<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 1-8402
---------
IRVINE SENSORS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 33-0280334
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3001 Redhill Avenue, Costa Mesa, California
(Address of principal executive offices)
92626
(Zip Code)
(714) 549-8211
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all 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
----- -----
As of June 30, 1996 there were 17,724,500 shares of Common Stock
outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
IRVINE SENSORS CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, October 1,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,040,800 $ 4,367,100
Accounts receivable, net of allowances of $10,000 2,175,100 2,388,000
Inventory 7,986,000 2,930,900
Prepaid expenses 122,700 241,500
------------ ------------
Total current assets 13,324,600 9,927,500
------------ ------------
Equipment, furniture and fixtures, net 12,320,700 5,649,600
Other assets 192,900 32,100
------------ ------------
$ 25,838,200 $ 15,609,200
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,931,500 $ 1,302,500
Accrued expenses 721,800 671,500
Deferred revenues 2,960,900 1,365,000
Notes payable and current portion of long-term debt 80,600 206,400
------------ ------------
Total current liabilities 5,694,800 3,545,400
------------ ------------
Commitment to employee retirement plan 168,000 -
------------ ------------
Long-term debt 3,022,100 78,000
------------ ------------
Deferred royalties payable - affiliated company 123,200 123,200
------------ ------------
Preferred stock of consolidated subsidiary 118,500 118,500
------------ ------------
Convertible subordinated debentures 5,950,000 2,250,000
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 500,000 shares authorized;
9,354 shares Series B Convertible Cumulative
Preferred issued and outstanding; aggregate liquidation
preference of $238,500 100 100
5,659 shares Series C Convertible Cumulative
Preferred issued and outstanding; aggregate liquidation
preference of $271,700 100 100
Common stock, $0.01 par value, 40,000,000 shares authorized;
17,724,500 and 15,566,800 shares issued and outstanding 177,200 155,700
Common stock warrants; 239,200 and 126,200
issued and outstanding - -
Paid-in capital 34,467,800 27,025,700
Accumulated deficit (23,883,600) (17,687,500)
------------ ------------
Total shareholders' equity 10,761,600 9,494,100
------------ ------------
$ 25,838,200 $ 15,609,200
============ ============
</TABLE>
See Accompanying Condensed Notes to Consolidated Financial Statements.
2
<PAGE>
IRVINE SENSORS CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
-------------------------- ---------------------------
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 1,917,700 $ 2,332,100 $ 6,469,900 $ 5,654,400
Other - 45,200 72,000 86,400
----------- ----------- ----------- -----------
Total revenues 1,917,700 2,377,300 6,541,900 5,740,800
Costs and expenses:
Cost of revenues 3,478,400 1,887,800 8,392,100 4,974,500
General and administrative 1,016,700 676,800 2,912,200 1,840,900
Research and development 474,600 396,300 1,293,500 1,062,700
----------- ----------- ----------- -----------
4,969,700 2,960,900 12,597,800 7,878,100
----------- ----------- ----------- -----------
Loss from operations (3,052,000) (583,600) (6,055,900) (2,137,300)
Interest expense (152,400) (2,400) (233,000) (5,200)
Interest income 49,100 8,800 94,600 69,700
----------- ----------- ----------- -----------
Loss before provision
for income taxes (3,155,300) (577,200) (6,194,300) (2,072,800)
Provision for income taxes - - 1,800 900
----------- ----------- ----------- -----------
Net loss $(3,155,300) $ (577,200) $(6,196,100) $(2,073,700)
=========== =========== =========== ===========
Net loss per common and
common equivalent share $ (0.19) $ (0.04) $ (0.38) $ (0.14)
=========== =========== =========== ===========
Weighted average number
of shares outstanding 16,990,400 14,877,700 16,341,800 14,833,500
=========== =========== =========== ===========
</TABLE>
See Accompanying Condensed Notes to Consolidated Financial Statements.
3
<PAGE>
IRVINE SENSORS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
39 Weeks Ended
------------------------------------------------------------
June 30, 1996 July 2, 1995
--------------------------- -----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 6,754,800 $ 5,018,300
Cash paid to suppliers and employees (13,541,000) (7,632,700)
Interest received 94,600 69,700
Interest paid (110,200) (5,200)
Income taxes paid (1,800) (900)
------------ -------------
Net cash used in operating activities $(6,803,600) $(2,550,800)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital facilities and equipment expenditures (8,177,300) (2,320,400)
Decrease in marketable securities - 4,447,500
------------ -------------
Net cash (used in) provided by investing activities (8,177,300) 2,127,100
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible
subordinate debentures 10,330,300 -
Proceeds from long-term debt 3,013,200 191,500
Proceeds from bank line of credit - 101,800
Principal payments under notes payable
and capital lease obligations (194,900) (50,800)
Proceeds from common stock issued 506,000 112,500
------------ -------------
Net cash provided by financing activities 13,654,600 355,000
------------- ------------
Net decrease in cash and cash equivalents (1,326,300) (68,700)
Cash and cash equivalents at beginning of period 4,367,100 437,300
------------- ------------
Cash and cash equivalents at end of period $ 3,040,800 $ 368,600
============= ============
RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIES:
Net loss $(6,196,100) $(2,073,700)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization $ 1,506,200 $ 744,500
Commitment to employee retirement plan 168,000 135,800
Common stock contributed to employee
retirement plan 327,300 242,400
Decrease (increase) in accounts receivable 212,900 (620,700)
Increase in inventory (5,055,100) (1,117,800)
Increase in prepaid expenses and other assets (42,000) (135,300)
Increase in accounts payable and accrued expenses 679,300 566,600
Increase (decrease) in deferred revenues 1,595,900 (190,800)
------------ -------------
Total adjustments (607,500) (375,300)
------------- ------------
Net cash used in operating activities $(6,803,600) $(2,449,000)
============= ============
NONCASH INVESTING AND FINANCING ACTIVITIES:
Bonds converted to common stock $ 7,900,000 $ -
============= ============
Commitment to employee retirement plan $ 495,300 $ 378,200
============= ============
Capitalized lease obligations $ 13,200 $ 191,500
============= ============
Capital facilities and equipment $ - $ 86,400
============= ============
</TABLE>
See Accompanying Condensed Notes to Consolidated Financial Statements.
4
<PAGE>
IRVINE SENSORS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The information contained in the following Condensed Notes to Consolidated
Financial Statements is condensed from that which would appear in the annual
consolidated financial statements; accordingly, the consolidated financial
statements included herein should be reviewed in conjunction with the
consolidated financial statements and related notes thereto contained in the
1995 Annual Report to Shareholders of Irvine Sensors Corporation (the
"Company"). It should be understood that accounting measurements at interim
dates inherently involve greater reliance on estimates than at year end. The
results of operations for the interim periods presented are not necessarily
indicative of the results expected for the entire year.
The consolidated financial information as of June 30, 1996 and July 2, 1995
included herein is unaudited but includes all normal recurring adjustments
which, in the opinion of management of the Company, are necessary to present
fairly the consolidated financial position of the Company at June 30, 1996, the
results of its operations for the 13 and 39 week periods ended June 30, 1996 and
July 2, 1995 and its cash flows for the 39 week periods ended June 30, 1996 and
July 2, 1995.
The consolidated financial statements include the accounts of Irvine Sensors
Corporation and its wholly owned subsidiaries Carson Alexiou Corporation ("CAC")
and Novalog, Inc. ("Novalog"). All significant intercompany transactions have
been eliminated in consolidation.
NOTE 2 - INVENTORY
Title to all inventories remains with the Company. Inventoried materials and
costs relate to work-in-process on serial infrared communication chips,
customers' orders, generic module parts and memory stacks which the Company
anticipates it will sell to customers. Such inventoried costs are stated
generally at the total of the direct production costs including overhead.
Inventory valuations do not include general and administrative expenses and are
valued at the lower of cost or market.
NOTE 3 - CONVERTIBLE SUBORDINATED DEBENTURES
In conjunction with the fiscal 1995 private financing of $2.25 million of 8
percent convertible subordinated debentures (the "Debentures"), the Company
issued an additional $500,000 of Debentures in October 1995 to institutional
investors in Europe. The gross proceeds less expenses were added to the
Company's general funds. During the first half of fiscal 1996, the Company, at
the request of bond holders, converted the entire $2.75 million of outstanding
Debentures at varying rates into 509,400 shares of the Company's common stock
which were subsequently registered.
In a private financing during February and March 1996, the Company issued
$11.1 million of 8 percent convertible subordinated debentures due in 1998, to
institutional and private investors in Canada and Europe. The Debentures are
convertible into shares of common stock at varying rates which are contingent
upon the closing bid prices of the common stock. The Company shall have the
right to demand conversion of the Debentures at any time after March 1997.
Interest is payable semi-annually on January 31 and July 31 of each year. The
Debentures are subordinated to prior payment of bank indebtedness of the
Company. The gross proceeds less expenses were added to the Company's general
funds. In May 1996, the Company filed a registration statement covering
2,997,000 shares, the approximate number of shares estimated to underly the
Debentures based on the then projected trading range of the Company's stock.
The Company intends to file a subsequent registration statement adjusting the
number of shares underlying the Debentures to reflect actual conversions and
changes in the trading range of the Company's stock. As of the date hereof,
said adjustment would require the registration of an additional 402,000 shares
of common stock. During the third quarter of fiscal 1996, the Company, at the
request of bond holders, converted $5.15 million of outstanding Debentures at
varying rates into 1,222,400 shares of the Company's common stock.
5
<PAGE>
NOTE 4 - ISSUANCE OF COMMON STOCK
During the 39 week period of fiscal 1996, the Company issued 257,100 shares
of common stock to seven employees, two of whom are officers and one officer-
director, and three non-employee directors upon exercise of options granted
under the Company's Stock Option Plans. The Company also issued 79,700 shares
of common stock to its foreign investment banker and 30,000 shares to a warrant
holder, both of whom exercised outstanding common stock purchase warrants. The
net proceeds of $506,000 were added to the Company's general funds.
NOTE 5 - ACQUISITION OF EQUIPMENT
On April 19, 1996, the Company consummated an agreement for the acquisition
and operation of the equipment comprising IBM's cubing line located at IBM's
Essex Junction, Vermont facility. The cubing line was established by IBM to
manufacture the stacked-chip assemblies required to commercialize the Company's
proprietary chip-stacking technology under the joint development alliance that
IBM and the Company entered into in 1992 and recently completed. According to
the terms of the agreement, the Company acquired the equipment and clean room
which comprises the cubing line for a cash payment of approximately $6.5
million. In addition, the Company signed a facility lease agreement for the
space required to operate the cubing line under the Company's management within
the IBM facility at least through December 1998. The Company's facility
expenses have been approximately doubled by this agreement and are expected to
increase by an additional $1.1 million per year in calendar years 1997 and 1998.
NOTE 6 - BANK LOAN
During April 1996, the Company borrowed $3.0 million from a bank pursuant to
a six-year term loan agreement. Interest is payable monthly at prime plus 1.5
percent, and principal is payable monthly beginning the second year of the loan.
Ninety percent of this loan is guaranteed by the Rural Economic Community
Development Service and Vermont Economic Development Authority. The loan
agreement contains restrictive covenants which include the maintenance of
minimum tangible net worth, as defined, and certain other financial ratios. The
loan is collateralized by substantially all the assets related to the Company's
Vermont operations.
NOTE 7 - RELATED PARTY TRANSACTIONS
In April 1980, the Company entered into an agreement with R&D Leasing Ltd.,
(RDL), a limited partnership in which the Company's Chairman and a Senior Vice-
President are general partners with beneficial interests, to design an
electronic circuit, to develop certain fabrication processes and to build
equipment for testing electronic integrated circuits. In connection with the
development of the electronic test equipment under the RDL agreement, certain
other proprietary fabrication processes were developed to which RDL retained
ownership. Upon the occurrence of certain specified events, such as the use of
patented fabrication processes in connection with contracts, the agreement with
RDL provides that the Company will pay RDL a royalty fee based on a percentage
of revenues from sales of the basic devices using the processes created during
the development of this equipment. As of June 30, 1996, the Company had accrued
$123,200 in deferred royalties payable to RDL.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS.
- --------------
Except for historical information contained herein, this Report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The
forward-looking statements contained herein are subject to certain risks and
uncertainties, including such factors, among others, as the pace at which new
markets develop, the ability of the Company to introduce new products and ramp
up manufacturing in a timely manner while controlling its operating expenses and
the response of competitors, many of whom are bigger and better financed than
the Company. In addition, the scope of the Company's growth plan may introduce
unanticipated risks and financial requirements. The availability of external
financing for the Company's plan cannot be assured and is subject to numerous
factors including those unrelated to the Company's performance such as economic
and market conditions. Further, the Company's financial performance prior to
substantial growth in revenues may not permit additional equity financing and
may place at risk the continuation of its long-term debt financing because of
inability to achieve financial convenants. Accordingly, investors are advised
to assess forward-looking statements contained herein with caution. Additional
information on various risk and uncertainties potentially affecting the
Company's results are discussed below and are contained in publicly filed
disclosures available through the Securities Exchange Commission EDGAR database
(www.sec.gov) or from the Company's Investor Relations.
RESULTS OF OPERATIONS
REVENUES
Revenues for the 39 week period ended June 30, 1996 of $6,541,900 surpassed
all previous records for a 39 week period and represents an increase of $801,100
or 14 percent from the corresponding 39 week period in fiscal 1995. The growth
in revenues for the 39 week period was attributable to increases in shipments of
Memory Short Stacks/TM/ from the Company's Vermont facility and shipments of the
Company's new serial infrared communications chip ("SIRComm") from the Company's
wholly owned subsidiary, Novalog, Inc. The SIRComm chip has continued to gain
market acceptance since its introduction in late fiscal 1995. The increase in
shipments of Memory Short Stacks by the Company's Computer Products Operations
("CPO") was a result of substantial increases in bookings for this product that
began in the second half of fiscal 1995 combined with the continued ramp-up in
production of stacked memory products achieved during fiscal 1996.
The decrease in revenues for the 13 week period ended June 30, 1996 of
$459,600 or 19 percent lower than the corresponding period in fiscal 1995 was
primarily attributable to procurement delays related to the Company's research
and development operations ("ATO") and the timing of product shipments from the
CPO unit. Substantial quantities of work-in-process which were inventoried
during the 13 week period ended June 30, 1996 are expected to be shipped during
the subsequent 13 week period thereby favorably affecting revenues. This timing
effect has led to the Company recording revenues in the first four weeks of the
subsequent period which exceed 80 percent of the previous 13 weeks. ATO, which
is largely dependent on contracts from the U.S. Government's military agencies
and subcontracts from major Government contractors, continued to be adversely
impacted by delays in contract funding and awards caused by the Federal
Government's budget crisis earlier in the year.
Other revenues were derived from a license agreement with Unitrode
Corporation which involves the transfer of technology allowing Unitrode to
produce Novalog's SIRComm chip.
COST OF REVENUES
Cost of revenues as a percentage of revenues for the 13 and 39 week periods
ended June 30, 1996 were 181 percent and 128 percent, respectively, as compared
to 79 percent and 87 percent for the comparable periods in fiscal 1995. The
increases were attributable to the Company's inability to absorb its indirect
costs while ramping up its capacity and incurring additional overhead costs.
Funding delays on existing contracts and the inability to obtain new contracts
as mentioned above created temporary under-absorbed costs at the Company's
research and development unit. A substantial escalation of overhead costs
occurred at CPO as a
7
<PAGE>
result of the IBM cubing line acquisition and facility lease, the completion of
the joint development activities with IBM to commercialize the Company's chip-
stacking technology, and from efforts to ramp-up production of stacked memory
products to meet existing backlog requirements and projected bookings. The
Company anticipates the overhead costs at the Vermont operation, including an
increase in rent expense projected to occur in the next two fiscal years (See
Note 5 of Notes to Consolidated Financial Statements), will have a strongly
adverse impact on the results of operations in the immediate future until the
output of the line and corresponding shipments of products can be substantially
increased. To a lesser extent, the recent slow down in the personal computer
market impacted Novalog's ability to sustain its initially strong positive gross
margin through the third quarter of fiscal 1996.
RESEARCH AND DEVELOPMENT
The Company increased its expenditure in research and development by $78,300
and $230,800 or 20 percent and 22 percent during the 13 and 39 week periods
ended June 30, 1996, respectively, compared to the corresponding periods in
fiscal 1995. The increases were primarily attributable to efforts directed at
developing the next generation SIRComm products and design efforts aimed at
developing new products at the Company's other operations.
GENERAL AND ADMINISTRATIVE
During the first half of fiscal 1996, the Company experienced moderate growth
in its administrative infrastructure in conjunction with the increase in
business activity and the anticipation of future growth driven by the transition
to a products-based company. During the third quarter of fiscal 1996, general
and administrative ("G&A") expense remained consistent with the second quarter.
As a percentage of revenues, G&A expense was 53 percent and 45 percent for the
13 and 39 week period compared to 29 percent and 32 percent in fiscal 1995,
respectively. The increase in G&A expense is primarily attributable to
additional marketing costs associated with promoting the Company's products and
efforts directed towards obtaining new research and development contract awards.
In addition, the Company incurred non-recurring legal expense in connection with
the IBM cube line acquisition and facility lease, its financing activities, and
in the incorporation of its wholly owned subsidiary, Novalog, Inc. Other
nonspecific nominal increases in G&A expense included additional consulting and
travel.
INTEREST EXPENSE/INTEREST INCOME
Interest expense increased $150,000 and $227,800 for the 13 and 39 week
periods ended June 30, 1996, respectively, compared to the similar periods in
fiscal 1995. The increase in interest expense was primarily attributable to
interest payable on subordinated debenture bonds (See Note 3 of Notes to
Consolidated Financial Statements), to interest on the $3.0 million bank loan
(See Note 6 of Notes to Consolidated Financial Statements) and to a lesser
extent, interest on capital lease obligations incurred primarily during fiscal
1995. Interest income increased from the corresponding periods in fiscal 1995
as a result of additional cash and cash equivalents held in deposits during
fiscal 1996 which were obtained from the financing activities discussed above.
LIQUIDITY AND CAPITAL RESOURCES
During the 39 week period ended June 30, 1996, the Company raised
approximately $13.9 million (net of related expenses) from financing activities
which included the issuance of $11.6 million 8 percent convertible subordinated
debentures (See Note 3 of Notes to Consolidated Financial Statements) and a $3
million bank loan (See Note 6 of Notes to Consolidated Financial Statements).
The Company anticipates that it will be in full compliance with two of the three
restrictive convenants of its bank loan for the foreseeable future, but will not
be in compliance with the third convenant until approximately the mid-point of
fiscal 1997 after anticipated Debenture conversions and improvements in
operating results. The primary uses of cash and cash equivalents during the 39
week period of fiscal 1996 were for capital facilities and equipment
expenditures, funding of the Company's net loss, and the build up of work-in-
process inventory. The Company invested approximately
8
<PAGE>
$8.2 million in capital facilities and equipment which included the acquisition
of the IBM cubing line with an approximate $6.5 million cash payment to IBM (See
Note 5 of Notes to Consolidated Financial Statements). The Company is
anticipating the current rate of capital expenditures (excluding the IBM
transaction) to increase in the immediate future. The approximate $5.1 million
increase in inventory resulted from the growth in backlog at CPO for Memory
Short Stacks and production of custom chip stacks by ATO. An approximate $1.6
million increase in deferred revenues slightly offset the cash used for
operations which represented advanced customer payments received for Memory
Short Stacks scheduled for delivery in the fourth quarter.
At June 30, 1996, the Company had cash and cash equivalents of $3,040,800,
working capital of $7,629,800 and a current ratio of 2.3 to 1. The Company
anticipates that the existing working capital and its ability to obtain pre-
payments from customers will be sufficient to meet its cash requirements for the
immediate future. However the Company's expansion of its Vermont operation has
materially increased its operating and working capital requirements. The
Company has undertaken this expansion with the expectation that revenues will
grow due to increased orders for its stacked memory products. There can be no
assurances that such increased orders will be forthcoming, and failure to
achieve such revenue growth would adversely affect the Company's results of
operations and its liquidity and capital resources.
At June 30, 1996, the Company's funded backlog was approximately $9,224,100
compared to $3,610,000 at July 2, 1995. In addition, existing contracts include
a small amount of unfunded backlog which typically is funded when the previously
funded amounts have been expended.
9
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
Exhibit 27.1 Financial Data Schedule
(b) Reports on Form 8-K.
During the fiscal quarter ended June 30, 1996, the Registrant filed a
report on Form 8-K dated April 22, 1996 covering the acquisition of the
cubing line and lease agreement with IBM, and for the 8 percent
convertible subordinated debentures issued by the Company to obtain the
necessary financing to complete the purchase agreement with IBM.
10
<PAGE>
SIGNATURES
----------
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.
IRVINE SENSORS CORPORATION
----------------------------------------
(Registrant)
Date: August 07, 1996 By: /s/ JOHN J. STUART, JR.
----------------------------------------
John J. Stuart, Jr.
Chief Financial Officer
(Principal Accounting Officer)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from third
quarter 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-START> OCT-02-1995
<PERIOD-END> JUN-30-1996
<CASH> 3,040,800
<SECURITIES> 0
<RECEIVABLES> 2,175,100
<ALLOWANCES> 10,000
<INVENTORY> 7,986,000
<CURRENT-ASSETS> 13,324,600
<PP&E> 18,261,800
<DEPRECIATION> 5,941,100
<TOTAL-ASSETS> 25,838,200
<CURRENT-LIABILITIES> 5,694,800
<BONDS> 5,950,000
200
0
<COMMON> 177,200
<OTHER-SE> 10,584,200
<TOTAL-LIABILITY-AND-EQUITY> 25,838,200
<SALES> 6,469,900
<TOTAL-REVENUES> 6,541,900
<CGS> 8,392,100
<TOTAL-COSTS> 12,597,800
<OTHER-EXPENSES> 1,293,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 233,000
<INCOME-PRETAX> (6,194,300)
<INCOME-TAX> 1,800
<INCOME-CONTINUING> (6,196,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,196,100)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> (0.38)
</TABLE>
