<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(X) Annual Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended DECEMBER 31, 1999.
EYE DYNAMICS, INC.
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(Name of small business issuer in its charter)
Nevada 88-0249812
- -------------------------- ------------------------------------
( State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
2301 W. 205th Street, #106, Torrance, CA 90501
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(Address of principal executive offices) (City, state and ZIP)
Issuer's telephone number 310-328-0477
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Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock Par Value $.001 per share
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days ( ) Yes (X) No.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB (X)
State issuer's revenues for its most recent fiscal year: $847,606
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State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as a
specified date within the past 60 days:
Non-affiliate Equity: 3,449,984 shares @ $.25 per share = $862,496
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The number of shares outstanding of the issuer's common stock as of February 8,
2000 was 9,139,46
Transitional Small Business Disclosure Format (check one). ( ) Yes (X) No
<PAGE>
PART 1
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ITEM 1. DESCRIPTION OF BUSINESS
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1. The Company
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The Company was formed under the laws of Nevada in 1989 under the name
Petro Plex, Inc., and changed its name to Drug Detection Systems, Inc. in 1991
upon the acquisition of OculoKinetics, Inc., a private corporation which
initially developed the Company's products. Prior to the acquisition of
OculoKinetics, Inc., the Company had no operations. In May 1993, the Company
changed its name to Eye Dynamics, Inc. to better describe the Company's
operating and marketing focus.
The Company markets and distributes diagnostic equipment that utilizes
the Company's proprietary technology and computer software to test individuals
for impaired performance resulting from the influences of alcohol, drugs,
illness, stress and other factors that affect eye and pupil performance. The
Company also markets a medical diagnostic product that tracks and measures eye
movements during a series of standardized tests. Results from the tests are used
by physicians and clinicians as an aid in diagnosing problems of the vestibular
(balance) system and other balance disorders. Testing of patients for irregular
eye movements has been a standard medical procedure for several decades and the
Company's products have gained a significant share of this highly specialized
market.
The underlying technology used in all of the Company's products is
similar, yet differs in its application and use. The Company's products utilize
infrared sensitive video cameras to monitor, videotape and analyze eye
performance and movement. Medical research conducted over the past 50 years has
furnished evidence demonstrating a relationship between irregular eye movement
and abnormal central nervous system physiology. The causes of these conditions
are numerous, and include the influences of alcohol, drugs, illness, stress,
extreme fatigue and other neurological conditions. Generally, product
development has followed two paths - that of performance evaluation and that of
data gathering for medical diagnostic purposes.
2. The Products
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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.
<PAGE>
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 Electronystagmographic
("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 Charge Coupled Device ("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
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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.
Irregular eye movements and conditions are analyzed by medical
specialists as an aid in diagnosing problems with the human balance system and
other neurological conditions. Heretofore, all competitive products have used
"electrodes" that are taped to the skin around the periphery of the patient's
eyes and a very small electrical signal from the corneoretinal potential of the
eyes drives a pen recorder. The pen recorder provides a graphical depiction of
the eye movements under different test conditions. These graphs then are
interpreted by the medical diagnostician.
The Company's Infrared/Video ENG System was the first to replace the
electrodes with infrared sensitive video cameras and with computer digital
processing that follow the movement of the eyes and graphically portrays the
movements much like the pen recorder. The Company believes the accuracy and
display of the IR/Video ENG System is much improved over other existing testing
methods. In addition, the use of video by the IR/Video ENG System allows the
test administrator or medical practitioner to observe the eye movements directly
and provides a videotape record of the test for later playback and additional
analysis. The Company believes that this is a large improvement over prior
technology. This product was first marketed in 1994, after gaining FDA approval
to market. Since then most every competitor has changed from electrodes and is
embracing video data acquisition as a superior technology.
MARKETING OF THE MEDICAL PRODUCT. Marketing of the IR/Video ENG System is done
through a network of independently owned special instrument dealers ("SID's").
These independently owned businesses are distributors of not only the IR/Video
ENG System, but of a variety of allied and related products for the audiometric
and otolaryngology ("ENT") markets. These distributors are across the United
<PAGE>
States and operate in territories that are assigned exclusively to them by the
Company. In addition, there are several foreign distributors that are
merchandising the product in countries such as Egypt, Hungary, Turkey, Thailand,
Taiwan and Korea. The Company is not yet selling in the European common market
countries due to lack of the "CE" mark of approval that must be acquired.
COMPETITION. The Company knows of several companies in the medical market making
ENG testing equipment, including Micromedical Technologies, Inc. of Chatham,
Illinois, ICS Medical Corporation of Schaumberg, Illinois and Nicolet
Instruments of Madison, Wisconsin. The market for the ENG type products is
mature and represents only annual growth estimated at 5%, but because of the
advancement of technology spurred by the Company's introduction of video data
acquisition methods in 1994, the market for replacement products has been robust
and will continue to be so for the foreseeable future.
Competitive companies now all have Video ENG Goggle products and there is a
great deal of price pressure in the market. As a consequence, the Company has
had to meet price competition and this has had some effect on overall gross
margins. To combat this competitive pressure the Company has been able to reduce
our manufacturing costs enough to offset the gross margin loss.
B. Performance Testing
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Impaired worker performance can result from many factors. While
substance abuse receives the most attention, it has been reported that billions
of dollars are lost annually due to worker impairment caused by other factors,
such as prescription and/or over-the-counter medications, stress, extreme
fatigue and illness. Costs are substantial for businesses with impaired workers
and are reflected in low productivity, accidents, higher workers compensation
costs, equipment and merchandise damage, as well as rising insurance premiums.
Over the past decade, different types of performance tests have evolved
based on extensive scientific studies validating the relationship between test
results and the impaired performance of an individual. They assess an
individual's motor and cognitive skills at the time of the test.
The Company's performance evaluation product consists of the EPS-100
Performance System. The EPS-100 is based on methods developed by the federal
government and used by law enforcement over the past 25 years. The EPS-100 is a
simple computer system that evaluates the ability of an individual's eyes to
follow a moving light and react to a dim and bright light stimulus. The EPS-100
is non-diagnostic and non-judgmental. It evaluates performance of the individual
for safety and productivity purposes. The initial price for the product was
$15,000, but with redesign and improved components and modest sales volume the
product is being repriced to $8,000, which the Company believes is competitive
with the price of professional desktop breath testing analyzers commonly used by
law enforcement for assessment of blood alcohol content ("BAC") levels in
individuals.
<PAGE>
A second model, the EM/1 is designed for use by law enforcement
agencies for forensic purposes and assists in evaluation of individuals
suspected of driving or being under the influence of intoxicants.
In most states, law enforcement agencies use a six point evaluation of
people thought to be intoxicated. This is referred to as the Standardized Field
Sobriety Test ("SFST"). The SFST includes three tests for balance and three
tests involving eye performance. Thus, the Company believes there is a need for
a product that can be utilized, not only in the jail or precinct house, but in
the field by traffic patrol cars. This product must ultimately be in a 'hand
held' configuration.
Hardware for the EM/1 is similar to the EPS-100, but different
operating software requires that a person trained and certified in SFST and Drug
Recognition and Evaluation operate the equipment and evaluate eye performance.
>From the EM/1 test results and other test information, the evaluator draws an
opinion as to whether the individual is impaired and under the influence of
intoxicants or not, or possibly should be medically treated. The video tape made
of the test is then used as evidence to support the conclusion of the law
enforcement officer and, depending on the jurisdiction, may be admissible as
evidence in court proceedings. The EM/1 is also priced at $8,000 per unit.
Marketing of the EPS-100 and EM/1.
- ----------------------------------
The Company has been test marketing the EPS-100 and has sold a number
of units in various locales. Currently, independent sales representatives are
being recruited to achieve geographic distribution coverage over the United
States. However, implementation of a full marketing plan is contingent on
receipt of additional working capital.
Also, modification of current government testing regulations must be
achieved in order for the EPS-100 to be totally accepted by the corporate
sector. Current regulations are all written around urine based testing;
modifications of these regulations to allow for performance based testing
methods in lieu of urine based screening tests is necessary to gain market
acceptance for the EPS-100. The Company is actively involved with various
government agencies to modify applicable regulations and procedures so that they
will encompass testing based on eye movement and performance. While governmental
agencies such as the Department of Education have expressed an interest in the
Company's products, management believes that changing governmental testing
regulations will be a lengthy process and success is not assured.
<PAGE>
Competition.
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Competition for the EPS-100 is from companies that have developed tests
and devices that evaluate motor and cognitive skills. These take the form of
hand-eye coordination tests, divided attention tests and other behavioral tests
or series of tests administered either in series or selectively. The Company has
identified three such competitors that are actively marketing their products,
including Performance Factors, Inc. located in Golden, Colorado, Essex
Corporation of Columbia, Maryland and Pulse Medical Instruments of Rockville,
Maryland.
The Company knows of only one other company, Pulse Medical Instruments
of Rockville, Maryland that is developing a product to be directly competitive
with the Company's products. The Pulse Medical product does not use video
sensors and its results are displayed in graphic form on a computer monitor for
the qualified expert to interpret. The Company believes that such competitive
product is much more expensive than the EPS-100 and is still being developed and
validated as a useful device.
The EPS-100 differs from its competitors' tests because the EPS-100
test evaluates changes in eye performance which are involuntary responses and
not under the control of the individual. For this reason, these responses cannot
be changed, improved upon or learned. All the other competitive forms of
performance tests can be learned and over time the individual being tested can
improve his skills. The Company feels that this difference is an important
competitive advantage over other forms of performance tests.
Engineering and Manufacturing
- -----------------------------
The Company has performed all its own design and engineering of
products and has developed all software and validation of software algorithms
that are used in the analysis portion of the proprietary software.
Manufacturing of the products is primarily done through subcontracting
with various suppliers. The Company does not rely on a single supplier for the
major manufacturing of items. Various companies build and test product modules
on an OEM contract basis. Final system integration and testing is completed by
the Company prior to shipment of devices to end customers.
Manufactured or fabricated modules include the molded eye piece, the
goggle assembly, the viewport assembly and proprietary printed circuit boards.
As a majority of the components in the Company's products are readily available,
the Company does not anticipate undertaking internal manufacturing of any
components. Manufacturing operations consist of only assembly, testing and
packaging functions.
Late in 1999 the Company experienced a tightening of supply for the
various components that its subcontractors must acquire for its products. The
result was a longer lead time requirement for placing production orders and a
stocking of more inventory of certain items than was required in the past. The
Company believes that this situation is a result of the burgeoning economy and
overall good business conditions.
<PAGE>
Patents & Proprietary Protection.
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The Company licenses the technology used in its performance evaluation
products from Ronald A. Waldorf, Chairman of the Board of Directors and founder
of OculoKinetics, Inc., which was acquired by the Company in 1991. The license
is for the term of the underlying patent, and calls for annual royalties of
$100.
The Company is the owner of a patent issued in August 1992, covering
specifically the EPS-100 and EM/1 models. The existence of patents may be
important to the Company's future operations but there is no assurance that
additional patents will be issued. For both of the above named patents, eleven
foreign patents have been issued and or are pending in several foreign
countries.
Proprietary information and trade secrets relate to a number of items,
but essentially cover the method of obtaining data regarding eye performance.
There have been no significant changes in patents and other proprietary
protection matters during 1999. The maintenance of foreign patents is rather
expensive and the continuance will be reviewed on a case by case basis as they
become due for renewal payments.
Employees.
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The Company currently employs three employees full time, including its
President, a development engineer and a marketing manager. Other part time
consulting and commissioned personnel are also utilized. The Company's employees
are not parties to any collective bargaining agreement, and the Company believes
that its employee relations are satisfactory.
ITEM 2 DESCRIPTION OF PROPERTY
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The Company owns no real estate. Company offices are leased in an industrial
complex at 2301 W. 205th St., #106, Torrance, CA 90501. The offices are 960
square feet in size and the lease expires April 30, 2001. Various subcontractor
facilities are utilized for manufacturing of the products.
<PAGE>
ITEM 3 LEGAL PROCEEDINGS
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There are no pending legal proceedings to which the Company is a party or to
which the property interests of the Company are subject.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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There were no matters submitted to the vote of security holders during 1999.
<PAGE>
PART II
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ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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A. MARKET INFORMATION
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The Company's common stock is traded on the OTC Bulletin Board under the symbol
"EYDY".
Price Range of Common Stock:
The following table sets forth the quarterly high and low closing bid and ask
prices for the Common Stock, as reported on the OTC/Bulletin Board, during the
1999 fiscal year.
CLOSING BID CLOSING ASK
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Fiscal 1999 LOW HIGH LOW HIGH
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First Quarter .14 .46 .16 .51
Second Quarter .13 1.30 .14 1.33
Third Quarter .37 .87 .42 .98
Fourth Quarter .02 .37 .31 .625
B. HOLDERS: As of December 31, 1999, the Company's Common Stock was held of
record by approximately 97 holders. Registered ownership includes nominees who
may hold securities on behalf of multiple beneficial owners.
C. DIVIDENDS: The Company has paid no cash dividends on its Common Stock and has
no present intention of paying cash dividends in the foreseeable future. Payment
of cash dividends in the future will depend, among other things, on the
Company's future earnings, requirements for capital improvements, the operating
and financial conditions of the Company and other factors deemed relevant by the
Board of Directors.
D. RECENT SALE OF UNREGISTERED SECURITIES: During 1999, the Company sold 750,000
shares of Common Stock for cash upon exercise of options to one purchaser. In
addition, the Company issued 88,888 shares of Common Stock to a consultant for
services rendered.
The Company believes that the issuances were exempt under Regulation D
of the Securities Act of 1933, as amended, or Rule 701 thereunder.
<PAGE>
ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS.
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The Company has invested substantial funds in the last several years
developing and validating its products. Successful marketing of the
Infrared/Video ENG System has been achieved, but this is a niche type market and
because of this, revenue growth is limited. Production of this system on a
profitable basis has been achieved for this product as well as securing a
contract to supply key portions of the product on a private label basis. Almost
all of the Company's current revenues come from sale of this product.
The EPS-100 Performance System has been sold to a few locales and the
beta marketing has been successful. For large scale sale of this product the
Company needs to have federal drug testing regulations modified. This is a
significant project requiring a coordinated effort with potential users,
government officials and the help of legislative bodies. Therefore, additional
investment capital is required to launch the marketing of the EPS-100 product. A
large scale marketing/lobbying effort will be necessary for this product to
succeed.
The Company is in the midst of soliciting capital investment for this
project. Until such capital is available, the EPS-100 marketing launch is being
delayed and revenues from sale of the medical product will continue to sustain
the Company, as it has the past year. Operating expenses are low and in keeping
with current revenue levels. There are no planned capital equipment expenditures
for the foreseeable future.
RESULTS OF OPERATIONS.
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Calendar Year Ended December 31, 1999 Compared to Year Ended December 31, 1998.
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Revenues from sale of products increased by 25% from $679,000 in 1998
to $847,000 in 1999. This increase is due to an increase in unit volume of
medical products, but was also largely influenced by the change in distribution
policy that was implemented in July of 1998. The distribution change eliminated
the Company's exclusive distributor of the medical products as the Company began
selling directly to end users through a Special Instrument Dealer network.
Eliminating the distributor increased the average selling price per unit which
also contributed to the increase in revenues.
The private label medical system buyer was also important to the
overall growth in 1999. In 1998 this customer purchased 20 systems whereas in
1999 this increased to 35 systems, an increase of 75% with only a nominal change
in system selling price. The goal for 2000 is a minimum of 50 systems.
The distributor change also increased the Company's marketing expense
because the distributor was no longer in place to absorb these expenses. The
increased marketing expense was not offset by the increased gross profit and
with increased non-operating expense a loss of $(45,667) occurred against a loss
of $(35,501) in 1998. The cost of sales for 1999 was held in check which
resulted in a gross profit of 57% as opposed to 40% for 1998. This substantial
improvement was needed as non-operating expenses continue to increase.
<PAGE>
There are no plans for significant capital expenditures for the near
future. Product development is limited due to financial resources available and
is concentrated on software and product improvements that will make our current
products more competitive and desirable.
A note payable became due on December 31, 1999. The Company started
negotiating a settlement of the note and the accrued interest on the note in
August 1999. The creditor was not very responsive, but, after several weeks of
discussion a settlement agreement was reached on December 27th. However, on
December 30th the creditor reneged on the settlement and has not put forth a
demand for payment nor offered a revised settlement agreement. The settlement
the Company agreed to provided for a partial cash payment and the balance in
shares of the Company. The Company has continued to probe the creditor to
negotiate a settlement, but to date, they have not been responsive.
LIQUIDITY AND CAPITAL RESOURCES
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At December 31, 1999, the Company had cash and cash equivalents of
$50,580. The principal source of liquidity has been cash generated from
operations and, to a lesser degree, cash from sales of securities. Management
anticipates that additional capital will be required to finance its operations
in the future. The Company believes that expected cash flow plus the anticipated
proceeds from sales of securities will be sufficient to finance its operations
at currently anticipated levels for a period of at least twelve months. However,
there can be no assurance that the Company will not encounter unforeseen
difficulties that may deplete its capital resources more rapidly than
anticipated.
<PAGE>
ITEM 7 FINANCIAL STATEMENTS
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HAROLD Y SPECTOR, CPA
80 South Lake Avenue, Suite 723
Pasadena, CA 91101
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, 1999 and 1998, and the related
consolidated statements of operations and accumulated deficit, and cash flows
for the years then ended, and the accompanying supplementary information
contained in Schedules A and B, which are presented only for supplementary
analysis purposes. 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 audit.
I conducted my audit 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 audit has 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, 1999 and 1998, 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 13 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.
/s/Harold Y Spector, CPA
Pasadena, California
March 2, 2000
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
ASSETS
1999 1998
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Current Assets
Cash $ 50,580 $ 36,452
Account Receivables 119,228 118,620
Inventories 50,083 60,263
Prepaid Expenses 4,952 0
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Total Current Assets 224,843 215,335
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Property and Equipment
Furniture and Fixtures 1,432 1,432
Equipment 13,331 12,632
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14,763 14,064
Less: Accumulated Depreciation (7,612) (5,015)
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Total Property and Equipment 7,151 9,049
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Other Assets
Receivable for Consigned Inventory 10,250 10,250
Consigned Inventory 51,250 51,250
Organizational Costs, net of accumulated
amortization of $4,858 0 0
Deposits 15,992 6,141
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Total Other Assets 77,492 67,641
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TOTAL ASSETS $ 309,486 $ 292,025
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SEE ACCOMPANYING NOTES AND AUDITOR'S REPORT
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
1999 1998
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Current Liabilities
Accounts Payable $ 46,491 $ 92,528
Accrued Expenses 275,146 255,601
Consigned Inventory 61,500 61,500
Deposit from Shareholders 7,758 0
Line of Credit 0 45,013
Notes Payable, current Portion 430,191 430,191
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Total Current Liabilities 821,086 884,833
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Long-Term Liabilities 0 0
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Total Liabilities 821,086 884,833
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Stockholders' Equity (Deficit)
Common Stock, $.001 par value, 50,000,000
shares authorized; 9,139,460 shares
issued and outstanding in 1999,8,300,627
in 1998 9,139 8,300
Paid-in Capital 2,459,063 2,333,027
Accumulated Deficit (2,979,802) (2,934,135)
------------ ------------
Total Stockholders' Equity (Deficit) (511,600) (592,808)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 309,486 $ 292,025
============ ============
SEE ACCOMPANYING NOTES AND AUDITOR'S REPORT
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Years ended December 31, 1999 and 1998
1999 1998
------------ ------------
SALES $ 847,606 $ 679,540
COST OF SALES - SCHEDULE A 370,143 392,303
------------ ------------
GROSS PROFIT 477,463 287,237
OPERATING EXPENSES - SCHEDULE B 483,043 284,721
------------ ------------
INCOME (LOSS) FROM OPERATIONS (5,580) 2,516
------------ ------------
OTHER INCOME (EXPENSES)
Interest Expenses (38,393) (36,285)
Penalties and Late charges (94) (132)
------------ ------------
Total Other Income (Expenses) (38,487) (36,417)
------------ ------------
NET INCOME (LOSS) BEFORE TAXES (44,067) (33,901)
PROVISION FOR INCOME TAXES 1,600 1,600
------------ ------------
NET INCOME (LOSS) (45,667) (35,501)
ACCUMULATED DEFICIT
Beginning Balance (2,934,135) (2,898,634)
------------ ------------
Ending Balance $(2,979,802) $(2,934,135)
============ ============
Net Loss per share - Primary $ (.005) $ (.005)
============ ============
Net Loss per share - Fully Diluted $ (.004) $ (.004)
============ ============
Weighted Average shares outstanding 8,948,383 7,502,030
============ ============
SEE ACCOMPANYING NOTES AND AUDITOR'S REPORT
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
COST OF SALES
Years ended December 31, 1999 and 1998
SCHEDULE A
COST OF SALES 1999 1998
----------- -----------
Beginning Inventory $ 60,263 $ 30,434
Purchases 256,091 320,919
Labor & Commissions 102,492 86,972
Consigned Inventory 0 10,250
Other Overhead Costs 1,380 3,991
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420,226 452,566
Less: Ending Inventory 50,083 60,263
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Total Cost of Sales $ 370,143 $ 392,303
=========== ===========
SEE ACCOMPANYING NOTES AND AUDITOR'S REPORT
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
OPERATING EXPENSES
Years ended December 31, 1999 and 1998
SCHEDULE B
OPERATING EXPENSES 1999 1998
----------- -----------
Accounting $ 16,500 $ 6,300
Advertising 1,004 0
Automobile 5,527 4,200
Bad Debts 1,487 3,568
Bank Charge 1,186 407
Billing 0 1,006
Cash Discounts 2,464 7,839
Commissions 62,973 21,848
Consulting 73,625 10,591
Depreciation 2,597 2,336
Dues and Subscriptions 752 390
Education 999 0
Employee Benefits Program 775 0
Freight 23,112 12,205
Insurance 10,401 4,649
Legal and Professional 20,352 14,331
Licenses & Regulatory Fees 4,106 1,983
Meals and Entertainment 2,826 44
Miscellaneous 0 21
Office Supplies 4,224 11,888
Payroll Taxes 14,457 10,815
Postage 8,379 4,045
Printing and Collateral 13,297 3,721
Rent and Lease 11,943 11,736
Repair and Maintenance 196 208
Royalty 0 1,000
Sales Promotion & Public Relations 8,364 475
Salaries - Officers 108,000 90,400
Salaries and Wages 0 10,963
Shows and Exhibits 6,368 6,500
Subcontractor and Outside Services 200 0
Supplies 5,124 7,626
Taxes - Other 21 168
Telephone 9,521 9,134
Travel 61,430 23,457
Utilities 833 868
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Total Operating Expenses $ 483,043 $ 284,721
=========== ===========
SEE ACCOMPANYING NOTES AND AUDITOR'S REPORT
<PAGE>
<TABLE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1999 and 1998
<CAPTION>
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
Exercising stock options 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)
Issuance stock for consulting 88,833 89 33,036 33,125
Exercising stock options 750,000 750 93,000 93,750
Net Loss (45,667) (45,667)
------------------------------------------------------------------------
Balance at December 31, 1999 9,139,460 $ 9,139 $ 2,459,063 $(2,979,802) $ (511,600)
========================================================================
</TABLE>
SEE ACCOMPANYING NOTES AND AUDITOR'S REPORT
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1999 and 1998
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (45,667) $ (35,501)
Adjustments to reconcile net loss to net
cash used by operating activities
Depreciation 2,597 2,336
Issuance Stocks for Salaries 0 400
Issuance Stocks for Consulting Fees 33,125 321
(Increase) Decrease in:
Accounts Receivable (608) (85,912)
Inventories 10,180 (29,829)
Prepaid Expenses (4,952) 0
Consigned Inventory 0 10,250
Receivable for Consigned Inventory 0 (10,250)
Deposits (9,851) (5,482)
Increase (Decrease) in:
Accounts Payable (46,037) 29,509
Accrued Expenses 19,545 81,972
------------ ------------
NET CASH (USED) BY OPERATING ACTIVITIES (41,668) (42,186)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (699) (1,903)
------------ ------------
NET CASH (USED) BY INVESTING ACTIVITIES (699) (1,903)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Deposit from Shareholders 7,758 0
Proceeds from exercising of options 93,750 31,250
Proceeds from (Payment to) Line of Credit (45,013) 45,013
Payments to Officers' Loans 0 (83)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 56,495 76,180
------------ ------------
NET INCREASE IN CASH 14,128 32,091
BEGINNING OF YEAR 36,452 4,361
------------ ------------
END OF YEAR $ 50,580 $ 36,452
============ ============
SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Year for:
Interest $ 1,559 $ 0
============ ============
Income Tax $ 1,600 $ 1,600
============ ============
SEE ACCOMPANYING NOTES AND AUDITOR'S REPORT
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
NOTE 1 - NATURE OF BUSINESS
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 company engaged in research,
development, manufacture, and marketing of non-invasive medical products and
software.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
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.
The subsidiary had no operations in both years of 1999 and 1998. All revenue is
derived from the Company.
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.
The Company prepares its consolidated statements of cash flows using the
indirect method as defined under Financial Accounting Standards Board Statement
No. 95.
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
Revenue is recognized when the products are shipped.
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 totaled $1,487 and $3,568 for years ended December 31, 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 $2,597 and $2,336 for 1999 and 1998, respectively.
Income Taxes
The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109 "Accounting For Income Taxes" (SFAS No. 109).
SFAS No. 109 requires a company to recognize deferred tax liabilities and assets
for the expected future income tax consequences of events that have been
recognized in the Company's financial statements. Under this method, deferred
tax assets and liabilities are determined based on temporary differences between
the financial carrying amounts and the tax bases of assets and liabilities using
the enacted tax rates in effect in the years in which the temporary differences
are expected to reverse.
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassification
Certain reclassifications have been made to the 1998 consolidated financial
statements to conform with the 1999 consolidated financial statement
presentation. Such reclassification had no effect on net loss as previously
reported.
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 personally guaranteed by the Company's President. As of
December 31, 1999 and 1998, the balance due was $0 and $45,013, respectively.
NOTE 4 - NOTES PAYABLE
1999 1998
---------- ----------
a)Notes to Officers, compound interest
accrued at 10%; due 60 days after
dates of notes; unsecured $ 23,470 $ 23,470
b)Notes to Others, interest at 12% per
annum; due on demand, unsecured 10,000 10,000
c)Note to TESA Corporation, interest at
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 430,191 430,191
Less current maturities 430,191 430,191
---------- ----------
Long-term debt, net $ 0 $ 0
========== ==========
NOTE 5 - 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 4c). As of December 31, 1999 and 1998,
interest of $167,987 and $139,991 was accrued and no principal payments were
made, respectively. The Company is currently negotiating the note.
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
NOTE 5 - SETTLEMENT AGREEMENT AND MUTUAL RELEASE (Continued)
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.
As of December 31, 1999 and 1998, the balance of these consigned inventories was
$51,250 in both years. There was a receivable of $10,250 on the consigned
inventory as of December 31, 1999.
NOTE 6 - 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, 1999 and 1998 consist of $1,600 minimum state income
taxes in each year, $800 for each corporation.
As of December 31, 1999, the Company has net operating loss carryforwards,
approximately, of $538,048 to reduce future taxable income. The subsidiary has
NOL carryforwards of $1,481,264. To the extent not utilized, both carryforwards
will begin to expire through 2012.
NOTE 7 - COMMON STOCK TRANSACTION
In 1999, the Company issued 88,833 shares of its common stock to a consultant,
in the amount of $33,125, for his service rendered. The balance owed to the
consultant as of December 31, 1999 was $19,500.
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 $0.20 per share and expire on December
20, 1999.
In 1999, the Company granted 60,000 non-qualified stock options to officers and
directors at fifty-four cents ($.54) through September 2001.
In addition, the Company had 2,500,000 outstanding stock options at various
exercise prices and expiration dates.
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
NOTE 8 - STOCKS OPTIONS (Continued)
A summary of options outstanding as of December 31, 1999 is shown as follows:
Exercise No. of shares Expiration
Price Outstanding Date
-------- ------------- ----------
$.10 400,000 1/2000
$.54 60,000 9/2001
$.25 1,000,000 11/2001
$.375 1,000,000 11/2001
$.001 100,000 11/2001
------------
2,560,000
============
In 1999 and 1998, there were 750,000 and 250,000 stock options exercised,
respectively.
NOTE 9 - 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 8)
been issued as of December 31, 1999, the Company's earnings (loss) per share
would have been $(0.004) for both years ended December 31, 1999 and 1998.
NOTE 10 - SEGMENT INFORMATION
SFAS No. 131 "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION" requires that a publicly traded company must disclose information
about its operating segments when it presents a complete set of financial
statements. Since the subsidiary did not have any operations in 1999 or 1998,
and all income are derived from the Company; accordingly, detailed information
of the reportable segment is not presented.
NOTE 11 - RELATED PARTY TRANSACTION
In 1998, the Company issued 721,433 shares of stock at par value for officers'
salaries and consulting fees.
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
NOTE 12 - COMMITMENTS AND CONTINGENCIES
Employment Agreements
The Company has employment agreements with two officers that provide for
aggregate annual compensation of $156,000 and $160,000 in 1999 and 1998,
respectively. The agreements are automatically renewed year to year. The
agreements may be terminated by the Company or by the officers with notice 60
days prior to any expiration date.
The unpaid officer's salaries of $48,000 in 1999 are being forgiven by the
officers.
Lease Commitments
The Company leases its office facilities for $768 per month. The lease expires
April 2001. Rent expense totaled $9,216 and $10,416 for 1999 and 1998,
respectively.
The Company leases various office equipments at $185 per month which commence to
expire in 1999.
As of December 31, 1999, the minimum commitments under these leases are as
follows:
December 31, Amounts
------------ ---------
2000 $ 9,216
2001 3,072
---------
Total $ 12,288
=========
NOTE 13 - 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, 1999, the Company has
accumulated deficit of $2,979,802, a stockholders' deficit of $511,600 and its
current liabilities exceed current assets by $596,243.
Management is currently involved in active negotiations to convert a note
payable of $396,721 into equity, 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.
<PAGE>
EYE DYNAMICS, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
NOTE 14 - YEAR 2000
The Year 2000 issue is the result of shortcomings in many electronic data
processing systems and other electronic equipment that may adversely affect the
Company's operations as early as fiscal year 1999.
The Company had assessed its various types of electronic equipment and does not
believe the Year 2000 issue will pose significant operational problems.
<PAGE>
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- ------ ---------------------------------------------
None
<PAGE>
PART III
- --------
ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
- ------ -------------------------------------------------------------
The directors and executive officers of the Company are as follows:
NAME AGE POSITION
- ---- --- --------
Charles E. Phillips 64 President, Treasurer & Director
Ronald A. Waldorf 51 Vice President, Secretary & Director
Arnold D. Kay 64 Director
Barbara J. Mauch 54 Chief Product Development Engineer
The directors are elected annually at the Annual Shareholders Meeting and the
term of office is nominally one year.
Charles E. Phillips and Ronald A. Waldorf have been directors of the Company
since 1991 and Arnold D. Kay was elected a director in September 1999.
RONALD A. WALDORF has been Chairman of the Board of Directors of the Company
since 1991 and is active in overall policy formation and strategic planning for
the Company. He is the inventor of the IR/Video ENG System, EPS-100 and EM/1
products. He also owns a patent covering closely related technology that has
been licensed exclusively to the Company. Since 1969 Waldorf has been active in
the field of otolaryngology, primarily in an academic research environment at
the University of Florida, College of Medicine and at the University of
California (Irvine), Department of Surgery. He has published numerous articles
on vestibular and optokinetic research in international scientific and medical
journals and was the principal investigator in a research grant funded by the
National Institute of Health/National Institute on Alcohol Abuse and Alcoholism
(NIH/NIAAA). Since 1981 he has acted as a consultant to clinics and hospitals in
the Los Angeles area, including the House Ear Clinic. He has also consulted to a
Japanese company developing new technologies for eye movement detection.
Waldorf earned an M.S. in 1972 from Department of Physiology, College
of Medicine, University of Florida, Gainesville, Florida.
<PAGE>
CHARLES E. PHILLIPS has been President and a Director of the Company and
predecessor since its inception in 1988. Prior to forming OculoKinetics, Inc. -
later Eye Dynamics, Inc. Mr. Phillips operated Charles E. Phillips, Inc., a
management and marketing consulting firm. His work has included assignments in
marketing, operations and the initiation of start-up ventures. He has over 35
years of management experience in both large and small firms. From 1974 to 1985,
Mr. Phillips was Executive Vice President and Director of Akai America, Ltd., a
consumer electronics company. His management background has encompassed
marketing, new product planning, sales, advertising, finance, accounting,
manufacturing, quality assurance and distribution.
Phillips was granted a B.A. in 1956 from Pepperdine College, Los
Angeles, California with emphasis on Business and Speech Education.
ARNOLD D. KAY was elected a Director in September 1999. He has more than 30
years experience in finance, sales and administration. Mr. Kay was an employee
of the Company from 1991 to 1994. He currently is co-owner and General Manager
of Lomita Blueprint/CADWEST of Lomita, California, a software and computer
imaging business focusing in design, graphics and distribution of CAD software
and systems.
Mr. Kay was Granted a B.S. in Business Administration/Finance from
California State University, Northridge, California in 1961.
BARBARA J. MAUCH is the primary product development engineer for the Company.
She has been with the Company since 1989 and is responsible for product
engineering and software development. Her background encompasses computer
systems design and software development for access control of buildings and
other properties. She served as a Director of the Company from 1991 to 1996.
Ms. Mauch earned a B.S. in Mathematics from Northern Colorado
University, Greeley, Colorado in 1971 and at UCLA, Los Angeles, California
completed the Master's program in computer science.
ITEM 10 EXECUTIVE COMPENSATION
- ------- ----------------------
The following table summarizes all compensation accrued and paid by the Company
in 1999 to the chief executive officer and each other executive officer:
SUMMARY COMPENSATION TABLE
Annual Compensation Compensation Awards
------------------- -------------------
Name and Securities
Principal Restricted Underlying All Other
Position Year Salary Bonus Other Stock Options Compensation
- -------- ---- ------ ----- ----- ---------- ---------- ------------
Charles E.
Phillips,
CEO 1999 $60,000 0 0 0 100,000 0
Ronald A.
Waldorf,
Secretary
& Director 1999 0 0 0 0 10,000 0
<PAGE>
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
- ------- ------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock of the Company as of December 31, 1999,
by (i) each of the Company's directors and executive officers, and (ii) all
directors and executive officers as a group.
Name & Address Number of Shares Percentage Owned
- -------------- ---------------- ----------------
Charles E. Phillips 2,567,489 (1) 27.2 (1)
2301 W. 205th St., #106
Torrance, CA 90501
Ronald A. Waldorf 1,901,315 (2) 20.2 (2)
2301 W. 205th St., #106
Torrance, CA 90501
Arnold D. Kay 73,128 (3) .8 (3)
2301 W. 205th St., #106
Torrance, CA 90501
All directors and executive 4,541,932 49.6
officers as a group
(3 persons)
- --------------------------------------
(1) Includes 115,000 shares covered by options exercisable within 60 days
(2) Includes 115,000 shares covered by options exercisable within 60 days
(3) Includes 5,000 shares covered by options exercisable within 60 days
<PAGE>
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------- ----------------------------------------------
Since inception, the Company has borrowed funds from Mr. Charles E. Phillips,
its president and CEO and from employee Barbara Mauch under various promissory
notes. These notes bear interest at 10% per annum and are unsecured. As of
December 31, 1999, the balance of the notes was $23,470, and the unpaid accrued
interest totalled $49,475.
The Company has employment agreements with its CEO and an employee that provide
for aggregate annual compensation of $150,000. 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.
ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(A) The following exhibits are included herein or incorporated by reference:
3(i)* Articles of Incorporation, as amended.
3(ii)* Bylaws
10.1* Employment Agreement, dated April 1, 1989
with Charles E. Phillips
10.2* Employment Agreement, dated December 1, 1989
with Barbara J. Mauch
10.3* Exclusive Licensing Agreement, dated November 1, 1989
with Ronald A. Waldorf
27 Financial Data Schedule
* Incorporated by reference from Amendment No. 1 to the Registration Statement
on Form 10-SB, filed on December 13, 1999.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Eye Dynamics, Inc.
Date: March 27, 2000 By /s/Charles E. Phillips
------------------------------
Charles E. Phillips, President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 50,580
<SECURITIES> 0
<RECEIVABLES> 119,228
<ALLOWANCES> 0
<INVENTORY> 50,083
<CURRENT-ASSETS> 224,843
<PP&E> 14,763
<DEPRECIATION> 7,612
<TOTAL-ASSETS> 309,486
<CURRENT-LIABILITIES> 821,086
<BONDS> 0
0
0
<COMMON> 9,139
<OTHER-SE> (520,739)
<TOTAL-LIABILITY-AND-EQUITY> 309,486
<SALES> 847,606
<TOTAL-REVENUES> 847,606
<CGS> 370,143
<TOTAL-COSTS> 853,186
<OTHER-EXPENSES> 94
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,393
<INCOME-PRETAX> (44,067)
<INCOME-TAX> 1,600
<INCOME-CONTINUING> (45,667)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,667)
<EPS-BASIC> (0.005)
<EPS-DILUTED> (0.004)
</TABLE>
