
(2) Amendment No. 1 to the Current Report on Form 8-K filed with
the Commission on January 7, 1998, filing a required exhibit
(filed with the Commission on January 14,1998).
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
POORE BROTHERS, INC.
By /s/ Eric J. Kufel
Dated: May 14, 1998 ------------------------------------------
Eric J. Kufel
President and Chief Executive Officer
(principal executive officer)
By: /s/ Thomas W. Freeze
Dated: May 14, 1998 ------------------------------------------
Thomas W. Freeze
Vice President, Chief Financial Officer,
Treasurer and Secretary
(principal financial and accounting officer)
11
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
27.1 Financial Data Schedule.
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 1998, INCLUDED WITH FORM 10-QSB, AND IS
QUALIFIED IN ITS ENTIRETY BY REFRERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,133,795
<SECURITIES> 0
<RECEIVABLES> 1,635,332
<ALLOWANCES> 188,000
<INVENTORY> 434,829
<CURRENT-ASSETS> 3,441,181
<PP&E> 7,266,844
<DEPRECIATION> 775,319
<TOTAL-ASSETS> 12,269,712
<CURRENT-LIABILITIES> 2,126,517
<BONDS> 4,894,291
0
0
<COMMON> 71,267
<OTHER-SE> 5,177,637
<TOTAL-LIABILITY-AND-EQUITY> 12,269,712
<SALES> 3,196,764
<TOTAL-REVENUES> 3,196,764
<CGS> 2,372,885
<TOTAL-COSTS> 2,372,885
<OTHER-EXPENSES> 935,844
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 137,092
<INCOME-PRETAX> (235,562)
<INCOME-TAX> 0
<INCOME-CONTINUING> (235,562)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (235,562)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>