U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 1996.
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT.
For the transition period from to
Commission file number 0-27610
LCA-Vision Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 11-2882328
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7840 Montgomery Rd., Cincinnati, OH 45236
(Address of principal executive offices)
(513) 792-9292
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed
since last report.)
Check whether the issuer (1) filed all reports required to be filed
by Section 3 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 ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports
required to be filed by sections 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a
court.
Yes___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date:
19,617,875 at October 31, 1996.
Transitional Small Business Disclosure Format (check one):
Yes ___ No X
LCA-VISION INC.
INDEX
Page No.
Facing Sheet 1
Index 2
Part I. Financial Information
Item 1. Financial Statements.
Unaudited Condensed Consolidated Balance
Sheet September 30, 1996 3
Unaudited Condensed Consolidated Statements of
Operations for the Three and Nine Months ended
September 30, 1996 and 1995 4
Unaudited Condensed Consolidated Statements of
Cash Flows for the Nine Months ended September
30, 1996 and 1995 5
Notes to Unaudited Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information 12
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures 14
<PAGE>
LCA-VISION INC
Condensed Consolidated Balance Sheet
September 30, 1996
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 802,847
Accounts receivable, net of allowance for
doubtful accounts of $206,975 2,283,440
Supplies inventory, prepaid expenses and other 1,103,902
----------
Total current assets 4,190,189
Property and equipment, net 8,644,793
Investment in unconsolidated affiliates 364,760
Other assets 783,344
----------
Total assets $13,983,086
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 546,411
Bank line of credit 1,940,000
Accrued liabilities 1,084,879
Current portion of long-term debt 636,757
Deferred revenue 623,245
----------
Total current liabilities 4,831,292
Long-term debt, net of current portion 5,056,870
Notes payable to shareholders 4,021,672
----------
Total liabilities 13,909,834
Shareholders' Equity
Preferred stock - authorized 10,000,000 shares,
$.001 par value 6,751 shares issued and
outstanding 7
Common stock - authorized 110,000,000 shares,
$.001 par value 19,617,875 shares issued and
outstanding 78,471
Paid-in capital 3,077,642
Retained (deficit) (3,103,147)
Translation adjustment 20,279
-----------
Total shareholders' equity 73,252
Total liabilities and shareholders' equity $13,983,086
===========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part
of this statement.<PAGE>
<TABLE>
LCA-VISION INC.
Condensed Consolidated Statements of Operations
Three and Nine months ended September 30, 1996 and 1995
(unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net revenue $ 3,243,075 $3,625,792 $10,454,551 $10,164,162
Direct operating expenses 1,641,601 1,375,830 4,994,386 4,378,993
Selling, general & administrative 1,931,506 1,888,294 6,132,880 4,501,413
Pre-opening expenses 0 0 87,444 0
Depreciation and amortization 386,926 232,686 1,169,336 728,947
--------- --------- ---------- ----------
Operating profit (loss) (716,958) 128,982 (1,929,495) 554,809
Equity in income (loss) of
unconsolidated affiliates (230,024) 80,462 (734,366) 80,462
Interest expense (198,701) (63,564) (541,187) (145,201)
Interest income 17,079 48,260 65,116 116,295
Other income (expense) 3,025 (10,650) 69,370 (10,745)
Gain on sale of investment
in unconsolidated affiliate 0 0 545,903 0
--------- --------- --------- ----------
Income (loss) before income taxes (1,125,579) 183,490 (2,524,659) 595,620
Income taxes (benefit) (34,413) (154,500) 43,180 (154,500)
--------- --------- --------- ----------
Net income (loss) $(1,091,166) $ 337,990 $(2,567,839) $ 750,120
=========== ========= ========== ==========
Net income (loss) per share $ (0.06) $ (0.13)
=========== ==========
If the Company had been subject
to income taxes,
net income would be:
Historical net income $ 337,990 $ 750,120
provision for income taxes 224,227 380,836
---------- ----------
Net income $ 113,763 $ 369,284
========== ==========
Pro forma net income per share $ 0.09 $ 0.35
========= ==========
Average shares outstanding 19,617,821 1,066,837 19,617,821 1,066,837
</TABLE>
The Notes to Consolidated Financial Statements are an integral part
of this statement.
LCA-VISION INC.
Condensed Consolidated Statement of Cash Flows
Nine Months Ended September 30, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows provided by operating activities:
Net income (loss) $(2,567,839) $ 750,120
Adjustments to reconcile net income(loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 1,171,224 728,947
Deferred income tax benefit (154,500)
Equity in earnings of affiliates 734,367
Gain on sale of investment in
unconsolidated affiliate (545,903)
Write down of intangible assets 106,772
Gain on property disposal (21,242) (104,240)
Other (72,561) 139,330
Changes in operating assets and liabilities
(Increase) Decrease in:
Accounts receivable (398,624) 13,489
Other current assets 152,413 343,482
Increase (Decrease) in:
Accounts payable (187,854) 259,205
Accrued liabilities 309,477 536,832
Deferred revenue 116,500 185,421
--------- ---------
Net cash provided (used) by operating activities (1,203,270) 2,698,086
Cash flows from investing activities:
Purchase of property and equipment (3,304,122) (1,305,653)
Proceeds from sale of investment in affiliate 1,000,000
Proceeds from sales of equipment 34,015 288,561
Acquisition of intangibles (4,883) (60,997)
Cash paid for acquisition (140,819)
Investment in unconsolidated affiliates (1,079,636)
---------- ----------
Net cash used in investing activities (3,354,626) (1,218,908)
Cash flows from financing activities:
Repayment of long-term debt and
capital lease obligations (278,862) (1,927,452)
Repayment of notes payable shareholders (354,097)
Proceeds from issuance of common stock 2,314,366
Borrowings under long-term debt
and capital leases 1,457,550 2,963,448
Borrowings from bank line of credit 1,940,000
Distribution to shareholders (4,065,398)
Other 9,000 266
--------- ----------
Net cash from financing activities 2,773,591 (714,770)
--------- ----------
Increase (decrease) in cash (1,784,305) 764,408
Cash and cash equivalents, beginning of period 2,587,152 2,068,988
Cash and cash equivalents, end of period $ 802,847 $ 2,833,396
</TABLE>
The Notes to Consolidated Financial Statements are an integral part
of this statement.
<PAGE>
LCA-VISION INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended September 30, 1996 and 1995
(unaudited)
1. Description of Business and Basis of Presentation
LCA-Vision Inc. ("LCA-Vision" or the "Company") owns and manages
free-standing surgery centers that provide excimer laser refractive
surgery procedures photorefractive keratectomy ("PRK") to correct
myopia ("nearsightedness") in individuals. At September 30, 1996,
the Company has eleven (11) laser eye surgery centers in operation:
nine in the United States, five of which are wholly-owned; one in
Canada; and one in Finland.
The Company also establishes and provides ongoing management of
laser and other minimally invasive surgery programs for healthcare
systems and medical centers. At September 30, 1996, the Company
provides these services to twenty-six hospitals and medical centers
throughout the United States.
On September 29, 1995, LCA-Vision merged with Laser Centers of
America, Inc. ("LCA"). At the time of the merger, two shareholders
together owned 92% of the outstanding voting stock of LCA-Vision and
100% of LCA. At the time of its acquisition by the LCA shareholders
in July 1995, LCA-Vision was inactive and had no operations. These
financial statements reflect the historical financial position and
results of operation of LCA; except for shareholders' equity which
has been restated to reflect the capital structure of LCA-Vision at
the time of the merger.
Immediately prior to the merger of LCA and LCA-Vision, LCA
distributed $6,390,772 to its shareholders representing a portion of
the S Corporation earnings previously included in the taxable income
of the shareholders. The shareholders, utilizing the proceeds of
the distribution, immediately acquired $2,000,000 of common stock of
the Company for cash and lent a total of $4,390,772, receiving in
return two promissory notes with interest at 6.91% which become due
and payable in full on September 26, 2005. Any or all amounts due
under the promissory notes may be prepaid at any time, without
penalty. Principal and accrued interest owed to the shareholders
was $4,237,798 at September 30, 1996. Interest expense on the notes
payable shareholders was $71,018 and $216,126 for the three and nine
months ended September 30, 1996, respectively.
Pro Forma Data
Prior to the merger, the Company elected to be treated as an S
Corporation for income tax purposes. As a result, federal and
certain state income taxes were paid by the shareholders.
Pro forma income taxes and net income are presented as if the
Company has terminated its S Corporation election effective January
1, 1995. The pro forma income taxes are based on a 38% effective
rate. Pro forma net income per share reflects the recapitalization
for the merger.
2. Stock Split
On June 3, 1996, the shareholders approved a one-for-four reverse
stock split of the Company's Common Stock and Preferred Stock. All
references in the financial statements to share and per share data
have been restated to reflect the stock split.
3. Significant Accounting Policies
The September 30, 1996 and 1995 financial data are unaudited;
however, in the opinion of the Company, such data include all
adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the interim periods.
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary since its date of
acquisition, August 31, 1995. All significant intercompany
transactions are eliminated.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial
statements and accompanying notes. Actual results could differ from
these estimates.
Pre-opening costs
Costs associated with the opening of a new laser eye surgery center
are expensed during the first full month of the Center's operation.
Pre-opening costs recorded as other current assets were $145,828 at
September 30, 1996.
Earnings per share
Net income (loss) per share is based upon the weighted average
number of common shares outstanding during the periods presented.
Common stock equivalents (stock options and stock appreciation
rights) are anti-dilutive and are not included in the calculation.
4. Acquisition
On August 31, 1995, the Company acquired the minority interest (33%)
of Toronto Laservision Centre (1992), Inc. ("Centre") for
approximately $140,000. The Company previously owned 67% of the
Centre; however, it did not have control of the activities or the
business affairs of the Centre because of the terms of a
shareholders' agreement. During the period that the Company owned
less than 100% of the Centre, its investment was accounted for under
the equity method of accounting whereby the Company recorded its
proportionate share of the Centre's income and losses as equity in
income of unconsolidated affiliate. Commencing in September 1995,
when the remaining 33% of the Centre was acquired, the Company
consolidated the Centre's operations with those of its own
operations.
On October 28, 1996 the Company acquired the shares of 938051
Ontario, Inc., a Canadian corporation that owns a laser eye surgery
center in Ft. Erie, Ontario, Canada, for approximately $320,000 plus
the assumption of the lease for the laser. The sellers have placed
$64,000 of the purchase in escrow for certain legal matters. In
addition, the sellers can receive additional consideration up to
$280,000 depending on future case volumes.
5. Investments in Unconsolidated Affiliates
In September 1996 the Company bought a 43% interest in a new laser
eye surgery center in Helsinki, Finland. The Company also has
investments in three limited liability companies that own and
operate PRK surgery centers.
The Company accounts for its investment in these limited liability
companies, as well as its investment in the Helsinki facility,
using the equity method. The Company's share of losses incurred
by its unconsolidated affiliates was $230,024 and $734,366 for the
three and nine months ended September 30, 1996, respectively.
In 1996, the Company sold its investment in Continuum Biomedical,
Inc., which had been accounted for using the equity method, for
$1,000,000; resulting in a gain of $545,903. Proceeds from the
sale were received in April 1996.
6. Preferred Stock
At the Annual Meeting of Stockholders held on June 3, 1996, the
stockholders approved an Amendment to the Certificate of
Incorporation to decrease the number of authorized shares of Class
A Preferred Stock from 10,000,000 shares to 1,688 shares. The
stockholders also approved an amendment to the Certificate of
Incorporation which creates and authorizes the Company to issue
5,000,000 shares of an additional class of preferred stock ("Class
B Preferred Stock"). The Board of Directors has discretion to
determine the terms of the Class B Preferred Stock without further
stockholder approval; however, in no event will the holders of
Class B Preferred Stock be granted voting rights superior to the
voting rights of any other existing class of stock authorized for
issuance by the Company.
7. Related Party Transactions
LCA-Vision provides certain administrative services to two
ambulatory surgery centers, and leases the facility space for one,
that have as their majority owner the Company's principal
stockholder. For the three and nine months ended September 30,
1996, the Company recorded rent and service income of $0and
$324,968, respectively, and has an account receivable from the
surgery centers of $387,571 at September 30, 1996.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
In July 1995, the stockholders of Laser Centers of America, Inc.
("LCA") acquired control of an inactive corporation, Maxoil
Incorporated, which then changed its name to LCA-Vision Inc. ("LCA-
Vision" or the "Company"). LCA-Vision was inactive and non-
operational at the time of its acquisition by the LCA stockholders
in July 1995.
On August 31, 1995, the Company acquired the minority interest of
Toronto Laservision Centre (the "Centre"). LCA previously owned
67% of the Centre; however, it did not have control of the
activities or the business affairs of the Centre and, accordingly,
recorded its investment using the equity method until August 31,
1995. The operations of the Centre since August 31, 1995, are
included in the consolidated financial statements of the Company.
The Centre provides corrective eye surgery using laser technology.
On September 29, 1995, LCA merged with LCA-Vision. At the time of
the merger, two stockholders together owned 92% of the outstanding
voting stock of LCA-Vision and 100% of LCA.
Immediately prior to the merger of LCA and LCA-Vision, LCA issued
a dividend of $6.4 million to its stockholders representing a
portion of the S Corporation earnings previously included in the
taxable income of the stockholders. Prior to the merger, the LCA
stockholders, utilizing the proceeds of their dividends, purchased
$2 million worth of LCA-Vision Common Stock at $2.00 per share and
loaned approximately $4.4 million to LCA-Vision for which the
stockholders received long-term promissory notes for the principal
amount of the loan plus interest at 6.91%. The promissory notes
become due and payable on September 26, 2005, but any and all
amounts due under the promissory notes may be prepaid without
penalty at any time.
Liquidity and Capital Resources
LCA-Vision's principal capital requirements include working
capital for the financing of accounts receivable from its hospital
surgery management contracts, the continuing development of
marketing programs for its laser eye surgery centers, and the
equipping and furnishing new laser eye surgery centers. The
Company has historically financed its operations through bank
borrowings and internally-generated funds. At September 30, 1996,
the Company has $950,017 in cash and temporary investments which
it plans to use to maintain its existing business and for
expansion into the refractive eyecare center business. The
Company also has an $8 million bank line of credit for use in
meeting its working capital requirements. At September 30, 1996,
there were borrowings of $1,940,000 outstanding under this line of
credit; the assets of the Company serve as collateral for these
borrowings.
The Company expects the laser eye surgery centers to become its
primary business focus. Each center costs between $1 and $2
million to equip and furnish the actual cost varies depending on
the configuration of each center, costs incurred for leasehold
improvements, costs of furnishing, and equipment costs. The
Company has been able to finance the costs of the lasers through a
leasing company. The remaining costs have been funded through
working capital or by forming operating companies with another
investor(s)--principally hospitals and certain physicians.
At September 30, 1996, the Company had cash and cash equivalents
of $802,847. The Company had negative working capital of $641,103
at September 30, 1996. This is due primarily to the use of its
line of credit to fund the expansion of its laser eye surgery
business. Net cash used to purchase property and equipment and to
invest in unconsolidated affiliates was $3,354,626; of which
$1,940,000 was funded by borrowings under the line of credit.
Cash used by operating activities for the nine months ended
September 30, 1996 was $1,203,270. Cash used in operating
activities was principally the funding of the anticipated losses
from the expansion of the laser eye surgery business. At
September 30, 1996, the Company had cash and cash equivalents of
$802,847. Since December 1, 1995, the Company has opened nine (9)
laser eye surgery centers (two in December)--five wholly-owned and
four with investors. Five new wholly-owned centers -Columbus,
Ohio; Palo Alto, California; Clearwater, Florida; Buffalo, New
York; and Albany, New York--are slated to open by December 31,
1996. This will raise the total to nineteen (19) laser eye
surgery centers in operation at December 31, 1996. In
anticipation of this and future expansion, management is actively
exploring financing options including: expanded use of the line
of credit; public offering or private placement of equity or debt;
lease financing of capital equipment; or some combination of
these. To assist in evaluating the Company's options and in
raising the necessary capital, the Company has retained the
services of a large New York-based investment banking firm.
Results of Operations
Net revenue for the three months ended September 30, 1996 and
1995, were $3,243,075 and $3,625,792 , respectively. Net revenues
for the nine months ended September 30, 1996 and 1995, were
$10,454,551 and $10,164,162, respectively. Even though the number
of hospitals under management contract has declined since June 30,
1995, the decline in revenues from this source has been offset in
large part due primarily to the rollout of laser eye surgery
centers and the acquisition of the minority interest in the
Toronto center.
Management anticipates that the composition of future revenue will
change as more laser eye surgery centers are developed and as the
photorefractive keratectomy (PRK) procedure becomes more widely
known and accepted by ophthalmic physicians and their patients.
Revenues from hospital-based multi-specialty centers will be less
significant to the Company while revenues from laser eye surgery
centers are expected to increase. The extent and degree of the
shift in the Company's future revenues are subject to significant
uncertainty.
The Company's change in focus from a contract manager of laser and
minimally invasive surgery programs to an owner and operator of
laser eye surgery centers has resulted in increased direct
operating costs and selling and administrative expenses. The
primary increases are due to additional personnel needed for the
laser eye surgery centers and the marketing efforts required to
educate both consumers and the medical community about the PRK
procedure and its benefits. It is anticipated that interest and
sales should build as the public learns more about this procedure,
but this educational effort results in significant marketing
expenditures.
Depreciation and amortization totaled $386,926 and $1,171,224 for
the three and nine months ended September 30, 1996, respectively,
compared to $232,686 and $728,947 for the three and nine months
ended September 30, 1995, respectively. The increase in
depreciation is due to the significant capital expenditures
required to equip and furnish the laser eye surgery centers.
Interest expense for the three and nine months ended September 30,
1996, increased $135,137 and $395,986 compared to the same periods
ended September 30, 1995, as a result of the increased borrowings
related to the capitalized leases for the lasers, borrowings under
the line of credit, and the loans from the principal shareholders.
The $545,903 gain on the sale of investment in unconsolidated
affiliate is the difference between the net selling price and the
carrying value using the equity method of accounting for the
investment in Continuum Biomedical, Inc. This investment was sold
in the first quarter 1996 and the Company received proceeds of
$1,000,000 from the sale.
Income taxes for the nine months ended September 30, 1996, are the
Canadian income taxes due on the profits of the Toronto laser eye
surgery center. The Company is unable to utilize its operating
losses against prior years' income because, prior to the merger
discussed above, it was taxed as a S Corporation. As a result,
federal and certain state income taxes were paid by the
shareholders rather than by the Company. The pro forma provision
for income taxes and pro forma net income for the three and nine
month periods ended September 30, 1995, reflect the Company's
results of operations for such periods as if it had not elected to
be taxed as a S Corporation.
The Company had a net loss of $1,091,166 for the three months
ended September 30, 1996, compared to net income of $337,990 for
the three months ended September 30, 1995. The Company had a net
loss of $2,567,839 for the nine months ended September 30, 1996,
compared to net income of $750,120 for the nine months ended
September 30, 1995. The losses are due primarily to the
increased costs associated with the expansion of the laser eye
surgery business and the reduced number of hospital-based surgery
programs the Company manages.
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) Exhibits.
Exhibit 11 Computation of Per Share Earnings (Loss)
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K.
None
Signatures
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
LCA-VISION INC.
Date November 13, 1996 /S/ Stephen N. Joffe
Stephen N. Joffe
President and Chief Executive Officer
Date November 13, 1996 /s/ Larry P. Rapp
Larry P. Rapp
Chief Financial Officer
Exhibit 11
LCA-VISION INC.
Computation of Per Share Earnings (Loss)
For the Three and Nine Months Ended
September 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
For the Three Months Ended September 30,
Primary Earnings:
Net income (loss) $(1,091,166) $ 337,990
Pro forma income tax expense $ 224,227
Pro forma net income (loss) $(1,091,166) $ 113,763
Shares:
Weighted average number of common
shares outstanding 19,617,821 1,066,837
Additional shares assuming exercise
of stock options (a)
Average common shares and equivalents
as adjusted 19,617,821 1,066,837
Earnings (loss) per share $ (0.06) $ 0.09
For the Nine Months Ended September 30,
Primary Earnings:
Net income (loss) $(2,567,839) $ 750,120
Pro forma income tax expense $ 380,836
Pro forma net income (loss) $(2,567,839) $ 369,284
Shares:
Weighted average number of common shares
outstanding 19,617,821 1,066,837
Additional shares assuming exercise of
stock options (a)
Average common shares and equivalents
as adjusted 19,617,821 1,066,837
Earnings (loss) per share $ (0.13) $ 0.35
<FN>
(a) Net loss per share is based on outstanding common shares.
Assuming exercise of options would be anti-dilutive since
an increase in the number of shares assumed to be outstanding
would reduce the amount of the loss per share.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE LCA-VISION INC.
CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1996 AND THE RELATED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996, ADN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 802847
<SECURITIES> 0
<RECEIVABLES> 2490415
<ALLOWANCES> 206975
<INVENTORY> 606220
<CURRENT-ASSETS> 4190189
<PP&E> 11463284
<DEPRECIATION> 2818491
<TOTAL-ASSETS> 13983086
<CURRENT-LIABILITIES> 4831292
<BONDS> 5056870
0
7
<COMMON> 78471
<OTHER-SE> 1073413
<TOTAL-LIABILITY-AND-EQUITY> 13983086
<SALES> 80360
<TOTAL-REVENUES> 3243075
<CGS> 81504
<TOTAL-COSTS> 1641601
<OTHER-EXPENSES> 2318432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 198701
<INCOME-PRETAX> (1125579)
<INCOME-TAX> 34413
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1091166)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
