<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 31, 1999
---------------
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 0-13328
-------
SENTEX SENSING TECHNOLOGY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2333899
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1801 East Ninth Street, Cleveland, Ohio 44114
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216)687-9133
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities and 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
----- -----
<PAGE> 2
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities and Exchange Act of 1934
after the distribution of securities under a plan confirmed by a court.
Yes No
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 78,919,762.
2
<PAGE> 3
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 1998 AND AUGUST 31, 1999
<TABLE>
<CAPTION>
NOVEMBER 30, AUGUST 31,
1998 1999
(AUDITED) (UNAUDITED)
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 111,133 $ 69,632
Accounts receivable 699,409 618,644
Inventories 1,118,990 1,126,762
Other Current Assets 62,279 51,253
---------- ----------
TOTAL CURRENT ASSETS 1,991,811 1,886,291
EQUIPMENT AND IMPROVEMENTS - [NET
OF ACCUMULATED DEPRECIATION AND
AMORTIZATION] 175,500 137,084
OTHER ASSETS
Goodwill and other tangibles 376,784 362,898
Consulting contracts and other assets 404,184 350,635
---------- ----------
TOTAL ASSETS $2,948,279 $2,716,908
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 1998 AND AUGUST 31, 1999
<TABLE>
<CAPTION>
NOVEMBER 30, AUGUST 31,
1998 1999
(AUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans $ 1,880,400 $ 2,000,000
Accounts payable 604,297 626,364
Accrued expenses and other current liabilities 779,524 640,307
Due to related party 551,000 1,179,000
----------- -----------
TOTAL CURRENT LIABILITIES 3,815,221 4,445,671
----------- -----------
LONG-TERM DEBT
Convertible subordinated notes payable 10,810 11,584
Other Accrued Expenses 288,899 181,900
----------- -----------
TOTAL LONG-TERM DEBT 299,709 193,484
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized
200,000,000 shares, issued 87,865,762
and 87,865,762 shares, outstanding
78,919,762 and 78,919,762 shares, respectively 2,880,079 2,880,079
Accumulated deficit (3,759,211) (4,514,015)
Treasury shares at cost, 8,946,000 shares (313,218) (313,218)
Cumulative translation adjustment 25,699 24,907
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (1,166,651) (1,922,247)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,948,279 $ 2,716,908
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 1,098,639 $ 1,418,800 $ 3,505,068 $ 4,393,624
Cost of sales 597,089 744,268 1,808,313 2,264,340
----------- ----------- ----------- -----------
Gross profit 501,550 674,532 1,696,755 2,129,284
Selling, General and Admin. 715,527 1,122,002 2,095,935 3,268,924
Research and Development 44,572 38,939 134,961 190,487
----------- ----------- ----------- -----------
Operating loss (258,549) (486,409) (534,141) (1,330,127)
----------- ----------- ----------- -----------
Other income (expense)
Interest income 0 9,028 0 44,486
Other income (740) 11,258 10,416 19,656
Interest expense (61,089) (60,883) (164,775) (182,001)
Loss on Disposal of Assets 0 (447,327) 0 (447,327)
Foreign currency transaction loss (6,383) 23,452 (66,304) 18,929
----------- ----------- ----------- -----------
Loss before income tax expense (326,761) (950,881) (754,804) (1,876,384)
Provision for income taxes 0 0 0 0
----------- ----------- ----------- -----------
Net loss $ (326,761) $ (950,881) $ (754,804) $(1,876,384)
=========== =========== =========== ===========
Net loss per share $ (0.00) $ (0.01) $ (0.01) $ (0.02)
=========== =========== =========== ===========
Weighted Average Number of
Shares Outstanding 78,919,762 78,919,762 78,919,762 78,919,762
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
<TABLE>
<CAPTION>
NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
1998 1999
----------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,876,384) $(754,804)
Adjustments to reconcile net [loss] income to net cash
Provided by [used in] operating activities:
Depreciation and amortization 74,849 58,417
Change in assets and liabilities:
[Increase] decrease in:
Accounts receivable 521,882 80,765
Inventories 351,933 (7,772)
Other assets (27,725) 59,116
Increase [decrease] in:
Accounts payable (310,127) 22,067
Accrued expenses and other liabilities 141,637 (245,442)
Currency translation adjustment (8,850) (792)
----------- ---------
TOTAL ADJUSTMENTS 743,599 (33,641)
----------- ---------
NET CASH USED BY OPERATING ACTIVITIES (1,132,785) (788,445)
----------- ---------
INVESTING ACTIVITIES:
Acquisition of equipment and improvements (16,795) (656)
Payment to prior shareholder (33,333) 0
----------- ---------
NET CASH USED BY INVESTING ACTIVITIES (50,128) (656)
----------- ---------
FINANCING ACTIVITIES:
Net proceeds on note payable - bank 595,400 119,600
Net proceeds on note payable - related party 551,000 628,000
Net decrease in factoring of accounts receivable 0 0
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,146,400 747,600
----------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (36,513) (41,501)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIODS 1,331,981 111,133
----------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIODS $ 1,295,468 $ 69,632
=========== =========
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE> 7
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]
[1] In the opinion of management, the unaudited financial statements contain all
adjustments [consisting of only normal recurring accruals and repayments]
necessary to present fairly the financial position at August 31, 1999 and the
results of operations and cash flows for the six months ended August 31, 1999
and August 31, 1998.
These interim statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the fiscal year ended November 30, 1998 (Commission File No.
2-13328).
[2] The results of operations for the six months ended August 31, 1999 and
August 31, 1998 are not necessarily indicative of the results to be expected for
the full year.
[3] INVENTORY
Inventories consist of:
<TABLE>
<CAPTION>
AUGUST 31,
1999
----------
<S> <C>
Raw Materials $ 375,462
Work-in-Process 195,245
Finished Goods 556,055
----------
Total $1,126,762
==========
</TABLE>
[4] EARNINGS PER SHARE
Earnings [loss] per share are based on the weighted average number of common
shares outstanding for the periods presented, after adjustment for the shares
issued in the stock acquisition.
[5] PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Sentex Sensing
Technology, Inc. and its wholly-owned subsidiaries [the "Company"]. All material
inter-company accounts and transactions have been eliminated in consolidation.
[6] STOCKHOLDERS' EQUITY
On May 15, 1998, Clarion Capital Corporation ("Clarion") converted two
convertible notes in the aggregate principal amount of $609,558 into an
aggregate number of 16,569,404 Common Shares of the Company. Immediately
thereafter, CPS Capital Ltd. ("CPS") purchased all 16,569,404 Common Shares from
Clarion for $230,000. Such shares have not been issued by the transfer agent.
7
<PAGE> 8
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [CONT'D]
In addition, on May 15, 1998, CPS and the Company entered into the Second
Amended and Restated Management Services Agreement, pursuant to which CPS agreed
to accept 5,025,745 Common Shares in lieu of accrued management fees equaling
$196,900. Such shares have not been issued by the transfer agent. All the shares
acquired by CPS were acquired for investment purposes.
8
<PAGE> 9
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company formed two wholly owned subsidiaries, Sentex Systems, Inc.,
("Systems") and Sentex Acquisitions Corp. on May 31, 1991, to separate the
present operations of the Company into a subsidiary to continue the business of
designing, developing and marketing gas chromatographic devices, and a
subsidiary to develop and acquire new investment opportunities. On September 4,
1998, all of the outstanding capital stock of Systems was sold to the ALR Group,
Incorporated ("ALR") and the Company is no longer in the gas chromatography
business.
Effective November 30, 1996, Monitek Technologies, Inc., a Delaware corporation
("Monitek") became a wholly owned subsidiary of the Company, pursuant to a
merger (the "Merger") of Sentex Merger Corp., a Delaware corporation and wholly
owned subsidiary of the Company, with and into Monitek. Monitek is now being
operated as a wholly owned subsidiary of the Company. Monitek also operates a
portion of its business through a wholly owned German subsidiary of Monitek
named Monitek GmbH, which over the last three years has accounted for over 60%
of Monitek's total revenues.
Hereinafter the "Company" shall refer to Sentex Sensing Technology, Inc. and its
wholly owned subsidiary, Monitek.
Monitek designs, develops, assembles and markets instruments for the measurement
of clarity (turbidity), suspended solids content, color, purity, flow, level and
volume of liquids in industrial and waste water environments. Monitek's current
line of products, which are based on optical, acoustic, magnetic and ultrasonic
technologies, have been specially adapted for various applications in the
chemical and petrochemical, food and beverage, water treatment, pulp and paper,
and bio-technology and pharmaceutical industries, where their abilities to
withstand high temperature, extremes in pressure and corrosive environments are
important factors. Monitek's products are currently sold world-wide.
In March 1998, the Company purchased Cypress Instruments, Inc. ("Cypress") for
the purpose of acquiring a new product line that has subsequently been folded
into the Monitek product line. The acquisition was not material to the overall
business of the Company.
FINANCIAL CONDITION
Working capital decreased to a negative $2,559,000 at August 31, 1999, as
compared to a negative $1,823,000 as of November 30, 1998. The decrease in
working capital is primarily due to the losses sustained by the Company during
the first three quarters of Fiscal 1999. Cash and cash equivalents equaled
approximately $70,000 as of August 31, 1999, compared with $111,000 as of
November 30, 1998. As set forth in the independent auditors' report and notes to
consolidated financial statements that accompanied the Company's Form 10-KSB for
the fiscal year ended November 30, 1998, the Company's recurring losses from
operations and the resulting effect on cash flow have reduced the Company's
liquidity to its current
9
<PAGE> 10
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
level, which raises substantial doubt about the Company's ability to continue as
a going concern.
To address the Company's working capital needs, the Company, in July 1998,
established a bank line of credit of $2,000,000, which was fully drawn on as of
August 31, 1999. This line of credit is secured by the personal guarantee of
Robert S. Kendall, the Chairman of the Company. From time to time, CPS has
provided the Company with temporary working capital loans and, as of August 31,
1999, there was an outstanding borrowing of $1,179,000 on such loans. As a
result of the acquisition of Cypress, the Company became obligated to make
payments to the shareholders of Cypress (for payment of shares and performing
future consulting services) of approximately $535,000 over the next four fiscal
years. As of August 31, 1999, payments of $172,000 had been made to the Cypress
shareholders and an additional sum of approximately $86,000 is payable by the
end of fiscal 1999.
To address the Company's working capital needs on a more long-term basis, the
Company will attempt to generate cash from internal operations of the Company.
To control the operating losses attributable to Systems, which totaled
approximately $700,000 during fiscal 1998, the Company sold Systems to ALR. In
addition, during the fourth quarter of fiscal 1998 and the first three quarters
of fiscal 1999, the Company's management has made significant reductions in
operating expenses, totaling approximately $40,000 per month. Additional cost
reductions will also be made during the fourth quarter of fiscal 1999, which the
Company estimates will save an additional $35,000 per month.
Even after reducing operating expenses, however, the Company does not expect to
generate positive cash flow for Fiscal 1999. The ultimate profitability of the
Company depends, in large part, on increasing the sales of Monitek products and
continuing to reduce expenses.
Net Operating Losses; IC-DISC
The Company has approximately $10,751,000 in net operating losses as of fiscal
1998, which will expire at various dates through the year 2012 that are mainly
attributable to losses incurred by Monitek. Federal tax law imposes restrictions
on the use of net operating loss carry-forwards in the event of a change in
ownership, such as a merger. Due to the Merger, approximately $6,265,000 of the
$10,751,000 net operating losses may be subject to these limitations and
potentially may not be able to provide any economic benefit to the Company.
As of April 1, 1991, Monitek's IC-DISC, Monitek International, Inc., was
effectively terminated. As a result, Monitek had begun repatriation of the
undistributed earnings of the IC-DISC as of April 1, 1991. The undistributed
earnings of approximately $780,000 has been and will continue to be recognized
as income, for tax return purposes, over the 10-year period ending March 31,
2001.
10
<PAGE> 11
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
RESULTS OF OPERATIONS
Nine Months Ended August 31, 1999 Compared to Nine Months Ended August 31, 1998
The Company's net sales decreased by 20%, from $4,394,000 for the nine months
ended August 31, 1998 ("Fiscal 1998 Nine Months") to $3,505,000 for the nine
months ended August
31, 1999 ("Fiscal 1999 Nine Months"). Sales of Systems products decreased to
zero for the Fiscal 1999 Nine Months compared to $344,000 for Fiscal 1998, as a
result of the sale of Systems to ALR. Monitek's domestic sales decreased by
$176,000, or 13%, while export sales from the United States decreased by
$15,000, or 5%. Sales to Continental Europe by Monitek GmbH decreased by
$354,000, or 15%, from the Fiscal 1998 Nine Months to the Fiscal 1999 Nine
Months. The Company's management believes that the primary cause of these sales
reductions was uncertainty on the part of customers and manufacturers'
representatives regarding the strategic direction of the Company.
Cost of goods sold, as a percentage of sales, increased to 52% for the Fiscal
1999 Nine Months from 51% for the Fiscal 1998 Nine Months, primarily as a result
of the decrease in sales without a corresponding reduction in direct labor and
factory overhead. Direct labor and overhead increased to 15% of net sales for
the Fiscal 1999 Three Months from 14% for the comparable Fiscal 1998 period,
while material costs remained constant at 37% of net sales.
Selling, general and administrative expenses decreased to $2,096,000 for the
Fiscal 1999 Nine Months from $3,268,000 for the Fiscal 1998 Nine Months. The
sale of Systems, which had total expenses of $592,000 during the Fiscal 1998
Nine Months, accounted for a large percentage of the total reduction. Cost
reduction measures, which were implemented by management during the second half
of Fiscal 1998, resulted in a decrease of approximately $360,000 for the Fiscal
1999 Nine Months as compared to the Fiscal 1998 Nine Months. Sales commissions
decreased to $663,000 from $783,000 as a direct result of the decrease in net
sales.
Research and development expenses decreased to $135,000 for the Fiscal 1999 Nine
Months from $190,000 for the Fiscal 1998 Nine Months, primarily as a result of a
decrease in activities by outside consultants.
Operating losses decreased to $534,000 for the Fiscal 1999 Nine Months from
$1,330,000 for the Fiscal 1998 Nine Months, primarily as a result of the
reduction in selling, general and administrative expenses, the reduction in
research and development expenses and the sale of Systems to ALR, partially
offset by the decrease in sales.
Foreign currency transactions between Monitek and its German subsidiary resulted
in a loss of $66,000 for the Fiscal 1999 Nine Months compared to a gain of
$19,000 for the Fiscal
11
<PAGE> 12
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
1998 Nine Months, as a result of fluctuations in the value of the U.S. Dollar
relative to the German Deutsche Mark.
During the Fiscal 1998 Nine Months, the Company incurred a $447,000 loss,
representing the disposal of the net assets of Systems. There was no such
expense during the Fiscal 1999 Nine Months.
Net losses decreased to $755,000 for the Fiscal 1999 Nine Months from $1,876,000
for the Fiscal 1998 Nine Months, primarily as a result of the decreased
operating loss and the decreased loss related to the disposal of net assets of
Systems, partially offset by the unfavorable change in foreign currency exchange
rates.
CHANGES IN ACCOUNTING STANDARDS
In February 1997, SFAS 128, Earnings per Share and SFAS 129, Disclosure of
Information About Capital Structure, were issued. SFAS 128 establishes new
standards for computing and reporting earnings per share. SFAS 129 requires an
entity to explain the pertinent rights and privileges of outstanding securities.
The Company has adopted these new standards in the current fiscal year and the
affect of the adoption was not material.
In June 1997, SFAS 130, Reporting Comprehensive Income, was issued. SFAS 130
establishes new standards for reporting comprehensive income and its components
and is effective for fiscal years beginning after December 15, 1997. The Company
expects that comprehensive income (loss) will not differ materially from net
income (loss).
In June 1997, SFAS No. 131, Disclosures About Segments of an Enterprise and
Related Information, was issued. SFAS No. 131 changes the standards for
reporting financial results by operating segments, related products and
services, geographic areas and major customers. The Company must adopt the new
standard no later that November 30, 1999.
In February 1998, SFAS 132, Employers' Disclosures about Pensions and other
Postretirement Benefits, was issued. SFAS 132 standardizes the disclosure
requirements for pension and other postretirement pension plans but does not
change the measure or recognition of those plans. SFAS 132 is effective for
fiscal years beginning after December 15, 1997. Management believes that this
pronouncement will have no material effect on the Company's financial statements
or disclosures thereto.
In June 1998, SFAS 133, Accounting for Derivative Instruments and Hedging
Activities, was issued. SFAS 133 establishes accounting and reporting standards
for derivative instruments and hedging activities. SFAS 133 is effective for
fiscal years beginning after June 15, 1998. Management believes this
pronouncement will have no effect on the financial statements.
12
<PAGE> 13
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT'D)
YEAR 2000 COMPLIANCE
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a two
digit year is commonly referred to as a Year 2000 Compliance issue. As the year
2000 approaches, such systems may be unable to accurately process certain
data-based information. The Company is in the process of identifying and
modifying all significant hardware and software applications that will require
modification to ensure Year 2000 Compliance. Internal and external resources are
being used to make the required modification and test Year 2000 Compliance. The
estimated cost to address Year 2000 issues is not expected to have a material
impact on the Company's business, operations or financial condition.
In addition, the Company is communicating with external service providers to
ensure that the external providers are taking the appropriate action to address
Year 2000 issues. However, there can be no assurance that the systems of third
parties on which the Company's systems rely will convert, or that a conversion
that is incompatible with the Company's systems would not have an adverse effect
on the Company's systems.
13
<PAGE> 14
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Not applicable.
(b) Not applicable.
SIGNATURE
Pursuant to the requirements of section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized:
Date: October 14, 1999 SENTEX SENSING TECHNOLOGY, INC.
By: /s/ Robert S. Kendall
----------------------------------------------
Robert S. Kendall, Chief Executive Officer
/s/ James S. O'Leary
----------------------------------------------
James S. O'Leary, Chief Financial Officer
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SENTEX SENSING TECHNOLOGY, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT, FILED ON FORM
10-QSB, FOR THE PERIOD ENDING AUGUST 31, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> AUG-31-1999
<CASH> 69,632
<SECURITIES> 0
<RECEIVABLES> 659,353
<ALLOWANCES> 40,709
<INVENTORY> 1,126,762
<CURRENT-ASSETS> 1,886,291
<PP&E> 339,245
<DEPRECIATION> 202,161
<TOTAL-ASSETS> 2,716,908
<CURRENT-LIABILITIES> 4,445,671
<BONDS> 0
0
0
<COMMON> 2,880,079
<OTHER-SE> (4,802,326)
<TOTAL-LIABILITY-AND-EQUITY> 2,716,908
<SALES> 3,505,068
<TOTAL-REVENUES> 3,515,484
<CGS> 1,808,313
<TOTAL-COSTS> 1,808,313
<OTHER-EXPENSES> 2,297,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 164,775
<INCOME-PRETAX> (754,804)
<INCOME-TAX> 0
<INCOME-CONTINUING> (754,804)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (754,804)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
