UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ___________.
COMMISSION FILE NUMBER: 0-8632
MEDICAL DYNAMICS, INC.
----------------------------------------------------
Exact name of Registrant as specified in its charter
Colorado 84-0631765
- ------------------------------ ---------------
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
99 INVERNESS DRIVE EAST, ENGLEWOOD, CO 80112
- -------------------------------------- --------
Address of principal executive offices Zip Code
Registrant's telephone number, including area code: 303-790-2990
------------
Former name, former address and former fiscal year, if changed since last
report: NA
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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
--- ---
The number of shares outstanding of each of the issuer's classes of common
stock, as of May 14, 1997 is 7,636,052 shares, $.001 par value.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS March September
31, 1997 30, 1996
----------- -----------
CURRENT ASSETS
Cash and equivalents $ 1,325,500 $ 993,200
Certificates of deposit 40,000 10,000
Trade receivables, less
allowance for doubtful
accounts of $25,000 204,300 181,600
Inventories 238,700 264,400
Prepaid expenses 22,300 9,400
----------- -----------
Total Current Assets 1,830,800 1,458,600
----------- -----------
PROPERTY AND EQUIPMENT
Loaner equipment 337,700 853,800
Machinery and equipment 279,600 266,800
Furniture and fixtures 267,300 266,700
Leasehold improvements 54,500 54,500
----------- -----------
939,100 1,441,800
Less accumulated deprecia-
tion and amortization (639,600) (1,225,300)
----------- -----------
Property and Equipment, Net 299,500 216,500
----------- -----------
OTHER ASSETS
Inventories, net of allowance
for obsolescence of $210,000 450,000 450,000
Patents, patents pending and
trademarks, net of accumulated
amortization of $701,000
and $681,400 79,500 96,700
Other 16,500 14,900
----------- -----------
Total Other Assets 546,000 561,600
----------- -----------
TOTAL ASSETS $ 2,676,300 $ 2,236,700
=========== ===========
See Notes to Consolidated Financial Statements.
-2-
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
March, September
31, 1997 30, 1996
------------ ------------
CURRENT LIABILITIES
Accounts payable $ 166,100 $ 217,900
Accrued expenses 33,000 77,500
Warranty reserve 15,000 15,000
Accrued royalties 60,000 --
------------ ------------
Total Current Liabilities 274,100 310,400
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, $.001
par value; authorized
5,000,000 shares; none
issued and outstanding -- --
Common stock, $.001 par
value; authorized
15,000,000 shares;
issued 7,636,100
and 7,180,200 shares 7,700 7,200
Additional paid-in capital 18,735,200 17,721,900
Accumulated deficit (16,340,700) (15,723,500)
------------ ------------
2,402,200 2,005,600
Treasury stock, at cost;
0 and 15,900 shares -- (79,300)
------------ ------------
Total Stockholders' Equity 2,402,200 1,926,300
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,676,300 $ 2,236,700
============ ============
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter ended Six months
March 31, ended March 31,
------------------ ---------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 290,700 $ 227,300 $ 488,300 $ 390,700
Cost of goods sold 226,800 127,200 372,100 239,800
----------- ----------- ----------- -----------
Gross profit 63,900 100,100 116,200 150,900
----------- ----------- ----------- -----------
Other operating
revenue 10,000 20,900 16,800 51,600
----------- ----------- ----------- -----------
Operating expenses:
Selling, general
and adminis-
trative 259,400 340,900 558,000 634,500
Depreciation and
amortization 38,800 28,500 77,600 89,800
Royalties 30,000 -- 60,000 --
Research and
development 48,700 42,600 81,000 93,800
----------- ----------- ----------- -----------
376,900 412,000 776,600 818,100
----------- ----------- ----------- -----------
Operating loss (303,000) (291,000) (643,600) (615,600)
----------- ----------- ----------- -----------
Other income
(expense):
Interest income 15,700 10,600 26,900 26,000
Interest expense -- -- (500) --
----------- ----------- ----------- -----------
15,700 10,600 26,400 26,000
----------- ----------- ----------- -----------
Loss before
income taxes (287,300) (280,400) (617,200) (589,600)
Income tax benefit -- -- -- --
----------- ----------- ----------- -----------
Net loss $ (287,300) $ (280,400) $ (617,200) $ (589,600)
=========== =========== =========== ===========
Net loss per share $ (.04) $ (.04) $ (.08) $ (.08)
=========== =========== =========== ===========
Weighted average
number of shares
outstanding 7,542,600 6,879,500 7,531,900 6,879,500
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
-4-
</TABLE>
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months ended March 31,
--------------------------
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(617,200) $(589,600)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization 77,600 89,800
Fair value of common
stock options 46,900 --
Gain on sale of loaner
equipment -- (4,500)
Change in assets and liabilities:
(Increase) Decrease in
trade accounts receivable (24,500) 135,500
Decrease in notes
receivable -- 110,000
Increase in accrued
royalties payable 60,000 --
(Increase) Decrease in
inventory purchases (123,700) 55,200
Change in other assets (14,400) 27,200
Decrease in accounts
payable, accrued expenses
and product warranty costs (96,400) (101,000)
--------- ---------
Net cash used in
operating activities (691,700) (277,400)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of
loaner equipment -- 4,500
Loss on disposal of
Loaner equipment 41,600 --
Increase in intangible assets (9,100) (8,900)
Purchase of certificate of
deposit (30,000) --
Purchase of equipment (24,800) (30,600)
--------- ---------
Net cash used in
investing activities (22,300) (35,000)
--------- ---------
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six months ended March 31,
--------------------------
1997 1996
------------ -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common
stock arising from exercise
of options $ 1,046,300 $ --
----------- -----------
Net Increase (Decrease) in cash
and cash equivalents 332,300 (312,400)
Cash and equivalents:
Beginning of Period 993,200 1,071,700
----------- -----------
End of Period $ 1,325,500 $ 759,300
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 500 $ --
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Loaner equipment transferred
from inventory $ 102,000 $ 23,300
=========== ===========
See Notes to Consolidated Financial Statements.
</TABLE>
-6-
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. MANAGEMENT ADJUSTMENTS
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the Registrant's September 30, 1996 Form 10-KSB. The
results of operations for the periods ended March 31, 1997 and March 31, 1996
are not necessarily indicative of operating results for the full years.
The Consolidated Financial Statements and other information furnished
herein reflect all adjustments which are, in the opinion of management of the
Registrant, necessary for a fair presentation of the results of the interim
periods covered by this report. Adjustments to the financial statements were of
a normal recurring nature.
Note 2. EARNINGS PER SHARE
For the six months ended March 31, 1997 and 1996, both primary and
fully-diluted earnings per share are calculated based upon 7,531,900 and
6,879,500, respectively, average common shares outstanding. For the three months
ended March 31, 1997 and 1996, both primary and fully-diluted earnings per share
are calculated based upon 7,542,600 and 6,879,500, respectively, average common
shares outstanding. Shares issuable under common stock options were excluded
from the computation of earnings per share because the effect was anti-dilutive.
At March 31, 1997 and 1996, the Registrant had 754,000 and 1,176,900,
respectively, of vested common stock options outstanding. Total common stock
options outstanding (including both vested and unvested) were 1,676,900 and
1,176,900 at March 31, 1997 and 1996, respectively.
NOTE 3. INCOME TAXES
Under the provisions of the Internal Revenue Code, the Registrant has
available net operating loss and research and development tax credit
carryforwards of approximately $16,300,000 and $170,000, respectively, which
expire in varying amounts from 1997 through 2011.
The net operating loss and business tax credit carryforwards described
above give rise to a deferred tax asset of approximately $6,600,000. This asset
is recorded net of a valuation allowance of the same amount. Therefore no
amounts are reflected in the accompanying balance sheet.
-7-
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 4. INVENTORIES
Inventories consist of the following at March 31, 1997 and September 30,
1996:
March 31, September 30,
1997 1996
--------- -------------
Raw materials, purchased and
replacement parts $ 509,900 $ 444,600
Finished goods 350,000 479,800
Work in process 38,800 --
Allowance for obsolescence (210,000) (210,000)
--------- ---------
$ 688,700 $ 714,400
========= =========
At March 31, 1997 and September 30, 1996, respectively, inventories of $450,000
are classified as a long term asset in the accompanying balance sheets. This
estimate was determined by considering both historical and projected levels of
sales for goods included in inventories. A substantial portion of raw materials
is expected to be utilized for repairs of equipment sold over the past several
years. Management believes that it may take up to five years to fully utilize
this portion of the Company's inventories based upon current levels of repairs
and expected production levels of new products.
-8-
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
As discussed in Note 2 to the audited financial statements as of September
30, 1996, (see the Registrant's form 10-KSB dated September 30, 1996 and the
accompanying audited financial statements), the Company has suffered recurring
losses and negative cash flows from operations. This raises substantial doubt
about the Company's ability to continue as a going concern. Without significant
sales increases, the Registrant anticipates negative cash flow from operations
for fiscal 1997 and beyond. The Registrant believes that its existing capital
resources are sufficient for the current fiscal year, and the Registrant is not
seeking any additional debt or equity financing at this time, however there are
754,000 vested common stock options outstanding as of March 31, 1997, and if
exercised (of which there can be no assurance), these options would provide
varying amounts of additional working capital to the Registrant. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Financial Condition. (March 31, 1997 as compared to September 30, 1996)
During the six month period ended March 31, 1997, the Registrant's net working
capital increased approximately $408,500, due primarily to the generation of
cash of $1,046,300 through the exercise of common stock options, offset by the
use of cash in operations and the resultant operating loss. Cash has been used
primarily to fund an increase in inventories in anticipation of increased dental
camera sales and certain manufacturer inventory purchase requirements, the
general operations of the Registrant including research and development, and to
promote the sales, introduction, and marketing of products.
Principal changes in the components of net working capital for the six
months ended March 31, 1997 consist of an increase in short term investments by
$30,000, an increase in the trade accounts receivable balance by $22,700, a net
decrease in total inventory levels by $25,700 (cash purchases of $123,700 net of
non-cash transfers of inventory to loaner and demo equipment of $102,000 and
other research and development use of inventory components), and a reduction in
current liabilities by $36,300.
During the six month periods ended March 31, 1997 and 1996, the Registrant
experienced negative cash flows from operations of approximately $691,700 and
$277,400, respectively. This increase in cash used for operations of $414,300
over the comparable period of last fiscal year was a result of the following
significant factors: Cash purchases of inventory increased by $123,700 during
-9-
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation. (Continued)
this period of fiscal 1997 as compared to a reduction in inventory levels by
$55,200 during the comparable period of fiscal 1996. This increase in
inventories during fiscal 1997 is in anticipation of increased dental camera
sales and certain manufacturer inventory purchase requirements. Trade accounts
receivable increased by $24,500 due to increased sales during this period of
fiscal 1997 versus a decrease of $135,500 during the comparable period of fiscal
1996. During the comparable period of fiscal 1996 the Registrant collected
$110,000 due on a related party note receivable. There was no note receivable
balance due during fiscal 1997. A non-cash expense was recognized during this
period of fiscal 1997 in the amount of $60,000 for the accrual of royalties per
the terms of the amended and restated licensing agreement with the Registrant's
chairman. No expense was accrued during this period of fiscal 1996. A non-cash
expense was recognized during this period of fiscal 1997 in the amount of
$46,900 for the fair value of common stock options accruing due to dental camera
sales benchmarks being achieved for consultant stock options in accordance with
FAS 123. No such option contracts existed during the comparative period of
fiscal 1996.
To continue the Registrant's objective of curtailing operating losses,
negative cash flow from operations and liquidity erosion further, management is
continually reviewing product profit margins and general expense accounts, and
will reduce or eliminate all non-essential expenditures. Purchasing procedures
are also in place to ensure minimized product costs and to avoid excess
inventory levels. Management of the Registrant is also continuing to seek OEM
customers for all product lines. The Company also entered into a revised license
agreement with Dr. Edwin Adair during fiscal 1995 resulting in reduced patent
maintenance and other associated costs.
Without significant sales increases, the Registrant still anticipates
negative cash flow from operations for fiscal 1997 and beyond. During fiscal
1997 and fiscal 1996 cash flow deficits were funded by employee, officer, and
consultant stock option exercises. In previous years this deficit has been
funded by equity placements and loans from the Company's chairman. However, the
Registrant's ability to fund its operations will be dependant upon achieving
profitability and in generating a positive cash flow from operations. Unless the
Registrant is able to increase sales revenues, and achieve and maintain
profitability during fiscal 1997, the Registrant may be facing significant
working capital shortages beginning in fiscal year 1998. There can be no
assurance that the Company will be able to achieve this goal.
-10-
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation. (Continued)
The Registrant believes that its existing capital resources are sufficient
for the current fiscal year, and the Registrant has planned no significant
capital expenditures. The Registrant is not seeking additional debt or equity
capital at this time, however there are 754,000 vested common stock options
outstanding as of March 31, 1997, and if exercised (of which there can be no
assurance), these options would provide varying amounts of additional working
capital to the Registrant. These options have various prices which range between
$1.125 and $4.00 per share and at May 8, 1997 the price of the Company's common
stock was approximately $2.13. If the Registrant does obtain additional capital
(of which there can be no assurance), the Registrant will be able to allocate
more resources to sales and marketing efforts (including negotiations with
prospective OEM relationships), and research and development.
Results of Operations. As an aid to understanding the Registrant's
operating results, the following table indicates the percentage relationships of
principal revenue and expense items to total net sales included in the
Consolidated Statements of Operations for the six month periods ended March 31,
1997 and 1996 and the percentage changes in those items for the same periods.
<TABLE>
<CAPTION>
As a percent of
total revenue
for the six Percentage
month period change from
ended March 31, the prior years
1997 1996 Revenue/Expense Items comparable period
---- ---- --------------------- -----------------
<S> <C> <C> <C>
100.0% 100.0% Net sales 25.0%
76.2% 61.4% Cost of goods sold 55.2%
23.8% 38.6% Gross profit (23.0%)
3.4% 13.2% Other operating revenue (67.4%)
114.3% 162.4% Selling, general and admin (12.1%)
15.9% 23.0% Depreciation & amortization (13.6%)
12.3% 0.0% Royalties n/a
16.6% 24.0% Research and development (13.6%)
(131.8%) (157.6%) Operating loss 4.5%
5.4% 6.7% Other income/(expense) 1.5%
(126.4%) (150.9%) Net loss 4.7%
</TABLE>
Revenue. Sales for the six months ended March 31, 1997 and 1996 totaled
$488,300 and $390,700, respectively, for an increase of approximately $97,600 or
-11-
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation. (Continued)
25.0%. The Registrant's intraoral dental camera, still in the introductory
stage, generated revenues of $346,500 for this six month period of fiscal 1997,
or 71% of total sales revenue, primarily during January through March of 1997.
There were no sales of this camera during the comparable period of fiscal 1996.
The Registrant had previously received significant purchase orders for intraoral
dental cameras specifically developed for an OEM company (see the Registrant's
form 10-KSB dated September 30, 1996 for further information). To date this
company has been unable to obtain the financing necessary to allow the
Registrant to prudently build and ship the previously ordered cameras. There
have been no sales to this company as of the date of this report. The Registrant
is currently involved in negotiations to resolve the unfilled purchase order
which could result in the Registrant's acquisition of additional rights under an
existing license agreement that currently exists between the two companies,
although no assurances as to the successful consummation of this transaction can
be given. The Registrant is also currently negotiating with a former
representative of that OEM company to replace those purchase orders with
purchase orders from a new entity which has already raised a portion of the
equity required to complete a similar project, although no assurances as to the
success of this project can be given. The following medical product groups
incurred significant sales decreases over the comparable six month period of
fiscal 1996 in the following amounts: general accessories $110,000, electronic
video laparoscope (EVL's) $48,500, optical catheters & accessories $78,100, the
Adair Veress needle $20,500. The declining sales levels are due to a decrease in
capital budget expenditures in hospitals coupled with less influence over
purchasing decisions by physicians, reduced medical marketing efforts by the
Registrant, and increased competition from other manufacturers of surgical
cameras. Domestic, non-OEM sales accounted for 96% and 52% of total sales,
foreign sales accounted for 4.0% and 40% of total sales, and OEM sales accounted
for 0% and 8% of the total sales for the comparable periods ended March 31, 1997
and 1996, respectively.
Foreign sales for the six months ended March 31, 1997 and 1996 were $19,100
and $155,700, respectively, for a decrease of $136,600 or 88%. This decrease is
due primarily to a decline in EVL, light source and spare cable sales to foreign
distributors in Pakistan and England, and to Rosot Enterprises, the Registrant's
South American distributor. The Company's foreign sales are derived primarily
from the following markets: South America, England, France, Australia and The
Netherlands. Management believes that foreign sales will be restored and exceed
previous period levels based upon the introduction of the True vision II
-12-
<PAGE>
MEDICAL DYNAMICS, INC. AND SUBSIDIARY
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation. (Continued)
intraoral dental camera, a digital version of the electronic video laparoscope,
and world wide distribution of lap wrap, although no assurances as to the
success of this strategy are given.
Cost of Goods Sold. Cost of goods sold for the six months ended March 31,
1997 and 1996 totaled $372,100 and $239,800, respectively, for an increase of
approximately $132,300 or 55.2%. Total cost of goods sold as a percent of sales
was 76.2% and 61.4%, respectively, for the same periods. The cost of goods sold
amount for both fiscal 1997 and 1996 no longer includes a significant
underapplied overhead amount for under-utilized manufacturing capacity. The
fiscal 1996 cost of sales figure reflects a reclassification of $135,500 made by
management from cost of goods sold to selling, general and administrative
expense in an effort to more accurately identify and compare standard cost of
sales. The increase of 14.8% in cost of sales is due to negative production
variances such as labor and materials. Varying sales product mixes also
contribute to the cost of sales percentage increase.
Selling, General and Administrative Expenses (SG&A). SG&A expenses for the
six months ended March 31, 1997 and 1996 were $558,000 and $634,500,
respectively, for a decrease of approximately $76,500 or 12.1%. The fiscal 1997
number includes a non cash expense of $46,900 for vesting of consultant common
stock options per FAS 123, a $41,600 writeoff of loaner and demonstration
equipment, and a $10,200 charge for bad debts. Without these non-cash expense
charges totaling $65,400, the fiscal 1997 SG&A expense would have been
approximately $459,300, or an improvement by $175,200 over fiscal 1996 expenses.
Other significant expense reductions during fiscal 1997 versus the comparable
period of fiscal 1996 include reduced depreciation and amortization charges as a
substantial amount of loaner equipment became fully depreciated during fiscal
1996, and cost cutting measures instituted by Management precipitated by lower
sales and production values. The registrant continues to reduce or eliminate
expenses in all areas when practical.
Research and Development Costs (R&D). For the six months ended March 31,
1997 and 1996 R&D expenses were $81,000 and $93,800, respectively, for a
decrease of approximately $12,800 or 13.6%. A significant portion of this
decrease is due to a reallocation and focus of the Registrant's R&D budget
toward projects specifically related to the intraoral dental camera. General R&D
funding has been reduced along with funding for the model 5990 optical catheter
system. The Registrant policy is to fund research and development as it deems
appropriate to maintain or gain a competitive advantage.
-13-
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information.
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27. Financial data schedule.
(b) Reports on Form 8-K: None.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 14, 1997 /s/ Van A. Horsley
------------------
Van A. Horsley, President,
Principal Executive Officer,
and Principal Financial Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,325,500
<SECURITIES> 40,000
<RECEIVABLES> 229,300
<ALLOWANCES> (25,000)
<INVENTORY> 688,700
<CURRENT-ASSETS> 1,830,800
<PP&E> 939,100
<DEPRECIATION> (639,600)
<TOTAL-ASSETS> 2,676,300
<CURRENT-LIABILITIES> 274,100
<BONDS> 0
0
0
<COMMON> 7,700
<OTHER-SE> 2,394,500
<TOTAL-LIABILITY-AND-EQUITY> 2,676,300
<SALES> 488,300
<TOTAL-REVENUES> 532,000
<CGS> 372,100
<TOTAL-COSTS> 1,148,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 500
<INCOME-PRETAX> (617,200)
<INCOME-TAX> 0
<INCOME-CONTINUING> (617,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (617,200)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
