<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER
SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
EYE DYNAMICS, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 88-0249812
- ------------------------------- -------------------
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification No.)
2301 West 205th Street, Torrance, CA 90501
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (310) 328-0477
- -------------------------------------------------------------
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None N/A
- ---------------------------------- -----------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
- -----------------------------------------------------------------------------
(Title of class)
<PAGE>
EYE DYNAMICS, INC.
2301 205th St., Suite 106
Torrance, CA 90501
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
CHARLES E. PHILLIPS PRESIDENT, TREASURER AND DIRECTOR
RONALD A. WALDORF VICE PRESIDENT, SECRETARY AND DIRECTOR
BARBARA J. MAUCH PRODUCT DEVELOPMENT ENGINEER &
SHAREHOLDER
ARNOLD D. KAY DIRECTOR
<PAGE>
EYE DYNAMICS, INC.
2301 205th St., Suite 106
Torrance, CA 90501
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
SHARES OF
COMMON STOCK
STOCKHOLDER NUMBER OF SHARES %
- ----------- ---------------- ----
RONALD A. WALDORF 1,786,315 19.6
CHARLES E. PHILLIPS 2,362,489 26
BARBARA J. MAUCH 1,292,594 14.2
<PAGE>
EYE DYNAMICS, INC.
2301 205th St., Suite 106
Torrance, CA 90501
CORPORATE PROFILE
Listing Exchange: OTC/Bulletin Board
Trading Symbol: EYDY
Description of business
1. The company
Eye Dynamics, Inc.(EDI) was founded in 1989 as a public company. In
1991, it acquired OculoKinetics, a private corporation, who had developed
proprietary and patented devices with the objective of quickly, accurately and
non-invasively revealing information regarding eye movements and pupil reactions
that heretofore had not been available. The result of this development effort
are three product categories targeted at the medical market for neurological
diagnostic purposes, the corporate market for performance testing of employees
and the parole, probation and corrections market for impairment detection of
subjects.
2. The Products
All the products share in a modular concept for efficiency in
manufacturing. The products are PC Computer based with specialized and
proprietary hardware and embedded firmware. The common element of the three is
the viewport, where the individual being tested peers into a dark environment.
The medical product is more complex because it includes a goggle assembly that
the patient wears. It is lightweight and uses microminiature video cameras. The
goggle is an essential instrument because certain of the ENG tests require the
patients to move their heads and often to recline on an examining table.
Common to operation of all the products is the use of infrared
sensitive CCD video cameras that provide a bright video image even though the
person being tested sees nothing but a small stimulus or tracking light amid
complete darkness.
A. Medical Product
For the medical market, The House InfraRed/Video ENG System is the
first major technological improvement in over 40 years for this standard medical
testing method. Eletronystagmographic (ENG) testing is a standard medical
procedure used in assessing problems of the balance system of patients. This
method provides enhanced diagnostic information for the medical practitioner to
use for his final diagnosis of the patient's problem. The FDA granted approval
in 1994 to market this product.
<PAGE>
Clinical evaluation and development of the system was done in
conjunction with the prestigious "House Ear Institute" in Los Angeles,
California. The House Ear Institute has given the Company permission to use "The
House" name when describing the product and in promotional materials.
B. Performance Testing
Primary model for the corporate sector is the EPS-100 Performance
System. This model is an evaluation product that is in the forefront of
assessing worker performance and impairment while on the job.
Impaired performance of employees can be the result of many factors.
While substance (drug and alcohol) abuse receives the most media attention, the
truth is that Billions of Dollars are lost annually due to worker impairment
caused by other factors such as legal and/or over the counter medications,
stress, fatigue, and illness. Workers with security of safety sensitive jobs are
the principal targets for this product.
C. Probation, Parole & Corrections
The corrections industry uses the EPS-100 Performance System for
detection of impairment and its use can substantially reduce the cost of urine
based drug testing. Urine drug testing is a 1980's technology. Eye Dynamics'
impairment detection system is for the 90's and on into the next millennium.
A model for Law Enforcement is the EM/1 Eye Observation System. This
model provides the testing officer with video images and documentation of eye
movements and pupillary reactions that is videotaped and can be utilized as
evidence in court proceedings.
3. Market Strategy
The company has completed development and has commenced its marketing
program through distributors, dealers and commission representatives. For the
medical product, the Food and Drug Administration (FDA) gave approval to market
it starting in 1994.
The combination of three markets in which to sell products offers less
risk than if only one market were to be approached. The proprietary technology
and patents are similar for the three product lines. This multiple use of our
core, patented technology indicates efficient use of proprietary assets.
A. Medical Market
<PAGE>
The medical market is mature, as are the ENG diagnostic procedures
used. Eye Dynamics brings a new way of testing to an established process. It is
estimated that over 3 million ENG tests are done every year in the United States
for the analysis by neurologists, ear nose & throat specialists and neuro-
opthalmologists. It is not known how many are done in foreign countries, but it
is substantial. ENG tests are a standard diagnostic procedure and are insurance
billable; this provides a ready market for the Company's improved and upgraded
methodology.
The House InfraRed/Video ENG System eliminates the use of electrodes
that are affixed to the patient's skin around the periphery of the eyes. The use
of the Company's product discontinues an invasive procedure and still enhances
the information that is gathered and provided to the medical practitioner for
analysis. By videotaping the eye movement tests, the physician can review the
test over and over instead of relying on only graphic tracings on which to base
his findings.
B. Performance Testing
Performance testing of workers is growing in popularity, though the
market is still in its early stages. Drug testing itself is a very large market,
but there is growing concern that drug testing, as it is presently done, does
not necessarily address the principals of safety and productivity in the
workplace. Whereas, performance testing of workers does address current
performance of the workers and provides immediate knowledge of results of the
test. The EDI EPS-100 Performance System is targeted directly at this need.
Costs are substantial for businesses with impaired workers and are
reflected in low productivity, accidents, higher worker's compensation insurance
costs, equipment and merchandise damage as well as rising liability insurance
premiums.
* More than 10% of employees are impaired while working.
* Average impaired employee costs a company $7,000 each
year.
* The average cost of a workplace injury is estimated to be
$16,800.
* A U.S. Bureau of Labor Statistics report indicates there
were 8.3 occupational injuries per 100 full-time private
sector employees.
This is why the Performance Testing marketplace is gaining in
popularity and represents a long term, large growth opportunity for the Company.
<PAGE>
C. Probation, Parole & Corrections
The Corrections Industry uses the EPS-100 Performance System for
detection of impairment as a screening test to see if urine drug testing needs
to be done. Most urine drug tests are negative (about 90%) and thus are very
costly. The EPS-100 test is substantially less expensive than a urine screen and
can eliminate the urine est if the EPS-100 test is passed. Only the FAILED EPS-
100 tests will go on to a urine screen, thus a large savings to the user of the
EPS-100 System.
Law enforcement agencies, for many years, have used eye movements and
pupillary reactions as part of the Standardized Field Sobriety Test (SFST). The
Company's product, the EM/1 Eye observation System, provides a trained officer
with improved methods of viewing the eye movements and pupillary reactions and
videotaping these eye signs as evidence for use in court proceedings. Eye
Dynamics provides a better and more productive way to observe and document the
eye and pupil tests than are currently being used in law enforcement.
Law enforcement is using more video taping tools to increase their
credibility as well as productivity. The Company's products are well positioned
to capture its share of the probation, parole, corrections and the law
enforcement markets.
4. Patents & Proprietary Protection
EDI owns one U.S. patent, has a worldwide license for another
U.S. patent and related technology, plus rights to eleven issued or
pending foreign patents. Also, software for the products is
copyright protected and is fully owned by EDI.
Market for Common Equity
Listing Exchange: OTC/Bulletin Board
Trading Symbol: EYDY
Authorized Shares: 50,000,000 Common Stock
Issued & Outstanding: 9,095,960
Restricted: 6,638,363
Float (Approx.): 2,457,597
Dividends: None Since Inception
<PAGE>
EYE DYNAMICS, INC. AND SUBSIDIARY
AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITOR'S REPORT..................................................F1
CONSOLIDATED BALANCE SHEETS................................................F2-F3
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT.................F4
COST OF SALES.................................................................F5
OPERATING EXPENSES............................................................F6
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY....................F7
CONSOLIDATED STATEMENTS OF CASH FLOWS.........................................F8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................................F9-F15
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and stockholders
of Eye Dynamics, Inc.
I have audited the accompanying consolidated balance sheets of Eye Dynamics,
Inc. (a Nevada corporation) and its subsidiary, Oculokinetics, Inc.(a California
corporation), as of December 31, 1998 and 1997, and the related consolidated
statements of operations and accumulated deficit, and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
consolidated financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audits have a reasonable basis for my
opinion.
In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial positions of Eye Dynamics, Inc.
and its subsidiary as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 12 to
the consolidated financial statements, the Company's deficit in stockholders'
equity and working capital raise substantial doubt about its ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Pasadena, CA
February 12, 1999
F1
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
ASSETS
1998 1997
------------ ------------
Current Assets
Cash $ 36,452 $ 4,361
Account Receivables (Note 2) 128,870 32,708
Inventories (Note 2 & 3) 111,513 91,934
------------ ------------
Total Current Assets 276,835 129,003
------------ ------------
Property and Equipment (Note 2)
Furniture and Fixtures 1,432 1,432
Equipment - Telemed 12,632 10,729
------------ ------------
14,064 12,161
Less: Accumulated Depreciation (5,015) (2,679)
------------ ------------
Total Property and Equipment 9,049 9,482
------------ ------------
Other Assets
Organizational Costs, net of accumulated
amortization of $4,858 0 0
Deposits 6,141 659
------------ ------------
Total Other Assets 6,141 659
------------ ------------
TOTAL ASSETS $ 292,025 $ 139,144
============ ============
See accompanying notes and independent auditor's report
F2
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
1998 1997
------------ ------------
Current Liabilities
Accounts Payable $ 92,528 $ 63,019
Accrued Expenses 255,601 173,629
Consigned Inventory (Note 6) 61,500 61,500
Line of Credit (Note 4) 45,013 0
Notes Payable, current Portion (Note 5) 430,191 80,274
------------ ------------
Total Current Liabilities 884,833 378,422
------------ ------------
Long-Term Liabilities
Long-term debt (Note 5) 0 350,000
------------ ------------
Total Liabilities 884,833 728,422
------------ ------------
Stockholders' Equity (Deficit)
Common Stock, $.001 par value, 50,000,000
shares authorized; 8,300,627 shares issued
and outstanding in 1998, and 7,329,194 in
1997 8,300 7,329
Paid-in Capital 2,333,027 2,302,027
Accumulated Deficit (2,934,135) (2,898,634)
------------ ------------
Total Stockholders' Equity (Deficit) (592,808) (589,278)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 292,025 $ 139,144
============ ============
See accompanying notes and independent auditor's report
F3
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Years ended December 31, 1998 and 1997
1998 1997
------------ ------------
SALES $ 679,540 $ 436,270
COST OF SALES - SCHEDULE A 392,303 228,487
------------ ------------
GROSS PROFIT 287,237 207,783
OPERATING EXPENSES - SCHEDULE B 184,146 123,219
------------ ------------
INCOME (LOSS) FROM OPERATIONS 103,091 84,564
------------ ------------
OTHER INCOME (EXPENSES)
Interest Income - 3
Cash Discounts (7,839) (6,137)
Depreciation (2,336) (1,247)
Late Charges and Penalties (132) (140)
Officer's Salaries (90,400) (35,417)
Interest Expenses (36,285) (36,633)
------------ ------------
Total Other Income (Expenses) (136,992) (79,571)
------------ ------------
NET INCOME (LOSS) BEFORE TAXES (33,901) 4,993
PROVISION FOR INCOME TAXES 1,600 1,600
------------ ------------
NET INCOME (LOSS) (35,501) 3,393
ACCUMULATED DEFICITS
Beginning Balance (2,898,634) (2,910,187)
Prior Year Adjustment (Note 11) - 8,160
------------ ------------
Ending Balance (Deficit) $(2,934,135) $(2,898,634)
============ ============
See accompanying notes and independent auditor's report
F4
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
COST OF SALES
Years ended December 31, 1998 and 1997
SCHEDULE A
COST OF SALES 1998 1997
------------ ------------
Beginning Inventory $ 91,934 $ 91,266
Purchases 320,919 214,246
Labors & Commissions 86,972 12,215
Other Overhead Costs 3,991 2,694
------------ ------------
503,816 320,421
Less: Ending Inventory 111,513 91,934
------------ ------------
Total Cost of Sales $ 392,303 $ 228,487
============ ============
See accompanying notes and independent auditor's report
F5
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
OPERATING EXPENSES
Years ended December 31, 1998 and 1997
SCHEDULE B
OPERATING EXPENSES 1998 1997
------------ ------------
Accounting $ 6,300 $ 6,500
Advertising - 378
Answering Service - 198
Automobile 4,200 4,200
Bad Debts 3,568 1,450
Bank Charge 407 3
Billing Service 1,006 -
Commissions 21,848 2,400
Contract Services - 12,817
Dues and Subscriptions 390 339
Equipment Lease and Rental 1,320 1,412
Freight 12,205 613
Insurance 4,649 7,993
Legal and Professional 24,921 22,008
Licenses & Regulatory Fees 1,983 1,866
Meals and Entertainment 44 -
Miscellaneous 21 401
Office Supplies 11,888 6,510
Payroll Taxes 10,815 5,633
Postage and Stationeries 4,045 2,313
Printing and Collateral 3,721 4,474
Rent 10,416 7,278
Repair and Maintenance 208 369
Royalty 1,000 -
Sales Promotion & Public Relations 475 1,681
Salaries and Wages 10,963 17,521
Shows and Exhibits 6,500 -
Subcontractor and Outside Services - 5,353
Supplies 7,626 3,987
Taxes - Other 168 21
Telephone 9,134 2,293
Travel 23,457 2,349
Utilities 868 859
------------ ------------
Total Operating Expenses $ 184,146 $ 123,219
============ ============
See accompanying notes and independent auditor's report
F6
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1998 and 1997
<CAPTION>
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 6,498,860 $ 6,499 $2,282,077 $(2,910,187) $(621,611)
Prior year adjustment 8,160 8,160
-----------------------------------------------------------
Adjusted balance 6,498,860 $ 6,499 $2,282,077 $(2,902,027) $(613,451)
Issuance stock for salaries 703,334 703 19,950 20,653
Issuance stock for
Professional Fees 127,000 127 127
Net income 3,393 3,393
-----------------------------------------------------------
Balance at December 31, 1997 7,329,194 $ 7,329 $2,302,027 $(2,898,634) $(589,278)
Issuance stock for salaries 400,000 400 400
Issuance stock for consulting 321,433 321 321
Issuance stock for cash 250,000 250 31,000 31,250
Net loss (35,501) (35,501)
-----------------------------------------------------------
Balance at December 31, 1998 8,300,627 $8,300 $2,333,027 $(2,934,135) $(592,808)
===========================================================
</TABLE>
See accompanying notes and independent auditor's report
F7
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (35,501) $ 3,393
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation 2,336 1,247
Prior year adjustments - 8,160
Issuance stocks for Salaries 400 20,653
Issuance stocks for Professional Fees - 127
Issuance stocks for Consulting Fees 321 -
(Increase) Decrease in:
Accounts Receivable (96,162) (31,474)
Inventories (19,579) (668)
Deposits (5,482) -
Increase (Decrease) in:
Accounts Payable 29,509 2,720
Accrued Expenses 81,972 25,314
Consigned Inventory - (20,500)
------------ ------------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (42,186) 8,972
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (1,903) (10,729)
------------ ------------
NET CASH (USED) BY INVESTING ACTIVITIES (1,903) (10,729)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuing common stock 31,250 -
Proceeds from Line of Credit 45,013 -
Payments to Officers' Loans (83) (137)
------------ ------------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 76,180 (137)
------------ ------------
NET INCREASE (DECREASE) IN CASH 32,091 (1,894)
BEGINNING OF YEAR 4,361 6,255
------------ ------------
END OF YEAR $ 36,452 $ 4,361
============ ============
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Year For:
Interest $ 0 $ 0
============ ============
Income Tax $ 1,600 $ 1,600
============ ============
See accompanying notes and independent auditor's report
F8
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1998 and 1997
NOTE 1 - GENERAL
Eye Dynamics, Inc. ("the Company") was formed under the laws of Nevada on August
7, 1989 under the name Petro Plex, Inc. and adopted later as Drug Detection
Systems, Inc. The Company changed its name to Eye Dynamics, Inc. and became a
California foreign corporation on November 2, 1992.
Eye Dynamics, Inc. is a medical technology and information services company
engaged in research, development and marketing of non-invasive medical data
analysis, software, and medical information services of disease risk assessment
and patient management.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company uses the accrual basis of accounting in accordance with generally
accepted accounting principles.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Oculokinetics, Inc. (a California
corporation), after elimination of all material intercompany accounts and
transactions.
Use of estimates
The preparation of the accompanying consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results of
reported assets, liabilities, revenue, and expenses. Actual results may differ
from these estimates.
Cash Equivalents
The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents. As of December 31, 1998
and 1997, there were no cash equivalents.
The Company prepares its consolidated statements of cash flows using the
indirect method as defined under Financial Accounting Standards Board Statement
No. 95.
F9
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1998 and 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
The Company has not established an allowance for doubtful accounts and does not
use reserve method for recognizing bad debts. Bad debts are treated as direct
write-offs in the period management determines that collection is not probable.
Bad debt expense totalled $3,568 and $1,450 for years ended December 31, 1998
and 1997, respectively.
Inventories
Costs incurred for materials, technology and shipping are capitalized as
inventories and charged to cost of sales when revenue is recognized.
Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.
Property and Equipment
Property and Equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Depreciation is computed on the straight-line
method based on the estimated useful lives of the assets. Depreciation expense
was $2,336 and $1,247 for 1998 and 1997, respectively.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109.
Reclassification
Certain reclassification have been made to the 1997 consolidated financial
statements to conform with the 1998 consolidated financial statement
presentation. Such reclassification had no effect on net loss as previously
reported.
F10
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1998 and 1997
NOTE 3 - INVENTORIES
As of December 31, 1998 and 1997, inventories consisted of the following:
1998 1997
------------ -----------
Finished Goods $ 60,263 $ 30,434
Consigned for TESA (See Note 5) 51,250 61,500
------------ -----------
Total $ 111,513 $ 91,934
============ ===========
NOTE 4 - LINE OF CREDIT
In 1998, the Company established a $65,000 operating line of credit with Wells
Fargo Bank at the bank's prime rate plus 2.75%. This line of credit is payable
on demand and is secured by all assets of the Company. As of December 31, 1998,
the balance due was $45,013.
NOTE 5 - NOTES PAYABLE
1998 1997
------------ -----------
a.)Notes to Officers, interest at 10%,
accrued semi-monthly; due 60 days
after dates of notes; unsecured $ 23,470 $ 23,553
b.)Notes to Others, interest at 12%,
due on demand, unsecured 10,000 10,000
c.)Note to TESA Corporation, interest
at 7% payable on maturity date,
December 31, 1999; maturing 11% of
gross revenues, collateralized by
accounts receivable, inventories,
patents and a licensing agreement 396,721 396,721
Total 430,191 430,274
Less current maturities 430,191 80,274
----------- -----------
Long-term debt, net $ 0 $ 350,000
============ ===========
F11
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1998 and 1997
NOTE 6 - SETTLEMENT AGREEMENT AND MUTUAL RELEASE
On December 29, 1993, the Company entered into a settlement agreement and mutual
release with TESA Corporation, a former distributor. The agreement provided a
payment of $400,000 with simple interest at 7% per annum, payable on or before
December 31, 1999. The note principal is payable in monthly installments of 11%
of gross revenue on the sales(See Note 5). As of December 31, 1998 and 1997,
interest of $139,991 and $111,995 was accrued and no principal payments were
made, respectively.
The agreement also provides a payment of $10,250 for each of the first nine
product units sold after the agreement as compensations for repurchased units.
The balance of these consigned inventory was $51,250 in 1998 and $61,500 in
1997.
NOTE 7 - INCOME TAXES
The Company files separate federal and state income tax returns with its
subsidiary.
Provision for income taxes in the consolidated statements of operations for
years ended December 31, 1998 and 1997 consist of $1,600 minimum state income
taxes in each year, $800 for each corporation.
The Company has net operating loss carryforwards of $461,761 to reduce future
taxable income. The subsidiary has NOL carryforwards of $1,479,644. To the
extent not utilized, both carryforwards will begin to expire through 2012.
NOTE 8 - STOCKS OPTIONS
In December, 1996, the Company granted 300,000 shares of stock purchase options
to principals of Impairment Detection Services, Ltd., as compensation for
rescission of Distributor and Preferred Manufacturer Agreements dated on March
8, 1996. The options are exercisable at $0.20 per share and expire on December
20, 1999.
In addition, the Company had 3,250,000 outstanding stock options at various
exercise prices and expiration dates. A summary of options outstanding as of
December 31, 1998 is shown as follows:
F12
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1998 and 1997
NOTE 8 - STOCKS OPTIONS (Continued)
Exercise No. of shares Expiration
Price Outstanding Date
--------- ------------- ----------
$.20 300,000 12/1999
$.10 400,000 1/2000
$.125 750,000 11/2001
$.25 1,000,000 11/2001
$.375 1,000,000 11/2001
$.001 100,000 11/2001
-------------
3,550,000
============
NOTE 9 - RELATED PARTY TRANSACTIONS
In 1998, the Company issued 721,433 shares of stock at par value for officers'
salaries and consulting fees.
In 1997, the Company converted $105,500 salaries into equity, by issuing 703,334
shares of stocks at $0.15 per share, for full consideration of such debt. In
addition, 127,000 shares of stock were issued at par value, totalled of $127,
for professional fees.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Distribution Agreement
In 1992, the Company entered into a three year distribution agreement with
JEDMED Instrument Company. The three year time period commenced ninety days
after FDA approval to market the House InfraRed/Video ENG System ("Product") was
received. Under the agreement, JEDMED has exclusive rights to market the Product
worldwide.
In July 1998, the Company invoked its privilege and terminated the agreement
with JEDMED. Subsequent to July, 1998, the Company has been selling the products
directly to end users and through Special Instrument Dealers throughout the
United States.
Employment Agreements
The Company has employment agreements with two officers that provide for
aggregate annual compensation of $160,000 in 1998. The agreements are
automatically renewed year to year. The agreements may be terminated by the
Company or the officers with notice 60 days prior to any expiration date.
F13
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1998 and 1997
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued)
Lease Commitments
The Company leases its office facilities for $710 per month. The lease expires
April 1999. Rent expense totaled $10,416 and $7,278 for 1998 and 1997,
respectively.
The Company leases various office equipments at $141 per month which commence to
expire in 1999.
As of December 31, 1998, the minimum commitments under these leases are $2,950.
NOTE 11 - PRIOR YEARS ADJUSTMENT
The Company had a credit of its legal fees of $8,160 in 1997. This adjustment
resulted in an increase of previously reported Retained Earnings for year ended
December 31, 1996. This error has no effect on years of 1998 nor 1997.
NOTE 12 - GOING CONCERN
The accompanying consolidated financial statements are presented on the basis
that the Companies are going concerns. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
consolidated financial statements, As of December 31, 1998, the Company has
accumulated deficit of $2,934,135, a stockholders' deficit of $592,808 and its
current liabilities exceed current assets by $607,998.
Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
F14
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1998 and 1997
NOTE 13 - YEAR 2000
The Company believes that it has identified each of its computer systems that
will require modifications to enable it to perform satisfactorily on and after
January 1, 2000. The financial impact of making such modifications to the
Company's systems is not expected to be material to the Company's financial
position or results of operations. In addition, the Company is currently
corresponding with vendors that provide products and systems to the Company in
order to determine if such products and systems will be required to be upgraded
or replaced. Although management believes the Company has an adequate program in
place to address the year 2000 issue, the costs of upgrades to, or replacements
of, its purchased products or systems has not been determined and there can be
no assurance that the program will ultimately be successful.
F15
<PAGE>
EYE DYNAMICS, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS.............................................F16-F17
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT...............F18
COST OF SALES...............................................................F19
OPERATING EXPENSES..........................................................F20
CONSOLIDATED STATEMENTS OF CASH FLOWS.......................................F21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..............................F22-F26
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1999 1998
------------ ------------
Current Assets
Cash $ 66,426 $ 36,452
Account Receivables 97,530 128,870
Inventories 115,169 111,513
------------ ------------
Total Current Assets 279,125 276,835
------------ ------------
Property and Equipment
Furniture and Fixtures 1,432 1,432
Equipment - Telemed 12,632 12,632
------------ ------------
14,064 14,064
Less: Accumulated Depreciation (6,279) (5,015)
------------ ------------
Total Property and Equipment 7,785 9,049
------------ ------------
Other Assets
Organizational Costs, net of accumulated
amortization of $4,858 0 0
Deposits 5,835 6,141
------------ ------------
Total Other Assets 5,835 6,141
------------ ------------
TOTAL ASSETS $ 292,745 $ 292,025
============ ============
F16
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
June 30, December 31,
1999 1998
------------ ------------
Current Liabilities
Accounts Payable $ 52,991 $ 92,528
Accrued Expenses 235,064 255,601
Consigned Inventory 61,500 61,500
Deposit from Shareholders 55,000 -
Line of Credit 4,995 45,013
Notes Payable, current Portion 430,191 430,191
------------ ------------
Total Current Liabilities 839,741 884,833
------------ ------------
Long-Term Liabilities
Long-term debt 0 0
------------ ------------
Total Liabilities 839,741 884,833
------------ ------------
Stockholders' Equity (Deficit)
Common Stock, $.001 par value, 50,000,000
shares authorized; 9,095,960 shares
issued and outstanding in 1999, and
8,300,627 in 1998 9,096 8,300
Paid-in Capital 2,471,314 2,333,027
Accumulated Deficit (3,027,406) (2,934,135)
------------ ------------
Total Stockholders' Equity (Deficit) (546,996) (592,808)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 292,745 $ 292,025
============ ============
F17
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 176,787 $ 82,755 $ 341,205 $ 204,744
COST OF SALES - SCHEDULE A 92,562 45,428 165,295 108,551
------------ ------------ ------------ ------------
GROSS PROFIT 84,225 37,326 175,910 96,192
OPERATING EXPENSES - SCHEDULE B 133,974 43,650 191,563 91,443
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS (49,749) (6,324) (15,653) 4,749
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSES)
Cash Discounts - (1,773) (876) (5,637)
Depreciation (632) (584) (1,264) (1,168)
Late Charges and Penalties (94) - (94) (132)
Officer's Salaries (27,000) (22,500) (54,000) (45,000)
Interest Expenses (9,486) (9,007) (19,784) (17,972)
------------ ------------ ------------ ------------
Total Other Income (Expenses) (37,212) (33,864) (76,018) (69,909)
------------ ------------ ------------ ------------
NET INCOME (LOSS) BEFORE TAXES (86,961) (40,188) (91,671) (65,160)
PROVISION FOR INCOME TAXES - - 1,600 1,600
------------ ------------ ------------ ------------
NET INCOME (LOSS) (86,961) (40,188) (93,271) (66,760)
ACCUMULATED DEFICIT
Beginning Balance (2,940,445) (2,925,206) (2,934,135) (2,898,634)
------------ ------------ ------------ ------------
Ending Balance $(3,027,406) $(2,965,394) $(3,027,406) $(2,965,394)
============ ============ ============ ============
EARNINGS (LOSS) PER SHARE $ (0.0096) $ (0.0055) $ (0.0105) $ (0.0091)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 9,095,960 7,329,194 8,864,960 7,329,194
============ ============ ============ ============
</TABLE>
F18
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
COST OF SALES
(Unaudited)
<CAPTION>
SCHEDULE A
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
COST OF SALES 1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Beginning Inventory $ 109,618 $ 79,059 $ 111,513 $ 91,934
Purchases 69,409 48,568 128,416 92,114
Labors & Commissions 28,198 2,805 39,820 9,507
Other Overhead Costs 506 2,222 715 2,222
---------- ---------- ---------- ----------
207,731 132,654 280,464 195,777
Less: Ending Inventory 115,169 87,226 115,169 87,226
---------- ---------- ---------- ----------
Total Cost of Sales $ 92,562 $ 45,428 $ 165,295 $ 108,551
========== ========== ========== ==========
</TABLE>
F19
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
OPERATING EXPENSES
(Unaudited)
<CAPTION>
SCHEDULE B
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
OPERATING EXPENSES 1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Accounting $ 3,200 $ - $ 5,200 $ 6,300
Advertising 925 - 1,004 -
Automobile 2,377 1,050 3,427 2,100
Bad Debts - - - 375
Bank Charge 107 - 167 -
Billing Service - 275 - 676
Commissions 12,779 - 26,501 -
Consulting 51,333 3,000 54,333 3,000
Dues and Subscriptions 115 66 181 126
Education 1,000 - 1,000 -
Freight 6,542 2,267 9,468 4,816
Insurance 3,009 1,162 7,609 2,324
Legal and Professional 4,012 2,650 9,614 6,763
Licenses & Regulatory Fees 255 60 542 307
Meals and Entertainment 1,538 44 1,660 44
Office Supplies 1,095 4,427 1,744 7,229
Payroll Taxes 3,634 2,216 7,415 4,927
Postage and Stationeries 3,779 1,271 4,399 2,156
Printing and Collateral 5,941 285 7,370 1,068
Rent and Lease 2,289 2,725 5,873 5,228
Sales Promotion & P.r. 4,405 - 7,150 -
Salaries and Wages 840 17,438 1,510 34,108
Shows and Exhibits 2,305 693 4,055 693
Supplies 500 583 1,024 2,442
Taxes - Other 21 - 21 168
Telephone 3,031 1,383 4,564 2,866
Travel 18,770 2,021 25,367 3,440
Utilities 172 34 365 287
---------- ---------- ---------- ----------
Total Operating Expenses $ 133,974 $ 43,650 $ 191,563 $ 91,443
========== ========== ========== ==========
</TABLE>
F20
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, 1999 and 1998
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (93,271) $ (66,760)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation 1,264 1,168
Issuance stock for consulting fee 45,333 -
(Increase) Decrease in:
Accounts Receivable 31,340 25,538
Inventories (3,656) 4,708
Deposits 306 -
Increase (Decrease) in:
Accounts Payable (39,537) (11,121)
Accrued Expenses (20,537) 38,112
------------ ------------
NET CASH (USED) BY OPERATING ACTIVITIES (78,758) (8,355)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment - (1,903)
------------ ------------
NET CASH (USED) BY INVESTING ACTIVITIES - (1,903)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuing common stock 93,750 -
Deposits from Stockholders 55,000
Payments to Line of Credit (40,018) -
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 108,732 -
------------ ------------
NET INCREASE (DECREASE) IN CASH 29,974 (10,258)
BEGINNING OF PERIOD 36,452 4,361
------------ ------------
END OF PERIOD $ 66,426 $ (5,897)
============ ============
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Period for:
Interest $ 1,464 $ 0
============ ============
INCOME TAX $ 1,600 $ 0
============ ============
Noncash investing and financing activities:
The Company issued common stock for consulting fee of $45,333.
F21
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Presentation of Interim Information
In the Opinion of the management of Eye Dynamics, Inc. & Subsidiary (the
Company), the accompanying unaudited consolidated financial statements include
all normal adjustments considered necessary to present fairly the financial
positions as of June 30, 1999, and the results of operations for the three
months and six months ended June 30, 1999 and 1998, and cash flows for the six
months ended June 30, 1999 and 1998. Interim results are not necessarily
indicative of results for a full year.
The consolidated financial statements and notes are presented as permitted by
Form 10-Q, and do not contain certain information included in the Company's
audited consolidated financial statements and notes for the fiscal year ended
December 31, 1998.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Oculokinetics, Inc. (a California
corporation), after elimination of all material intercompany accounts and
transactions.
Use of estimates
The preparation of the accompanying consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results of
reported assets, liabilities, revenue, and expenses. Actual results may differ
from these estimates.
Cash Equivalents
The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents. As of June 30, 1999,
there were no cash equivalents.
The Company prepares its consolidated statements of cash flows using the
indirect method as defined under Financial Accounting Standards Board Statement
No. 95.
F22
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
The Company has not established an allowance for doubtful accounts and does not
use reserve method for recognizing bad debts. Bad debts are treated as direct
write-offs in the period management determines that collection is not probable.
Bad debt expense totalled $0 and $375 for six months ended June 30, 1999 and
1998, respectively.
Inventories
Costs incurred for materials, technology and shipping are capitalized as
inventories and charged to cost of sales when revenue is recognized.
Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.
Property and Equipment
Property and Equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Depreciation is computed on the straight-line
method based on the estimated useful lives of the assets. Depreciation expense
was $1,264 and $1,168 for 1999 and 1998, respectively.
Research and Development
Research and development costs are expensed as incurred.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109.
NOTE 2 - INVENTORIES
Inventories consisted of the following:
June 30, December 31,
1999 1998
------------ ------------
Finished Goods $ 63,919 $ 60,263
Consigned for TESA 51,250 51,250
------------ ------------
Total $ 115,169 $ 111,513
============ ============
F23
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - LINE OF CREDIT
In 1998, the Company established a $65,000 operating line of credit with Wells
Fargo Bank at the bank's prime rate plus 2.75%. This line of credit is payable
on demand and is secured by all assets of the Company. As of June 30, 1999, the
balance due was $4,995.
NOTE 4 - NOTES PAYABLE
June 30, Dec.31,
1999 1998
------------ ------------
a.)Notes to Officers, interest at 10%,
accrued semi-monthly; due 60 days
after dates of notes; unsecured $ 23,470 $ 23,470
b.)Notes to Others, interest at 12%,
due on demand, unsecured 10,000 10,000
c.)Note to TESA Corporation, interest at 7%
payable on maturity date, March 31,
1999; maturing 11% of gross revenues,
collateralized by accounts receivable,
inventories, patents and a licensing
agreement 396,721 396,721
------------ ------------
Total 430,191 430,191
Less current maturities 430,191 430,191
------------ ------------
Long-term debt, net $ 0 $ 0
============ ============
NOTE 5 - INCOME TAXES
The Company files separate federal and state income tax returns with its
subsidiary.
Provision for income taxes in the consolidated statements of operations for six
months ended June 30, 1999 and 1998 consist of $1,600 minimum state income taxes
in each year, $800 for each corporation.
The Company has net operating loss carryforwards of $461,761 to reduce future
taxable income. The subsidiary has NOL carryforwards of $1,479,644. To the
extent not utilized, both carryforwards will begin to expire through 2012.
F24
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - COMMON STOCK TRANSACTIONS
In April 1999, the Company issued common stock to a consultant in the amount of
45,333 shares for his service rendered.
NOTE 7 - STOCKS OPTIONS
In December, 1996, the Company granted 300,000 shares of stock purchase options
to principals of Impairment Detection Services, Ltd., as compensation for
rescission of Distributor and Preferred Manufacturer Agreements dated on March
8, 1996. The options are exercisable at $0.20 per share and expire on December
20, 1999.
In addition, the Company had 2,800,000 outstanding stock options at various
exercise prices and expiration dates. A summary of options outstanding as of
June 30, 1999 is shown as follows:
Exercise No. of shares Expiration
Price Outstanding Date
--------- ------------- ----------
$.20 300,000 12/1999
$.10 400,000 1/2000
$.25 1,000,000 11/2001
$.375 1,000,000 11/2001
$.001 100,000 11/2001
-------------
2,800,000
=============
NOTE 8 - EARNINGS (LOSS) PER SHARE
Earnings per share is based on the weighted average number of shares of common
stock and common stock outstanding during the period. Earnings per share is
computed using the treasury stock method. Had the Stock Options (See Note 6)
been issued as of June 30, 1999, the Company's loss per share would have been
$0.0069 and $.0075 for three and six months ended June 30, 1999, respectively.
NOTE 9 - LEASE COMMITMENTS
The Company leases its office facilities for $768 per month. The lease expires
April 1999. Rent expense totaled $5,026 and $4,382 for 1999 and 1998,
respectively.
The Company leases various office equipments at $141 per month which commence to
expire in 1999.
F25
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - LEASE COMMITMENTS (Continued)
As of June 30, 1999, the minimum commitments under these leases are $0.
NOTE 10 - GOING CONCERN
The accompanying consolidated financial statements are presented on the basis
that the Companies are going concerns. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
consolidated financial statements, the Company incurred net losses of $93,271
for six months ended June 30, 1999, and as of that date, the Company had
accumulated deficit of $3,027,406, a working capital deficiency of $560,616 and
a deficit in net worth of $546,996.
Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
F26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
EYE DYNAMICS, INC.
----------------------------------------
(Registrant)
Date: Oct 6, 1999 By: /s/ Charles E. Phillips
----------------------------------------
CHARLES E. PHILLIPS, PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 66,426
<SECURITIES> 0
<RECEIVABLES> 97,530
<ALLOWANCES> 0
<INVENTORY> 115,169
<CURRENT-ASSETS> 279,125
<PP&E> 14,064
<DEPRECIATION> 6,279
<TOTAL-ASSETS> 292,745
<CURRENT-LIABILITIES> 839,741
<BONDS> 0
0
0
<COMMON> 9,096
<OTHER-SE> (556,092)
<TOTAL-LIABILITY-AND-EQUITY> 292,745
<SALES> 341,205
<TOTAL-REVENUES> 341,205
<CGS> 165,295
<TOTAL-COSTS> 356,858
<OTHER-EXPENSES> 56,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,784
<INCOME-PRETAX> (91,671)
<INCOME-TAX> 1,600
<INCOME-CONTINUING> (93,271)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (93,271)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
